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P056236 |  ICRR 13224
Report Number : ICRR13224
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 06/23/2011
PROJ ID : P056236 Appraisal Actual
Project Name : Higher Education US$M ):
Project Costs (US$M): 60 56\.86
Enhancement Project
Country : Egypt Loan /Credit (US$M
Loan/ ):
US$M): 50 50
Sector Board : ED US$M ):
Cofinancing (US$M): 0\.5 0\.5
Sector (s): Tertiary education
(49%)
Law and justice (20%)
Vocational training
(18%)
Central government
administration (13%)
Theme (s): Education for the
knowledge economy
(50% - P)
Law reform (25% - S)
Other financial and
private sector
development (25% - S)
L/C Number : L4658
Board Approval Date : 07/29/2002
Partners involved : DFID Closing Date : 12/31/2007 12/31/2008
Evaluator : Panel Reviewer : Group Manager : Group :
Helen Abadzi Fernando Manibog IEG ICR Review 1 IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
The Project was to create the conditions fundamental to improving the quality and efficiency of the higher education
system in Egypt through legislative reform, institutional restructuring, and establishment of independent quality
assurance mechanisms and monitoring systems \.
The PAD and the loan agreement have a nearly identical statement of the objective \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
(a) Improving efficiency through the reform of governance and management (US$29 29 \.55 M at appraisal, US$ 30 M
US$ 29\.
actual ) to support activities aimed at improving system governance, management and efficiency : (i) Reform
legislation governing higher education, (ii) rationalize funding allocation mechanisms; (iii) establish a National Quality
Assurance Council; (iv) build capacity, develop a management information system (MIS), and train management; (v)
establish a Higher Education Enhancement Project Fund to support (i) teaching and learning improvements in
academic departments through program and course innovations; (ii) collaboration between universities, technical
colleges, and the private sector; and (iii) projects intended to enhance management and administration in the higher
education sector\.
(b) Improving the quality and relevance of university education (US$7US$ 7\.67 M at appraisal, US$ 6\.2 M actual ) through
facilitating the use of new learning technologies and human resource development to (i) establish an integrated
computer and network infrastructure; (ii) train faculty and staff, and (iii) install and operationalize an inter -university
library system\.
(c) Improving quality and relevance of mid -level technical education (US$ US$ 13\.
13 \.55 M at appraisal, US$ 13\.
US$13 13 \.4 M actual )
through (i) the consolidation of 47 middle technical institutes into 8 Technical Colleges with civil works, equipment,
and technical assistance, (ii) curriculum design and instructor training to provide customized in-service employee
training programs for industry on a cost -recovery basis; (iii) strengthened academic administration and management \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
After an extension of 12 months, the project closed on December 31, 2008 and disbursed fully\.
3\. Relevance of Objectives & Design:
Relevance of Objectives - Substantial
The overall relevance of project objectives was substantial at the time of preparation and at completion \. The 2001
Country Assistance Strategy for Egypt stressed the need to accelerate Egypt's economic development and build its
competitiveness in a global market \. In the education sector, it recommended expanding support for basic and
secondary education, and for increasing the market relevance of technical education and vocational training institute
s\. The objectives are also connected to the Government of Egypt âs longrange plans for higher education reform,
which were articulated in a landmark National Conference on Higher Education held at the turn of the century \. It
articulated 25 reform initiatives for improving the quality, relevance, and efficiency of higher education, of which 11
were addressed by the Higher Education Enhancement Project \.
Relevance of Design - Modest
The project design used by the implementers included 5 sub-projects and was different than the design proposed in
the project document\. The project financed âthe conditions fundamental to improving the quality and efficiency of the
higher education systemâ? but the conditions discussed in the PAD were not the only fundamental ones, there were
others not addressed by the project \. The background section of the PAD (p\. 4) mentioned high faculty absenteeism
(due to multiple jobs), reportedly over 75% in the professional programs; it referred to high repetition and dropout
rates, and low pass rates, 50% in some faculties\. However, the design had no particular activities to address or even
to monitor improvements in teacher absenteeism or pass rates (other than the MIS development)\. There was
similarly little mention of prior knowledge of entrants to technical colleges, textbook availability, achievement during
training, need for private tutoring, or women âs access to various specialties \.
4\. Achievement of Objectives (Efficacy):
The project objective focused on certain conditions fundamental to improving the quality and efficiency of the
higher education system in Egypt through legislative reform, institutional restructuring, and establishment of
independent quality assurance mechanisms and monitoring systems\.
Objective (a): Create Conditions for Improved Efficiency \. (Rating â Modest )
Outputs
Key legislative reforms on university self -governance \. Although the project facilitated a discussion among
stakeholders on system reform, the new legislative framework to award more autonomy to universities faced
resistance in Parliament and has not yet been adopted \. The Ministry decided to pursue implementation of many
elements of its reform agenda in an ad -hoc manner until a new framework was ready for Parliament âs
consideration\.
Rationalized funding \. The MOHE has developed a model to estimate and analyze student unit costs, and
worked on a funding formula, but it was not adopted \. Recurrent and investment budgets continue to be allocated
through direct negotiations between individual universities and the Ministry of Finance and the Ministry of
Planning\.
Develop HE Management Information System (operating, annual reports published, guiding decisions )\. MIS
applications for undergraduate students, graduate studies and staff administration were completed and MIS
centers were established in universities but were not fully operational at the Supreme Council of Universities at
the close of HEEP, but became so under HEEP 2\.
Strengthening academic management (universities and TCs )\. Supreme Council of Universities and Supreme
Council of TCs were in place by 2008, but at this point it is not clear to what extent they have power to make
substantial changes\. The 47 MTIs were consolidated under 8 Technical Colleges which are now guided by
Boards of Trustees\.
Outcomes
Cost per student \. The cost per student increased by 45 percent between 2002/03 to 2006/07, a sign of
diminished efficiency since at the same time the student -staff ratio did not change\.
Graduation rates \. The average graduation rate for public universities in 2005/06 was 75 percent, but in the large
elite public universities (Cairo and Alexandria) it was well below that average (50 and 69 percent respectively)
and international norms\.
Objective (b): Create Conditions for Improved Quality (Rating â Substantial )
Outputs Universities
Integrated computer network infrastructure : all faculty /students have access to IT and new teaching
methodologies \. All 17 universities in 2008 were connected to the unified fiber optic informational network and
over 60% of university computers were connected to the internet; videoconference, streaming and e -learning
facilities were set up in all universities and staff trained in their use \. Over 50 percent of students have used
electronic forms of learning and of those who have, 70 percent preferred electronic courses \.
Integrated computer network infrastructure : inter -university library system \. The Project established the
Egyptian universities libraries consortium including all public Universities and some foreign and private
universities in Egypt\. In 2008 the digital library included 16 international databases and 10 free web resources
that served most of the Egyptian scholars â academic needs\. All resources are available through the Egyptian
Universities Network (EUN) website\. A catalog database of the universities holdings contained the data of 60
libraries in 15 universities\. More than 2\.2 million records were indexed and stored in the system \.
Train faculty and staff training \. Staff training goals (target: 5000 instructors in original project subcomponent )
for IT applications was met by ICTP trainers \. Beyond that the project supported a much broader staff training
agenda, through its Faculty Leadership and Development subprojects \. Training centers were established in 17
universities and the collaboration with an international partner (ICTB)\. About 760 trainers have been trained,
including a core group of 40 certified trainers expected to play a leading role in promoting quality in their
respective institutions\. The project supported the development of 16 specialized and 3 TOT training packages,
and the delivery of more than 220,000 trainee hours to staff members\.
A National Authority for Quality Assurance and Accreditation in Education (NAQAAE ), reporting directly to the
Prime Minister, was established in 2006 by Presidential Decree with the mandate of assessing and providing
accreditation to public and private institutions at all levels of education \. This act was accompanied by a
substantial program of staff training on QA and accreditation processes through HEEP âs Quality Assurance and
Accreditation Project (QAAP), plus the establishment of QA centers /units in all universities and faculties, the
creation of national academic standards, and the beginning of university /faculty self-evaluation and site visits in
relation to the standards
Outcomes - Universities
Student -staff ratio \. Used as a proxy for quality, the ratio was high at the beginning of HEEP (30:1 in 2002) and
remained on a similar level by its final year (29:1 in 2007)\.
Change in Instructional Methods \. Before/after project change in staff use of small group teaching (71 percent
increase) and in staff using technological aids in teaching (200 percent increase)\.
Proportion of students enrolled in social science and humanities programs remained on a similar level with 80
percent in 2003 and 79 percent in 2007\.
Outputs Technical Colleges (TC)
Technical Institutes were consolidated into 8 Technical Colleges \. Boards of Trustees were formed to include
representatives of the private sector \. Programmatic links to industry through customized training programs were
established in some colleges \.
Curricular redesign, related instructor training, and improved facilities \. The project supported rehabilitation and
equipment for 3 pilot TCs, revision of the curricula and development of new courses, training courses to upgrade
qualifications of existing staff, and recruitment of qualified new staff \. Totally 26 academic programs were
revised and 6 new programs of improved relevance to commerce and industry were designed by expert
committees in collaboration with the potential employers \.
Outcomes Technical Colleges
Student -Staff Ratio fell sharply from 118:1 in 2002 to 40:1 in 2007 in the industrial subjects, and from 305:1 to
98:1 in the service subjects, a result of hiring more (and more qualified) TC staff\.
Graduate unemployment rate \. Prior to HEEP, about 60 percent of Middle Technical Institute graduates had not
found relevant employment at least 2 years after graduating\. It is unclear whether this had improved by the end
of HEEP, largely because entrants into new work -place connected programs had not yet graduated \.
Technical student enrollments increased by 10% over the project, double the targeted increase of 5%\.
5\. Efficiency (not applicable to DPLs):
Efficiency - Substantial
The ICR did not conduct an efficiency analysis \. Initially, disbursement of funds was slow \. After amendments to the
budget, disbursement followed the expected curve, accelerating at the end so that loan funds were fully disbursed
within a one year extension\. Operational costs accounted for 3 percent of project expenditures \. There was a large
expansion of project scope in both Faculty Leadership and Development and Quality Assurance and Accreditation
without any increase in project funds \. At no additional expense, the project spawned the creation of a Strategic
Planning Unit within the MOHE, which produces regular statistical reports (drawing from the MIS), and advises the
ministry on reform options\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The overall outcome of the project is rated Moderately Satisfactory , based on relevance ratings that are substantial
for objectives and modest for design; efficacy ratings of modest for improving efficiency and substantial for
improving quality; and an efficiency rating of substantial \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
All of the HEEP subprojects except one (the HEEP Fund) have continued under the government funded HEEP 2 and
have retained most of their original features \. HEEPF was not continued, but competitive funding has, being used as
a way to distribute other funds \. Now the HEEP is more decentralized with QAAP action beng based on university
proposals; Faculty Learning and Development is conducted and planned by local trainers at university centers and
locally funded (with only guidance from the national center )\. One risk is that the drafted legislative package which
was stalled in Parliament and its related formula funding strategy will lose momentum and perish, however,
Government officials indicated that the package had been revised and had a good chance of being adopted by a new
Parliament\.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
The Bank âs performance during preparation - moderately unsatisfactory \. The Bankâs team brought lessons
learned from similar projects and prior operations in the sector, and sought guidance from Quality Assurance
Group (QAG) at the project concept stage \. However, project design had significant shortcomings because of (i)
insufficiently elaborated sector analysis; (ii) lack of clarity and consistency in the results framework; (iii)
insufficiently developed implementation arrangements given the complexity of the project; and (iv) poorly
designed indicators\. (ICR p\. 17) Also, lack of technical assistance and limited references to the government's
capacity to bring about major reforms could have been emphasized during project design \.
Project supervision - moderately unsatisfactory \. Overall the Bank worked closely with the PMU in supervising
project implementation\. However, the Bank did not take early actions to correct a mismatch that arose between
the design and components of the project to define the project objectives in more realistic terms, improve
implementation arrangements, or to improve monitoring and evaluation system and indicators \. Even when
project implementation had slowed down, supervision reports have maintained progress as satisfactory \. Finally,
the Bank could have been more candid and paid more attention to procurement issues , such as university staff
being paid as consultants in their own institutions, that arose during the project (section 11)\.
at -Entry :Moderately Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Unsatisfactory
c\. Overall Bank Performance :Moderately Unsatisfactory
9\. Assessment of Borrower Performance:
Government performance - moderately satisfactory \. The Government had full ownership of the project from the
beginning and used strong participatory processes for consensus building and broad program design \. It showed
commitment to the reform agenda through the establishment of a high -level steering committee with some quality
control mechanisms\. Also, despite delays, counterpart funding was provided, and legislation was adopted to
consolidate technical college and establish the NAQAA \. However, the Government was overly optimistic about its
ability to push legislative reforms on university governance and financing through the Parliament and was not
able to find a compromise solution during the course of HEEP
Implementing agency performance - moderately satisfactory \. The PMU faced challenges in implementing such
a complex project given the lack of details in project design \. Its structure was strengthened by the appointment of
directors for the five sub-projects\. The PMU had to develop action plans, operation manuals and guidelines for
the five subprojects\. Despite the additional delays due to the change of some directors and the release of
Government contribution, the PMU was able to successfully complete almost all the activities planned in the
project\. The PMU performance, however, is somewhat mitigated by shortcomings in monitoring and evaluation,
and some problems in fiduciary compliance (see Section 11)\.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Moderately Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
M&E Design : The original M&E framework included plans for a project information system, the production of
quarterly financial management reports, and an annual substantive progress report, and use contracted independent
auditors to undertake technical review of each component \. The set of performance indicators in the logframe to
measure progress against project objectives included five outcome indicators and 12 output indicators, but the
indicators used to measure outcomes were actually inputs (ICT infrastructure), outputs (consolidation of MITs,
implementation of MIS) or processes (legislative reforms)\. The output indicators identified in the PAD were often
vague and lacking baseline and /or target values\. Finally, the failure to reconcile the PAD and the GOE project
structure meant some ambiguity as to the application of the logframe indicators \.
M&E implementation : Although the PMU has made substantial effort to document HEEP activities and achievements
through quarterly progress reports, several publications and its website, there was a lack of robust M&E output \.
From project mid-term to near project completion the PMU was repeatedly reminded to put in place a system to track
and report progress made towards the developmental objectives and the problems facing implementation, and to
appoint an M&E specialist, but this was not actively taken up, nor were the technical audits commissioned \. In the last
year the PMU did implement an impact assessment on a sample of students and staff, sharing the results with the
Bank for the implementation completion report, but there were some limitations, due to its small sample size and the
lack of baseline data\.
M&E utilization : Despite the lack of a well documented M&E system at the project level, sub -projects such as the
HEEP Fund and the Faculty Learning and Development Project had built -in monitoring systems to take some
corrective actions such as adjusting geographical and sectoral coverage or training content \. The impact assessment
was published, and used to inform the next phase of HEEP
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards were not triggered\.
Financial Management : HEEP did not have its financing accounting and reporting systems in order at the beginning
of the project, which caused some aspects of FM to lag behind until project closure \.
Procurement : Two Independent Procurement Reviews in 2006 and in 2008 questioned the practice of selection and
employment of faculty members as individual consultants under the Disbursement Category âConsultants Services
and Trainingâ? for about US$12\.3 million without following the procedures specified in Schedule 4 of the Loan
Agreement\. The Single Source Selection method used would have required a prior waiver from the Bank, and the
hiring of university professors â who are Ministry employees - on a systematic basis violated procurement rules \.
According to the ICR, it should have been agreed during the project preparation and disclosed in the project
documents\.
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Moderately The project carried out many complex
Satisfactory activities but encountered
discrepancies in the project design that
affected implementation\. Reforms to
improve efficiency in higher education
ran into political opposition\. Without
operational definitions, good indicators,
and baseline data, it was difficult to
convincingly demonstrate the impact of
HEEP interventions on project
objectives\.
Risk to Development Moderate Negligible to Low
Outcome :
Bank Performance : Satisfactory Moderately Quality at entry had deficiencies \.
Unsatisfactory During supervision the Bank did not
take early actions to correct the
mismatch between project design and
components\.
Borrower Performance : Satisfactory Moderately Overall the borrower showed
Satisfactory commitment\. Complex activities were
carried out competently but some
procurement irregularities were found \.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
When a widely adopted institutional change model is being introduced in a field like higher education for the
first time in a country, it needs to be preceded by sufficient sector analytic work to create an appreciation of
the complexities and the implications of the proposed changes and of the likely sources of resistance; such
analysis could help determine the parts of the model that are appropriate to the context, and the pace of
adoption\.
Higher education reforms supporting improved quality are easier to put in place than those for improved
institutional efficiency and financial management, leading to decreases in cost -effectiveness\. In Egypt this
imbalance of reform (quality outstripping efficiency ) cannot be sustained\.
Programs to improve the condition for higher education quality, relevance and efficiency cannot be expected
to do so just because they have been made operational \. Appropriate outcome indicators need to be
formulated and used to determine whether to conditions have been sufficient to leverage real change \.
There are currently few disincentives for students enrolling in overcrowded and non -employment-conducive
fields\. Adding some elements of student cost recovery (which did not receive due consideration in HEEP ) is a
controversial topic, but some aspects of it (high subsidies for room and board ) should be open to discussion,
as well as fees for other non-instructional aspects of higher education \.
14\. Assessment Recommended? Yes No
Why? This project has been included in the comparative PPAR on higher education in MENA, which allowed
verifying and adjusting the ratings of the original ICR review \.
15\. Comments on Quality of ICR:
The ICR offered extensive information on the events of the project as well as frank assessments regarding its
performance\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P067606 |  ICRR 13729
Report Number : ICRR13729
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 07/03/2012
Country : India
Project ID : P067606 Appraisal Actual
Project Name : Uttar Pradesh State US$M ):
Project Costs (US$M): 610 516
Roads Project
L/C Number : L4684 Loan/ US$M ):
Loan /Credit (US$M): 488 446
Sector Board : Transport US$M):
Cofinancing (US$M ):
Cofinanciers : Board Approval Date : 12/19/2002
Closing Date : 12/31/2008 12/31/2010
Sector (s): Roads and highways (94%); Other social services (3%); Sub-national government
administration (3%)
Theme (s): Infrastructure services for private sector development (50% - P); Injuries and
non-communicable diseases (25% - S); Other public sector governance (25% - S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Ramachandra Jammi Robert Mark Lacey Soniya Carvalho IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
The project development objective (PDO) is stated identically in both the project appraisal document (PAD) and the
Loan Agreement: "to improve the performance of the core road system in Uttar Pradesh \."
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
1\. Upgrading and widening of State Highways : Increase the capacity and structural strength of part of the core
State road network through the upgrading and widening of about 1,000 km of priority State Highways (SHs)\. This
included the construction of four new bypasses of about 20 km in length and five major bridges\. This component was
divided into: (a) civil works; (b) supervision of civil works; and (c) implementation of the Resettlement Action Plan
(RAP) and the Environmental Management Plan (EMP) for road widening\. (Planned: US$324M; Actual: US$255M)
2\. Rehabilitation of SHs & MDRs (major district roads ): Reduce the periodic maintenance backlog of the state
by funding the overlaying, resealing, and minor rehabilitation of about 2,500 km of SHs and MDRs\. This component
was divided into: (a) civil works; and (b) technical review\. (Planned: US$212M; Actual: US$255M)
3\. Institutional Strengthening, Advisory Technical Assistance, Training, Equipment, and Pre -investment
Studies : Finance consultant services and technical assistance and training programs to facilitate the implementation
of the institutional development strategy (IDS) action plan\. This component also funded short - and medium-term
training activities of Public Works Department (PWD) managers and staff\. The component had a provision for funding
techno-economic feasibility and detailed engineering studies for future road investment projects \. GoUP (Government
of Uttar Pradesh) funded miscellaneous activities such as incremental operating costs and applicable taxes for
consultancy and goods \. (Planned: US$13M; Actual: US$5M)
4\. Pilot Highway Safety Program and Traffic Transport Operations : Financed civil works for the
implementation of engineering and traffic management measures to enhance road safety and mitigate traffic
accidents at selected high priority black spot locations throughout the state, road safety training, studies for black
spot identification, procurement of hardware and software for accident analysis and accident management system \.
The component also financed civil works to improve road transport operations by constructing offside trade assistant
centers at selected border crossings, 10-12 in number with commercial vehicle traffic of 500 vpd (vehicles per day) or
more, services for design and supervision of the centers and goods such as weigh bridges, scanners and computers \.
The land cost for the facilities was entirely borne by GoUP \. (Planned: US13M; Actual: US$0\.5M)
The PDO and Key Indicators were not revised, although the physical targets were scaled down during
implementation (upgrading: 1,000 km to about 685 km; rehabilitation: 2,500 km to about 1910 km; two bridges were
dropped; and three upgrading packages were downgraded to rehabilitation level )\. The reasons for scaling down
included: (i) delays in the project implementation (pertaining to pavement design changes, approval of contract
variations, shifting of utilities, payment for relocation & resettlements of affected persons, procurement decision
making, etc\.); (ii) appreciation of the Indian rupee against the US dollar; (iii) unexpected high price escalation of
construction materials, fuel and manpower; and (iv) improved engineering designs resulting in higher cost \. The
curtailment of the scope of civil works was acknowledged by the Bank âs supervision mission (ref: Aide-Memoire, Nov
6-11, 2006)\. Additionally, it was mutually agreed to delete the Study on Trade Assistance Centers at State border
crossings\. GoUP advised that other Government departments would undertake this study \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Against the planned Bank loan of US$ 488M, the actual amount disbursed was US$ 446M at project completion\.
Though the scope of physical works was curtailed substantially in physical terms - upgrading of roads by 31% and
rehabilitation by 24% -- the 9% net shortfall in the loan was lower due to the cost overruns experienced during
implementation\. For the upgrading and rehabilitation components, each of which accounted for nearly 50% of the
the final project cost, the cost overruns were 30% and 35% respectively and the time overruns were 26% and 34%
respectively\. The Borrower's contribution of US$70M was about 55% of the planned US$127M\.
The project was extended by two years through two extensions of one year each beginning December 31, 2008, to
accommodate delays caused by various factors mentioned in section 2c above\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
The State of Uttar Pradesh has a population of over 160 million people and is among the five poorest states in India \.
The state has 90,000 km of roads over an area of 294,411 square km, giving the state the lowest road density in
India - 121 km per 100,000 people, compared to the country average of about 250; and in terms of area 33 km of
PWD surfaced roads per100 sq\. km\. At appraisal, only 7 percent of the PWD road network met double -lane
standards, while 85 percent of the total network consisted of single -lane roads\. The rapid growth of traffic at 10
percent per annum, the poor quality and capacity of the roads, and inadequate funding for maintenance threatened
further deterioration of the road network \. The lack of attention to road safety and inefficient operation of traffic
management further aggravated road conditions as reflected in rising accidents and death rate (22 deaths per 10,000
registered vehicles annually )\.
The shortcomings of the road transport system in India are addressed in the Country Partnership Strategy (CPS) for
2009-2012, which focuses on improving infrastructure to help sustain rapid economic growth to achieve poverty
reduction objectives\. The strategy is also closely aligned with the Government of India âs development priorities
expressed in its Eleventh Five -Year Plan\. Against this background of the State's needs and country -wide priorities,
overall relevance of the project development objective (PDO) is rated high\.
b\. Relevance of Design:
The project design had an appropriate balance between physical works for upgrading, rehabilitation and
maintenance of roads; improving road safety; and measures for improving institutional capacity and processes for the
long term\. The project design sought to incorporate lessons learned from previous Bank road sector operations in
India and other countries in the region \. Design was, however, complex in light of capacity in Uttar Pradesh \.
The results framework reflects the linkage between the physical components of the project with intermediate results
and the overall project objective \. The link between the institutional component and intermediate results is adequately
made\. The impact of project activities on institutional and financial capacity is not fully clarified \.
Several areas of risk for project implementation were identified viz \. (i) GoUP's fiscal situation and timely flow of
counterpart funds (from the Government of India to GoUP and then on to PWD ); (ii) timely and effective procurement
with adequate competition for works; (iii) capacity of PWD staff in implementing Bank âs procurement guidelines; (iv)
timely clearance of construction sites, relocations and resettlement actions; and (v) reliability of traffic growth
forecasts\.
While the risks were appropriately identified, the project design could have provided stronger measures to mitigate
them\. This was crucial for risks that have been realized in similar state -level transport sector projects in India,
especially relating to the overall capacity of the implementing agency to administer a large project, procurement in
accordance with the Bankâs guidelines, and resettlement actions \. Given the importance of these factors in project
implementation, relevance of design is rated modest\.
4\. Achievement of Objectives (Efficacy):
Improve the performance of the core road system in Uttar Pradesh \. Modest\.
The project development objective (PDO) is expressed in broad terms\. According to the results framework, the road
works and institutional improvements under the project were expected to yield improved performance in terms of
travel time and costs, road safety, and road sector management \.
The scope of physical works was reduced substantially through restructuring of components during implementation \.
At project close, 685 km were upgraded (against the original target of 1,000 km) and 3 bridges were completed
(against the original target of 5 bridges); rehabilitation was carried out for 1,910 km against an original target of 2,500
km\. Even for this reduced level of output, the achievement of intermediate outcomes was mixed -- Travel time on the
upgraded/rehabilitated roads was reduced by 40% against a target of 20%\. Deaths due to road accidents decreased
to 13 per 10,000 vehicles/year against a target of 15\. The percent of the core network assessed to be in good or
better condition increased from a baseline value of 17% to 60%, but fell short of the target of 70%\. The share of
project roads with a V/C (Volume/Capacity) ratio greater than 1 fell from 20 percent to 10 percent against a target of 5
percent\. 30 black spots were improved against a target of 50\.
Institutional development
The ICR states that the implementation status of the PWD -centered institutional strengthening strategies and action
plan was achieved to the extent of 65 percent\. The share of non-planned budget expenditures was reported to have
been reduced to 42% against a target of 35%\. A Geographic Information System (GIS) was developed for 21 out of
76 districts\.
However, the institutional improvement effort fell short of expectations in most areas \. The various cells created in
PWD -- Human Resources Development and Training; Environmental and Social Development; Quality
Management; Road Safety Planning and Engineering; and Information Technology Management and Planning --
remained under-staffed, limiting their contribution\. The Road Maintenance Management System (RMMS) was not
functional\. A planned computerized black spot identification system was not developed \. While there are no clear
indicators to assess the outcomes of the institutional component, the several shortcomings in completing planned
activities, and overall PWD performance point to significant shortcomings in this regard \.
5\. Efficiency:
The economic analysis used HDM -3 software at appraisal, and the Indian Road Congress special publication (IRC:
SP: 30-2009) as the basis at project completion \. The overall weighted average ERR for the restructured upgrading
component (685 km) was 25\.4% at project completion compared to 35\.3% at appraisal for the original target of 1000
km\. However, the ICR adds that these weighted ERR figures may be overestimated because the ERR for road
sections with negative benefits was set to zero \. The overall weighted average ERR for the roads sections sampled
under the rehabilitation component was 39\.5% at project completion compared to 34\.9% at appraisal\. The NPV for
the upgrading and rehabilitation components were INR 40,967M and INR 27,053 million respectively\. The greater
than expected increase in the volume of traffic on the project roads (an average annual traffic growth rate of eight
percent) contributed positively to the ERRs and NPVs \.
There were cost over runs\. Though the scope of physical works was curtailed substantially in physical terms -
upgrading of roads by 31% and rehabilitation by 24% -- the 9% net shortfall in the loan was lower due to the cost
overruns experienced during implementation \. For the upgrading and rehabilitation components, each of which
accounted for nearly 50% of the the final project cost, the cost overruns were 30% and 35% respectively\. There was
also a 2 year delay in project completion \.
Overall, efficiency is rated modest\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 35% 98%
ICR estimate Yes 32% 98%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
There were significant shortcomings in the scale and outcome of physical works, and lack of progress in
institutional reform and capacity development \. Efficiency was modest\.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
Shortcomings in institutional capacity pose a risk for effective management of the roads sector in Uttar Pradesh \.
The cells created under the project âs institutional strengthening component are not fully functional due to a lack of
qualified staff\. In terms of financial resources, GoUP's action in narrowing the funding gap for the road maintenance
for 2010-11 is a positive development\.
While the quality of works was generally up to standards, a few road sections showed unsatisfactory quality \. The
ICR notes shortcomings at certain upgrading packages (UPG): UPG/3 (damaged wet mix macadam), UPG/2
(bleeding of dense bituminous concrete ) and RMC/30 (unsatisfactory quality of the wet mix macadam and large
segregations)\. The ICR mission also observed cracks in UPG road sections while PWD was undertaking repair
work\. The supervision of the works by the PWD /PIU (project implementation unit) remains a problem as
acknowledged by PWD\.
Two contracts are still underway (UPG/13 for Construction of a Bridge across River Ghaghra at Chelariaghat, and
UPG/13A for Construction of Approaches and Guide bunds (embankments) etc\. for the Bridge at Chelariaghat) which
are planned to be completed by the PWD (according to the ICR, GoUP/ PWD has committed itself to allocate
adequate funds to ensure completion )\. The bridge over the railway track near Chaudagra will be completed by the
railways but the approach roads have been completed under the project \.
Overall, much will depend on GoUP and PWD's commitment to the remaining physical works and for implementation
of the Institutional Development and Strengthening Action Plan, the RMMS, and road safety measures, Adequate
staffing of the cells established with qualified personnel, as well as training, equipment and development of
institutional manuals, are crucial to sustain the momentum gained \.
The Region adds (through its email dated June 27, 2012) that the state government is giving serious attention to
institutional capacity building and quality improvements as a result of the project \. The government has also acted to
narrow the funding gap for road maintenance in 2010-2011\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The Bank team faced considerable challenges in preparing a large road project in what is one of the largest,
poorest and most populous states in India \. While the Bank attempted to carry a out rigorous project preparation
exercise while incorporating lessons from similar projects, the effort fell short in terms of (i) evaluating
implementation capacity of the PWD for administering a project of this size; (ii) approving the technical designs
and specifications of the roads selected for upgrading and rehabilitation in time for immediate implementation
after loan approval; (iii) guiding the implementing agency by taking them through the full requirements of the land
acquisition and resettlement actions for timely completion; and (iv) advising a realistic implementation period for
the project\.
Further, during the project preparation phase, the Bank team did not identify and act upon a major bottleneck
created by GoUP/PWD's decision to restrict the corridor of impact * to 13 meters\. Dealing with this constraint led
to significant problems in getting departmental clearance for tree -cutting, shifting of utilities and removal of other
obstructions to clear the right -of-way for the construction works, ultimately leading to major delays during
implementation\. The detailed engineering carried out for about 50 percent of civil works contracts before
appraisal was not fully examined and needed further checking and modifications \. Also about 35- 40 percent of
the contracts expected for award prior to loan effectiveness were not ready in time \.
*The corridor of impact (CoI) is the width required for the actual construction of a road including the carriageway,
shoulder, embankment, longitudinal drainage, wayside amenities like bus stops, bus shelters, etc \. and necessary
safety zones\.
at -Entry Rating :
Quality -at- Moderately Unsatisfactory
b\. Quality of supervision:
The Bank conducted extensive supervision, including interim missions every six months \. However, the team
did not follow up in a timely manner on agreed actions to reduce administrative bottlenecks and to speed up
implementation\. Even after acknowledging that the project scope needed to be curtailed, the Bank did not advise
or undertake a restructuring \. The Borrower pointed out that on occasion the Bank âs no-objection and approvals
also took more time than anticipated \. The outcome and output indicators (as required in the PAD) were not
monitored consistently throughout implementation \.
Quality of Supervision Rating : Moderately Unsatisfactory
Overall Bank Performance Rating : Moderately Unsatisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
GoUP demonstrated a high level of commitment and ownership at the project preparation stage through a
number of participatory actions \. During implementation, a GoUP-mandated Governing Board was set up to
support the implementing agency, PWD, to avoid long delays from lengthy internal processes in clearing
administrative and financial sanctions \. However, GoUP experienced a new level of challenge and responsibilities
in overseeing this large scale project \. The Departments of Finance, Revenue, Forestry, and Power did not
demonstrate sufficient capacity to handle the volume of work for several tasks including timely issuance of
statutory clearance to executing agencies for shifting of utilities (power, gas, and telephone lines ); timely
issuance of excise and custom duty waivers to the contractors (to acquire material and equipment etc \.)\. In
addition, poor coordination and collaboration between GoUP departments and PWD contributed to slowing the
pace of project implementation\.
The Projectâs Governing Board (under the Chairmanship of the Chief Secretary of (GoUP) rejected the concept of
recruiting independent supervisory consultants as was planned for the major maintenance / rehabilitation
contracts\. It was then proposed that out of 32 contracts in Phase II, the first 8 would be supervised by the PWD
staff with the assistance of an independent consultant \. The remaining 24 contracts would subsequently be
supervised by these PWD Engineers \. The ICR reports that these decisions negatively affected the quality of
oversight of the physical works \.
Government Performance Rating Moderately Unsatisfactory
b\. Implementing Agency Performance:
This large-scale and complex project (about 30-40 contracts were underway at any given time during
implementation) proved a huge challenge for PWD, the implementing agency, from design to completion \.
Although PWD staff made strong efforts, implementation was negatively impacted by technically deficient road
design due to unsatisfactory work by consultants; lack of effective collaboration between GoUP /PWD and other
concerned departments/ministries; shortage of qualified staff and frequent staff turnover; and slow and faulty
procurement\.
The engineering designs prepared by the international consultant for Phase I of road improvements were
assessed as deficient by the Bank and PIU /PWD\. This assessment was, however, delayed, and by the time the
designs were remedied by PWD for Phase I as well as for Phase II, considerable cost and time overruns had
resulted\.
Lack of effective collaboration among GoUP /PWD and other concerned departments such as Forest, Revenue,
Power and utilities, resulted in (i) slow progress relocating utilities and land acquisition; (ii) poor consultation and
delays in disbursement of rehabilitation & resettlement assistances to the project affected persons; (iii) delays in
tree cutting to clear the right-of-way; (iv) delays in obtaining excise and custom duty waiver for construction
material, equipment\. Quality control of the road improvement works suffered, and contractors did not pay
sufficient attention to implementing EMPs \. Further, as noted above, the decision of PWD to adopt a corridor of
impact of only 13 m for upgrading was a major shortcoming in project preparation \.
There was a lack of qualified professional personnel to staff the Project Implementation Unit (PIU)\. PWD staff
were generally unfamiliar with Bank guidelines and with contract provisions \. There was frequent turn-over of staff
within the Department (including in particular the rotation of the Chief Engineer and Project Director )\. Together
with a lack of coordination within PWD, these factors resulted in inadequate monitoring of the contractors'
progress and consultants supervision; inability to take timely actions with respect to poorly performing works
contracts; and lack of adequate control over site works resulting in frequent variations \. At the contractor's end
there was insufficient capacity, plant, equipment and manpower at the sites \. More information on fiduciary
compliance should have been provided (see Section 11)\.
Implementing Agency Performance Rating : Unsatisfactory
Overall Borrower Performance Rating : Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The M&E framework consisted of a mix of output indicators (length of roads upgraded/rehabilitated; number of
black spots repaired) and intermediate outcome indicators (share of the core road network in good or better
condition; reduction in mean travel time; decrease in the number of road deaths /10,000 vehicles; share of project
roads with V/C ratio greater than 1)\. Indicators for the institutional component were more in the nature of output
indicators (creating and staffing new cells, preparing manuals \. training staff, etc\.)\. Overall these indicators were
useful in assessing performance of the core road network \.
b\. M&E Implementation:
PWD was responsible for implementing the M&E framework \. Baseline data were established at appraisal for most
outputs and intermediate outcomes \. Project monitoring reports were prepared and submitted on a quarterly basis \.
PWD was assisted by consultants in carrying out data collection for road safety, quality control, construction
supervision, project management, and environmental and social safeguard management \. The targets were specified
to be measured at the MTR and then at project completion \. The performance indicators were monitored and
evaluated periodically by the Bank's supervision missions in collaboration with the PWD / PIU\. However, according to
the ICR (p\.8), âthe monitoring system was established and operational late in the project implementation cycle,
therefore, surveying, data collection and monitoring could not be undertaken as often by the PWD \.â?
PWD carried out three road user satisfaction surveys during implementation of the project, a baseline survey in
2005-2006; an interim survey in 2007-2008, and a final user satisfaction survey in 2010\. The surveys covered
variables such as road surface quality, condition of shoulders, stopping distance, drainage, traffic delays, accidents
observed, riding comfort levels etc \. The surveys covered respondents from different regions of the country in order
to compare the perceptions between the national highways, roads covered by this project, and the overall status of
roads in Uttar Pradesh\. In general, the percentage of favorable responses for this project were better than for other
roads in the state but less than those for national highways \. The ICR does not provide a comparative analysis across
the three surveys\.
A stakeholder workshop was organized comprising implementing agencies, consultants, contractors, and NGOs who
were involved in preparation and implementation of the project \. The participants shared experiences and discussed
the challenges, successes, and lesson learned from the project - for details,
c\. M&E Utilization:
Feedback from the M&E framework appears to have spurred the restructuring of project components \. Beyond
this, there is no clear indication that feedback from M&E was used to improve the pace and quality of project
implementation\.
M&E Quality Rating : Substantial
11\. Other Issues
a\. Safeguards:
This was a Category 'A' project, and triggered the Bank's safeguard policies for Environmental Assessment (OP
4\.01), Natural Habitats (OP 4\.04), Cultural Property (OP 11\.03), Indigenous Peoples (OP 4\.02 ) and Involuntary
Resettlement (OP 4\.12)\.
Environmental Safeguards: The ICR reports that an Environmental Management Plan (EMP) was prepared and
disclosed publicly as required \. The environmental impacts to be addressed included (i) removal of approximately
5,800 roadside trees in two phases; (ii) local pollution during construction; (iii) locations and management of
contractorsâ campsites; (iv) management of material quarries; and (v) disposal of hazardous pavement material \.
Under the institutional development component, PWD prepared an environmental manual to be used for all major
works, even beyond the project \. However, the environmental management procedures that were adopted during
project implementation were inadequate \. For example, safety procedures were often not followed at construction
sites and traffic management at some sites was poor \. The contractorsâ camp sites, plant sites, and stack yards did
not fully comply with the requirements of the EMP at so me locations\. Hence suspension of works was advised for
such sites until the contractors implemented adequate pl ans\. Based on its May 2011 supervision mission, the task
team has further clarified that " the activities that were agreed to during its previous mission have been completed,
and that the implementation of environmental management is rated "moderately satisfactory"\.
3\. Social Safeguards: A Resettlement Action Plan (RAP) identified 4,681 affected families of which there were
3,144 titleholders, 222 displaced titleholders and 340 non-titleholders\. A total of 144 common property resources
(CPRs) were relocated under the project \. The majority of those displaced were commercial non -titleholders
(encroachers, squatters, kiosks and tenants )\. The total land required beyond right -of-way for the project was 311
hectares, including 266 hectares of private land\. The majority of those losing private land were cultivators \. Around
60 percent of the land owners lost more than five bigha (a bigha is about 10,000 square feet but its definition can
vary from region to region) of land\. According to the ICR, the land acquisition and resettlement (LA&R) process
proceeded relatively smoothly considering the spread and size of the project \. But it experienced delays and
interruptions especially where shifting of utilities, power lines etc \. was involved\. In some contracts, civil works started
prior to the completion of the land acquisition (LA) process (e\.g\. the Yamuna bridge area)\. Also, the policies and
procedures on LA and rehabilitation were not explained to the affected communities at the outset \. Negotiations with
landowners were prolonged at some locations, and at others the Government refused to acquire lands (e\.g\. land
between two guide bunds)\. The slow disbursement of relocation and resettlement (R&R) assistance and training for
income restoration means to the affected families contributed to the overall delays \.
The ICR reports that implementation of the Resettlement Action Plans (RAPs) largely followed accepted principles of
minimizing the impacts by avoiding displacement wherever possible \. Furthermore, PAPs reported that R&R
assistance provided as per the entitlements was adequate \. An independent end-term evaluation survey of the RAP
implementation reported that 97 percent did not face any difficulty in receiving their compensation and assistance
amount\. The assistance package not only fulfilled the objective to maintain the pre -project living standards, a
majority of them benefited by way of improvements in their housing conditions and other living standards \.
The ICR does not mention any issues relating to the safeguards fo r cultural property and indigenous peoples \.
b\. Fiduciary Compliance:
According to the ICR, the project adopted the country's systems for payments and accounting which generally
ensured internal financial controls \. The audit reports were mostly received on time \. The main concerns related to: (i)
inadequate supervision by project financial management staff (based in the state capital, Lucknow ) particularly as
they did not visit the implementing divisions until two years before project completion; (ii) difficulties in obtaining
Utilization Certificates (UCs) for disbursements from the concerned departments, which also improved from 2009;
and (iii) the lack of an internal audit system as part of management oversight, which would have provided more
assurance regarding adherence to contractual conditions, adequacy of internal controls and a basic review of
payment transactions\.
The Bankâs supervision reports and Independent Procurement Review did not find many substantial deviations from
the agreed procedures and guidelines for the procurement of works, goods and consulting services \. However, the
project implementation unit (PIU) lacked sufficient contract management and supervision skills for carrying out the
large volume (in value, quantity, and complexity ) of contracts required for the project \. There were extensive delays in
the award of contracts and consultancies \. Moreover, during implementation, a considerable number of variations
had emerged in works and consultancies, which added to the supervisory difficulties of both the PIU and the Bank \.
Many of the variations were processed after their implementation without the Bank âs no objections\. The
implementing agency reported that on occasion the procurement clearances from the Bank took longer than should
have\.
c\. Unintended Impacts (positive or negative):
A detailed HIV/ AIDS study was carried out during project preparation which highlighted the link between road
transport operators and HIV/ AIDS and sexually transmitted diseases \. Preventive plans for raising awareness both at
the public and government level were included in the RAP \. Condom vending machines were installed at targeted
locations\. Awareness-raising measures included campaigns at public gatherings and road shows; door to door
information dissemination; and publicity through local newspapers \.
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately There were significant shortcomings in
Satisfactory Unsatisfactory the scale and outcome of physical
works, and lack of progress in
institutional reform and capacity
development\. Efficiency was modest\.
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Unsatisfactory Unsatisfactory
Borrower Performance : Moderately Unsatisfactory There were major weaknesses in
Unsatisfactory routine project monitoring by the
Implementing Agencies and in
collaboration among relevant
stakeholders\. See Section 9b\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
In situations where the Borrower lacks a track record for handling large and complex projects, project design
should either keep the project to a manageable size, or make realistic provision to improve or augment capacity \.
This project was too large for PWD and GoUP to handle effectively in the given time -frame, and their absorptive
capacity for institutional improvements was low, with clear implications for project design \.
An under-performing project should be restructured sooner rather than later \. In this project, the feedback from the
supervision process could have triggered more timely corrective measures to rationalize project components and
deploy available resources more effectively for better outcomes \.
The period between project preparation and beginning of the implementation should be minimized to avoid facing
major changes in ground conditions \. This is relatively more important where natural growth, moral hazard, and
resettlement needs can quickly require a change in design parameters, as was broadly the experience in this
project\.
14\. Assessment Recommended? Yes No
Why? To verify the ratings\. Together with the Kerala State Transport Project (P072539) an assessment of this
project can yield lessons for other provinces in India and perhaps for similar country situations \. The areas for
learning include balancing institutional capacity with project expectations and design; engaging the Government and
implementing agency for institutional development; and the role of country -based Bank supervision of projects \.
15\. Comments on Quality of ICR:
The ICR is informative and covers relevant aspects of the project experience in sufficient depth \. The ICR provides
substantial information on compliance with environmental and social safeguards but no information on compliance
with safeguards policies regarding cultural property and indigenous peoples, which were also triggered for the
project\. The ICR should have discussed fiduciary compliance more fully and stated the extent of compliance \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P042039 | Document of
The World Bank
Report No: ICR00001118
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA3288A, IDA32880)
ON A
CREDIT
IN THE AMOUNT OF SDR 73\.8 MILLION
(US$100 MILLION EQUIVALENT AT APPRAISAL )
TO THE
REPUBLIC OF MOZAMBIQUE
FOR A
RAILWAYS AND PORTS RESTRUCTURING PROJECT
December 28, 2009
Transport Unit
Country Department AFCS2
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 30, 2009)
Currency Unit = New Metical (MN)
SDR 1 = MN 15\.80
US$1\.00 = MN 26\.65
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
BOT Build, Operate, and Transfer
BRP Beira Railways Project
CAS Country Assistance Strategy
CFM Portos e Caminhos de Ferro de Moçambique, E\.P\.
DCA Development Credit Agreement
EIRR Economic Internal Rate of Return
EMP Environment Management Plan
EU European Union
FIRR Financial Internal Rate of Return
FMR Financial Management Reports
GOM Government of Mozambique
IDA International Development Association
INAC Instituto Nacional de Aviação Civil
M&E Monitoring and Evaluation
MTC Ministry of Transport and Communications
NPV Net Present Value
PAS Project Account Section
PDO Project Development Objectives
PMR Project Management Report
PPP Public Private Partnership
ROCS I Roads and Coastal Shipping Project
RPRP Railways and Ports Restructuring Project
SRSAP Staff Redeployment and Social Adjustment Program
USA United States of America
USAID United States Agency for International Development
Vice President: Obiageli Katryn Ezekwesili
Country Director: Luiz Pereira Da Silva
Sector Manager: C\. Sanjivi Rajasingham
Project Team Leader: Anil S\. Bhandari
ICR Team Leader: Anil S\. Bhandari
ICR Primary Author: Fang Xu
MOZAMBIQUE
Railways and Ports Restructuring Project
CONTENTS
Data Sheet
A\. Basic Information\. i
B\. Key Dates \. i
C\. Ratings Summary \. i
D\. Sector and Theme Codes\. ii
E\. Bank Staff\. ii
F\. Results Framework Analysis \.iii
H\. Restructuring (if any) \. vii
I\. Disbursement Profile \. vii
1\. Project Context, Development Objectives and Design:\. 1
2\. Key Factors Affecting Implementation and Outcomes \. 7
3\. Assessment of Outcomes \. 11
4\. Assessment of Risk to Development Outcome\. 19
5\. Assessment of Bank and Borrower Performance \. 19
7\. Comments on Issues Raised by the Borrower/Implementing Agencies/Partners\. 23
Annex 1\. Project Outputs, Costs and Financing \. 24
Annex 2: Output by components \. 25
Annex 3\. Economic and Financial Analysis \. 37
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 37
Annex 5\. Beneficiary Survey Results \. 39
Annex 6\. Stakeholder Workshop Report and Results\. 41
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 42
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 43
Annex 9\. List of Supporting Documents \. 44
Annex 10\. Additional Supporting Data \. 45
A\. Basic Information
MZ-Railway & Port
Country: Mozambique Project Name:
Restr (FY00)
Project ID: P042039 L/C/TF Number(s): IDA-32880,IDA-3288A
ICR Date: 12/29/2009 ICR Type: Core ICR
REPUBLICE OF
Lending Instrument: SIL Borrower:
MOZAMBIQUE
Original Total
XDR 73\.8M Disbursed Amount: XDR 73\.8M
Commitment:
Revised Amount: XDR 73\.8M
Environmental Category: C
Implementing Agencies:
Ministry of Transport and Communications
Portos e Caminhos de Ferro de Mocambique, E\.P\. (CFM)
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 11/18/1997 Effectiveness: 03/28/2000
05/30/2007
Appraisal: 02/08/1999 Restructuring(s):
06/07/2008
Approval: 10/14/1999 Mid-term Review: 02/07/2003
Closing: 06/30/2005 06/30/2009
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 14 14
General public administration sector 19 19
General transportation sector 9 9
Ports, waterways and shipping 58 58
Theme Code (as % of total Bank financing)
Administrative and civil service reform 20 10
Decentralization 20 5
Improving labor markets 20 70
Social safety nets 20 10
State enterprise/bank restructuring and privatization 20 5
E\. Bank Staff
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo
Country Director: Luiz Pereira Da Silva Phyllis R\. Pomerantz
Sector Manager: C\. Sanjivi Rajasingham Yusupha B\. Crookes
Project Team Leader: Anil S\. Bhandari Yash Pal Kedia
ICR Team Leader: Anil S\. Bhandari
ICR Primary Author: Fang Xu
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The Project Objective is to substantially increase the operating efficiency of the three
major port-rail systems in Mozambique and enable them to increase their share of the
ii
international freight traffic of the neighboring countries\. The increased use of the port-
railway systems in Mozambique should enable: (a) the neighboring countries to reduce
the surface transport costs of their exports and imports resulting from use of shorter
routes, increased efficiency of operations, and use of railways in preference to roads; (b)
the ports and railways in Mozambique to move towards becoming financially self-
sustaining; (c) Portos e Caminhos de Ferro de Moçambique, E\.P\. (CFM) to increase its
net income (net of its own expenses and provision for long-term infrastructure
replacements) and, consequently, be in a position to pay dividends to the Government of
Mozambique (GOM); and (d) Mozambique to generate more foreign exchange\. A
related but equally important objective is to strengthen the transport sector policy, the
regulatory framework, and the institutional capacity of the Ministry of Transport and
Communications (MTC)\.
Revised Project Development Objectives (as approved by original approving authority)
PDO was not changed during the restructuring\.
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Indicator 1 : Staff rationalization\. Reduced total staff at the end of the project
Value
5,200 (14,000
quantitative or 19,200
retrenched)
Qualitative)
Date achieved 09/14/1999 06/30/2009
Comments
(incl\. %
achievement)
Concessions operationalized
a) Nacala Port and Railways
b) Maputo Port
Indicator 2 : c) Beira Port Terminals
d) Beira Railway System
e) Ressano - Garsia Line
f) Limpopo Line
a) to d)
concessioned and
operational; e) and
f) to be
Value concessioned
quantitative or None jointly, however
Qualitative) only after
rehabilitation of
Ressano-Garcia
line (process will
take longer than
iii
remaining project
period)
Date achieved 09/14/1999 06/30/2008
Comments
(incl\. %
achievement)
Indicator 3 : Increase in International traffic through ports and over the major railway systems
Ports: 8\.2 million tons in Ports: 10 million
Value
2002 tons
quantitative or
Railways: 4\.1 million Railways: 7
Qualitative)
tons in 2002 million tons
Date achieved 01/01/2003 06/30/2009
Comments
(incl\. %
achievement)
Indicator 4 : CFM restructured and Profitable
Value
CFM making losses and CFM' cash balance
quantitative or
in serious debt positive
Qualitative)
Date achieved 01/01/2002 06/30/2008
Comments
(incl\. %
achievement)
Indicator 5 : Fluvial Transport improved at selected jetties
Maputo: 3\.40
Annual traffic at: million
Value
Maputo: 1\.90 million Inhambane: 0\.70
quantitative or
Inhambane: 0\.57 million million
Qualitative)
Quelimane: 0\.36 million Quelimane: 0\.63
million
Date achieved 05/30/2007 06/30/2009
Comments
(incl\. %
achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Indicator 1 : Transport Cost Study completed\.
Value Final report
(quantitative None submitted to
or Qualitative) Government
Date achieved 12/01/2004 03/30/2005
Comments
(incl\. %
iv
achievement)
Indicator 2 : Ressano-Garcia Line rehabilitated and traffic improved
Concession canceled and
Value Rail Traffic
traffic significantly
(quantitative increased to 4\.25
reduced (less than 2\.0
or Qualitative) million tons
million tons)
Date achieved 01/01/2005 06/30/2009
Comments
(incl\. %
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 06/05/2000 Satisfactory Satisfactory 0\.00
2 11/20/2000 Satisfactory Satisfactory 1\.92
3 04/20/2001 Satisfactory Satisfactory 2\.84
4 12/20/2001 Satisfactory Satisfactory 5\.09
5 04/30/2002 Satisfactory Satisfactory 12\.69
6 10/01/2002 Satisfactory Satisfactory 24\.47
7 04/22/2003 Satisfactory Satisfactory 31\.48
8 10/22/2003 Satisfactory Satisfactory 34\.42
9 05/25/2004 Satisfactory Satisfactory 46\.06
10 11/16/2004 Satisfactory Satisfactory 56\.01
11 03/23/2005 Satisfactory Satisfactory 65\.31
12 08/29/2005 Satisfactory Satisfactory 68\.01
13 12/28/2005 Satisfactory Satisfactory 68\.94
14 06/22/2006 Satisfactory Satisfactory 78\.43
15 12/29/2006 Satisfactory Satisfactory 83\.38
16 06/27/2007 Satisfactory Satisfactory 94\.69
17 12/13/2007 Satisfactory Satisfactory 97\.01
18 06/26/2008 Satisfactory Moderately Satisfactory 99\.02
19 12/23/2008 Satisfactory Satisfactory 105\.08
20 06/28/2009 Satisfactory Satisfactory 105\.86
H\. Restructuring (if any)
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
05/30/2007 N S S 93\.11 Amendment to legal agreement
v
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
and reallocation of funds\.
Changed circumstances in
06/07/2008 N S S 98\.70 country and need to enhance
developmental impact
I\. Disbursement Profile
vi
1\. Project Context, Development Objectives and Design:
1\.1\. Context at Appraisal
1\. Introduction: Mozambique has enjoyed high economic growth since the mid
1990's; however, it remains one of the poorest countries in the world with a gross
domestic product (GDP) per capita of US$370 in 2008\. A central pillar of the World
Bank's Country Assistance Strategy (CAS) for Mozambique called for promoting
dynamic growth that is sustainable and based broadly on a geographical, environmental,
and socio-economic viewpoint\. The CAS also called for private sector led growth
including the development of local enterprises as well as partnership with foreign capital\.
Along with continuing economic policy reforms, IDA, IFC, and MIGA were to combine
efforts in support of the development of high potential growth sectors, transport being
one such sector\. Supporting the transport sector through the Railways and Ports
Restructuring Project (RPRP) was an important component of the CAS strategy\. Given
their importance for the economy, successful concession of the Maputo, Beira, and
Nacala port-railway systems was included as one of the key base case indicators\.
2\. The main issues in the transport sector were identified as follows: (a) the
Railways and Ports in Mozambique were not financially self-sustaining; (b) the Parastatal
Framework was inadequate for the business environment which was progressively
becoming more competitive; (c) the organizational structure of Portos e Caminhos de
Ferro de Mozambique, E\.P\. (CFM) was inappropriate to manage the changing nature of
the railways and ports industry; (d) the Regulatory Framework in the transport sector was
inadequate; (e) the analytical and decision making capacity of the Ministry of Transport
and Communications (MTC) was weak; and (f) tertiary ports in Mozambique had an
important role to play but needed to be rehabilitated in order to be more efficient\.
3\. The Government of Mozambique's (GOM) strategy to address the transport sector
issues, especially railways and ports, comprised: (a) a large scale involvement of the
private sector in the operations and management of all the major ports and railways in the
country; (b) entering into build, operate, and transfer (BOT) arrangements for railway
networks requiring major rehabilitation such as the Sena line; (c) comprehensive
restructuring of CFM including the retrenchment of surplus staff; (d) strengthening the
Ministry of Transport and Communications (MTC) by training staff, refining the
transport sector policy and establishing an appropriate regulatory framework for the
transport sector; and (e) rehabilitation of key tertiary ports and passenger jetties along
with the replacement of existing boats and ferries with modern ones\. The original project
assisted the GOM/CFM in implementing all the elements of the strategy except for the
rehabilitation of passenger jetties and acquisition of new boats and ferries - items which
were included later at the time of restructuring\.
1\.2\. Original Project Development Objectives and Key Indicators
1
4\. According to the PAD and the DCA, the two Project Development Objectives
(PDOs) are as follows:
(a) Increasing the operating efficiency of the Borrower's three major port-rail
systems thus enabling the Borrower to increase its share of international freight
traffic from neighboring countries; and
(b) Strengthening the transport sector policy, the regulatory framework, and the
institutional capacity of MTC\.
5\. Key Indicators: There were originally one outcome and six output indicators\.
The outcome indicator was: Increase the international traffic handled by the three major
ports to ten (10) million tons per year and by the three major railway systems to seven (7)
million tons per year\.
6\. The six output indicators were:
(a) CFM restructured and profitable with increase in its net income and,
consequently, its ability to pay dividends to the GOM;
(b) CFM Staff rationalized and total staff reduced by 13,000 by the end of the project;
(c) Concessions for the three major ports and railways (i) Nacala Port and
Railways; ii) Beira Port Terminals and railway system; iii) Maputo Port and
railways system (Ressano - Garcia Line and Limpopo Line) - finalized and
operational;
(d) MTC restructured;
(e) Regulatory body established; and
(f) Tertiary port rehabilitation completed\.
1\.3\. Revised PDO (as approved by original approving authority) and Key
Indicators, and Reasons/Justification
7\. There were no changes in the PDOs\. However, the project was restructured in
2007, two new activities, rehabilitation of the Ressano-Garcia line and rehabilitation of
jetties, were added, and the component on rehabilitation of tertiary ports was dropped\.
Along with these changes: (i) two new intermediate indicators were introduced; (a)
rehabilitation and traffic improvement of the Ressano-Garcia line; and (b) improvement
of fluvial transport at selected jetties; and (ii) one output indicator pertaining to the
rehabilitation of tertiary ports was dropped\.
1\.4\. Main Beneficiaries (original and revised)
8\. The main beneficiaries comprised all users of the rail and port systems as well as
the general population who would benefit from more reliable rail and port operations and
lower effective transport costs in Mozambique, specifically the following: (a) users of
railway and port systems in Mozambique; (b) the neighboring countries of Zimbabwe,
South Africa, Swaziland, Malawi, and Zambia; (c) industry supplying materials to
railways and ports; (d) the GOM in general and MTC in particular; and (e) public sector
2
entities such as CFM\. Adding fluvial transport component in the project also introduced a
new group of beneficiaries, such as, the passengers using ferry services (mainly low
income groups including vendors, women and children) in Inhambane, Maxixe, Maputo
and Catembe who benefitted from reduced coastal transport costs and safer operations\.
1\.5\. Original Components Supported by the Project
9\. The project originally comprised of the six following components (summarized
from the DCA)\.
10\. Component One - Concession of CFM major Ports and Railways (original
allocation US$1\.0 million; Actual cost US$1\.81 million)\. This component was to: (a)
strengthen the operational capabilities of CFM through technical advisory services to
manage the concessioning process of Nacala, Beira and Maputo port and railway
systems, and (b) provide financial support for any activities essential for the
concessioning process\.
11\. Component Two - Staff Rationalization (original allocation US$73\.5million;
Actual cost US$77\.8 million)\. This component was to assist CFM: (a) to carry out a
program for the reduction of staff of CFM through retrenchment or early retirement,
including support for the payment of negotiated and statutory severance payments; (b) to
carry out a program of redeployment of said redundant CFM staff including counseling
and training services; (c) to carry out a program to mitigate the adverse social impact of
staff redundancy and rationalization, consistent with the Social Mitigation Plan; (d) to
establish and operate a pension fund; (e) develop a system for the dissemination of
information on a regular basis regarding the issues pertaining to its restructuring in
general and staff rationalization program in particular; and (f) with related technical
advisory services and limited amount of critical equipment\.
12\. Component Three - CFM Corporate Restructuring (original allocation US$2\.6
million; Actual cost US$0\.96 million)\. This component was to: (a) finance a study for
creating a number of holding and subsidiary companies to take over some of the
functions of CFM, and for establishing a technical regulatory unit within CFM; and (b)
provide related technical advisory services and office equipment\.
13\. Component Four - Strengthening of MTC (original allocation US$1\.7 million;
Actual cost US$4\.39 million)\. This component was to: (a) carry out a study to review the
transport policy framework and the legal and institutional framework for concessions; (b)
define the new functions of MTC, assess its organizational structure and staffing
requirements - taking into account the Borrower's civil service reform program; and (c)
provide technical advisory services;
14\. Component Five - Regulatory Framework (original allocation US$7\.2 million;
Actual expenditure US$0\.90 million)\. This component was to: (a) carry out a study to
review the options of setting up a regulatory body for either the railway sector or the
transport sector and provide detailed design and structure of the accepted option; and (b)
provide the equipment and technical advisory services for the launching of the new
3
regulatory agency for supporting the functioning of the agency for an initial period of
three to five years\.
15\. Component Six - Tertiary Port Rehabilitation (original allocation US$9\.0
million, Actual expenditure US$0)\. This component was to: (a) assist MTC in carrying
out a program of rehabilitation of the small ports of Angoche, Macuse, Mocimboa da
Praia, and Pebane; and (b) provide technical advisory services for the supervision of the
civil works in the said four ports, and the preparation of a study on the revitalization of
the Inhambane Port\.
1\.6\. Revised Components
16\. In 2007 the project was restructured to make the following changes:
(a) Dropping the tertiary ports rehabilitation component\. (Original allocation
US$9 million; Actual cost US$0)\. Only one study pertaining to the Inhambane
region and some technical assistance for the development of the port serving the
region were retained and implemented by MTC;
(b) Introduction of a new component for the rehabilitation of key passenger jetties
and purchase of new boats and ferries (Estimated cost - US$15\.0 million, Actual
cost US$8\.78 million)\. A component comprising the rehabilitation of key jetties
used for ferry services (passenger and minor cargo) in Maputo, Catembe,
Inhambane, Maxixe; the study and engineering design for the rehabilitation of
the Quelimane-Recamba wharfs; and procurement of new ferries and other
vessels for water transport was introduced with a view to strengthening
Mozambique's fluvial transport; and
(c) Introduction of a new Sub-component for the rehabilitation of the Ressano-
Garcia line (estimated cost - US$20 million, IDA allocation US$6\.4 million, IDA
Actual cost US$5\.96 million)\. A sub-component comprising the rehabilitation of
the Ressano-Garcia line as well as technical services to supervise the
rehabilitation works was introduced with a view to making the line more
efficient and reliable\.
17\. Justification for the changes made at restructuring\. The justifications for the
changes were as follows:
(a) Dropping the tertiary ports rehabilitation component: This sub-project had been
under the spotlight since 1991, when it was first included as a component of the
Road and Coastal Shipping Project but could not be implemented due to the need
for diverting funds for urgent road rehabilitation\. When RPRP was being
prepared, the Government requested and the Bank Management agreed to
consider its inclusion in the RPRP\. The reappraisal and other government studies
found this component to be economically feasible but since the dominant theme
of RPRP was private participation in the management of the major railways and
ports in the country, the proposed investment of this component was also linked to
the successful concessioning of the said tertiary ports, more so because there was
4
no satisfactory institutional arrangement for their operation and management\.
However, these ports could not be concessioned due to inadequate private sector
interest and due to the rehabilitation of the road network which reduced the
relevance of river transport\. Consequently the importance and viability of the
tertiary ports declined dramatically\. After considerable discussion, the
Government agreed that the rehabilitation could be postponed until there was
better growth in the region and until there was renewed interest in the use of these
ports such that the dropping of this component prevented sub-optimal use of
scarce funds\.
(b) Rehabilitation of passenger jetties and acquisition of new vessels\. This
component was introduced at the request of the GOM and on the basis of a strong
demand for ferry services, of the severe deterioration in the condition of the
existing jetties and vessels, of the high economic rate of return of the proposed
investment at an estimated cost of US$14 million, and its impact on poverty
reduction\.
(c) Rehabilitation of the Ressano-Garcia line\. This task was initially expected to be
undertaken by the concessionaire as part of the concession of the Ressano-Garcia
railway line (a part of the Maputo rail system)\. Subsequent to its cancellation,
CFM and the South African Railways agreed on an interim strategy to increase
the use of the line for traffic originating and terminating in the north-eastern part
of South Africa\. The strategy required that the line be rehabilitated by CFM to
acceptable standards to enable the safe and efficient operation of longer trains\.
The rehabilitation was estimated at about US$20 million and since the tertiary
ports rehabilitation was dropped, it was proposed that part of the rail line
rehabilitation cost (US$5 million) be met from the proceeds of the IDA Credit\.
The Credit was to support: (i) procurement of rails for the rehabilitation of the
line; and (ii) independent supervision of rehabilitation to ensure quality\.
1\.7\. Other significant changes
18\. Extension of Closing Date\. The closing date of the project was extended four
times as follows: (a) The first extension: In May 2005, the project was extended by 18
months from June 2005 to December 2006, to: (i) complete the retrenchment and social
mitigation activities flowing from the concession of the railway and ports systems; (ii)
complete CFM corporate restructuring; and (iii) reach an agreement for the concessioning
of the Limpopo and Goba lines, which were partly closed during the floods in February
and March 2000 and whose rehabilitation was only completed in October 2004\. Another
rationale for the extension was to keep the Bank involved as coordinator in the
increasingly sensitive dialogue between the Government and the concessionaires\. (b)
The second extension: In December 2006 an interim extension from December 31, 2006
to May 31 2007 was granted to allow preparation of the Environmental Impact
Assessment for the new jetty rehabilitation component which was introduced as part of
the restructuring to take into account country realities i\.e\. accommodate the
Government's urgent request to strengthen the fluvial transport system within the
5
country; (c) The third extension: In May 2007, the project was restructured including
the extension of the closing date by 13 months from May 31, 2007 to June 30, 2008 to
accommodate the dropping of the Tertiary Ports component and the introduction of the
new components, namely, the rehabilitation of the jetties, acquisition of ferries and
passenger boats, and the rehabilitation of the Ressano-Garcia railway line\. The latter was
in line with a government strategy to rehabilitate this line to acceptable standards which
was absolutely essential to re-gaining customers' confidence after the concession failed\.
These changes required amendments in the DCA and reallocation of credit proceeds; and
(d) The fourth and final extension by 12 months from June 30, 2008 to June 30, 2009
was made necessary to fine-tune the remaining activities and to reallocate the funds to
complete: (i) the rehabilitation of jetties and delivery of ferries and boats; (ii) the
extension of consultancy services pertaining to the Maritime Sector's legal and regulatory
framework; (iii) the establishment of a sustainable management of fluvial passenger and
cargo transport system with Transmaritima, Lda; (iv) establishment of a unit within the
Ministry of Transport and communications to monitor compliance with concession
agreements and (e) complete the studies of the competitiveness of Maputo as a regional
port and the analysis of coal transport on the Beira Railway\.
19\. By the initial closing date of June 30, 2005, about 70% of the credit had been
disbursed and the CFM component was nearly completed, that is, all major ports and
railways (except for the Maputo railway system) had been concessioned and the CFM
staff had been reduced by about 70%\. By December 31, 2006 (the first extension), major
originally planned activities including the concession of the port-railway system, staff
retrenchment, CFM restructuring and MTC strengthening had been completed and
disbursements stood at 80%\. By June 2007, about 95% of the credit had been disbursed\.
The project could have been closed at the original closing date and certainly by the end of
June 2007\. However, it was strongly felt that the use of the remaining small amount of
credit and the Bank's continuing involvement could effectively ensure outcomes far
greater than envisaged under the Project, viz\., improving the fluvial passenger transport,
laying the basis for catalyzing the development corridors, and rehabilitating the Maputo
rail system after the collapse of the concession\. The benefit/cost ratio was considered
enormous compared to the options of leaving these issues as they were or starting a new
project to address them\.
20\. Amendment of Development Credit Agreement (DCA)\. There were three
reallocations of credit proceeds\. The first one, in 2004 was to increase funds for: (i)
Category 2 Goods by SDR6\.39 million and (ii) Category 5 (b) - Severance Pay by
SDR13\.56 million (Schedule 1 of the DCA)\. Regarding item (i), delays in the
concessioning of the Nacala and Maputo Port railway systems made it necessary for
CFM to continue the maintenance of the above mentioned systems and to acquire
essential maintenance equipment, which otherwise would have been the responsibility of
the concessionaire\. Regarding item (ii), at the project design stage it was difficult to
correctly anticipate the number of staff that would become redundant, the timeframe in
which these redundancies would take place, the exchange rate during the project
implementation period, and the inflation rate which would trigger the wage increases\.
The second amendment (to Schedule 2 of the DCA) was made in 2007 due to the
6
restructuring of the Project, and the third and last amendment was made in 2008, at
which time the extension of the credit closing date was to fine-tune final expenditure
estimates for the remaining activities and reallocate funds under Schedule 1\. However,
the components remained unchanged\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design, and Quality at Entry
21\. Project preparation was conducted between 1997 and 1999\. The operation was
complex and it took close to two years to finalize the project design and bring the project
to the Board because the team placed considerable emphasis on consensus building and
ownership by discussing all options with GOM, CFM management and staff, staff
unions, and other interested parties\. The Project demonstrated very good understanding
of the background, technical context, and political environment, and included taking
calculated risks by proposing to undertake the following challenging tasks\. First, private
concessioning of the railways and ports was included as the cornerstone of the Project
even though there was considerable skepticism in most countries in Africa regarding
private participation in key public utilities\. Second, to facilitate privatization and reduce
operating costs, extensive staff retrenchment was advocated even as the Bank had just
started to finance staff retrenchments - politically a sensitive issue with considerable
reputational risk for the Bank\. Third, CFM was an old bureaucratic institution and its
restructuring to become a business and commercially-oriented entity involved major and
difficult changes in the organizational structure (i\.e\. staffing, management system,
attitude and culture)\. Fourth, restructuring and strengthening of MTC and facilitating a
decision to introduce a regulatory framework for railways and ports involved major
consensus building efforts\. In spite of the complexity of these issues, the Project
undertook to implement reforms that were critical for making the ports and railway
systems more efficient and financially self-sustaining in the long-run\.
22\. Assessment of Project design\. This project had incorporated the lessons learned
from previous operations and the reality on the ground\. The project design was
comprehensive and in line with the prevailing government policies\. The main lesson
incorporated was that improving only the infrastructure would not bring efficiency to the
port and railway systems and key institutional changes including private sector
involvement in the management and operation of the systems was essential to improve
service delivery\. Hence the Project was designed to focus on concession of the railway-
port systems, retrenchment of surplus staff and the restructuring of CFM (these
comprising close to 80 percent of the project funding)\. The staff retrenchment package
was well designed and included counseling, training and financial services for the
affected staff that allowed a smooth retrenchment process and a useful post-retrenchment
life for the affected staff\.
23\. The project had only one outcome indicator, namely, the increase in aggregate
freight traffic\. Though this indicator implied increase in operational efficiency and
customer-based initiatives as these are essential for increasing traffic, this is probably not
7
the most appropriate indicator for the increased port-railway efficiency because this
target is dependent on exogenous factors, i\.e\. competition from the road sector, decisions
and economic situation of the neighboring countries\. An indicator like this could not be
depended on to identify the causes of any shortfall in the achievement of the target\. Other
related key indicators pertaining to CFM restructuring, the staff retrenchment, the
concessioning of the port and railway systems constituted output rather than outcome
indicators\. Regarding the second PDO, output indicators like MTC restructuring and the
establishment of a regulatory body were specified as outcome indicators\.
24\. Assessment of risks: Most of the critical risks were identified and mitigation
measures were prepared\. For example, the concession agreements were structured to
reduce the risk of low level of private interest in railway concessions by including a 40
percent shareholding by CFM, allowing concessionaires a free hand in setting tariff rates
in accordance with market conditions, proving fiscal incentives and tax holidays in the
initial years, and so on\. The team also mitigated the risk of wasteful investment by
linking the rehabilitation of tertiary ports to private concessioning\. However, the team
could not anticipate the speed and severity of Zimbabwe's economic and political crisis,
which was outside of the project's control but adversely affected the railway freight
traffic in Mozambique\. The Project could not anticipate the decline of the South African
Railways and its revised strategy to take limited interest in railway concessions in the
region, which adversely impacted the concession of the Ressano-Garcia railways\.
Nevertheless, despite recognition of the low level of private sector interest in railway
concessions in Africa, the Bank and GoM were rather optimistic about the timetable for
concessioning which took much longer than anticipated\.
2\.2 Implementation Delays
25\. The Project was approved in October 1999 and the Credit became effective in
March 2000, but effective disbursements only started by the end of 2002\. Shortly after
the start of activities, the Project faced two major unexpected challenges which affected
the disbursement rate and threatened the realization of Project outputs, namely: (a) the
processing period for concessioning; and (b) excessive time required to get the
implementation and monitoring arrangements in place for retrenchment\. Furthermore, it
was originally agreed that staff retrenchment was to start only after the successful
conclusion of the concessions so that the people not selected by the concessionaire would
be declared redundant\. Since the concessioning was taking longer than expected, the
retrenchment was further delayed\. Against this backdrop, in agreement with GOM and
CFM, a new rule for identifying surplus staff was developed to commence the
retrenchment even as the concessioning process was underway\.
26\. Implementation constraints\. There were a few setbacks during the
implementation period, many of which were beyond the control of the GOM or CFM
which led to delays in the concessioning process and to the eventual collapse of the
Maputo railway concessions, namely: (a) the Limpopo line was heavily damaged due to
floods and needed rehabilitation, the concession collapsed as a result (after the
concessionaire abandoned the concession) and the effort of many years was lost; (b) the
concession for the Ressano-Garcia line collapsed when South Africa Railways, a key
8
partner of the concession consortium, pulled out of the concession due to a change in its
strategy as it decided to focus on revitalizing its own railway system even as the
concession negotiations were close to being finalized\. As a result, the remaining partners
were reluctant to continue the negotiation without South African Railways' participation
given that most of the traffic on this line was originating from South Africa; and (c) the
concession for the port of Maputo was delayed because the selected concessionaire
refused to sign the concession agreement until the Ressano-Garcia line, the feeding line
for the port, was also successfully concessioned\. The port concession became operational
eventually, with GoM's assurances to rehabilitate the Ressano-Garcia line, but this took
much longer\.
27\. The GOM and the Project team responded to the unexpected challenges by
measures including but not limited to: (a) coordinating with the United States Agency for
International Development (USAID) to finance and monitor the rehabilitation of the
Limpopo line; and (b) supporting the rehabilitation of the Ressano-Garcia line with
financing from CFM and IDA\.
28\. Consequent to the above developments, the following decisions were taken: (a)
dropping the tertiary ports rehabilitation and introducing the new component, namely,
improvement of fluvial transport in order to increase access and mobility of the rural and
urban poor; (b) launching a new Beira Railways Project with provisions for a BOT type
concession on a Public-Private Partnership (PPP) basis when it became clear that the
Beira railway system could not be concessioned without GOM supporting a substantial
part of the large investments required for the rehabilitation of the Sena line; and (c)
reaching an agreement with MTC for setting up a concession monitoring unit within
MTC instead of establishing an independent regulatory body or continuing with the
current arrangement of CFM monitoring the concessions\. The project had four extensions
of the closing date and took 9 years to implement instead of the planned 5 years\. As
explained in Paragraph 18 and section 2\.2, the extensions were sought to respond to the
changing business and economic environment and to maximize the benefits of the
Project\.
2\.3\. Monitoring and Evaluation (M&E) Design, Implementation and Utilization
29\. M&E Design: The M&E framework specified the outcome, the intermediate and
output indicators for the project components\. The M&E framework also outlined
appropriate methods to review the progress of these indicators\. These methods included
quarterly reports, disbursements for retrenchment, Bank supervision missions, frequent
telephonic conversations, faxes, e-mails, and discussions with transaction consultants\.
However, as has been discussed in the project design section (section 2\.1), the outcome
indicators could have been more detailed to fully reflect the PDOs\.
30\. Implementation and utilization: Both CFM and MTC maintained the M&E
system satisfactorily\. They were able to track regularly the evolution of output indicators
through supervision and quarterly reports\. Monitoring was further enhanced by TA
9
experts engaged under the project to conduct frequent reviews\. M&E data was
extensively utilized during implementation and remedial actions were taken where
necessary\. When the project was restructured, two new intermediate indicators were
added to the M&E framework to better monitor the attainment of project objectives\.
2\.4\. Safeguard and Fiduciary Compliance
31\. Environment\. The environmental category of the project was rated as `B' at
project appraisal\. An environment assessment was conducted, and an environment
management plan was prepared taking into account the safety and environment-related
regulations included in Mozambique's transport sector policy and railways-related
legislation\. The concession agreements included adequate provisions for minimizing
environmental degradation and recommendations were implemented during supervisions\.
In addition, CFM created an environment unit with staff to focus on any emerging
environmental issues\. At the time of restructuring, an additional environmental impact
assessment was done for the proposed rehabilitation works for the jetties and mitigation
measures were included in the civil works contracts\. Ratings were assessed as
satisfactory during implementation\.
32\. Financial Management: Overall, the FM system in place was rated satisfactory\.
The quarterly Financial Monitoring Reports (FMRs) were received regularly and were
fully compliant with the agreed formats\. Audit reports were done annually and on a
timely basis, and were unqualified except in 2005\. The auditors had issued a qualified
opinion on MTC\. The Borrower and the Bank's Financial Management Specialist
worked out an action plan to remedy the issues as per the auditor's recommendations\.
Since then, all major issues have been resolved and Bank procedures were followed\.
Strict control of the utilization of funds was maintained through: (a) ring-fencing of IDA
funds; (b) a dedicated account was maintained for severance payments to which funds
were transferred only after the severance payments, computed using a certified and
secure software, were certified by independent auditors engaged for that purpose; (c) the
dedicated accounts were specially audited and reimbursement was made on submission
of all previous expenditures; (d) a special account was maintained in the PMU created in
the MTC; and (e) all expenditures incurred below the prior-review threshold were
regularly reviewed both by the project team as well as the independent auditors\.
33\. Counterpart funding: The commitment of the GOM remained strong
throughout the Project\. GOM fulfilled its obligation (US$20 million) upfront at project
start\. The only negative factor was the significant depreciation of the Metical (national
currency) vis-à-vis the US$, resulting in a shortfall of US$4 million, which lowered the
actual government contribution to US$16 million at the end of the project\. Also CFM,
one of the implementing agencies, contributed an additional US$8\.7 million to the
project, specifically toward the staff rationalization component to cover severance
payments\.
34\. Procurement: Procurement under the project was also satisfactory\. All contracts
for goods, works, consultancy and other services followed the agreed procedures without
10
any exception\. No formal protests were lodged against the procurement decisions, except
in the case of the procurement of ferries and boats\. A complaint lodged by an individual
was investigated by INT which found no evidence of any wrong-doing in the process\.
Another complaint by the sub-contractor (manufacturer) to the supplier of the ferries and
boats is deemed to be an internal issue between the supplier and the manufacturer and has
been brought to the attention of the Borrower to handle as appropriate\. All prior-review
thresholds were followed\.
2\.5\. Expected Next Phase/Follow-up Operation
35\. The current arrangements are expected to ensure sustainability of port and railway
performance as well as the maintenance of the infrastructure in reasonable condition,
especially the following: (a) Nacala, Beira, and Maputo ports and Nacala and Beira
railway systems which are under long-term concessions\. The concessionaires are
expected to respond to the market better and keep the system efficient and competitive
and are expected to remain geared to meet all traffic needs subsequent to the resumption
of economic growth of the neighboring countries\.; (b) CFM has established a special unit
internally to keep track of the performance of the concessions and evolving issues in all
these concessions and take timely action wherever required\. (c) The Government has
obtained funding from a Spanish Trust Fund to set up the concession monitoring unit
within MTC to take-over the role of monitoring compliance of various concessions to
agreed provisions in the contracts, especially performance standards; and (d) CFM
maintains its ultimate responsibility for the development of ports and railways in
Mozambique and its profitable financial status after restructuring will provide resources
for carrying out such responsibility\. In addition, given the strategic importance of the
Nacala Corridor for landlocked neighbors, such as Malawi and Zambia, the AfDB, JICA
and the World Bank are collaborating to review the corridor (Roads and Rail) to assess
any further support needed to upgrade the transport infrastructure in that corridor\.
36\. For the unconcessioned Maputo railway system, CFM intends to further improve
its performance and then consider alternative arrangements to operate and manage that
line in the long run\. In the interim, CFM is negotiating an operations agreement with
South African Railways for the Ressano-Garcia Line which will ensure sustained traffic
increase\.
37\. The Beira Railways Project (BRP) has been concessioned under a long-term BOT
arrangement, which is expected to ensure orderly development of the system, particularly
for transporting the coal from the Moatize coal mines that have been concessioned to the
private sector, such as Vale from Brazil and Riversdale from Australia\.
3\. Assessment of Outcomes
3\.1\. Relevance of Objectives, Design and Implementation
11
38\. The relevance of objectives, design and implementation is rated as substantial
because: (i) the PDOs are relevant and consistent with the CAS and the policies of the
Government, particularly in reference to private sector involvement; (ii) the design and
the implementation arrangements were clearly centered on achieving project
development objectives through concessioning of major ports and railways which is
expected to result in improved operating efficiency and consequently increased traffic\.
39\. The project design was comprehensive and aimed at supporting all actions for the
creation of an enabling environment for the successful concessioning of the ports and
railways and for improving their performance within Mozambique\. The implementation
effort remained focused on achieving the PDOs and appropriate adjustments were made
when the environment and needs of the economy changed\.
40\. As mentioned in section 2\.1, the design to a certain extent was somewhat
ambitious and complex especially with regard to the concessioning of three major port
and railway systems and retrenchment of close to 14,000 staff in the context that was
prevailing in 1999 in Mozambique\. Some activities such as the proposed pension study
and tertiary ports rehabilitation, though important, were eventually dropped for the
reasons explained earlier\. Nevertheless, the dropping of these components did not
diminish the possibility of achieving the PDOs
3\.2 Achievement of Project Development Objectives
41\. The overall PDO rating is Satisfactory\. The project has two PDOs: (i)
increasing the operating efficiency of Mozambique's three major port-railway systems;
and (ii) strengthening transport policy, the regulatory framework and capacity of MTC\.
The first PDO is rated satisfactory\. On completion of the project, the efficiency of the
port-railway system has been increased as measured by indicators like traffic, staff
productivity and turnaround time\. The second PDO is rated moderately satisfactory
because it has been achieved only partially\. The transport policy framework is in place; a
separate regulatory body is not set up but instead the Government has decided to set up a
concession monitoring unit within MTC; the institutional capacity of MTC has been
sufficiently strengthened to enable it to take on many responsibilities that it was not
adequately capable of doing before, such as, leading concession negotiations, planning
large scale infrastructure projects on its own and preparing a national transport policy\.
Given that more than 70% of the IDA credit went to the first PDO related activities, the
rating of first PDO is granted more weight, such that the weighted overall PDO
achievement is rated satisfactory\. The detailed evaluation of individual PDOs is as
follows:
42\. Project Development Objective 1: Increasing the operating efficiency of the
Borrower's three major port-rail systems thus enabling Mozambique to increase its share
of the international freight traffic from the neighboring countries\.
12
43\. This PDO is rated satisfactory because the project has substantially improved the
operating efficiency of the three major port-railway systems\. The increased efficiency is
reflected by the various indicators summarized in Table 1\.
Table 1: Railways and Ports Productivity Indicators
Unit 1999 2000 2005 2006 2007 2008
Rail Traffic (tons) million 3,960\.8 3,454\.2 4,059\.0 4,002\.6 3,822\.4 4,351\.9
Net ton-km (NTKM) million 721\.2 604\.8 767\.0 775\.1 736\.3 694\.8
Passenger kms (PKM) million 144\.8 129\.8 283\.7 346\.7 106\.3 113\.6
Total traffic units million 866\.0 734\.6 1050\.7 1121\.8 842\.6 848\.4
(NTKM+PKM)
Rail staff Numbers 10620* 10460 1801 1909 1962** 2021**
Staff Productivity Traffic 82 70 583 588 429 400
units
(000)/staff
Port Staff Numbers 6791* 4573 1414 1401 1519** 1627**
Port Traffic (tons) million 6\.89 6\.73 10\.89 11\.43 11\.09 11\.34
Staff Productivity (All) Tons 1\.02 1\.47 7\.7 8\.16 7\.30 6\.97
(000)/staff
Data source: CFM report
* Excludes staff engaged by CFM in other than rail and port activities
** Staff numbers increased since 2007 because concessionaires recruited additional staff\. Such increase
should be taken into account for computing productivity but not for computing staff retrenchment\.
44\. The port traffic in 2008 was 11\.3 million tons, exceeding the target of 10 million
tons\. The rail traffic in 2008 was 4\.3 million tons compared to 3\.4 million tons in 2000
but is short of the target of 7\.0 million tons (freight traffic in NTKM in 2008 was
marginally less than that in 1999 mainly due to reduction in long-haul traffic from
Zimbabwe)\. The railway traffic did not increase as expected due to various reasons, most
of which were outside of the borrower's control: (a) Beira railway - the downturn of
Zimbabwe's economy and dysfunction of Zimbabwe's railway system have affected the
traffic of Machipanda line and the incomplete rehabilitation of Sena line, which is non-
operational; (b) Maputo railway - the low traffic is partly due to the downturn of
Zimbabwe's economy and partly due to the failure of the concessions and the need to
rehabilitate the Ressano-Garcia line by CFM, which has only recently been completed;
(iii) Nacala railway - poor performance of the concessionaire who has made inadequate
infrastructural and rolling stock investments and does not have a competent railway
operator on the ground\.
45\. Staff Productivity in the railways and ports has increased five and seven fold
respectively\. The productivity increase was mainly due to fewer staff working for the
ports and railways and more traffic in the ports as a result of the project\. Key indicators
of operating efficiency in the ports and railways also improved as indicated in Table 2
below:
13
Table 2: Indicators of Ports and Railways Operating Efficiency
Ports Ships calling on Tons/ship/day TEUs/ship/day
ports
1999 1353 2280 207
2008 1574 3658 297
% increase 16 16 43
Railways Wagon turnaround Derailments Locomotive reliability Comment
time
Unit Days Number Mean Kilometers between
failure
1999 7\.3 326 <10,000 Not
tracked by
CFM but
is an
estimate
2008 5\.4 167 >30,000 Only for
CCFB
% 27 50
improvement
Data source: CFM report
46\. The achievement of the first PDO can also be collectively measured by the
achievement of individual components:
47\. Component One: Concessioning of CFM Ports and Railways is rated as
satisfactory\. All the three major ports, Nacala, Maputo, and Beira, and two out of the
three railway systems, Nacala and Beira, have been concessioned and the concessions are
operational\. Details are given in Table 3 below\. The Maputo rail system has not been
concessioned as the concessions broke down for reasons beyond the control of
CFM/GOM and as explained in detail in section 2\.2, Para 26\.
Table 3: Major Concessions in Operation
System Concessionaire Takeover Date Term(years)
Port of Beira (General Cornelder December 2001 25
Cargo, Container
Terminals)
Port of Maputo MPDC April 2003 15
Nacala Rail CDN January 2005 15
Nacala Port CDN January 2005 15
Beira Rail CCFB December 2004 25
Port of Quelimane Cornelder March 2005 25
48\. Component Two: Staff rationalization is rated as highly satisfactory\. i) A
total of 14,800 staff was retrenched/retired (exceeding the target of 13,000), and
successfully received severance payments and other benefits through the proceeds of the
14
Credit; ii) In addition to the retrenchment, about 1800 people were transferred to various
concessionaries and 1200 left through natural transition that reduced the permanent staff
of CFM from about 19, 400 at the end of 1998 to 1,600 with CFM and 1800 with
concessionaires at the end of June 2009\. (iii) Out of the 14,800 retrenched staff, 12,378
received counseling service and 6,121 received various training and financial services, to
ensure a smooth retrenchment process and equip them with technical and managerial
skills and readiness to exploit new formal or self employment opportunities; iv) Close to
7,000 staff were self-employed among which 900 created small-scale businesses that
hired another 800 people, 553 established 46 associations in agriculture, tailoring,
mechanics, poultry and bakery business, etc\. In addition, 557 found new formal
employment in the economy\.
49\. Component Three: Corporate Restructuring of CFM is rated as moderately
satisfactory\. CFM is now leaner with about 1,600 staff compared to a little more than
19,000 at the beginning of the project; with regard to financial status, CFM, which was
unprofitable before the project, registered an operating surplus of more than US$50
million per year for the last four years (more than $80 million in 2009)\. However, a
separate holding company was not established as planned, due in part to complex legal
requirements and in part to the lack of obvious profitability\. Yet special units have been
established for monitoring CFM's equity and interests in various concessions, joint
ventures and partnerships, monitoring safety and operational requirements and rules, and
strategy development; So far, CFM has not paid dividends to GOM because: (i) CFM has
not yet reached an agreement with GOM on a dividend policy though the efforts to refine
a "performance contract" are on-going and will include a policy on the disposal of
surplus income; and (ii) CFM is keen to build a reserve for carrying out urgent repairs of
the port and railway infrastructure if damaged as a consequence of "force majeure"\.
50\. Project Development Objective 2: Strengthening of the transport sector policy,
the regulatory framework, and the institutional capacity of MTC\.
51\. This second PDO is rated as moderately satisfactory given the fact that the
institutional capacity of MTC has been strengthened but a self-standing regulatory body
has not been set up (see Para\. 54)\. The achievements of the PDO's related components
are evaluated as follows:
52\. Component Four: The strengthening of MTC is rated as moderately
satisfactory\. Activities under this component include: organizational reform and
restructuring of MTC, preparation of an initial strategic plan, completion of seven critical
studies, training of staff in various disciplines, and computerization of MTC\. The
completion of these activities has led to the increase in the knowledge base of the
Ministry, enhancing the capacity of staff and increasing its overall efficiency and
confidence\. As mentioned earlier, MTC is assuming more responsibilities than before,
such as, evaluating bids for concessions, leading concession negotiations, planning large
scale infrastructure projects and preparing annual development strategy\.
15
53\. Yet, there are some pending issues under this component that will require further
attention: (a) while the structure of the ministry has been simplified, the new structure has
still to be effectively functional\. For example, the Economy and Investment directorate is
not yet making comprehensive analysis of the investment proposals of the various
companies under its control; (b) in spite of substantial training of staff, particularly in the
economics discipline, there remains a need for developing more practical skills; and (c)
the Strategic Plan needs to be refined to be more pragmatic and to focus on core values
which also need to be defined more clearly\. Overall, however, it would seem that greater
effort could have been put into the institutional strengthening component (MTC) so that
the second PDO (institutional strengthening) could have been achieved to a greater
extent\.
54\. Component Five: The Regulatory Framework is moderately unsatisfactory\.
During project preparation, the Government agreed to carry out an independent study in
two phases: (i) reviewing all the options of setting up a self-standing regulatory body; and
(ii) a detailed design and structure for the selected option\. Funds were allocated for the
implementation of the selected option so that the establishment of the regulatory body
would not suffer from lack of funding\. However, the study did not provide clear
recommendations and the market competition proved to be quite effective (the railway
concessionaires have not increased railway tariff since the systems were concessioned)\.
In addition, a self-standing regulatory body was found to be too costly for a small railway
sector\. The Government decided to wait and the Bank agreed with the decision\. Instead,
it was decided that a concession monitoring unit be established within MTC under the
assistance of a Spanish Trust Fund\. The main function of the unit would be to ensure that
CFM and the concessionaires live up to their respective obligations under the concession
contracts\. The unit could be converted into a self-standing regulatory body later when
justified\.
55\. New Component Six: Rehabilitation of Key Jetties at selected locations and
provision of ferries and boats is rated satisfactory\. The rehabilitation of jetties used for
ferry services at Inhambane, Maxixe, Maputo and Catembe, as well as the study and
engineering design for Quelimane-Recamba wharfs were completed\. In total, six ferries
and boats were acquired and put into use - one ferry in Maputo-Catembe, two passenger
boats in Inhambane-Maxixe, one boat in Beira-Buzi, one sea-faring boat in Beira-
Machanga and one ferry in Quelimane-Recamba\. These transport services were highly
rated in terms of satisfaction by the users - faster, safer and more comfortable service for
passengers compared to the old slippery jetties and the small boats which could only ship
10 to 12 passengers, often without any cover or roof\. The new boats (2 catamarans) have
the capacity of accommodating 100 passengers and 2 tons of cargo; the two smaller
ferries can carry, respectively, 58 passengers plus 10 tons and 90 passengers plus 2 pick-
ups and 10 motorcycles\. The larger ferry, operating at Maputo carries 293 passengers
plus 4 trucks and 10 cars\. Due to the improved ferry services, more local people are
crossing the river either for school, work or for market opportunities which result in more
exchange of economic activities between the two sides of the waterways (Annex 5)\.
16
3\.3\. Efficiency
56\. Improving the efficiency of port and railway system is rated satisfactory\.
The port and railway systems are now on track to provide better service in order to
maximize their share of traffic and consequently profits\. Actual freight traffic handled by
the ports has exceeded the target\. The freight traffic handled by the railways did not
reach the target for reasons indicated in section 3\.2\., but the basic fundamentals exist for
handling the increased traffic as soon as the economic situation of the neighboring
countries improves\. Table 1 shows significant increases in staff productivities, and as
competition among ports and between road and rail transport increases, one expects the
private sector to improve efficiency further in the interest of attracting more traffic\.
Similar results in the form of improved services are anticipated in the public sector,
particularly the MTC, where restructuring and training has led to better planning,
budgeting and policy making skills in the transport sector\.
57\. Efficiency of the Investments is rated satisfactory\. The analysis (Annex 3)
shows the following results compared to the estimates at the beginning of the project:
Table 4: IRR and NPV
IRR (%) NPV (Million US$)
Financial at ICR 23 45
Financial in PAD Not calculated 158
Economic at ICR 24 51
Economic in PAD 52\.0 357\.0
58\. Financial and economic internal rates of return (IRR) and NPV are less on
completion than at appraisal because of the reduction in railway traffic in the earlier years
of the project, which have a big impact on the IRR as well as NPV\. The reasons for less-
than-expected traffic increase have been highlighted in section 3\.2\. Overall, the financial
return (23%) and economic return (30%) are nevertheless satisfactory\. Both FRR and
ERR are also much lower because the CFM's cash flow has been limited to, on average,
US$50 million per annum given the downturn in the neighboring country's economy and
the world-wide financial crisis, both of which could not be visualized at the time of
Project preparation\.
3\.4\. Justification of Overall Outcome Rating
59\. The overall outcome rating for the Project is Satisfactory\. Given that: (a) the
project objective is relevant to the higher development objectives of the country and in
line with Mozambique's longer-term growth strategy, wherein regional integration and
trade underpin this growth strategy through the new economy (CAS Partnership Strategy,
April 2007)\. For example, the GDP has averaged six percent annually since 1996 and
transport is one of the sectors which has grown rapidly between 1996 and 2005; and (b)
The PDOs have largely been achieved\. The achievement of some indicators like staff
retrenchment and port traffic is more than 100%\. The implementation period was longer
than original planned and the project got four closing date extensions\. However, as
17
explained in section1\.7, the PDOs were largely achieved by the time of the first
extension\. The other three extensions were required to further enhance the project
benefits with the addition of new components\.
3\.5\. Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
60\. The ICR team did not undertake a specific assessment of gender aspects and
poverty impacts of RPRP\. However, based on limited interaction with beneficiaries such
as ferry passengers, retrenched CFM staff, the project had a positive impact on social
development and poverty reduction\. For example, the improved ferry service has led to
safer transportation and more economic exchanges; the professional skill of the
retrenched staff was improved after job training such that the human capital was also
strengthened\.
(b) Institutional Change/Strengthening
61\. There has been an increase in the capacity of both MTC and CFM\. MTC is now
more competent than before as mention earlier (paragraph 54)\. CFM's increased capacity
is reflected in its profitable financial status, diversified business and focus on the long-
term development of the port-railway systems\. In 2009, the railway and port sector
presents a completely different picture when compared to 2000\. More details of
institutional change and impact of various components are given in Annex 2\.
(c) Other Outcomes and Impacts
62\. There were three main unintended outcomes and impacts\. First, the credit
financed studies related to the development of corridors and supported the setting up of a
corridor management unit which was not originally included as part of the Project design\.
This support has resulted in the setting up of information and of a data base for future
development of these corridors and will lead to generating private sector interest to invest
in the corridors\. This effort is also supported by other donors and two PPIAF grant
financed studies\. Second, even though the floods of 2000 damaged the Limpopo line, its
subsequent rehabilitation was accompanied by the widening of the culverts to cope with
similar or even more severe floods in the future\. As a result, the line is in a better shape\.
Finally, the breakdown of the concession for the Ressano-Garcia line led to the
rehabilitation and modernization of the line which can now operate longer trains with a
higher axle load and at higher speed and has the potential of attracting more bulk traffic,
particularly coal and magnetite from South Africa\.
Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
63\. No formal beneficiary survey was undertaken but several beneficiary interactions
were held with: (a) the railway systems in Malawi, Zimbabwe, South Africa, and
Swaziland on service delivery, (b) staff and staff unions on retrenchment mitigation
measures, (c) the concessionaires on their performance and support of the GOM, (d)
18
passengers using the new boats and vessels, and (e) businesses and major exporters and
importers in Mozambique and the neighboring countries using the ports and railways\.
These interactions yielded positive responses from beneficiaries on the results achieved
by the project, especially with regard to the redeployment efforts made for the retrenched
staff and the improvement of services in the ports of Beira and Maputo\. According to the
railway concessionaires, privatization has led to improved operating agreements and
arrangements with the neighboring countries involving the sharing of locomotives and
wagons, extended locomotive runs, and sharing of information\.
4\. Assessment of Risk to Development Outcome
4\.1 The overall risk is assessed as moderate\.
64\. Three ports and two railways are under long-term (15-25 years) concessions\.
Compared with public sector management, the concessionaires, free from many
restrictive procedures and rules, are expected to respond to the market more quickly and
manage the system more efficiently to stay competitive\. The freight traffic on railway and
port systems is, therefore, expected to continue increasing with the recovery of the
regional and global economies, especially after the Sena line becomes fully operational
and after CFM and South African Railways have reached operating agreements with
regard to operations on the Ressano-Garcia line\. The already strengthened MTC capacity
is only likely to be strengthened further as a result of more trained staff, strategic
planning, and increased exposure to world-wide information through the extended use of
the internet\.
65\. However, the risk to development outcomes is still considered as "moderate" due
to the following pending issues\. For the Port-railway systems: (a) the planned concession
monitoring unit in MTC is yet to be set up and the delay in this mechanism could impose
risks for the existing concessions especially when some unanticipated issues not covered
by the concession contracts arise; (b) the traffic increase on the Ressano-Garcia line
depends to a great extent on the traffic sharing agreement with South African Railways
(SAR)\. While SAR has shown a willingness to cooperate, it could continue to focus on its
domestic railway development and on implementing tariff policies and practices aimed at
encouraging traffic to move to its own ports in which case the expected dramatic increase
in freight traffic on the Ressano-Garcia line may not materialize\. For the strengthening of
the MTC, seven studies were conducted under this Project\.
5\. Assessment of Bank and Borrower Performance
Bank performance
(a) Bank Performance in Ensuring Quality at Entry
66\. The Bank's performance in ensuring Quality at Entry is rated satisfactory
for three main reasons: (a) the Bank's appraisal team accurately identified key issues and
made the right proposals that eventually led to a more efficient port-railway system that
19
benefited the country\. Full use was made of the existing information and studies in
developing the project components and technical specialists were engaged to evaluate
every proposal; (b) an adequate effort was made to build consensus and get full
commitment from all stakeholders to ensure that the chances of failure due to contentious
elements of staff retrenchment and privatization were minimized and the project could be
well received and implemented; (c) appropriate provisions were made for technical
assistance in the form of: (i) an expatriate railway expert and a local human resource
specialist to help CFM implement its part of the project; and (ii) a project coordinator to
head the implementation unit within MTC and help it to implement its part of the project
and prepare regular reports\. However, the project design had a few shortcomings as
mentioned in section 2\.1 such as inadequate definition of outcome indicators to fully
reflect the PDOs; an ambitious timeline for completing the various concessions, and
linking staff rationalization to concessioning which delayed staff retrenchment\. The
project attempted to address too many complex issues which turned out to be difficult to
accomplish within the timeframe such as, setting up of a regulatory body, undertaking a
pension study for the whole public sector and linking the improvement of tertiary ports to
private sector interest in their operation\.
(b) Bank Performance in Quality of Supervision
67\. The overall rating in quality of supervision is assessed as Satisfactory\. This was
a complex and difficult project, the implementation was full of challenges and
unexpected issues such as concession breaking up and floods damaging the Limpopo
line\. The Bank team remained focused and results oriented while at the same time
maintaining flexibility and making necessary changes to ensure successful achievement
of the development outcomes\. Such examples included restructuring the project to meet
new demands, launching a separate Beira Railway Project to enable the concessioning of
the Beira railway system as a public-private partnership with significant public sector
inputs, and enhancing project benefits by addressing the fluvial transport needs of the
coastal rural population\.
(c) Justification of Rating for Overall Bank Performance
68\. Overall, the Bank Performance is rated as satisfactory, given that the quality
at entry and Bank supervision are both rated satisfactory\.
Borrower Performance
(a) Government Performance
Rating: Satisfactory
69\. The GOM was fully committed to the achieving the development objectives in
spite of the formidable challenges facing the country and an uncertain sentiment with
regard to privatization\. Such commitment included: (a) enunciating and implementing a
policy of privatization of one of the most strategic enterprises in the country, knowing
20
full well that the step would entail massive staff retrenchment and readjustment of roles;
(b) providing full support for implementation including funding, personnel and policy
adjustments\. There was teething problems during the implementation yet, privatization
and private-sector participation remained the corner-stone of government policy\. The
Ministry of Finance, in particular, helped solve staff retrenchment issues and expedited
the concessioning process\. On balance, GOM's performance is rated satisfactory\.
(b) Implementing Agency Performance
Rating: Satisfactory
70\. There were two implementing agencies for this project\. The performance of CFM
is rated as satisfactory, while the performance of MTC is rated as moderately satisfactory,
with an overall combined rating as satisfactory\. CFM successfully implemented staff
rationalization, its own restructuring, and the concessioning of the port and railway
systems\. For staff rationalization, CFM established a staff rationalization unit to process
more than 14,000 cases in an orderly manner and expeditiously and compassionately
addressed any complaints from retrenched staff\. CFM also fully supported the consultants
engaged in providing counseling and training to the retrenched staff\. For its own
organizational restructuring, CFM management team led the effort\. Through careful
planning and implementation, it has turned CFM into a profitable entity with no
dependence on Government financial support, a rare example in sub-Saharan Africa\. For
concessioning, CFM participated fully in the selection of concessionaires and took its
responsibilities as a minor equity holder in the major concessions very seriously\.
71\. MTC took full advantage of the opportunities created by the project and has
restructured and strengthened itself and implemented the project sub-components with
diligence\. Though the allocation for the MTC components was small, implementation
involved dealing with knowledge-based and deeply-impacting investigations using
specialist consultants, institutions, universities, and individuals with all the accompanying
problems\. MTC was not hesitant to submit alternative proposals within the allocated
funds in order to optimally utilize the funds and was instrumental in developing and
implementing new sub-components such as the development of corridors, fluvial
transport, and a transport cost study\. However, MTC delayed decisions on the setting up
of a regulatory body and the implementation of the recommendations of several studies
that were undertaken under this project, hence, leaving some key planned activities
incomplete at the time of credit closure\.
(c) Justification of Rating for Overall Borrower Performance
72\. As a whole, the Borrower's performance is rated satisfactory\. This rating has
been arrived at considering the weighted performance of the GOM and the two
implementing agencies as described above\.
21
6\. Lessons Learned
73\. Lessons learned from the Project are as follows:
(a) The Project outcome indicators should be fully reflective of the PDOs\. These
indicators should be backed by an appropriate model or a set of equations in order
to compute their values with clear identification for the control of relevant
exogenous variables and their impact\. For example, the outcome indicator of this
project is traffic growth, as this indicator itself is a function of many variables
such as efficiency of the railways and ports, economic growth in the neighboring
countries, developments in the road sector, etc, a model with all the relevant
parameters should have been designed to identify the impact of each variable\.
This would also facilitate improved monitoring by the implementing authorities,
unambiguous evaluation of performance at every stage, and identification of
timely corrective actions\.
(b) The relative weights of various indicators should be identified at the project
preparation stage so that the aggregate performance with respect to a
particular PDO can be judged unambiguously\. Taking example of this Project,
it would have been useful to make a more informed judgment on the overall
performance under each PDO if the methodology for integrating the results
measured by port traffic, railway traffic, ports efficiency, railways efficiency, staff
retrenchment, and capacity building had been specified during appraisal - not
necessarily in quantitative terms only but even in a broad ranking form or by
relative weights contributing to the specific PDO\.
(c) Staff rationalization is complex and difficult; it could be successfully
completed only if the rationalization design could integrate a good severance
package, counseling services, job training and have provision for follow up
services\. More concretely: (i) the staff being retrenched should not be the only
losers and the severance package should be enough to maintain them while they
seek an alternative career; (ii) psychological, social, and financial counseling must
be provided both in groups and individually to enable the staff to overcome the
shock of retrenchment; (iii) adequate training and retraining should be arranged so
that the staff can leverage their experience and skills towards another career; and
(iv) guidance to staff should be continued for a number of years and the progress
of staff monitored closely\. The program under RPRP was successful because all
the elements were observed and taken into consideration during the design and
implementation of the program\.
(d) Railway concessioning and revitalization is complex and time-consuming
especially when the potential investors consider the risks of investing in
Africa as high\. Successful concessioning of the railways required a balanced
risk sharing structure, a good understanding of the local business
environment, working on the logistics chain as a whole, and having a good
marketing strategy\. More concretely: (i) The risks should be well balanced
22
between the potential investors and the government; (ii) the concessionaire should
be one who knows the business environment and respects the culture, has good
communication skills or strategy and builds trust with all the stakeholders in the
country, so that they can work together to solve problems and focus on
development issues; (iii) the concessionaire, together with other stakeholders,
should work on the whole logistics chain including shipping line, customs service,
port and inland transport, so that traffic can flow smoothly; and (iv) marketing is
as important as the other development strategies to generate more business\.
(e) The lesson drawn from dropping the tertiary port rehabilitation component
is: if investment for a component is delayed for any reason, the economic analysis
must be repeated just before the investment is actually undertaken to make sure
that the changed business environment has not diminished the economic
feasibility\.
7\. Comments on Issues Raised by the Borrower/Implementing Agencies/Partners
Co-financiers\. There were no co-financiers in this project\.
Other partners and stakeholders\. There were no other development partners\.
74\. CFM raised the following four issues regarding the railway and port concessions:
(a) Does the public sector have a role to play? (b) What is the best approach for port
concessions? Is a Master Lease Concession the best alternative? (c) Are Advisers
necessary to structure a good deal? and (d) is competitive tendering the best approach to
select a partner in a concession?
75\. These issues invoke intense discussion around the world including within the
World Bank with supporters on either side\. The comments from the project team on
these issues are: (a) The role of the Public sector is clearly very important in PPPs and in
formulating policies and providing the required regulation and oversight; (b) Master
Lease Concessions have been successful elsewhere in the world and have definite
advantages and disadvantages over other methods, so there is no clear conclusion
whether a Master lease concession is the best approach\. Even in Mozambique, the
Maputo port is under master concession while the Beira port is under landlord
concession, both are successful; (c) Transaction Advisers could bring worldwide
experience to bear on the complex procedures and processes that are required to
implement privatization of public assets\. They are not necessary, but do add value
especially when the government does not have the requisite capacity; and (d) Negotiated
contracts have advantages, however, in general competitive bidding has proved to
produce better results\.
23
Annex 1\. Project Outputs, Costs and Financing
(a) Project Cost by Component (in US$ million equivalent)
Components Appraisal Estimate at Actual/Late Percentage
Estimate Restructuring Estimate of
US$ US$ million US$ million appraisal
million
Concessioning of CFM Ports 1\.00 1\.60 1\.81 181%
and Railways
Staff Rationalization 96\.44 81\.00 77\.81 81%
Corporate Restructuring 2\.60 2\.60 0\.96 37%
Strengthening of MTC 1\.70 6\.00 2\.57 151%
Regulatory Framework 8\.20 1\.00 0\.70 9%
Tertiary Ports 10\.06 0\.00 0\.00 0%
Rehabilitation of Passenger 0\.00 15\.00 16\.55
Jetties and acquisition of new
boats/ferries
Rehabilitation of the Ressano-
Garcia line 0\.00 6\.40 5\.45
Exchange Rate Adjustment 0\.18
Total Project Cost 120\.00 120\.00 106\.03 88%
MDRI SPLIT 39\.44
TOTAL 66\.59
(b) Project Financing (in US$ million equivalent)
Appraisal Actual/Latest
Estimate US$ Estimate US$ Percentage of
Source of Funds million million appraisal
GOVERNMENT** 20\.0 16\.0 80%
CFM 0\.0 8\.7
IDA 100\.0 106\.0 106%
TOTAL 120\.0 130\.7 109%
** Government counterpart funding fully paid at project start, however actual cost was affected by the exchange rate
fluctuation
24
Annex 2: Outputs by Component
Part A: Concession of CFM major Ports and Railways:
1\. Design: It was agreed that the three major ports Maputo, Beira, and Nacala
and the related railway systems would be concessioned\. By the time the project became
effective, the Portos e Caminhos de Ferro de Moçambique, E\.P\. (CFM) had already
embarked on undertaking concessioning on a limited scale, having concessioned the coal,
sugar, container, and citrus terminals of the Port of Maputo\. CFM and the Government
of Mozambique (GOM) had indicated their preference for the following equity structure:
Winning bidder 51 percent, CFM 33 percent, and the Mozambican public and key
stakeholders 16 percent (which shares would be warehoused with CFM until a
methodology to identify such shareholders is identified)\. The general methodology was
that a strategic partner would be identified through a competitive process but CFM
reserved the right to identify a strategic partner directly\. The credit was available for
studies, transaction advisors, and any other assistance\.
2\. Implementation\. The results at the close of the Project are as follows:
(a) The Port of Beira was concessioned prior to the project becoming effective\. The
concession was awarded to a consortium whose main foreign partner was a Dutch
firm with which CFM had a relationship of many years through various port
activities\. The concession has been doing extremely well from the very beginning
and in 2008, made a pre-tax profit of US$16 million;
(b) The Port of Maputo was concessioned with the concessionaire being identified on
a competitive basis\. The consessioning process took a long time during
evaluation, negotiation, and operationalization as the Concessionaire insisted on
the concessioning of the Ressano-Garcia line being concessioned before making
the concession operational\. The concession did not do well for many years but
the ownership has now changed, the new concessionaire has streamlined
operations, and the prospects now look much better;
(c) The Port of Nacala and the Nacala Railway system were concessioned on a
negotiated basis and the concession was awarded to the SPDN, the Malawi
railways concessionaire\. It was expected that the same concessionaire for both
sides of the corridor would provide synergy and avoid interface problems\.
However, the concession has not performed well at all\. Performance has declined
sharply, infrastructure has deteriorated, and accumulated losses have mounted\.
The main foreign partners appear to have abandoned the concession and the future
looks very uncertain\. The hope is that, as in the case of the concession for the port
of Maputo, new investors will be forthcoming and with renewed management and
investment, the corridor will be revitalized as the fundamentals of the corridors
are strong;
(d) The Beira railway system was difficult to concession as the Sena Line, a part of
the system, had been in disuse since 1984 and required extensive rehabilitation,
25
A new project was launched to offer a BOT-type concession and the
concessionaire was identified on a private-public partnership basis with
considerable financing from the World Bank\. The rehabilitation of the Sena Line
is progressing well\. However, the line will have to be further strengthened and its
capacity increased considerably to be able to carry large quantities of coal\. Some
of the key issues of tariff and capacity are currently under discussion;
(e) The concession of the Limpopo and Goba lines, part of the Maputo railway
system could not be signed though the concessionaire was identified through a
competitive bid because the line suffered extensive damage due to floods just
before the concession agreement was to be signed\. Currently, the private interest
in the line is low because of the sharp decline in freight traffic consequent to the
decline in the Zimbabwean economy\. The line is being managed by CFM after it
was rehabilitated;
(f) The Ressano-Garcia line, also a part of the Maputo rail system, was also
concessioned but the concession could not be signed because South African
railways, a key partner of the concession consortium, pulled out of the
consortium\. The line has since been upgraded and is being managed by CFM\.
The Concession depends on the cooperation of South African Railways, which is
not reported to be in favor of a private concession\. However, CFM is in the
process of reaching an agreement with South African Railways to operate on their
lines by paying access charges and the prospects on increased traffic have
brightened\.
3\. Issues\. Even though the implementation of the concessions so far has been mixed
disappointing in some cases and encouraging in others - there are some issues where
either the answers are not clear or some more post-project work would need to be done\.
These issues are discussed below:
(a) CFM's Thirty-three percent equity participation in major port and railway
concessions\. Considerable concern has been expressed by many regarding this
participation as this can be seen as a direct conflict of interest, with CFM
indirectly assuming the roles of both the conceding authority and the
concessionaire and additionally increases CFM's risk exposure\. However, CFM
has explained that this participation has many benefits including the following: (a)
the equity participations grants them a seat on the Board of Directors of the
concessionaire and thus provides an opportunity to understand the
concessionaires' plans and strategy and even a chance to influence them ; (b) it
provides an opportunity to CFM to offer its assets (locomotives, wagons, cranes
etc\.) as part of its equity, which assets will otherwise be difficult to sell; (c) CFM
stands to gain in the form of dividends in an upswing of the business of the
concessionaire; and (d) even the concessionaire welcomes this participation as
this implies a partnership rather than a confrontation ;
(b) Master concession or landlord-type concession: Maputo and Nacala ports have
been concessioned on a master concession basis with the existing terminal
concessionaire being brought within the scope of the master concession\. That
26
means that the concessionaire is responsible for most services within the port
including dredging\. The Port of Beira has been concessioned with CFM retaining
the landlord status\. There is a worldwide debate on the merits of both types of
concession\. The current concessionaire seems to favor a master concession as
that gives him greater flexibility and lesser interface problems whereas CFM
seems to feel that a landlord-type concession is more lucrative for CFM and also
presents less risk of failure\. More analysis is required to make a meaningful
comparison\.
(c) Future of the Nacala port-railway system\. As indicated above, the future of
Nacala is a major issue laced with legal, institutional, and financial complexity\.
More effort is required to set a right course for the system\.
(d) Future of the Ressano-Garcia line: As indicated above, the agreement for
mutual use of the line in South Africa by CFM and of Ressano-Garcia could
provide a promising framework for increasing freight traffic on the line\. Other
arrangements and partial sub-contracting could be used to make better use of the
institutional arrangements\.
(e) Future of the Limpopo and Goba lines: for quite some time, there could be a
low interest in the concession because the traffic is low and an increase in traffic
will depend a lot on the progress made in Zimbabwe\. The line may have to be
managed by CFM for a long time and in that case, there has to be a bigger focus
on the efficient running of the railways\. It does not mean that the line is being
operated inefficiently but there is always room for improvement\.
4\. Evaluation: Overall, based on the complexity of the task of concessioning, and
the unavoidable impact of the policies of neighboring countries but also on the results so
far, the component is rated as moderately satisfactory\.
Part B: Staff Rationalization:
5\. Design: It was clear from any number of past privatization efforts that
concessioning would have been difficult, if not impossible, if the staff on roll had not
been drastically reduced\. In order to ensure staff reduction with the least possible pain
and to be fair to those who had been retrenched, the severance package was finalized only
after discussion with the staff and after conducting a survey and included many novel
features such as:\.
(a) allowing a severance package comprising a supplement of 27\.5 percent on the
pension of the retrenched staff computed by the Ministry of Finance and certified
by the legal authority, which proved satisfactory to all staff - higher pension for
relatively senior staff and higher pension for a longer period for relatively
younger staff instead of paying a severance payment based on past service for the
staff entitled to pension (I\.e\., those employed before 1989), ;
(b) the payment of the pension and the supplement could be cashed on the basis of
net present value of the pension stream or; if the staff could continue to remain in
27
the pension scheme and receive monthly pension from the Ministry of Finance
with only the supplement paid in cash;
(c) the staff, who were employed after 1989 and were not participants in the
Government-managed pension scheme, were to be paid severance at the rate of
six months' pay for every year of service completed, twice the legal entitlement
but still low in cash terms because average service life was low and so were the
wages; and
(d) an elaborate scheme was put in place for the counseling of retrenched staff,
training them for future reemployment or self employment, and assisting them in
seeking employment in the non-railway sector or open small businesses\.
6\. Severance computation software was developed and vindicated before being
applied and strict security measures were taken to ensure that the package is not tempered
with; all computations of severance payments and actual payments were certified by
professional audit firm, also financed through the Credit\.
7\. It was announced that transparent and efficient procedures would be established
to instill confidence in the staff that what had been promised would be delivered\. In
particular, it was widely announced that: (a) a separate staff retrenchment office managed
by competent and experienced staff would be established to ensure strict and speedy
compliance with retrenchment procedures; (b) severance computation software would be
developed before being applied and strict security measures would be taken to ensure that
the package would not be tempered with; and (c) all computations of severance
payments and actual payments would be certified by a professional audit firm selected for
this purpose\.
8\. Implementation\. The following actions were taken under this component:
(a) a special workforce rationalization unit, manned by lawyers, a psychologist,
Human resource experts and staff, and an IT specialist, was established;
(b) the staff rationalization program was implemented with considerable efficiency,
as a result of which the permanent staff with CFM and various concessionaires
stands reduced from around 19400 at the end of 1998 to around 3400 (1600 with
CFM and 1800 with the concessionaires) at the end of June 2009\. The reduction
of staff by 16000 took place as follows: (i) natural attrition, deaths, dismissals,
and abandonment 1200; (ii) retrenchment 14800\. The retrenchment took
place as follows: (i) Option A under which staff were paid full retirement benefits
as a lump sum 8100: (ii) Option B under which the staff remained under the
retirement scheme but were paid the supplement and golden handshake 700;
(iii) Staff who were not a part of the retirement scheme, having joined after 1989
and were paid on the basis of the length of their service 4800; and (iv) Staff who
were paid only the golden handshake 12003\.
3
All figures have been rounded to the nearest hundred
28
(c) Vigorous staff mitigation measures were taken, the details being as follows: (i)
more than 12000 staff (about 80% of the retrenched staff) were provided
psychological, career-related and financial counseling; (ii) 84 management
courses (1496 staff), 344 professional courses (3925 staff), and 47 agricultural
courses (700 staff) were held with a total of 6121 staff attending one or more
courses; (iii) 3823 staff (about 25% of the retrenched staff) attended follow-up
training programs;
(d) The mitigation measures resulted in the following: (i) staff in self-employment
7000; and (ii) staff employed in small-scale formal and informal firms 900\. In
the self-employment or reemployment process, 263 staff were provided with
micro finance and many more were provided with start-up assistance\. Assistance
was also provided to staff in different provinces, with 553 members to form 46
associations aimed at facilitating discussions of mutual interest; and
(e) Payments were made promptly and all complaints were duly and comprehensively
addressed; and free training was also offered to dependents of the staff in case the
staff was unable or incapable of going through any sort of training\.
9\. Issues\. Even though the implementation went very well, there have been some
issues where either the answers are not clear or some more post-project work would need
to be done\. These issues are discussed below:
(a) Complaints: It has been reported that close to 700 complaints (5% of the total
retrenched) were made during the period of retrenchment and most were resolved
to the entire satisfaction of the complainants\. Most complaints pertained to
computation errors due to deficiencies in data base regarding the date of birth,
length of service etc\. and CFM paid close to US$1 million (about 1\.3% of the
total amount of retrenchment) after rectification of the errors\. However, seven
cases are pending in courts, the complainants having challenged the basis of
discounting rate and mortality assumption for computing the NPV\. The
complainants have a very weak case but the fact that the workers have access to
courts is a sign of transparency;
(b) Statistics of staff reemployed or self-employed and sustainability: The
numbers (7000 or so) are based on the estimates of consultants who managed the
counseling and training of staff\. The following issues have been raised during
discussions: (i) an independent survey would have been better; (ii) it is not clear
whether the small businesses started by the retrenched staff have been sustainable;
(iii) no contacts were made with staff who did not opt for training to find out
whether they were reemployed or otherwise; (iv) there is no mention whether the
influx of the retrenched staff adversely affected the chances of the already-
unemployed residents of Mozambique;
(c) Future plans: CFM still has around 1600 staff mainly because it is still operating
and managing the southern railway system, the oil and grain terminals, and many
other assets and businesses that have not been concessioned\. There is no
immediate plan to retrench any further staff but CFM does not plan to replace the
staff lost through natural attrition except to balance the skill base\. Even so, the
plan is not clearly spelled out;
29
(d) Staff wages and salaries: Even though 70 percent of the staff has been
retrenched and another 15 percent transferred to concessionaires, the staff wages
and salary bill continues to be roughly the same as before the start of the
retrenchment\. Some reasons for this were explained as follows: (i) wages and
salaries of staff had to be substantially increased over the years to keep pace with
the inflation and market averages; (ii) close to 3000 retired staff are awaiting
settlement of their pension by the Ministry of Finance and who have to be paid
their salaries until their pension is settled; and (iii) the remaining staff includes a
relatively higher percentage of middle and high level management staff as very
little such staff was taken over by the concessionaires\. CFM needs to take the
following post-Project actions: (i) make a separate list of the staff who are being
paid as they are awaiting their retirement settlement; and (ii) take action to
critically look at the staff wages and salaries; and
(e) Micro-financing: The micro-financing scheme has been claimed as being
successful though on a small scale\. Normal experience being otherwise, CFM
should require the consultants to prepare a detailed note on this\.
10\. Evaluation: Overall, based on the complexity of the task and despite some of the
issues discussed above, the component is rated highly satisfactory:
Part C: Corporate Restructuring:
11\. Design\. Based on internal studies and brain-storming, CFM had created a broad
blue print where by the original CFM was to continue as a holding company and many
subsidiary companies were to be created for various commercial functions\. The proposed
corporate restructuring was aimed at increasing the capacity of CFM to effectively
manage the concessions, resolve emerging problems, and efficiently manage the assets
and businesses still remaining with CFM\.
12\. Implementation\. The studies were undertaken and short-term experts were also
employed by CFM to help it reach decision on the most appropriate structure\. Resulting
from the study recommendations, but mainly through its own thinking, CFM finally gave
up on the idea of creating a structure of holding and subsidiary companies and provided
the following reasons: (a) procedurally it was extremely difficult to create any more
public companies as the Government was not prepared to take the risk of getting involved
in more public companies and was in fact trying to divest the already existing companies;
(b) Both the Government and CFM favored gradually involving the private sector
through joint ventures for managing its assets and functions on a case by case basis rather
than first creating separate companies; and (c) it was advised that the holding company-
subsidiary structure would add considerably to the cost of CFM while the subsidiary
companies were unlikely to sustain themselves\. Instead, CFM created a new organization
structure, the main features of which were as follows:
(a) A relatively flat structure with lesser authority levels;
(b) A thin structure that employs much lesser staff;
(c) A separate directorate created to manage CFM's shareholding in different
businesses including the concessions of major ports and railway systems\. CFM
30
currently has close to 16 companies where it has equity or partnership in a joint
venture (see Annex 3 for the list of companies along with CFM's interest);
(d) A separate directorate created to undertake inspections and safety regulations until
the Government establishes a regulatory authority;
(e) A separate directorate has also been created to effectively manage the real estate
and property owned by CFM;
(f) Human resources directorate has been maintained though with considerably
diminished staff to reflect lower workload consequent to reduction in staff;
(g) Finance, internal audit, and some operational directorates have been maintained
and strengthened in the light of the diversification of CFM's involvement;
(h) The regional directorates in the North and the Center were radically trimmed to
discharge only overseeing functions; and
(i) The regional directorate in the South was also trimmed to maintain staff only for
the management and operation of the rail system, which remains un-
concessioned;
13\. The review of the audited accounts of CFM for the years 2000 to 2008 indicates
that its profitability has increased despite the decline in railway traffic mainly for the
following reasons: (a) less maintenance cost because all concessioned infrastructure and
leased assets are required to be maintained by the concessionaires; (b) CFM has taken
action to reduce its wagons and locomotives and the resulting operating costs; (c) CFM
has made the most of its redundant assets by creating joint ventures with private entities
to manage these assets; (d) CFM has streamlined its organization and reduced its
expenditure considerably; and (e) concession fees from port concessions have increased
consequent to increase in port traffic\.
14\. Issues\. Even though the implementation of CFM restructuring has gone quite well
and CFM's profits have shown an increasing trend, there are some issues where either the
answers are not clear or some more post-project work would need to be done\. These
issues are discussed below:
(a) Equity in many loss-making companies: Annex 3 shows that CFM has a share
holding in some companies that are making losses\. While agreeing to the
situation, CFM feels that these companies have good fundamentals and are
expected to do better in the future;
(b) Effective utilization of assets: Even though CFM has made considerable effort to
utilize the assets, it is not certain that more cannot be done\. An intensive study,
either internal or with the help of experts, could provide many new ideas on what
could be done better or differently with the real estate, the railway assets, other
assets, and cash reserves\. The study could also recommend areas where joint
ventures could prove useful\.
(c) Further optimization of the structure: Though the structure has been
streamlined, there is some feeling that it could be improved further and, in
particular, there could be additional reductions of staff in high-paying positions,
more involvement of the private sector in various activities and functions,
outsourcing of some functions, and rationalization and consolidation of functions\.
CFM has indicated that it will intensify its efforts in the above areas\. Inter-
31
railway and inter-port comparisons: CFM now has a variety of structures for
its ports and railways systems concessions, BOT-type concession, self-
management but no comparative figures of efficiency, productivity and
profitability are being maintained\. These statistics could be difficult to obtain, but
if an arrangement can be made with the concessionaires, even on a confidential
basis, this might be useful for all concerned\.
15\. Evaluation: Overall, based on the complexity of the task of organization
restructuring and despite some of the issues discussed above, the component is rated as
"highly satisfactory"\.
Part D: Strengthening of MTC:
16\. Design: This component comprised the following: (a) carrying out of a study or
studies to: (i) review the Borrower's transport policy framework; (ii) review the
framework for concessions; (iii) define the new functions of MTC and assess MTC's
organizational structure in the framework of its evolving role; and (iv) determine staffing
requirements, taking into account the Borrower's civil service reform program; and (b)
provide technical advisory services in connection with this Part component\.
17\. Implementation: Most studies and technical assistance planned have been
carried out and additionally many more studies and TA were carried out also\. Only one
TA sub-component, i\.e\., planned earlier, viz\., TA for strengthening the civil aviation
directorate was not carried out because the Ministry took time to determine the structure
of that directorate\. As a whole, the following sub-components have been carried out:
(a) Seven studies: (i) MTC restructuring and strengthening study; (ii) study for the
development of a strategic plan; (iii) transport studies; (iv) port security study; (v)
review of development corridor initiatives; (vi) study of coal transport tariffs; and
(vii) Maputo port competitiveness study;
(b) Training of (i) Road Safety Administration staff from different provinces
including trip to South Africa; (ii) 10 MTC provincial directors in fundamentals
of transport economics and logistics; (iii) 15 staff members of MTC in transport
logistics (B \.Tech Degree) at central and provincial level by a South African
University; and (iv) 7 staff members of MTC, Public Transport Companies and
Municipalities in Public Transport Reform and Planning;
(c) TA involving: (i) initial support for 4 economists recruited by MTC; (ii) support
for an ICT specialist; (iii) support for the development of Corridors Special
Program through financing of one Director at central level, administrative and
financial staff for the Maputo, Limpopo, Beira and Nacala corridors as well as
computers, accessories and vehicles; and (iv) support for a project coordination
unit;
(d) Goods and services involving: (i) internet at the Ministry; (ii) \.computers; (iii) a
digital Private Automatic Branch Exchange (PABX); and (iv) vehicles\.
18\. The main impact of the above inputs can be recounted as follows:
32
(a) The restructuring of the Ministry's organization, which has been facilitated by the
different studies and the TA is still on-going and changes are still being made
(b) Increasing the knowledge base of the Ministry;
(c) Development of an initial strategic plan;
(d) Enhancement of the capacity of MTC staff and that of various other staff in
municipalities and provinces connected with transport;
(e) Computerization of MTC as well exposure to the internet and capacity to reach
data bases and specialist articles and transport research; and
(f) Overall increase in confidence\.
19\. Issues: Even though the implementation of the MTC's capacity strengthening
program has gone quite well and MTC is much better off in terms of its structure,
analytical capacity, and its knowledge base, there are some issues which answers are
either not clear or some more post-project work needs to be done\. These issues are
discussed below:
(a) The Organization structure still needs to be fully functional: While the
structure has been simplified, there is less evidence that it is fully functional\. For
example, the Economy and Investment directorate is not making comprehensive
analysis of the investment proposals of the various companies under its control\.
A second review is essential and working norms have still to be established;
(b) The Concession Monitoring Unit has not been established: The setting up of
the unit required considerable preparatory work and that has not been done\. The
World Bank has assisted the Government in making arrangements with the
Spanish Trust Fund to finance studies and TA to assist MTC set up this unit;
(c) Staffing levels are still not optimal: In spite of substantial staff training,
particularly in economics, more skill development is still required and some staff
may be redundant as well\. During supervision missions, MTC was urged to
review the human resource models employed by some other ministries and
introduce the same at MTC in order to have an effective human resource
management; and
(d) The Strategic Plan needs to be refined: A good start was made and a first
strategic plan had been developed\. However, the report needs to be refined to be
more pragmatic and to focus on core values which also need to be defined more
clearly\.
20\. Evaluation: Overall, based on the complexity of the task of enhancing the
capacity of MTC and despite some of the issues discussed above, the component is rated
satisfactory\.
Part E: Regulatory Framework:
21\. Design: This component is comprised of the following: (a) the carrying out of a
study to: (i) identify the scope, functions, and instruments for the economic regulatory
framework for the transport sector; (ii) recommend the sectoral coverage and
accountability relationships for the regulatory institution; (iii) define the staffing, internal
organization, operating costs and financing mechanisms for a new regulatory agency; and
33
(iv) prepare the necessary draft legislation; and (b) the acquisition of equipment and
provision of technical advisory services to (i) enable the launching of the Borrower's new
regulatory agency and the preparation of its staff in the carrying out of the agency's
functions; (ii) support the functioning of the agency for an initial period of 3-5 years; and
(iii) strengthen Instituto Nacional de Aviação Civil (INAC's) capabilities in the technical
regulation of the civil aviation subsector\.
22\. Implementation\. Only phase I study for the identification of the scope,
functions, and instrument for the regulatory framework was completed\. Studies to detail
the nature, structure, functions, regulations, modus operandi and financing of the
transport sector regulatory bodies were not completed\. Maritime legal and regulatory
support and technical assistance to implement the recommendations was also not
provided as the government could not decide on the final regulatory framework in spite
of a stakeholders' workshop and considerable internal thinking\. It is noted that
establishing a cost-effective and sustainable regulatory body is always difficult and since
the institutions were evolved and concession agreements had not been finalized, the
Ministry found it difficult to finalize a specific model for implementation\. In the
meantime, major regulations of the rail and port sectors are being done through the
concession agreements and no major problems are being encountered\.
23\. The main impact of the above inputs has been to sensitize to the various options
for regulating the transport sector and the costs and issues involved\. However, the main
tasks of actually establishing a regulatory framework have still to be completed\.
24\. Issues\. Even though there are understandable reasons for a final decision to not
have been made, the work of establishing an appropriate regulatory body has still not
been completed and the following issues would need to be addressed in the near future:
(a) Identifying a cost-effective regulatory framework: Even though
recommendations, have been made in the Phase I study more thinking has to go
into identifying a cost-effective regulatory framework\. This could involve the
consolidation of existing regulatory bodies and considerable reorganization and
staff rationalization\. However, before a follow-up consulting study is launched,
the Government has to develop some key options which could then be studied
intensively\. The Government also needs to study the experience of regulation of
similar systems in other countries;
(b) The Concession Monitoring Unit has not been established (also discussed
under MTC strengthening component): The setting up of the unit required
considerable preparatory work that has not been done\. The World Bank has made
arrangements with the Spanish Trust Fund to finance studies and TA to assist
MTC in set up this unit;
(c) Distinction needs to be made between policy and regulation\. A clear
distinction could enable the formation of a more appropriate regulatory body; and
(d) Compiling data on regulatory issues: Since concessions have been in operation
for some time, it will be a good idea to critically examine the impact of non-
regulation of the railway and port sectors in order to define the scope of any
future regulatory body\.
34
25\. Evaluation: Overall, based on the limited progress made but also realizing the
complexity of the task, the component is rated as moderately satisfactory\.
Part F: Tertiary Ports:
26\. Design: This component comprised the following: (a) assisting MTC in the
carrying out of a program of rehabilitation of the small ports of Angoche, Macuse,
Mocimboa da Praia, and Pebane; and (b) the provision of technical advisory services for:
(i) the supervision of the civil works in the mentioned four ports, and (ii) the preparation
of a study on the revitalization of the Inhambane Port\.
27\. Implementation: Economic and Social Study of the Inhambane Region and
Rehabilitation was completed but the rehabilitation of small ports was dropped
considering: (a) the decline in traffic after road rehabilitation; (b) an insufficient
economic justification; and (c) a lack of interest of the private sector to seek concession
of these ports\.
28\. The main impact of the above input was limited to a better understanding of the
Inhambane Region\.
29\. Issues: The component was dropped except for the above-mentioned study\.
30\. Evaluation: Since the component was dropped, it has not been evaluated
Part G: Rehabilitation of Passenger Jetties and Acquisition of new boats/Ferries
(New component introduced at restructuring)
(Estimated Bank financing US$14\.0 million, Actual Cost US$13\.36 million)
31\. Design: The component comprised: (a) the rehabilitation of key jetties used for
ferry services (passenger and minor cargo) in Maputo, Catembe, Inhambane, Maxixe,
Quelimane, and Recamba; and (b) the procurement of new ferries and other vessels for
water transport\. The objective was to strengthen Mozambique's fluvial transport\.
32\. Implementation: The following were implemented: (a) studies for (i) the
Maputo and Catembe jetties rehabilitation; (ii) the maritime means of transport; (iii) the
Quelimane- Recamba wharfs rehabilitation; (iv) the Transmaritima technical and
financial Audit; and (v) the environmental impact Assessment of Rehabilitation of Jetties;
(b) Technical assistance towards (i) the Inhambane Maxixe Rehabilitation Supervision;
and (ii) the Maputo Catembe Rehabilitation supervision; and (c) goods and services
towards: (i) the rehabilitation of the Inhambane and Maxixe Jetties; (ii) the rehabilitation
of the Maputo and Catembe Jetties; and (iii) the supply of 6 Ferries and Boats\.
33\. The main impact of the component has been: (a) the restructuring of the
Transmaritima; (b) the quality and economic use of resources; (c) the increased safety of
35
maritime means of transport; (d) the Improved access to safe fluvial and maritime
transport; and (e) the improved mobility for the poor
34\. Issues\. Even though the rehabilitation of jetties and procurement of boats and
jetties was completed, there are certain remaining issues requiring attention :
(a) The Quelimane - Recamba wharfs rehabilitation: This has still to be done
using Government resources;
(b) The Completion of the rehabilitation of the Inhambane Maxixe and the
Maputo Catembe jetties: Some works are left incomplete and will have to be
done using GOM finances;
(c) Procedures for the operation and the maintenance of boats and ferries; For
some years, it has not been possible to recover the operating and maintenance
costs from the revenues and firm financing arrangements need to be made based
on tariffs and efficiency norms;
(d) Impact on private small boats: There appears to be dissatisfaction among
private boat owners whose business has suffered as a result of the introduction of
these ferries and boats\. A plan needs to be devised to optimally utilize the
existing private capacity\.
35\. Evaluation: Overall, based on the progress made and the works remaining, the
component is rated satisfactory\.
36
Annex 3\. Economic and Financial Analysis
1\. The financial rate of return has been computed from the point of view of GOM
and CFM (as the ultimate owners of the assets)\. The FRR has been computed on the
basis of cost-benefit analysis of the "with" and "without" scenarios\. The assumptions of
investment and benefits are as follows:
2\. Investments under the "with" scenario: (a) The main investments under the
project by CFM/GOM comprised the investments using the proceeds of the Credit; (b)
GOM and CFM did not make any investments using their own funds as long as the
concessioning process was on and made some investments only after the concession in
Ressano Garcia line failed (about US$15 million spread over four years or so) but that
investment has been covered in the yearly cash flow and not logged as investment; (c)
investments made by the concessionaires have not been considered as the concessionaires
have been considered outside parties and as such the profits of the concessionaires have
also not been considered; (d) The actual investment in each of the Project years has been
considered as equal to the disbursement every year (as per the disbursement of Credit
funds) with the total investment amounting to SDR60\.6 million (US$86 million
equivalent) (details in Annex 1); and (e) interest on the investment has been ignored; and
(e) Investments under TA and the institutional components for MTC have not been
considered as their benefits have also not been considered, being long-term and not easily
quantifiable\.
3\. CFM's Cash Flow: The cash flow figures have been taken from CFM's audited
statements and the cash flow = direct revenues from all CFM's activities, concession fees
and leasing charges) minus (operating costs and investments made by CFM including
dredging of ports)\.
4\. Net cash Flow: the net cash flow for CFM and GOM for all scenarios = IDA
disbursements (investments) + Investments by GOM + CFM's cash flow + concession
fees to GOM
5\. The "With" scenario is based on the Project with investments through the IDA
Credit as indicated above;
6\. The "Without" scenario is always difficult to imagine\. The probabilities are:
(a) GOM is unable to take a decision on staff retrenchment and concessioning but based
on natural attrition and management effort, the railways and ports are maintained at the
2000 or slightly better level; (b) the increasing staff costs and low level of efficiency lead
to gradual decline of the railways and ports if some investments are made or more rapidly
if no investments are made; or (c) the investment is undertaken by CFM through a
commercial loan but with considerable delay\. A five-year delay is logical as deciding to
take a commercial loan in order to finance severance payments is difficult\. Scenario (c)
has the least damaging effect for CFM in the long-term as without going through with the
Project, the consequences would be even worse\.
37
7\. The results of the analysis are as follows:
8\. Cost-benefit analysis: Considering that CFM's increased cash flow is only as a
result of the Project, the NPV and the FRR amount to US$245 million and infinity
respectively\. The complete improvement in performance, however, cannot be considered
as due only to the Project alone but also resulting from investments by the
concessionaires and which have not been considered\. Considering only 30% of CFM's
cash flow, the NPV and the FRR amount to US35 million and 18% respectively\. It is
obvious that the actual results lie somewhere in between\.
9\. "With" and "Without" Analysis: The five year delay, the level of investment and
CFM's cash flow has been considered as similar when put in juxtaposition\. The NPV and
the FRR under this analysis amount to US$45 million and 23% respectively\.
10\. Additional assumptions used in the calculation of Economic Internal Rate of
Return (EIRR) are:
(a) In terms of economic analysis, both the GOM/CFM and the staff are
considered as part of the economy and any transfers of funds between
them are considered as transfers unless the balance constitutes a benefit or
cost\. As such the following adjustments have been made:
Loss of wages and salaries have been considered a cost to the economy
and offsets the benefit to CFM and are, therefore, subtracted from CFM's
financial cash flow where these had been taken as savings;
Investment in severance payments has been considered a cost (investment)
under the financial analysis but the part of severance payment paid as
bonus and supplement payments to staff have been added back as these
were not payments due to staff but considered as value additions by the
retrenched staff in alternative employments;
(b) 30% of the retrenched staff has been assumed as re-employed or self
employed (even though the actual re-employment or self employment has
been much larger\. By definition, the retrenched staff has been assumed to
have been contributing no value to the economy and the 30% staff
reemployed or self employed have added value, which has been
conservatively assessed as equivalent toUS$600/year\. The cumulative
number of staff retrenched every year is very accurately documented\.
(c) The benefit to consumers from the shift from road to rail has been ignored
for two reasons: (i) these benefits will arise much later in the time frame
of analysis and their discounted value will be much smaller; and (ii) given
the world-wide economic slump, it is difficult to project when the shift
will really take place and how much gain will be involved\.
11\. The Tables below project the financial and economic flows for the investment
over the period 2001 - 2020 based on the above assumptions\. The Tables also show the
Financial Internal rate of Return (FIRR), FNPV, EIRR, and ENPV for the investment\.
38
34
35
12\. The analysis shows the following results compared to the results estimated at the
beginning of the project:
IRR (%) NPV (Million US$)
Financial at ICR 23 45
Financial in PAD Not calculated (>12%) 158
Economic at ICR 24 51
Economic in PAD 52 357
13\. Financial values are less because of the reduction in railway traffic mainly
because of the down turn in the economy of all the countries, especially Zimbabwe and
the failure of the concession of the Maputo rail system\. Moreover, CFM's cash flow has
been limited to US$50 million per year in view of the recent experience of the world-
wide financial crisis, which at the time of project preparation could not be foreseen\. The
actual could be much more\.
14\. Economic values are less because of the reduced rail traffic in the first years of
the project which have a bigger impact on the financial NPV and also on the economic
NPV\. Economic values are also lower because the government responsibilities for
pension payments had to be financed using the Credit amount and benefits of the funds
saved by the Government have not been considered even though these payments have
been considered as investments\.
36
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Maryvonne Plessis- Sector Manager AFTTR Management
Fraissard
Yash Pal Kedia Team Leader/Railway Engineer AFTTR Railway
Uprety Kishor Sr\. Counsel LEGES Legal
Stephan Von Klaudy Principal Financial Specialist AFTTR Finance
Pedro Geraldes Principal Transport Economist AFTTR Transport
Sunita Kikeri Adviser GCMCG Private Sector
Louis Thompson Consultant LCSTR Transport
Philippe De Naurois Consultant MNSSD Finance
Francesco Sarno Consultant AFTEN
Cyprian Fisiy Director SDV Social Develop\.
Elizabeth Monowski Sr\. Environment Specialist
Ayse Kudat Lead Specialist
Brian Levy Adviser PRMPS
Anthony Hegart Chief Financial Management Officer OPCFM Finance
Serigne Omar Fye Environment Specialist AFTEN Environment
Carl Lundin Environment Specialist
Adelaide Barra Program Assistant FEUUR
Josiane Luchum Program Assistant AFTSP
Supervision/ICR
Sanjivi Rajasingham Sector Manager AFTTR Management
Anil Bhandari Senior Advisor/TTL AFTTR Engineering
Yash Pal Kedia Consultant/Railway Engineer AFTTR
Joao Tinga Financial Management AFTFM Finance
Ntombie Siwale Sr\. Program Assistant AFTTR Operations
Farida Khan Operations Analyst AFTTR Operations
Felly Kaboyo Operations Analyst AFTTR Operations
Fang Xu Economist AFTTR Economics
Jose Chembeze Transport Specialist AFTTR Transport
Jyoti Bisbey Operations Analyst FEUFG
Antonio Chamuco Procurement Specialist AFTPC Procurement
Maria Nhassengo- Procurement Assistant AFTPC Procurement
Massingue
Jonathan Nyamukapa Sr\. Financial Management Specialist AFTFM Finance
Elvis Langa Consultant AFTFM Finance
Paul Amos Consultant ECSSD Finance
Rakhi Basu Transport Specialist
Imogene Jensen Lead Transport Specialist EASIN
V\. Krishnakumar Manager AFTPC Procurement
Ajay Kumar Lead Transport Economics AFTTR
Robert Robelus Consultant AFTWR Environment
George Tharakan Lead Transport Specialist SASDT
Kavita Sethi Sr\. Transport Economist AFTTR
37
Tesfaalem Gebreiyesus Lead Procurement Specialist SARPS
Lucien Aegerter Junior Professional Officer AFTTR Private Sector
Slaheddine Ben Halima Consultant AFTPC Procurement
(b) Staff Time and Cost
Stage of Project cycle Staff time & cost (Bank Budget only)
No\. of Staff weeks US$ (including travel
and consultant costs)
Lending
FY98 127,873
FY99 143,039
FY00
Total 270,912
Supervision/ICR
FY00 20\.54 98,235
FY01 15\.74 89,818
FY02 18\.19 76,983
FY03 12\.69 97,791
FY04 12\.19 63,312
FY05 15\.91 87,043
FY06 16\.75 101,276
FY07 16\.58 121,387
FY08 15\.37 80,022
FY09 32\.65 218,184
FY10 9\.25 89,315
Total 185\.86 1,123,364
Grand Total 185\.86 1,394,276
38
Annex 5\. Beneficiary Survey Results
No formal beneficiary surveys were conducted\. However, the ICR team interviewed
some retrenched CFM staff and visited the Inhambane ferry service and the response
from the staff and the passengers was positive\. The following pictures taken by the ICR
team illustrate what has changed in the Inhambane ferry service due to the project\.
Picture One: The new boat operating at Inhambane
Picture Two: Boats operating prior to the project
39
Picture Three: Inside the new boat
Picture Four: New Jetty
40
Annex 6\. Stakeholder Workshop Report and Results
No stakeholder workshops were held\. However, specific workshops were held to discuss
consultants' reports on regulation, development corridors, and transport study\.
41
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
1\. The Government has not submitted its own full ICR by the time of the ICR
review meeting\. A partial ICR prepared by one of the implementing agencies, CFM, was
sent to the Bank\. In this partial ICR, CFM has pointed to what it considers are four
misconceptions regarding the railway and port concessions\. The CFM disagrees that: (a)
the public sector has no role to play in the provision of ports and railway services; (b) the
Master Lease Concession in Port Business is the best approach; (c) Advisers are
necessary to structure a good deal; and (d) Tendering is the best approach to select a
partner in concession\.
2\. Although CFM has not explicitly pointed at the World Bank as harboring these
misconceptions it seems that this is what has been implied\. However, the Project was
based on the GOM's policy that was articulated by the Minister of Transport and
Communications (Mozambique) in many speeches in 1998-2000 including in a donors'
conference\. The fact is that these issues invoke intense discussion all around the world
including at the World Bank with supporters on either side\.
3\. With regard to the specific misconceptions cited by CFM, it is noted that:
(a) even before RPRP became effective, CFM had on its own concessioned at
least five terminals in the port of Maputo as well two key terminals in the port of
Beira and RPRP only supported the GOM and CFM in continuing the process in a
more comprehensive way\. Moreover CFM has continued to have a major role in
all concessions (from a 31 percent to a 49 percent share in equity) and the World
Bank has supported the GOM's desire to have significant shares in the
concessions;
(b) The Bank did suggest that a master concession for the port of Maputo would
lead to better performance but the final decision has been a joint decision made
with GoM and CFM\. In any case, the master concession is doing well;
(c) A possible implication of CFM's statement is that the concessions finalized by
CFM without advisers have been more successful\. In this regard, two
clarifications are in order: (i) CFM has indeed acquired sufficient expertise and
except in the case of the first concession, the Bank has not insisted on having
advisors for processing of the transactions; and (ii) at CFM's request, the Bank
has financed an advisor to CFM who has been regularly advising CFM in all
concessions;
(d) Tendering is considered everywhere as the best strategy to achieve optimum
results\. CFM has a different point of view in which case it will then be better for
CFM to undertake a comparative evaluation on the various methods of selecting a
concessionaire in order to reach a definitive conclusion\.
42
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
None\.
43
Annex 9\. List of Supporting Documents
Project Appraisal Document (June 15, 2001)\.
Implementation Status and Results Reports (ISR)\.
Development Credit Agreement (DCA) and Project Agreements with BPE and NEPA\.
Aide Memoires\.
Various memos and communications listed in project files and IRIS\.
Data presented by CFM and MTC
Copies of study reports
44
Annex 10\. Additional Supporting Data
None\.
45 | REVIEW |
P113844 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR00004984
IMPLEMENTATION COMPLETION AND RESULTS REPORT
IBRD 81620-PH
ON A
LOAN
IN THE AMOUNT OF US$275 MILLION
TO THE
LAND BANK OF THE PHILIPPINES
WITH THE GUARANTEE OF THE REPUBLIC OF THE PHILIPPINES
FOR THE
METRO MANILA WASTEWATER MANAGEMENT PROJECT
December 23, 2020
Water Global Practice
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Exchange Rate Effective June 30, 2020
Currency Unit = Philippine Peso
P49\.896 = US$1
US$1 = P0\.02
FISCAL YEAR
January 1 â December 31
Regional Vice President: Victoria Kwakwa
Country Director: Ndiamé Diop
Regional Director: Benoit Bosquet
Practice Manager: Sudipto Sarkar
Task Team Leader(s): Christopher Casuga Ancheta
ICR Main Contributor: Marilyn Tolosa Martinez
ABBREVIATIONS AND ACRONYMS
BNR Biological Nutrient Removal
BOD Biological Oxygen Demand
CAS Country Assistance Strategy
CPF Country Partnership Framework
DENR Department of Environment and Natural Resources
ERR Economic Rate of Return
ESMP Environmental and Social Management Plan
ESSF Environmental and Social Safeguards Framework
FY Fiscal Year
GDP Gross Domestic Product
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion and Results Report
ISR Implementation Status and Results Report
LBP Land Bank of the Philippines
LGU Local Government Unit
MBSDMP Manila Bay Sustainable Development Master Plan
M&E Monitoring and Evaluation
mg/L Milligrams per liter
MSSP1 Manila Sanitation and Sewerage Project
MSSP2 Manila Second Sewerage Project
MTSP Manila Third Sewerage Project
MWCI Manila Water Company, Inc\.
MWMP Metro Manila Wastewater Management Project
MWSS Metropolitan Works and Sewerage System
NEDA National Economic and Development Authority
OP Operational Policy
PAD Project Appraisal Document
PCR Project Completion Report
PDP Philippine Development Plan
PDO Project Development Objective
PPP Public-Private Partnership
SAPR Semi-annual Progress Report
STP Sewage Treatment Plant
TABLE OF CONTENTS
DATA SHEET \. 1
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 5
A\. CONTEXT AT APPRAISAL \.5
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \.9
II\. OUTCOME \. 11
A\. RELEVANCE OF PDOs \. 11
B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 12
C\. EFFICIENCY \. 19
D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 20
E\. OTHER OUTCOMES AND IMPACTS \. 20
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 21
A\. KEY FACTORS DURING PREPARATION \. 21
B\. KEY FACTORS DURING IMPLEMENTATION \. 23
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 25
A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 25
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 27
C\. BANK PERFORMANCE \. 29
D\. RISK TO DEVELOPMENT OUTCOME \. 30
V\. LESSONS AND RECOMMENDATIONS \. 30
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 32
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 39
ANNEX 3\. PROJECT COST BY COMPONENT \. 41
ANNEX 4\. EFFICIENCY ANALYSIS \. 42
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 46
ANNEX 6\. SUPPORTING DOCUMENTS \. 49
APPENDIX 1: STATUS OF MWMP INVESTMENT OUTCOMES AND IMPACTS \. 50
APPENDIX 2: LIST OF SUBPROJECTS PENDING COMPLETION AS OF OCTOBER 30, 2020 \. 52
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
P113844 Metro Manila Wastewater Management Project
Country Financing Instrument
Philippines Investment Project Financing
Original EA Category Revised EA Category
Financial Intermediary Assessment (F) Financial Intermediary Assessment (F)
Organizations
Borrower Implementing Agency
Maynilad Water Services, Inc\. (Maynilad), Manila Water
Land Bank of the Philippines
Company, Inc\. (MWCI)
Project Development Objective (PDO)
Original PDO
To improve wastewater services in selected sub-catchments of Metro Manila and surrounding areas\.
Page 1 of 53
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
World Bank Financing
275,000,000 275,000,000 275,000,000
IBRD-81620
Total 275,000,000 275,000,000 275,000,000
Non-World Bank Financing
0 0 0
Borrower/Recipient 96,700,000 228,000,000 142,114,000
Total 96,700,000 228,000,000 142,114,000
Total Project Cost 371,700,000 503,000,000 417,114,000
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing
15-May-2012 19-Oct-2012 30-Jan-2014 30-Jun-2017 30-Jun-2020
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
14-Jun-2017 125\.06 Change in Loan Closing Date(s)
27-Jun-2019 201\.61 Change in Loan Closing Date(s)
Change in Disbursements Arrangements
Change in Implementation Schedule
KEY RATINGS
Outcome Bank Performance M&E Quality
Satisfactory Satisfactory Substantial
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
01 03-Oct-2012 Satisfactory Satisfactory 0
02 25-May-2013 Satisfactory Satisfactory 0
Page 2 of 53
03 29-Dec-2013 Satisfactory Satisfactory 2\.00
04 07-Jul-2014 Satisfactory Satisfactory 8\.65
05 17-Dec-2014 Satisfactory Moderately Satisfactory 14\.82
06 07-Jun-2015 Satisfactory Moderately Satisfactory 27\.62
07 08-Nov-2015 Satisfactory Moderately Satisfactory 53\.96
08 03-Jun-2016 Moderately Satisfactory Moderately Satisfactory 79\.81
09 15-Dec-2016 Moderately Satisfactory Moderately Satisfactory 107\.59
10 23-Jun-2017 Moderately Satisfactory Moderately Satisfactory 128\.04
11 08-Dec-2017 Moderately Satisfactory Moderately Satisfactory 143\.51
12 13-Jun-2018 Moderately Satisfactory Moderately Satisfactory 175\.14
Moderately Moderately
13 11-Dec-2018 179\.90
Unsatisfactory Unsatisfactory
Moderately Moderately
14 20-Feb-2019 188\.08
Unsatisfactory Unsatisfactory
15 17-Sep-2019 Moderately Satisfactory Moderately Satisfactory 241\.49
16 20-Dec-2019 Moderately Satisfactory Moderately Satisfactory 245\.44
Moderately
17 28-Jun-2020 Moderately Satisfactory 275\.00
Unsatisfactory
SECTORS AND THEMES
Sectors
Major Sector/Sector (%)
Water, Sanitation and Waste Management 100
Sanitation 100
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Private Sector Development 10
Public Private Partnerships 10
Page 3 of 53
Urban and Rural Development 67
Urban Development 67
Urban Infrastructure and Service Delivery 34
Services and Housing for the Poor 33
Environment and Natural Resource Management 33
Environmental Health and Pollution Management 33
Air quality management 11
Water Pollution 11
Soil Pollution 11
ADM STAFF
Role At Approval At ICR
Regional Vice President: Pamela Cox Victoria Kwakwa
Country Director: Motoo Konishi Ndiame Diop
Director: John A\. Roome Benoit Bosquet
Practice Manager: Mark C\. Woodward Sudipto Sarkar
Task Team Leader(s): Sudipto Sarkar Christopher Casuga Ancheta
ICR Contributing Author: Marilyn Tolosa Martinez
Page 4 of 53
The World Bank
Metro Manila Wastewater Management Project (P113844)
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A\. CONTEXT AT APPRAISAL
Country Context
1\. At the time of appraisal of the Metro Manila Wastewater Management Project (MWMP, the âprojectâ), the
Philippines was experiencing strong economic growth, propelled mainly by Metro Manila, which accounted for one-
third of the national economic output and 13% of the countryâs population1, with some 15 million people living in the
expanded metropolitan region\. Economic growth was reported at 7% and was expected to remain strong due to
government efforts to strengthen the macroeconomic environment and enhance investor confidence by reducing the
costs of doing business and encouraging public-private partnerships (PPPs) in the delivery of infrastructure\. Major
economic activities were largely concentrated in Metro Manila, the countryâs national capital region\. Despite the
economic growth, Metro Manila was unable to keep pace with the delivery of basic infrastructure services, including
sewerage and sanitation services\.
Sector Context
2\. The existing PPP model for the delivery of water services in Metro Manila worked well and was extended to
sanitation\. The Metropolitan Waterworks and Sewerage System (MWSS) is responsible for water, sewerage, and
sanitation services in Metro Manila and the surrounding provinces of Rizal and Cavite\. Since 1997, water and
wastewater service delivery has been handled by two private concessionaires on behalf of MWSS\. Manila Water
Company, Incorporated (MWCI) covers the east zone, while Maynilad Water Services, Incorporated (Maynilad) serves
the west zone of the metropolis\. Concession agreements were initially signed with each concessionaire for a period of
25 years, until 2022\. The concession term was then extended by 15 years, until 2037\. MWCI and Maynilad initially
focused on water supply services\. MWSS put in place a functional system for regulation and management to ensure
quality of services\. A tariff structure based on full cost recovery (with allowable cross-subsidy between water and
wastewater services) was also established at the beginning of the concessions\. Moreover, a monitoring system covering
key performance indicators in water, sewerage and sanitation, customer service, and business efficiency was
established and has been used to track the performance of the concessionaires against agreed service standards\.
3\. Wastewater management service coverage through separate sewers was low\. Sewerage coverage at the time
of appraisal was 16% in the east zone and 8% in the west zone\. Most parts of Metro Manila only had combined sewer
systems, which were used to collect wastewater from houses and from surface runoff\. Wastewater from these drains
was not treated before it was discharged into the different water bodies in the area\. In terms of sanitation, 85% of
households used about 2\.2 million private septic tanks\. The operational status and treatment efficiency of these septic
tanks varied and the latter were not regularly desludged, resulting in overflows that polluted groundwater and created
environmental concerns\.
1 Philippine Statistics Authority\. 2010\. Census on Population and Housing\.
Page 5 of 53
The World Bank
Metro Manila Wastewater Management Project (P113844)
4\. Provision of wastewater management services had been seriously neglected in the past decades, resulting in
high levels of pollution of Metro Manilaâs water bodies, including Manila Bay\.2 The average annual investment in
water supply and sanitation was estimated at 1\.5% of Philippine Gross Domestic Product (GDP) in 1999 and, of this
amount, sanitation investments accounted for only 3%\.3 Underinvestment in wastewater management resulted in
extremely high levels of domestic pollution of Metro Manilaâs water bodies, including Manila Bay\. Pollution loads in
these water bodies were high, leading to detrimental effects on the environment, public health, tourism, and fisheries\.
Resulting annual economic losses were estimated to be around 1\.5% of the countryâs GDP in 2005\.4 The impact was
deemed larger in Metro Manila due to its high population density\.
5\. Provision of wastewater management services was declared a national priority\. In 2008, the Philippine
Supreme Court passed a decision mandating concerned national government agencies (including MWSS), local
government units (LGUs), and other state entities to clean up, rehabilitate, and restore the water quality of Manila Bay
to ultimately reach a level that is fit for contact recreation\.5 In compliance with the Supreme Court decision and as part
of the obligations under the extension of the concession term, MWCI and Maynilad were mandated to achieve 100%
wastewater service coverage by 2037\. The expansion of service coverage would require a significant amount of financing
and would take time to implement\. The government strategy was to carry out short- and long-term measures, including:
(a) improving operations of septic tanks through regular septage collection; (b) treating wastewater before discharging
it into Metro Manilaâs water bodies; and (c) putting in place separate sewer systems in the long run\. MWCI planned to
increase sewerage service coverage from 16% in 2010 to 45% in 2016, 63% in 2021, and 100% by 2037\. Maynilad on the
other hand, aimed to increase sewerage service coverage from 8% in 2010 to 31% in 2016, 66% in 2021, and 100% in
2037\. The concessionaires prepared their business plans in 2008 with investments totaling US$3\.5 billion\. The MWMP
was deemed a key instrument for expediting the achievement of wastewater services targets\.
Rationale for World Bank Support
6\. The World Bank has a long history of support in the Philippine water and sanitation sector, spanning six
decades\. The World Bankâs support was initially in water supply and distribution, starting in 1964\. Its earliest engagement
in wastewater management started in the 1980s with the Manila Sanitation and Sewerage Project (MSSP1, 1980), which
aimed to improve environmental sanitation in the poor and densely populated areas of Metro Manila as well as to
develop an institutional strategy for implementation\. MSSP1 was succeeded by the Manila Second Sewerage Project
(MSSP2, 1998) and the Manila Third Sewerage Project (MTSP, 2006)\. Although these investments had mixed success,
they provided important lessons and experience which the MWMP, the fourth of such of investment projects supported
by the Bank, built on\.6 At the time of appraisal, MWMP was well-aligned with the Bank Groupâs FY2010-2013 Country
Assistance Strategy (CAS, Report No\. 47916-PH) objective of increasing access to better public services for the poor\. The
2 Metro Manila is bounded by Laguna Lake to the east and Manila Bay to the west\. Laguna Lake is connected to Manila Bay through the Pasig
River, which provides an important two-way hydraulic flow between the two water bodies\. Fresh water draining from Laguna Lake flows through
the Pasig River and eventually to Manila Bay\. Saline water from Manila Bay also enters the Pasig River and Laguna Lake\. These three major water
bodies, along with 31 tributaries in Metro Manila, form the Laguna Lake-Manila Bay watershed system\.
3 Rodriguez UE, Jamora N, Hutton G\. 2008\. Economic Impacts of Sanitation in the Philippines\. World Bank, Water and Sanitation Program\.
4 Ibid\.
5 Contact recreation is defined as ârecreational activities involving a significant risk of ingestion of water, including wading by children, swimming,
water skiing, diving, and surfing\.â
6 See Project Appraisal Document (Report No: 59675-PH), paragraph 23 and annex 2, and section III\.A\. in this Implementation
Completion and Results Report (ICR)\.
Page 6 of 53
The World Bank
Metro Manila Wastewater Management Project (P113844)
project was expected to benefit citizens of Metro Manila as improvements in sanitation would improve the environment
and reduce health risks for the citizens\. The poor would also benefit from the reduction of untreated water being
discharged into the water bodies along which they often reside\. In addition, the Bank has been involved in initiatives to
improve Metro Manilaâs urban conditions\. MWMP formed part of its overall program of support for the metropolitan
region, which included flood management, disaster-risk management, and slum upgrading\.
7\. The lending instrument was an Investment Project Financing, designed to support capital-intensive
investments in wastewater management services\. The financing arrangements included the Bank as lender, the
Government of the Philippines as guarantor of the loan, the Land Bank of the Philippines (LBP, a government financing
institution) as borrower and financial intermediary, and MWCI and Maynilad as sub-borrowers\. The MWMP was
designed following the implementation arrangements under its predecessor project, MTSP\.
Theory of Change (Results Chain)7
8\. The project intended to improve wastewater services in selected sub-catchments of Metro Manila and
surrounding areas\. This would be achieved by supporting MWCI and Maynilad in increasing their capacity in wastewater
collection and treatment as well as in septage management\.
9\. Project activities included (a) construction of North and South Pasig Sewage Treatment Plant (STP) and
associated conveyance systems under MWCI; (b) construction of new STPs (Pasay, Valenzuela, Talayan, Muntinlupa) with
combined capacity of 187,500 cubic meters per day and associated conveyance systems under Maynilad; (c)
rehabilitation of Ayala-Alabang STP with treatment capacity of 10,000 cubic meters per day under Maynilad; (d)
construction of South Septage Treatment Plant with treatment capacity of 250 cubic meters per day under Maynilad;
and (e) carrying out other wastewater investments agreed among the Bank, Guarantor, Borrower, and the
concessionaires\. Consultancy assignments to support the infrastructure investments were also eligible\. These included
the conduct of technical studies and designs, procurement support, construction supervision, preparation of
environmental and social safeguards documents, preparation of project monitoring reports and audit reports, and public
awareness campaigns to inform the citizens about the project and benefits of better wastewater services\. The project
also supported land acquisition and resettlement activities, the costs of which were borne by the concessionaires as part
of their equity\.
10\. The expected outputs were: (a) construction of five new8 STPs with combined treatment capacity of 352,500
cubic meters per day; (b) rehabilitation of Ayala-Alabang STP with treatment capacity of 10,000 cubic meters per day;
(c) construction of the South Septage Treatment Plant with treatment capacity of 250 cubic meters per day; and (d) a
minimum of 65 kilometers of conveyance system\. Once operational, these investments would allow MWCI and Maynilad
to improve wastewater services in selected sub-catchments in Metro Manila\. The volume of wastewater treated before
disposal into different water bodies in Metro Manila would increase\. Water quality measured in terms of Biological
7 There was no Theory of Change (TOC) in the Project Appraisal Document Report (No: 59675-PH)\. The TOC for this ICR was derived from the project
preparation documents\.
8 At appraisal, the project intended to construct Muntinlupa STP with treatment capacity of 66,000 cubic meters per day\. Due to limited availability
of land in the city itself, two other nearby STPs were constructed nearby during implementation: Cupang STP (46,000 cubic meters) and Tunasan
(20,000 cubic meters)\. The planned treatment capacity of 66,000 cubic meters remained the same\.
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Oxygen Demand (BOD)9 reduction in collected wastewater would improve\. Access to wastewater services, measured in
terms of population equivalent benefiting from the project, would also increase\.
11\. The project assumed the following: (a) relevant national government agencies and LGUs would provide sufficient
policy and political support to the project; (b) MWCI, Maynilad, and LBP would provide adequate staffing all throughout
project implementation; (c) land acquisition would be completed within two years; (d) MWCI and Maynilad would
continue their public consultations and public awareness campaigns on the benefits of wastewater management
services; and (e) contractors would have sufficient technical and financial capacity to implement the project\. The theory
of change is presented in figure 1\.
Figure 1: Theory of Change
ACTIVITIES OUTPUTS OUTCOMES
SHORT-TERM INTERMEDIATE LONG-TERM
ï MWCI\. Construction of North and
ï MWCI\. North and South
South Pasig STP (treatment capacity
Pasig STP (treatment
of 165,000 cubic meters per day) and
capacity of 165,000 cubic
associated conveyance system
meters per day) and
ï Carrying out of other wastewater
conveyance system
investments agreed between the
constructed
Bank, Guarantor, Borrower and
ï University of the Philippines
MWCI
and Marikina conveyance
ï University of the Philippines and
systems constructed
Marikina conveyance systems
ï PDO:
ï Maynilad\. New STPs Improved
ï Maynilad\. Construction of new STPs
constructed with wastewater
(combined capacity of 187,500 cubic
combined capacity of services in
meters per day) and conveyance
187,500 cubic meters per
systems: Pasay, Valenzuela, Talayan, selected sub-
day (Muntinlupa, Pasay
Muntinlupa catchments
ï Rehabilitation of Ayala- Alabang STP
Valenzuela and Talayan) ï Improved
ï Conveyance systems in Metro
with treatment capacity of 10,000 public health
constructed Manila
cubic meters per day ï Increased
ï Ayala- Alabang STP o Reduced
ï Construction of South septage property
rehabilitated Increased BOD in
treatment plant with treatment capacity values
ï South septage treatment wastewater collected
of 250 cubic meters per day
plant constructed with ï Reduced
ï Carrying out of other wastewater treatment wastewater
treatment capacity of 250 domestic
investments wastewater investments capacity o Population
cubic meters per day pollution in
agreed between the Bank, Guarantor, equivalent
Borrower and Maynilad Manila Bay
ï Technical studies and
in the
designs, safeguards catchment
ï Consultancy services (MWCI and area that
documents and monitoring
Maynilad) for technical studies and
reports prepared would
designs, procurement support,
construction supervision, preparation of
benefit
ï Public awareness campaigns from the
environmental and social safeguards
conducted (through regular project
documents, preparation of project
programs of MWCI and
monitoring reports and audit reports,
Maynilad)
and public awareness campaigns
Note: The University of the Philippines and Marikina conveyance systems were not planned at appraisal, but were included during implementation\.
9 BOD measures the approximate quantity of dissolved oxygen consumed by bacteria as they decompose organic matter\. It is the most commonly
used parameter to establish concentration of organic matter in wastewater\.
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Project Development Objectives (PDOs)
12\. The PDO was to improve wastewater services in selected sub-catchments of Metro Manila and surrounding
areas\. The PDO statement was consistently written in the Project Appraisal Document (PAD) (Report Number 59675-PH)
and Loan Agreement (Ln 8162-PH)\.
Key Expected Outcomes and Outcome Indicators
13\. Achievement of the PDO was to be measured in terms of (a) Reduction of BOD in collected wastewater
(tons/year); and (b) Population equivalent in the catchment area that would benefit from the project (number, in
millions)\.
Components
14\. Component 1: Investments in Wastewater Services by MWCI\. This component supported MWCI to carry out
investments in wastewater collection and treatment in the east zone, including (a) construction of an STP and associated
conveyance system covering North and South Pasig, and (b) construction of other wastewater management investment
subprojects agreed upon among the Bank, Guarantor, Borrower, and MWCI\.
15\. Component 2: Investments in Wastewater Services by Maynilad\. This component supported Maynilad to carry
out investments in wastewater collection and treatment in the west zone, including: (a) construction of STPs and
associated wastewater conveyance systems in Talayan (Quezon City), Pasay City, Muntinlupa City, and Valenzuela City;
(b) rehabilitation of Ayala-Alabang STP (Muntinlupa City); (c) construction of septage treatment plant in the southern
part of Metro Manila; and (d) other wastewater management investment subprojects agreed upon among the Bank,
Guarantor, Borrower, and Maynilad\.
Table 1: Project Cost and Financing, US$ million
Estimates at Appraisal Actuals at ICR Stage
Financing Financing
Total Project Total
Cost IBRD Equity* Project Cost IBRD Equity
Component 1 (MWCI) 193\.42 137\.50 55\.92 239\.40 137\.50 101\.90
Component 2 (Maynilad) 178\.33 137\.50 40\.83 263\.60 137\.50 126\.10
Total 371\.75 275\.00 96\.75 503\.00** 275\.00 228\.00***
*Equity refers to the financial contribution of MWCI and Maynilad to the project\.
**The total project cost is US$503,000,000\. Actual disbursement from IBRD financing and equity is US$417,114,000\. The
difference accounts for the amount needed to finish ongoing works\.
***The Datasheet only reflected actual disbursement of equity as of the loan closing date in the amount of
US$142,114,000\.
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION
Revised PDOs and Outcome Targets
16\. No changes\.
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Revised PDO Indicators
17\. No changes\.
Revised Components
18\. There were no changes in the broader scope of the components\. However, there were adjustments made due
to the following: (a) integration of Biological Nutrient Removal (BNR) in two STPs under Maynilad; (b) replacement of
North and South Pasig conveyance system subprojects with University of the Philippines and Marikina conveyance
system subprojects under MWCI; (c) changes in subproject scope; and (d) some cost increases\. (See section III\.BâKey
Factors during Implementation\.)
Other Changes
19\. A Level II restructuring was approved on June 14, 2017, to extend the project closing date from June 30, 2017
to June 30, 2019\. Another Level II restructuring was approved on June 27, 2019\. The project changes included in the
second restructuring were: (a) extension of the loan closing date from June 30, 2019 to June 30, 2020; (b) revision of
disbursement estimates; and (c) revision of implementation schedule\.
Rationale for Changes and Their Implication on the Original Theory of Change
20\. Two types of changes were introduced under the project\. The first type included the changes that did not
require formal project restructuring (see paragraph 18), as the Loan Agreement provided flexibility to include additional
wastewater investments under the project as long as these were agreed among the Bank, Guarantor, Borrower, and
concessionaires and complied with the projectâs eligibility criteria as defined in the PAD\. These changes were:
a\. Integration of BNR process in two STPs under Maynilad\. This was required to comply with a new and tighter
government regulation on effluent quality that was issued in 2016\.
b\. Replacement of North and South Pasig conveyance system subprojects with University of the Philippines
and Marikina conveyance system subprojects under MWCI\. The implementation of four North and South
Pasig conveyance system subprojects, with a total length of 20\.59 kilometers, was stalled\. The LGU tightened
the issuance of permits for construction due to the unprecedented traffic congestion at the project sites\. In
2017, MWCI requested to replace these stalled subprojects with the University of the Philippines and
Marikina conveyance system subprojects with a total length of 39\.53 kilometers\. These subprojects were
part of the Metro Manila Sewerage and Sanitation Master Plan and were planned to serve portions of
Marikina River and Juan River sub-catchments\. These were also identified as part of MWCIâs business plan\.
As such, these subprojects would help MWCI to fulfill its service obligation to expand wastewater coverage
and comply with the Manila Bay clean-up directive\. These wastewater investments were also aligned with
the PDO\. At the time of the request, the University of the Philippines STP was already operating while the
Marikina STP was under commissioning\. Two Marikina conveyance system subprojects were completed and
one was under ongoing construction\. In addition, four University of the Philippines conveyance system
subprojects were in various stages of implementation: for budget approval (1), under preparation (1), under
procurement (1), and ongoing construction (1)\. By the time the substitution was approved, the Marikina
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conveyance system subprojects were completed and the University of the Philippines conveyance system
subprojects were under construction\.10 The substitution did not require any formal restructuring as the Loan
Agreement allowed financing of these additional investments\. There was no reduction in the scope of the
North and South Pasig sewerage system\. IBRD financed a total of 44\.41 kilometers of the said conveyance
system\. The remaining segment, with a length of 20\.59 kilometers, was to be financed through MWCI equity\.
MWCI was to continue the construction of this segment as part of its service obligation under the Concession
Agreement\. The substitution only entailed a change in financing source from IBRD to MWCI equity\.
c\. Changes in subproject scope\. These changes included the implementation of adaptation measures necessary
to address soft soil conditions as well as flooding and earthquake risks in the project sites, and the shift from
conventional to trenchless pipelaying methodology to mitigate further delays resulting from right-of-way
issues, difficulties in securing lots for pump stations, difficulties in excavation permit acquisition, and traffic
disruption\.
d\. Cost increases as a result of extending subproject schedules due to delays in land acquisition and/or delays
in obtaining construction permits\. Although the exact amount of the cost increases under the project-
supported investments is not known due to aggregation in the concessionairesâ accounting reports, it is not
deemed significant\.
21\. The second type of changes included those that were formally approved through project restructuring\. These
were the first loan extension of two years to complete ongoing subprojects and the second loan extension of one year
to adjust the disbursement estimates and implementation schedule in order to complete and operationalize the STPs
and the sewer networks in line with the PDO\. These project changes did not alter the original theory of change\.
II\. OUTCOME
A\. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
Rating: High
22\. The PDO is highly relevant to the countryâs development priorities\. It supports government efforts to achieve
the Philippine national vision, Ambisyon Natin 2040, which embodies the collective long-term ambition of the Filipino
people to build a prosperous, predominantly middle-class society where no one is poor\. Ambisyon Natin 2040 was
approved by the President of the Republic of the Philippines in October 2016\. It specifically aimed to increase per-capita
incomes three-fold by 2040, end poverty, and promote long and healthy life for all Filipinos\. Ambisyon Natin 2040
guided the development of the Philippine Development Plan (PDP) 2017-2022 and the Manila Bay Sustainable
Development Master Plan (MBSDMP) 2040\. The PDP emphasized the need to rehabilitate and restore degraded natural
resources and protect fragile ecosystems\. In addition, the MBSDMP highlighted the need to reduce pollution load in
Manila Bay by increasing investments in infrastructure for wastewater collection and treatment, enforcing stricter
10 Wastewater conveyed by the Marikina and University of the Philippines conveyance systems is delivered to the existing Marikina STP and
University of the Philippines STP\.
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pollution laws, and increasing public awareness of the impacts of untreated wastewater on public health and the
environment\. The ultimate aim is to improve Manila Bayâs ecological state so as to be able to provide environmental
goods and services and improve the health and socio-economic status of the communities around the Manila Bay area\.
The project also supported the implementation of the Clean Water Act of 2004, which aims to protect the countryâs
water bodies from domestic, commercial, agricultural, and industrial pollution\.
23\. The project supported the overall plan for increasing wastewater coverage in Metro Manila with the goal of
cleaning up Manila Bay\. At appraisal, Metro Manila was generating about two million cubic meters of wastewater per
day\. Only 17% was treated prior to being discharged into different water bodies\. The project was in line with the overall
obligations of MWCI and Maynilad to increase wastewater treatment capacity for Metro Manila, and was likewise
aligned with the Supreme Court ruling to clean up Manila Bay\. The investments under the project were fully integrated
in the business plans of MWCI and Maynilad, which were regulated by MWSS\.
24\. The PDO remains aligned with the current Country Partnership Framework of the World Bank Group for the
Philippines (CPF, Report No\. 24605-PH for FY2019-2023)\. The project supports the CPF focus area on Competitiveness
and Economic Opportunity for Job Creation, which addresses ways to unlock key constraints and broaden opportunities
for good jobs, livelihoods, and private and financial sector development\. The CPF identified the lack of basic
infrastructure in solid waste and wastewater management as one key constraint that has been restricting the countryâs
ability to attract tourists and private investments, and that has, in turn, been limiting opportunities for businesses,
livelihoods, and employment\. Under this focus area of engagement, the Bank is helping the Government to improve the
efficiency of infrastructure services in selected areas to stimulate local economic growth and job creation (objective 6)\.
25\. The project also fully supported the Corporate Commitment of the World Bank Group on Maximizing Finance
for Development\. The project was a public-private operation\. Financing came from public and commercial sources, but
operation was fully private\. The project demonstrated an innovative model that facilitated operational efficiency
through the private sector and applied an economic approach toward investments through the tariff and regulatory
systems already in place\. (see also section II\.E\.â Mobilizing Private Sector Financing\.)
B\. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
Rating: Substantial
26\. The PDO was to improve wastewater services in sub-catchments of Metro Manila and surrounding areas\.
Improvement in wastewater services was measured in terms of water quality (PDO indicator 1: reduction of BOD in
collected wastewater) and population served (PDO indicator 2: population equivalent in the catchment areas that would
benefit from the project)\. By loan closing, the project substantially achieved its PDO as measured by the project
indicators and additional supporting evidence\.
PDO indicator 1: Reduction of BOD in collected wastewater
(Baseline: 0; Target: 3,556 tons of BOD; Achieved: 6,403 tons of BOD)
27\. The project exceeded the PDO target on reduction of BOD in collected wastewater\. The rehabilitation of Ayala-
Alabang STP and the construction of Talayan STP were the first two wastewater investments that were completed by
the project\. In 2015, these STPs treated a combined volume of 3,663,964 cubic meters of wastewater and removed a
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total of 335 tons of BOD\. The volume of wastewater treated and BOD removed have increased steadily with the
continuous operation of these STPs and with the completion of additional wastewater investments: South Septage
Treatment Plant (2015), Pasay STP (2018), Marikina conveyance system (2018), University of the Philippines conveyance
system (2019), and North and South Pasig STP (2019)\. By October 30, 2020, these completed wastewater investments
resulted in cumulative treatment of 68\.4 cubic meters11 of wastewater and removal of a total of 6,403 tons of BOD12
(see table 2)\. The project surpassed the target of 3,556 tons of BOD by 80%\. The target was exceeded, even though
three STPs13 were not completed by loan closing, as the STPs that were completed in earlier years had been continuously
removing BOD\. In addition, the STPs are required to comply with effluent standards not only for BOD, but also for other
pollutants such as Total Suspended Solids, Chemical Oxygen Demand, Oil and Grease, and Total Coliform, among others\.
In the process of removing these pollutants, more BOD was removed and higher treatment efficiency was achieved (see
also paragraph 34)\.
PDO indicator 2: Population equivalent in the catchment area that would benefit from the project
(Baseline: 0; Target: 2,490,000 population equivalent; Achieved: 1,988,462)
28\. This indicator refers to the number of people serviced by wastewater treatment as a result of project-supported
investments (rehabilitated STP, new STPs, and conveyance systems)\. The PAD noted that PDO indicator 2 on population
equivalent should be computed by dividing STP capacity by 130 liters of wastewater generated per capita (MWMP PAD
- Annex 1)\. Following this methodology, the project has so far achieved 1,988,46214 (80%) as compared to the target of
2\.49 million population equivalent expected to benefit from the wastewater infrastructure assets\. When all the
remaining investments are completed in 2021, the total beneficiaries would be 2\.96 million people and the project target
would be exceeded (see table 2)\. The completion of the South Septage Treatment Plant has benefited an additional
1\.45 million people (not counted against PDO indicator 2)\.
Table 2: MWMP Results Framework
Indicators Baseline Achievement Target Remarks
PDO Results Indicators
Reduction of BOD in the 0 6,403 3,556 MWCI removed 2,054 tons of BOD from collected wastewater,
collected wastewater exceeding its target of 1,708 tons by 20%\. Maynilad likewise
(tons per year) removed 4,349 tons of BOD in collected wastewater, exceeding
its target of 1,848 tons by 135%\. Overall, the project removed a
total of 6,403 tons of BOD in collected wastewater, surpassing
the project target of 3,556 tons by 80%\.
Population equivalent 0 1,988,462 2,490,000 A total of 1,492,308 and 496,154 population equivalent in the
in the catchment area catchment area benefited from wastewater investments of
that would benefit from MWCI and Maynilad, respectively\. These represent 124% and
11 The investments under MWCI cumulatively treated 27,179,418 cubic meters of wastewater: North and South Pasig STP: (2,425,859 cubic
meters), University of the Philippines conveyance system (5,007, 142 cubic meters), and Marikina conveyance system (19,746,417 cubic meters)\.
The investments under Maynilad cumulatively treated 41,223,760 cubic meters of wastewater: Talayan STP (17,924,282 cubic meters), Pasay
STP (19,087,422 cubic meters), and Ayala-Alabang STP (4,212, 056 cubic meters)\.
12 MWCI cumulatively removed a total of 2,054 tons of BOD: North and South Pasig STP (343 tons), University of the Philippines and Marikina
conveyance systems (1,711 tons)\. Maynilad, on the other hand, cumulatively removed a total of 4,349 tons: Talayan STP (1,247 tons), Pasay STP
(1,821 tons), Ayala- Alabang STP (511 tons), and South Septage Treatment Plant (770 tons)\.
13 The STPs expected to be completed in 2021 are Valenzuela, Cupang, and Tunasan\.
14 The wastewater investments under MWCI benefited a total of 1,492,308 people: North and South Pasig STP (1,269,231 people), University of
the Philippines and Marikina conveyance systems (223,077 people)\. Wastewater investments under Maynilad benefited a total of 496,154
people: Talayan STP (119,231 people), Pasay STP (353, 846 people), and Ayala- Alabang STP (23,077 people)\.
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the project 38% of the respective target of 1\.2 million and 1\.29 million
beneficiaries\. Additional 353,846 beneficiaries are expected
with the commissioning of Cupang STP by December 2020,
increasing the number of beneficiaries under Maynilad to
850,000 (66% of target)\. The expected completion of
Valenzuela and Tunasan STPs in 2021 will further increase the
number of beneficiaries to 1,465,385 (114% of target)\.
Overall, the project has benefited 1,988,462 people, achieving
80% of the total of project target of 2\.49 million beneficiaries\.
The completion of Cupang STP will increase the total number of
beneficiaries to 2,342,308 (94% of project target)\. When all
STPs are completed, the project will have benefited a total of
2\.96 million people (119% of the total project target)\.
In addition, a total of 1\.45 million people have benefited from
the operation of the South Septage Treatment Plant, which
serves the cities of Pasay, Paranaque, Las Pinas, and Muntinlupa
in Metro Manila and the cities/municipalities of Bacoor, Imus,
Cavite, Rosario, Noveleta, and Kawit in the province of Cavite\.
Intermediate Results Indicators
Progress in construction 0 88\.80% 100% Maynilad has substantially achieved the target\.
for Maynilad (%)
Progress in construction 0 82\.41% 100% MWCI has substantially achieved the target\.
for MWCI (%)
Increase in wastewater 0 229,500 352,500 MWCI achieved the target increase in wastewater treatment
treatment capacity capacity of 165,000 cubic meters per day\. Maynilad achieved
(cubic meters per day) an increase in wastewater treatment capacity of 64,500 cubic
meters, equal to 34% of the target increase in treatment
capacity of 187,500 cubic meters per day\.
Overall, the project achieved 65% of the target of 352,500 cubic
meters per day\. The commissioning of Cupang STP under
Maynilad by December 2020 will increase wastewater
treatment capacity to 275,500 cubic meters per day (78% of
project target)\. The expected completion of Valenzuela and
Tunasan STPs under Maynilad in 2021 will further increase
treatment capacity by 80,000 cubic meters per day, resulting in
a total of 355,500 cubic meters per day, exceeding the project
target\.
Increase in septage 0 250 250 Maynilad achieved the target\.
treatment before
disposal (cubic meters
per day)
Source: MWMP Project Completion Report, October 30, 2020
29\. As of the time of this ICR, the targets for some of the intermediate outcome indicators related to progress of
physical works are partially achieved, but full achievement is expected once pending investments have been
completed by MWCI and Maynilad\. MWMP has supported the completion of three new STPs (Talayan, Pasay, and North
and South Pasig) with combined treatment capacity of 229,500 cubic meters per day, achieving 65% of the end-of-
project target of 352,500 cubic meters per day on increase in wastewater treatment capacity\. It also supported the
rehabilitation of the Ayala-Alabang STP, construction of a new septage treatment plant, and laid 105\.34 kilometers of
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conveyance systems (83% of total length of 126\.94 kilometers15)\. Progress in construction was reported at 82\.41%
(MWCI) and 88\.8% (Maynilad), below the target of 100%, which is expected to be achieved in 2021\. The target on
increase in septage treatment before disposal16 of 250 cubic meters per day was fully achieved\. The status of each
project-supported investment is summarized below and Appendix 1 shows the status of MWMP investments as of
October 30, 2020\. The list of subprojects pending completion is shown in Appendix 2\.
MWCI
a\. North and South Pasig (Ilugin) STP\. North and South Pasig (Ilugin) STP is currently the largest STP in the
Philippines\. The project financed the construction of this STP with treatment capacity of 165,000 cubic meters
per day\. The STP has a catchment area of 3,443 hectares covering Pasig City, portions of Mandaluyong City,
Quezon City, and the municipalities of Taytay and Cainta in the province of Rizal\. The STP is currently under
commissioning and is now treating 26,000 cubic meters of wastewater per day\. The STP has treated 2\.42
million cubic meters of wastewater and has removed 343 tons of BOD from December 2019 to October 2020\.
b\. North and South Pasig Conveyance System\. The project also sought to construct 65 kilometers of
conveyance system\.17 However, four procurement packages (with a total length of 20\.59 kilometers) were
dropped from IBRD financing and replaced with the University of the Philippines and Marikina conveyance
systems with a combined length of 39\.53 kilometers (see item c below)\. At loan closing, the project had
supported the construction of 27\.22 kilometers of conveyance systems (61\.29% of the revised target of 44\.41
kilometers)\. As some segments are not yet completed and are yet to deliver wastewater to the STP, MWCI
constructed additional interceptors to capture wastewater from the adjacent Ilugin River to make up for the
delayed wastewater inflows that would have come from these segments\.
c\. University of the Philippines and Marikina Conveyance Systems\. These conveyance systems formed part of
the University of the Philippines and Marikina sewerage systems, which were also identified as priority
wastewater investments in MWCIâs business plan\. The project replaced the four North and South conveyance
system subprojects that were stalled (see section I\.B\. âRationale for Changes and Their Implications on
Original Theory of Change)\. The project partially and retroactively financed18 the construction of the two
conveyance systems with lengths of 28\.30 kilometers and 11\.23 kilometers, respectively\. Wastewater flowing
through these conveyance systems is delivered to the University of the Philippines STP and Marikina STP for
treatment\. From January 2018 to October 2020, 24\.75 million cubic meters of wastewater were treated and
1,711 tons of BOD were removed\.
15 The project did not have specific indicators on the length of conveyance systems\. At appraisal, it intended to construct 65 kilometers of
conveyance system under MWCI (MWMP PAD, page 23)\. No targets were set for Maynilad\. At ICR, the project had supported the construction
of 126\.94 kilometers of conveyance systems: MWCI (83\.94 kilometers) and Maynilad (43\.00 kilometers)\.
16 Only applied to Mayniladâs South Septage Treatment Plant\.
17 MWMP PAD, pages 23\.
18 The project did not finance the entire University of the Philippines and Marikina sewerage systems\. It only financed the conveyance systems,
as the STPs are already functioning\. The Marikina conveyance system was already completed and the University of the Philippines conveyance
system was ongoing construction when the substitution was approved by the World Bank\.
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Maynilad
d\. Talayan STP and Conveyance System\. The project supported the construction of the STP with treatment
capacity of 15,500 cubic meters per day and the conveyance system with a total length of 2\.44 kilometers\.
The Talayan STP has been operating since 2015\. It has cumulatively treated a total of 17\.92 million cubic
meters of wastewater and removed a total of 1,247 tons of BOD from January 2015 to October 2020\.
e\. Pasay STP and Conveyance System\. The project supported the construction of the STP with treatment
capacity of 46,000 cubic meters per day and the conveyance system of 9\.28 kilometers\. The Pasay STP has
been operational since 2018\. It has cumulatively treated 19\.09 million cubic meters of wastewater and has
removed a total of 1,821 tons of BOD from May 2018 to October 2020\.
f\. Ayala-Alabang STP\. The Ayala-Alabang STP was constructed in 1983 with design capacity of 10,000 cubic
meters per day\. Wastewater was conveyed by an existing separate sewer system to the STP\. However, the
STP was already showing operational inefficiencies\. Actual treatment capacity prior to rehabilitation ranged
from 6,000 to 7,000 cubic meters per day\. The project rehabilitated the STP and restored its original
treatment capacity\. The rehabilitated STP has been fully operational since 2013\. It has treated an additional
4\.2 million cubic meters of wastewater, and has removed additional 511 tons of BOD from March 2013 to
October 2020\.19
g\. South Septage Treatment Plant\. The construction of the South Septage Treatment Plant increased the
capability of Maynilad for treating septage from septic tanks\. Since the start of its operation in 2016, it has
been treating about 49% of the total septage collected in the West Zone\. The other two existing Maynilad
septage treatment plants are Project 7 in Quezon City and Dagat-dagatan in Caloocan City, which are both
located in the northern part of Metro Manila\. Due to traffic congestion in the metropolis, it took a significant
amount of time for vacuum tankers to travel from the southern to the northern part of the metropolis to
deliver septage to the treatment plants\. The geographical location of the South Septage Treatment Plant
substantially reduced the distance travelled by the vacuum trucks: by 111% and 167%, respectively, if septage
collected from the south were to be discharged in Quezon City or Caloocan City\. Likewise, travel time has
substantially decreased by 147% and 173%, respectively\.20 This has significantly improved Mayniladâs
operational efficiency in delivering desludging services to its customers by reducing the operating and
maintenance expenses of the vacuum trucks\. From 2016 to October 2020, the South Septage Treatment Plant
cumulatively removed 770 tons of BOD\.
30\. Three STPs under Maynilad (Valenzuela, and Cupang and Tunasan [part of the Muntinlupa STP, see below])
and their associated conveyance systems were still under construction as of October 30, 2020\. These subprojects faced
significant implementation hurdles, including delays in acquiring land and securing construction permits\. In addition, in
the last seven months before loan closing, implementation was affected by contract management issues and the
imposition of a national lockdown due to the COVID-19 pandemic\. Works have resumed since June 2020, albeit at a
slower pace\. Contractors are working with 50% manpower capacity to comply with government health and safety
19 The ICR only considered the incremental increase in STP capacity of 3,000 cubic meters per day as a result of rehabilitation\.
20 Source: Mayniladâs operational data\.
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protocols during the COVID-19 pandemic\. Once these STPs are completed in the near term, the Intermediate Outcome
Indicator on increase in wastewater treatment capacity will be fully met (see table 2)\.
a\. Valenzuela STP and Conveyance System\. The project financed this STP with a treatment capacity of 60,000
cubic meters per day and conveyance system with a total length of 27\.16 kilometers\. The Valenzuela STP and
conveyance system are nearing completion (STP: 95\.13%; BNR: 82\.10%; conveyance system: 85\.23%)\.
Commissioning is expected to start by June 2021\.
b\. Muntinlupa STP and Conveyance System\. This STP, composed of Cupang STP and Tunasan STP, has a
combined capacity of 66,000 cubic meters per day\. It was envisaged to help decrease the pollution load in
Laguna de Bay\. The Cupang STP is 91\.99% completed and is ready to receive influent wastewater for
commissioning by December 2020\. The Tunasan STP is 91\.57% completed\. Works are ongoing and will be
completed by March 2021\. Commissioning is expected to start by June 2021\. The conveyance system with a
total length of 4\.12 kilometers is 90\.48% advanced\. Completion is expected by June 2021\.
31\. The remaining ongoing subprojects mentioned above are part of the overall service obligations of Maynilad
and MWCI, as outlined in the Concession Agreements and corresponding business plans\. MWCI and Maynilad are
therefore obliged to complete and deliver these investments, as their completion is linked to performance achievements
and tariff adjustments\. Funding for the remaining works would come from the concessionairesâ equity\. As mentioned
earlier, works under the remaining STPs and conveyance systems have resumed, although at a slower pace due to the
COVID-19 situation\. All remaining subprojects are expected to be completed in 2021, provided that the situation remains
unchanged\.
32\. The Bank supported institutional strengthening of different national government agencies in the water and
sanitation sector during project preparation\. The Bank facilitated a review of the institutional and regulatory
arrangements for the sector and a detailed study and prioritization of the environmental hotspots in Metro Manila\. This
was complemented by learning visits and dialogues among the different government stakeholders21 and concessionaires
on the innovative technological approaches for sewerage and sanitation, as well as on lessons from international
experience in cleaning up bays and water bodies\.
33\. The Bank also supported capacity-building for staff of the implementing agencies\. The Bank provided technical
assistance on the adoption of BNR, which was a new technology\. It mobilized consultants to discuss how BNR works and
help the concessionaires in assessing the technical viability of incorporating BNR into the STPs and determining its cost
implications\. The Bank also facilitated discussions on the application of trenchless technology in other countries\. It
brought key staff from MWCI, Maynilad, and MWSS to Vietnam to become familiarized with the huge force main crossing
Mekong river and its tunnel boring machine technology operation for its conveyance systems under the Ho Chi Minh
City Second Environmental Sanitation Project (P127978)\. Moreover, the Bank provided orientation-training and just-in-
time support to the implementing agencies in procurement, financial management, environmental safeguards, and
social safeguards\. Public awareness campaigns under the project were carried out through the regular programs of the
concessionaires\.
21 Supreme Court, Department of Finance, National Economic and Development Authority, and MWSS\.
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34\. The water quality of receiving water bodies has started to show improvements\. Based on MWCI and Maynilad
STP operational data, the overall average BOD concentration for influent entering the completed STPs (94\.58 mg/L) does
not pass the water quality standard for BOD concentration of 50 mg/L\. However, after treatment, all discharges from
the completed STPs consistently meet or exceed the minimum effluent quality requirements\. The overall average BOD
concentration in the effluent coming from the STPs is 5\.09 mg/L\.22
a\. North and South Pasig (Ilugin) STP\. The average BOD concentration for influent and effluent water was
reported at 135\.52 mg/L and 6\.95mg/L, respectively\. The Ilugin STP is discharging higher quality effluent into
the Ilugin River, which is a tributary of Pasig River\.
b\. Talayan STP\. The average BOD concentration for influent and effluent water was reported at 65\.66mg/L and
4\.40mg/L, respectively\. Similar to Ilugin STP, the Talayan STP has shown high treatment efficiency, which has
promoted faster water quality improvement of Talayan creek\. Moreover, the Talayan STP, together with
other Maynilad STPs, has contributed to the improved water quality of San Juan River, which is a tributary of
Pasig River\. The downstream of San Juan River has shown significant reduction in organic pollution load as
reflected in the reduction of BOD from 86\.83 mg/L in 2017 to 38\.83 mg/L in 2019\.
c\. Pasay STP\. The Pasay STP discharges into Dilain and Maricaban creeks, which are tributaries of the
Parañaque-Las Piñas-Zapote river system\. The river system passes through the cities of Pasay, Parañaque,
and Las Piñas, and flows into Manila Bay\. The average BOD concentration for influent and effluent water was
reported at 65\.65 mg/L and 4\.82mg/L, respectively\. Water quality sampling conducted in Dilain creek has
shown improvements from 65\.58mg/L BOD in 2017 to 43\.32 mg/L BOD in 2019\. The water quality of
Maricaban creek has also been improving with the reduction of BOD from 90\.17 mg/L in 2017 to 74\.36 mg/L
in 2019\.
d\. Ayala-Alabang STP\. The average BOD concentration for influent and effluent water was reported at 111\.49
mg/L and 4\.19mg/L, respectively\. The water quality of Pasong Diablo creek has been found to be improving,
as shown in the reduction of BOD concentration from 16\.42 mg/L in 2017 to 11\.33 mg/L in 2019\. Pasong
Diablo creek discharges into Laguna Lake, which is the raw water source of Mayniladâs Putatan Water
Treatment Plant\.
Overall Project Impact
35\. The investments under the project have supported the response to the Supreme Court Mandamus and have
started to contribute to the cleanup of Manila Bay\. Domestic pollution generated from the Manila Bay Region is
estimated at 1,020 tons of BOD per day\.23 Metro Manila accounts for around 30% of this pollution load\. The Government
intends to reduce the domestic pollution load coming from the metropolis by expanding coverage for sewerage and
septage management\. This would necessitate constructing STPs with combined treatment capacity of 2,891,000 cubic
meters per day to be implemented by 2037\. The STPs completed by the project would have a significant impact, as they
already account for 8% of that wastewater treatment capacity\. This capacity is expected to increase to 11% when the
Cupang, Tunasan, and Valenzuela STPs are completed in the near term\. As discussed above, treated discharges from the
22 MWCI and Maynilad STP monthly operational data 2015-2020\.
23 National Economic Development Authority\. Republic of the Philippines\. 2018\. Manila Bay Sustainable Development Master Plan\. Atlas\.
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completed STPs are compliant with effluent standards\. Water quality improvements in receiving bodies of water have
been observed\. Thus, the water flowing from these different water bodies to Manila Bay is cleaner and will eventually
contribute to Manila Bayâs cleanup and rehabilitation\.
Justification of Overall Efficacy Rating
36\. The overall rating for efficacy at the time of ICR is Substantial\. The achievement for PDO indicator 1 is High; and
the achievement for PDO indicator 2 is Substantial\. Further improvements in project outcomes are likely with the
completion of the remaining STPs after the COVID-19 pandemic is contained\. The project has also been impactful in
terms of improving water quality of the water bodies receiving effluent from the STPs supported by the project\.
C\. EFFICIENCY
Assessment of Efficiency and Rating
Rating: Substantial
37\. The ICR-stage economic analysis shows that the MWMP wastewater investments have generated positive net
economic benefits to society\. The recomputed Economic Rates of Return (ERRs) of wastewater subprojects are
significantly higher than the social discount rate of 10%,24 and higher than the computed ERRs at appraisal\. The overall
weighted ERR average at ICR is 16%, which is higher than the social discount rate of 10% and is also higher than the
weighted ERR average at appraisal of 14%\. Sensitivity analysis indicates that if the benefits were 20% lower compared to
the base results, this would lower the ERR to 12%, but it still remains higher than the social discount rate of 10%\. In
addition, the project is expected to generate substantial positive externalities associated with improved water quality,
including improved public health, increased value of commercial fishing and tourism, and enhanced recreational value
of Manila Bay\. These positive externalities were not included in the ERR computation\.
38\. MWMP investments are also cost-effective\. A World Bank study (2013) estimates that the investment cost to
construct STPs and conveyance systems and improve septage management is around US$250 per capita\.25 Per-capita
investment costs under MWMP are lower compared to this benchmark estimate\.26 Per-capita investment costs were
computed by dividing the total actual investment costs (STP and conveyance system) by the total population equivalent\.
Table 3: Cost Effectiveness of Wastewater Investments
Subproject Capital Investment Cost per Capita (US$)
Pasig North and South STP 132\.47
Talayan STP 66\.20
Valenzuela STP 241\.66
Pasay STP 140\.63
Muntinlupa STP 135\.00
24 The economic analysis applied social discount rate of 10% adopted by the Government of the Philippines in 2016 to evaluate economic viability
of public investments, which was based on comparative analysis of social discount rates used by multilateral banks and specific technical study
conducted in 2014 on the determination of social discount rate for the Philippines\. This social discount rate also reflects the positive
developments in the Philippine economy in the past years\.
25 World Bank (2013)\. East Asia and the Pacific Region\. Urban Sanitation Review: A Call for Action\.
26 The ICR did not have details on the benchmark estimate for wastewater investment cost per capita of US$250\. Thus, the reasons for the
differences between the benchmark estimate and the actual wastewater investment cost per capita under the project could not be determined\.
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39\. Efficiency gains were also generated when the project introduced efficiency enhancing elements in project
design and implementation\. These included: (a) application of technical, social, environmental, financial, and economic
viability criteria in subproject screening; (b) consideration of the 15-year life-cycle costs in the computation and
comparison of bidding parameters; that is, a subproject would be awarded to the bidder whose bid was evaluated as
substantially responsive to the requirements of the bidding documents and with the lowest life-cycle costs; and (c)
incorporation of resilience adaptation measures to consider geo-technical risks and hazards, which allow the STPs to (i)
provide continuous and uninterrupted service (e\.g\., Pasay STP continues to operate even during heavy downpour and
flooding), and (ii) avoid damages and replacement costs associated with the shocks and impacts of natural hazards\. The
operational STPs have demonstrated high treatment efficiency\. Higher BOD was removed relative to agreed targets in
the case of Talayan and Pasay STPs\. In addition, efficiency is ensured through the existing tariff and regulatory
mechanisms, which require that water and wastewater services are provided at economic prices\.
40\. Implementation efficiency\. The project was extended by three years due to delays in implementation\. Project
costs also increased by 35% due to changes introduced during implementation (see section III\.B\.âKey Factors during
Implementation)\. However, the project extension and cost increases had an overall positive effect in terms of additional
pollutants (phosphates and nitrates) prevented from entering water bodies, increased infrastructure resilience, and
averted socio-economic impact during construction, as well as the inclusion of additional project beneficiaries associated
with the University of the Philippines and Marikina conveyance systems\. (See section II\.B\.âEfficacy\.)
D\. JUSTIFICATION OF OVERALL OUTCOME RATING
41\. The overall outcome rating is Satisfactory based on High relevance, Substantial efficacy, and Substantial efficiency\.
E\. OTHER OUTCOMES AND IMPACTS
Gender
42\. The project did not have a focus on gender\.
Institutional Strengthening
43\. The project did not have a focus on institutional strengthening\.
Mobilizing Private-Sector Financing
44\. The project was a mobilizing-finance-for-development project\. It was one of the few private-sector initiatives
directly supported by the Bank, considering the âpublic goodâ nature of wastewater management services that the private
sector provides\. Wastewater management services generate substantial economic benefits to society\. These services
require large capital investments, but generate low financial flows\. Thus, while the concessionaires could easily mobilize
private financing for water services from private banks and other sources, they could hardly do so for wastewater
management services\. MWCI and Maynilad were given access to concessional financing with a government guarantee to
enhance and expedite the delivery of wastewater management services, which are a public good\. The joint financial
contribution of MWCI and Maynilad by loan closing was US$142,114,000\.
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Poverty Reduction and Shared Prosperity
45\. The project did not have a specific poverty focus\. The project benefits all citizens of Metro Manila, including the
poorer segment of the metropolitan population, through better public health and general improvement in environmental
quality\. The poor are expected to benefit as they disproportionately suffer from untreated wastewater being discharged
into the rivers and creeks along which many of them reside\. Data showed that around 100,000 households (approximately
500,000 people) live along the waterways27 of Metro Manila\. Water quality has been improving in various creeks where
STPs discharge effluent, which is expected to lead to improvements in the environmental conditions of Metro Manila and
the public health of its citizens, including the poor\.
Other Unintended Outcomes and Impacts
46\. The project promoted the reuse of treated wastewater\. In the case of Talayan STP, treated wastewater has been
used for polymer preparation in coagulant dosing systems, cleaning of equipment, and toilet flushing in facilities with
office spaces\. In the South Septage Treatment Plant, treated water has been used for cleaning and maintaining vacuum
tank units\. Treated wastewater has also been used for watering ornamentals along roadways\. In Ayala-Alabang STP,
treated effluent has been used for golf course watering\. In the case of Pasay, the utilization of reused water for polymer
preparation and other plant operations has offset an estimated 3\.6 million liters of potable water per year, thereby
increasing the availability of potable water for residential customers\. These results demonstrate the huge potential for
further utilizing scarce water resourcesâparticularly in Metro Manila, which is currently experiencing water security
issues\.
47\. The project adopted technical innovations\. Trenchless pipelaying methodology was applied in areas with high
population densities\. This can serve as a model for other countries in the construction of conveyance systems\. A Design-
and-Build approach was also introduced to encourage participation of capable contractors\. Under this modality, the
concessionaires would carry out feasibility studies in parallel with acquiring land for the STPs\. These studies would be the
basis for preparing conceptual designs for the STPs\. Detailed design was conducted after the land for the STP was
acquired\. The Design-and-Build contractor was to be selected based on the lowest combined investment and operating
costs required to meet certain levels of wastewater treatment\.
48\. The STPs are also used as learning facilities\. Different groups, including universities and communities in Metro
Manila and across the country, have requested educational field visits to the STPs to learn about current best practices in
wastewater management\.
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A\. KEY FACTORS DURING PREPARATION
49\. The projectâs strategic relevance was laid out well at entry\. MWMP responded to a clear development need (low
wastewater service coverage) and fully supported the Governmentâs objective of reducing the pollution load being
27 Department of Interior and Local Government\. 2011\. Shelter Development for Urban Informal Settlers: Building on Strengths and
Overcoming Challenges\.
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discharged into Manila Bay, as mandated by the Clean Water Act of 2004 and the 2008 Supreme Court decision\. The
project was conceptualized to facilitate private sector entry in the provision of wastewater management services, in
alignment with the approach of maximizing finance for development\.
50\. The project drew from the Bankâs extensive sector knowledge and experience\. Project design further took into
account the existing implementation arrangements in the delivery of water and wastewater services in Metro Manila\. It
also considered many lessons from its predecessor projects, including (a) ensuring the availability of land for STPs; (b)
considering operating cost efficiency of STPs by including life-cycle cost of the treatment facilities in procurement of STPs;
(c) using a Design-and-Build modality to encourage participation of capable contractors; and (d) considering
environmental and social factors in subproject planning, including community consultations and consideration of citizenâs
concerns\.
51\. Project design was based on in-depth technical analysis of wastewater issues in Metro Manila\. The activities,
particularly the locations of the STPs, were carefully planned and identified\. The STPs were not isolated wastewater
solutions, but formed part of the sewerage master plan for Metro Manila\. The tributary river systems receiving effluent
from the STPs financed by the project were high-priority areas based on their pollution loads\. The project design was
flexible, as it allowed financing of additional investments agreed among the Bank, Guarantor, Borrower, and the
concessionaires, after they had passed subproject technical, social, environmental, economic, and financial criteria\.
52\. The PDO was clear and realistic, and the Results Framework was adequate in capturing and measuring intended
outcomes\. Indicators were appropriately identified and were linked to form a clear logic to achieve the PDO\. The PDO
indicators reflected the key elements of the PDO statement\. The intermediate outcome indicators sufficiently captured
progress and contributions of each component and were linked to the PDO outcome indicators\. Baselines and targets,
including the methodology for measuring progress, were made available at appraisal\.
53\. The implementing agencies were assessed to have adequate implementation capacities\. LBP and MWCI had
previous experience in implementing Bank-financed projects\. They were knowledgeable in Bank safeguards and fiduciary
requirements and procedures\. While this was Mayniladâs first Bank-financed project, it had adequate capacity and had
established sufficient internal arrangements to be able to comply with Bank fiduciary and safeguards requirements\. MWCI
and Maynilad also had adequate technical capacity to implement large infrastructure projects\. LBP is primarily a financial
intermediary, and did not have internal specialized experts to review and evaluate large wastewater infrastructure
subprojects\. Measures to enhance LBPâs technical capacity were identified, including the development of clear procedures
for subproject appraisal and recruitment of consultants to carry out review and evaluate the subprojects\. Despite
adequate implementation capacities, all implementing agencies faced challenges in delivering part of the project
investments as scheduled\. (see section III\.B\.âKey Factors during Implementation\.)
54\. Arrangements for project monitoring and evaluation (M&E) adopted the existing M&E mechanisms\. The project
did not introduce new M&E arrangements, but utilized the M&E systems that were already in place within the
implementing agencies (LBP, MWCI, and Maynilad), as well as those established by government regulatory bodies,
including MWSS and the Department of Environment and Natural Resources (DENR)\. The investments were part of the
business plans of the concessionaires that were monitored and reviewed on a regular basis\.
55\. Significant efforts were made to facilitate the projectâs readiness for implementation\. The Metro Manila
Wastewater and Sanitation Master Plan was reviewed along with other government plans to clean up Manila Bay\. The
project supported investments included in the business plans so that the scope of work and outcomes of the project were
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in line with government objectives and regulatory requirements\. In addition, land acquisition for STPs was a primary
consideration, as land availability is highly constrained in Metro Manila\. The project was planned to be carried out in two
phases\. Phase 1 would cover four subprojects for which the sites were already known and safeguards instruments had
been prepared and submitted to the Bank\. Phase 2 included subprojects for which the sites were under process of land
acquisition\. Feasibility studies were also undertaken during the preparation phase\.
56\. Most of the risks were appropriately identified, but some risks were optimistically assessed given the
circumstances at the time of preparation\. Stakeholder risks and risks associated with local permitting were rated
Moderate during appraisal, as the concessionaires already had existing working relationships with stakeholders,
particularly the LGUs, and had been regularly coordinating with them\. However, these risks turned out to be material
during implementation\. In addition, land acquisition risks were rated High in recognition of the difficulty of securing land
in Metro Manila\. Land acquisition for the STPs was considered and right-of-way issues were analyzed and included in the
development of Resettlement Action Plans\. Despite this, land acquisition remained the most challenging aspect in moving
forward with investments\. The risk of limited availability of contractors for large-scale infrastructure was not identified,
but emerged during implementation (see next section)\.
B\. KEY FACTORS DURING IMPLEMENTATION
Factors within the Control of Government and/or Implementing Entities
57\. The project had momentum at startup owing to adequate capacities of implementing agencies and substantial
efforts made during preparation\. Land for STPs was secured prior to project startup, except for Muntinlupa STP where
acquisition was completed in 2014\. Land acquisition for conveyance system subprojects was likewise initiated\. In addition,
bid documents for the majority of the STPs as well as for conveyance system subprojects were already prepared\.
58\. The project experienced challenges, which resulted in implementation delays up until loan closing\. These delays
were caused by a number of factors that occurred either simultaneously or in succession over the eight-year life of the
project\.
a\. Unanticipated geo-technical difficulties\. To optimize efficiency in collecting wastewater, STPs are located in
the lowest part of the catchment areas, which also places these facilities at risk of flooding\. Flooding was
addressed during the design stage by considering the highest historical flood levels and providing additional
contingencies for future flood levels\. However, other complex factors also emerged\. The Cupang and Tunasan
STPs are located near the West Valley fault and are adjacent to Laguna Lake\. Soil testing was conducted during
the design stage to analyze the particular underground conditions to be used as basis for constructing
underground structures\. Seismic conditions were also considered\. In the case of North and South Pasig STP,
soil and underground conditions were found to be unstable\. Design review was conducted, and a
comprehensive design was formulated to stabilize the underground structures\. The complex design challenges
encountered by MWCI and Maynilad necessitated additional time and resources\. However, these were
outweighed by the added value provided in terms of STP resiliency as a result of design considerations for
flooding, natural disasters, underground conditions, and seismic load\.
b\. Lengthy land acquisition process for conveyance system subprojects\. Long stretches of conveyance systems
were planned to be laid in densely populated areas of Metro Manila\. Thus, land acquisition was inevitable\.
Almost all conveyance system subprojects involved right-of-way issues and took time to be resolved\. The
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lengthy process of land acquisition resulted in significant delays and had cascading effects on procurement,
construction, and operation of the STPs and conveyance system subprojects\.
c\. Procurement delays\. The project faced some procurement delays due to excessive bids in one procurement
package as well as limited availability of qualified bidders for large infrastructure contracts\. The North and
South Pasig conveyance system was conceptualized to be procured in three contracts\. However, this did not
materialize as the pool of qualified contractors for large conveyance system subprojects was limited\. MWCI
repackaged these subprojects into 11 smaller contract packages to ensure successful bidding\.
d\. Tight restrictions on the issuance of construction permits\. LGUs tightened the issuance of construction
permits, noting the need to manage the unprecedented traffic congestion at the project sites that had
escalated over the years\. LGUs faced daunting challenges in managing the traffic situations in their respective
areas considering their highly built-up environment\. This was exacerbated by the simultaneous construction
activities (drainage, telecommunications, power, water, and sewers) of various entities\. The permit-related
delays were most notable for the North and South Pasig sewerage system and the Valenzuela sewerage
system\. Construction was further affected by road closures associated with holidays and festivities, election
campaigns, and flooding, among others\. To mitigate the adverse impact on road traffic and avert further delays
in implementation, MWCI and Maynilad adopted technical measures, including comprehensive traffic
management and, where possible, applied trenchless pipelaying construction methodology\. Socio-political
actions were likewise carried out, such as extensive public awareness and communications campaigns as well
as consultations and dialogues with different stakeholders, including concerned national government agencies
and LGUs\.
e\. Changes in project costs\. The total project costs increased by 35% due to: (a) inclusion of BNR in two Maynilad
STPs to respond to stricter government policy on water quality; (b) substitution of the University of the
Philippines and Marikina conveyance systems for the stalled North and South Pasig conveyance system; (c)
changes in subproject scope (e\.g\., inclusion of adaptation measures for flooding, earthquakes, and soft soil
conditions) and construction methodology (i\.e\., shift from conventional to trenchless pipelaying), and (d)
extension of project schedules\. The increase in project costs necessitated an increase in the financial
contribution of MWCI and Maynilad to the project, as these were part of their business plans\. The changes,
however, yielded some benefits\. The revision of technical designs (under North and South Pasig and
Muntinlupa STP) as a result of geo-technical validation and inclusion of adaptation measures was necessary to
ensure that the wastewater infrastructure assets have structural integrity, are resilient to natural hazards, and
are able to provide continuous and uninterrupted services\. The changes in construction methodology for
conveyance systems mitigated the substantial adverse impact on road traffic and averted further delays in
implementation\. They also facilitated stakeholder acceptance of the project\. The inclusion of BNR allowed the
STPs to remove additional pollutants (nitrates and phosphates), thereby further improving the water quality
of receiving water bodies\.
f\. Challenging stakeholder coordination\. The project was aligned with national plans and priorities\. However,
given the projectâs metropolitan scope, project implementation required critical inputs from different
stakeholders at different levels of governance: barangay (village), city, metropolitan, regional, and national
levels\. At the local level, LGU leadership also affected project implementation as new officials faced a learning
curve on project specifics\. MWCI and Maynilad had to coordinate with stakeholders and manage their
competing objectives\. The concessionaires responded to different stakeholder concerns through their
respective public affairs departments, which regularly conducted public consultations and stakeholder
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dialogues, maintained grievance redress mechanisms, and carried out awareness-raising and information
campaigns\. These efforts required additional time and led to project delays\.
g\. Contract management issues\. In the last seven months of implementation, work on Valenzuela STP and
Tunasan STP was stalled by contract management issues\. The contractor for both of these STPs had liquidity
issues that significantly constrained its ability to pay works and renew bank guarantees\. These issues have
since been resolved, with the contractor resuming construction in June 2020\.
Factors within World Bankâs Control
59\. The Task Team was composed of a multi-disciplinary set of specialists, including engineers, a social safeguards
specialist, an environmental safeguards specialist, a procurement specialist, and a financial management specialist\.
Implementation support missions were carried out once a year in the early years of implementation and were later
increased to twice a year and supplemented by technical missions\. In the last three years, coordination between the
implementing agencies and the Bank became more frequent\. Monthly meetings were carried out to follow up actions to
resolve outstanding issues\. At Mid-term Review (January 2014), the Task Team appropriately focused on key issues and
measures to speed up implementation, including focusing on construction schedules, resolving land-acquisition issues,
and coordinating with LGUs\.
Factors outside the Control of Government and/or Implementing Entities
60\. The Philippines has experienced sustained annual economic growth of 7% and the Government has carried out
massive transport infrastructure investments in Metro Manila in the last eight years\. Metro Manila is a highly urbanized
and built-up environment\. The subprojects are located in older parts of the metropolis, with high population densities
and characterized by narrow roads and traffic congestion\. High economic growth in the last eight years has amplified
traffic congestion in different parts of the metropolis and has caused the LGUs to issue tight restrictions on construction
permits, creating challenges for the concessionaires\. Additional coordination issues were encountered as construction of
wastewater conveyance systems had to be coordinated with planned or ongoing construction activities of utilities and
national government agencies\.
61\. The Philippines has been hit hard by the COVID-19 pandemic since March 2020\. National lockdowns were
imposed by the National Government to contain the impact of the COVID-19 pandemic\. This disrupted the completion of
the three remaining STPs\. When the lockdowns were lifted, the project activities continued to be affected, as Maynilad
had to reduce manpower capacity to 50% to comply with government protocols\. In some instances, construction had to
be put on hold, as some construction workers were infected and needed to be quarantined\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A\. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
62\. The M&E design was adequate and captured the basic information needed to track project progress during
implementation\. The PDO indicators were appropriately identified and supported the projectâs theory of change\.
Achievement of the PDO of improving wastewater services was measured in terms of two indicators\. The indicator on
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BOD reduction was appropriate for capturing improvements in wastewater services in terms of water quality\. The
Government has been utilizing this indicator as a major parameter for monitoring domestic pollution load\. In addition, the
indicator on population equivalent benefiting from the project was appropriate for capturing the increased access of
Metro Manila constituents to wastewater services\. Arrangements for data collection, consolidation, and analysis were
also in place\. Baselines and targets, including the methodology for measuring progress, were available at appraisal\. Project
monitoring was embedded in the existing arrangements and procedures for monitoring (a) concessionaire performance
and compliance with the Concession Agreements; (b) performance of the water and sanitation sector; and (c)
environmental compliance\.
M&E Implementation
63\. The M&E mechanism designed at appraisal was carried out during implementation with minor shortcomings\.
Actual operational data were used to measure the first PDO indicator on BOD reduction\. However, there was a minor
shortcoming in measuring the population equivalent expected to benefit from the project\. The implementing agencies
and the Bank Team had different interpretations of the methodology for measuring the indicator\. Population equivalent
was measured in terms of actual population in the catchment areas instead of the methodology defined and agreed at
appraisal and reflected in the PAD (i\.e\., STP treatment capacity divided by wastewater generation per capita of 130 liters)\.
Corrective measures were carried out in the last year of project implementation\.
64\. Project data were used by MWCI, Maynilad, and LBP in the preparation of the Semi-Annual Progress Reports
(SAPRs)\. The SAPRs included information on (a) overall progress in achieving the targets in the Results Framework, (b)
physical progress of subprojects, (c) status of procurement activities, (d) social and environmental compliance, and (e)
financial management\. The reports also provided information on the progress of MWCI and Maynilad in achieving the
Concession Agreement targets\. The SAPRs were submitted to the Governmentâs regulatory and oversight agencies (MWSS,
National Economic and Development Authority, and Department of Finance) and the Bank, albeit with delays in some
cases\. MWCI and Maynilad also regularly submitted Environmental Compliance Monitoring Reports to DENR (copies
shared with the Bank and subsequently disclosed)\. Moreover, LBP submitted Loan Status Reports on a quarterly basis to
the Department of Finance\. Finally, MWCI and Maynilad submitted quarterly status reports of activities to the Supreme
Court in line with the overarching objective of cleaning up Manila Bay\.
65\. Two indicators (private capital mobilized by MWCI and Maynilad) were included in the Results Framework in
the Implementation Status and Results Reports (ISRs)\. These indicators were included in June 2014\. In the December
2014 ISR, the Task Team noted that these indicators were core sector indicators meant for corporate reporting on how
much private capital was used to complement the Bank loan\.
M&E Utilization
66\. M&E information was used as the basis for discussions between the implementing agencies and the Bank during
implementation support missions\. It was also utilized to inform the decisions of the Government and the Bank, including
the first and second project restructuring\. Finally, at completion, M&E information was used to provide evidence of project
achievements and document constraints and challenges faced by the project during implementation\.
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Justification of Overall Rating of Quality of M&E
67\. The overall rating of the quality of M&E is Substantial\. The M&E design was adequate\. Indicators were
appropriate\. Baseline and target values were determined at appraisal\. During implementation, data were collected and
monitored\. Progress reports were generated and submitted to the Bank and government oversight agencies, albeit with
some delays\. M&E data were used to inform key project decisions\. There was a shortcoming in M&E implementation as
discussed in paragraph 63, but it did not affect the overall project performance\.
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
Environmental Safeguards
68\. The project complied with the World Bankâs environmental safeguards policies\. MWMP was classified as a
Financial Intermediary operation from the point of environmental safeguards\. It triggered Operational Policy (OP) 4\.01:
Environmental Assessment and OP 4\.04: Natural Habitats\. An Environmental and Social Safeguards Framework (ESSF) was
prepared and disclosed by LBP before appraisal\. During appraisal, the candidate subprojects for Phase 1 were verified
during site visits and subjected to environmental and social screening that included site selection criteria\. The same
approach was used for the Phase 2 subprojects\. Environmental scoping was conducted on all subprojects to ensure that
the locations of the STPs were in compliance with the zoning plans and locational clearances issued by the LGUs (since
the sites are all within residential areas in Metro Manila)\. After the sites were selected, an environmental assessment was
conducted for each STP to ensure that the potential impacts were properly identified and the Environmental and Social
Management Plans (ESMP) were included in the design and costing of the STPs\. All the environmental assessments have
been duly published over time (2011-2014)\. The same approach was applied to the conveyance systems, which expanded
the capacities of the existing combined drainage networks to connect to new areas\. New canal diggings were needed to
accommodate larger pipes that had to pass in the middle of major highways or underneath narrow roads\. The main
environmental challenge was the continued flow of untreated sewage into water bodies as the construction of some of
the STPs slowed down and some conveyance segments remained unfinished due to lack of permits issued by the LGUs\.
Another challenge was the traffic and noise generated during the diggings\. This was adequately addressed and resolved
by the crews on site\.
69\. The North and South Pasig investment was considered Category A - full assessment - given the potential
significant environmental impact of the large-scale STP\. The STP subprojects in the Maynilad portfolio were considered
Category B â partial assessment\. All activities during the construction phase were carried out in accordance with the
environmental and safety due diligence set out in the ESSF\. Appropriate environmental instruments were prepared and
implemented for each STP subproject\. MWCI and Maynilad regularly prepared and submitted Self-Monitoring Reports
and Compliance Monitoring Reports to DENR\. Copies of documents were shared with LBP and the World Bank\. Mitigating
measures identified in the respective ESMPs were implemented\. There were no adverse environmental impacts reported
onsite\. Annual Third-Party Environmental Audits were conducted by an independent auditing firm to evaluate the
compliance of MWCI and Maynilad with the conditions set in both concessionairesâ ISO 14000 certifications and their
respective Environmental Compliance Certificates\. MWCI and Maynilad have properly managed the environmental
impacts encountered during construction, as demonstrated by the adequate implementation and monitoring of their
respective ESMPs\. Issues relating to construction that were submitted through the Grievance Redress Mechanism, such
as noise and traffic disruptions, were addressed in a satisfactory and timely manner by both concessionaires through their
contractors on the ground\.
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70\. LBP and the concessionaires have committed to submit and publicly disclose the environmental monitoring
reports of ongoing subprojects every six months until these are completed\. The reports will include the completion of
the conveyance systems and their connection to the STPs, and the proper operation and adequate treatment of the
influent for each STP according to the design of the STPs and in compliance with the water quality standards under the
Clean Water Act of 2004 (see Appendix 2)\. The overall environmental safeguards rating is Satisfactory\.
Social Safeguards
71\. The project complied with the World Bankâs social safeguards policies\. The project triggered the Bankâs Policy
on Involuntary Resettlement (OP 4\.12)\. Social safeguards documents for Phase 1 subprojects were prepared during
appraisal and were found to be compliant with OP 4\.12\. For subprojects under Phase 2, the ESSF included a Resettlement
Policy Framework that outlined the various modalities and procedures for land acquisition that the LBP, MWCI, and
Maynilad needed to carry out to ensure compliance with OP 4\.12\. MWCI and Maynilad established teams to handle social
safeguards issues and set up their respective grievance redress mechanisms to handle complaints\. All land acquisitions
were carried out through âwilling-buyer willing-sellerâ modalities, including the lot needed for the Tunasan and Cupang
STPs, which necessitated the physical displacement of informal settler families\. Procedures for land acquisition and
resettlement in the ESSF were complied with, including in the relocation of 21 informal settler families in Tunasan STP
and in Cupang STP\.28 The implementing agencies prepared Land Acquisition Reports, Due Diligence Reports, and
Resettlement Completion Reports for subprojects with land acquisition and resettlement activities\. An Abbreviated
Resettlement Plan was prepared for the Tunasan informal settler families\. All documents were reviewed by the Bank to
ensure their compliance with the ESSF\. All social safeguards reports were publicly disclosed\.
72\. Land acquisition and right-of-way issues were significant and recurrent from project startup until loan closing\.
These activities took time to be resolved\. For instance, it took MWCI more than a year to purchase a lot in Greenwoods
in Pasig to connect the North and South Pasig STP with the conveyance system; at one point, expropriation was considered
as well\.
73\. LBP and Maynilad have committed to submit monitoring reports on remaining social safeguards issues every
six months until these are solved\. At project closing, Maynilad had to resolve three pending issues: (a) agree with the
landowner for Pumping Station 12 in Valenzuela on the construction methodology in order for civil works to start; (b)
conclude the Memorandum of Agreement with the owner of the house affected by the Bayanan Pumping Station in
Cupang, Muntinlupa; and (c) conclude negotiations with the landowner affected by the influent line for the Tunasan STP
or, if unsuccessful, re-route the line to the steel bridge (see Appendix 2)\. Maynilad has demonstrated compliance during
the life of the project and is expected to exercise the same diligence in resolving these issues\. The overall social safeguards
rating is Satisfactory\.
Procurement
74\. Procurement activities were implemented following the World Bank Procurement Guidelines and in accordance
with the approved Procurement Plan\. The project implementing agencies were private-sector entities\. The project
primarily used International Competitive Bidding and relied on Bank procedures and commercial practice, which was also
in line with the World Bank Procurement Guidelines\. Commercial practice allowed MWCI and Maynilad to carry out
28 Informal settler families: Tunasan STP (14) and Cupang STP (7)\.
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procurement following their own procedures\. The procedures followed by the two concessionaires were in line with the
World Bank Procurement Guidelines\. Project activities were integrated in the operations of MWCI and Maynilad\.
75\. Procurement activities had momentum in the first two years of implementation\. However, these started to be
derailed at mid-term largely due to delays in land acquisition and permitting issues related to conveyance systems\. In
addition, for the North and South Pasig conveyance system, procurement was affected by the limited availability of
contractors for large-scale infrastructure projects and by the excessive bids in one conveyance system contract package\.
At closing, the procurement was rated Satisfactory\. The overall procurement rating is Satisfactory\.
Financial Management
76\. The project complied with the World Bankâs financial management policies and requirements\. The project had
adequate financial management capacity and arrangements\. Internal controls were adequate\. Financial management
performance was rated Satisfactory in the first three years of implementation\. However, it was downgraded to
Moderately Satisfactory at mid-term due to low project disbursements and some delays in the submission of interim
financial reports\. Project and entity financial statements were submitted regularly\. The Commission on Audit rendered
clean (unqualified) opinions\. The overall financial management rating is Satisfactory\.
C\. BANK PERFORMANCE
Rating: Satisfactory
Quality at Entry
77\. The projectâs strategic relevance was well articulated at entry\. The project supported the government national
priorities\. It was conceptualized to support the implementation of the Clean Water Act and the Supreme Court decision
to clean up Manila Bay\. It was also designed following the maximizing-finance-for-development approach to facilitate
entry of the private sector in the provision of wastewater management services\. Lessons from the Bankâs long-term
engagement in the sector were incorporated\. Project design was realistic, flexible, and based on in-depth technical
analysis of wastewater management issues\. Project activities were carefully identified and selected\. The Results
Framework and arrangements for M&E were adequate\. Significant efforts were made to facilitate readiness for
implementation\. Measures to enhance project efficiency were incorporated in the project design\. The assessment of
fiduciary and safeguards aspects and project implementation arrangements was adequate\. Some risks were optimistically
assessed, given the circumstances at the time of preparation\.
Quality of Supervision
78\. Bank supervision focused on the resolution of critical implementation issues and the achievement of the PDO\.
The Task Team provided just-in-time advice, recommended actions, and brokered several dialogues with different
stakeholders to help the implementing agencies address implementation issues\. It also provided support on fiduciary and
safeguards concerns throughout project implementation\. At Mid-term Review, the implementation support team
appropriately focused on key issues and measures to speed up implementation\. The Task Team supported innovations in
the delivery of wastewater management services, including the use of a Design-and-Build modality and trenchless
construction methodology, and encouraged the use of solar panels and reuse of treated wastewater\. The Task Team
appropriately supported the two project restructuring activities, which extended the loan closing date by three years\. The
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Aide Memoires reflected project challenges and the Task Team provided recommendations to address them\. Project
ratings in the ISRs were candid and adequately discussed ongoing issues and solutions\.
Justification of Overall Rating of Bank Performance
79\. Overall Bank performance is rated Satisfactory\. The preparation team articulated well the projectâs strategic
relevance and adequately assessed the projectâs technical, fiduciary and safeguards aspects as well as implementation
arrangements\. M&E was likewise adequate to capture the projectâs achievements\. The supervision team gave adequate
focus on development impact\. It also provided sufficient implementation support on the technical, fiduciary and
safeguards aspects during implementation\. It worked closely with the implementing agencies in identifying and resolving
implementation challenges\. Project ratings were candid\.
D\. RISK TO DEVELOPMENT OUTCOME
80\. Risk in operating and maintaining STPs\. The subprojects were constructed with acceptable quality\. Geo-technical
risk considerations were incorporated in the technical design\. Adequate transfer of knowledge between the Design-and-
Build contractor and the concessionaires was ensured through sufficient manpower deployment since STP commissioning\.
Organizational capacity, including systems and procedures for operation and maintenance, is adequate\. A mechanism for
cost recovery, which is critical to sustain the operation of the STPs, is in place\. Both capital investments and operating
costs are included in tariff setting\.
81\. Risk in maintaining conveyance systems\. The maintenance of conveyance systems is challenging and may affect
STP operational efficiency\. While MWCI and Maynilad have allocated resources for maintenance costs, maintenance
requires extensive information and education campaigns as well as close coordination and continued engagement with
barangay and city LGUs, the Metropolitan Manila Development Authority, and the Department of Public Works and
Highways\.
82\. Risk of not completing the remaining ongoing subprojects in the near future\. Three STPs are nearing completion
and 21\.59 kilometers of conveyance system subprojects still need to be completed\. The implementing agencies are
obliged to complete the remaining ongoing subprojects and comply with World Bank technical and safeguards
requirements as part of their commitments under the Concession Agreement\. These subprojects have been fully
integrated in the business plans of MWCI and Maynilad\. The business plans are the basis for full cost recovery and tariff
adjustments\. MWCI and Maynilad would need to continue engaging with the respective LGUs\. LBP has committed to
continue to monitor the remaining civil works under the project and ensure that the STPs are fully operational\. As a
financial intermediary, LBP is required to continuously monitor the activities it has financed\. LBP has an Environmental
Policy Relative to Credit Delivery that requires accounting officers to monitor compliance with applicable environmental
laws and regulations until the loan is fully paid by the client\. The Loan Agreement also requires the implementing agency
to continue to submit monitoring reports for the remaining subprojects until these are fully completed\.
V\. LESSONS AND RECOMMENDATIONS
\.
83\. Sustained engagement is necessary to help shape solutions and create development impact in the urban water
and sanitation sector\. Over the span of four decades, the Bank has supported the development and implementation of
the Governmentâs major wastewater management strategies\. Through a series of lending support, complemented with
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policy, analytical advice, and learning initiatives, the Bank was able to (a) bring global knowledge and expertise into
implementation; (b) distill lessons from implementation experience; and (c) feedback learning into succeeding operations\.
The MWMP was the fourth lending operation in Metro Manila\. It incorporated the lessons learned from predecessor
projects, while taking into account current conditions and challenges\.
84\. Stakeholders at all government levels that have a critical role in supporting the implementation of interventions
in densely populated areas should be included in the project design\. The MWMP involved construction of STPs and
conveyance systems in densely populated areas that require the issuance of construction permits and land acquisition,
for which LGUs play a critical role\. The project was delayed when permits were not issued on time\. This could have been
avoided if the LGUs had been considered as part of the institutional set-up of the project\. Likewise, LGUs could have
facilitated land acquisition and coordinated with utilities and national government agencies in the implementation of
different infrastructure projects at the project sites\. The MWMP also experienced challenges in obtaining the right of way
as the conveyance systems passed through land owned by different entities, LGUs, and individuals\. In addition, the project
was affected by other infrastructure developers and utilities operating in the project sites, and would have benefitted
from close coordination with these entities\. The construction impacts on the public in terms of increased traffic
congestion, socio-economic disruptions, and inconveniences were substantial\. These concerns could have been
anticipated and addressed through the LGUs\.
85\. Flexibility is an important element that needs to be introduced in any project to allow implementing agencies
to respond to unanticipated factors during implementation\. The project benefited from flexibility of design\. It allowed
financing of other wastewater investment subprojects as long as these were agreed among the Bank, Guarantor,
Borrower, and the concessionaires and had passed the eligibility criteria set forth at appraisal\. The flexibility reflected in
the project design allowed the inclusion of the University of the Philippines and Marikina conveyance systems without
the need for a formal restructuring process\. Such flexible approach should be considered in future operations, to allow
for the scope of work to change without need for major restructuring\.
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ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: To improve wastewater services in selected sub-catchments of Metro Manila and surrounding areas\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Reduction of BOD in the Tones/year 0 1,708 2,054
collected wastewater in
MWCI 31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
MWCI has achieved 120% of the target BOD reduction in collected wastewater\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Reduction of BOD in the Tones/year 0 1,848 4,349
collected wastewater in
Maynilad 31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
Maynilad has achieved 235% of the target BOD reduction in collected wastewater\. It exceeded its target despite non-completion of three STPs at loan
closing because of cumulative reduction in BOD and high treatment efficiency of the completed STPs\.
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Population Equivalent in the Number 0 1,200,000 1,492,308
catchment area that would
benefit from the project in 31-May-2012 14-Feb-2019 30-Oct-2020
MWCI
Comments (achievements against targets):
MWCI has achieved 124% of the target\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Population Equivalent in the Number 0 1,290,000 496,154
catchment area that would
benefit from the project in 31-May-2012 14-Feb-2019 30-Oct-2020
Maynilad
Comments (achievements against targets):
Maynilad has partially achieved the target\. However, additional 353,846 beneficiaries are expected with the commissioning of Cupang STP by December
2020, elevating the number of beneficiaries to 850,000 people (66% of Maynilad target)\. The expected completion of Valenzuela and Tunasan STPs in 2021
will further increase the number of beneficiaries to 1,465,385 (114% of the target)\.
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Private Capital mobilized by Amount(USD) 0 55,920,000 101,900,000
MWCI
31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
This indicator was added in June 2014\. It was added to capture the equity provided by MWCI to the project\. By June 30, 2020 loan closing, MWCI had
provided US$101\.9 million as equity (financing contribution to the project)\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Private Capital mobilized by Amount(USD) 0 40,820,000 126,100,000
Maynilad
31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
This indicator was added in June 2014\. It was added to capture Mayniladâs equity contribution to the project\. By June 30, 2020 loan closing, Maynilad had
infused US$126\.1 million as equity (financing contribution to the project)\.
A\.2 Intermediate Results Indicators
Component: Investments in Wastewater Services by MWCI
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Progress in construction for Percentage 0 100 82
MWCI
31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
MWCI substantially achieved the target on physical progress\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Increase in wastewater Cubic 0 165,000 165,000
treatment capacity in MWCI Meter(m3)
31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
MWCI achieved its target\.
Component: Investments in Wastewater Services by Maynilad
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
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Progress in construction for Percentage 0 100 89
Maynilad
31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
Maynilad substantially achieved the target on physical progress\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Increase in wastewater Cubic 0 187,500 64,500
treatment capacity in Meter(m3)
Maynilad
31-May-2012 14-Feb-2019 30-Oct-2020
Comments (achievements against targets):
Maynilad partially achieved its target at loan closing\. The remaining STPs (Cupang, Valenzuela, Tunasan STPs) will be completed in the near term (2021)\.
Once these STPs are completed, the project will fully achieve the target\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Increase in septage Cubic 0 250 250
treatment before disposal in Meter(m3)
Maynilad
31-May-2012 14-Feb-2019 30-Oct-2020
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Comments (achievements against targets):
Maynilad achieved the target\.
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B\. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1\. Improved wastewater services in selected sub-catchments of Metro Manila and
surrounding areas
Outcome Indicators 1\. Reduction of BOD in the collected wastewater
2\. Population equivalent in the catchment area that would benefit from the project
Intermediate Results 1\. Progress in construction for MWCI
Indicators 2\. Progress in construction for Maynilad
3\. Increase in wastewater treatment capacity
4\. Increase in septage treatment before disposal
Key Outputs by Component 1: Investments in Wastewater Services by MWCI
Component (linked to the 1\. Design and construction of North and South Pasig STP with treatment capacity of 165,000
achievement of cubic meters per day (completed)
Objective/Outcome 1) 2\. Construction of North and South Pasig conveyance system with a total length of 44\.41
kilometers (ongoing construction)
3\. Construction of University of the Philippines conveyance system with a total length of 28\.30
kilometers (completed)
4\. Construction of Marikina conveyance system with a total length of 11\.23 kilometers
(completed)
Component 2: Investments in Wastewater Services by Maynilad
1\. Design and construction of STPs with combined treatment capacity of 187,500 cubic
meters per day
a\. Talayan STP (15,500 cubic meters per day) (completed)
b\. Pasay STP (46,000 cubic meters per day) (completed)
c\. Valenzuela STP (60,000 cubic meters per day) (ongoing construction)
d\. Cupang, Muntinlupa STP (46,000 cubic meters per day) (commissioning is expected
to start by December 2020)
e\. Tunasan, Muntinlupa STP (20,000 cubic meters per day) (ongoing
construction)
2\. Construction of conveyance systems
a\. Talayan (2\.44 kilometers) (completed)
b\. Pasay (9\.28 kilometers) (completed)
c\. Valenzuela (27\.16 kilometers) (ongoing construction)
d\. Muntinlupa (4\.12 kilometers) (ongoing construction)
3\. Rehabilitation of Ayala- Alabang STP (10,000 cubic meters per day, of which 3,000 cubic
meters were added as a result of rehabilitation) (completed)
4\. Construction of South Septage Treatment Plant (250 cubic meters per day) (completed)
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ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A\. TASK TEAM MEMBERS
Name Role
Preparation
Sudipto Sarkar Task Team Leader
Christopher Casuga Ancheta Senior Sanitary Engineer
Fatima Zehra Shah Senior Economist
Minneh M\. Kane Lead Counsel
Maya Gabriela Q\. Villaluz Senior Environmental Safeguards Specialist
Gerardo Pio Francisco Parco Operations Officer
Victoria Florian Lazato Social Safeguards Specialist
Miguel-Santiago Oliveira Senior Finance Officer
Samuel Haile-Selassie Senior Procurement Specialist
James Seward Senior Financial Sector Specialist
Karen Jacob Social Safeguards Consultant
Tomas Sta\. Maria Financial Management Specialist
Shyam KC Disaster Risk Management Specialist
Minerva Dacanay Environmental Safeguards Consultant
Friedrich Schwaiger Technical Consultant
Kishore Nadkarni Financial Consultant
Anna Mendoza Financial Consultant
Mariles Navarro Consultant
Rosanna Martin- Manuel Consultant
Mara Baranson Consultant
Demilour R\. Ignacio Program Assistant
Jeanette Wiget Team Assistant
Supervision/ICR
Sudipto Sarkar Task Team Leader
Christopher Casuga Ancheta Task Team Leader
Rene SD\. Manuel Procurement Specialist(s)
Maya Gabriela Q\. Villaluz Environmental Safeguards Specialist
Gerardo Pio Francisco Parco Environmental Safeguards Specialist
Agnes Chung Balota Environmental Safeguards Specialist
Marivi Amor Jucotan Ladia Social Safeguards Specialist
Karen Jacob Social Safeguards Consultant
Tomas JR\. Sta\.Maria Financial Management Specialist
Maria Liennefer Rey Penaroyo Financial Management Specialist
Lilanie Magdamo Maitim Team Member
Shyam KC Procurement Team
Demilour Reyes Ignacio Procurement Team
Kristine May San Juan Ante Procurement Team
Lilian Loza San Gabriel Procurement Team
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Berta Adelaide Da Silva Macheve Team Member
Ronald Rubenecia Muana Team Member
Aileen Bolus Castro Team Member
Marilyn Tolosa Martinez Team Member, ICR author
Teresita Fallado Victoria Team Member
Venessa Vaishali Sarkar Team Member
B\. STAFF TIME AND COST
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY10 25\.978 141,684\.13
FY11 68\.973 391,729\.25
FY12 50\.706 281,480\.40
FY13 0 79\.48
FY15 5\.870 13,803\.40
FY16 5\.935 10,352\.95
Total 157\.46 839,129\.61
Supervision/ICR
FY10 0 0\.00
FY13 38\.165 236,280\.54
FY14 39\.269 214,251\.22
FY15 40\.010 231,117\.45
FY16 36\.349 170,047\.21
FY17 35\.843 112,255\.42
FY18 61\.848 156,974\.00
FY19 33\.091 125,887\.82
FY20 32\.475 141,980\.27
Total 317\.05 1,388,793\.93
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ANNEX 3\. PROJECT COST BY COMPONENT
Amount at Approval Actuals at Project Closing Percentage of
(US$ million) (US$ million) Approval at
Total Financing Total Financing Appraisal
Project Project
IBRD Equity IBRD Equity
Cost Cost
Investments in Wastewater 193\.42 137\.50 55\.92 239\.40 137\.50 101\.90 124%
Services by MWCI
Investments in Wastewater 178\.33 137\.50 40\.83 263\.60 137\.50 126\.10 147%
Services by Maynilad
Total 371\.75 275\.00 96\.75 503\.00 275\.00 228\.00 135%
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ANNEX 4\. EFFICIENCY ANALYSIS
1\. Economic Analysis at Appraisal\. An ex-ante cost benefit analysis was carried out during project appraisal\. It
covered five STPs with a total amount of US$302\.1 million, representing 91% of total project cost\. The analysis assumed
five years of construction, 10 years of operation\. A 10-year operational period was used to avoid estimates of additional
rehabilitation investments typically needed after 10 years\. The financial costs were derived from project estimates and
then converted to economic costs by deducting taxes (12%)\. Capital costs included costs of STPs and interceptors, and
consultancy services\. Operation and maintenance costs were assumed to be US$0\.1 per cubic meter\. Two benefit
streams were used: (a) increase in land property values, and (b) improved water quality\. Increase in land property values
was computed by multiplying the land value with the land area directly benefiting from the project, which was assumed
only as a portion (39%) of the total catchment area of 16,774 hectares\. Improvement in water quality was measured in
terms of environmental fees paid by water consumers, which were assumed to be US$0\.60 per cubic meter\. The
assumed per-capita consumption was 140 liters per day\. The resulting economic rates of return (ERRs) were as follows:
North and South Pasig (11%), Talayan (19%), Valenzuela (20%), Pasay (20%), and Muntinlupa (13%)\. All subprojects had
ERRs higher than the social discount rate of 10%\.
2\. Economic Analysis at ICR\. An ex-post economic analysis was conducted at ICR to evaluate the efficiency of MWMP
investments\. The analysis covered the same subprojects that were evaluated at appraisal\. These subprojects represent
91% of total project cost\. The economic analysis applied the same approach used at appraisal\. Adjustments were made
in the assumptions\. The analysis used actual capital costs at the time these were incurred and actual operation and
maintenance costs\. It covered all costs regardless of financing sources\. Assumptions on the price of land and tariffs were
adjusted to reflect current conditions\. The key assumptions and respective adjustments are presented in table 4\.1
below\. The analysis assumed that all STPs will be operational by 2021\.
Table 4\.1: Key Assumptions at Appraisal and Adjustments Made at ICR
Key Assumptions At Appraisal At ICR
1\. Technical
Period of Construction 5 Actual
Period of Operation 10 10
2\. Economic Cost
Capital ï Included costs of STPs, interceptors, and ï Used capital cost figures at the time these
consultancy services based on financial were incurred
project estimates ï Included actual costs of STPs and
ï Applied 12% tax to convert financial cost interceptors, consultancy services, and land
to economic cost ï Applied 12% tax to convert financial cost to
economic cost
O&M ï Used project estimate of US$0\.1 per cubic ï Used actual O&M costs of STPs of US$0\.06
meter per cubic meter
3\. Benefits
(a) Increase in land property ï Price of land: US$100 per square meter\. ï Price of land was assumed to be US$120 per
value ï Area of influence was only a portion of the square meter\. This value is conservative as
catchment area\. It was calculated by it is lower than the average land price per
multiplying the length of both sides of the square meter in the project sites\.
riverbanks that would benefit from the ï For University of the Philippines and
project by 1000 meters Marikina conveyance systems, the
ï Annual increase of 1% of land value influence areas used for the computation of
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Table 4\.1: Key Assumptions at Appraisal and Adjustments Made at ICR
Key Assumptions At Appraisal At ICR
(constant per year) based on empirical increase in land value were 354 and 1,100
evidence: San Francisco (10%) and Ontario hectares, respectively\.
(18\.5%)29
ï Population equivalent was derived by
dividing STP capacity by 130 liters of
wastewater generated per day
(b) Improved water quality ï 20% of tariff of US$0\.60 per cubic meter ï 20% of tariff of US$0\.78 per cubic meter\. The
ï 140 liters of water consumption per capita same figure of US$0\.78 per cubic meter was
per day used for both concessionaires as the
ï Used only the environmental fees paid by geographical area is the same (Metro
the equivalent population Manila), although there is a slight difference
in tariffs between the two concessionaires
(US$0\.73 and US$0\.78 per cubic meter)\.
ï The University of the Philippines and
Marikina conveyance systems incrementally
deliver 7,000 and 22,000 cubic meters of
wastewater per day to the University of the
Philippines and Marikina STPs\.
ï All other assumptions remained the same\.
4\. Social Discount rate ï None ï 10%\. The economic analysis applied social
discount rate of 10% adopted by the
Government of the Philippines in 2016 to
evaluate economic viability of public
investments, which was based on
comparative analysis of social discount rates
used by multilateral banks and specific
technical study conducted on the
determination of social discount rate for the
Philippines\. This social discount rate also
reflects the positive developments in the
Philippine economy in the past years\.
5\.Project-level Average ERR ï No project level ERR was computed ï Project level ERR was computed based on
the share of each subproject in the total
costs\.
3\. Results showed that the recomputed ERRs of subprojects are significantly higher than the social discount rate of
10%, and higher than the computed ERRs at appraisal\. The overall weighted ERR average at ICR is 16%, which is higher
than the social discount rate of 10%\. Sensitivity analysis indicated that if the benefits had been 20% lower compared to
the base results, this would lead to a lower ERR of 12%\.
29 The Genuine Progress Index (GPI) Water Quality Accounts; Case Study: The Costs and Benefits of Sewage Treatment and Source Control for
Halifax Harbour, GPI: Atlantic; July 2000\.
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Table 4\.2: ERR Computation
Subproject Economic Cost (US$ million) ERR Sensitivity
At Appraisal At ICR Analysis (-20%
Cost Percentage Cost Percentage At At ICR of benefits
of Total Cost of Total Cost Appraisal
North and South Pasig 168\.2 56% 148\.0 37% 11% 16% 13%
Talayan 8\.9 3% 6\.9 2% 19% 29% 23%
Pasay 33\.0 11% 43\.8 11% 20% 18% 14%
Valenzuela* 43\.8 14% 98\.2 24% 20% 10% 4%
Muntinlupa* 48\.2 16% 60\.3 15% 13% 15% 10%
University of the Philippines** - - 13\.3 3% - 24% 19%
Marikina** - - 31\.7 8% - 26% 21%
Total 302\.1 100% 402\.1 100%
Weighted Average 14% 16% 12%
*Valenzuela and Tunasan (Muntinlupa) STPs have a BNR component, which allows the STPs to remove additional pollutants (nitrates and
phosphates)\. The additional benefits provided by BNR were not included in the computation of the ERRs\. Adding these benefits will further
improve the ERRs of Valenzuela and Tunasan STPs\.
** Only incremental benefits and costs were included\.
4\. Positive Externalities\. The project has large positive externalities, but these were not included in the ERR
computation\. First, the investments supported by MWMP would help improve water quality not only of the receiving
water bodies, but also of Manila Bay\. Improvements in water quality of Manila Bay are expected to generate substantial
benefits in terms of improved public health of the communities surrounding Manila Bay, enhanced value of commercial
fishing, and increased tourism revenues\.30
5\. Cost-effectiveness of Wastewater Investments\. A World Bank study (2013) estimated that the investment cost
to construct STPs and conveyance systems and improve septage management is around US$250 per capita\.31 Per-capita
investment costs under MWMP are lower compared to this benchmark estimate\. Per-capita investment cost was
computed by dividing the total actual investment costs (STP and conveyance system) by the total population
equivalent\.32
Table 4\.3: Cost Effectiveness of Wastewater Investments
Subproject Capital Investment Cost per Capita (US$)
Pasig North and South STP 132\.47
Talayan STP 66\.20
Valenzuela STP 241\.66
Pasay STP 140\.63
Muntinlupa STP 135\.00
30 PEMSEA\. 2005\. Initial Valuation of Selected Uses and Habitats Damage Assessment of Manila Bay\. Quezon City, Philippines: Partnership in
Environmental Management for the Seas of East Asia (PEMSEA)\.
31 World Bank\. 2013\. East Asia and the Pacific Region\. Urban Sanitation Review: A Call for Action\.
32 The ICR did not have details on the benchmark estimate for wastewater investment cost per capita of US$250\. Thus, the reasons for the
differences between the benchmark estimate and the actual wastewater investment cost per capita under the project could not be determined\.
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6\. Efficiency in Regulatory and Tariff Systems in Place\. The Concession Agreements with MWCI and Maynilad were
designed to ensure full cost recovery of capital investments and operation and maintenance costs through the existing
tariff mechanism\. Tariffs are adjusted mandatorily through rate rebasing every five years\. Rate rebasing is a process that
determines the level of rates for water and wastewater management services that permits the concessionaires to
recover over the life of the concession (2037) their operating, capital maintenance, and investment expenditures\.
Through this process, MWSS reviews the historical performance of the concessionaires against established
commitments and targets\. The concessionaires are allowed to renegotiate performance targets and tariffs every five
years\. The regulatory and tariff systems in place ensure that the water and wastewater services are provided at
economic prices, and that the financial and operational sustainability of investments will be maintained\.
7\. Efficiency-enhancing Elements in Project Design and Implementation\. Efficiency gains were also generated when
the project introduced efficiency-enhancing elements in project design and implementation\. These included: (a)
application of technical, social, environmental, financial, and economic viability criteria in subproject screening; (b)
computation and comparison of the 15-year life-cycle costs in the bidding parametersâa subproject would be awarded
to the bidder whose bid was evaluated as substantially responsive to the requirements of the bidding documents and
with the lowest life-cycle costs; and (c) incorporation of resilience adaptation measures to consider geo-technical risks
and hazards, which allow the STPs to (i) provide continuous and uninterrupted service (e\.g\., Pasay STP continues to
operate even during heavy downpour and flooding), and (ii) avoid damages and replacement costs associated with the
shocks and impacts of natural hazards\. Operational STPs exhibit higher treatment efficiency\. Higher BOD was removed
relative to the agreed target in the case of Talayan and Pasay STPs\.
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ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
1\. The MWMP ICR was shared with the Land Bank of the Philippines (LBP), MWCI, and Maynilad\. The comments
received from the implementing agencies were incorporated in the final ICR\. Below is a summary of the MWMP Project
Completion Report that was prepared by LBP in coordination with MWCI and Maynilad\.
2\. Relevance\. MWMP supports the goals and objectives of the following Philippine Development Plan (PDP)
chapters: Chapter 19: âAccelerating Infrastructure Developmentâ and Chapter 20: âEnsuring Ecological Integrity, Clean
and Healthy Environment\.â LBP, through the MWMP, contributes to both improvement of environmental quality (PDP
Chapter 20) and acceleration of infrastructure development in the Metro Manila region (PDP Chapter 19)\.
3\. Efficacy\. The project achieved the PDO\. It exceeded the target reduction of BOD in collected wastewater\. It also
exceeded the target for population beneficiaries\. The actual achievement level for BOD reduction in collected
wastewater was 6,403 tons as of October 30, 2020, exceeding the targeted 3,556 tons\. Around 3\.19 million people have
benefited from the STPs including the 1\.45 million people who have benefitted from South Septage Treatment Plant\.
The overall physical progress was reported at 82\.4% and 88\.8% for MWCI and Maynilad, respectively\. There were delays
in the construction of three STPs and conveyance systems despite the efforts of the concessionaires to mitigate traffic
and minimize social disturbance\. It is expected that once the remaining subprojects are fully complete, the PDO will
further exceed the originally planned targets and beneficial impacts\.
4\. Efficiency\. The Project Completion Report (PCR) adopted the economic analysis framework used during project
preparation and submitted to the National Economic and Development Authority\. The PCR is prepared by the Borrower\.
Thus, the economic analysis framework used for the PCR was different from that used by the Bank\. Efficiency was
measured in terms of economic rate of return (ERR)\. Costs included the capital cost of the STPs and operating costs\.
Environmental benefits included: (a) health benefits due to reduction of mortality and morbidity, (b) increase in fisheries
production, and (c) environmental benefits, which are assumed as the willingness to pay valued at 20% of the basic
water charge\. While the absolute values of the ERRs are different in the PCR, the results are consistent with the results
of the Bankâs economic analysis (see section II\.C\.âEfficiency, and annex 4: Economic Analysis)\. The project yielded ERRs
higher than the social discount rate of 10%\.
Subproject ERR
At Appraisal At ICR
Ayala-Alabang - 44%
Pasay STP 20% 20%
South Septage Treatment Plant 25% 25%
Talayan 19% 51%
North and South Pasig 11% 12%
MWMP Project Completion Report (October 30, 2020)
5\. Disbursement\. As of October 30, 2020, loan proceeds were fully utilized\.
6\. Key Factors Affecting Implementation\. The following factors affected implementation: (a) delays in land
acquisition under the sewerage network packages had cascading effects on procurement and construction; (b) tight
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restrictions imposed by concerned LGUs on the issuance of permits for the construction of wastewater network lines;
(c) road closure due to local festivities; (d) natural disasters (e\.g\., typhoons and flooding); (e) soil erosion and
unanticipated obstruction below ground during excavation works; (f) insufficient planning and coordination with other
Government agencies on implementation of road projects on subproject sites; and (g) contract management issues\.
7\. M&E\. LBP ensured that implementation arrangements were being followed and that each subproject investment
met the subproject eligibility criteria and was compliant with the submission of all reportorial requirements to the World
Bank\.
8\. Fiduciary Compliance\. Procurement was carried out by the concessionaires with oversight from LBP\. The
procurement activities for all subcontract packages were completed for both concessionaires in accordance with the
World Bankâs Procurement Guidelines\. LBP is familiar with the World Bank policies on fiduciary matters and
implemented these satisfactorily\. LBP complied with the World Bank policies and procedures on disbursements and
financial management\.
9\. Environmental and Social Safeguards Compliance\. LBP undertook the oversight function on environmental
assessment\. It assessed and identified key potential social and environmental issues that could arise from the proposed
subprojects\. Environmental and Social Compliance Reports were prepared by LBP semi-annually, based on information
provided by MWCI, Maynilad, and World Bank Aide Memoires, as well as the results of activities undertaken by LBP\.
Both concessionaires were compliant with the Environmental and Social Safeguards Framework\. A third-party
environmental safeguards performance review was conducted regularly for both concessionaires to ensure that all
environmental safeguards requirements were met\. Land Acquisition Reports and Resettlement Action Plans as well as
public consultation process documentations by MWCI and Maynilad were reviewed by LBP to facilitate and assist in
safeguarding the welfare of the common stakeholders in the direct impact areas\. Maynilad still needs to address two
social safeguards requirements\. Maynilad is still negotiating with the owner of an adjacent lot that is needed for the
effluent line of Tunasan STP\. Under Valenzuela STP, it is also negotiating with an affected property owner on the
methodology for protecting property\. LBP will continuously monitor the progress of these subcontract packages until all
civil works financed under MWMP are completed and the PDO has been achieved\. Close coordination and collaboration
with the two concessionaires should be maintained to discuss possible strategies needed to fast-track the
implementation of the remaining subcontract packages\.
10\. Performance of Implementing Agencies:
a\. LBP\. LBP ensured that the terms and conditions outlined in the Loan Agreement and related documents are
complied with; performed the necessary oversight functions on behalf of the government; and conducted
the overall supervision of project implementation and monitoring of the Project\. LBP is compliant in the
submission of the monitoring and evaluation reports\. LBP actively participated during the MWMP missions\.
b\. Sub-borrowers\. MWCI and Maynilad are responsible for overall project implementation and monitoring, and
for ensuring compliance with World Bank and government policies in key areas, including technical, social,
environment, procurement, and financial management\. MWCI and Maynilad had adequate capacity to carry
out subprojects and complete the project\. Maynilad and MWCI have been clients of LBP since 2002 and 2005,
respectively, and have maintained good working relationship during MWMP implementation\.
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c\. World Bank\. The World Bank sufficiently supervised and monitored the implementation of MWMP\. It
reported critical delays and presented interventions necessary to address them\. The missions aimed to
determine the root causes of the delays and to brainstorm interventions that could be implemented to
eliminate these root causes\.
11\. Lessons:
a\. Comprehensive research must be done to identify all possible risks in project design and implementation,
and recommend appropriate technical/engineering methods and other possible interventions\.
b\. The duration of project implementation needs to be realistically set based on the realities and the pre-
identified obstacles on the ground\. Maintaining close communication with concessionaires also facilitates
project monitoring\.
c\. Project roadshow and government relations must be intensified for the alignment of wastewater projects
with upcoming government projects, specifically road upgrading and drainage construction, to minimize
disturbance in the communities\.
d\. Ongoing or planned projects near or in same area and their implementation durations must be identified and
factored in to achieve appropriate engineering design, maintain realistic schedule of implementation, and
avoid unnecessary reworks\.
e\. To avoid construction delays, especially in high density areas, special modern construction methods and
systems must be adopted for a smoother project implementation\.
f\. Close coordination with the LGUs is necessary to have a smooth implementation of the project\. It is important
to have continuous communication with the LGUs from project startup to completion\. Regular coordination
and communication will generate better understanding of the project goals and speedy resolution of project
issues\. There is also a need to consider the local political cycle\.
g\. Documentation and promotion of project achievements increases the positive response of residents within
the sewerage/sanitation service delivery area\. This can form part of LGU initiatives\.
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ANNEX 6\. SUPPORTING DOCUMENTS
1\. The World Bank, Metro Manila Wastewater Management Project: Loan Agreement (Loan Number:
IBRD-81620-PH) between the LBP of the Philippines and International Bank for Reconstruction and
Development, May 31, 2012\.
2\. The World Bank, Metro Manila Wastewater Management Project: Project Appraisal Document (Report
Number: 59675-PH), April 6, 2012\.
3\. The World Bank, Aide Memoires for Metro Manila Wastewater Management Project: Aide Memoires,
2012-2020\.
4\. The World Bank, Restructuring Paper on a Proposed Project Restructuring of Metro Manila Wastewater
Management Project (Loan Number: IBRD-81620-PH), June 17, 2017\.
5\. The World Bank, Restructuring Paper on a Proposed Project Restructuring of Metro Manila Wastewater
Management Project (Loan Number: IBRD-81620-PH), June 28, 2020\.
6\. The LBP of the Philippines, Metro Manila Wastewater Management Project: Project Completion
Report\. December 7, 2020 (draft)\.
7\. Economic Analysis Excel Sheet saved in project files\.
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APPENDIX 1: STATUS OF MWMP INVESTMENT OUTCOMES AND IMPACTS
AS OF OCTOBER 30, 2020
Investments Investments
Planned at appraisal Completed at Loan Closing
North and South Pasig STP and ï STP with treatment capacity of 165,000 cubic meters per ï STP with the same treatment capacity planned at appraisal\.
conveyance system day The STP is currently under commissioning\.
ï Conveyance system with a length of 65 kilometers ï Conveyance system with a total length of 27\.22 kilometers
(61\.29% of the revised target of 44\.41 kilometers)\.
Talayan STP and conveyance system ï STP with treatment capacity of 15,500 cubic meters per day ï STP with the same treatment capacity planned at appraisal\.
and conveyance system ï Conveyance system with a total length of 2\.44 kilometers\.
The STP and conveyance system have been operational
since 2015\.
Pasay STP and conveyance system ï STP with treatment capacity of 46,000 cubic meters per day ï STP with the same treatment capacity planned at appraisal\.
and conveyance system ï Conveyance system with a total length of 9\.28 kilometers\.
The STP and conveyance system have been operational
since 2018\.
Valenzuela STP and conveyance system ï STP with treatment capacity of 60,000 cubic meters per day ï STP with the same treatment capacity planned at appraisal
and conveyance system and a conveyance system\. The STP is 95\.13% completed\. The
project constructed a total of 23\.15 kilometers of
conveyance system (85\.23% of target of 27\.16 kilometers)\.
Construction of STP and conveyance system is expected to
be completed by June 2021\.
ï BNR was added during implementation and is 82\.10%
completed\. Construction is expected to be completed by
June 2021\.
Muntinlupa STP and conveyance system ï STP with treatment capacity of 66,000 cubic meters per ï Due to limited availability of land, Muntinlupa STP was
day and conveyance system divided into two STPs: Cupang STP (46,000 cubic meters per
day) and Tunasan STP (20,000 cubic meters per day)\. The
combined capacity remained 66,000 cubic meters per day,
as planned at appraisal\.
ï Cupang STP is 91\.99% completed\. Works have already been
completed\. Commissioning is expected to start by
December 2020\.
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ï Tunasan STP is 91\.57% completed\. Works are ongoing and
will be completed by March 2021\. Commissioning is
expected to start by June 2021\.
ï BNR was added under Tunasan STP\. It is 85\.69% completed\.
Construction is expected to be completed by March 2021\.
ï The project completed 3\.73 kilometers (90\.48% of target of
4\.12 kilometers)\. Full completion is expected by June 2021\.
Ayala-Alabang STP ï Rehabilitation of STP with treatment capacity of 10,000 ï Rehabilitation of the STP with treatment capacity of 10,000
cubic meters per day cubic meters per day\. The STP has been operational since
2013\.
South Septage Treatment Plant ï Septage treatment plant with treatment capacity of 250 ï Septage treatment plant with the same treatment capacity
cubic meters per day planned at appraisal\. The facility has been operational since
2015\.
University of the Philippines conveyance ï Not considered at appraisal stage ï 28\.30 kilometers of conveyance system\. 100% operational\.
system
Marikina conveyance system ï Not considered at appraisal stage ï 11\.23 kilometers of conveyance system\. 100% operational\.
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APPENDIX 2: LIST OF SUBPROJECTS PENDING COMPLETION AS OF OCTOBER 30, 2020
Subproject Subproject Cost Brief Status as of Loan Closing Target Remaining Social Remaining Environmental
Package (USD Description Date of Safeguards Issues and Safeguards Issue and
Number millions) Completion of Actions Actions
Construction
MWCI
1\. Construction of SP1A 19\.33 5\.04 37\.26% completed 2024 None LBP and MWCI to submit to
North and kilometers World Bank and publicly
South Pasig SP1B 15\.84 8\.25 65\.91% completed 2022 None disclose ESMP Monitoring
conveyance kilometers Report every six months
system NP1 24\.52 12\.49 88\.21% completed 2022 None until completion\.
kilometers
NP2 7\.34 4\.70 33\.14% completed 2022 None
kilometers
NP3 10\.60 9\.70 31\.96% completed 2022 None
kilometers
Maynilad
2\. Design & 27\.68 46,000 cubic 91\.99% completed\. STP is October 2020 LBP and Maynilad to submit
Construction of meters per ready for commissioning\. to World Bank and publicly
Cupang STP day disclose ESMP Monitoring
3\. Construction of STP: 16\.95 20,000 cubic STP: 91\.57% completed March 2021 Conclude negotiations with Report every six months
Tunasan STP BNR: 4\.94 meters per BNR: 85\.69% completed the landowner needed for until completion\.
day the influent line for the
Tunasan STP or, if
unsuccessful, re-route the
line to the steel bridge\.
4\. Construction of 14\.74 4\.12 km 90\.48% completed\. June 2021 Conclude the Memorandum
Muntinlupa Remaining length to of Agreement with the
conveyance connect conveyance owner of the house that will
system system to Cupang STP is be affected by the Bayanan
±15 meters (bridge Pumping Station in Cupang,
crossing from Buli to PS07) Muntinlupa\.
and 340 meters for
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Subproject Subproject Cost Brief Status as of Loan Closing Target Remaining Social Remaining Environmental
Package (USD Description Date of Safeguards Issues and Safeguards Issue and
Number millions) Completion of Actions Actions
Construction
Tunasan STP (Buendia
Street)\.
5\. Design & STP: 29\.75 60, 000 STP: 95\.13% completed March 2021 Agree with the landowner
Construction of BNR: 7\.01 cubic meters BNR: 82\.10% completed for Pumping Station 12 in
Valenzuela STP per day BNR structure is Valenzuela on the
completed\. Interceptor construction methodology
Structure is 86\.87% in order for civil works to
completed\. start\.
6\. Construction of Package 1 28\.59 11\.83 km 82\.77% original completed June 2021 None
Valenzuela 17\.16% supplemental
conveyance Package 2 21\.04 7\.48 km 89\.87% original completed June 2021 None
system 95\.72% supplemental
Package 3 17\.17 7\.85 km 89\.86% completed June 2021 None
Page 53 of 53 | REVIEW |
P009496 | Documentof
TheWorld Bank
ReportNo\.: 32563
PROJECT PERFORMANCEASSESSMENTREPORT
BANGLADESH
INTEGRATEDNUTRITIONPROJECT
(CREDIT 2735-BD)
June 13,2005
Sector, Thematic and Global Evaluation Group
Operations Evaluation Department
Currency Equivalents(annual averages)
Currency Unit =Bangladesh Taka
2002 US$1\.oo Tk\. 59\.93
Tk\. 1 US$0\.01669
AbbreviationsandAcronyms
BINP Bangladesh IntegratedNutrition Project
BRAC BangladeshRuralAdvancement Committee
CBNC Community-Based Nutrition Component
CNC CommunityNutrition Center
CNO CommunityNutrition Organizer
CNP Community NutritionPromoter
EPS Executive Project Summary
GOB Government o f Bangladesh
ICR ImplementationCompletion Report
IEC Information, Educationand Communication
IEPS Initial Executive Project Summary
ICDDR,B IntemationalCenter for Diarrhoeal Disease Research, Bangladesh
LBW Low birthweight
M&E Monitoring and Evaluation
M C H Maternal and childhealth
MTR Midterm Review
MOHFW MinistryofHealthandFamilyWelfare
NGO Nongovernmental Organization
NNC NationalNutrition Component
"P NationalNutritionProject
OED Operations EvaluationDepartment
PPAR Project Performance Assessment Report
PSR Project Status Report
S A R StaffAppraisal Report
SD standard deviation
SENA Strengthening ExistingNutrition Activities
TINP Tamil Nadu IntegratedNutrition Project
VAT Value added tax
VNMC Village NutritionManagement Committee
UNICEF UnitedNations' Children's Fund
Fiscal Year
Government: July 1-June 30
Acting Director-General, Operations Evaluation : Mr\.Ajay Chhibber
Acting Director, Operations EvaluationDepartment : Mr\.R\.KylePeters
Manager, Sector, Thematic and Global Evaluation Group : Mr\.AlainBarbu
Task Manager : Mr\.HowardWhite
OED Mission: Enhancing development effectiveness through excellence and independence in evaluation\.
About this Report
The Operations EvaluationDepartmentassessesthe programsand activitiesof the World Bank for two
purposes:first, to ensure the integrityof the Bank's self-evaluationprocessand to verifythat the Bank's work is
producingthe expected results,and second, to help developimproveddirections, policies,and proceduresthrough
the disseminationof lessonsdrawn from experience\.As part of this work, OED annuallyassesses about 25 percentof
the Bank's lending operations\. Inselectingoperationsfor assessment,preferenceis given to those that are
innovative, large, or complex;those that are relevantto upcomingstudies or countryevaluations; those for which
Executive Directors or Bank managementhave requestedassessments;and those that are likely to generate
important lessons\.The projects,topics, and analyticalapproachesselectedfor assessmentsupport larger evaluation
studies\.
A Project Performance Assessment Report (PPAR) is basedon a review of the Implementation Completion
Report (a self-evaluation by the responsible Bank department) and fieldwork conducted by OED\. To prepare
PPARs, OED staff examine project files and other documents, interviewoperational staff, and in most cases visit
the borrowing country for onsite discussions with projectstaff and beneficiaries\.The PPAR thereby seeks to
validate and augment the information provided in the ICR, as well as examine issues of special interest to broader
OED studies\.
Each PPAR is subject to a peer review process and OED managementapproval\. Once cleared internally, the
PPAR is reviewed by the responsible Bank department and amended as necessary\.The completed PPAR is then
sent to the borrower for review; the borrowers' comments are attached to the document that is sent to the Bank's
Board of Executive Directors\. After an assessment report has been sent to the Board, it is disclosed to the public\.
About the OED Rating System
The time-tested evaluation methods used by OED are suited to the broad range of the World Bank's work\.
The methods offer both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or
sectoral approach\. OED evaluators all apply the same basic method to arrive at their project ratings\. Following is
the definition and rating scale used for each evaluation criterion (more information is available on the OED website:
http://worldbank\.org/oed/eta-mainpage\.html)\.
Relevance of Objectives: The extent to which the project's objectives are consistent with the country's
current development priorities and with current Bank country and sectoral assistance strategies and corporate
goals (expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers,
Operational Policies)\. Possible ratings: High, Substantial, Modest, Negligible\.
Efficacy: The extent to which the project's objectives were achieved, or expected to be achieved, taking into
account their relative importance\.Possible ratings: High, Substantial, Modest, Negligible\.
Efficiency: The extent to which the project achieved, or is expected to achieve, a return higher than the
opportunity cost of capital and benefits at least cost compared to alternatives\. Possible ratings: High, Substantial,
Modest, Negligible\. This rating is not generally applied to adjustment operations\.
Susfainabilify: The resilienceto risk of net benefits flows over time\. Possible ratings: Highly Likely, Likely,
Unlikely, Highly Unlikely, Not Evaluable\.
lnsfitufionalDevelopment Impact: The extent to which a project improves the ability of a country or region
to make more efficient, equitable and sustainable use of its human, financial, and natural resources through: (a)
better definition, stability, transparency, enforceability, and predictability of institutional arrangements and/or (b)
better alignment of the mission and capacity of an organization with its mandate, which derives from these
institutional arrangements\. InstitutionalDevelopment Impact includes both intended and unintended effects of a
project\. Possible ratings: High, Substantial, Modest, Negligible\.
Outcome: The extent to which the project's major relevant objectives were achieved, or are expected to be
achieved, efficiently\. Possible ratings: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately
Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
Bank Performance: The extent to which services provided by the Bank ensured quality at entry and
supported implementationthrough appropriate supervision (including ensuring adequate transition arrangements
for regular operation of the project)\. Possible ratings: Highly Satisfactory, Satisfactory, Unsatisfactory, Highly
Unsatisfactory\.
Borrower Performance: The extent to which the borrower assumed ownership and responsibility to ensure
quality of preparationand implementation, and complied with covenants and agreements, toward the achievement
of development objectives and sustainability\. Possible ratings: Highly Satisfactory, Satisfactory, Unsatisfactory,
Highly Unsatisfactory\.
\.
ill
Contents
PrincipalRatings \. v
Key Staff Responsible \. v
Preface \. \.
vi1
Summary \. ix
1 Background
\. \. 1
Nutrition inBangladesh\. 1
The World Bank and Nutrition\. 1
Project Preparation\.,\. 2
2 \. ProjectObjectivesandDesign \. 5
Objectives \. 5
Components \. 5
Geographic coverage \. 7
Design Issues \. 8
3 Implementation
\. \. 10
Overview\.,\. 10
Inter-SectoralNutrition ProgramDevelopment\. -11
NationalNutrition Component \. 12
Community-BasedNutrition Component \. 13
Scaling-up to the National Nutrition Project \. 15
4\. Outputs and Outcomes by Objective \. 16
Objective 1:Institutionbuildingat national level\. 16
Objective 2: Improve capacity o f communities to understand their
nutritionalproblems and take actions to addressthem\. -16
19
5\. Ratings \. \.
Objective 3: Improve nutritional outcomes inproject areas\.
, 22
Outcome\. 22
InstitutionalDevelopment Impact\. 22
Sustainability\.
\. \. \. 23
Bank Performance\. 23
Borrower Performance\. 24
This reportwas preparedby HowardWhite\. who assessedthe projectinAugust 2004\. withinputsprovided
by EdoardoMasset andHughWaddington\.The reportwas editedby William Hurlbut\. and Soon-WonPak
providedadministrative support \.
iv
6 Findings and Lessons
\. \. 24
References\. 26
Annex A \.BasicData Sheet \. 27
V
PrincipalRatings
ICR* ICR Review* PPAR
Outcome Satisfactory Satisfactory ModeratelyUnsatisfactory
Sustainability Likely Likely Likely
Institutional Modest Modest Modest
Development Impact
Bank Performance Satisfactory Satisfactory Satisfactory
Borrower Satisfactory Satisfactory satisfactory
Performance
* The ImplementationCompletionReport(ICR) is a self-evaluationby the responsibleoperational divisionof
the Bank\.The ICR Review is an intermediateOED productthat seeksto independentlyverify the findings of
the ICR\.
Key StaffResponsible
Project Task ManagedLeader Division Chief/ Country Director
Sector Director
Appraisal S\. I\.Sudhaka BarbaraHerz Paul lsenman
Completion Meera Chatterjee/ Anabela Abreu FrederickThomas
MicheleGargnolati Temple
vii
Preface
This project performance audit report (PPAR) covers the Bangladesh IntegratedNutrition
Project (BINP, Credit 2735-BD)\. The US$67\.4 million project was financed by a credit
o f US$59\.8'millionapproved inMay 1995\. The project closed with disbursementso f
US$51\.6 million inDecember 2002\.
The PPAR was prepared by the Operations EvaluationDepartment (OED), basedupon
the Implementation CompletionReports (ICR), project documents, and interviewswith
government officials and Bank staffwith experience o f the projects\. It also draws on the
OED impact study Maintaining Momentum toward the MDGs? An Impact Evaluation of
Interventions to Improve Maternal and Child Health and Nutrition Outcomes in
Bangladesh, includingthe fieldwork for that study, which took place inNovember 2003
and August 2004\. The assistanceo f those who met with the study team i s gratefully
acknowledged\.
Following standard OED procedures, the draft o f this PPAR was sent to the borrower for
comments before finalization, but none were received\.
i x
Summary
TheBangladesh Integrated Nutrition Project (BINP) was initiated inresponse to the very
highlevelofmalnutritionprevalent inthe country andthe fact that activities explicitly
focused onnutritionhadbeen relatively neglected byboth govemment and extemal
agencies\. The proposed design drew heavily on the Tamil Nadu IntegratedNutrition
Project (TINP) inIndia, at the heart o fwhich was nutritional counseling to change
behavior\. The govemment was initially resistant to the project\. The Bank adopted both an
advocacy approach and adapted the program design to win govemment acceptance\. The
main changeswere the scaling down o f the project from 70 to 40 thanas, phased inover
time with the intention o f learningfrom experience inthe earlier thanas, but assurances
were also givenbythe Bankthat the community-level workers would not becomepart o f
the government service\.
Theproject's long-term goal o freducingmalnutrition inBangladesh to the extent that it
ceasedto be a public healthproblemwas to be reached through three intermediate
objectives:
(a) to improve the capacity o f national level nutrition institutions inBangladesh inthe
areas o f advocacy, analysis o f causation and consequenceso f malnutrition, policy
advice, operational research, andoperational support o fnationalprograms;
(b) to improve the capacity o fcommunities, households andindividuals inthe project
areato understand their nutritional problems inpractical terms andtake
appropriate action to address them at their own level; and
(c) to improve the nutritional status o f the populationinthe project area, with
particular emphasis onpregnant and lactatingwomen and on children\.
To achieve these objectives, the project had three components:
0 National nutrition activities (US$l9 million, 32 percent o f the total), including
institutionbuilding, operational research, and monitoring and evaluation\.
0 Community-Based Nutrition Component (US$32\.6 million, 56 percent), which
usedgrowthmonitoring as a framework for nutritionalcounseling and targeted
supplementary feeding for childrenaged under 24 months, and for pregnant
women\.
0 Inter-sectoral nutrition activities (US$7 million, 12percent), programs from other
sectors to improve nutrition, such as home gardens andpoultry keeping\.
Implementationbegan slowly; service delivery at the community level was delayed by
one year\. However, once it began, impressiveparticipationlevels were achieved, and the
monitoring system showed large reductions insevere malnutrition\. But evidence from the
midterm evaluation and, even more so the endline study, showed the project to behaving
less impact than hadbeen thought; an impact that was certainly well below target levels\.
Pregnancy weight gain met the project target, but this was also achieved inthe control
areas, so that only a small gain canbe attributed to the project, and too little to make a
large difference to the prevalence o f low birthweight, which fell by less than targeted\.
Outcome data were not collectedon anemia and Vitamin A and iodine disorders, though
use o fmineral supplementsdid increase inthe project area\. The Community-Based
X
Nutrition Component (CBNC) thus had some success inimplementation but failed to
achieve its objectives interms o fnutritional outcomes\.
The other two components sufferedfrom implementationproblems, thus compromising
the achievement o fproject objectives\. The inter-sectoral component only financed two
activities, when more hadbeenplanned, and had limitedcoverage andpoor targeting\.
These activities had limitedimpact onnutritional outcomes\. At the national level,
information, education, and communication(IEC) materials were not developed as
planned\. Capacitybuildingwas mixed: whilst there were positive aspects, key institutions
were missed\.A good monitoring and evaluation system was put inplace for the CBNC,
though its use for program decisions has beenlimited\.
The three objectives were all highlyrelevant, but project efficacy and efficiency were
modest\. Capacity creationat the national level was modest and limitedin scope\. Capacity
buildingat the community level inproject areas was substantial, butwith modest
efficiency, since the project's infrastructure hasprovedquite costly\. Nutritional
knowledge has improved inproject areas, but there has beena frequent failure to apply
such knowledge inpractice\. The impact o f the project on nutritional status has been
limited\. Hence, project outcome i s rated as moderatelyunsatisfactory overall\.
Onbalance institutional development hasbeenmodest\. It has beengreatest at the
community level, where committees have beenestablished and community workers
trained, but far less at the national level, with key institutions ignoredby the project\.
Given the creationof capacity at both nationaland local levels, sustainability is rated as
likely, though concerns are raised regarding financing\.
The limited impact o fBINPraises serious doubts as to the proposedjustification for
scaling the project up to the national level, which has already begun\. To do so will prove
very costly, with limited nutritional gain\. However, several lessons for possible future
Bankassistanceemerge from this assessment:
0 Supplementary feeding for childrendoes improve nutritional status, especially for
the most malnourishedchildren\.
0 Supplementary feeding for pregnantwomen appears an ineffective approach on
two grounds: the pregnancy weight gain achieved i s mostly too small to have a
notable impact on birthweight, though there are important exceptions amongst
sub-groups o fwomen for which a substantial impact i s found\. The programmight
have beenmore successful ifi t hadrestricted its attention to the most
malnourishedo f women, improving targeting to reduce Type I1error, and ifit
triedharderto discourage leakage andsubstitution\.
0 For bothtypes o f feeding program, there i s evidence o f a greater impact inthe
lean season\. There are grounds for consideringeither increasingthe size o f the
food supplementinthis period, restricting it to those months, or adjustingthe
eligibility criteriabytime of year\.
0 Discouragingwomen from "eating down" (Le\., less) duringpregnancy has some
benefit for birthweight\. But all forms o fknowledge transmittedby the project
suffer from a knowledge-practice gap (ie\., not puttingknowledge into practice,
xi
though uptake o f better practices has increased inproject areas)\. Such gaps are
common and have multiple causes\. However, paying attention to the causes o f the
gap can help enhance project effectiveness\.
Ajay Chhibber
Acting Director-General
Operations Evaluation
1
1\. Background
NutritioninBangladesh
1\. Inthe 1980s,malnutritionlevelsinSouthAsiawerethehighestintheworldand
those inBangladesh were the worst inthe region\. Stunting affected two-thirds of
Bangladeshi children under five inthe early 1980s, a higherproportionthan inbothIndia
andPakistan, and far higherthan inSri Lanka (Table 1)\. This gap hadwidened by the
early 1990s, as there hadbeenvirtually no improvement inBangladesh, whereas
malnutritionrates were improving inthe other countries inthe region\.
Table 1:Anthropometric Outcomes in SouthAsia (percentof childrenbelow -2
standarddeviationsfrom the referencemedian)
1975-79 1980-84 1985-89 1990-94 1995-99 2000-04
Stunting (Height for age)
Bangladesh 67\.7 67\.5 64\.4 53\.9 44\.7
India 72\.3 58\.4 44\.9
Sri Lanka 44\.6 36\.2 27\.2 23\.8 20\.4
Pakistan 67\.0 57\.9 42\.9
Underweight (Weight for age)
Bangladesh 68\.0 70\.9 67\.1 59\.2 47\.7
India 71\.3 59\.4 46\.7
Sri Lanka 54\.3 37\.3 37\.7 32\.9 33\.0
Pakistan
Source: World Bank, WorldDevelopment Indicators\.
2\. This dismal trend inpart reflects a lack o fserious poIicy attention to nutrition\.
The Bangladesh NationalNutritionProgramwas set up in 1975but carried out a limited
range o f activities\. Policy interventions insupport o f nutritionpalled into insignificance
incomparisonwiththe substantial family planningprogrambeguninthe 1970s, and
compared to the success inraising immunization coverage during the 1980s\. Itwas
against this backgroundthat the World Bank proposed the Bangladesh Integrated
Nutrition Project\.
The World Bank and Nutrition
3\. The World Bankbegan its involvement innutrition inthe 1970sas a part o f the
new emphasis on basic needs\. Three free-standing nutritionprojects were initiated inthat
decade: Brazil (1976), Colombia (1977), and Indonesia (1977)\. These projects included a
broadrange o f elements on a pilot basis -rural credit; nutrition education; information,
education, communication (IEC); food supplementation; child monitoring; school
feeding; micronutrientssupplementation; processing and marketing o f low-cost foods;
h i t andvegetable gardens; food storage; supplyo fpotablewater; andconstruction o f
healthposts\. The projects gave mixed signals as to what worked and what didn't\.
2
4\. The Tamil Nadu IntegratedNutrition Project (TINP), India, begunin 1980,
adopted a "medical" approach to malnutrition, relyingheavily on nutrition education (or
counseling)\. Community healthworkers were employed to instruct women on how to
make betteruse o fthe existingresources\. Foodwas seen as a "medicine" (Berg 1983)
provided at community healthcenters, where children are weighedinorder to detect
malnourishment\. This approach mirrored developments inthe economic literature,
including research at the World Bank, arguingthat income-based improvements in
nutrition would be inadequate, so there is a strong case for nutrition education\. TINP has
been widely heldup as a success story, beingcalled one o f the "most successful
[projects] inthe world inreducingmalnutrition\."' An OED impact study o f TINP in 1994
found that the project achieved unprecedented rates o f decline inmalnutrition inproject
areas, most ofwhich was attributable to the project (World Bank, 1994)\. The Bangladesh
IntegratedNutrition Project was modeled on TINP\.
Project Preparation
5\. The Bank's involvement inthe healthsector inBangladesh began in 1975 with
the First Population Project\. As the name suggests, the focus was on family planning\.
Subsequentprojects were extended to the broader health sector, butwith little attention to
nutrition\.
6\. A sector studypublishedin1985highlightedthe depthofthe malnutrition
problem: "malnutrition is awidespread, persistent and apparently increasingproblem in
Bangladesh\. Daily per capita caloric consumption has deteriorated significantly inthe last
two decades-from an estimated 2,301 in 1962-66 to an estimated 1,943 in 1981-82"
(World Bank 1985: i)\. Giventhe later focus o fBINP on behavior change, it shouldbe
noted that the sector study argued that "the major determinants o f food consumption in
Bangladesh are household income and wealth\. Malnutrition is, therefore, essentially a
poverty and rural employment generation problem" (ibid\.: i)\. Although the role o f
"deleterious food beliefs andpractices" are mentioned, nutrition education receives only
one paragraph inthe 54 pages o fthe mainreport, being subsumedunder healthpolicies,
which are secondary to the report's main focus on foodproduction and distribution\.
7\. Ajoint Bank-UNICEF missionto take forwardthe nutritioninitiative took place
in1989, resultinginachapter onnutritionbeingincludedinthe country's FourthFive-
Year Planand a draft proposal beingprepared by the World Bank\.2The proposal
document indicates that the Bangladesh project was to be based on the Tamil Nadu
Integrated NutritionProject; adopting the central focus onbehavior change\. A second
element o fproject design, which evolved out o ftwo papers byworking groups under the
MinistryofHealthandFamilyWelfare (MOFHW),was the needfor amulti-sectoral
focus\.
1\. http://www\.worldbank\.org/ourdream/india-2\.htm (accessed on 04/14/05)\.
2\. The proposal i s outlined inthe InitialExecutive Project Summary (IEPS), a 2-3 page document which
describes the proposed objectives and main design features of the project\.
3
8\. A missionto preparethe projectwas plannedfor the secondhalfo f 1992\. A
backgroundnote for the preparation team indicatedthat the basic package shouldbebuilt
around three elements: growthmonitoring, targeted supplementaryfeeding, andnutrition
education to change behavior\. The report o f the preparation mission, which took place in
September 1992, confirmedthis view\. The importance o fthe other two determinants o f
nutrition - food security and health-was acknowledged\. But it was argued that programs
were inplace to addressthese issues, whereas that was not the case for caring practices\.
Moreover, it was argued that a substantial proportion o fthe problem o fpoor nutrition
among children under three couldbeprevented through appropriate care practices, even
inthe absenceo fimprovements infood security anddiseasecontrol\. Thepreparation
mission confirmed that the project shouldhave an inter-sectoral component to finance co-
ordination activities with other ministries carrying out work important to nutrition, e g ,
MinistryofEducationto improvenutrition education for adolescent girls inschool and
MinistryofWomen's Affairs to enhancethe status o fwomen\. Thesepriorities were
reflectedinthe revisedproposal o fFebruary 1993, which allocated US$54 million o f the
total budget o fUS$75 million (i\.e\., 72 percent) to the Community-BasedNutrition
Interventions component, and another US$l0 millionto Inter-Sectoral NutritionProgram
Development\.
9\. As project preparation proceeded, misgivingsbeganto beexpressed byboth
government (especially the Ministryo f Finance) and other donors (notably USAID, but
also WHO, UNDP, andUKODA)\. The main area o f concem was the proposal to create a
new cadre o f community-level nutrition workers who would bepaid for their services\. It
was felt that this practice might cause illfeeling among existing community-level
volunteers, who were unpaid, and be financially unsustainable once government had to
assume responsibility for these payments\. Itwas proposed by government that a smaller
pilot might be more appropriate\. The Britishraised evenmore fundamental concems as to
whether the proposed approach was the right one, andthat there was a need for a better
understanding o f malnutritioninBangladeshbefore designinga large-scale intervention\.
10\. Bank staff undertook several activities to address these concems\. A question-and-
answer document was prepared to be usedinsupport o fthe proposal; a video and series
o fpresentations was commissioned to makethe case for the project; and key government
officials were sent to visit nutrition projects inTamil Nadu andIndonesia\. A program
called PROFILES, which projects the various benefits from nutritional interventions, was
presented to government officials at various levels to persuade themo fthe worth o f the
p r ~ j e c tIt~was argued by the Bank that the project's recurrent costs o f US$10 million a
\.
year were far less than the cost o f the government's existing nutritionprograms -though
this argument was disingenuous as existing programswere nationalwhereas the proposed
project would benefit less than 10percent o fthe country's children\. Similarly, the
PROFILES projections promised addressing nutrition at the national level, although the
project itselfwas geographically limitedinscope\. By early 1994, an internalBank memo
noted that acceptance o fthe project appeared to be growing\. The Ministryo fFinance
3\. Describing the experience, a staffmember from the organizationthat developed PROFILES, the
Academy for Educational Development, wrote that "World Bank officials said that the PROFILES
applicationplayed a vital part ingaining acceptance o f the [project]'' Burkhalter et al\. (1999)\.
4
withdrew its objections once the project was scaled down from the proposed 70 thanas4to
40\.5The community workers were not to bepart o f the government service, and the
intention was that their cost should eventually be absorbedby the community\.6Finally,
rather than agreeing to a smaller pilot, the project was to be phased inover time, with
continued expansion dependent on the results o f the midtermreview Insupport o f the
proposalthe Bank also notedthat the project designwas not entirely novel, since an
existingBRAC project inMuktagachahad an approach similar to BINP\.
11\. The Bank's appraisal report put forward stronger argumentsfor nutritional
counseling: "behaviors relating to the feeding o f young childrenhave at least as much (if
not more) to do with the serious problems o fmalnutrition inBangladesh as poverty and
the resultant household food insecurity do\., [Claring practices, culture-specific
,
consumptionpractices (particularly by women), intra-household food distribution, [and]
personal hygiene constitute the most significant, hitherto un-addressed, set o f nutritional
determinants inBangladesh" (SAR: 4-5)\.' N o substantial changeswere made to this
design at the negotiations inMarch 1995\. The main change was an increase inthe amount
allocated to inter-sectoral projects from US$2\.5 to $7\.5 million\.
12\. Two observations can be made withrespect to project identification and
preparation\. First, Save the Children (2003) has argued that the Bank adopted a
"blueprint approach," proposinga designbasedonthe Tamil Naduproject with little
effort to adapt the project to local circumstances\. There appear good reasons for
accepting this critique\. The Bank's sector work on nutrition inBangladeshpredated the
project by nearly a decade, and argued for a quite different approach to that adopted in
BINP\.InternalWorldBank memosmentionedthat studies ofnutritionwouldbe carried
out before project design, and some studies were indeedcommissionedby UNICEF\.
However, it i s not clear how these may have influencedproject design, since the basic
approach already decided uponwas retained, and it i s notable that other donors argued
that further analysis was needed\.' Rather, the core features o fthe design- focused on
behavior change for caring practices -were identifiedearly on, with reference to the
growing body o f international evidence o fthe weak link from income growthto
nutritional improvement and the perceivedsuccess o fthe TamilNadu project\. Second,
4\. A thana i s an administrative unit at the sub-district level\. Eachthana is further sub-divided into a small
numbero funions\. There are 480 thanas inthe country as a whole\.
5\. Giventhis reduction, proposed Asian Development Bank cofmancing o f US$20 million (bringingthe
proposed total budget to U S 9 5 million) was no longer considered necessary\.
6\. But the position that these women should be paid was maintained\. It was argued that existing volunteers
worked only 4-6 hours a week, whereas nutritioncounseling would be a full-time occupation, so that
payment was a necessary incentive, and would not cause resentment\.
7\. Additional data analysis was presentedto demonstrate the relative unimportance o f income factors in
nutrition inBangladesh: (1) that even children o f the top 20 percent suffered from poor nutrition, although
this i s to a lesser degree than that amongst lower quintiles, and (2) that nutritional status improved after 24
months\.
8\. The only explicit mention o f the UNICEF background studies i s an annex that lists background
documents inproject files, which includes as one document infiles a summary o f the UNICEFstudies\. It is
o f course possible that the influence is not explicitly acknowledged\. Since the document i s no longer inthe
project file, and could not be traced, it is not possible to make a closer examination\.
5
the Bank adopted a dual-prong strategy towardthe misgivingsthat were expressed
regardingthe project\. One part of this strategy was advocacy to convince government and
donor officials that the project designwas appropriate\. However, there was also
accommodationo f some o f these concerns, notably the scaling back of the project from
70 to 40 thanas\.
2\. Project Objectives and Design
0bjectives
13\. The Staff Appraisal Report (SAR) states that "the ultimate goal o fthe national
programwould be to reduce malnutrition inBangladeshto the extent that it ceases to be a
public healthproblem and improve the nutritional status o f its population, particularly
children under five, women and adolescent girls" (SAR: p\.14, para 2\.6)\. This goal was to
bereachedthrough three intermediate objectives:
(a) to improve the capacity o fnational level nutritioninstitutions inBangladesh inthe
areas of advocacy, analysis o fcausation and consequences of malnutrition, policy
advice, operational research, and operational support o f nationalprograms;
(b) to improve the capacity o fcommunities, households andindividuals inthe project
area to understandtheir nutritional problems inpractical terms andtake
appropriate action to address them at their own level; and
(c) to improve the nutritional status o f the population inthe project area, with
particular emphasis on pregnantand lactatingwomen andon children\.
14\. The following quantitative targets were set for the project with respect to the
nutritional impact inthe areas coveredbythe Community BasedNutrition Component
(CNBC):
0 Reduction o f severe malnutrition(weight for age) by 40 percent and moderate
malnutritionby 25 percent, among under-two children
0 Restorationo f the rate o f growth as measuredby monthly weight gain for at least
50 percent o f childrenunder-two
0 Reductiono f vitamin A and iodine deficiency disorders by 50 percent
0 Reductiono f iron deficiency anemia by 33 percent among children and pregnant
andlactatingwomen
0 Reductiono f low-birth weight by 50 percent
0 Improvement inmaternalweight gainby at least 50 percent inat least 50 percent
of pregnant women\.
Components
15\. Theproject hadthree components: (1) national-levelnutrition activities; (2)
community-based nutrition component (CBNC); and (3) an inter-sectoralnutrition
component\.
6
National-Level Nutrition Activities (US$l9 million, 32percent of total)
16\. The national-level component comprised the following four sub-components:
Program development and institution building (US$2\.7 million): This sub-
component hadthe objective o f maintaining a strong political commitment and
buildinginstitutional capacity for the successful implementation ofthe project\.
The activities consisted of areviewo f existingcapacity, the development o f
nutritional experts, guidingresearch for the program, assessingthe role o fNGOs,
and strengthening o f the Bangladesh National Nutrition Council\.
Information, Education, and Communication (IEC, US$4\.4million): This sub-
component was to develop the messages and materialto be`usedinboththe
CBNC and separate national advocacy andmass media campaigns\.
Strengthening of existing nutrition activities (US$6\.4 million): The project sought
to improve the coverage and effectiveness o f existing nutritionprograms such as
the control o fnutritional anemia, the breastfeedingprogram, the "Baby Friendly
Hospital Initiative," andthe Vitamin A program\.
Project management, monitoring, and evaluation (US$S\.5 million): Evaluation
was to be based on three surveys (baseline, midterm at three years and endline at
the end o f the project), with the baseline already beingfielded at the time the S A R
was prepared (with UNICEFfinancing)\. There would be annual World Bank-
UNICEF supervision meetings\. Monitoring was to bebased on data generated at
the thana level\.
Community-Based Nutrition Component (US$32\.6million, 56percent)
17\. The core o fthe project was the Community BasedNutrition Component (CBNC),
based on growth monitoring, food supplementation andnutritional counseling\.
Nutritional counseling was the central part o fthis plan, with the other activities providing
a framework for such counseling\.
18\. CommunityNutrition Promoters (CNPs) were to be recruitedineach community
(at a ratio o f one CNP for every 1,000 population insome areas and every 1,500 in
others)\. These were to be women with children and a minimum 8 years o f education\. The
CNPs were responsible for implementation o fmost project activities at the community
level, incollaborationwith the Women's Group, and under the supervision o f the
CommunityNutrition Organizer (CNO, each o fwhom was responsible for 10 CNPs)\.
The work o fthe CNP was to be supported bythe Village Nutrition Management
Committee (VNMC)\.
19\. Theprogram adopted two different target audiences, the second o fwhich was a
pilot injust one o fthe initial six thanas\. Under the approach used inthe majority o f
thanas, all children aged under two years were intendedto be coveredby monthly growth
monitoring, with feeding supplementation offered to severely malnourished andgrowth
faltering childrenunder two years (meetingcriteria based on weight-for-age charts) and \.
7
malnourishedpregnant mothers (meetingcriteria basedon midarmcircumference)\. Under
the experimental targeting strategy inone thana all newly marriedcouples inthe project
area were to be provided a special package o fhealth andwelfare services\.' IEC, with
particularly strongnutritional counseling focusing on the period from pregnancy to two
years after childbirth; preferentialtreatment at healthlfamily planning facilities with an
emphasis on maternal andchild healthcare (MCH) and particular attentionto childhood
infections, inclusion ina homestead gardening program; special provision to their
householdinterms o f access to safe water supply and sanitary facilities; etc\. The couples'
first pregnancy was to get extra attention, including supplementary feeding o f the mother
and/or the child ifthey meet nutritional criteria, full pre-, intra- andpostnatal care,
breastfeeding promotion, complete immunization (for the mother and the child)\. The
couples would leave the programwhen the first child reached two years old\.
20\. The programwas to be implementedintwo different ways\. Some thanas were to
be wholly contracted out to NGOs for the management and implementationo f all CBNC
activities; ineach o fthese thanas, a selected NGO will take the full responsibilityfor all
activities, including the recruitment and training o f the various field personnel;
community mobilization; procurement, preparation, packaging, and delivery o f food
supplements; payment o f salarieshonorariaand allowances; procurement o f equipment
andsupplies; quality control; supervision andmonitoring; andIEC activities; they would
use the existing government systems for the provision o fprimaryhealth care services as
necessary and for inter-sectoral coordination\. Inthe other thanas, the Government o f
Bangladesh (GOB) was to use its own management structure to runthe project activities;
NGO support was to beprovidedinthe following key areas: community mobilization,
training and technical supervision o f field personnel, logistics o fpreparing, packaging,
andsupplyingfood supplements, includingquality control\.
Inter-Sectorat Nutrition Program Development (US$7million, 12percent)
21\. The objective o f this component was to promote activities, outside o f health and
familyplanning, which would have apositive healthimpact\. Three sub-projects were
underconsideration: (1) homesteadvegetable production, (2) homestead poultry
production, and (3) study o f the impact o f agricultural programs\. Ifany o f these were
found to be inappropriate, then alternative proposals were to be sought\. A fund was
created (the Inter-Sectoral NutritionFund) to which NGOs and government departments
could apply with proposals for implementation inproject areas\. These proposals should
re-orient existing activities to be more nutritionally relevant\.
Geographic coverage
22\. Activities at the national levelwere institutionbuildingand IEC development,
includinguse o f nationwide media for IEC messages\. The field-level activities o f the
CNBC were to cover 40 o fthe country's 480 thanas (about 8-9 percent o fthe
9\. The evaluation data set covers the initial six thanas, but the evaluation study didnot consider the
question o f whether this approach had proved more effective\. Evenhad it done so, since the different
approach was usedinjust one thana it would not be possible to separate the area effect from the design
effect\.
8
population)\. These were to bephased in, beginningwith six thanas inthe first year, and
17 inthe third and fourth years\. The project was to operate only inrural areas\.
23\. The criteria for the selection o fthe project thanas were:
0 At least one district per division
0 About halfthe thanas would be included ineach chosen district
0 A range o f distressed andnon-distressed thanas, but excludingthanas that are
most disaster-prone or that lack basic healthinfrastructure
0 Only thanas with 80 percent o f infants fully immunizedwere to be included\.
24\. Nutritional status was not included among the criteria for thana selection\. Indeed,
the last two selection criteria mighthave induced a bias toward areas where malnutrition
was less o f a problem\. Table 2 uses DHS data to look at this question\. The data are from
the secondround o f the DHS, collected in 1996/97, just before the project became
operational at the field level\. The table shows the anthropometric status of children aged
6 to 24 months, that is, the BINPtarget group\. Ineach casenutritional status is, on
average, significantly better inthe BINP thanas thanthe non-BINP ones, thus confirming
that there was a small bias infavor o fbetter off areas\. These differences are all
significant at the one percent level\.
25\. The decisionto exclude urbanareas might also be criticized\. As Table 2 shows,
nutritional status inurbanareas is, on average, muchbetter than that inrural areas\.
However, the urban average i s misleading, since intra-cluster variation innutritional
status i s much greater inurbanareas\. Inslum areas malnutritionrates are very high,
easily rivaling those found inrural areas (see, for example, Rahmanet al\., 2000)\.
Table 2: MeanAnthropometricOutcomes (for childrenaged6-24 months)inBINP
andNon-BINPAreas Priorto the Project
Non-BINP BINP mean Urban areas
Height for age -1\.86 -1\.54*** -1\.56
0\.04 0\.12 0\.07
Weight for age -2\.02 -1\.92*** -1\.66
0\.03 0\.14 0\.06
Weight for height -1\.12 -1\.25*** -0\.90
0\.03 0\.15 0\.05
No\. of observations 2512 534 566
No\. of clusters 444 86 60
Note: figures in parentheses are standard errors\. *** Indicates significant
difference from non-BINP mean at 1%level\. Source: calculated from DHS data
DesignIssues
26\. Six observations may be made about the project design\. First, the targets for
CNBC were very ambitious: the targets o f a 40 percent reduction insevere malnutrition
and 25 percent reduction inmoderate malnutritioninproject areas might be seen as
9
unrealisticallyhigh, setting the project up to fail to achieve these goals\.'O Certainly these
targets are ambitious compared to that contained inthe MillenniumDevelopment Goals
o fhalving malnutrition over a 25 year period\. Onthe other hand, these figures are not
dissimilar to the targets set for TINP, which came close to achievingthem (infact
surpassing those for severe malnutrition)\.
27\. Second, the designwas complex, not only because o f the combination o fnational
andlocal activities withmultiple institutions, but also because o fthe large variations in
designfeatures from thana to thana\. Although the intentionwas to use the evaluationto
see which worked best, since only the six thanas for the first phase were coveredby the
evaluation, this was not possible\. For example, marriedcouples counseling was tried in
just one thana, so the impact ofthis designfeature cannot be separatedfrom any "area
effect" associated with that thana\.
28\. Third, BINPnutritional counseling activities targetedpregnantand lactating
women and adolescent girls, with limited attention to the role o f other family members\."
However, inBangladesh decisions regarding health andnutrition do not rest solely with
the mother, but also the husbandand frequently the mother-in-law\. Hence, project design
and implementationshould have sought to broaden the target audience for its nutritional
messages\. This view was expressedbyBINP fieldworkers andwomen themselves in
project areas during field visits\.
29\. Fourth, the criteria usedto admit childreninto the supplementary feeding program
were not sufficiently targeted to the neediest children\. Dual criteria were applied:
children were to be admittedifthey were either severely malnourishedor they were
growth faltering'* (whatever their nutritional level)\. But growth faltering is quite normal,
so enrolling growth faltering children regardless o f their nutritional level will mean
enrolling perfectly well-nourished children\.l3OED analysis o f the Save the Children
register data show that over 40 percent of those enrolled inthe feeding program were not
malnourished(i\.e\., the children were above -2 SDs WAZ)\. At the same time, a very low
threshold was set for malnourished children (e-4 SDs), which is such an extreme level of
malnourishment that there are few living children with such values; only 5 percent o f
programparticipants qualifiedby virtue o f their level o fmalnourishment\. The implication
10\. Save the Children (2003) alleges that the claims about the project's potential impact were exaggerated
inorder tokeepthe governmentinterested\. Thispointcanbemadeattwo levels\. The first isthat the
appraisal document talks about a long-term or ultimate goal o f ensuring that malnutritioni s no longer a
problem, although the specific objectives are more carefully worded to be clear than they only apply to the
project areas\. As noted inparagraph 10 above there does appear to have been some over-selling ofthe
project\. Second the specific targets set for CBNC may have beentoo ambitious, though as noted inthe text,
they were basedon what TI" had actually achieved\.
11\.Inaddition to the adolescent girls' forum(discussion group ledbythe CNP), there is a marriedcouples'
forum\. However, during fieldwork, only wives were found to be present at the latter\. The S A R mentions
mothers-in-law once and husbands once (compared to 35 references to mothers)\.
12\. Growth faltering does not mean zero growth, but growth at a lower rate than that inthe reference
population\.
13\. One study found that 37 percent o f a group o f U\.S\. children from well o f f backgrounds would qualify
for supplementary feeding under the criteria used inthe Tamil NaduIntegratedNutrition Project (Martorell
and Shekar 1992)\.
10
i s clearly that a lower bar could be used(say -2\.5 SDs) while not admitting children who
are growth faltering but not malnourished\. The screening criteria under the follow-on
National Nutrition Project (NNP)have been changed fiom those usedunder BINP to be
closer to the suggestion made here\.
30\. Fifth,eventhoughthe supplementary feedingwas offeredprimarily as a
demonstration o f the benefits o fbetter nutrition, the protocols called for three months'
feeding o fthose identifiedas malnourished, leadingto the conclusionthat defacto this
was a feeding program for the most malnourishedchildren\. The feeding provided was the
same special supplement throughout the feedingprogram, which does not demonstrate
the importance o f a varied diet\.
31, A final, minor, point is the poor wording ofthe target "improvement inmaternal
weight by at least 50% inat least 50% o fwomen\." The literal readingo f this target i s that
o f a given group o fpregnant women, at the end o f the project halfo f them will have a 50
percent greater pregnancy weight gain than they did at the start\. But the same group o f
women will not be pregnant at the end o f the project as at the beginning\. Evenifthe
target is applying to different cohorts o fpregnant women, which 50 percent should be 50
percent better off! The endline evaluation reworded this target to be "increase inmaternal
weight gain to 7 kgin50% ofwomen," which i s easy to understand, but there i s no
information on what percentage o fwomen attained that pregnancy weight gain before the
project\.
3\. Implementation
Overview
32\. Implementation got off to a slow start: inthe first two years, disbursements were
around 20 percent o f the planned amount (Figure 1)\. The project became effective inJuly
1995\. A t the time o f first supervision mission ninemonths later (March 1996), field-level
activities had not yet begun\.Key constraints were the completion o fthe Project
Implementation Volume, concluding agreements with the NGO selected to implement the
project (BRAC), and completing staffing o f the project office\. However, there had also
beenprogress\. BRAC hadbeenselected to implementthe project inthree of the initial six
thanas, with government taking responsibility for the other three\. Moreover, BRAC had
taken steps toward putting the program inplace prior to a formal agreement being
reached\.
33\. After initial delays, CNBC was implementedas planned\. Project status reports
soon beganto record good progress inenrolling children ingrowth monitoring, and fiom
1999 reduction insevere malnutrition\. The project was eventually extended to 59 thanas
rather than the 40 agreed at appraisal\. However, disbursement delays were only
eliminated toward the end o f the project: inFYOO, one year before the planned close o f
the project, actual disbursementswere onlyjust over halfthe planned amount\.
11
Figure1 :BINP Disbursement Profile
60
s 50
E 40
3
`E
3 30
20
10
0
--\.-
Planned -Actual1
34\. Manyother project components didnot go according to plan: only two inter-
sectoral project components were implemented, IEC materials were not developed at the
national level, andthere was little attention paidto some national-level institutions such
as the BangladeshNutrition Council\. Some components were implemented, most notably
the monitoring and evaluationsystem, a review o fnutrition-relatedinstitutions and a
program of operations research\.
35\. Despitethe failure to complete some sub-components andthe expansiono f
coverage o f CBNC, the component-wise breakdown o f costs didnot change much (Table
3)\. Rather, funds unspent on some nationalnutrition components were absorbed
elsewhere inthat component; for example, expenditureon office costs was seven times
the amount planned, these increases indecision partly arising from government's
decision to impose VAT onNGOs inthe project\.
Table 3: ProjectCosts by Component,US$millions
Appraisal estimate Actual estimate Percentage of
(USSmillion) (USSmillion) appraisal
NationalNutritionActivities 19\.0 I8\.4 99
Community Based NutritionComponent 32\.6 32\.3 99
Inter-sectoralNutrition Program 7\.0 6\.5 93
Total' 67\.3 65\.7 98
Note: I/ Totalincludescontingencies(not shown)\. Source: ICR Annex 2\.
Inter-SectoralNutritionProgramDevelopment
36\. The inter-sectoral programwent ahead as plannedwith the promotion of gardens
andpoultry keeping\. A thirdplannedcomponent was not implementedowingto a lack of
interest by the parent ministry\.Other activities were also to be identified, but none were\.
The component was weakly managed at the center, andreceivedlittle attentionduring
12
supervision; the relevant indicators for this component were not reported inthe project
status reports\.
37\. At field level, theseprograms were implemented bydifferent NGOs than those
responsible for the CBNC inthe same communities, resulting ina lack o f co-ordination\.
The women that benefitedfrom the inter-sectoral programs were not those identifiedas
beinginneed under CBNC, with the result that a majoritywere not from the target group
(64 percent for gardens and 56 percent for poultry)\.
NationalNutrition Component
38\. Implementation o fthe nationalnutrition component was mixed, with monitoring
and evaluation beingthe most satisfactory\. The main sub-components are reviewed in
turn\.
39\. Review ofMajor Nutrition Institutions: The review o fmajor nutritioninstitutions
was completed only with considerable delay\. Therehas been only slow, and incomplete,
follow-up to the review, with some important institutions (e\.g,\. BangladeshNational
Nutrition Council) have received very little attention from the project\. However, some
other agencies have benefited from technical assistance, e\.g\., BangladeshBreastfeeding
Foundationand HelenKeller International\.
40\. Operational Research: Eighteenoperational research studies were contracted from
the International Centre for DiarrhoealDiseasesResearch(ICDDR,B)\. There i s no
evidence that these were usedto influence the implementation o fBINP\.The ICR says
that no strategy for such influence was developed, but does state that lessons from the
research were usedinthe design o f the follow-on NNP\.Having said that, current Bank
nutrition staff do not appear familiar with the contents o f this research\.
41, Development o f IEC Materials: Central production o f IEC materials was not
carried out under the project as a result o f the Bank declaring mis-procurement on the
IEC contract (the Bankhad given no objection, but the selected agency was not awarded
the contract)\.
42\. Monitorina and Evaluation: a well-functioning monitoring system was put in
place for CBNC and was soon beingreliedupon insupervisionreports\. Indeed, it was the
positive feedback being given from the monitoring systems -notably the highcoverage
rates and apparent large reductioninsevere malnutrition-that resulted inthe positive
early assessments o fthe project\. Subsequent evaluation data suggested that the
monitoring data exaggeratedthe project benefits, but not to an unusual extent\. Monitoring
o f other components o f BINPdoes not appear to have beencarried out ina systematic
way\.
43\. The project evaluationwas also o fhighquality\. Bank and project staff ensured
that a well-designed evaluation system was put inplace, conducting three surveys
(baseline prior to the project, financed by UNICEF, midtenn and endline), resultinginan
impact study after the close o f the project\. National andinternational experts were
involved inthe designo f the evaluation and incommenting on findings as they emerged\.
13
The project-financed evaluation ofBINP canbepointedto as bestpractice\. The
identifiable shortcomings should be seen as caveats on this very positive assessment: (1)
different companies conducted differentrounds ofthe survey, resultinginchanges in
design and so problems o f comparability; (2) the control group, especially inthe baseline
survey, was too small; (3) nutritional outcome measureswere restricted to anthropometric
measurement, so that the evaluation sheds no light on some project objectives (such as
Vitamin A disorders); and (4) outcome data were not collectedon children over two (the
rationalewas to collect data only from the target group, but there should have been some
lasting impact onthose who had graduated)\. Inaddition, the evaluation focused on the
CBNC component\. This was indeedthe largest and most important part o f the project;
but some formal analysis ofother componentswould have beenuseful\.
44\. The final comment on monitoring and evaluation concems two timingissues\.
First, giventhe government's reservations, it was agreedthat scaling up would take place
inthe secondphase incorporatinglessonslearnedfrom the first phase, andafter the
midtermevaluation for the thirdphase\. Since there were delays inproject start-up there
was only one year, rather than the planned two, between initiation o f the first and second
phases\. The thirdphase commenced inMarch 1999, the same month as the publicationo f
the final draft o fthe midterm evaluation report\. It does not appear that the decision to
continue into the thirdphase was explicitly linked to the positive assessmentwhich
emerges from the midterm review, but by that time very positive assessmentsof project
performance were beingmade on the basis o fmonitoring data\. These positive
assessments also lay behindthe decision to scale up to the nationallevel, starting
preparationo f the follow on NationalNutritionProject (NNP), evenbefore to the results
o f the midtermstudy - let alone the endo fproject impact study (which was delayed
owing to contractual problems), as hadbeen the intention\.
Community-BasedNutritionC~mponent'~
45\. Because o f the initial delays inproject implementation, the project became
effective inthe first-phase six thanas only inNovember 1996\. Work was begun inthe
second-phase 17 thanas one year later on November 1997 and another 17 inMarch 1999,
bringingthe total to planned40 thanas\. A hrther 19thanas were added inJanuary 2000\.
So, byproject close, BINP was active in59 thanas\. As discussed elsewhere inthis report,
plans to scale up on the basis o f evaluation results appear to have not been adhered to\.
46\. Proiect Coverage and Targeting: Ideally, all children inthe project area were to
participate ingrowth monitoring\. The target set inthe project appraisal document was
that 80 percent of 0-24 month old children should beregistered, and 80 percent o f these
(i\.e\., 64 percent o f all children) receive at least 18 out o f 24 monthly weighings\. The
evaluationdata show that over 90 percent o f children were weighed at least sometimes,
with 88 percentbeingweighed on aregular basis\. Hence, the project's coverage targets
for participationingrowth monitoringwere met\. Factors behindnon-participation include
14\. This section, andthat onnutritionaloutcomes below, is basedonthe OED impactstudy (World Bank
2005: Chapter 5 andAnnex G),where more details canbe found\.
14
remoteness and traditional constraints on women's mobility which operate inthe more
conservative areas\.
47\. These highparticipation rates are an impressiveachievement\. Field and Bank
staff say that there was an initial reluctance to have childrenweighed, or to allow women
to attend growth monitoring or counseling sessions\. Therewere also misgivings as to
whether the CNPs, as relatively young women, couldwield much authority inchanging
social norms\. While these constraints continueto operate insome places, the overall
participationlevels show that they have mostly beensuccessfully overcome\. The support
o f the Village NutritionManagement Committee (VNMC) i s one factor inthis success:
where local influential figuresput their weight behindthe work o f the CNP (which may
extendto the use o f the verandah o ftheir house for weighing and counseling sessions),
her positionbecomes easier\.
48\. Low growth, identifiedby growth monitoring, was to be addressed intwo ways:
nutritional counseling and supplementary feeding\. The feeding is said to have been
intendedas an example to mothers, the heart o fthe strategy beingcounselingto achieve
behavior change\. The growthmonitoring sessions themselves are too chaotic a setting to
providenutritional counseling\. The CNps work full time intheir position andprovide
advice through different forums, such as the various group counseling sessions or one-to-
one meetings with parents\. However, datapresented inthe OED impact study show that
over one-third o fwomen whose childrenwere receivingsupplementary feeding saidthat
they hadneither discussed nutrition directly with the CNP, nor sat inany meeting where
itwas beingdiscussed\.
49\. Supplementary feeding also didnot reach those intended\.Analysis o f register and
field data shows there was a reasonably low Type I1error: only 16percent o f children
receiving food supplementation should not havebeenreceiving it\.'' But Type Ierror was
very high:over two-thirds (69\.8 percent) o f eligible childrenwere not being fed\. One
reason for this higherror rate is the difficulty CNps have ininterpretingthe growth
charts\.l6
50\. Tumingto monitoringo fpregnancy weight gain, close to three-quarters o f
pregnantwomen attendedweighingsessions, andjust underhalfreceivedsupplementary
feeding, withboth these percentages beinga bit lower at endline than the baseline\. OED's
analysis shows there i s no pattembetween attendance at weighing sessions andthe
mother's nutritional status, which is to be expected\. Supplementary food was meant to be
receivedby women with low Body Mass Index\. However, by the endline about 60
15\. Type I1error i s the proportion o f those receiving the feeding who are not eligible\. Type Ierror is the
proportion o fthose eligible who do not receive the benefit\.
16\. TenCNPs were administereda test as part o f OED fieldwork\. The test consisted o f four hypothetical child
growth patterns drawn on the growth charts usedby the project\. These patterns were taken from a figure from
the World Bank Nutrition Toolkit (Chapter 3, page 20), and illustrate different cases: adequate growth, early
growth faltering, prolonged growth faltering, and severe growth faltering\. The CNPs were asked to interpret
the child growth as good, dangerous, or very dangerous\. None o fthe CNPs was able to correctly identify the
case of adequategrowth\. Most charts were interpreted as "dangerous" cases\. A few charts were described as
"very dangerous," but not always corresponding to the "severe growth faltering" case\.
15
percent o f eligible women were not receiving the supplement\. Onthe other hand, 40
percent o f those who were receivingthe supplement were not eligible\.
5 1\. For both children andmothers, the OED analysis finds evidence o fboth leakage
and substitution o f the food supplement\. For example, 32 percent o fwomen saidthey had
shared their food supplementwith someone else\. Many o fthose who were not sharing
said they didnot eat more duringpregnancy than usual, indicating that the BINP
provided food was substitutingfor other foodstuffs\. This was possible, since at least half
the women and one-quarter o fthe children, contrary to project design, consumedthe food
at home rather than at feeding sessions\.
52\. Insummary, enrollmentingrowthmonitoringsessionshasbeenat ahighlevel for
both childrenand pregnant women\. However, attendance at these sessions has not
providedopportunities for nutritional counseling for a sizeable minority o f women\. There
have beenproblems inthe targeting o f feedingprograms, especiallythe exclusion o f
eligibleparticipants for both childrenandpregnantwomen\. Inthe case o fpregnant
women, a considerable number o f feedingbeneficiaries are infact ineligible\. Such Type
I1error is less o faproblemfor child feeding, thoughthe entrycriteriathemselves appear
inappropriate, and only a minority o f enrolled children complete the full three months o f
feeding\.
Scaling-upto the NationalNutritionProject
53, Following a visit by the Bank's president inmid-1998 the Bank decided to follow
upwith a scaled-up, nationalproject, before a thorough evaluationo fBNIP could be
carried out\.
54\. One aspect o f thepreparationandtransition from BINPto the NationalNutrition
Project (NNP) i s o frelevance for BINPperformance\. NNP was to encompass the thanas
already operating under BINP, though the contracts were to be re-tendered so that the
implementingNGO might change\. However, the Bankwas dissatisfiedwith the selection
process for NGO implementing agencies, and this dissatisfaction delayed the start o f
NNP\.BINPwas extended to cover this gap, but inthe endthere remained a seven-month
gap between the closing o f BINP andthe start o f"P\.Where the implementing NGO
changed, the actual gap to the resumption o f operations at field level was longer\.
55\. This gap had adverse implications\. TheNGOs continued to pay their own staff,
but CNPswere told they could continue to provide counseling on a voluntary basis only
and there was no supplementaryfeeding\. Data from the monitoring system showed the
impact o f this breakthrough a dramatic fall inbreastfeeding rates\." Impressionistic
evidence from the field i s that inmany areas new CNPs had to be recruited as the old one
would not return\. The gap was clearly damaging and would have best been avoided\. At
the same time, the Bank should not be expected to concede on all points inorder to avoid
such an occurrence\. Onthe other hand, a further extension o fBINPmight have been
considered inorder to continue money flowing to those thanas\.
17\. This figure fromthe monitoringdata contrastswith that from evaluationdata, which show low rates of
breastfeeding\.However, the latter refers to exclusive breastfeeding\.
16
56\. This discussion should not betaken to meanthat there has beenno learning from
the BINP experience\. As mentioned above, the targeting criteria for supplementary
feeding for childrenhave beenrevisedandthe inter-sectoral component is now more
closely coordinatedwith the CBNC\. AndNNP i s said to be making renewed efforts to+
reach family members other than mothers\.
4\. Outputs and Outcomesby Objective
Objective1:Institutionbuildingat nationallevel
57\. As described above, implementationofthis component was uneven\. Important
institutions, notably the Bangladesh NationalNutrition Council, were little involved in
theproject so that no institutionbuildingtook place\. Whilst operational researchtook
place it didnot influence project design or more general nationalpolicy on nutrition\.
58\. Onthe positive side, the project established the BI" project office, which has
evolved into that for the NationalNutrition Programwith ambitions to be a directorate o f
the Ministryo fHealthandFamilyWelfare\. It is claimedby many associatedwith the
project that it established nutrition on the nationalpolicy agenda, though staff o fNGOs
not associated with the project are skeptical o f such claims\.
Objective2: Improvecapacityof communitiesto understandtheir nutritional
problemsand take actionsto addressthem
59\. The mainchannel for improving nutritional knowledgewas the CBNC, which i s
the focus ofthe discussion inthis report\. Theplanneddevelopment ofIECmaterials at
the national level didnot take place, so that potential channel was lost\.
60\. Creationo f capacitv: BINP successfblly created a nutrition-oriented structure at
the community-level, notablythe Village NutritionManagement Committees and the
recruitmento f the CNP\. The CNP operated discussion sessions for targeted women and
adolescent girls, and liaisedwith women's groups which would also sometimes take up
nutrition issues\. At the national level some credit the project with having placednutrition
on the development agenda\.
61\. Acquiring knowledge at household and individual level: The central thrust o f
project design was to change nutritional behavior o f child caretakers\. There are a number
o fnutritionalpractices considered adverse to child nutrition\. Some are simple differences
inhabit, such as cuttingvegetables before washingthemratherthanvice versa,which is
nutritionallydisadvantageous\. Others, such as eating less duringpregnancy ("eating
down"), result from different perceptions o fhealthrisks and benefits (mothers perceive
the benefit o f a lower-risk delivery o f a smaller child, discounting the risks to low birth
weight children)\.18And others stem from traditionalbeliefs which appear to have no
~
18\. Eating down was recommended medical practice inEuropeancountries for this reason untilthe 1940s\.
17
plausible health-related rationale, such as avoiding meat, fish, and eggs during
pregnancy\.
62\. Multivariate analysis shows that attending nutritional counseling indeed has a
significant association with a woman's knowledge o fvarious pieces o f nutritional
information, such as the importance o f exclusive breastfeeding, thoughbeing inreceipt o f
supplementary feeding does not\. However, even when these participationvariables are
included inthe regression equation, the BINFproject dummy i s still significant: women
inproject areashavesignificantly highernutritionalknowledgethanthose inthe control\.
This means either that there are spillover effects (women who get the knowledge in
nutrition sessions communicate it to others) or that other project activities not captured in
the participation variables, e\.g\., women's group meetings, are also channels for
communicationo fnutrition education\. According to these regressionresults, simply
living intheproject arearaises a woman's probabilityo fhaving apiece o fnutrition
knowledge by 7 percent, but full participationinproject activities increases this
probability bybetween 10-23 percent\.
63\. Tuminnknowledge into practice: the knowledaepracticegap: Although the
project has had success inpromotingnutritional information, women do not put into
practice things they say they agree with\. This gap exists for every practice\. For example,
94 percent o fwomen inproject areas say they know they should not undertakehardwork
duringpregnancy, butonly 53 percent follow this advice\. The gap exists inbothproject
andcontrol areas, with little evidence that the gap is any less inproject areas thancontrol\.
Since the project has improvedknowledge it has also improvedpractice\. Nonetheless,
tackling some o fthe multiplefactors underlying the gap would help improve project
effectiveness\.
64\. OED's multivariateregression analysis andthe results o fqualitative fieldwork
commissioned by OED identifya common set o f factors which explain the knowledge-
practice gap\. Resource and time constraints are foremost among these, although the
influenceo f other decision makers (notably mothers-in-law) also plays a role\. Women
who have work to do, including children and elderly relatives to care for, are less likely to
be able to rest or avoid hardwork duringpregnancy (Table 4)\. Women engaged in
agricultural work may also not have time to breastfeed, or not able to do so ifthey are
with the child away from the home\. Although theprojecthas some effect inreducingthe
gap, the multivariateanalysis shows the magnitude o fthis effect to be very small\. There
are other channels - such as increasing education o fbothmales and females -that will
also close the gap\.
18
Table 4: Many FactorsPreventWomen from PuttingNutritionalAdvice into
Practice, Though the ProjectPartially OvercomesSome of These
Knowledge Main determinants Project Moderatingproject impacts
effect
Rest during Agricultural work, children, elderly None None
pregnancy male in household, poverty
Feeding colostrum to More children reduces gap None None
the baby*
Breastfeeding Agricultural work None Reduces effect of living with
(exclusive and/or mother-in-law and being poor
duration)
More food during Poverty, children, having a Reduces Bigger effect in working season
pregnancy vegetable garden reduces the gap gap
Avoid hard work Children, agricultural work (including Reduces Reduction of gap bigger for poor
during pregnancy vegetable garden), but lower for gap (who have a larger gap than the
female headed households and non-poor), but smaller reduction in
women not in paid employment working season\.
Note: * Colusbum is the fust milk produced by the mother inthe early days of breastfeeding\. It is low involume but high inconcentratednunition for the
newbom
Thesame results are found from OED analysis of both the Save the Children and the BlNP data\.
65\. Insummary, the project was associated with anincrease inknowledge about
nutritional practices and with increased take up o f good practices\. However, there is a gap
between knowledge and practice, and the project does not have an impact inreducing the
size o f the gap\. But since knowledge is more widespread, and the gap the same inproject
andcontrol areas, then the promoted practices are morewidespread inthe project area\.
So, are these practices beneficial to nutritional outcomes?
Box 1 Studies of BINP Impact
0 The project evaluation was contracted out to a team o f staff from the Institute o f Nutrition
and Food Science at the University o f Dhaka and the Friedman School o f Nutrition Science
and Policy from Tufts University\. The Endline Evaluation (Karim et al\., 2003) analyzes all
three BINP surveys (baseline, midterm and endline) for project and control communities at
all levels o f the causal chain\.
0 Save the Children conducted a survey o f BINP areas and control published inthe report Thin
on the Ground (Save the Children, 2003)\.
The Implementation Monitoring and Evaluation Department (NED) o f the Ministry of
Planning commissioned a study by READ and Associates, for which a survey o f BINP thanas
from all three phases o f the project, with control thanas, was undertaken\. The findings are
publishedinHaider et al\. (2004)\.
0 Two PhD doctoral students from Cambridge University have analyzed register data from
BINP\. The results reported here are from a summary presentation by the supervisor o f the
PhDs, Professor Mascie-Taylor\.
0 OED re-analyzedthe project evaluation data, together with that of Save the Children\. For the
former, the quality o f the control was improved by usingpropensity score matching drawing
on data from the Nutritional Surveillance Project o f Helen Keller International
19
Objective 3: Improvenutritionaloutcomes inprojectareas
66\. There havebeena number o f studies of the impact o f the CBNC: the project
endline evaluation (Karimet al\.), the surveyundertakenby Save the Children, two recent
PhDs at the Universityo f Cambridge, a report bythe ImplementationMonitoringand
EvaluationDepartment (IMED,Haider et al\., 2004) and OED's own re-analysis o f these
various data sets, combined with data from the Nutritional Surveillance Project as a
control group (see Box 1)\. Table 5 summarizes the results from each o fthese with respect
to each target:
0 Reducechildmalnutrition:Onlythe project evaluation finds a notable impact,
andthat is only for severe malnutrition at midtenn(withmoderate malnutrition
having risen); Save the Children and IMEDfindno difference betweenproject
andcontrol, andthe OED study found significant, but very small, improvements\.
The target was not achieved\.
0 Restorationof rateof growth: Three studies consider this goalwith respect to
children enrolled insupplementary feeding-the Cambridge study finds no
impact, Save the Children a significantbut small impact, and OED an impact only
for severely malnourishedchildren\. The target was not achieved\.
0 Reducemicronutrient-relateddisorders:N o outcome data were collectedby
any o fthe studies for the targets onvitamin A andiodine disorder andreduction
on anemia\. Though data were collected on mothers taking the appropriatepills,
these figures were substantially betterinthe project area than the control\.
0 Reductionoflow birthweight: The project evaluation reportsa 38% reduction
inlowbirthweight, comparedto the target o f50%\. The OED study finds a
reduction, but with a similar reduction incontrol areas, so there i s no project
effect\. The target was not met\.
0 Improvementin maternalweight gain: The Cambridgestudy (see Box 1) finds
a small effect for women receivingsupplementary feeding\. The project evaluation
and OED study find an improvement inpregnancy weight gain inproject areas,
but an even larger one inthe control\. Allowing for other factors, the OED study
finds a small project effect overall, but areasonably substantial one for women
who are either destitute or o fpoor nutritional status\. The target was met, but the
amount attributable to the project appears small\.
67\. The inter-sectoral nutrition component was also intended to raise nutritional
status\. However, coverage fell short o f the desired 10beneficiariesper community in
many cases-andthose who didparticipate were not always the most needy\. The ICR
states that the level o finputs was insufficient to bringabout any improvement inthe
nutritional status o f children inbeneficiary households\. Some coordination mechanism
would have beendesirable, which has been handledthough NNP by makingthe same
NGOresponsible for implementation o fCBNC andinter-sectoral components within a
giventhana\.
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22
5\. Ratings
Outcome
68\. All three project objectives werehighlyrelevant to the country's development
objectives at the time and continue to be so today\. The efficacy o fthe project in
institution building at the nationallevel -the first objective -- was modest\. Capacity
buildingat the community levelinproject areas, was substantial, contributing toward
meetingboth the first and second objectives\. Efficiencyi s more doubtful since the project
infrastructure hasprovedquite costly, the knowledge-practice gap i s still high, and
nutritional gains have beenvery small\. The project outcome rating o f satisfactory
awarded by the ICRwas based on observed nutritionalimprovements from the CBNC -
the third objective\. However, these improvements were based on information from the
l9
monitoring system, with the ICR itselfnoting that field observations did not support such
a positive view\. The view from the endline, reinforcedby a number o f other studies, i s o f
at best a small nutritional impact, certainly falling far short o f the targets set at appraisal\.
The efficacy o f the project inmeetingthe thirdobjective, therefore, was modest\. The
overall project outcome rating i s ModeratelyUnsatisfactory\.
InstitutionalDevelopmentImpact
69, Institutional development impact i s measured by the extent to which the project
enhancesthe ability o f the country to make better use o f its resources, inthis case in
tackling the nutritionproblem inBangladesh\. The issue can be looked at from the point
o fview o f government, implementingNGOs and communities\.
70, Theproject was managedby a separateproject office, with NGOs responsible for
implementation at field level\. Hence, the bulk o f training has not beento people who are
part o f government structure\. Institutionaldevelopment activities with a range o fnational
nutrition agencies were only partially carried out\. The direct impact on the ability o f
government to utilize its resources more efficiently intackling nutrition problems was
thus negligible\.
71\. TheNGOsrecruitedwere ones who already hadthe capacity to implement such
programs\. IndeedBRAC already had a similar project, so that BINP was leaming from
BRAC rather thanvice versa\. So it cannot be argued that the project built the capacity o f
the implementingNGOs at a national level\. However, there has been an impact on the
nutrition-relatedknowledge o fNGO employees, community workers (CNOs and CNPs)
and creation o f the VNMCs - atthis level there hasbeenconsiderable capacity creation\.
Offsettingthis assessment i s the fact that the NGOshave beenvery successfbl in
mobilizing women to take part, but have a mixed record inother respects, including the
poor performance o f some CNPs\.
19\.The ICRpaidless attention to the other project objectives (none inthe discussion of achievement of
objectives)\.
23
72\. At the community level therelevant findingis that the ability to understand
nutritional issues (shown by the knowledgemeasures) has indeedincreased, but that there
remains a gap betweenhavingknowledge and usingit\. Onbalance these different
considerations indicate that an overall rating o fModest i s appropriate\.
Sustainability
73\. There are bothpositive andnegative factors to take into account inassessing
sustainability\. On the positive side are the impressive creation o f community-level
infrastructure for nutritional interventions, growing public and government awareness o f
the importance o f nutrition, and the integrationo fnutrition into the tasks o fthe MOHFW
under NNP\. However, the cost implications o f going to scale are large\. Moreover, it was
originally envisaged that the cost o fpaying CNP stipends wouldbe borne by
communities, not government -it will berecalledthat one o f government's concerns
about BINPwas the creation o f a government-financed cadre o f community workers\. But
there i s no sign that communities would be willing to take on these costs\. Inthe short-run
activities are being sustained through the Bank-financed follow-on project\. On balance,
sustainabilityi s rated as `Likely', but the concems raised here shouldbe noted\.
Bank Performance
74\. Bankperformance overall is rated Satisfactory, althoughthere were serious
shortcomings insome aspects o fbothpreparation andsupervision, both o f which would
warrant a marginally satisfactory rating were it to be available\. The shortcomings on the
Bank's sideincludedwere the failure to seriously consider alternative designs, some
designflaws (poor targeting criteria for supplementary feeding andinadequate attempts
for counseling to reach all decision makers)or to learn from experience as it emerged\. On
theplusside, the Bank mobilized support for the project, accommodatingsome concerns
on the part o fthe borrower, and oversaw implementation, including expansion o f the
project beyondthe area originally envisaged\.
75\. To be fair, the project design was based on a project perceived to be successful
( T N ) andthe data which initially emergedon BINP, from boththe monitoring system
andto some extent the midtermreviewwere promising\. The process variables look good
-unfortunately, thechangesinbehaviorhavenotprovedsufficienttobringabout
substantial changes innutritional status\. The discrepancy betweenwhat an apparently
similar approach has achieved inTamilNadubutnot achieved inBangladeshpoints to
weak implementation\. The OED impact study o f the TamilNaduproject points to the
importance o fthe quality o f training for community workers, which appears to have been
deficient inBangladesh; OED found varying ability amongst CNPs incorrectly
interpreting growth charts\.
76\. Bank supervision of components other than CNBC appearsto havebeen
unsatisfactory with little discussion inthe PSRs\.
24
BorrowerPerformance
77\. The Borrower hadinitial misgivingsconcerning the project\. These shouldnot be
seen as poor performance, but as a genuine attempt to engage the Bank is dialogue
concerning a project about which it had doubts\. Once it was agreed to proceedborrower
performancewas largely Satisfactory, despite initial delays, the imposition o f VAT on
NGOs, and a reluctance to accept technical assistance andweakness insome aspects o f
implementation at the national level\.
6\. Findings and Lessons
78\. Therewere institutional problems inBINPwhich hampered implementation\. The
ICR suggeststhat the inter-sectoral component shouldnot havebeenincluded, allowing
resources (including supervision) to focus on the core community component\. However,
it appearsthat the more integrated approach to the inter-sectoral programsbeingadopted
underNNP isnow, unlikebefore, reachingthe target group\.
79\. The limited impact ofBINP onnutritional outcomes raises serious doubts as to
thejustification for scaling theproject up to the nationallevel\. To do so will prove very
costly, with limited nutritional gain\. Several lessons emerge from this analysis which
shouldbe borne inmind:
0 Supplementary feedingfor children does have a positive impact, especially for the
most malnourishedchildren\. NNP has revised the eligibility criteria so that only
growth faltering children with WAZ<-2SDs receive feeding, as well all children
with WAZ<-4 SDs\. The latter group constitutes a very smallpercentage o f
children, so there appears to be scope for raising this thresholdto, say, -2\.5 SDs,
to capture more children amongwhom feeding seems most successful\. There i s
also some mis-targeting,which i s likelyto bebest addressedby further training
for CNPs ininterpretinggrowth charts\.
0 Supplementary feeding for pregnant women appears likelyto be an ineffective
approach on two grounds: the pregnancy weight gain achieved by most women is
too small to have a notable impact on birthweight (though there are sub-groups
for which benefits are more substantial) and evidence from elsewhere suggests it
i s anyhow pre-pregnancy weight which i s the more important determinant o f birth
weight (Kramer, 1987)\. The programwould appear more successful ifit restricted
its attention to the most malnourishedwomen, improvedtargeting to reduce Type
I1error andtriedharder to discourage leakage and substitution\.
0 For both types o f feeding program, there i s evidence o f a greater impact inthe
lean season\. There are grounds for considering either increasingthe size o f the
food supplement inthis period, restrictingit to those months, or adjustingthe
eligibility criteria by time o f year\.
25
0 Discouragingwomen from eating down duringpregnancy has some benefit for
birthweight\. But all forms o fknowledgetransmitted bytheproject suffer from a
knowledge-practice gap &e\., not puttingknowledge into practice, though uptake
o fbetter practices has increased inproject areas)\. Such gaps are common and
have multiplecauses\. However, paying attention to the causes o f the gap can help
enhance project effectiveness\. Inthe short-run the gap can also be alleviated
through better targeting, although that maynot help those who are time
constrained\.
80\. More general lessonscan also be drawn about the use o f the growth monitoring
approach\. This approach has proved successful elsewhere, notably inTI", so it cannot
be arguedthat growthmonitoringwith counseling is an inherentlyflawed approach\.
Indeed, many studies show the role o fmother's knowledge inimproving child nutrition -
including OED's own impact study o fbasic education inGhana\. There appear two main
reasonswhy the approach hasbeen less successful inBangladesh: (1) poor
implementation, notably training o f CNPs; and (2) resource constraints on mothers\.
Consideration o f the context and attention to detail inimplementation are, rather needless
to say, vital ingredients o fprogram success\.
81\. A positive lesson from BINP emerges withrespect to evaluation\. There was a
strong commitment to evaluationfrom the start\. Crucially, funds were obtained to
conduct the baseline prior to project effectiveness\. This i s not usually done; inmany
projects the plannedbaseline gets delayed given other problems encountered during
project start-up\. However, it would have beensensible to award a contract for all three
studies at the outset, rather than change contractors for the survey duringthe course of the
project\.
26
References
Berg, A\. 1983\. Nutrition Review, Population and Human Resources Department, World
Bank,Washington DC\.
Burkhalter B\.R\., E\.Abel, V\. Aguayo, S\.M\.Diene, M\.B\.Parlato, and J\.S\.Ross\. 1999\.
"Nutrition advocacy and nationaldevelopment: the PROFILESprogramme and
its application\." Bulletin of the WorldHealth Organisation 77:407-15\.
Haider, S\. et al\. 2004\. Impact Evaluation of Bangladesh Integrated Nutrition Project
Dhaka: IMED\.
Karim, R, S\.A\. Lamstein, M\.Akhtaruzzaman, K\.M\.Rahman, andN\.Alam\. 2003\. The
Bangladesh Integrated Nutrition Project: Endline Evaluation of the Community
Based Nutrition Component\. The Instituteof Nutrition and Food Sciences
University of Dhaka, Bangladesh and The FriedmanSchool o fNutrition Science
andPolicy, Tufts University, USA\.
Kramer, M\.S\. 1987\. "Determinants of low birth weight: methodologicalassessment and
meta-analysis"\. Bulletin of the WorldHealth Organization 65(5), 663-737\.
Martorell, R\. and M\. Shekar\. 1992\. "Growth-faltering Rates in California, Guatemala,
and Tamil Nadu: Implications for Growth-Monitoring Programs"\. Food and
Nutrition Bulletin 5(3)\.
Rahman, Ataur, Tom Marshall, Abul KalamAzad, and Jane Pryer\. 2000\. "Nutritional
Vulnerability inDhaka Slum\." Mimeo, Dhaka: PROSHIKA\.
Save the ChildrenFederation\. 2003\. Thin on the Ground\. Questioning the Evidence
Behind WorldBankfunded Community Nutrition Projects in Bangladesh,
Ethiopia and Uganda\. Save the ChildrenFederation, United Kingdom, London\.
World Bank\. 1985\. Bangladesh: Food and Nutrition Sector Review\. Report No\. 4974-
BD\.Population, Health andNutritionDepartment, WorldBank,Washington,
D\.C\.
World Bank\. 1994\. Tamil Nadu Integrated Nutrition Project: Impact Evaluation Report\.
Report No\. 13783-IN\. Washington, D\.C\.: OED, World Bank\.
World Bank\. 1995\. Staff Appraisal Report: Bangladesh Integrated Nutrition Project\.
Population and HumanResources Division, Washington, D\.C\.
World Bank\. 2005\. Maintaining Momentum? An Impact Evaluation of Interventions to
Improve Maternal and Child Health and Nutrition in Bangladesh\. Washington,
D\.C\.: OED, World Bank\.
27 Annex A
Annex A\. Basic Data Sheet
BANGLADESHINTEGRATEDNUTRITIONPROJECT(CREDIT 2 7 3 5 - ~ ~ )
Key ProiectData(amounts in US$miZZion)
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total projectcosts 67\.30 65\.74 97%
Loan amount 59\.8 58\.6 97%
Cofinancing 0\.0 0\.0 ma\.
Cancellation _- __ _-
CumulativeEstimatedandActualDisbursements
FY96 FY97 FY98 FY99 FYOO f f O 1 f f 0 2 f f 0 3 FY04 FY05
Appraisalestimate 3\.3 6\.9 16\.5 31\.1 45\.2 59\.8 59\.8 59\.8 59\.8 59\.8
(US$M)
Actual (US$M) 0\.6 1\.6 6\.3 13\.8 24\.5 39\.5 45\.4 51\.6 51\.6 51\.6
Actual as % of 18 23 38 44 54 66 75 86 86 86
appraisal
Dateof final disbursement: 04/06/2003
ProjectDates
Original Actual
PCD 04/27/1990 04/27/1990
Appraisal 01/I011994 0111011994
Boardapproval 05/30/1995 05/30/1995
Effectiveness 0711211995 0711211995
Closingdate 12/31/2001 06/30/2002
Staff Innuts(staff weeks)
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$(lOOO)
Identification/Preparation 122\.3 398\.6
AppraisaVNegotiation 11\.4 30\.7
Supervision 292\.3 409\.1
ICR 10 60
Total 436 898\.4
28 Annex A
Mission Data
Stage of Project Cycle No of Persons & Specialty Performance Rating
lmplementati Development
on Progress Objective
IdentificationlPreparation
March 1993 5 Populationand Health, Management,
Economist, Procurement,Operations
Analyst
AppraisallNegotiation
January 1994 5 Population and Health, Public
Health, Management (2), Team
Leader
March 1994 4 Populationand Health, Legal,
Procurement, OperationsAnalyst
Supervision
06/30/1995 PSR initial Summary S
03/07/1996 5 Procurement; Maternal& Child Health; S
Public Health; PHN (Mission Leader);
Management
09/29/1996 4 PHNTTechnical; Management S
(MILeader); NutritionTTechnical;
Procurement
05/1311997 3 Procurement; Mission Leader;
Nutrition/Technical
1211711997 4 Procurement; Disbursement;Audit and
Finance; Mission Leader
07/30/1998 6 Management;Team Leader;
Procurement Specialist; Disbursement
Specialist; Financial management
specialist; Inter Sectoral and WID
11/22/1999 3 Task Leader; Operations Officer; S
Operations Analyst
07/20/2000 5 Nutrition; Operations Officer; S
Operations Analyst; Procurement ;
Financial Management
05/17/2001 8 Task Leader; Operations ; Training; S
Procurement ; Disbursement; Financial
Management; Management; M&E
05/23/2002 8 Mission Leader; Technical; Training ; S
Financial Management; Disbursement;
procurement; Social; Public Health
ICR
09/28/2002 4 Social Development (2);
Economist (Task Team Leader)
(1); Operations Officer (1)
29 Annex A
Other Project Data
BorrowetYExecuting Agency:
FOLLOW-ON OPERATIONS
Operation Credit no\. Amount Board date
(US$mi/lion)
National Nutrition Project C 3356 124\.46 05f2512000 | REVIEW |
P008497 |  ICRR 13149
Report Number : ICRR13149
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 04/19/2010
PROJ ID : P008497 Appraisal Actual
Project Name : Municipal Wastewater Project Costs (US$M):
US$M ): 88\.89 112\.67
Project
Country : Hungary Loan/
Loan /Credit (US$M ):
US$M): 31\.60 34\.70
Sector Board : WAT US$M ):
Cofinancing (US$M): 20\.20 24\.29
Sector (s): Sanitation (69%)
Sewerage (29%)
Sub-national
government
administration (1%)
Flood protection (1%)
Theme (s): Pollution management
and environmental
health (34% - P)
Access to urban
services and housing
(33% - P)
Environmental policies
and institutions (33% -
P)
L/C Number : L4511; L4512
Board Approval Date : 09/16/1999
Partners involved : EU and EIB Closing Date : 12/31/2006 12/31/2008
Evaluator : Panel Reviewer : Group Manager : Group :
Emily O'Sullivan George T\. K\. Pitman IEGSE ICR Reviews IEGSE
2\. Project Objectives and Components:
a\. Objectives:
The project development objectives were to (a) reduce the pollution load in the Danube River Basin; (b) to
strengthen compliance with Hungarian and European Union environmental standards; and (c) improve wastewater
operations in the water and wastewater utilities of the Borrower \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Budapest Component (Appraisal: US$64\.98 million; Actual: US$101\.38 million) included:
Expansion and upgrade of the North Budapest Wastewater Treatment Plant;
Expansion and upgrade of the South Pest Wastewater Treatment Plant;
Construction of the North Buda wastewater /rainwater pumping and collection system;
Provision of a wastewater monitoring system; and,
Technical assistance for preparation of three studies \.
Dunaujvaros Component (Appraisal: US$7\.68; Actual: US$10\.64 million) included:
Construction of a wastewater treatment plant, reconstruction of a storm overflow chamber, and upgrade of St \.
Istvan Street pumping station; and,
Technical assistance for the preparation of two studies \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost : The loan was in Euros\. The sizable difference between project cost at appraisal and closing in USD
can be largely explained by changes in the exchange rate during implementation \. Total project cost in Euros was 114
percent of the appraisal value \. Total Bank outlays in Euros totaled only 98% of the appraisal estimate\. Additional
funding came almost entirely from municipal sources to cover operation costs, maintenance and infrastructure
rehabilitation\.
Financing : The European Investment Bank took over financing of the Pok Street pumping station instead of the initial
local financing and contributed US$ 3\.58 million equivalent\. Co-financing in the sum US$20\.71 million equivalent was
provided by the EU Large Scale Infrastructure Utility and Phare Grants \.
Borrower Contribution : This was from two sources: a government grant to the utilities and the utilities own
contribution\. It was planned that government grants would be US$ 12\.10 million and US$11\.64 million was actually
provided\. In contrast the municipalities provided US$ 42\.05 million or 168% more than the planned US$25\.00 million\.
Dates : The initial closing date for the project was extended once, from 12/31/2006 to 12/1/2008\. This change
reflected the decision to upgrade the North Budapest WWTP sub -component to include tertiary treatment \. That
activity is expected to be complete at the end of 2010\. Additional time was also required when site preparation in
Budapest at the Pok Street pumping station uncovered Roman ruins, and local archaeological authorities were
brought in to recover artifacts before work was continued eight months later \.
3\. Relevance of Objectives & Design:
High \. The objectives met the needs of the Hungarian government as they prepared for accession to
Objectives : High\.
the EU\. One of the key issues regarding Hungary's wastewater management at the time of the project's authorization
was to bring its environmental standards up to date with EU requirements \. The project was also consistent with the
Country Assistance Strategy (CAS document number: 17257-HU)\. The primary objectives of the CAS were to help
Hungary sustain its recent economic recovery and to support the country's efforts to join the EU - the primary goal of
Hungary during the 1998-2000 CAS period\. Hungary ceased borrowing from the Bank during the referenced CAS
period, and its overall financing needs have declined as deficits have been kept at moderate levels \. In addition, it
enjoys access to private capital at terms that are extremely competitive for sovereign borrowings, and to significant
financing from European institutions \.
Design : Substantial \. Design details were arrived at only after a drawn -out five year period, during which the project's
scope winnowed considerably from seven prospective municipalities to two \. Design of wastewater treatment plants
was perhaps too optimistic with regard to expanding capacity based on assumptions of expected future economic
growth which did take place as planned \. Project design did not include clear financial indicators for the Operating
Companies (OC) for operation of the completed services; however, operating ratios were recorded and used
appropriately as a proxy for financial performance indicators \. Baseline data were not specified in the Project
Appraisal Document, and there were discrepancies in documentation and the accuracy of baseline data \. These
mistakes were, however, corrected early during implementation \.
These issues aside, project design was thorough and well thought through \. The components were well matched to
fulfill the project's objectives and performance indicators were appropriate \. The additional time taken to design the
project ultimately contributed to more effective use of funds as the smaller municipalities were able to secure EU
grants while the Bank financed the larger cities \. Design took into consideration the municipalities â commitment in
meeting the physical objectives, and correctly reviewed technical, financial, and social aspects as well as critical
risks, environmental impacts and mitigation measures for implementation of the project \. Although two plants are
operating below capacity the operating cost was not greatly affected (explained in further detail in section 5)\.
4\. Achievement of Objectives (Efficacy):
The project development objective consisted of three parts :
1) Reduce the pollution load in the Danube River Basin \. Substantial \.
The wastewater treatment plants were completed as scheduled resulting in an increase in wastewater with
secondary treatment from 0 to 98 percent in the Municipality of Dunaujvaros and from 20 to 50 percent in the
Municipality of Budapest\.
The overall appraisal target for increasing secondary treatment capacity was met with an average capacity of
250,000 m3/day\. The North Budapest WWTP met the appraisal target of treating 155,000 m3/day on average\.
Similarly the South Budapest WWTP treats 80,000 m3/day on average\. A new WWTP at Danuajvaros met the
design target capacity of 15,000 m3/day\. Both the South Budapest and Dunuajvaros WWTPs operate below
capacity due to a decreased population in the service area \.
In May 2006, the project was modified by adding capacity and tertiary treatment to the North Budapest WWTP \.
That extensive change could not be fully implemented by the time of project closing \. As such, the first
development objective was not fully achieved, but is expected to be in 2010\.
2) Strengthen compliance with Hungarian and European Union environmental standards \. Substantial \.
EU effluent standards for wastewater discharges were met in all cases, but some project targets were set higher \.
Although some appraisal discharge targets were not met - Nitrogen in the North Budapest system, Ammonia and
Phosphorus in the Danaujvaros system - these shortcomings are expected to be mitigated soon \. Once the
tertiary treatment addition is completed, the North Budapest WWTP will be able to reduce Nitrogen discharge to
meet the target\. Current technology prevents the Danaujvaros WWTP from meeting project targets but they did
meet EU standards\.
3) Improve wastewater operations in the water and wastewater utilities of the Borrower \. Modest \.
The performance indicator set for achieving financial management meeting international standards had no
specific target in the PAD\. The project monitored tariffs and operating and working ratios as proxy measures \.
Adequate financing of satisfactory operation and maintenance of the wastewater facilities through fair and
affordable tariffs was only achieved indirectly \. Budapest now uses a private contractor to handle wastewater
operations and its operating ratio at closing was 0\.80\. The Municipality of Dunaujvaros has not been able to
comply with the operating ratio required by the Bank covenant of 0\.70\. The working ratio at the time the ICR was
written was 0\.90; however, the tariff is adequate to cover operation and maintenance \.
5\. Efficiency (not applicable to DPLs):
The ex-post ERR is 13 percent; however, there was no ERR calculated at appraisal so a comparison is not
possible\. The methodology for calculating the closing ERR was not presented in the ICR thus the coverage /scope is
not available\. The project estimated the net present value of environmental benefits produced by the reduction of
BOD and nutrient discharges to be US$ 10\.64 million (discounted to 1999)\.
The South Budapest WWTP and the Dunaujvaros WWTP were not operating at maximum capacity at project closing \.
The wastewater inflow at the South Budapest plant has been steady for several years at about 55,000-60,000 m3/d,
therefore the plant while constructed for 80,000 m3/day is operating below the constructed capacity \. The reason is
slower than expected new city development with only 75 percent connected\. The wastewater inflow at the
Dunaujvaros plant has been about 7,000 to 8,000 m3/day, thus below the 20,000 m3/day maximum\. Downsizing of
the city's main employer in last several years of implementation resulted in out -migration of a significant number of
residents\. However, the cost increase has not been great because at the current inflow there has been no need to
install and use an electric propeller which would significantly increase cost \. For both treatment plants, improvement
in metering and leak reduction resulted in reduced per capita consumption \. Though tariffs have increased, coupled
with more accurate measuring of water use the water charges have remained affordable \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate Yes 13% 100%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The project was substantially relevant overall and it met its objectives in a timely and effective manner \. Reducing
the pollution load in the Danube River contributed to Hungary's EU accession requirements \. However, there were
moderate shortcomings in the completion of some components, in particular the addition of the sub -component to
improve the North Budapest WWTP midway through the project's life which has yet to be completed \. Even so, overall
efficacy is rated substantial \. Project efficiency is rated substantial \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Risks related to the sustainability of the project âs impact are negligible\. The Governmentâs focus on infrastructure
supports increased financing to the municipal wastewater infrastructure to comply with EU requirements and
wastewater secondary treatment standards \. Although the component to add tertiary treatment to the North Budapest
WWTP was not completed at closing, it is fully expected to be as the main reason for the delay is the component's
late addition to the project\.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
Quality at Entry: Satisfactory \. Initial plans for the project were far too broad, resulting in a significant
scaling-down of the project's scope, which in turn led to a five -year preparation period before approval \. While
many of these complications were the result of Borrower vacillations, the length of time between initial proposal
and approval was large\. However, the Bank's approach in supporting the ambitions of the country and allowing
the client to drive the process ultimately contributed to good relations between the Bank and Borrower and the
design of a project appropriate to achieve wastewater treatment standards \.
Supervision: Moderately Satisfactory \. Supervision missions were carried out at routine six month intervals and
Aide-memoires were regularly prepared\. Though the third objective did not have a clearly stated indicator in the
PAD, operating ratios were monitored and included in Aide -memoires and the Implementation Status Report \. The
ICR notes some deficiency in reporting the technical status of works as well as explanation of delays \. Late-stage
implementation of smaller sub-components and adoption of the tertiary treatment plant upgrade at the North
Budapest WWTP led to delays in the project closing date \. The latter may have been due to tardy responses from
the Bank regarding procurement \. However, the primary investments, the wastewater treatment plants, were
completed by 2002\. Finally, the task team leader changed four times in the course of the project, which likely
affected continuity and efficiency in implementation, though frequent reporting likely reduced any negative
impact\.
at-Entry :Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government: Moderately Satisfactory \. Government parties were active and involved partners in project
preparation and demonstrated significant investment in the project's design and implementation \. As such, they
should be considered satisfactory \. However, the significant lag time involved between conceptualization to
project appraisal (30 months) and even larger lag between appraisal and approval /implementation (an additional
53 months) contribute to an overall downgrade \.
Implementing Agency: Satisfactory \. Both Budapest and Dunaujvaros Municipalities established adequately
staffed project implementation units (PIUs) at the beginning of the project, and maintained them throughout the
course of implementation\. The PIUs represented the main link with the Bank, and were responsible for ensuring
that the project was implemented in accordance with all relevant guidelines and requirements \. They submitted
timely, high-quality reports attesting to this \.
Overall: Satisfactory \. Although the project was significantly delayed, in part due to Borrower indecisiveness, once
approved the implementing agency performed well \. Progress was at times halting, and slowed after the mid -term
review to account for the late -stage implementation of additional investments, but throughout the process the PIU
kept up adequate supervision and maintained quality \.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
Design : Substantial \. The key performance indicators were clear and well connected to the project's objectives \.
There was some difference between the PAD's Project design summary and the ICR results framework with regard to
quantity of wastewater to be treated and levels of discharge \. These were minor, though unexplained \. Targets were to
be monitored through quarterly project implementation progress reports by respective project implementation units \.
The only notable flaw to the M&E design was the absence of targets for the financial performance indicators \.
However, operating ratios were monitored and recorded as per the legal covenant made in the Loan Agreement \. A
clear target was set for the Dunaujvaros Water and Supply and Sewerage Company to achieve an operating ratio of
0\.75 for its fiscal year ending December 31, 2000, and equal or less than 0\.70 throughout subsequent years of
project implementation\. For the Municipality of Budapest, it was left flexible in the event that the municipality wanted
to increase tariffs, in consultation with the Bank, to maintain sound financial and operating ratios \. These ratios were
used as a proxy in evaluating financial performance \.
Implementation : Substantial \. Quarterly implementation progress reports were completed as planned \. The baseline
data established early in supervision was not correct and did not accurately reflect the initial pre -Project status\. This
was later corrected and subsequent monitoring of the Project âs physical implementation was detailed and regularly
updated; relevant changes were reflected in the procurement plans and these were routinely reported \. The cause of
the incorrect data early on was largely due to changes in data collection requirements and standards over the
ten-year implementation period\.
Utilization : Substantial \. Evaluation of project monitoring data was used to effectively manage the project and for
decision-making on needed improvements to water treatment infrastructure \.
a\. M&E Quality Rating : Substantial
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards : All appropriate policies were followed \. The project was classified as Environmental Category B (OP
4\.01), and construction permits were issued only after completion of the environmental assessments and mitigation
of potential negative impacts required under Hungarian Law \. Physical Cultural Resources (OP 4\.11): while
excavation for the Pok Street pumping station project was being conducted, Roman -era ruins were discovered,
triggering an eight-month waiting period while artifacts were removed \. All relevant land and rights of way were owned
by the participating governments, and no persons were resettled (OP 4\.12)\. No notification of international riparians
party to the Danube river were notified of this project, as negative impacts were not foreseen (OP 7\.50)\.
Fiduciary Issues : Financial management arrangements were rated satisfactory, and quarterly monitoring reports
were submitted in a timely manner\. Procurement issues proved slightly more problematic \. Although Borrower PIU
staff were trained in procurement by a Bank specialist, the process slowed in 2005 before improving from 2007
through completion\. These delays may have resulted from Bank task team leader turnover \.
Unintended Positive Impacts : The South Pest WWTP significantly increased its capacity for generation of biogas
through a process made possible by upgrades to sludge management technology \. This contributed to a reduction in
cost of electricity for operation \.
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Negligible to Low Negligible to Low
Outcome :
Bank Performance : Satisfactory Moderately Supervision had some problems (see
Satisfactory Section 8)\.
Borrower Performance : Satisfactory Moderately Government Performance had some
Satisfactory problems (See Section 9)\.
Quality of ICR : Satisfactory
NOTES
NOTES:
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The following lessons are drawn from the ICR lessons learned :
More effective coordination is required between Bank procurement and disbursement processes \. The last
withdrawal application for payment on the North Budapest WWTP upgrade was denied, even though the Bank had
previously issued no-objection to the contract containing this disbursement schedule \. It is therefore imperative that
during the contract approval processes, procurement and disbursement aspects are properly coordinated to
prevent similar recurrences\.
The risks to correctly sizing infrastructure should be carefully appraised \. Where the risks are high a phased
approach to infrastructure provision may be required bearing in mind economies of scale \. The Wastewater
Treatment Plant in Dunaujvaros was constructed under an excessively optimistic economic outlook, and when
conditions changed due to the exit of a major employer, the Municipality's population decreased leaving the plant
operating significantly under capacity \. Although such a change could not be foreseen at appraisal, the expectation
of rapid economic growth should perhaps have been reflected in project design more modestly to account for
uncertainties\.
When new infrastructure are to be introduced during project implementation take care to factor in the additional
time required to avoid unplanned project extensions \. Upgrading the North Budapest WWTP using project savings
moved the closing date back two years \. Bank approval for the use of project savings should not only cover the
technical and other Bank eligibility criteria for new infrastructure but also include a comprehensive assessment of
the additional implementation time required and its implications for supervision costs \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR is concise, candid and consistent \. Adequate evidence is provided to support the project rating, though some
shortcomings exist\. In particular, the economic analysis could have been improved with further discussion of the ERR
or another measure of efficiency as well as of its methodology \. Overall, the document is of satisfactory quality \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P005720 |  ICRR 11174
Report Number : ICRR11174
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 06/12/2002
PROJ ID : P005720 Appraisal Actual
Project Name : Tn-rural Finance Project Costs 420\.0
US$M )
(US$M)
Country : Tunisia Loan/ US$M ) 65\.0
Loan /Credit (US$M) 47\.37
Sector (s): Board: RDV - General Cofinancing
agriculture fishing and US$M )
(US$M)
forestry sector (53%),
Micro- and SME finance
(31%), Agro-industry
(13%), Housing
construction (2%), Banking
(1%)
L/C Number : L3892
Board Approval 95
FY )
(FY)
Partners involved : Closing Date 09/30/1999 06/30/2001
Prepared by : Reviewed by : Group Manager : Group :
John English John R\. Heath Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The primary objectives of the project were to assist Tunisia in promoting viable private investment in rural areas
and in strengthening, on a sustainable basis, the financial viability and institutional reform process of the National
Agricultural Bank (BNA) in order to improve its development impact on the country's rural sector \. Specifically, the
project was to assist in:
supporting the implementation of a sound action plan to recapitalize BNA, address its arrears problems, and
improve its overall profitability;
developing an effective strategic planning process, decentralized organizational plan and internal controls for
BNA to implement improved lending policies, risk analysis, and client selection, provide credit to all creditworthy
farmers, and expand financial intermediation (savings and credit) in rural areas); and
developing a pilot program for the establishment of group lending schenes at the village level \.
b\. Components
The project had three components :
BNA's Credit program\. - to include loans for: on-farm activities by small, medium and large farms; agricultural
service activities; aquaculture and coastal fishing; cooperatives and medium sized enterprises; rural housing;
and activities of rural artisans and women \. (98% of estimated project cost)
BNA's institutional development\. - to support a program to strengthen BNA's financial viability and
organizational structure, improve its management effectiveness through enhanced management tools, and
facilitate the effective decentralization of its operations, including provision of training, data processing
equipment and MIS\. (2% of estimated project cost)
Informal rural finance and group lending schemes - to develop and carry out a feasibility study on group lending
with two elements: (a) informal rural markets and the operation of group lending to better understand its
riskiness, terms, conditions and recovery; and (b) the legal and regulatory institutional framework to understand
how best to promote mutual guarantee credit groups and credit unions at the village level \. (0% of estimated
project cost)
c\. Comments on Project Cost, Financing and Dates
The final project cost is not available in the report \. The only data provided is for the amounts disbursed from the
Bank loan in the sub-categories, totalling US$ 47\.37 million\. The closing date was extended twice by a total of 21
months\.
3\. Achievement of Relevant Objectives:
The project failed to achieve its stated objectives \. Some progress was made in enhancing the financial
sustainability of BNA, but the institution cannot be said to have yet achieved this goal \.
4\. Significant Outcomes/Impacts:
Progress in the individual componenents was as follows :
BNA's credit program\. The component only partially achieved its objective of promoting viable private
investments in rural areas, mainly by supporting on -lending for improved land utilization and water resource
management, livestock production, fishing and aquaculture, and equipment and small infrastructural
investments\. Overall, a total of over 800 sub-loans were made, the majority to small and medium farmers, which
amounted to 99% of the disbursement under the project \. But, initial uptake of the funds was slow, partly
because the Bank only reimbursed 50% of the amount financed by BNA\. When the first loan extension was
agreed the reeimbursemant rate was increased to 75% or more, providing this amount did not exceed 70% of
the project cost;
Institutional development \. Some progress was made in improving BNAs financial viability but BNA's portfolio
quality remains weak\. However, reductions were achieved in the proportion of past -due loans and of the
portfolio considered "at risk"\. Steps were taken to decentralize the organizational structure and operations and
to modernize branches, including computerization of operations \.
Informal rural finance \. Very little progress was made\. The component was to help develop microfinance for
rural entrepreneurs by establishing a pilot group lending scheme at village level \. The feasibility study originally
proposed was substituted by a GoT study on financing for small farmers \. This was much delayed\. A first phase
was finally completed, and was considered satisfactory by the Bank, but no progress is reported on the phase
two effort, which was to recommend solutions to small farmer financing needs \.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Data on outcome of the sub-loans made by BNA is limited, but overall performance appears to be poor \. During the
project the repayment rate varied from 26% to 48% and was 39% at completion\.This was partly attributed to the
activities being in the start-up phase, but this raises questions about the appropriateness of the loans and of the
repayment conditions applied to them \. Factors hampering loan recoveries have been adverse weather conditions
(primarily drought) and the government's decisions, from time to time, to write off repayments of loans after droughts,
thereby creating expectations of forgiveness among borrowers \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory
Institutional Dev \.: Substantial Modest The project as a whole increased only to a
limited extent (rather than significantly)
the country's ability to effectively use
financial and natural resources \.
Sustainability : Unlikely Unlikely
Bank Performance : Unsatisfactory Unsatisfactory
Borrower Perf \.: Unsatisfactory Unsatisfactory
Quality of ICR : Satisfactory
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
NOTE:
7\. Lessons of Broad Applicability:
1\. In financial intermediation projects it may be preferable to define a positive list of sub -project categories that
could be financed and specify that no single category may receive more than a stated share of loan proceeds, rather
than incorporating an up-front allocation in agreements that later have to be changed \.
2\. In an operation of this type, that aimed to support both rural development and institutional development of a
specific financial institution, the Bank must ensure that there is a clear strategy in place to allow all the objectives to
be met in a coherent manner\.
8\. Assessment Recommended? Yes No
9\. Comments on Quality of ICR:
The ICR is generally satisfactory, but does have shortcomings \. Data on overall project "cost" is not provided, and
no data is included on the use of the lines of credit provided by the co -financiers, although the text hints that they
were fully utilized\. It should have been feasible to reproduce a cost table to parallel that in the appraisal report \.
Rather perfunctory comments are included from only one of the two co -financiers despite their significant role in
the project\. This response, combined with the above lack of data, suggests that the relationship with them during
implementation was not close\. No discussion on this is included \. | REVIEW |
P096019 |  Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR00004237
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD 81990, IBRD 48600)
ON A
LOAN
IN THE AMOUNT OF US$220 MILLION AND
ADDITIONAL FINANCING LOAN IN THE AMOUNT OF US$61\.7MILLION
TO THE
THE REPUBLIC OF INDIA
FOR THE
HIMACHAL PRADESH STATE ROADS PROJECT ( P096019 )
DECEMBER 20, 2017
Transport and ICT Global Practice
South Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its
contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective October 29, 2017)
Currency Unit = Indian Rupee (INR)
INR65\.03 = US$1
FISCAL YEAR
April 1 â March 31
ABBREVIATIONS AND ACRONYMS
AF Additional Financing
BoQ Bill of Quantities
CPS Country Partnership Strategy
CSC Contract Supervision Consultant
EIRR Economic Internal Rate of Return
FIDIC International Federation of Consulting Engineers
GoHP Government of Himachal Pradesh
GoI Government of India
HDM Highway Design and Management Tool
HP Himachal Pradesh
HPSRP Himachal Pradesh State Roads Project
ICB International Competitive Bidding
ICR Implementation Completion and Results Report
M&E Monitoring and Evaluation
MOU Memorandum of Understanding
NCB National Competitive Bidding
NPV Net Present Value
PA Project Agreement
PBM Performance-Based Maintenance
PDO Project Development Objective
PMGSY Pradhan Mantri Gram Sadak Yojana (Prime Minister's Rural Roads Scheme)
PPF Project Preparation Facility
PWD Public Works Department
RADMS Road Accident Database Management System
RF Results Framework
RIDC Road and Other Infrastructure Development Corporation
RMMS Road Maintenance Management System
RRP Rural Road Project
VOC Vehicle Operating Costs
Regional Vice President: Annette Dixon
Country Director: Junaid Kamal Ahmad
Senior Global Practice Director: Jose Luis Irigoyen
Practice Manager: Karla Gonzalez Carvajal
Project Task Team Leader: Mesfin Wodajo Jijo
ICR Task Team Leader: Radia Benamghar
ICR Main Contributor: Alan Carroll
TABLE OF CONTENTS
DATA SHEET \. 1
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 6
A\. CONTEXT AT APPRAISAL \. 6
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \. 10
II\. OUTCOME \. 10
A\. RELEVANCE OF PDOs \. 10
B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 11
C\. EFFICIENCY \. 12
D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 14
E\. OTHER OUTCOMES AND IMPACTS \. 14
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 16
A\. KEY FACTORS DURING PREPARATION \. 16
B\. KEY FACTORS DURING IMPLEMENTATION \. 17
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 21
A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 21
B\. ENVIRONMENTAL SAFEGUARD, SOCIAL SAFEGUARD, AND FIDUCIARY COMPLIANCE \. 22
C\. BANK PERFORMANCE \. 24
D\. RISK TO DEVELOPMENT OUTCOME \. 24
V\. LESSONS LEARNED AND RECOMMENDATIONS \. 26
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 28
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 37
ANNEX 3\. PROJECT COST BY COMPONENT \. 39
ANNEX 4\. EFFICIENCY ANALYSIS \. 43
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 48
ANNEX 6\. SUPPORTING DOCUMENTS \. 50
ANNEX 7\. ADDITIONAL LESSONS AND RECOMMENDATIONS \. 52
ANNEX 8: PROJECT MAP \. 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
P096019 HIMACHAL PRADESH STATE ROADS PROJECT ( P096019 )
Country Financing Instrument
India Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A) Full Assessment (A)
Related Projects
Relationship Project Approval Product Line
Additional Financing P130616-HP State 25-Oct-2012 IBRD/IDA
Roads Project -
Additional Financing
Organizations
Borrower Implementing Agency
The Republic of India HPRIDC
Project Development Objective (PDO)
Original PDO
To reduce transport costs and to improve traffic flows on priority segments of the core road network of Himachal
Pradesh for the road users in the state\.
Page 1 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
World Bank Financing
220,000,000 219,998,008 219,998,008
IBRD-48600
61,700,000 46,700,000 46,700,000
IBRD-81990
Total 281,700,000 266,698,008 266,698,008
Non-World Bank Financing
Borrower 83,430,000 98,510,000 98,510,000
Total 83,430,000 98,510,000 98,510,000
Total Project Cost 365,130,000 365,208,008 365,208,008
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing
05-Jun-2007 05-Oct-2007 15-Jul-2010 30-Jun-2013 30-Jun-2017
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
25-Apr-2016 204\.39 Change in Loan Closing Date(s)
25-Apr-2017 245\.27 Change in Components and Cost
Cancellation of Financing
Reallocation between Disbursement Categories
KEY RATINGS
Outcome Bank Performance M&E Quality
Moderately Satisfactory Moderately Satisfactory Substantial
Page 2 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
01 19-Nov-2007 Satisfactory Satisfactory 1\.20
02 13-May-2008 Satisfactory Satisfactory 6\.06
03 04-Nov-2008 Satisfactory Moderately Satisfactory 15\.73
04 03-May-2009 Moderately Satisfactory Moderately Unsatisfactory 24\.37
05 27-Jul-2009 Moderately Satisfactory Moderately Unsatisfactory 24\.37
06 11-Jan-2010 Moderately Satisfactory Moderately Unsatisfactory 24\.37
07 24-Sep-2010 Moderately Satisfactory Moderately Satisfactory 39\.84
08 10-Apr-2011 Moderately Satisfactory Moderately Satisfactory 74\.43
09 30-Oct-2011 Moderately Satisfactory Moderately Satisfactory 96\.24
10 10-Jun-2012 Moderately Satisfactory Moderately Satisfactory 139\.01
11 29-Aug-2012 Moderately Satisfactory Moderately Satisfactory 139\.01
12 12-Mar-2013 Moderately Satisfactory Moderately Unsatisfactory 149\.66
13 08-Jul-2013 Moderately Satisfactory Moderately Satisfactory 149\.81
14 23-Dec-2013 Moderately Satisfactory Moderately Satisfactory 149\.81
15 22-Feb-2014 Moderately Satisfactory Moderately Satisfactory 149\.81
16 31-Aug-2014 Moderately Satisfactory Moderately Unsatisfactory 159\.37
17 04-Feb-2015 Moderately Satisfactory Moderately Unsatisfactory 169\.42
18 03-Aug-2015 Moderately Satisfactory Moderately Satisfactory 191\.04
19 06-Jan-2016 Moderately Satisfactory Moderately Satisfactory 191\.04
20 06-Jul-2016 Moderately Satisfactory Moderately Satisfactory 208\.48
21 19-Jan-2017 Moderately Satisfactory Moderately Satisfactory 231\.33
22 16-Mar-2017 Moderately Satisfactory Moderately Satisfactory 238\.02
Page 3 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
SECTORS AND THEMES
Sectors
Major Sector/Sector (%)
Public Administration 100
Sub-National Government 3
Social Protection 100
Social Protection 1
Transportation 100
Rural and Inter-Urban Roads 96
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Private Sector Development 23
Jobs 13
Job Creation 13
Public Private Partnerships 10
Social Development and Protection 20
Social Inclusion 18
Other Excluded Groups 18
Fragility, Conflict and Violence 2
Forced Displacement 2
Human Development and Gender 40
Disease Control 40
HIV/AIDS 20
Non-communicable diseases 20
Page 4 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
Urban and Rural Development 26
Urban Development 13
Urban Infrastructure and Service Delivery 13
Rural Development 13
Rural Infrastructure and service delivery 13
ADM STAFF
Role At Approval At ICR
Regional Vice President: Praful C\. Patel Annette Dixon
Country Director: Isabel M\. Guerrero Junaid Kamal Ahmad
Senior Global Practice Director: Fayez S\. Omar Jose Luis Irigoyen
Practice Manager: Guang Zhe Chen Karla Gonzalez Carvajal
Task Team Leader(s): Ke Fang Mesfin Wodajo Jijo
ICR Contributing Author: Alan G\. Carroll
Page 5 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A\. CONTEXT AT APPRAISAL
Context
1\. Himachal Pradesh (HP), with its largely mountainous topography and significant forest cover,
presents special challenges to the roads sector\. The difficult terrain, seasonally poor weather conditions,
scarcity of construction materials, and dispersion of the population cause the unit costs of road
development and maintenance to be significantly higher (50â100 percent) than equivalent works in
states with mainly flat topography\.1 The combined effects of the monsoon season during July-
September and the snows in winter limit the construction season to about six months of the year\.
2\. At the time of the appraisal of the Himachal Pradesh State Roads Project (HPSRP), over 90
percent of the Stateâs population lived in rural areas and over two thirds of employment was generated
in the agricultural sector\. There were considerable disparities in access to services across the state\. Even
so, HP had been makingâand continues to makeânotable advances in economic growth, accompanied
by relatively favorable good human development outcomes\.2
3\. When the project was appraised, the development strategy of the Government of Himachal
Pradesh (GoHP) was to raise standards of living, correct fiscal imbalances, and stimulate economic
growth by accelerating hydro-power generation, diversifying agriculture towards cash crops, facilitating
industrial investment, and promoting tourism\. An efficient road transport system is crucial for all of
these objectives\. With very little rail,3 no waterways, and only three small domestic airports, the state
relies almost exclusively on its road network for transport\. At appraisal, the stateâs road network totaled
about 28,000 km, comprising 2,000 km of national highways and border roads financed by the
Government of India (GoI), 2,160 km of state highways, 2,240 km of major district roads, and the
balance rural roads\. Half of this network was unsurfaced, 90 percent of the highway network was single
lane, and fewer than half of all villages were connected\.
4\. The main issues facing the road sector in HP at appraisal were: (a) lack of past investment; (b) a
poorly funded and implemented maintenance regime; (c) monolithic and traditional management by the
Public Works Department (PWD) with a large in-house force account staff of 44,000 laborers; (d)
outdated business practices; (e) absence of a coherent financial strategy; and (f) limited application of
modem planning, design and construction methods\. The Road and Other Asset Development
Corporation (RIDC) was created in 1999 under the Companies Act with a mandate to raise funds and
facilitate infrastructure development\. However, in practice, by the time of project appraisal, the RIDC
had been used to a very limited extent\. The GoHP decided to make RIDC the implementing agency for
1
PAD, Annex 1, p\.17\.
2
For a recent analysis of HPâs performance in economic and social development, see âScaling the Heights: Social Inclusion and
Sustainable Development in Himachal Pradeshâ?, World Bank, 2015\.
3
HP has only two narrow gauge railway lines connecting Shimla with Kalka (96 km) and Jogindernagar with Pathankot (113 km)
and one 33 km broad gauge railway line from Nangal Dam to Charuru in Una District\.
Page 6 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
the project to initiate movement toward separate institutional arrangements for the core state road
network and rural roads\.
5\. The HPSRP was designed to complement another Bank-funded operation, the Rural Road
Project (RRP)\.4 The latter aimed to improve access to markets and services for residents of selected rural
districts, while the HPSRP sought to upgrade the core highway network into which the rural roads
connect\.
6\. During preparation of the RRP, a Maintenance Action Plan and Institutional Strengthening
Action Plan were prepared and endorsed by the GoHP\.5 As part of the preparation of the HPSRP, PWD
undertook a study on road sector finance,6 which projected a significant funding gap for road upgrading
and maintenance if the State continued to rely on the traditional sources, that is, the State budget,
various subsidies from the GoI, and borrowing\. The study recommended establishing a dedicated road
funding mechanism through some combination of road user charges and public-private partnerships
(PPPs)\. This system was envisioned to include the adoption of new contracting modalities for road
maintenance uch as long-term PBM contracts\. It was assumed that GoHP would adopt the key
recommendations of the study, and the HPSRP aimed, through various further technical assistance
activities, to support the âfull operationâ? of a âstable road financing mechanism for the core networkâ?\.7
Theory of Change (Results Chain)
PDO: To reduce transport costs and improve traffic flows
on priority segments of the core road network of Himachal Pradesh
Activities Outputs Project Outcomes Longer-Term Impacts
Road upgrading works Kilometers of roads Reduced transport costs Quality of the Stateâs core
upgraded road network is improved
Improved traffic flows and sustained
Periodic and performance- Kilometers of roads
based road maintenance maintained Reduced rates of vehicular RIDC becomes an effective
works accidents contribute to manager of the core road
lower transport costs and network, further advancing
improved traffic flows the project objectives of
reduced transport costs
4
The first RRP (P077977), approved in 2004 and closed in 2012, complemented GoI financing for rural road improvements in 60
percent of the districts in four of the most poorly connected states: HP, Jharkhand, Rajasthan and Uttar Pradesh\. This was
followed by the PMGSY (Pradhan Mantri Gram Sadak Yojana, Prime Minister's Rural Roads Scheme) Rural Roads Project
(P124639), which also included Himachal Pradesh, approved in 2012 and ongoing\.
5
These Plans were included in the HPSRP PAD as Appendices to Annex 1\. One of the actions of the Maintenance Plan was
âCreate road maintenance fund through existing and new resourcesâ?\. The Institutional Plan included the action âGoHP to
establish the road fund or other mechanism\.â?
6
Himachal Pradesh Road Sector Finance Study, Final Assessment Report, PriceWaterhouse Coopers, December 2006\.
7
See PAD, Annex 3\.
Page 7 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
Activities Outputs Project Outcomes Longer-Term Impacts
Accident black spot Numbers of black spots Road Maintenance Fund and improved traffic flows
improvements improved becomes operational and
helps improve road Improved road
Provision of road accident Road accident data base quality, contributing to connectivity for rural
data base installed project outcomes residents and producers in
HP
Technical assistance for Road Maintenance Fund
capacity building in: study delivered Lower costs of doing
ï Road maintenance and business and accessing
management Institutional and HR services within the State
ï Human resource reform studies delivered and of importing and
development and exporting goods to and
training Road maintenance from the State
ï Quality management management system
systems (RMMS) delivered Economic and intangible
ï Computerization of PWD benefits of fewer deaths,
and RIDC systems Other systems delivered injuries and accidents
Key assumptions of the Theory of Change:
ï Police and other authorities use the Road Accident Data Base Management System to gain
improved ability to enforce safety and identify critical safety improvements\.
ï The State Government has the political will to establish and operationalize a Road Maintenance
Fund and to make RIDC the core road network manager\.
ï PWD and State authorities are willing to implement organizational and human resource changes
to improve the efficiency and effectiveness of road asset management\.
ï RMMS and other new systems are used effectively by RIDC to improve road asset management\.
Project Development Objectives (PDOs)
7\. The Project Development Objective (PDO) was to reduce transport costs and to improve traffic
flows on priority segments of the core road network of Himachal Pradesh for the road users in the state\.
Key Expected Outcomes and Outcome Indicators
8\. The PDO was supported by four key indicators, as shown in table 1\.
Table 1\. Indicators, baselines, and targets
Baseline at
Indicator Target
Appraisal
Percent of the entire core road network in poor 40% =<10%
condition
Average speeds on the project financed roads which TBD at appraisal +25%
Page 8 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
Baseline at
Indicator Target
Appraisal
received upgrading (percent increase)
8
Death rate on state highways per 1,000 vehicles 2\.0 =<2\.0
Level of road user satisfaction with the entire core road 1\.5 3\.0
9
network (index 1â5)
9\. These original PDO indicators all supported the second PDO outcome to improve traffic flows\.
There was no original key indicator for the first PDO outcome to reduce transport costs\. See Sections
III\.B and IV\.A below\.
Components
10\. The original projectâs total cost was US$303\.43 million, financed by an IBRD loan of US$220
million and counterpart funds of US$83\.43 million\. It comprised two components10:
ï Core Network Improvement (US$235\.25 million net of project preparation facility [PPF]),
consisting of road upgrading works, including widening, realignment, new structures and
pavement strengthening, on approximately 447 km of state roads in the core network, plus
associated supervision, land acquisition, and application of social and environment
safeguard measures\.
ï Core Network Maintenance and Management (US$66\.02 million net of PPF), including (a)
periodic maintenance (overlays and reseals) and minor rehabilitation (replacement and
addition of base materials and structures) of about 2,000 km of the core road network; (b)
piloting performance-based maintenance (PBM) contracts;11 (c) accident black spot
improvements; (d) pre-investment studies for road network improvement and
maintenance; and (e) capacity enhancement in road maintenance, financing, and
management\.
8
The baseline data for this indicator cited at appraisal came from National Crime Records Bureau and pertained to the entire
road network, not specifically to State Highways\. For this ICR, the data were sourced from the RADMS as of 2014\. See section
II\.E\.
9
A score of 1 was defined a âquite dissatisfiedâ?, while a score of 5 meant âquite satisfiedâ?\. Source: âConsultancy Services f or
Road User Satisfaction Survey and Speed Survey in the State of Himachal Pradeshâ?, Final Report, 2016, prepared by TNS India
Pvt\. Ltd\. A baseline survey was conducted in 2007\.
10
In the original cost table, US$0\.56 million of incremental operating costs for project management were itemized separately
from the two main components\.
11
Under these contracts, payments are linked to the achievement of outputs and service levels, providing an incentive to
contractors to execute quality work up front and thereby reduce subsequent maintenance costs\.
Page 9 of 56
The World Bank
Himachal Pradesh State Roads Project ( P096019 )
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets
11\. Neither the PDOs nor the outcome targets were revised\.
Revised PDO Indicators
12\. PDO indicators were not revised, except for the addition of number of beneficiaries as an
intermediate indicator as part of the Additional Financing (AF) in 2012 (to comply with the Bankâs core
sector indicators)\.
Revised Components
13\. No revisions were made to components\.
Other Changes
14\. An Additional Loan of US$61\.7 million was approved by the Bank on October 25, 2012, together
with an extension of the original closing date by three years to June 30, 2016\. Although not mentioned
in the AF Project Paper, the AF Project Agreement (PA) included a new covenant requiring that RIDC be
entrusted with the entire Core Road Network by December 31, 2013 (about 11 months after the signing
of the PA)\. A restructuring was approved on April 25, 2016 to extend the closing date of the Additional
Loan by one more year, to June 30, 2017, to allow time for completion of two large road upgrading
contracts\. A further restructuring was approved on April 25, 2017 to cancel US$15 million from the
Additional Loan because (a) the Indian Rupee depreciated against the US Dollar, producing a gain in the
available amount of local currency, in which most contracts were established and (b) one of the road
upgrading contracts would not be fully completed by the revised closing date, such that part of the
contract amount would not be used\.
Rationale for Changes and Their Implication on the Original Theory of Change
15\. The addition of the covenant on RIDC becoming the core network manager made this outcome
more explicit but did not modify the projectâs Results Framework (RF) or theory of change\. The other
changes concerned only the costs and duration of the project and had no effects on the original theory
of change\.
II\. OUTCOME
A\. RELEVANCE OF PDOs
16\. GoHP has not recently produced an updated development strategy or sector policy, but it may
be inferred from a recent Economic Survey12 that hydro-power generation, horticulture, industrial
12
Government of Himachal Pradesh, Economic Survey 2016-17, Economic and Statistics Department\.
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investment, and tourism continue to be the key development priorities\. All of these require a robust and
sustainable road transport network\. The project spanned three World Bank Country Partnership
Strategies (FY06-0813, FY09-1214, and FY13-1715)\. At the time of its approval, the project was embedded
in one of the three Program Priorities of the FY06-08 CPS, âPromoting Private Sector-Led Growthâ?
through âProvision of adequate Infrastructure, accelerating rural growth, and fostering the competitive
economyâ?, in which road transport was mentioned frequently\. The project remained fully in line with
the FY09-12 CPS, under the first pillar of âachieving rapid, inclusive growthâ? as well as the second pillar
of âsustainable growthâ?\. The project also fit within the FY09-12 focus on the low-income states, for
which investments in roads were highlighted as contributing to sustainable, inclusive growth and
improved service delivery\. Finally, the project remained fully consistent with the FY13-17 CPS in directly
supporting the outcome of âimproved transport connectivityâ? under the first of the CPSâs three
âengagement areasâ?, integration, whose focus was on improved physical connectivity and the
strengthening of market mechanisms\. The project also substantially contributed to another of the latest
CPSâs engagement areas, inclusion, through improving access to services for marginalized segments of
population\. Further, the project was consistent with the current CPSâs emphasis on state-level activities
and especially on low-income and special category states\. As the project remained central through its
lifespan to achieving both the Stateâs and the Bankâs objectives, the relevance is rated High\.
B\. ACHIEVEMENT OF PDOs (EFFICACY)
17\. The PDO contained two outcomes: reduce transport costs and improve traffic flows (on priority
segments of HPâs core road network)\.
18\. Reduce transport costs\. As mentioned above, the original RF did not include any indicator for
this outcome\. An available proxy indicatorâvehicle operating costs (VOCs)âwas used\. VOCs were
derived as part of the ex ante and ex post economic analyses (see section II\.C and Annex 4) on the 10
roads upgraded by the project\. The baseline average VOC in 2006 for the 10 roads was 14\.39 Rs/km\.
based on pre-project prices and road conditions\.16 The post-upgrading VOC derived in 2006 was an
average of 10\.01 Rs/km\. This was slightly surpassed, as the final average VOC was 9\.78 Rs/km for the 10
roads, based on 2017 prices and post- upgrading road conditions in 2017\. This represents an overall
decline of 32 percent\.
19\. Improve traffic flows\. The project financed the upgrading (widening, strengthening, and
improved riding quality, geometry, and safety) of 435 km of the Stateâs core road network (state
highways and major district roads)\. Of these, 355 km were completed by the projectâs closing date, and
the remaining 80 km were under implementation and are likely to be completed by June 2018 with
financing from the Stateâs own resources\. The project also financed periodic maintenance of 1,833 km of
roads (1,485 km of conventional contracts and 346 km of performance-based contracts)\. As reported by
RIDC in August 2017, out of 686 km of Core Road Network (State Highways and Major District Roads)
found poor in 2016â17, 303 km were provided periodic maintenance during 2016â17, up to June 2017\.
13
Report No\. 29374-IN, September 15, 2004\.
14
Report No\. 46509-IN, November 14, 2008\.
15
Report No\. 76176-IN, March 21, 2013\.
http://documents\.worldbank\.org/curated/en/207621468268202774/pdf/7617600CAS0REV0PUBLIC00R20130005004\.pdf
16
As measured by the International Roughness Index (IRI), which was 9\.7 for the roads as a whole\.
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As such, the balance length of Core Network roads in poor condition as on June 30, 2017 came to 383
km\. (686 km â 303 km)\. Accordingly, the length of the total core network as of mid-2017 being 3,684 km,
the percentage of core network roads in poor condition at the closure of the project was 10\.4 percent
(383/3,684)\. Thus, the project achieved the PDO indicator target for reduction of the share of the core
network in poor condition from 40 percent to 10 percent\.17 Average speeds on the upgraded roads,
another PDO indicator, rose from an average of 29 km/hr before the project to 40 km/hr after
completion of the works, an increase of 38 percent, surpassing the target of 36 km/hr (+25 percent over
the baseline)\.
20\. Surveys of road user satisfaction were carried out in 2007 and 201618 covering users of all types
of roads in 10 of the Stateâs 12 Districts\. These Districts were chosen without regard to the extent of
HPSRP interventions in them\. The overall road user satisfaction index score for all roads in these
Districts went up from an average of 2\.5 in 2007 to 3\.3 in 20016\. It is difficult to attribute these higher
scores to the HPSRP, as there were other road improvements implemented in HP during 2007-2017,
including the RRP (2004-2010), the RRP/PMGSY (2010-2107), and others carried out and financed by GoI
and HP State resources\. However, the road user satisfaction survey of 2016 did collect data for eight of
the HPSRP upgraded roads, and found that the average score for the users of the projectâs upgraded
roads reached 3\.619, surpassing the PDO target of 3\.0\. It has not been possible to obtain the source of
the pre-project satisfaction level of 1\.5 cited in the Project Appraisal Document\. The satisfaction scores
are not higher because traffic volumes increased substantially over the period, so congestion still occurs,
and users cited inadequate parking and street lighting as residual concerns\.
Justification of Overall Efficacy Rating
21\. The project achieved or surpassed the targets for all three of the original PDO indicators related
to improved traffic flows and achieved the target for reduction of transport costs that was set in the
original economic analysis\. On this basis, the projectâs efficacy is rated as High\.
C\. EFFICIENCY
22\. Economic analysis\. Details of the economic analysis are presented in Annex 4\. At appraisal,
economic cost-benefit analyses were carried out for the road upgrading investments and the periodic
maintenance works\. For the road upgrading works, the âwithout projectâ? situation was the existing lane
configuration which would have absorbed growing traffic congestion as practical capacities were
exceeded\. In the âwith-projectâ? scenario, the new two/four-lane roads with paved shoulders would
provide improved traffic flows, higher speeds, reduced travel times, and lower VOCs\.
17
The length of the State core network was reduced from 4,400 in 2006 to 3,684 in 2017 due to reclassifications of State
Highways to National Highways\. The original indicator was stated as â% of the entire core network ( ï»4,000 km) in poor
conditionâ?\. Using the 4,000 km figure, the result achieved by 2017 would be 9\.6 percent, just shy of the target, but not a
significant variation\.
18
âConsultancy Services for Road User Satisfaction Survey and Speed Survey in the State of Himachal Pradeshâ?, Final Report
2016, TNS India Pvt Ltd\.
19
Ibid\. Page 89, âRUSI Score on Project Roadsâ? Table 9\.8\.
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23\. The original analysis determined the Net Present Value (NPV) and Economic Internal Rate of
Return (EIRR) of each road upgrading package using the Highway Design and Management tool (HDM 4)
and of each periodic maintenance package using the Road Economic Design model\. Net benefits were
discounted over the life of the investments at 12 percent\. All roads with EIRRs of less than 12 percent
were screened out\. The economic viability of the selected packages was found to be robust to standard
sensitivity tests for cost increases and benefit decreases\.
24\. The ex post economic analysis20 determined that all of the road upgrading works achieved
favorable EIRRs and NPVs\. The EIRRs for the 10 roads in 2017 varied from 13\.6 percent to 55\.5 percent\.
The overall NPV was Rs\. 16,332 million\. The overall EIRRs at appraisal and completion (based on
weighted average) were 26\.8 percent and 25\.9 percent, respectively, showing that gains from higher
than expected traffic volumes mostly offset the cost escalations\. The EIRRs at completion for seven
upgraded roads were slightly to moderately lower than at appraisal, because of higher costs\. For the
other three roads, the final EIRRs were significantly higher than at appraisal because of much higher
than projected traffic volumes\.
25\. Ex post economic analysis was not carried out for the entirety of the periodic maintenance
contracts, but it was done for a sample of seven periodic maintenance contracts awarded in 2014 â15\.
The project achieved favorable EIRRs and NPVs for six of the seven roads considered\. The results for one
road (Sainj-Chopal Nerwa Shallu Road-Slice2) were negative due to very low traffic\. The EIRRs for the six
road sections with positive NPVs varied from 25 percent to 38 percent, with an overall weighted average
of about 27 percent\. The overall NPV for the sample of roads was Rs\. 299\.1 million\. For periodic
maintenance, a comparison to results at appraisal was not possible, as there is little overlap between
the roads evaluated at appraisal and those evaluated at the ICR stage\. However, the overall EIRR at
appraisal was 26\.9 percent, which is similar to the overall EIRR at completion (27 percent) for the
different roads in the sample\.
26\. Overall efficiency\. Although the results of the ex post economic analysis are positive, the
projectâs significant cost and time overruns reduced its overall efficiency\. The costs of the road
upgrading contracts, which made up a majority of total project costs, were 31 percent higher than
anticipated\.21 The four additional years of project implementation substantially increased the projectâs
management costs\. In addition, one major road upgrading package (5\.1) and two important institutional
development activitiesâthe Road Management System and the computerization of PWDâwere not
completed by the closing date\. Based on these considerations, projectâs overall efficiency is rated as
Modest22\.
20
âComparison of Project Indicators including Vehicle Operating Cost (VOC) Before and After Works for Road sections covering
435 kmâ?, Himachal Pradesh State Roads Project, prepared by HIMS/SATRA for the HP Road and Other Infrastructure
Development Corporation Limited, May 2017\.
21
Additional Loan Project Paper, Annex 5, September 25, 2012\.
22
Per the Bankâs ICR Guidelines, Substantial efficiency is defined as âwhat would be expected in the operationâs sectorâ?\. Modest
efficiency is âbelow expectations in the operationâs sectorâ?\.
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D\. JUSTIFICATION OF OVERALL OUTCOME RATING
27\. Applying the Bankâs criteria for deriving the outcome rating,23 the projectâs overall outcome is
rated as Moderately Satisfactory based on High relevance, High efficacy, and Modest efficiency\.
E\. OTHER OUTCOMES AND IMPACTS
Institutional Strengthening
28\. HPSRP financed several tools to improve GoHPâs road management\. Early in the project,
technical assistance was provided for RIDC to achieve ISO 9001:2008 Quality Management and ISO
14001:2004 Environmental Management\. Certifications were awarded in 2011 in nine units of RIDC and
the National Highways wing of PWD\. These were reflected in an intermediate indicator in the projectâs
monitoring and evaluation (M&E) framework, âsetting up of quality assurance systemâ?\. Three
surveillance audits were conducted from March 2014 to March 2017, and re-certifications were issued
to the same units\. Another intermediate indicator was ârolling annual training plan prepared and
implementedâ?\. This was fully achieved, with 204 RIDC/PWD staff having attended 57 distinct training
events between 2008 and 2017 covering construction supervision, contract management (for design,
construction, and maintenance), procurement, environmental and social aspects, road safety,
performance-based contracting, public-private partnerships, and information technology\. The project
financed the development of a web-based project management system to enhance the quality and
efficiency of decision making at all levels through automated storage, collation and retrieval of project
information\. The consultancy services were completed in April 2016, and 14 licenses were procured for
RIDC offices, contractors and Contract Supervision Consultant (CSC)\. The application was used for
upgrading packages 1 (Bridges), 5/I, 5/II, 6/I and 6/II, and the data captured were shared with the Bank
during its last mission June 2017\. Having observed its usefulness, GoHP has authorized extending this
application to the entire PWD through acquiring an additional 85 licenses\.
29\. An additional intermediate indicator was âdevelopment of accounting policies and procedures
relating to road assetsâ?; this activity was not implemented\. The project initiated financing of (a) the
upgrading of PWDâs existing RMMS to a web-based Road Management System application and (b) the
computerization of PWD to integrate core activities of the department by way of automated business
processes and work flow systems using an electronic information database\. These tools are expected to
be delivered in 2018\.
30\. In the workshop in October 2017 on lessons learned from the project, RIDC credited the World
Bank for introducing international best practices for (a) the objective selection of roads to be improved
based on economic and cost effectiveness criteria and (b) the procurement of goods, works and services
under both national and international competitive bidding (ICB)\. Use of these procedures built the
capacity of PWD/RIDCâs engineers on many facets of road asset management\.
23
Bank Guidance, Implementation Completion and Results Report (ICR) for Investment Project Financing (IPF) Operations, July
1, 2017, Appendix H, Deriving the Overall Outcome Rating\.
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Gang Labor
31\. In its first year, the project financed a study to review the productivity of PWDâs in-house labor
force of some 44,000 workers and make recommendations for reforms to improve resource efficiency\.
The studyâs recommendations resulted in a decision to deploy more small contractors and reduce the
gang labor force to the essential size for handling emergency works not amenable to contracting\. PWD
implemented a ban on further hiring of workers, non-replacement of retiring workers, and transfer of
some workers to other jobs in the State government, while increasing the involvement of small
contractors, who in turn hired some workers who were released by PWD\. These actions reduced the in-
house labor force to about 29,000 by mid-2013, a drop of about 34 percent\.24 This issue was considered
important enough to merit an intermediate indicator in the projectâs M&E framework: âReduction in the
share of permanent gang labor costs in total spending on routine and emergency worksâ?\. The share
achieved at the projectâs closing date was 62 percent, short of the target of 50 percent\. Even so, this was
a significant reduction, for which the project can claim credit\.
Road Safety
32\. The project made a major contribution to road safety by incorporating safety enhancements in
all the upgrading works (for example, safer alignments and intersections, guard rails, markings, signage)\.
The project also improved 25 âblackspotsâ? in the core network, exceeding the indicator target (25 vs 20)\.
The original baseline and target values for the PDO indicator âdeath rate on HP state highways (deaths
involved in traffic accidents/1,000 vehicles)â? were found to be inaccurate, as they came from the
National Crime Records Bureau and pertained to the entire road network, not the State highways\. The
data for this indicator were subsequently sourced for the State highways only as of 2014, when the
RADMS became operational\. The baseline value for 2014 was 0\.28 deaths in traffic accidents per 1,000
vehicles\. This figure declined slightly each year afterwards, reaching 0\.21 in 2017\. This small and
preliminary trend may be attributed to the project, considering that, during the period, there were no
other significant road infrastructure interventions, legal reforms, enforcement improvements, or
awareness campaigns related to road safety in HP State\. In addition, the project financed the
development of a Road Accident Database Management System (RADMS) which has been implemented
in all districts as of July 2015, and the Police has established an Accident Data Management Cell\. The
application will enable all concerned stakeholdersâHPPWD, Police Department, Health Department,
Transport Department, and othersâto identify and address road safety challenges on a common
platform\. At the projectâs closing, close to 100 percent of accident data were being captured by the
Police Department through the RADMS\. The system allows customized reports to be quickly generated
to assist in applying prompt counter measures to reduce deaths and injuries from road accidents\. The
annual maintenance support contract of the consultant was extended for one more year to train all
stakeholders at zonal levels in proper analysis and use of the data\. The PWD and the Police have started
working together to define additional road accident blackspots based on the two years of data from the
RADMS and historical data, and they plan to develop a State road safety program\. The GOHP plans in the
follow-on project to upgrade the system to include an analytical module with utilities to prepare a road
safety investment program\. GoHP needs to strengthen the road safety governance within the
24
HPSRP Aide Memoire May 2013\.
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stakeholder institutions (Police, Public Works, Transport and Health), with a stronger oversight role from
the Road Safety Council\.
Bioengineering
33\. One of the projectâs major achievements was the successful piloting and mainstreaming of
bioengineering as a cost-effective and environmentally friendly slope stabilization measure\. The project
provided training and capacity building in these techniques to HPPWD staff and laborers in various
Divisions\. In addition to applying bioengineering for slope stabilization throughout the upgraded roads,
the project also rehabilitated about 80 debris disposal sites using various bioengineering techniques\.
Bioengineering is now successfully being applied to other HPPWD road projects\. Work is ongoing to
analyze and document each bioengineering technique and quantify its cost-effectiveness\. Specifications
for bioengineering in slope stabilization and protection were prepared and published in 2015, with
copies distributed to all of PWDâs field Divisions\.
Gender
34\. The only gender-related metric available was in connection with the Resettlement and
Rehabilitation (R&R) compensation\. A survey was conducted of PAPs on the 10 road upgrading packages
in October, November and December of 2016\. One of the findings was that women recipients reported
nearly 100 percent affirmative responses as to whether the project had provided benefits in terms of
improved access to employment and income generation opportunities, access to public services,
improved safety, and access to markets\.
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A\. KEY FACTORS DURING PREPARATION
35\. Project design\. Although the design was generally simple, the scope of the civil works proved to
be too ambitious for the capacity of PWD/RIDC\. The project design also included a number of more
challenging elements not stated in the PDOs, namely the establishment of a new road maintenance
system and reform of the institutional arrangements for road asset management\. As it turned out, these
changes were not achievable (see following section)\. Some more modest capacity-building results were
reflected in a number of intermediate indicators on (a) physical targets for periodic maintenance, black
spot improvements, and performance-based contracts; (b) reduction of force account labor in road
maintenance, and (c) implementation of a quality assurance system\.
36\. Risk assessment and mitigation measures\. Although fiduciary and safeguards risks were well
assessed and mitigated, numerous other risks were underestimated, as follows\.
ï Risks of inadequate asset management and maintenance were rated Substantial\. The
mitigation measures at appraisal were (a) designating RIDC to focus on long-term
management of the core road network and (b) demonstrating the effective application of
new maintenance planning/implementation tools under Component 2\. These risks were
properly assessed but inadequately mitigated\. See IV\.D, Risk to Development Outcome\.
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ï The risk of weakening of GoHPâs willingness and/or ability to fund maintenance of the core
road network was rated Modest at appraisal\. This risk was underestimated\. See IV\.D, Risk
to Development Outcome\.
ï Risks of high staff turnover and inadequate skills in RIDC were rated Modest at appraisal\.
The main mitigation measures were (a) deputation of staff to RIDC which was to provide
incentives for competent officers to stay in RIDC rather than return to PWD after only a
short period, and (b) specialized training\. This risk was underestimated (see III\.B below)\.
ï Risks of inadequate supply of contractors and consultants, unsatisfactory contractor and
consultant performance, construction delays, materials shortages, quality problems, cost
overruns, and contract disputes were bundled together as a set of interrelated risks rated
Substantial\. The key mitigation measures were training of contractors, conservative
packaging of works, identification of materials constraints, and use of independent
supervision consultants\. These mitigation measures proved insufficient and were not
effectively applied (see III\.B and V below)\.
ï Risk of delays in removing utilities and trees and obtaining necessary clearances was rated
Modest, with mitigation measures listed as Memoranda of Understanding (MOUs) with
utility companies, utility shifting included in bills of quantities (BoQs), adequate staffing
and control\. These risks were considerably underestimated (see II\.B below)\.
37\. Readiness for implementation\. According to the PAD, GoHP and the Bank made efforts to
ensure that the project met the implementation readiness filters for appraisal, as agreed between the
Bank and the GoI, to address the pervasive implementation delays in road projects\. These included: (a)
adequate staff; (b) an Operations Manual; (c) advanced start of procurement of works and key
supervision services; (d) advanced action on land acquisition, regulatory clearances and utility
relocation; (e) signing of MOU between the implementing entity and utility companies; (f) early
mobilization of an NGO to support resettlement and rehabilitation of project affected people; and (g)
training to the implementing agency and auditing staff on application of FIDIC (International Federation
of Consulting Engineers) conditions of contract\. As it turned out, these measures did not prevent serious
implementation and disbursement delays (see III\.B below)\.
B\. KEY FACTORS DURING IMPLEMENTATION
38\. Overall, project implementation experienced serious delays and difficulties, due to a
combination of factors, as explained below\. Disbursements generally lagged far behind projections,25
and the project ended up taking 10 years to complete, compared with the six years originally estimated\.
Implementation Progress (IP) was rated Moderately Unsatisfactory in six of the 22 ISRs, covering a total
of 32 months or about one quarter of the projectâs duration\.
25
By September 2010, more than three years after approval, cumulative disbursements had reached only $39\.8 m\., or 18
percent\. Disbursements accelerated as of FY11, but by October 2011, 20 months short of the original closing date, they had
reached only $96\.2 m\., or 44 percent\.
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Factors Subject to Governmentâs or Implementing Agencyâs Control
39\. Commitment to sector reforms
a\. Road financing\. During the entire 10 years life of the project, the Bank continuously pressed
GoHP to officially adopt the dedicated road funding scheme and periodically offered support
to do so\.26 During 2011â13, GoHP reported that it was considering a draft Road Fund Bill,
but eventually it was abandoned\.27 By the projectâs closing, GoHP had not adopted any
reforms in road financing\. See IV\.D, Risk to Development Outcome\.
b\. RIDC as network manager\. A covenant in the Additional Loan PA called for RIDC to take over
management of the stateâs core road network\. In September 2014 GoHP issued a
notification of the decision,28 giving RIDC responsibility for all State Highways and Major
District Roads, and establishing a Committee under the chairmanship of the Principal
Secretary of Public Works to administer the maintenance funds for this Core Network\.
Despite reminders by the Bank team, GoHP took no further actions to implement this\.
However, the draft Core Road Asset Management Policy (2016),29 states, âThe state core
roads shall be centrally managed through the HPRIDC which shall act as a subsidiary of HP
Public Works Department \. \. \.â?
c\. PWD/RIDC human resource management\. Consultants prepared recommendations as early
as 2009 for improvements in PWD/RIDC human resources management\. The Bank raised
this issue on numerous occasions\. The Aide Memoire of May 2013 reported that the Cabinet
had approved recommendations for restructuring of PWDâs functional organization\.
However, there is no evidence of further actions in this regard\.
40\. Organizational capacity and human resources\. Throughout the projectâs life, Aide Memoires
urged PWD/RIDC to address the frequent turnover of key positions in RIDC, especially of Project
Directors, and delays in filling vacancies\. Over the course of the project, RIDCâs actual staffing did not
exceed about 75 percent of its sanctioned strength, with particular deficits in Assistant Engineers and
Junior Engineers\.30 Perhaps in part related to the preceding, inadequate contract management by RIDC
was a recurring major problem that was never fully remedied\.31 RIDCâs delays in making payments to
contractors were especially problematic during the first three years of the project and were the subject
26
For example, early during implementation, in April 2008, the Bank discussed with GoHP options for promoting PPPs in the
roads sector and offered to facilitate access to a grant from the Bankâs Public Private Infrastructure Advisory Facility (PPIAF)\. It
was agreed that RIDC would apply for such a grant, but apparently this was not done\.
27
See the Aide Memoires of September 2011, June 2012, and February 2013\. The Aide Memoire of May 2013 reported that the
consideration of the Road Fund Bill was broken off due to a change of the State government and would have to be restarted
afresh\. The draft bill would have financed the Road Fund from a state cess on fuels, revenues from commercial use of road
space, an incremental cess on cement bags, fees to PWD for implementing other departmentsâoworks, and a share of the State
Marketing Boardâs collections\.
28
Notification No\. PBW(B)H(3)1/2011-X-L, September 17, 2014\.
29
âHimachal Pradesh Core Road Assets Management Policy for State Highways and Major District Roadsâ?, Draft-I, August 2016\.
30
HPRIDC, Sanctioned Strength of Staff, 2014/2015/2016\.
31
During 2009-2011, Bank missions urged RIDC to hire a contract management advisor, but it appears that this was not done\.
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of recurring interventions by Bank supervision missions\.32 A major cause of payment delays was RIDCâs
not having its own finance unit, such that payments were handled by the Stateâs Finance Department\.
As cited in Aide Memoires, delays by RIDC in facilitating clearances and issuing approvals of variation
orders also contributed substantially to the slow progress of works, exacerbating the problems created
by the poor performance of some works contractors (see below)\. Some of the more egregious delays
occurred in (a) procurement of the PBM contracts, for which bidding documents were not invited until
late 2013 and 2014, and (b) the blackspot improvement program, for which the studies took until mid
2012, bidding started in 2013, and most contracts were not awarded until 2014\.
41\. Coordination\. Except for some occasional initiatives, project implementation was hindered by
weak inter-institutional coordination\. Higher level coordination was to have been facilitated by the RIDC
Board, which is chaired by the Stateâs Chief Secretary and includes six Secretaries of relevant
Departments, but the available documentation does not indicate that it was effective in this regard\.
Delays associated with handing over encumbrance-free land to contractorsâthat is, with 100 percent
completion of utility shifting, tree cutting,33 and land acquisitionâwere very significant impediments to
progress of the upgrading works during the first five years of the project and eventually caused RIDC to
grant time extensions for all the upgrading contracts\.
42\. Contractor performance\. Road upgrading packages 4, 7, 9 and 10 had to be retendered due to a
lack of qualified bidders, indicating the difficulty of attracting well-performing contractors\. All the Aide
Memoires, starting with the very first supervision mission in late 2007, highlighted problems with
contractorsâ performance in terms of pace, organization, logistics, and quality of works\. At various times
during the life of the project, such problems affected most of the 10 road upgrading contracts, notably
packages 1, 4 and 5 in Phase I and packages 6 and 9 in Phase II, and also all of the 25 periodic
maintenance contracts\. The main causes of deficiencies directly attributable to contractors were cash
flow problems,34 inadequate manpower,35 failure to mobilize adequate equipment, and unfamiliarity
with HPâs working environment\. During every mission, the Bank supervision teams conducted detailed
due diligence on works progress and quality, organized meetings of all parties, and provided detailed
recommendations to RIDC and the CSC regarding remedial measures\. In some instances, these were
acted upon, but in many cases they were not, or were addressed only after much delay\. Starting from
the supervision mission of November/December 2009, the Bank began regularly calling on RIDC to apply
contractual remedies to non-performing contractors, by imposing liquidated damages or issuing notices
leading to contract termination\. Eventually in 2012, RIDC levied liquidated damages on contracts 1 and
2\. RIDC terminated contracts 5 and 6 in July and October 2012, respectively, due to poor performance\.36
43\. Supervision consultant performance\. Inadequate performance of the CSC was a permanent and
serious problem throughout the 10 years of project implementation, noted in every Aide Memoire from
September 2008 onwards\. The CSC was continuously cited as lacking proactivity in helping contractors
32
Some contractors filed claims due to non-payment\.
33
Delays in tree cutting occurred on both public and private land; in the latter cases PWD had to purchase the land first and
then convert it to public land other than forest before obtaining tree cutting clearances from the Forest Department\.
34
Contractors for upgrading packages 1, 5 and 9 continued to perform poorly as of late 2011 despite a second installment of
cash advances\.
35
In one case in 2009, a contractorâs foreign personnel demobilized for about six months because of lack of wor king visas\.
36
These two contracts were split into four packages and rebid in May 2013\.
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to overcome impediments to finding materials and staging sites, obtaining clearances, and overcoming
deficiencies in design drawings\. The CSC was often criticized, in addition, for delayed reviews and
approvals of contractorsâ works and requests, deficient quality control, lack of timely preparation of
revised costs estimates and variation orders, inadequate cooperation with the RIDC, poor quality of
project monitoring and reporting, and problems in mobilizing adequate staff\. In spite of these persistent
shortcomings, RIDC never imposed serious sanctions on the CSC\. However, RIDC sometimes delayed
payments to the CSC, to the point where in 2012 the CSC invoked provisions in its contract for
termination\. The Bank team intervened, citing the risk of serious harm to the project if the CSC were to
withdraw in the absence of an effective alternative arrangement for independent works supervision\.
The payments problem was resolved in 2013, and the CSCâs contract was extended\.
44\. Cost overruns, AF, and closing date extension\. A major financing gap due to cost overruns was
first identified in the Mid-Term Review MTR) in July 2010\. Subsequently, GoHP asked GoIâs Department
of Economic Affairs to approve a request for an Additional Loan from the Bank, which was eventually
granted on October 25, 2012 for US$61\.7 million, together with an extension of the closing date by
three years to June 30, 2016 to allow time for completion of road upgrading packages 5, 6, 7, and 10\. An
economic analysis performed for the Additional Loan demonstrated that all of the 10 road upgrading
packages retained healthy economic internal rates of return and NPVs, despite the large cost
increases\.37 The main reasons cited for the cost overruns were:
a\. Major delays in implementation of some road upgrading contracts, caused by slow
procurement and difficulties in acquiring all the land needed for rights-of-way, obtaining
forest clearances, and implementing utility shifting, leading to cost escalation of materials,
especially bitumen\.
b\. Deficiencies of detailed designs, attributed to (i) complexities of topography and underlying
geology in mountainous terrain that were not thoroughly investigated beforehand and (ii)
failure to carefully review the quality and accuracy of the detailed designs before
incorporating them in bid documents\.
c\. The use of officially set unit costs (âschedules of ratesâ?) for estimating costs for the detailed
designs, which did not reflect the real costs of specific works in particular locations\.
Factors Subject to World Bank Control
45\. Bankâs overall supervision\. The frequency and thoroughness of Bank supervision missions and
associated documentation were a positive factor for project implementation\. See Bank performance,
section IV\.C below\.
46\. Policy dialogue\. The Bankâs implementation support focused largely on the civil works, and on
key technical assistance activities such as the RADMS and the RMMS\. The Bank raised the more
significant policy and institutional reform issues (i\.e\., sector financing, asset management) during its
supervision missions, but it did not engage on them with sufficient depth and consistency, or at the
appropriate higher levels of the State government\. See sections IV\.C and IV\.D below\.
37
AF Project Paper, Report No\. 67972-IN, September 25, 2012, Annex 5\.
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Factors Outside the Control of Government or Implementing Entities
47\. HPâs difficult topography, climate and geology caused problems beyond the control of
contractors or consultants\. Landslides were a common hindrance\. For example, the completion of
upgrading Contract 9 was delayed by an unprecedented landslide that forced the contractor to take up
substantial additional works, including removal of debris, restoration of the damaged pavement, and
additional protection works against further slides\.38 The steeply sloping terrain made it impossible in
some cases to move utilities prior to the commencement of works, due to the lack of space\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A\. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
48\. Responsibility for M&E was vested with RIDC\. However, the data collection and tabulation for
M&E were to be contracted out to consultants\. There was no M&E focal point in the RIDC project staff
at appraisal\. Prior to the project, a computerized data base of PWDâs road and structural assets had
begun to be established, including data on road condition and traffic for about 75 percent of the PWD
network\. The project intended to invest in further data acquisition, storage and retrieval, but these were
only partially implemented\. The theory of change was clear and logical\. The two PDO outcomes âreduce
transport costs and improve traffic flowsâ? were simple, straightforward, and limited in scope to what
the project could directly achieve under Component 1, Core Network Improvement\.
49\. The RF had some shortcomings\. The PDO did not include any key outcomes related to
Component 2, Core Network Maintenance and Management, which accounted for nearly US$60 million
or about 22 percent of total project costs\. There were two flaws in the alignment of the PDO with the
key indicators\. One was, as mentioned in Section II\.B above, that the RF did not include any indicator to
measure the PDO outcome âreduce transport costsâ?\. The other was that the original RF included a road
safety PDO indicator, but there was no related outcome stated in the PDO\.
M&E Implementation
50\. RIDC monitored and updated the PDO and intermediate indicators periodically during the life of
the project\. Aide Memoires and ISRs regularly recorded and commented on the progress of the
indicators\. Consultants were duly contracted to carry out surveys for key indicator including road user
satisfaction, R&R progress, road accidents, and road conditions and traffic\. Four intermediate indicators
(awareness by construction workers and road users of HIV/AIDS prevention, setting up quality assurance
system, development of accounting policies and procedures, and implementation of the training plan)
were not monitored or reported in ISRs\. The shortcomings in the original RF were never addressed
during implementation\.
38
Aide Memoire of June 2016\.
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M&E Utilization
51\. The Aide Memoires and ISRs show that M&E data were regularly used to assess project
implementation and progress toward the projectâs outcomes\. In some cases, as at the MTR and the
processing of the AF, the data were taken into account in making major decisions on contract
management, cost overruns, and project timing\.
Justification for Overall Rating of Quality of M&E
52\. Based on the above, the quality of M&E is assessed as Substantial\. The M&E system as designed
and implemented was adequate to assess the achievement of the projectâs objectives and to
meaningfully support the management of the project\. The absence of explicit PDO outcomes and key
indicators for the projectâs maintenance and management interventions could be seen as a
shortcoming, or on the other hand as a deliberate hedge against risks that certain difficult-to-achieve
results, such as a new road funding mechanism or RIDC becoming core network manager, might not be
achievable\. The four intermediate indicators that were not tracked were minor, and their absence did
not hinder the effectiveness of the projectâs M&E\.
B\. ENVIRONMENTAL SAFEGUARD, SOCIAL SAFEGUARD, AND FIDUCIARY COMPLIANCE
53\. Financial management\. FM performance was generally satisfactory during the life of the
project, with only minor shortcomings\. The Bankâs Financial Management Specialists provided thorough
due diligence and follow-up, to help ensure that, inter alia, staffing gaps were filled, counterpart funding
was regularly allocated, the FM Manual was updated, payment processing was expedited, financial
reports and audits were prepared and submitted on time, and small irregularities highlighted in audits
were addressed\.
54\. Procurement\. Procurement of works was generally slow during the first three years of project
implementation, despite attempts during preparation to promote readiness (see above)\. At the time of
the September 2008 Aide Memoire, 16 months after Board approval and 11 months after effectiveness,
the first five of the road upgrading contracts were barely at the mobilization stage\. Procurement delays
were due partly to RIDCâs capacity constraints, which were reflected in deficient bid packages and bid
evaluations\. The Bank contributed to some of the deficiencies by not doing sufficient due diligence early
on regarding the âright sizingâ? of bid packages\. Procurement performance eventually improved as of
2010, as RIDCâs procurement capacity stabilized and gained experience\. In some instances, for example
in the periodic maintenance contracts, delays were caused by poor bid response\.39 The Bank assisted
RIDC in addressing this by breaking down the packages into smaller ones\.
55\. Environmental and social\. The projectâs environmental and social impacts were generally well
managed, and a few minor or moderate problems were effectively dealt with\. Regarding environmental
aspects, EMPs were largely prepared on time, were of acceptable quality, and were implemented
adequately\. The Bankâs specialists provided regular and detailed field supervision of environmental
issues, as documented in the Aide Memoires\. Delays in obtaining forest clearances sometimes caused
39
Aide Memoire February 2013, pages 1 and 5\.
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works to lag behind schedule\. The Bank team identified some instances of contractor negligence and
non-compliance that caused environmental problems and that were subsequently corrected\.40 During
several months starting in late 2014, environmental performance was rated Moderately Unsatisfactory
due to serious problems in contracts 5-I, 5-II, 6-I and 6-II with poor debris management, protection of
forest lands, dust pollution, road safety, and workplace safety\. On the positive side, from the very start
of the project, the Bank focused implementation support on bioengineering, and it maintained a strong
emphasis on this throughout the projectâs life\. This helped to scale up the initial pilot to a practice of
applying bioengineering to all the upgrading works\. The project achieved the intermediate indicator
target for the survival rate of trees planted; the target was 50 percent, and the actual was 69\.75 percent
(out of a total of 432,692 planted)\.41
56\. Regarding social safeguards, by far the most significant factor was land acquisition and
resettlement, which often was slow, primarily due to inadequate coordination between RIDC and the
office of the Land Acquisition Officer (LAO), but also to other issues including inaccurate information
about land holdings in Resettlement Action Plans (RAPs), mismatches between road design drawings
and revenue maps, changes of alignments, delays in negotiations and disbursements, and other aspects
of the complex R&R process\.42 The Bank team provided detailed due diligence and follow-up through
field visits on resettlement and compensation issues, as well as other social safeguards matters as they
arose\.
57\. The project in effect achieved the intermediate indicator target of 100 percent of Project
Affected People (PAPs) paid compensation and provided with R&R assistance\. Of the total compensation
due, 96\.2 percent had been paid by the project closing date\. Residual amounts unpaid on packages 3, 4,
5, 6 and 8 were due to factors beyond the control of RIDC: (a) demise of owners, with legal heirs still to
be brought on record, (b) court cases or stays granted, and (c) disputes among co-owners\. It is expected
that these cases will be resolved\. Of the total R&R assistance due, 93\.5 percent had been paid by the
closing date\. Residual R&R amounts unpaid on packages 1, 2 and 6 were due to factors beyond the
control of RIDC: (a) land owners not turning up to receive payment despite notices, (b) court cases, and
(c) beneficiaries not being traceable\.43
58\. The NGO that assisted with RAP implementation conducted awareness programs on HIV/AIDS
for the residents of the communities affected by the road works\. However, the intermediate indicator
âpercent of road users and project construction workers aware of correct ways of HIV/AIDS prevention
and transmissionâ? (target 50 percent) was not tracked in any ISRs and was never measured\.
40
For example, in September 2011, lack of proper planning and sequencing of works in contract 9 led to several large landslides
affecting access for vehicles and pedestrians\.
41
Source: RIDC\.
42
During two consecutive supervision missions in 2008 and 2009, social safeguards performance was rated MU because the
post of social development officer in RIDC remained vacant, no NGO was in place for R&R assistance, and RIDC failed to take
action on allegations that contractors had occupied private lands in excess of what had been acquired\. The problems were
eventually remedied\.
43
âFinal Impact Evaluation Report, Consultancy Services for Carrying out Terminal Impact Evaluation of the Implementation of
RAP for all Packages of Upgrading Roads under Himachal Pradesh State Roads Projectâ?, Royal Haskoning DHV Consulting Pvt\.
Ltd\., June 2017\.
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C\. BANK PERFORMANCE
Quality at Entry
59\. Overall, the project was well-prepared (see III\.A above)\. The projectâs scope turned out to be too
ambitious relative to the implementation capacity of the PWD/RIDC and the available works
contractors\.; however, this would have been difficult to anticipate, given that there were no precedents
for such a project in HP\. As mentioned above, the Bank could have done a better job of assessing the
market for the road upgrading works to determine the optimal sizes of bid packages\. The Bank
overestimated the willingness of the GoHP to implement major policy and institutional reforms in the
roads sector, perhaps because it relied too much on the high level of support expressed by the GoHP
leadership in place at the time of project preparation\.
Quality of Supervision
60\. Bank supervision was thorough and timely, as evidenced by the 18 well-staffed supervision
missions, all documented by detailed Aide Memories\. In addition, Bank staff made numerous interim
visits on particular issues\. The vast majority of the Bankâs efforts focused on the civil works, including
meticulous oversight of construction, procurement and safeguards\. Bank teams consistently made field
visits to obtain firsthand information and provide advice on the road works and associated issues\. The
Bankâs Aide Memoires were forthright about the various problems of implementation and constructive
in recommending solutions\. The ISRs showed candor in their ratings\. The sustained pressure from the
Bank to resolve the multiple problems affecting the civil works contracts, as documented in the Aide
Memoires, was essential in ensuring that the delays and cost overruns were not worse than they ended
up being and that deficiencies in works quality, fiduciary matters, and safeguards were for the most part
promptly and adequately corrected\. The Bank did not give enough importance to institutional
development issues in the early years of the project, and, even in later years, these tended to get
secondary or cursory attention\. The Bankâs primary focus on the upgrading and maintenance works
contributed to the late implementation of the RADMS, the web-based project management system, and
the computerization of PWD, and the incomplete execution of the latter two\. Moreover, some issuesâ
notably CSC performance, road maintenance financing, and PWD/RIDC structural reformsânever
seemed to be resolved, only monitored and commented on\. The Bank displayed a high tolerance for
extreme delays with regard to the PBM contracts and blackspot improvement contracts\. Finally, the
Bank failed to initiate a collaboration with RIDC to correct the flaws in the original RF outlined in the
previous paragraph\.
Justification of Overall Rating of Bank Performance
61\. Considering the projectâs overall good quality at entry and the Bankâs diligent supervision,
together with the moderate shortcomings mentioned above, the Bankâs overall performance is assessed
as Moderately Satisfactory\.
D\. RISK TO DEVELOPMENT OUTCOME
62\. The main risk to the projectâs development outcome is inadequate funding and institutional
capacity to properly maintain the assets created under the project\. The achievements of the
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Maintenance Action Plan and Institutional Strengthening Action Plan that had been adopted by the
State as part of the RRP turned out to be modest, limited to the development of simple maintenance
management systems and a start toward allocating maintenance funds according to the priorities
established under the annual plans\. The recommendations of the 2006 Road Sector Finance Study,
which had initially been received favorably by the GoHP, were not implemented\.
63\. A draft âCore Road Assets Management Policy for State Highways and Major District Roadsâ? was
prepared in 2016 by the PWD\. This brief draft expressed âa need to adopt [an] effective core road
maintenance policy and implement the same on [a] sustainable basis by devising [a] funding mechanism
in such a way that funds requirement never remains an issue and the investment made delivers the
required results\.â? It called for the establishment of a dedicated road fund âso as to maintain a
continuum in the availability of required fundsâ?, together with an HP Road Fund Committee to manage
it\.44 This draft Policy would need elaboration, but its basic elements are encouraging and could form the
basis for future policy dialogue between GoHP and the Bank as part of a proposed follow-on project\.45
64\. In the meantime, the official position of the GoHP up to the HPSRPâs closing date was that the
existing road funding mechanisms are adequate, and that it is not necessary to create a new structure
such as road fund\. This viewpoint was spelled out in detail in an email dated March 30, 2017 from the
RIDC Chief Engineer/HPSRP Project Director to the World Bank Task Team Leader\. It presents an analysis
of PWDâs current work force, equipment, and funding sources46 as compared with the estimated annual
needs for kilometers of periodic and routine maintenance\. It finds that âThere is no dearth of funds for
maintenance for State Highways and Major District Roadsâ? and that âthe entire Rural Road Network,
PMGSY Roads and Core Road Network is being properly maintained by the HP PWD with adequate
manpower, machinery and sustainable funding mechanism\. As such the items of institutional
strengthening and sustainable funding mechanism may kindly be considered as settled in view of the
prevailing scenario\.â? In the course of discussions with the Bank on these issues, GoHP expressed strong
concerns about public opposition to new taxes or levies to finance a road fund\.47 This position leaves
unresolved the sustainability of road maintenance financing, that is, that funding remains dependent on
the vagaries of year-to-year budgeting by the State, the GoI, and other entities\. In addition, the claim
that current funding is adequate may be debatable, as estimates of road maintenance needs vs\.
resources are subject to significant variations depending on the assumptions made\.48
44
The draft proposes a variety of financing sources for the Fund, including regular State and GoI budget allocations, the Central
Road Fund (CRF), fees from public and private users of rights-of-way, public-private partnerships, and cesses (taxes) on hotels
and liquor\.
45
In this context, it is worth noting that the GoHP officially issued, in January 2015, a Policy on Maintenance of Rural Roads and
Standard Operating Procedures for Maintenance of the Rural Road Network\.
46
The funding sources cited are the State budget, NABARD (National Bank for Agriculture and Rural Development), Financial
Commission grants for special categories of States (under Policy Commission, Niti Ayog), PMGSY, Central Road Fund (CRF),
multilateral agency projects, Member of Parliament Local Area Fund, Natural Calamity Relief Fund, and Border Area
Development Fund\.
47
Reference RIDC note on âSustainable Maintenance Fundsâ?, further to the World Bank mission wrap up meeting at Shimla,
January 19, 2017 in which road maintenance and asset management were extensively discussed\.
48
The Aide Memoire of January 2017 contained a table, presumably prepared by RIDC, showing that annual expenditures for
road maintenance during 2013-14 to 2016-17 added up to between 59 percent and 67 percent of Finance Commission norms\.
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V\. LESSONS LEARNED AND RECOMMENDATIONS
65\. A workshop on âLessons Learned from HPSRPâ? was held in Shimla on October 13, 2017\. The
following are the main strategic lessons and recommendations\. Additional lessons are presented in
Annex 7\. The reader also is referred to the documentation of the workshop in the project files\. The
lessons and recommendations are intended to inform future support for the road sector in HP and other
comparable states and countries\.
66\. Sector reforms\. Today, the World Bankâs strategy in India is to leverage its global knowledge and
convening power to help achieve systemic, medium to long term policy and institutional improvements,
recognizing that the Bankâs financial contributions in themselves are very limited relative to Indiaâs own
financial resources\. In this light, the experience of the HPSRP could be seen as a missed opportunity to
focus on institutional reforms as the key element of the Bankâs value proposition\. On the other hand,
although structural changes in road financing and road asset management remain to be adopted and
implemented in HP, the project can reasonably be judged to have laid a foundation for future progress
in these areas\. In this regard, the Bank must in the future engage with State clients on policy and
institutional reform in a much more intensive and sustained manner, using combinations of lending and
non-lending instruments to help leverage results\. Program for Results or Development Policy Lending
can be considered as alternatives or complements to traditional Investment Project Financing, when
there is a willingness to undertake policy and institutional reforms needed to make physical investments
sustainable\.
67\. Organizational capacity and human resources\.
a\. Contract management\. PWD/RIDC should strengthen their in-house capacity for technical
quality assurance and contract management\. Inadequate capacity in these areas led PWD/RIDC
to rely unduly on the CSC and the dispute resolution/arbitration mechanisms, which proved to
be adversarial and ineffective\. Flaws in detailed designs leading to major variation orders and
cost escalations can best be prevented by the employerâs careful ex ante quality review\.
PWD/RIDC should assess the key areas of competence required at each level of management
and design a capacity building and technical assistance program in contract management and
quality assurance, including FIDIC contracts\. This would enable PWD/RIDC to deal with
contractual issues at earlier stages before they develop into disputes\.
b\. Decision-making authority\. The lack of independent authority of the RIDC Chief
Engineer/Project Director was a significant contributor to implementation delays\. Most decision
making was centralized at higher levels, including a board which did not convene often\. As good
practices elsewhere suggest, the implementing agency and its head should be vested with
appropriate authority for most management decisions, while reserving higher risk issues for
superior levels (defined, say, by certain monetary value thresholds)\.
68\. Coordination\.
a\. Financial management\. RIDC has cited that not having its own Financial Wing, directly
responsible to the Project Director as mandated under clause 2\.15 of the Operation Manual,
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was a major impediment to efficient project management\. Such an arrangement was
implemented under the Bank-financed RRP and should be a feature of any future project\.
b\. Clearances for mining, forest, materials, crushing and camp sites\. Traditionally contractors are
responsible for securing these clearances from government agencies that lack incentives for
rapid, efficient performance\. Contractors with strong motivations to obtain prompt clearances
in order to meet their contractual obligations may be subject to rent seeking and other
malpractices\. This could be avoided if PWD took over the responsibility to identify and obtain
clearances for forest, mining, materials, crushing, and camp sites\. Considering the opportunity
cost of delays in capital projects such as HPSRP, GoHP may consider setting up a governance and
accountability mechanism, including a one-stop-shop clearance mechanism, monitored by a
high-level oversight committee, for all key infrastructure investment projects\.
69\. Contractor performance\. For future road investments, a market study of local contractors
should be carried out during project preparation to guide the packaging of works so as to maximize the
participation of contractors and obtain the best value for money\.49 The Bankâs recently introduced
Project Procurement Strategy for Development (PPSD) should in the future increase the likelihood of
attracting well-performing bidders for road improvement contracts\.50 In the bidding documents for
future road upgrading and periodic maintenance contracts, contractor qualification and evaluation
criteria should favor those with experience and capacity for working in mountainous terrain, including
locally-based contractors\.
\.
49
Other factors to be taken into account for package sizing include topography, length of the construction season, availability of
materials, and proximity to input supply centers\.
50
The next PPSD for roads in HP should find out what was done in the re-tendering of four packages (4,7,9,10) in HPSRP to
obtain an adequate number of qualified bidders\. Also, the PPSD should assess whether road and bridge contracts should be
packaged separately\.
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ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: Improve traffic flows
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Roads rehabilitated, Rural Kilometers 0\.00 447\.00 355\.00
30-Apr-2007 30-Jun-2013 30-Jun-2017 30-Jun-2017
Comments (achievements against targets): Partially achieved\. This indicator was added during implementation to comply with the Bank's core indicators;
it is basically another unit of measurement for one of the original intermediate indicators\. It refers to roads of HP State's Core Road Network, comprising
State Highways and Major District Roads, which were the subject of upgrading under Component 1\. The achievement against the target was 79\.4%\. During
implementation, about 12 km\. were deleted from several packages due to land acquisition issues\. Thus the actual target ended up being 435 km, yielding
an achievement of 81\.6%\. The shortfall was due to the non-completion of package 5-I by the project's closing date\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of the entire core network Percentage 40\.00 10\.00 10\.40
(~4,000 km) in poor condition
30-Apr-2007 30-Jun-2013 30-Jun-2017 30-Jun-2017
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Comments (achievements against targets): Achieved\. As reported by RIDC on August 26, 2017, out of 686 km\. of Core Road Network (State Highways and
Major District Roads) found poor in 2016-17, 303 km\. have been provided periodic maintenance during 2016-17, up to June 2017\. As such, the balance
length of Core Network roads in poor condition as on June 30, 2017 came to 383 km\. (686 km\. â 303 km\.)\. Accordingly , the percentage of core network
roads in poor condition at the closure of the project = 383/3,684= 10\.4%\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Average speeds on the WB Percentage 0\.00 25\.00 38\.40
financed roads, which
received upgrading, 30-Apr-2007 30-Jun-2013 30-Jun-2017 30-Jun-2017
predicted using HDM-4, (%
increase)
Comments (achievements against targets): Surpassed\. Before the project (2006), the average weighted speed on the core roads to be upgraded was 28\.9
km/hr\. After completion of the improvements, the average weighted speed was measured as 40\.0 km/hr, an increase of 38\.4 percent, compared with the
targeted increase of 25 percent\. Source: Surveys conducted by HIMS/SATRA, Final Report, May 2017\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Death rate on HP state Number 0\.28 2\.00 0\.21
highways (number of deaths
involved in traffic 30-Jun-2009 30-Jun-2013 30-Jun-2017 31-Dec-2016
accidents/1,000 veh)
Comments (achievements against targets): Achieved\. The original baseline and target values were found to have been incorrect, as they were taken from
the National Crime Records Bureau and pertained to the entire State road network, not specifically to the State Highways\. Fresh data starting in 2014 were
sourced from the Road Accident Data Management System (RADMS)\. The baseline value for 2014 was 0\.28 deaths involved in traffic accidents per 1,000
vehicles\. This figure steadily declined each year subsequently, reaching 0\.21 in 2017\. This small decline can be attributed to the project, considering that
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there were no other significant interventions related to road safety in HP State during the period\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Level of road user satisfaction Number 1\.50 3\.00 3\.10
with the entire core network,
index 1-5 30-Apr-2007 30-Jun-2013 30-Jun-2017 31-May-2016
Comments (achievements against targets): Achieved\. The actual Road User Satisfaction Surveys (RUSS) carried out (baseline 2007, mid-line 2011, and final
2016) covered a representative sample of users of the entire State road network, not just of the core network\. Even so, attribution to the project is strong,
considering that there were no other significant road improvement interventions in HP State during the period\. The final satisfaction score for the State
was 3\.1,reflecting variations among the 10 sample districts from 2\.8 to 3\.4\. The RUSS final report of 2016 gives a baseline for 2007 of 2\.5, which differs
from that in the PAD of 1\.5; the reason for the difference is unclear\. The RUSS final survey also collected scores for the users of the project's upgraded
roads; the overall satisfaction score for these was 3\.6, ranging between 3\.2 and 3\.9\. The scores are not higher because (i) traffic volumes have increased
substantially, so congestion still occurs and (ii) users cite inadequate parking and street lighting as major concerns\.
A\.2 Intermediate Results Indicators
Component: Component 1 Core Network Improvement
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of target roads (~ 447 km) Percentage 0\.00 100\.00 79\.40
of core network completed
upgrading 30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): Partially achieved\. This indicator refers to roads of HP State's Core Road Network, comprising State Highways
and Major District Roads, which were the subject of upgrading under Component 1\. The achievement against the target was 79\.4%\. During
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implementation, about 12 km\. were deleted from several packages due to land acquisition issues\. Thus the actual target ended up being 435 km, yielding
an achievement of 81\.6%\. The shortfall was due to the non-completion of package 5-I by the project's closing date\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of target roads (~447 km) Percentage 0\.00 95\.00 99\.00
in excellent condition (no
cracking; IRI < 3\.5) 30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): REQUESTED EXPLANATION FROM RIDC MY EMAIL 9/19\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of PAPs paid compensation Text 0% 100% for Phase I in Yr Phase 1 = 100%, Phase
and provided with R&R 3 and 100% for Phase 2 = 100%
assistance II in Yr 5
30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): Achieved\. Of the total compensation due, 96\.2% had been paid by the project closing date\. Residual amounts
unpaid on packages 3, 4, 5, 6 and 8 were due to factors beyond the control of RIDC: (I) demise of owners, with legal heirs still to be brought on record, (ii)
court cases or stays granted, and (iii) disputes among co-owners\. It is expected that these cases will be resolved\. Of the total R&R assistance due, 93\.5%
had been paid by the closing date\. Residual R&R amounts unpaid on packages 1, 2 and 6 were due to factors beyond the control of RIDC: (I) land owners
not turning up to receive payment despite notices, (ii) court cases, and (iii) beneficiaries not being traceable\.
Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at
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Target Completion
% survival rate for trees Percentage 0\.00 50\.00 69\.75
planted under the Project
30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): Surpassed\. Out of a total of 432,692 trees planted under the both the upgrading and periodic maintenance
components\. Source: RIDC\.
Component: Component 2 Core Network Maintenance and Management
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of fiscal year contracts let Percentage 0\.00 100\.00 100\.00
within 120 days of bidding
(after deadline of bids 30-Apr-2007 30-Jun-2013 30-Jun-2017
received)
Comments (achievements against targets): Achieved, based on data from RIDC on contracts awarded in 2016-17 (two consultant and two goods)\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of target roads (~2,000 Percentage 0\.00 100\.00 100\.00
km) of core network
receiving periodic 30-Apr-2007 30-Jun-2013 30-Jun-2017
maintenance
Comments (achievements against targets): Achieved\. Works of 1,484\.8 km were awarded in three tranches for periodic maintenance and completed\.
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Another 346\.5 km were awarded under OPBMC in four zones of the state through five year contracts to be completed up to the year 2019 (Mandi Zone),
2020 (Hamirpur & Shimla Zones) & 2021 (Kangra Zone)\. Thus the total length of periodic maintenance work awarded was 1,831\.3 km\. The balance of
168\.7 km short of the 2,000 km estimate was planned to be awarded, and bid documents were prepared\. But, in the meantime, this stretch was declared
as National Highways by the GoI, so, it was deleted, and the World Bank was apprised accordingly\. Further, in the Project Appraisal Document (PAD) it is
clearly mentioned that the Bank will fund 20% of each project for periodic maintenance subject to a ceiling of loan funds available for the activity\.
Considering these factors, and that the original target was framed as âapproximatelyâ? 2,000 km, the total actual reached of 1,831 km is an acceptable
level of achievement relative to the target\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of performance-based Percentage 0\.00 100\.00 66\.40
contract packages executed
on target roads (~300 km) 30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): Partially achieved\. Four performance-based maintenance contracts for a total road length of 346 km have
been awarded and were in progress as of the project closing date\. The execution was not 100% by the closing date because the contracts were awarded
between 2014 and 2016 for five -year periods\. The completion dates of the contracts are Sept 2019 (Mandi Zone), Feb 2020 (Hamirpur Zone), May 2020
(Shimla Zone), and Feb 2021 (Kangra Zone)\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
% of 20 target locations Percentage 0\.00 100\.00 125\.00
receiving blackspot
treatment 30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): Surpassed\. The original target was 20 black spots improved; actually 25 black spots were improved on core
network roads\.
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Himachal Pradesh State Roads Project ( P096019 )
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Full operation of stable road Text No stable road Mechanism in No new road finance
financing mechanism for the financing mechanism operation mechanism
core network (~4,000 km)
30-Apr-2007 30-Jun-2013 30-Jun-2017
Comments (achievements against targets): Not achieved\. No new road financing mechanism was put in place during the life of the project\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Reduction in share of Percentage 75\.00 50\.00 62\.00
permanent gang labor costs
in total spending on routine 30-Apr-2007 30-Jun-2013 30-Jun-2017
and emergency maintenance
Comments (achievements against targets): Partially achieved\.
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B\. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: Reduce Transport Costs
Outcome Indicators 1\. Vehicle Operating Costs (VOC) on upgraded roads
Intermediate Results Indicators None
Key Outputs by Component Component 1:
(linked to the achievement of the 1\. 435 km of core state roads upgraded
Objective/Outcome 1) Component 2:
1\. 1,485 km of periodic maintenance works
2\. 346 km of output and performance-based maintenance works
Objective/Outcome 2: Improve Traffic Flows
Outcome Indicators 1\. Percent of the entire core road network in poor condition
2\. Average speeds on the WB financed roads which received upgrading
3\. Death rate on HP state highways
4\. Level of road user satisfaction with entire core road network
Intermediate Results Indicators 1\. Percent of target roads of core network completed upgrading
2\. Percent of target roads in excellent condition
3\. Percent of fiscal year contracts let within 120 days of bidding
Key Outputs by Component Component 1:
(linked to the achievement of the 1\. Land acquisition 132 ha
Objective/Outcome 2) 2\. Forest land diverted including afforestation 154 ha
3\. Utility shifting Rs 7\.29 crore
4\. Construction supervision consultancy services Rs 69\.81 crore, June 2008-June 2018
5\. Feasibility studies, detailed designs, and bid documents for 435 km of state roads, April 2008
6\. Detailed designs and bid documents for 6 tunnels, July 2008, proof review May 2010
7\. Consultancy services to assist in implementation of Resettlement Action Plans, July 2009
8\. Terminal impact evaluation of implementation of RAPs, June 2017
9\. Road sector finance study to assess fund requirements for the state road network for future 10 years, April
2007
10\. Road user satisfaction surveys, baseline September 2007, interim November 2012, final November 2016
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11\. Consultancy services for independent review of environmental screening for Phase 1 upgrading, August
2008
12\. External evaluation of Resettlement, December 2012
Component 2:
1\. Periodic maintenance works 1,485 km
2\. Output and performance-based maintenance works 346 km
3\. Black spot improvements 25 no\.
4\. Consultancy for technical examination of first two tranches of periodic maintenance works, July 2008
5\. Study to short-list and prioritize black spots and design counter-measures, March 2013
6\. Road Accident Data Base Management System developed and functioning, June 2017
7\. Consultancy services to certify units of PWD and RIDC in Quality Management and Environmental
Management, June 2011 and recertification in 2017
8\. Study on productivity of force account staff in the PWD, November 2007
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Himachal Pradesh State Roads Project ( P096019 )
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A\. TASK TEAM MEMBERS
Name Role
Supervision/ICR
Mesfin Wodajo Jijo Task Team Leader(s)
Arun Kumar Kolsur, Anand Kumar Srivastava Procurement Specialist(s)
Dilip Kumar Prusty Chinari Financial Management Specialist
Venkata Rao Bayana Social Safeguards Specialist
Neha Pravash Kumar Mishra Environmental Safeguards Specialist
Deepali Uppal Team Member
B\. STAFF TIME AND COST
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY06 14\.792 71,298\.38
FY07 43\.396 206,654\.19
FY08 \.100 243\.54
Total 58\.29 278,196\.11
Supervision/ICR
FY07 0 343\.35
FY08 33\.028 133,234\.63
FY09 38\.042 161,341\.43
FY10 17\.805 61,630\.24
FY11 17\.685 56,231\.59
FY12 15\.321 55,202\.88
FY13 29\.045 138,762\.05
FY14 22\.206 114,962\.58
FY15 23\.472 129,142\.73
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FY16 12\.745 64,705\.56
FY17 19\.114 132,034\.20
FY18 1\.282 9,163\.87
Total 229\.75 1,056,755\.11
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Himachal Pradesh State Roads Project ( P096019 )
ANNEX 3\. PROJECT COST BY COMPONENT
Table 3\.1\. Project Cost by Component
Actual at Project
Amount at Approval Percentage of Approval
Components closing (US$,
(US$, millions) (US$, millions)
millions)
1\. Core Network Improvement 244\.60 320\.59 131\.07
2\. Core Network Maintenance and 56\.67 41\.61 73\.42
Management
Incremental Operating Costs 0\.61 0\.53 86\.88
Refinancing of project preparation 1\.55 1\.72 110\.97
facility
51
Front end fee 0 0\.75 __
Total 303\.43 365\.21 120\.36
51
The front end fee was waived by the Bankâs Board of Directors in 2007, but it was applied in 2013 for the Additional
Financing\.
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Himachal Pradesh State Roads Project ( P096019 )
Table 3\.2\. Component Wise Total Expenditure by State and World Bank Shares as of June 30, 2017
State World
Total Expenditure
Particulars Share Bank
INR (crore) US$ (millions) INR (crore) US$ (Million) INR (crore) US$ (millions)
1\.a\. Upgrading works 1,517\.92 264\.63 151\.83 26\.47 1,366\.10 238\.17
1\.b\. Periodic Maintenance works 231\.10 41\.61 184\.88 33\.29 46\.22 8\.32
2\. Goods 6\.90 1\.06 0\.69 0\.11 6\.21 0\.94
3\.a Consulting services 111\.58 19\.47 1\.16 1\.95 100\.42 17\.53
3\.b NGO Services 0\.40 0\.07 0\.04 0\.01 0\.36 0\.06
4\. R&R Assistance 5\.71 1\.03 0\.57 0\.10 5\.14 0\.92
5\. Land Acquisition 182\.04 32\.67 182\.04 32\.67 0\.00 0\.00
6\. Utility Shifting, Tree Cutting, and 18\.92 3\.38 18\.92 3\.38 0\.00 0\.00
Afforestation
7\. Incremental Operating Cost 3\.07 0\.53 3\.07 0\.53 0\.00 0\.00
FEE Charged 0\.00 0\.75 0\.00 0\.00 0\.00 0\.75
Total 2,077\.64 365\.21 553\.19 98\.51 1,524\.45 266\.70
Table 3\.3\.
World Bank Loanâ? US$ (millions)
4860â?IN 220\.00
8199â?IN 61\.70
Total sanctioned $81\.70
Less Amount surrendered 15\.00
Balance Loan 266\.70
Loan Utilized 266\.70
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Himachal Pradesh State Roads Project ( P096019 )
Table 3\.4\. Project Costs by Component as of June 30, 2017
Actual/Latest Estimates (US$,
Appraisal Estimates (US$, millions) Percentages Actual/Appraisal
Particulars million)
Borrower IBRD Borrower IBRD Borrower IBRD
Core Network Upgrading 73\.54 268\.26 64\.52 256\.07 87\.74 95\.46
Core Network Maintenance and 44\.78 11\.19 33\.29 8\.32 74\.33 74\.37
Management
Incremental Operating Costs 0\.61 0\.00 0\.53 0\.00 86\.58 0\.00
Total Baseline Cost 118\.93 279\.45 98\.34 264\.40 82\.69 94\.61
Physical Contingencies 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Price Contingencies 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Total Project Costs 118\.93 279\.45 98\.34 264\.40 82\.69 94\.61
Reâ?financing of PPF Assistance 0\.00 1\.55 0\.17 1\.55 â 100\.00
Front end fee 0\.00 0\.70 0\.00 0\.75 â 106\.81
Financing 118\.93 281\.70 98\.51 266\.70 82\.83 94\.67
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Himachal Pradesh State Roads Project ( P096019 )
Table 3\.5\. Project Costs by Category as of June 30, 2017
Actual/Latest Estimates (US$,
Appraisal Estimates (US$, millions) Percentages Actual/Appraisal
Particulars millions)
Borrower IBRD Borrower IBRD Borrower IBRD
1\.a\. Upâ?grading works 27\.75 249\.03 26\.47 238\.17 95\.38 95\.64
1\.b\. Periodic Maintenance work 44\.78 11\.19 33\.29 8\.32 74\.33 74\.37
2\. Goods 0\.13 1\.18 0\.11 0\.94 88\.42 80\.06
3\.a Consulting services 1\.54 14\.34 1\.78 15\.98 115\.26 111\.40
3\.b NGO Services 0\.03 0\.22 0\.01 0\.06 24\.03 29\.49
4\. R&R Assistances 0\.38 3\.49 0\.10 0\.92 27\.03 26\.49
5\. Land Acquisition 35\.72 0\.00 32\.67 0\.00 91\.47 0\.00
6\. Utility Shifting, Tree Cutting, and 7\.99 0\.00 3\.38 0\.00 42\.32 0\.00
Afforestation
7\. Incremental Operating Cost 0\.61 0\.00 0\.53 0\.00 86\.58 0\.00
Total Project Cost 118\.93 279\.45 98\.34 264\.40 82\.69 94\.61
Reâ?financing of PPF Assistance 0\.00 1\.55 0\.17 1\.55 â 100\.00
Front end fee 0\.00 0\.70 0\.00 0\.75 â 106\.81
Financing 118\.93 281\.70 98\.51 266\.70 82\.83 94\.67
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Himachal Pradesh State Roads Project ( P096019 )
ANNEX 4\. EFFICIENCY ANALYSIS
Introduction
1\. An ex post economic analysis52 was performed to assess whether the economic benefits of the
project were higher than its economic cost and whether these benefits were similar to those estimated
at the appraisal and additional finance stages\. The analysis accomplished this by first assessing whether
the EIRR53 was greater than 12 percent and then comparing it to the EIRR estimated at the appraisal and
additional finance stages\.
Framework
2\. Economic analysis was separately performed for two categories of road works financed under
the projectâ upgrading works (Component 1) and periodic maintenance (Component 2)\. For upgrading,
economic analysis was performed for 435 km of roads, which were upgraded between 2008 to 2017
from single lane highway in poor condition (weighted average roughness of 9\.7 m/km) to two lane
highway in good/excellent condition (weighted average roughness in 2017 is 3\.7 m/km)\. These roads
were divided into 10 packages/segments\. The HDM4 model was used to perform the economic analysis
for these roads\. For the roads that received periodic maintenance, analysis was performed for a sample
of 140 km of roads divided into seven packages/segments\. In this case the Roads Economic Decision
model was used\.
Assumptions
3\. The following assumptions were applied:
ï The analysis for upgrading was performed for a period of 20 years and the analysis for
periodic maintenance for a period of 10 years\.
ï The discount rate was assumed to be 12 percent\.
ï The vehicle classification used in the analysis consists of eight vehicle types ranging from
two-wheelers to multi-axel trucks\.
ï To convert financial costs into economic costs, a conversion factor of 0\.9 was used (as
suggested by the World Bank for highway projects in India)\.
ï All prices, costs and benefits were reported in 2017 values\.
52
âComparison of Project Indicators including Vehicle Operating Cost (VOC) Before and After Works for Road sections covering
435 kmâ?, Himachal Pradesh State Roads Project, prepared by HIMS/SATRA for the HP Road and Other Infrastructure
Development Corporation Limited, May 2017\.
53
EIRR is the discount rate that equates the discounted stream of benefits and costs\.
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Himachal Pradesh State Roads Project ( P096019 )
With Versus Without Project Scenario
4\. The âwithout projectâ? scenarios for both components were assumed to be the do minimum
scenario\. This assumes the existing lane configuration remains, which would have seen growing traffic
congestion as practical capacities were exceeded\. The âwith-projectâ? scenario for upgrading assumes
new, higher capacity roads (additional lanes) with paved shoulders\. The âwith-projectâ? scenario for
periodic maintenance assumes that the project roads received the intended maintenance\.54
Costs and Benefits
5\. The economic benefits of both categories of road works were assumed to stem from two
sources: (a) time savings benefits (Value of Time/VoT) and (b) reduction in VOC\. For the analysis, traffic
volumes were collected through surveys, and traffic growth data were estimated using elasticities which
were based on a number of factors (including economic activities in the surrounding regions)\. For both
components, traffic growth rates by vehicle type are presented in table 4\.1\.
Table 4\.1\. Traffic Growth Rates (Percentages)
Vehicle Type 2017â2022 2023â2027 Beyond 2028
Cars 8\.8 7\.7 6\.4
Two-Wheelers 8\.2 7\.4 6\.4
Light Motor 7\.7 6\.8 5\.9
Vehicles 3W
Buses 6\.3 6 5\.4
Light Commercial 5\.2 4\.8 4\.4
Vehicles
2-Axle Trucks 4\.4 4 3\.6
3-Axle Trucks 6 5\.6 5\.2
Multi-Axle Vehicles 6 5\.6 5\.2
6\. For upgrading, project costs took into account both improvements (road widening) and
maintenance (routine and periodic)\. The total project costs for upgrading in economic terms were Rs\.
18,177 million\. The breakdown of the cost by road segment is presented in table 4\.2\.
Table 4\.2\. Component 1: Final Road Upgrading Costs
Total Economic Cost (Rs
Road Names Length (Km)
Millions)
1 Mehtapur -Una Jhalera Road 44\.8 2,565\.06
2 Una - Nerchaowk Road 45\.0 1,892\.24
3 Barsar - Bhota - Jahu Road 45\.8 2,174\.75
54
To bring the roads and associated minor structures back to their original service level, including environmental management
measures and provisions to meet regulatory requirements\.
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Total Economic Cost (Rs
Road Names Length (Km)
Millions)
4 Jahu - Kalakhahr Road 15\.4 737\.86
5 Theog - Kotkhaihatkoti - Rohru Road 80\.7 3,429\.50
6 Sarkaghat - Ghumarwin Road 42\.0 2,887\.67
7 Ranital - Kotla Road 39\.1 787\.53
8 Kumarhatti - Sarahan - Nahan Road 71\.7 2,456\.83
9 Dhaman - Sihunta Road 24\.0 631\.94
10 Bhawarna - Lambagaon Road 26\.3 613\.29
Total 435\.0 18,176\.67
7\. For periodic maintenance, the total project costs for the sample of 140 km roads in economic
terms was Rs\. 242 million\. The breakdown of the costs by road segment is presented in table 4\.3\.
Table 4\.3\. Periodic Maintenance Costs for Sample Roads
Total Economic Cost
Road Names Length (Km)
(Rs Millions)
Sainj-Chopal Nerwa Shallu Road-Slice1 18 25\.75
Sainj-Chopal Nerwa Shallu Road-Slice2 15 18\.24
Sainj-Chopal Nerwa Shallu Road-Slice3 19 18\.99
Chaila Sainj Yashwantnagar Oachghat Sultanpur 18\.5 79\.69
Kumarhatti road
Solan Meenus road 31 45\.39
Nahan Dadahu Haripurdhar 26 22\.78
Rampur Gaura Mashnoo Sarahan Jeori-MDR-19 road 13 30\.64
Total 140 241\.48
Analysis
Road Upgrading
8\. The analysis indicates that the project achieved a favorable EIRR and NPV\. Table 4\.4 presents
the breakdown of the EIRRs and NPVs by road sections for 2017\. As expected, the NPVs of benefits were
positive for all road sections\. The EIRRs varied from 13\.6 percent to 55\.5 percent\. All the final EIRRs were
well above the 12 percent threshold\. The overall NPV was Rs\. 16,332 million\. The overall weighted
average EIRR of all roads was about 26 percent\. This confirms that, for the road upgrading works, the
realized benefits far outweighed the project costs\.
Table 4\.4\. Final EIRRs and NPVs for Road Upgrading 2017
EIRR
Road Names NPV (Rs\. Millions)
(percentage)
Mehtapur -Una Jhalera Road 13\.6 298
Una - Nerchaowk Road 24\.7 1,975
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EIRR
Road Names NPV (Rs\. Millions)
(percentage)
Barsar - Bhota - Jahu Road 17\.1 841
Jahu - Kalakhahr Road 32\.3 1,293
Theog - Kotkhaihatkoti - Rohru Road 25\.5 3,871
Sarkaghat - Ghumarwin Road 15\.1 679
Ranital - Kotla Road 55\.5 3,311
Kumarhatti - Sarahan - Nahan Road 25\.4 2,736
Dhaman - Sihunta Road 35\.4 664
Bhawarna - Lambagaon Road 26\.9 664
Total 25\.9 16,332
Periodic Maintenance
9\. The analysis indicates that the project achieved favorable EIRRs and NPVs for the sample of
roads considered\. Table 4\.5 presents the breakdown of the EIRRs and NPVs by road sections for 2017\.
The NPVs were positive for six of the seven road sections\. The NPV and EIRR of the Sainj-Chopal Nerwa
Shallu Road-Slice2 was negative due to very low traffic on that road\. The EIRRs for the six road sections
with positive NPVs varied from 25 percent to 38 percent\. The overall NPV for the sample of roads was
Rs\. 299\.1 million\. The overall weighted average EIRR of all the roads was about 27 percent\. This confirms
that, for this sample of periodic maintenance roads, the realized benefits far outweighed the project
costs\.
Table 4\.5\. EIRRs and NPVs for Sampled Periodic Maintenance Roads 2017
EIRR
Road Names NPV (Rs\. Millions)
(Percentage)
Sainj-Chopal Nerwa Shallu Road-Slice1 30 30\.6
Sainj-Chopal Nerwa Shallu Road-Slice2 -10 -12\.5
Sainj-Chopal Nerwa Shallu Road-Slice3 35 30\.9
Chaila Sainj Yashwantnagar Oachghat Sultanpur 38 154
Kumarhatti Road
Solan Meenus Road 25 35\.2
Nahan Dadahu Haripurdhar 31 24\.2
Rampur Gaura Mashnoo Sarahan Jeori-MDR-19 Road 33 36\.7
Total 27 299\.1
Comparison to PAD and AF
10\. For the road upgrading works, the EIRRs at appraisal, AF, and ICR stages are compared\. The
overall EIRR for AF is not available, but the overall EIRRs at appraisal and completion (based on weighted
average) were 26\.8 percent and 25\.9 percent, respectively, showing robust total economic benefits,
whereby gains from higher than expected traffic volumes mostly offset the cost escalations\.
11\. Table 4\.6 presents the EIRRs for individual upgraded roads at appraisal, AF, and completion\. In
most instances, the EIRRs at completion were slightly to moderately lower than at appraisal, because of
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Himachal Pradesh State Roads Project ( P096019 )
cost escalations\. However, the EIRRs at completion were significantly higher than at appraisal for three
road segmentsâRanital - Kotla Road, Bhawarna - Lambagaon Road, and Dhaman - Sihunta Roadâdue
to higher than projected traffic volumes\. On the Ranital - Kotla Road, traffic increased very considerably
as a result of diverted traffic from NH 20\.
Table 4\.6\. EIRRs for Road Upgrading at Appraisal, AF, and ICR
Road Names Appraisal AF ICR
Mehtapur -Una Jhalera Road 18 21 14
Una - Nerchaowk Road 25 25
Barsar - Bhota - Jahu Road 35 25 17
Jahu - Kalakhahr Road 26 32
Theog - Kotkhaihatkoti - Rohru Road 27 22 26
Sarkaghat - Ghumarwin Road 37 23 15
Ranital - Kotla Road 13 18 56
Kumarhatti - Sarahan - Nahan Road 25 20 25
Dhaman - Sihunta Road 26 15 35
Bhawarna - Lambagaon Road 18 19 27
12\. For periodic maintenance, a comparison to results at appraisal was not possible, as there is little
overlap between the roads evaluated at appraisal and those evaluated at the ICR stage\. However, the
overall EIRR at appraisal was 26\.9 percent, which is similar to the estimated EIRR at completion (27
percent) for a different set of roads\.
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Himachal Pradesh State Roads Project ( P096019 )
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
Comments sent by RIDC, December 15, 2017:
We appreciate the in-depth and comprehensive ICR, which has commented on all stakeholders in a fair
and judicious manner covering in detail âLessons Learnt from HPSRP-Iâ? in particular besides every other
aspects of physical, environmental, social and financial aspects of the project\.
General
1\. The Consultancy Servicesâsuch as ICT, RMS which are of utmost importance for the HPPWD /
HPRIDC [and] could not be completed by the closing date of HPSRP-I i\.e\. June 30, 2017âshould be
continued in the HPSRP-II which has already been approved by the Department of Economic Affairs
(DEA), Govt\. of India for the World Bank funding\.
2\. e-based Project Management System (e-PMS) consultancy services has been found to be very
effective application for supervision and micro level monitoring of the various works, services etc\.
and same be put in use in HPPWD through acquiring additional 85 licenses\.
3\. Road Accident Data Management System (RADMS) application developed under HPSRP-I is very
good tool for collection of road accidents and other related details for road safety measures\.
However, only Police Department is collecting data of road accidents and other stakeholders are not
actively using the modules of RADMS pertaining to them\. The implementation of this application is
yet to achieve the intended objective for which the regular meetings and trainings to the
stakeholder departments are required to achieve the goal of minimising the road accidents\. The on-
going practice of AMC should be continued for this application and efforts should be made to
improve this application by adding new features in this system after discussion with various
stakeholders\.
Additional points under Annex-7 (Additional Lessons and Recommendations)
Points 1-6 pertain to paragraph 4, Costs of Road Upgrading:
1\. To avoid frequent changes in the alignment of a road during execution, the process of land
acquisition should start only after the Design Consultant has finalized the most economic and
technically viable alignment of the road\. Accordingly if the acquisition is done within the Right of
Way boundaries fixed and marked on both the hill and valley sides of the centre line of the road, this
will minimize the occurrence of land disputes and thereby changes in alignment or the road during
its construction/upgradation\.
2\. Preparation of cases for diversion of forest land should be made part of the DPR consultant ToR and
no work should be awarded without obtaining the necessary forest clearance under FCA 1980\.
3\. The type & design of bridges should be simple which is executable with ease and fast speed keeping
in view for the site conditions\.
4\. Identification of quarries for mineral aggregates and muck/debris dumping sites must be
incorporated in the DPRsâ finalised by the Design Consultants to avoid undue time and cost
overruns\.
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5\. The credentials of Joint Venture Partners should be verified carefully and the provision should be
made in the Bid Document that the Joint Venture partner should actively participate during
execution of the work by deploying their resources\.
6\. There must be some penal provision for faulty designs by the Design Consultant and similarly for
poor performance by the Supervision Consultant and a provision for regular periodic review of their
performance\.
7\. As suggested under Annex 7, Technical Assistance for Contract Management, putting in place a
competent PMC is highly appreciated and needs to be implemented in HPSRP-II\.
8\. The recommendations regarding staff turnover such as multi-skilled trainings, ban on frequent
transfers and providing incentives to RIDC staff are appropriate and need to be implemented for
HPSRP-II\.
9\. The major lesson learnt from HPSRP-I is delay on account of land acquisitions and delayed
clearances\. The recommendations regarding a minimum of 80% of the land for the road right-of-way
should be available before issuance of the invitation of bids needs to be strictly enforced under
HPSRP-II\.
10\. We appreciate the World Bank for introducing several best engineering practices in the state such as
EIA, ESMF and Institutional Development initiatives which has benefitted the HPPWD as a whole\.
Continuous support, guidance and encouragement by the World Bank Mission helped in successful
implementation and completion of HPSRP-I\.
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Himachal Pradesh State Roads Project ( P096019 )
ANNEX 6\. SUPPORTING DOCUMENTS
Comparison of Project Indicators including Vehicle Operating Cost (VOC) Before and After Works for
Road sections covering 435 km, Himachal Pradesh State Roads Project, prepared by HIMS/SATRA for the
HP Road and Other Infrastructure Development Corporation Limited, May 2017\.
Consultancy Services for Road User Satisfaction Survey and Speed Survey in the State of Himachal
Pradesh, Final Report 2016, TNS India Pvt Ltd\.
Country Partnership Strategy for India for the Period 2013â17, World Bank, Report No\. 76176-IN, March
21, 2013\.
Economic Survey 2016-17, Government of Himachal Pradesh, Economic and Statistics Department\.
Final Impact Evaluation Report, Consultancy Services for Carrying out Terminal Impact Evaluation of the
Implementation of RAP for all Packages of Upgrading Roads under Himachal Pradesh State Roads
Project, Royal Haskoning DHV Consulting Pvt\. Ltd\., June 2017\.
Himachal Pradesh Core Road Assets Management Policy for State Highways and Major District Roads,
Draft-I, Public Works Department, August 2016\.
Himachal Pradesh Road Sector Finance Study, Final Assessment Report, PriceWaterhouse Coopers,
December 2006\.
Implementation Status and Results Reports, Himachal Pradesh State Roads Project (P096019), Sequence
Nos\. 1-22, 2007-2017\.
Labour Productivity Audit Report â Final Study Of The Productivity Of Force Account Staff In Public
Works Department, Himachal Pradesh, JPS Associates (P) Ltd\., July 2007\.
Loan Agreement, Himachal Pradesh State Roads Project, Loan No\. 4860-IN, between India and
International Bank for Reconstruction and Development, August 7, 2007\.
Loan Agreement, Himachal Pradesh State Roads Project, Additional Loan No\. 8199-IN, between India
and International Bank for Reconstruction and Development, January 21, 2013\.
Project Agreement, Himachal Pradesh State Roads Project, Loan No\. 4860-IN, between India and
International Bank for Reconstruction and Development, August 7, 2007\.
Project Agreement, Himachal Pradesh State Roads Project, Additional Loan No\. 8199-IN, between India
and International Bank for Reconstruction and Development, January 21, 2013\.
Project Appraisal Document, Himachal Pradesh State Roads Project, Report No\. 39322-IN, April 30, 2007\.
Project Paper on a Proposed Additional Loan, Himachal Pradesh State Roads Project, Report No\. 67972-
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Himachal Pradesh State Roads Project ( P096019 )
IN, September 25, 2012\.
Scaling the Heights: Social Inclusion and Sustainable Development in Himachal Pradesh, World Bank,
2015\.
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Himachal Pradesh State Roads Project ( P096019 )
ANNEX 7\. ADDITIONAL LESSONS AND RECOMMENDATIONS
1\. Project scope and duration\. The project was too ambitious in scope relative to the
implementation capacity of the PWD/RIDC and the available works contractors at the time of appraisal\.
A smaller projectâin sizes and numbers of contractsâmight have experienced fewer delays and smaller
cost overruns, and could have been scaled up easily through Additional Financing\. The lesson is that the
Bank must appraise implementation capacity much more carefully in future projects and tailor the scope
accordingly\. It is expected that a planned follow-on project to be financed by the World Bank will use
the Bankâs new Multi-Phase Programmatic Approach (MPA), with each phase limited to about US$110
million each covering only three to four key road upgrading contracts not exceeding about INR 100â120
crores (around US$15â18 million)\. Future projects should have more realistic time frames for
implementation, on the order of six to seven years\.
2\. Legal covenants\. RIDC suffered from persistent high staff turnover and unfilled positions despite
a covenant in the original PA requiring the maintenance of a dedicated, qualified project team\. A
covenant in the AF PA of 2013 requiring that the HPRIDC be entrusted with the entire Core Road
Network by December 31, 2013 was never complied with\. Even minor covenants in the original PA
regarding the issuance of annual maintenance plans, network condition and traffic reports, and
maintenance implementation reports were not fulfilled\. These lapses reflect the inherent difficulties of
enforcing the Bankâs legal remedies for covenants, which are limited to threatened or actual suspension
of disbursements and partial or full cancellation of the loan/credit\. In the future, project-specific legal
covenants should be avoided unless the Bank is fully prepared to invoke the available remedies\. If not,
the project risks a failure of accountability\. An alternative, where a requirement is considered
indispensable, is to use a condition of disbursement applied to the related component or activity\.
3\. Multi-project synergies\. Two Bank-financed multi-state rural roads projects in which HP
participatedâthe Rural Roads Project (P077977), approved in 2004 and closed in 2012, and the follow-
on PMGSY Rural Roads Project, approved in 2010 and scheduled to close in 2017âfinanced several
institutional development interventions aimed at HPâs PWD\. These featured (i) establishment of a
simple Road Management System (RMS); (ii) implementing annual maintenance programs, including the
use of performance based contracting; (iii) implementing a pilot framework for transferring ownership
of non-core rural roads to local bodies (Panchayati Raj Institutions, PRIs); (iv) human resources
strengthening; (v) procuring material and quality control testing equipment and IT and associated office
equipment; and (vi) implementing training in each state for PWD staff and the local contracting industry\.
The ICR of the RRP55 reported that these interventions were carried out successfully\. Regarding the
PMGSY, so far the documentation indicates little in terms of institutional development results in HP,
55
Implementation Completion and Results Report for the India Rural Roads Project September 25, 2012, Report No\. ICR 2531,
September 25, 2012, Para 2\.2\.6\.
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Himachal Pradesh State Roads Project ( P096019 )
except for the notification of a new maintenance policy for rural roads\.56 What is notable is the apparent
lack of any synergies, planned or not, between the institutional development efforts of the three
projects, considering how closely entwined PWD and RIDC remain\. As noted above, the institutional
capacity-building activities of the HPSRP and the two rural roads projects (RDC and PMGSY/RDC) were
not coordinated\. Given that PWD and RIDC remain closely interlinked, it is essential going forward that
such institutional capacity improvements be designed to benefit both entities, for maximum efficiency
and impact, within a framework of well-defined roles and responsibilities\. In addition, serious
consideration should be given to evaluating the combined network effects of the two sets of
improvementsâcore state highways and rural roadsâon access and transport costs in their larger
influence areas\.
4\. Costs of road upgrading\. The Bank accepted major delays and cost overruns in the HPSRPâs road
upgrading works as a âfact of lifeâ?, considering that the investments remained viable economically\. This
is to some extent understandable, given the major challenges posed by systemic capacity limitations of
government agencies and contractors, physical and climatic conditions, and other factors examined in
this ICR which transcend a single project\. Going forward, the following recommendations apply:
a\. Training and orientation should be given to officials and staff of other State government
agencies, that is, Department of Finance, to help them understand the rationales for the
higher costs of meeting adequate design standards for highways in mountainous terrain,
especially features related to road safety and environmental protection\. The impact of the
monsoon/snow periods in HP should be factored into the time of completion required for an
contract\. Pressures to reduce essential design features must be resisted\.
b\. The stipulated duration of construction contracts should be adapted to the local conditions,
including the limited working period\.
c\. Cost estimates should not be based on standard schedules of rates but rather on realistic
unit costs of roads in mountain areas\.
d\. More detailed geotechnical investigations at the design stage, using the latest technologies
and incorporating the resulting appropriate design measures, would avoid the substantial
amounts of reworks encountered in this project and their associated costs\.
e\. Mainstreaming of bioengineering techniques (see below) would significantly reduce life
cycle costs of road improvements\.
5\. Technical assistance for contract management\. The GoHP plans to adopt the Engineering,
Procurement and Construction (EPC) form of contract, in which the contractor is responsible for design,
procurement, construction, and handover of the project to the client\. Managing such contracts requires
greater capacity than conventional ones\. It is recommended that capacity support be provided by a
project management consultant (PMC) selected through a QBS procurement method\. The PMC, while
providing training and advice to the client, would be responsible for reviewing and vetting the
contractorâs designs and monitoring of performance indicators prescribed in the contract document\.
6\. Staff turnover\. Future projects should consider shifting from being dependent on current staff
strength to building a resilient project management system that is not vulnerable to frequent staff
changes\. This could include a strong new staff induction program, multi-skilled training of potential back
56
PMGSY Rural Roads Project, 11th Implementation Support Mission: April 19- July 10, 2017 Aide Memoire, paragraph 8\.
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Himachal Pradesh State Roads Project ( P096019 )
up staff, and the like\. The World Bank and PWD/RIDC should examine the feasibility of providing
incentivesânot necessarily in monetary termsâto RIDC staff assigned to a project, in consideration of
the higher than normal demands of working on a Bank-financed project\.
7\. Contractor performance\. For future road upgrading and periodic maintenance contracts,
contractor qualification and evaluation criteria should favor those with experience and capacity for
working in mountainous terrain, including locally-based contractors\. Pre-bid conferences should make
prospective bidders fully aware of such special conditions\. The qualification criteria and due diligence
protocols related to the financial capacity of contractors should be strengthened\. Contract provisions
regarding Joint Ventures (JVs) should be strengthened to provide stronger remedies against partners
who do not participate as stipulated\. To ensure that mobilization advances are used for the purposes
intended, contractors should be required to submit mobilization plans that can then be monitored\.
8\. CSC performance\. PWD/RIDC should have sufficient in-house technical and contract
management capacity to judge and asses the work of the works contractors and the CSC\. Even so, a CSC
remains necessary to provide professionally impartial supervision\. PWD/RIDC should in the future
exercise more proactive and stringent control over the CSCs\. Terms of reference for CSCs should require
expertise in mountain geology and construction planning\. Contracts for CSCs should contain a wider
range of remedies against degrees of unsatisfactory performance, short of suspension or termination\. In
addition, consideration should be given to the possibility of engaging more than one CSC for a program
of multiple road contracts, in order to diversify risk\. The powers of engineers in RIDCâs field offices to
exercise controls over work done and over CSCâs Resident Engineer (CSC) need to be enhanced\.
9\. Performance-based maintenance\. Four five-year PBM contracts, for a total of 348\.5 km\. of core
network roads, were awarded in 2014/15/16, with end dates of 2019/20/21\. Initial procurement was
difficult due to a lack of bidders, even with repeated tenders\. Better results were obtained when
packages were made smaller\. RIDCâs preliminary assessment is that the optimum size of PBM contracts
is in the range of 50â150 km\. RIDC is considering the possibility of offering an incentive of one year
additional contract period at the same awarded cost to help make the contracts more cost-effective\. It is
too early to draw systematic conclusions about the relative cost-effectiveness of PBM vs\. regular
periodic maintenance\. However, PWD/RIDCâs preliminary assessment indicates that PBM provides
favorable cost-effectiveness (INR 5,02,000 km/annum for PBM vs\. INR 6,25,666 km/annum for
traditional periodic maintenance over the same period, with PBM providing better quality)\. GoHP has
decided to continue applying the PBM approach using its own resources, having allocated INR 20 crores
during the current FY specifically for these contracts\. Among the lessons learned is the need to provide
more orientation and training as well as implementation guidelines to PWD engineers and prospective
contractors on the special characteristics of PBM\.
10\. Encumbrances on access to sites\. In future projects, a minimum of 80 percent of the land for
the road right-of-way should be available before issuance of the invitation for bids, and the remainder
should be fully available within six months of the commencement of works\. This includes (a) land for the
right of way fully acquired and compensated, (b) forest clearances finalized, (c) utility shifting
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Himachal Pradesh State Roads Project ( P096019 )
implemented, and (d) all mining and dumping sites identified and cleared for use\.57 Utility shifting needs
to be properly planned and incorporated as BoQ items in the detailed designs\.
11\. Land acquisition\. It is by now well established that the most expeditious method of land
acquisition is private negotiation (as opposed to compulsory acquisition)\. Even so, negotiated
acquisition can take 1â2 years\. Going forward, PWD/RIDC should endeavour to deploy revenue staff at
the field office level to help expedite the processes\. Significant implementation delays were experienced
in some contracts as a result of alignment changes in response to late claims by persons who came
forward after detailed designs and land acquisition plans were finalized\. It is not clear to what extent
this problem can be prevented, given the relatively fragmented land ownership in much of the Stateâs
hilly areas and the existing legal requirements for due process for claimants\. RIDC proposes the
following measures to improve land acquisition going forward: (a) a Law Officer and a Divisional Forest
Officer should be attached to the Project Director for speedy disposal of cases; (b) a dedicated Land
Acquisition Collector for the project should be appointed to bring the process more under the control of
the RIDC; (c) the Resettlement Action Plans should be updated whenever there is a change in the road
alignment; and (d) some other changes should be implemented in the structure of the field offices
including the creation of a position of Assistant Engineer (Social) in every office\.
12\. Environment\. PWD should pursue the proper mainstreaming of bioengineering in its design
standards and specifications\. Issues that need to be addressed going forward include (a) adequate
staffing of PWD/RIDC for proper supervision and execution of bioengineering and improving the survival
rate of plantations, (b) orientation and training of PWDâs staff and contractors in bioengineering at
regular intervals, (c) ensuring that civil and environmental works in BoQ items are kept separate for
proper accountability, and (d) more research and development based on local geology and bio-diversity,
in collaboration with the academic institutions\. Apart from the issues of bioengineering as such, RIDC
recommends that tree plantations should be entrusted to the Forest Department, which has a large
infrastructure for such work\. Also, provisions for Environmental Management Plans should be
incorporated in the detailed designs as separate BOQ items and not as items incidental to work, as
contractors generally are lax about executing such items\.
57
The World Bankâs National Competitive Bidding (NCB) and ICB Conditions of Contract (21\.1) stipulate that the Employer shall
give possession of âall parts of the siteâ? to the Contractor; if not, the Employer is deemed to have delayed the start, and t his will
be a Compensation Event\.
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The World Bank
Himachal Pradesh State Roads Project ( P096019 )
Annex 8: Project MAP
Page 56 of 56 | REVIEW |
P073483 | Document of
The World Bank
Report No:ICR0000000087
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(Credit No\. 3540-MK )
ON A
CREDIT
IN THE AMOUNT OF SDR2\.0 MILLION (US$3\.02 MILLION EQUIVALENT)
TO
FORMER YUGOSLAV REPUBLIC OF MACEDONIA
FOR A
CHILDREN AND YOUTH DEVELOPMENT PROJECT
LEARNING AND INNOVATIN LOAN (LIL)
June 29, 2007
Sustainable Development Department
South East Europe Country Unit
Europe and Central Asia Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective 09/30/2006)
Currency Unit = MKD
MKD 1\.00 = US$ 48\.0960
US$ 1\.00 = MKD 0\.0208
FISCAL YEAR
January 1- December 31
ABBREVIATIONS AND ACRONYMS
AYS Agency of Youth and Sports
BYC Babylon Youth Center
CAS Country Assistance Strategy
CDCP Community Development and Culture Project
CDP Community Development Project
CPS Country Partnership Strategy
CO Country Office
CYDP Children & Youth Development Project
DTF Dutch Trust Fund
ECA Europe and Central Asia
ECCD Early Child Care and Development
EU European Union
FMS Financial Management System
FOSIM Foundation Open Society Institute Macedonia
FYR Former Yugoslav Republic
GoM Government of Macedonia
HD Human Development
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion Report
IDA International Development Association
ISR Implementation Status Report
IT Information Technology
LIL Learning and Innovation Loan
M&E Monitoring and Evaluation
MIS Management Information System
MTR Mid-term Review
NGOs Non-Governmental Organizations
PAD Project Appraisal Document
PCF Post-Conflict Fund
PMU Project Management Unit
PS Procurement Specialist
QSA Quality of Supervision Assessment
UNICEF United Nations Children's Fund
WB World Bank
WDR World Development Report
Vice President: Shigeo Katsu
Country Director: Orsalia Kalantzopoulos
Sector Manager: Maninder S\. Gill
Project Team Leader: Gloria La Cava
ICR Team Leader: Gloria La Cava
FYR Macedonia
Macedonia Children and Youth Development Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes \. 4
3\. Assessment of Outcomes\. 7
4\. Assessment of Risk to Development Outcome\. 15
5\. Assessment of Bank and Borrower Performance \. 15
6\. Lessons Learned \. 18
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 20
(e\.g\. NGOs/private sector/civil society)Annex 1\. Project Costs and Financing\. 21
Annex 1\. Project Costs and Financing\. 22
Annex 2\. Outputs by Component \. 23
Annex 3\. Economic and Financial Analysis\. 26
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 28
Annex 5\. Beneficiary Survey Results\. 30
Annex 6\. Stakeholder Workshop Report and Results\. 33
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 45
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 48
Annex 9\. List of Supporting Documents \. 50
MAP
A\. Basic Information
Children & Youth
Country: Macedonia Project Name: Development Project
(LIL)
IDA-35400,NETH-
Project ID: P073483 L/C/TF Number(s):
52502
ICR Date: 06/29/2007 ICR Type: Core ICR
Lending Instrument: LIL Borrower: MACEDONIA
Original Total
XDR 2\.0M Disbursed Amount: XDR 1\.8M
Commitment:
Environmental Category: B
Implementing Agencies:
Agency for Youth and Sports
Cofinanciers and Other External Partners:
Government of Netherlands
Directorate General for Development Cooperation
B\. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 01/18/2001 Effectiveness: 03/12/2002 03/12/2002
Appraisal: 02/28/2001 Restructuring(s):
Approval: 06/26/2001 Mid-term Review: 06/20/2005 06/14/2005
Closing: 07/31/2006 07/31/2006
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank Overall Borrower
Performance: Satisfactory Performance: Satisfactory
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Performance Indicators (if any) Rating
Potential Problem Project No Quality at Entry
None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No Moderately Satisfactory
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 10 10
Other social services 80 80
Sub-national government administration 10 10
Theme Code (Primary/Secondary)
Improving labor markets Primary Secondary
Injuries and non-communicable diseases Secondary Secondary
Other social protection and risk management Primary Primary
Participation and civic engagement Primary Primary
Vulnerability assessment and monitoring Secondary Secondary
E\. Bank Staff
Positions At ICR At Approval
Vice President: Shigeo Katsu Johannes F\. Linn
Country Director: Orsalia Kalantzopoulos Christiaan J\. Poortman
Sector Manager: Maninder S\. Gill Alexandre Marc
Project Team Leader: Gloria La Cava Gloria La Cava
ICR Team Leader: Gloria La Cava
ICR Primary Author: Zeynep Ozbil
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The Project's main development objective was to significantly increase social cohesion
through the social integration of youth at risk from different socio-cultural backgrounds\.
In particular, the project aimed to: (a) test community-based approaches to support
ii
adolescents and youth at risk (ages 15-24), prevent their marginalization and reduce
exposure to abuse (drug, alcohol, etc\.) and conflict; (b) strengthen the institutional
capacity at central and local levels to address children and youth issues by: (i)
contributing to the preparation and implementation of a Children and Youth Strategy; (ii)
monitoring social trends affecting youth and assessing the impact of project activities;
and (iii) building the financial sustainability of youth activities through cost effectiveness
and increasing private and local public contributions\.
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Revised Achieved at
approval Target Completion or
documents) Values Target Years
Indicator 1 : Affinity of Youth Center participants for different ethnic groups significantly
increased by end of project\.
96 (7-14 year old)
89 (15-18 year old)
94 (19-24 year old)
93 (7-14 year old) Note: measured
Note: measured among among 16,000
4,800 beneficiaries aged beneficiaries per
Value 7-14 that were the year aged
quantitative or original beneficiaries of 100 7 - 24 years old
Qualitative) the Program (for all age groups)
NA (15-18 year old) M&E data show
NA (19-24 year old) minority
participation
(Albanians and
Roma) in BYCs
doubled between
2003 and 2006
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments Percentage of target achieved: 93%\. This indicator was measured by an affinity
(incl\. % index\. Given the lack of baseline for youth (15-24), this index was
achievement) complemented by beneficiary survey data which showed 47% increase in
interethnic friendships by completion\.
Indicator 2 : High level of satisfaction of children and youth beneficiaries with Youth Center
programs\.
80% (7-14 year olds)
Value Note: at Project launch 97% (7-14 year
quantitative or only this age group was 100% olds)
Qualitative) participating in the Youth 96% (15-24 year
Centers olds)
Date achieved 12/15/2002 07/31/2006 06/25/2006
Comments Percentage of target achieved: nearly 100% across all age groups
iii
(incl\. %
achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : New Youth Centers established and operational
Value 31 (23 existing 33 (23 existing
(quantitative 23 (already existing) BYCs plus 8 to be BYCs plus 10
or Qualitative) newly opened) newly opened)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments Percentage of target achieved: more than 100%
(incl\. % 2 new Babylon Youth Centers (BYCs) additional to the initialy expected 8
achievement) BYCs\. Coverage of beneficiaries increased from 4,800 per year at baseline to
16,000 per year by project completion\.
Institutional capacity strengthened at central Ministry, local government and
Indicator 2 : community levels\. At the community level, measured through:
(a) Share of recurrent costs covered by local communities' budgets
Value
(quantitative 0 at least 50% 54\.5%
or Qualitative)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments
(incl\. % Percentage of target achieved: More than 100%
achievement)
Indicator 3 : Robust youth center program piloted and tested in terms of participant ages,
ethnicity and gender
All 6 activity
programs
designed, piloted All designed and
and modified tested successfully:
successfully for - youth and parents
sub-age groups: expressed positive
- lower drugs effects on
prevention
Value trends - 60% of young
(quantitative Not tested\. - increase in girls managing
or Qualitative) young girls
managing BYCs BYCs at project
- lower completion from
unemployment initial 10%
trends - positive impact on
- high beneficiary employability
satisfaction - 94% said
-increase in programs met needs
willingness to pay
Date achieved 12/15/2002 07/31/2006 06/30/2006
iv
Comments Percentage of target achieved: 100%
(incl\. % The 6 programs were designed for the 15 -24 years olds\. But the age group 19-
achievement) 24 was predomininant in entrepreneurial skills, advanced English and IT\.
Beneficiary distribution was balanced for gender and ethnicity\.
Indicator 4 : At least 10 Youth Centers fully sustainable by end of project
Value
(quantitative 0 10 28
or Qualitative)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments Percentage of target achieved: 280%
(incl\. % 28 BYCs, rather than the initial target of 10, are fully financially sustainable with
achievement) local government and community contributions\.
Institutional capacity strengthened at central Ministry, local government and
Indicator 5 : community levels\. At the central level, measured through:
(a) Relevant Agency Youth and Sports and ministry officials trained (%of
target)
Value
(quantitative 0 100% 100%
or Qualitative) (100 officials)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments
(incl\. % Percentage of achieved target: 100%
achievement)
Institutional capacity strengthened at central Ministry, local government and
Indicator 6 : community levels\. At local government level, measured through:
(c) Relevant Local Government personnel trained (%of target)
Value
(quantitative 0 100% 80%
or Qualitative) (200 officials) (160 officials)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments
(incl\. % Percentage of achieved target: 80%
achievement)
Institutional capacity strengthened at central Ministry, local government and
Indicator 7 : community levels\. At the central level, measured through:
(a) Relevant Agency Youth and Sports and ministry officials trained (%of
target)
Value
(quantitative 0 100% NA 100%
or Qualitative) (100 officials)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments
(incl\. % Percentage of achieved target: 100%
achievement)
Institutional capacity strengthened at central Ministry, local government and
Indicator 8 : community levels\. At local government level, measured through:
(c) Relevant Local Government personnel trained (%of target)
Value 0 100% NA 80%
v
(quantitative (200 officials) (160 officials)
or Qualitative)
Date achieved 12/15/2002 07/31/2006 05/15/2006
Comments
(incl\. % Percentage of achieved target: 80%
achievement)
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 07/25/2001 Satisfactory Satisfactory 0\.00
2 02/05/2002 Satisfactory Satisfactory 0\.00
3 03/26/2002 Satisfactory Satisfactory 0\.00
4 10/24/2002 Satisfactory Satisfactory 0\.34
5 04/22/2003 Satisfactory Satisfactory 0\.53
6 11/10/2003 Satisfactory Satisfactory 0\.81
7 06/16/2004 Satisfactory Satisfactory 1\.16
8 12/20/2004 Satisfactory Satisfactory 1\.45
9 06/21/2005 Satisfactory Satisfactory 1\.67
10 07/08/2005 Satisfactory Satisfactory 1\.67
11 09/08/2005 Satisfactory Satisfactory 1\.67
12 07/19/2006 Satisfactory Satisfactory 1\.90
H\. Restructuring (if any)
Not Applicable
vi
I\. Disbursement Profile
vii
1\. Project Context, Development Objectives and Design
(this section is descriptive, taken from other documents, e\.g\., PAD/ISR, not evaluative)
1\.1 Context at Appraisal
(brief summary of country and sector background, rationale for Bank assistance)
Following the refugee crisis as a result of the conflict in Kosovo in 1999, the World Bank
gave a US$2 million post-conflict grant to FYR Macedonia to support communities and
households hosting refugee children and their families\. With the end of the refugee crisis,
the grant shifted its focus to three areas\. The first was on Early Child Care Development,
(ECCD)\. The second was on non-formal education activities, mainly life skills imparted
through community based youth-friendly spaces denominated Babylon Youth Centers,
(BYCs)\. At the time of appraisal, BYCs provided the only available public program
addressing youth development in FYR Macedonia\. However, their activities were limited
to 8 urban centers, and focused only on children and adolescents\. Rural needs and those
of young people aged 19-24 were therefore not covered\. The third area of focus was a
drug prevention program implemented by the Agency of Youth and Sports (AYS), in 55
out of 92 secondary schools around the country\.
The CAS Progress Report 2000 emphasized that social cohesion is key to sustainable
development\. But it pointed out that wide ethnic differences and regional imbalances
make FYR Macedonia particularly vulnerable to inter-ethnic tensions and present a threat
to its social cohesion\. Because of these differences, ensuring equal access to services and
economic and social opportunities is an important challenge\. The 2001 conflict brought
to the surface the underlying ethnic divide in the country and raised the awareness among
both the international and local policy makers of the urgent need to strengthen conflict
resolution and social cohesion mechanisms\.
At the time of appraisal in February 2001, the following issues were particularly relevant
for FYR Macedonia's youth: conflict, crime, drug addiction, sexually transmitted diseases
and unemployment\. The number of children with delinquent behavior had almost doubled
in the five years preceding the PAD\. In the same period, the number of registered drug
abusers increased fourfold and the number of criminal acts by juveniles increased by 50%\.
The share of some ethnic groups in secondary education (especially Albanians, Roma and
Turks) did not correspond to their proportional share in the total population, particularly
in terms of the female participation\. Schools were segregated along ethnic lines and there
were no spaces for inter-ethnic interaction\. The World Bank responded to the
Government of Macedonia (GoM's) request for this project in the context of its
community development approach to strengthen social cohesion, particularly following
the 2001 conflict\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
The Project's main development objective was to significantly increase social cohesion
through the social integration of youth at risk from different socio-cultural backgrounds\.
In particular, the project aimed to: (a) test community-based approaches to support
1
adolescents and youth at risk (ages 15-24); (b) prevent their marginalization and reduce
exposure to abuse (drug, alcohol, etc\.) and conflict; and (c) strengthen the institutional
capacity at central and local levels to address children and youth issues by: (i)
contributing to the preparation and implementation of a Children and Youth Strategy; (ii)
monitoring social trends affecting youth and assessing the impact of project activities;
and (iii) building the financial sustainability of youth activities through cost effectiveness
and increasing private and local public contributions\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
N\.A\.
1\.4 Main Beneficiaries,
(original and revised, briefly describe the "primary target group" identified in the PAD
and as captured in the PDO, as well as any other individuals and organizations expected
to benefit from the project)
The primary target beneficiaries were the youth aged between 15 and 24\. Within the
beneficiary population, the 18-24 years age group posed a particular challenge\. The
Project extended the approach to this group, while maintaining a broader range of
activities targeting children and adolescents under 15 years within the existing youth
centers\.
The areas with higher marginalization, higher poverty rates, more risk of ethnic tensions
were targeted more specifically\. Unlike the earlier emphasis of the Post Conflict Fund
(PCF) on urban areas, the Project reached out to rural youth\. In addition, the project
specifically pursued a gender balance in life skills/leadership training and participation in
youth activities, targeting female drop-outs from secondary school\.
As part of the institutional strengthening component, the Project also targeted the AYS,
the line Ministries and municipalities\.
1\.5 Original Components (as approved)
Component 1: Youth
This component carried out three main activities: (1) scaled up the program of life
education for youth through the BYCs; (2) explored new innovative approaches for youth
social integration by piloting new forms of outreach and targeting; and (3) expanded the
innovative drug abuse prevention program of AYS to all secondary schools in FYR
Macedonia and to the BYC\.
Under this component, the project: (i) continued to test methods and experimentation
through the 8 existing BYCs; (ii) supported the expansion of this program to an
additional 15 sites which were initially developed under the PCF (which had resources to
cover the initial investment costs but not staff costs nor program and activities
development); and (iii) established additional centers to experiment with innovative new
2
approaches like community-based HIV/AIDS and drug prevention program In the latter
case, the programs were established in existing buildings in which small youth centers in
rural areas were set up as satellite units for the larger urban-based centers\.
Component 2: Institutional Development
The institutional development component supported and consolidated the youth
component by: (i) supporting the participatory development of the Children and Youth
Strategy to promote ownership and sustainability of the proposed program among the
policy makers and communities; (ii) establishing a monitoring mechanism to facilitate
institutional learning and improvement of the program inter alia by monitoring social
trends affecting youth and beneficiaries' responsiveness to program activities and
awareness raising programs; and (iii) launching a public information campaign about the
program\. This Component also included the establishment of the Project Management
Unit (PMU)\. The Children and Youth Strategy aimed at: (i) fostering institutional
cooperation at the national and municipal levels to support project objectives in a
sustained way; (ii) strengthening the operational partnerships between local NGOs and
communities on children and youth issues; (iii) disseminating best practices learned from
ongoing and future activities; and (iv) establishment of a coordination process at the
institutional level\.
1\.6 Revised Components
N\.A\.
1\.7 Other significant changes
(in design, scope and scale, implementation arrangements and schedule, and funding
allocations)
In practice the Youth Component scaled up the existing program of life skills training
initially developed by UNICEF for the age group 7 to 14 years old introducing 6 new
training modules (i\.e\. debates, healthy livestyles, arts for social change, entrepreneurial
skills, advanced language training and advanced IT training) for the older age groups (15
to 24 years) throughout the existing BYCs (8 at the time of appraisal and 23 at project
launch)\. It also introduced a new model of youth-friendly spaces managed by youth-led
NGOs on a demand driven basis, in partnership with local governments, marking a shift
from the existing model of centralized youth centers\. In the new model, the programs
were established in existing public spaces in disadvantaged urban and rural communities\.
During Project implementation concerns were expressed by beneficiaries and
communities that sports facilities were either unavailable or in poor condition and there
were no organized sports activities for young people\. Upon request from the Ministry of
Finance, the Credit Agreement was amended and 0\.45 Million US$ was reallocated upon
managerial approval for refurbishment of small sport playgrounds under Component
Youth, as can be seen in the increased cost of the youth component (see annex 1 for
appraisal estimates and actual estimates)\. The appreciation of XDR vis-à-vis the US
3
dollar made it possible to finance sports activities with added positive impact, without
affecting any of the originally planned activities\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
(including whether lessons of earlier operations were taken into account, risks and their
mitigations identified, and adequacy of participatory processes, as applicable)
The LIL incorporated several important lessons from the implementation of the World
Bank PCF, which targeted children and adolescents up to the age of 18\. At the time of the
PCF implementation, there was very little ownership of the Project by municipalities\. The
decentralization process which would have given greater financial autonomy to local
governments was delayed\. However, given the lack of fiscal resources, in some limited
cases the municipalities were able to provide only space for the Youth Centers\.
Given the lack of ownership, cooperation from the municipalities was limited,
significantly impacting the success and sustainability of project outcomes\.
Implementation of the PCF made clear that seeking the involvement of the local
government at the beginning of the project produces stronger results\. To this end, the
Children and Youth Development Project (CYDP) sought municipal involvement from
the start\. In addition, to address the problem of limited financial resources at the local
level, the Project helped to diversify the sources of income generation (private sector,
municipalities, beneficiaries, etc\.)\.
At the time of Project appraisal, FYR Macedonia was emerging from an inter-ethic
conflict\. The political instability could have significantly influenced Project
implementation\. In order to address potential risks to implementation, project design
foresaw the use of grass-roots organizations in the management of local youth activities,
unlike the centralized approach followed by UNICEF during the implementation of the
PCF\. A consultative stakeholders' workshop, organized by the World Bank and UNICEF
in early 2001, integrated stakeholders' views, inputs, ideas and concerns into the project
design\. The LIL also promoted a wide geographic distribution of youth activities across
FYR Macedonia to create greater opportunities for cultural interaction and minimize the
impact of potential conflict in some communities on the overall project\.
The LIL was prepared on a very fast track to meet the deadline for IDA funds, in view of
FYR Macedonia's graduation to IBRD\. This limited the ability of the project team to
develop a comprehensive impact evaluation plan, which was a shortcoming at entry and
subsequently during project implementation\.
2\.2 Implementation
(including any project changes/restructuring, mid-term review, Project at Risk status, and actions
taken, as applicable)
Due to the disruptions caused by the 2001 conflict, the subsequent political instability,
delayed effectiveness of the Credit (March 12, 2002) and the change in government
4
following elections in September 2002, overall Project implementation was more than
one year behind schedule, in relation to the timeline established in the Credit Agreement,\.
As a result, there were delays in disbursements, with consequent delays in
implementation\. Given the fact that youth activities in the Western part of the country
were disrupted significantly by conflict during 2001, a series of informative workshops
were launched in conflict-affected areas in Western Macedonia to ensure that they
received considerable attention in the start-up phase of the project\.
Project activities were implemented at a very slow pace at the beginning, since the
Project and the PMU were under the direct control and supervision of the AYS, which
appointed the Project Director from among its civil servants\. This did not serve the
project implementation well, as some activities were completely stalled during the
election period in 2002, which created an additional three-month delay in implementation\.
Political changes in the AYS leadership also posed the risk of discontinuity in the PMU
technical team\. The TTL and the Country Office timely addressed this risk by ensuring
that the new Project Director would base his decision on retaining the PMU team
members on strictly technical and merit-based, rather than, political criteria\. Towards the
achievement of this goal, the TTL engaged in an intensive dialogue with the new AYS
management which resulted in an overall increased ownership of the project\. During
2003 and 2004, the project team focused on ensuring that the sustainability of BYCs and
outreach to disadvantaged youth groups were given adequate attention by the PMU\.
During this time, a local project officer was hired to strengthen field supervision\. The
Mid-Term Review, conducted in May 2005, acknowledged progress of BYCs
sustainability while highlighting the constraints of those centers which were not yet self-
sustainable\.
A Dutch grant of US$ 1 million became available in December 2004, but due to delays in
the transfer of funds, all three installments were received in late December 2005, which
delayed implementation arrangements\. At the time of Project closure, 90% of the Dutch
funds were disbursed for capacity building programs and IT equipment for the expansion
of the BYC programs to young people aged 20-24, particularly in rural areas\.
As noted by the QSA7 Review, "The Bank correctly focused at first on implementation
issues, institutional strengthening and financial and institutional sustainability, but was
slow to put in place arrangements for an impact assessment/evaluation which is critical to
the learning agenda\." QSA7 Review noted that "the team needed an M&E expert with
qualitative and quantitative skills\. Otherwise it was a good team with important field
office participation\. The Project did measure the key variable (Affinity Index), but the
Panel remained concerned about the quality of data on impact of participation in youth
centers on youth behavior\."
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Although an Impact Evaluation was initially not part of the M&E System, the Monitoring
and Evaluation design of the project included some very effective and replicable features
5
in monitoring the project performance\. In particular, the system was structured around: (i)
an overall monitoring of project inputs, outputs and performance indicators by the PMU,
including an affinity index to measure inter-ethnic engagement as a proxy for social
cohesion; (ii) participatory instruments to measure periodically the performance of
BYCs; and (iii) an initial survey of youth trends which would inform the National Youth
Strategy\. As part of the participatory instruments, yearly beneficiary satisfaction surveys
tested the level of satisfaction among project beneficiaries, monitored the trend of the
demand for given programs, provided feedback to service providers and monitored
changes in attitudes of key-stakeholders\. A final stakeholder workshop was organized to
solicit beneficiary and other stakeholder feedback on the overall success and
shortcomings of the project\. These features of the M&E system are being replicated in
new youth development projects currently under implementation in Kosovo and the
North Caucasus\.
As identified by the QSA7 review, a major shortcoming of the M&E system design was
the lack of an impact evaluation methodology\. Both the WB supervision team and the
implementation agency acknowledged this shortcoming and commissioned an impact
evaluation methodology to an international consultant in early 2005 to specifically
measure the impact of the Youth Component, particularly that of BYC activities\.
However, due to technical problems with the consultant's performance, the local research
team was unable to deliver the results of the impact evaluation, initially expected by May
of 2005\. The PMU and the WB team then developed, with the assistance of the Human
Development (HD) chief economist, a retrofitting methodology to ensure more accurate
results\. This method involved a comparison between young people who had been
exposed to the program for at least 1 year (19 year olds) and those who have taken up the
program, but have been exposed to it for a very short duration (18 year olds)\. The data
collection was conducted in summer 2006, at project closure, and by the time of this ICR
the preliminary findings of the impact evaluation became available (see section 3\.2)\.
2\.4 Safeguard and Fiduciary Compliance
(focusing on issues and their resolution, as applicable)
Quality of Supervision Assessment rated safeguard and fiduciary compliance of the
project satisfactory\.
The project involved the rehabilitation of BYCs (dirt removal, soil leveling and asphalt
topping) for which field-based staff conducted on site supervision to ensure
environmental due diligence\. No asbestos or toxic materials were used\.
No social safeguards were triggered by the project\.
On the procurement and FMS side, this LIL was supervised to an appropriate degree,
given the small scope of procurement under the Project\. The PMU recruited a
Procurement Specialist (PS), as recommended in the PAD (main feature of the mitigation
plan) who performed well\. The Bank PS carried out one ex-post review mission; the
review identified only few minor procedural procurement problems\. The initial
(relatively simple) procurement plan was updated once\. FM supervision was in
6
accordance with the risk-based approach and supported by good planning and
documentary evidence\. FM issues were identified appropriately and dealt with in a timely
manner\.
The Project experienced a rapid increase in disbursements in the last quarter of 2006,
which is in accordance with the formally revised disbursement schedule\. The closing
dates of many of the consultancy and minor works contracts under the sport component
correspond to the closing date of the Project\. Hence, all related payments were disbursed
at Project closure\.
2\.5 Post-completion Operation/Next Phase
(including transition arrangement to post-completion operation of investments financed by
present operation, Operation & Maintenance arrangements, sustaining reforms and institutional
capacity, and next phase/follow-up operation, if applicable)
The majority of BYCs are fully sustainable except for 5 youth centers which have
insufficient local funding due to high poverty levels\. During the last supervision mission
in May 2006, the project team had reached an agreement with the Director of the AYS
that funding for these 5 BYCs would be secured\. However, given the government
changes after the June 2006 election resulting once again in a new political leadership at
the AYS, to this date the funding has not materialized\. However, with a new potential
World Bank grant for implementing youth employment schemes, it is expected that the
Bank and the AYS will resume the policy dialogue on youth development issues, which
should also help to address the pending questions related to the 5 BYCs support\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
(to current country and global priorities, and Bank assistance strategy)
The project was formulated under the CAS for FYR Macedonia for FY04-06 that outlines
"Promoting social cohesion, building human capital, and protecting the most vulnerable"
as one of the three priority themes for the WB program in the country\. Project objectives
were therefore consistent with the Bank's CAS at the time and the main development
objective of the CYDP, i\.e\., social cohesion of youth at risk clearly contributes directly to
the sector-related CAS goal\. Through the BYCs, the project contributed to the increased
social cohesion CAS objective among ethnically different communities by creating safe
and tolerant environments for youth to interact\. With its emphasis on non-formal
education programs (i\.e\., IT training, language training, life and livelihood skills), the
project contributed to the CAS objective of human capital development of young people\.
With its emphasis on outreach strategies, the project reached-out to the most vulnerable
adolescents and youth in disadvantaged communities\.
The current Country Partnership Strategy (CPS) for FY07-10 aims to accelerate FYR
Macedonia's perspective to join the European Union\. One important outcome of the
CYDP implementation has been its contribution to the process of EU integration as it
relates to absorption of EU funds for Youth Programs in Macedonia\. The EU Youth
7
Program opened to FYR Macedonia as of January 1, 2007, and consequently EU funds
are becoming available at two levels: (a) direct funding to youth organizations and (b)
direct funding for the EU Youth Agency for FYR Macedonia (to be set up separately
from the AYS in 2007, but under its supervision)\. This new EU Youth Agency will
function until 2013 and will be responsible for continuing the capacity building of the
ministries, local governments, and NGOs\. The CYDP PMU negotiated the EU Youth
Program membership on behalf of the AYS, which will ensure the reception of grants
from the European Community\. The fact that the NGOs that are currently running the
BYCs have good communication and receive financial support from the AYS should help
them in the process of accessing EU funds\.
The project has been relevant to the country priorities during implementation but the
lessons learned and outcomes continue to be relevant\. The current CPS identifies the
importance of the decentralization process\. One of the most important outcomes of the
project design and implementation was to contribute to the decentralization process
through the development of youth policies at the local level\. Nine municipalities
requested the AYS support to develop local youth policies\. Furthermore, a partnership
was created between the AYS, three Municipal Governments introducing a small grants
program for informal youth groups (non-organized youth)\. In addition, a total of 27, out
of 33 municipalities in which the project was active, received training on local youth
policy development\.
An independent evaluation assessing the three community development projects in FYR
Macedonia, completed in June 2006, concluded that the main contributions of the Project
were in the area of strengthening of local organizations related to youth and local
communities and in fostering citizen participation in public life\. The Project developed
institutional links with most local governments that further strengthened their capacities
to deal with youth issues and address their needs in the future\. By strengthening the
municipal role in identifying priorities, allocating budgets and involving municipalities in
BYC activities, the project was successful in promoting long term sustainability\.
Finally, the CYDP is mentioned in the 2007 World Development Report (WDR):
Development and the Next Generation, as a promising, but unproven intervention in
exercising youth citizenship, specifically through `building safe spaces and trust'\. The
WDR was published before the impact evaluation data, briefly summarized in the next
section, became available\. Several project outcomes derived from both qualitative and
quantitative impact evaluation data point to the relevance of community-based
interventions such as those promoted by the BYCs both in supporting youth transition to
citizenship, but also in their transition to work\.
8
3\.2 Achievement of Project Development Objectives
(including brief discussion of causal linkages between outputs and outcomes, with details on
outputs in Annex 2)
The project fully achieved its development objective to significantly increase social
cohesion through the social integration of youth-at-risk from different socio-cultural
backgrounds\. It created a network of multi-ethnic youth friendly spaces for young people
aged 15 to 24 years which fully reflect the local ethnic distribution or in some cases (e\.g\.
Roma) exceeds it\. Such spaces successfully provide young people from different ethnic
groups with social integration opportunities as illustrated below\.
Social integration of youth at risk from different socio-cultural background:
The project was successful in socially integrating youth at risk from different socio-
cultural backgrounds\. Gender and ethnic distribution of BYCs beneficiaries was balanced
and inclusive of the most disadvantaged groups\. Annually the Project was reaching
almost 16,000 youth at risk in regular BYC activities and 2,000 youth in programs
outside the BYCs, from the initial 4,800 beneficiaries\. The ethnic composition of
beneficiaries in 2006 was as follows: Macedonians 71%; Albanians 15\.7%; Romas 6\.7%;
Turks 3\.4%; Serbs 2%; Vlachs 1\.2%\. Most importantly, it should be noted that the
participation of the Albanian and Roma minority youth in BYCs' activities doubled between
2003 and 2006\.
According to the analysis of the beneficiary enrollment forms (October 2005)
approximately 70% of the beneficiaries were coming from families with low income; 9
percent of total BYCs beneficiaries were out of school youth\. Rural beneficiaries
accounted for 35% of the total number\.
According to the 2005 Beneficiary survey, beneficiaries perceived the BYCs as one of
the few places, where young people could gather with their peers from other ethnic
communities unlike schools, bars, sports and music events\. In this context, the
beneficiaries mentioned BYCs as places that offered possibilities for greater
communication and interaction for meeting other youth, learning about each other and
other cultures\. While the Beneficiary survey 2006 indicated that only 20% of
beneficiaries stated that they did not have friends from other ethnic groups before they
started to visit the BYCs, by the end of the project 67% of them developed friendships in
the BYCs with peers from other ethnic groups which were maintained\. Among the
beneficiaries from communities in which one ethnic group is largely predominant, 65%
stated that they now actively consider involving peers from other ethnic communities in
various activities undertaken by them\. Among those, 80% actually participated in
projects with mixed ethnic groups, the majority of which are youth exchanges between
youth centers (43%), cultural activities (21%), sports tournaments, (16%), workshops and
seminars (9%), etc\. An affinity index measuring the level of interaction among
beneficiaries from different ethnic groups in the course of BYCs activities showed high
values for all participating age groups (i\.e 7-14 years, 15-18 years and 19-24 years), with
especially high affinity values for the youngest cohort\.
9
Testing of community-based approaches to support adolescents and youth at risk:
The project was successful in testing community-based approaches as a means to support
adolescents and youth at risk\. The testing of community based approaches resulted in a
shift from centralized management of BYCs to demand-driven community based BYCs
managed by youth-led NGOs, in partnership with local governments and located in
publicly-owned spaces in disadvantaged urban and rural communities\. As discussed
throughout this ICR, the community-based model allowed for greater participation of
young people aged 15 to 24 in BYCs programming, both in the planning and
implementation of activities, introduction of young volunteers partially replacing the paid
educators, increased community contributions, allowed greater outreach to disadvantaged
young people and promoted greater institutional and financial sustainability\.
Preventing youth marginalization and reducing exposure to abuse (drug, alcohol, etc\.)
and conflict\.
Another major achievement was the project's positive impact on beneficiaries'
employability and civic engagement and prevention of marginalization\. The Impact
Evaluation Analysis (2007) shows that the 19 year olds who have spent more than two
years in the BYCs (benefiting from IT training, English language training and basic
livelihood skills) are more likely to be employed (either as employees or self-employed)
than 18 year-olds, with only one year or less of exposure to BYCs programming\.
Specifically, 19 year olds with a longer exposure to BYCs, were found to be 16 percent
more employed than 18 year olds, who had been exposed for a year or less\. However,
young Macedonian beneficiaries were much more likely to be working than either
Albanians or the other ethnic groups, and females were overall less likely to be working
than males\.
Among the 19 year olds with a longer exposure to BYCs, the confidence about being
fully employed was 7 percent higher than among the 18 year olds who have been exposed
for a year or less\. The percentage was 5 percent higher for the 19 years old as to self
employment (Impact Evaluation Analysis, 2006)\. Having taken IT and English language
training, for which certifications were provided, positively influenced the self-
employment decision\. These positive expectations about employability are especially
relevant given that fear of being unemployed among young people in FYR of Macedonia
is pervasive\.
The project also had a significant impact in inducing young people in participating in
their communities\. Regarding civic engagement, the Impact Evaluation Analysis (2006)
shows that the longer the young people benefit from the BYC programs, the more active
they become in their communities, including participation in youth organizations, direct
interaction with municipalities, and participation in peaceful demonstrations\. For
example, the 2006 impact evaluation shows that 25 percent of BYCs beneficiaries who
were enrolled as early as 2004 participate in community activities as active citizens, as
compared to 16 percent of those enrolled in 2005\.
10
The project seems to have also contributed to a decrease in violent behavior\. Data on
trends related to youth violence were only available for one rural community, where a
correlation appears between the BYCs' activities and the reduction of violent behavior
among youth\. According to official police records in the rural community of Caska,
violent behavior among young people significantly dropped as a percentage of the total
number of registered cases; (i) the percentage of registered cases of violent behavior
among youth aged up to 24 (registered reports on fights, school fights, bullying,
harassments, etc\.) halved from 20% of the youth population at the end of 2003 to 10% at
the end of 2005; (ii) the percentage of registered criminal activities among youth up to 24
years old (petty crimes, etc\.) dropped from 8% of the youth population at the end of 2003
to 5% at the end of 2005\. Feedback from police officials, closely working on awareness
programs with the BYC, clearly attributed the decrease in violent behavior to the BYC
activities which addressed youth idleness in after-school hours\.
Although there is no hard evidence as to the project impact on reducing health risks,
qualitative analysis suggest a positive impact of the project in preventing such risks\. The
impact evaluation included a series of questions to BYCs beneficiaries related to their
behavioral changes with respect to smoking, drug abuse, alcohol and unsafe sex\. Because
the responses on such risky behaviors among the sample participants (both treatment and
control groups) of the BYCs were extremely low --indicating that the respondents were
unwilling to address these sensitive questions-- it was not possible to measure the
respective impact of the BYCS in quantitative terms\. However, as part of the qualitative
analysis, most respondents (especially young beneficiaries and their parents) noted the
positive role of BYC activities in raising awareness about healthy livestyles and in
preventing risky behaviors\.
Strengthening institutional capacity at central and local levels to address children and
youth issues
The project reached its development objective of strengthening the institutional capacity
at central and local levels to address children and youth issues by contributing to the
preparation and implementation of: (i) a Youth Strategy, (ii) monitoring social trends and
(iii) building the financial sustainability of youth activities through cost effectiveness and
increased private and local public contributions\.
The National Youth Strategy was developed and is being implemented with the
participation of 100 youth organizations, line ministries and donors and was adopted by
the Government in December 2005 (for more details see Annex 2)\. As part of this
decision, the Government stipulated the creation of a National Steering Committee which
is composed of 12 representatives of line ministries and government agencies and 12
elected representatives of the youth NGO sector\. This co-management decision-making
structure that will steer the strategy implementation is considered a youth policy best
practice in South Eastern Europe\. In 2001, the AYS was only administering a small
grants program for youth organizations\. The Project has transformed AYS into a leading
policy institution in the youth field, contributing to its capacity to lead the development
11
of the national youth strategy and cooperate with other governmental structures and the
youth NGO sector\.
As part of the institutional strengthening component, the Project systematically trained
160 local authorities on the European Charter for the Participation of Young People in
Local and Municipal Life, and 100 representatives of line ministries in best practices on
national youth policy development, which significantly increase their capacities to design
and implement youth policies and programs at national and local level\.
The monitoring of social trends affecting youth was initiated by the project as part of the
preparation of the National Strategy and will be periodically conducted by the AYS to
measure the overall effectiveness of the National Strategy implementation\.
The project supported the social integration of youth at risk in FYR Macedonia in a
financially sustainable way\. The project: (i) increased the cost effectiveness of youth
activities as measured by the decrease of costs per beneficiary (see section 3\.3); (ii)
improved local level financing through cost recovery from users who are able to pay; (iii)
encouraged and increased the contribution of municipalities to these programs, and (iv)
introduced and supported a structured and coherent approach to raise funding from the
private sector and local donors\. The approach to achieve financial sustainability has been
progressively implemented, full financial sustainability with Macedonian resources were
achieved by 28 out of 33 youth centers at the time of project closure\. At the same time,
the program increased the number of beneficiaries and the quality of services\.
3\.3 Efficiency
(Net Present Value/Economic Rate of Return, cost effectiveness, e\.g\., unit rate norms, least cost,
and comparisons; and Financial Rate of Return)
Given the nature of the project, no comprehensive economic analysis was conducted at
the beginning of project implementation\. Cost effectiveness was assessed through
projections of cost per beneficiary as a proxy for effectiveness and also through the
coverage of youth center expenses by local governments\.
The cost per beneficiary declined from US$ 54 at Project launch to US$ 17 at project
completion, a much lower amount than the US$ 34 expected in the PAD\. The cost per
beneficiary refers to all expenditures related to the Youth Center beneficiaries: facility
running costs, didactic materials, office supplies, salaries of staff, staff/volunteers training,
program expenses, local travel, equipment maintenance, etc\. The cost per beneficiary
decrease resulted from the introduction of different sources of income generation,
community participation in activities, in-kind contribution and volunteer participation\.
During the mid-term evaluation in June 2005, the cost per beneficiary was 13 US$\. At the
time of project closure, the cost per beneficiary was slightly higher at 17 US$, as a result
of the new programs designed for youth aged 20-24 (additional fees for educators,
transportation costs for rural outreach, internet connection, equipment purchase etc\.), all
supported under the Dutch grant\.
12
The Project has seen a steady increase in municipal support for the BYCs\. For the 23
centers that existed before the Project, the level of municipal support for BYCs was
estimated at 13% of total funding\. Today the support level is approximately 30% of total
funding\. Among the 10 entirely new BYCs opened by the Project in the period 2004-
2005, the initial municipal support was estimated at 66% and today it is estimated at 79%\.
These municipalities are providing support (in kind and financial) for BYC premises,
utilities, office supplies and partial or full coverage of staff salaries\. Of the 33 existing
BYCs, 28 were self-sustaining (through income generating activities and partnership
agreements with municipalities) at the time of Project closure\. Although the AYS had
committed to finance the five remaining BYCs which were not fully sustainable, at the
time of this ICR this support has not yet materialized (see Annex 3 for more details on
financial sustainability)\.
3\.4 Justification of Overall Outcome Rating
(combining relevance, achievement of PDOs, and efficiency)
Rating: Satisfactory
The project was in line with the CAS at the time it was developed and with the current
CPS\. The achievement of the overall outcomes is rated satisfactory because all aspects of
the PDO were achieved (See section 3\.2)\. The project demonstrated efficiency by
exceeding its high cost effectiveness targets (see section 3\.3)\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(if any, where not previously covered or to amplify discussion above)
(a) Poverty Impacts, Gender Aspects, and Social Development
Although BYCs did not address beneficiary participation through categorical income-
based targeting, it naturally attracted the disadvantaged youth, who could not afford to
pay for cultural entertainment, internet access, language and other training at market
prices\. The project addressed the non-income dimensions of poverty by providing access
to information, non formal learning and safe spaces for socialization\.
Project also systemically tried to reach out to young girls in rural areas and ensure that
the beneficiary profile for the project reflect an overall gender balance\. According to the
2006 Beneficiary Survey, boys represented 48% of the total number of beneficiaries in
comparison to 52% for female beneficiaries\. A similar gender balance was observed
among BYC educators and volunteers\. 58% of the Youth Centers staff is comprised of
17-24 year old girls\. Out of 118 volunteers, 56% are 17-24 year old girls\.
Project directly reflects the key objective of social development, related to "empowering
people by transforming institutions"\. By introducing NGOs founded and led by young
people, CYDP strengthened local organizations representing youth and opened a new
space for participation of young people in public life\. CYDP was also effective in
creating youth groups in small, rural communities that do not possess many NGOs or
community based youth initiative groups\.
13
(b) Institutional Change/Strengthening
(particularly with reference to impacts on longer-term capacity and institutional development)
The AYS has grown into a leading policy institution on youth issues in the country\.
Today the AYS is consulted by all line ministries on youth-related issues, is a member of
9 steering committees, working groups and coordinating bodies dealing with youth-
related issues in the Government and in the youth sector\. The Agency's Youth
Department has now 7 staff with a diverse set of skills who, apart from the small grants
program, lead the youth policy department, the international cooperation department, the
institutional and training and capacity building program, the youth entrepreneurship
program, and the non-formal education program\. The budget of the Youth Department
saw a steady increase from 10 million MKD in 2002 to 12, 14, and 16 million MKD in
2005, 2006 and 2007 respectively\. This accounts for a 60 percent increase in the budget
allocation since the beginning of the project\.
A National Youth Steering Committee composed of 12 ministries and local government
representatives and 12 youth NGOs representatives was created by the GoM and is
chaired by the AYS, to follow on and develop policy recommendation throughout the
national youth strategy implementation 2005-2010\. This provides for cross-sectoral and
multi-level coordination of youth issues in FYR Macedonia, and enables direct
participation of young people in the decision making process\.
As part of the institutional strengthening component, the long-term capacity building that
the Project provided for the BYCs resulted in the creation of the BYC Network\. The
Network is a legal non governmental organization composed of all 33 BYCs\. The
objective of this Network is to further support the capacity building of the youth centers,
fundraise on behalf of the BYCs for joint future activities, and represent the BYCs vis-à-
vis governmental institutions\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
(optional for Core ICR, required for ILI, details in annexes)
The stakeholder workshop conducted in Ohrid in July 2006 provided the following
general feedback of the CYDP\.
BYCs are already recognized as a brand and as resource centers within their local
communities;
Local municipal authorities recognize BYCs as a good potential partner and they
are willing to work with the BYCs in order to achieve community development\.
Local authorities also acknowledge that the BYCs will play a crucial role in the
development and implementation of local youth strategies;
BYCs are well integrated horizontally and their linkages within the Babylon
network enable them to share relevant experiences, for example with respect to
sustainability\.
14
The results of the 2006 Beneficiary Survey show that the BYC contributed to increased
tolerance among young people from different ethnic backgrounds\. Among the
beneficiaries in multi-ethnic communities, 95% of those interviewed stated that they
work, play and participate together with young people from different ethnic backgrounds
and the BYCs helped them develop a better understanding of other cultures and youth
from different ethnic communities\. The survey results also show that the Project
contributed to better educational performance, establishment of new friendships,
improved leisure activities for young people, and better quality of life for beneficiaries\.
The detailed results of the beneficiary survey are provided in Annex 8\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
The CYDP has successfully developed the capacity of various stakeholders including
AYS, local governments, and BYCs\. It has increased the accountability of these
stakeholders and empowered the communities in which it was active\. These positive
changes are well rooted and are expected to be reinforced, once the EU funds for youth
programs become available to FYR Macedonia\. The political environment is overall
more stable and as a result, it is unlikely that the development outcome is at a significant
risk\.
5\. Assessment of Bank and Borrower Performance
(relating to design, implementation and outcome issues)
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
(i\.e\., performance through lending phase)
Rating: Moderately Satisfactory
World Bank performance at entry was largely satisfactory based on the: (a) consistency
of project objectives with government priorities for fostering social integration of youth;
(b) successful integration of the lessons learned and the experiences gained under the
PCF; (c) innovation of Project design which required the development of a monitoring
mechanism to facilitate institutional learning (e\.g\. by monitoring beneficiaries
responsiveness to program); and (d) efforts of the project team to identify and secure co-
financing for this project through the Dutch government, which agreed to also co-finance
CDP and CDCP in FYR Macedonia\. Nevertheless, the project did not include an impact
evaluation methodology at the onset, which was remedied through retro-fitting
methodologies in later stages of project implementation\. Given that intensive M&E and
knowledge gathering is a key element of a LIL, and given this shortcoming at the
beginning, the quality at entry is rated moderately satisfactory\.
(b) Quality of Supervision
(including of fiduciary and safeguards policies)
15
Rating: Satisfactory
The Bank's performance during the implementation of the project was satisfactory\. The
WB conducted detailed supervision missions during the first two years of project
implementation, when the basic implementation mechanisms had to be established\.
Subsequently, as the client's ownership and capacity increased, the Bank supervisions
focused more specifically on institutional and financial sustainability of project activities\.
Over the years, the Bank supervision team included several global experts, ranging from
youth employment specialist to the Children and Youth Advisor\. The supervision team
however did not include any M&E specialist who could have improved the overall
quality of supervision\. There were no outstanding fiduciary and safeguards issues\. The
content of all project related documentation was objective, including the Aide-Memoires
and ISRs\.
One important setback in overall Bank performance, as pointed out in the QSA7 Report
was the delay in the Mid-term review, which took place in June 2005, a year behind
schedule\. Two factors contributed to this delay: i) Municipal Elections: Given that the
sustainability of BYC was a priority for the Project and for the CO, the Bank team
decided to wait for the March 2005 municipal elections before conducting an MTR to get
a clear indication of commitment from newly elected mayors to BYCs, without which the
sustainability assessments would not have been accurate, and ii) Delays in impact
evaluation: There was an unrealistic expectation that the initial results of the impact
evaluation would be ready by the time of the MTR, therefore strengthening the mid-term
assessment and providing advanced results for corrective action\.
The Dutch donor raised concerns about project's sustainability as indicated in Section 7\.
However, the team believes that these issues were thoroughly addressed during Project
supervision which is reflected in the positive forecasting of the BYC sustainability\. The
Task Team Leader, and the team in the headquarters sought meetings with the Dutch
counterparts and extended invitations to participate in field supervision, which were duly
declined\. Nevertheless, the Dutch representatives conducted parallel and unannounced
visits to the BYCs, without informing at any point neither the task team leader nor the
Agency of Youth and Sports, thus creating a serious communication gap\. Finally, the
Dutch were invited to the key dissemination events for the project, i\.e\. the workshop on
the National Youth Policy and the final stakeholder workshop, which they did not attend\.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
The Bank's performance was satisfactory overall, during the project identification,
preparation and implementation stages\. Information gathered during the identification
mission and the lessons learned from the PCF were effectively incorporated into project
design\. There was timely coordination and communication between the CO, the task team
and the PMU on all project related matters\. Regular supervision missions were
undertaken and a staff member in the field office was assigned for the close monitoring
of the implementation process\. Additional efforts were made to discuss outstanding
issues with the borrower both during missions and through regular communication\.
16
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
The overall performance of the Government is rated satisfactory due to the overall
timeliness and quality of implementation\. Ownership was strong throughout project
preparation and implementation with effective guidance and supervisory role performed
by the Ministry of Finance\. The Government was fully committed to the Project
implementation\. It provided for timely government counterpart funding, except at the
time of project closure due to disruptions caused by changes in Government officials\. It
also provided for significant dialogue and input from different governmental agencies
and partners to the Project activities by establishing the CYDP Steering Committee in
2002 and consequently the National Youth Strategy Steering Committee in 2005\. Further
commitment was demonstrated by achieving high participation of government and
municipal officials to the capacity building activities and the fact that Ministries
committed funds for different programs foreseen in the National Youth Strategy\. The
central government also established a quality dialogue with the youth NGO sector not
only through the AYS but also as part of other sectoral polices\.
17
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
AYS Project's overall implementation was over a year behind schedule due to the
disruptions caused by the 2001 conflict, the subsequent political instability,
the belated credit effectiveness, and the change in government following
elections in September 2002\. Despite delays in Project launch, the
implementing agency performance for the duration of the Project is rated as
satisfactory due to the following reasons:
The implementing agency remained dedicated and fully committed to the
Project implementation, maintaining adequate financial management
expertise and capacity and close cooperation with and support to the PMU\.
The full integration of the PMU in the AYS Youth Department and their
close cooperation on all Project related activities created the required links
between the Project implementation and the National Youth Policy
development process, enabling the Youth Department to identify and initiate
several policy initiatives like the recognition of the non-formal education,
and the expansion of drug-prevention activities in the secondary school
system\.
The PMU was adequately staffed in terms of expertise and professional
background\. Despite the small number of employees, the PMU demonstrated
adequate team work and successful follow-up on all legal Covenants,
notwithstanding some delays in Project reporting\. Frequent consultations
with beneficiaries and proper monitoring enabled the staff to take initiatives
and adjust programs and the M&E system to the changing environment,
while addressing the growing demands on the Project performance\. The
PMU also provided for systematic beneficiary involvement in design,
implementation and activities evaluation\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
The overall performance of the Government during CYDP is assessed as satisfactory\.
The Borrower demonstrated good ownership of the Project during development and
implementation through funding, dialogue, capacity building and policy development,
despite changes in the governing coalitions at central and local levels\.
6\. Lessons Learned
(both project-specific and of wide general application)
1\. The Children and Youth Development Project illustrated a successful and cost-
effective aged-based intervention to integrate children and youth from different
ethnic communities in Macedonia\. The project has demonstrated positive achievements
18
especially on inter-ethnic integration, young people's employability, active citizenship,
youth policy formulation and associated institutional development\. There is, however, an
urgent need to mainstream its key instruments more broadly across the children and
youth population in order to secure lasting impacts for social cohesion\. To do so a two-
pronged approach is needed\. On the one hand, additional resources should be mobilized
to expand the coverage of community-based, youth-NGO led interventions for
adolescents and young people across the country\. On the other hand, children-based
interventions focused on life skills development with special emphasis on peace and
tolerance approaches, require renewed attention as younger children (7 to 14 years) have
been observed to be even more receptive than young people to interactions with other
ethnic groups\.
2\. The successful delivery of life skills training and other relevant modules could be
further expanded if delivered also within the formal school system\. The formal
school system in Macedonia should invest more substantial human and financial
resources, both at primary and secondary levels, to systematically incorporates life skills
training, and especially peace and tolerance education, to reverse the current inter-ethnic
distance among students\. Given the current separation of school shifts for different
ethnicities of students, it is crucial to revamp the extra-curricular activities with an
emphasis on life skills and peace and tolerance with active student participation\.
3\. Non-formal education programs offered by community-based youth centers
provide additional skills that complement the secondary school curricula and
support young people in their transition to work and active citizenship\. Life and
livelihood skills, such as problem solving skills, creative thinking, team building skills,
peace and tolerance, IT and language training, provided in youth-friendly environments,
are instrumental in increasing young people's self esteem and overall sense of
empowerment, while being a channel for increasing social cohesion\. BYCs also support
schools by providing school based extra-curricular activities\. They work with special
categories of students in cooperation with the school psychologists and local social
workers to reach out to young people that have obstacles in learning, young people with
violent and criminal background, and school drop-outs\.
4\. Non-formal education programs are most-effective (and marketable for
employment purposes) where official certification is provided for these programs\.
Certification is highly desirable for IT and language skills training and by 2006 the BYCs
were issuing certificates based on modules approved by the Ministry of Education\.
5\. There is a need to differentiate between programs for adolescents and youth\.
Adolescents participate more regularly in the standard training programs and activities of
youth centers\. Young people aged 19-24 years, on the other hand, are mostly engaged in
specific short term projects\. For this age group, non-formal education programs can be
most effective if integrated with employment activities\. Even though there have been
some positive outcomes on youth employment and employability, the impact of the
project could have been significantly higher particularly for the older age cohort, had
there been a specific youth employment program\.
19
6\. The BYC experience indicates that a community-driven approach can prove most
effective in achieving project success and sustainability\. Experience shows that greater
success is achieved when institutional and financial sustainability are emphasized at the
beginning of project implementation\. Early involvement by youth organizations, parents'
groups and local government officials is a pre-condition for ownership\. Running a local
youth center does not require enormous external financial support and resources provided
by local stakeholders also contribute to ownership and therefore to project sustainability\.
7\. However, demand-driven approaches should be combined with national level
planning and policy\. This ensures that disadvantaged areas, such as conflict-affected
areas and poor communities with low capacity to demand interventions, are adequately
covered\. In particular the project showed that financial support from the central
government level was critical for sustainability of youth centers in poor communities that
were unable to generate revenues locally\. In addition, consistency in national youth
policy across sectors is necessary to maximize the impact of community-based
interventions\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
Report by the AYS is provided in Annex 7\.
(b) Co-financiers
The key comments received from the Dutch donor are as follows: (i) compared to the
other two projects, the CYDP's reporting was subject to delays; (ii) utilization of donor
funds was lagging behind schedule; and (iii) the initial ICR version reviewed by the
donor was perceived as over-optimistic in its assessment of BYCs sustainability\. Below
is the Bank response sent to the Dutch Counterpart\.
The CYDP PMU closed its operations in September 2006\. The Project Coordinator
continued to provide support to the Agency to finalize project related activities until
November 2006 in an unofficial capacity\. The former coordinator was contacted, who
assured the Bank that the report was handed over to the Agency with the rest of the
Project archives at the time of the team's departure\. The Bank believes that in the
transition of the Government and the hand-over of the Project, the Report was not
delivered to the Dutch Embassy as planned\. The CYDP Report of the activities for the
period January - June 2006 under the DTF was sent to the Dutch Embassy immediately
upon receipt of the comments from the donor\.
The late effectuating of the DTF was caused by the delay in World Bank and Macedonian
government administrative procedures, causing the Grant Agreement to be signed almost
9 months after the respective agreements for the other two community Projects\. The
administrative procedures to transfer funds to the CYDP sub-account were only possible
to start once the Grant Agreement was effectuated and the first round of funds were
available only after the sub-account was activated on March 30 2005, almost 4 months
20
after the Agreement was signed\. In reality, it meant that the CYDP was not able to spend
funds from the DTF for almost the entire first half of 2005\. The Bank agrees that as part
of the lessons learned and for future projects and references, better understanding of the
administrative procedures is required from all parties involved, in order to minimize the
time needed for effectuating and implementation of donor contribution funds\.
The sustainability model developed by the CYDP involves funding or contribution from
different sources, the local governments being one of them\. Approximately US$ 0\.5
million from the DTF were used to substantially reduce the contribution of local
governments to the BYCs\. In addition, US$ 0\.25 million were used to expand their
activities in rural communities\. This was made possible through micro grants awarded to
the BYCs to cover for utilities, space and additional spare materials and office supplies\.
The funds received helped the BYCs to strengthen their position and activities and prove
their usefulness to many of the municipalities\. This has also lifted a heavy burden form
the small budgets municipalities have for the NGO sector, but also committed them to
continue their support to the BYCs once the Dutch funds were over\. To that effect, the
local government's contribution varies from space / utilities coverage only (old BYCs) to
full support including salaries for the educators (new BYCs)\. The assessment conducted
stated that 5 BYCs will need additional support from the AYS within the next year in
order to be able to reach full sustainability in communities where municipalities do not
support (space and/or utilities)\.
With regard to the community programs of the European Union, the previous
Government adopted a decision to become a program country to 12 community programs
including YOUTH, and consequently YOUTH IN ACTION 2007-2013\. The funds are
being administered directly by the DG Education and Culture through decentralized
National Agencies\. In 2005 three contact points were created under the guidance of the
National YOUTH Agency of Slovenia, whose main task was to popularize the YOUTH
Program in FYR Macedonia and work with the AYS on the establishment of the National
YOUTH Agency for FYR Macedonia\. The CYDP PMU was the focal point for the
negotiations with the European Commission under the guidance of the Government's
Secretariat for Euro-integration\. It is expected that this National YOUTH Agency, under
the current Euro-Integration Action Plan of the Government will become operational in
2007, for which funds have been already allocated by the Government (offices set-up,
salaries, utilities and supplies, entry ticket to the Program)\. Once operational, the new
Agency will be responsible for advertising the YOUTH Program, disseminating
information and conducting training for the youth NGO sector, as well as for making
calls for applications, collecting, assessing and approving project proposals to be funded
by the YOUTH Program\.
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
21
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in US$ Million equivalent)
Appraisal Estimate Actual/Latest
Components Percentage of
(USD millions) Estimate (USD
millions) Appraisal
YOUTH 3\.10 3\.50 113
INSTITUTIONAL
DEVELOPMENT (STRATEGY,
PMU SET UP, M&E, PUBLIC 0\.50 0\.50 100
INFORMATION CAMPAIGN)
Total Baseline Cost 3\.60 4\.00
Physical Contingencies 0\.00 0\.00 0\.00
Price Contingencies 0\.00 0\.00 0\.00
Total Project Costs 3\.60 4\.00
Project Preparation Fund 0\.00 0\.00 \.00
Front-end fee IBRD 0\.00 0\.00 \.00
Total Financing Required 3\.60 4\.00 111
(b) Financing
Appraisal Actual/Latest
Source of Funds Type of Estimate Estimate Percentage of
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower 1\.15 0\.00 \.00
International Development
Association (IDA) 2\.50 3\.02 121
UN Children's Fund 0\.36 0\.00 \.00
22
Annex 2\. Outputs by Component
Youth Component
The Youth component aimed at: i) scaling up the program of life skills education for
young people through BYCs; ii) exploring innovative approaches for youth social
integration by piloting new forms of outreach, and iii) expanding the innovative AYS
program on drug prevention\.
When the Project began in 2002, there were 23 existing centers, where UNICEF piloted
non-formal education activities, but they were exclusively targeted at children, were run
in a centralized manner, did not cover rural areas and were not sustainable\. Since 2002,
the CYDP redirected existing centers to a sustainable path, strengthened curricula,
successfully targeted young people, and opened 10 additional centers in multi-ethnic
communities\. 6 additional core programs were successfully piloted for ages 15-24,
meeting youth demands: (i) debate and debate clubs; (ii) preventive health programs
(drugs and HIV/AIDS); (iii) arts for social change; (iv) entrepreneurial skills
development; (v) advanced English and other languages; (vi) advanced IT training\. A
BYC Network was created to replace the PMU functions at Project end\.
As part of its efforts to promote social integration, the Project tested new forms of
outreach particularly targeting disadvantaged youth in rural communities\. Small youth
centers were set up as satellite centers for larger urban-based centers as a means to reach
out to rural communities\. The CYDP also initiated cooperation among the schools and
the BYCs\. Youth clubs in high schools were established to support the active
participation of youth in public life and promote volunteer work and extra-curricular
activities, as well as to maintain working relationship with the BYCs\. The clubs were
instrumental in bringing youth from different backgrounds together and attracting youth
to BYCs\.
A small grants program was launched in 2005, in order to develop non-formal activities
and programs with young people aged 15-24 in areas where youth-oriented services were
not available\. The programs were developed based on the needs and the interests among
the beneficiaries, and funded based on their prospects for sustainability and community
ownership\. The small grants program: i) supported youth in rural and remote areas; youth
from Roma background and school drop-outs; ii) promoted volunteer work among the
young people; iii) promoted European values and citizenship concept among youth in
FYR Macedonia and iv) supported intercultural learning and exchange programs through
vocational training seminars\. 37 NGOs were supported under this program, developing
activities in 12 urban and 35 rural communities and reached to an estimated 10,000
young people aged 15-24\.
To promote healthy life styles among youth, the drug prevention program implemented
by AYS was expanded to all 92 secondary schools in FYR Macedonia\. In addition, a
more comprehensive program addressing healthy life styles, including training on
23
reproductive health, prevention of drug, alcohol and tobacco use, as well as prevention of
HIV/AIDS and other sexually transmitted diseases were expanded in all BYCs\.
Institutional Development
This component aimed at consolidating and supporting the Youth component by
strengthening the capacity of AYS in developing and implementing youth policies and
programs\. Within this context, the Project supported the participatory development of a
National Youth Strategy, which was adopted by the Government in December 2005\. The
strategy aimed at: i)fostering institutional cooperation at the national and municipal levels,
ii) strengthening the operational partnerships between NGOs and local communities and
iii) disseminating best practices on youth issues in a systematic way\.
The strategy was developed with support from 100 youth organizations, ministries and
donors\. A National Steering Committee, chaired by AYS, was created to provide policy
guidelines and inter-ministerial coordination for strategy implementation\. Several line
ministries allocated funds for distinct youth programs, including the Ministry of
Education (4 million MKD for certification of non-formal education activities), the
Ministry of Culture (5 million MKD for support of young talents), and Ministry of
Environment (5 million MKD to support youth environmental NGOs implementing
projects with high school students)\. 6 trainings, 24 local round-table discussions were
organized with 160 municipal representatives between 2003 and 2005\. 5 additional
trainings were organized for 100 civil servants from 12 ministries and institutions and for
the AYS\. 60 projects of local youth organizations were supported during the past 2 years\.
As part of Project implementation, continuous cooperation has been established with
many ministries (directly or through steering committees cooperation) and today the AYS
is in regular contact and cooperates with 100 youth organizations, 3 youth coalitions, 8
ministries, and the Secretariat for European Affairs\.
The AYS has established a good reputation among government and civil society
counterparts in South Eastern Europe as a well functioning youth governmental body\.
The AYS was invited to share its experiences and know-how on youth issues with
representatives from Serbia and Montenegro, Bosnia Herzegovina, Kosovo and Turkey\.
As part of the institutional development and capacity building efforts, the CYDP,
together with FOSIM, developed training modules for the local authorities, especially
aimed at the NGO and the Education Counselors, based on the European Charter on
Youth Participation in regional and municipal life\. The Ministry of Self-Government
approved the implementation of the local youth development chapter - part of the
National Youth Strategy\. This chapter was developed according to the guiding principles
of the European Charter on Youth Participation in regional and municipal life with the
objective of involving youth in the decision-making process at the local level through the
creation of the Municipal youth committees; mainstream youth issues in other sectoral
policies of the Municipalities; and to enable direct support to youth initiatives through the
existing Municipal budgets for NGOs\.
24
Finally, the GoM has approved the full membership of FYR Macedonia into the new EU
Youth in Action Program 2007-2013, designating the AYS as the main partner for
negotiations and preparations\. Many youth NGOs and Projects will benefit from this
program in the future through program grants and on a competitive basis\.
25
Annex 3\. Economic and Financial Analysis
(including assumptions in the analysis)
The project has supported the social integration of youth at risk in FYR Macedonia in a
financially sustainable way without increasing the proportion of central government
financing going to these activities\. The project: (i) increased the cost effectiveness of
youth activities; (ii) improved local level financing through cost recovery from the users
able to pay; (iii) encouraged and increased the contribution of municipalities to these
programs; (iv) introduced and supported a structured and coherent approach to raise
funding from the private sector and local donors\. The approach to achieve financial
sustainability has been progressively implemented, full financial sustainability with
Macedonian resources were achieved by a majority of youth centers at the time of project
closure\. At the same time, the program increased the number of beneficiaries and the
quality of services\.
Most BYCs have been developed as self-standing youth facilities governed by NGOs and
supported by several sources of income: (a) contributions from local governments
(running costs, facilities, staff salaries, etc\.) are estimated at 55% of total costs and
currently implemented by 23 communities; (b) membership fees; (c) income generating
activities/ programs; (d) fundraising activities from local/ international donors; (e)
network of volunteers implementing programs, gradually replacing paid staff; (f)
cooperation with 124 local and national youth organizations/ groups for additional
activities; (g) providing services for local businesses and municipalities; and (h) support
from central government through the Youth Agency for running costs\.
The Project observes steady increase in municipal support for the BYCs:
a) At the start of the Project, the level of municipal support for BYCs was estimated at
13% among the initial 20 youth centers that existed before the Project start; today the
support level is estimated at 30%: this support (financial and in-kind) is focused on the
YC premises and partial or full coverage of utilities;
b) Among the 13 new youth centers opened in the period 2004-2005 by the CYDP the
initial municipal support was estimated at 66% and today it is estimated at 79%; this
support (in kind and financial) covers BYC premises, utilities, office supplies and partial
or full coverage of staff salaries;
c) The difference between the old and the new youth centers clearly shows the perception
of the municipalities in relation to the BYC ownership in the planning stage\.
Cost recovery and beneficiary contribution:
Beneficiary contribution varies according to the activities\. The nature of the activities is
such that participants are willing to pay a modest ticket or offer service for their
26
organization\. Theater performances, sports events, arts and craft shows, field trips, tuition
for computer and language courses are primary examples\. Willingness-to-pay
assessments is part of the monitoring and evaluation forms (monthly reports) to ensure
that some fee mechanisms could be sustained and other mechanisms are piloted to ensure
that poorer families are not penalized by an increase in beneficiary contribution to the
project\. Information on the socio-economic status has been provided within the system of
social welfare and child protection as part of the beneficiary enrollment forms\. In 2004
participation fees were introduced: according to the participation fees paid by
beneficiaries (varies between 50 and 100 MKD per center, e\.g\. 2 US$ per month) as
stated in the in December 2005 Monthly reports in each of the 33 Youth Centers, the
average beneficiaries willingness to pay stands at 80% of the total number of
beneficiaries, while 60% of the beneficiaries actually pay their participation fee\.
Participation fees today represent around 20% of the average youth centers income on
annual basis\.
27
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Supervision/ICR
Naushad Khan Lead Procurement Specialist ECSSD Procurement
Plamen Kirov Sr\. Procurement Officer ECSPS Procurement
Elmas Arisoy Sr\. Procurement Spec\. EAPCO Procurement
Olav Rex Christensen Sr\. Financial Management Spec\. ECSPS FMS
Piet Gooverts Consultant ECSSD Operations Manual
Kamal Siblini Consultant ECSSD M&E
Elena Galliano Consultant ECSSD Social
Development
Paula Lytle Sr\. Social Development Specialist ECSSD Institutional
Development
Bekim Ymeri Social Scientist ECSSD Community Driven
Development
Sarah Leigh Hammill Senior Program Assistant ECSSD Project Support
Viviana Mangiaterra Adviser, Children and Youth HDNCY Adolescent Health
Giovanni Casarosa Consultant ECSSD Drug Prevention
Manuel Pinto Consultant ECSSD Youth Employment
Navtej Dhillon Junior Professional Associate EASSO Non formal
Education
Minna S\. Mattero Operations Officer HDNCY Operational
Support
Sarah G\. Michael Social Development Spec\. AFTS3 Non Formal
Education
Zeynep Ozbil E T Consultant ECSSD Social
Development
Zlatko Nikolovski Junior Professional Associate ECCU4 Project Support
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY01 9 76\.91
FY02 9 44\.83
FY03 0\.00
FY04 0\.00
28
FY05 0\.00
FY06 0\.00
FY07 0\.00
Total: 18 121\.74
Supervision/ICR
FY01 0\.00
FY02 0\.00
FY03 9 63\.18
FY04 9 91\.90
FY05 28 109\.44
FY06 17 88\.48
FY07 18 48\.64
Total: 81 339\.82
29
Annex 5\. Beneficiary Survey Results
(if any)
The last CYDP beneficiary survey was conducted in July 2006\. For complete objectivity
of the survey, 1000 beneficiaries aged 15-24 in the BYCs, randomly selected among the
33 existing youth centers were asked to individually fill in pre-designed questionnaires -
anonymously and without any assistance from the educators\. Hired pollsters were
available for any questions or assistance to the beneficiaries\. The ethnic, social, gender
and age structure of the beneficiaries corresponds to the same structure of the overall
beneficiaries of the youth centers, e\.g\. 72% Macedonians, 14% Albanians, 6% Roma etc\.
(ethnical background); equal percentage of males and females, age groups 15-19 and 20-
24, 75% from urban and 25% from rural communities\.
Overall Satisfaction of the Youth centers
The greater percentage of the beneficiaries visit the youth center two times a week, but
there are beneficiaries that visit the center almost every day\. In general, 95% of the
beneficiaries consider the BYC as Highly Satisfactory\. 81% consider the BYC objectives
as satisfactory, 96% consider that the youth programs are satisfactory; 94% consider that
the programs and the activities of the youth centers correspond with their needs; 87% of
them also regard the way they spend their free time in the centers as satisfactory as well\.
Almost 100% of the beneficiaries believe the youth centers have influenced their life to
some extent: especially in improving their leisure time (93%), educational performances
(80%), further educational prospect (55%), new friendships (78%), knowing other
cultures and youth from other ethnic communities (65%), quality of life (49%), vision
and perspectives for their future (65%), and employment prospect (28%)\. In some areas,
beneficiaries identified youth centers as the only places where they could have non-
formal education and youth activities\.
For 98% of the beneficiaries youth centers are necessary and must continue with their
work\. All the beneficiaries will continue to visit the centers and participate in their
programs and activities\.
92% of the interviewed consider the youth centers to be non-formal and flexible when
compared to schools and their programs\.
Youth Center's facilities
The majority of the beneficiaries consider that the facilities of the youth centers should be
improved: 72% consider that there is not enough space in the youth centers in order to
successfully organize parallel activities in an adequate and timely manner\. 52% have
stated that there is no adequate furniture\. In relation to organized sports events by the
youth centers, 42% of the beneficiaries stated that there are no sports facilities adjusted to
the youth center\. 25% consider that there are sports facilities but they are far away\. 16%
30
consider the existing sports facilities not easily accessible and only 17% consider the
existing sports facilities in the community adequate and easily accessible\.
In general, BYCs are considered youth friendly\. 92% of the beneficiaries feel
comfortable within the BYC and 88% participate in its design and decoration\. This shows
that that the beneficiaries have a great sense of ownership over the BYC facilities\.
Overall, beneficiaries are satisfied with the distance of the youth centre from their homes
(65%)\. The location is a bigger issue for the beneficiaries from rural areas (19%)\. They
use organized transport by the Project\. The distance of the centre is important for all
beneficiaries who want its location to be near their place of residence\.
Technical equipment
51% of the beneficiaries estimated the technical equipment of the youth centers as
satisfactory\. The need of young people to be in step with the latest technological
developments and program activities in the youth center but there is always room for
improvement\. 24% of the interviewed consider that the youth centers should have more
equipment that is to the latest standards and fashion\. 25% consider that there is a need for
further and continuous updating of the computer software and hardware, as the
equipment tends to get old or needs repairs over time\. The beneficiaries coming from
rural areas have evaluated the equipment as highly satisfactory\.
Training materials
In general, the beneficiaries are satisfied with the training materials of the youth centers\.
The beneficiary's survey presented that the needs of the beneficiaries for learning are
mainly accomplished\. The youth centers succeed to provide proper training materials for
different programs design according to their needs\. Greater demand exists for up to date
and specialized, professional computer literature (37%), professional language books and
manuals (39%), business development literature (27%)\.
Youth Center's activities
BYCs provide regular activities, additional activities, out-of-center activities and special
events for its beneficiaries\. Only 34% of the beneficiaries aged 18-24 are visiting the
youth center on a regular twice per week basis\. The rest show higher interest in project-
based (56%) and one-time activities (67%)\. From the ones participating in the regular
activities (minimum twice per week) the majority is interested in and attending activities
that contribute to their employment prospect (CV writing, job searching skills, business
development, special skills, computers, language, project management)\. The beneficiaries
of the 14-18 age groups are more interest for the regular activities of the center and also
for the additional activities, mostly sports, cultural events and environment programs\.
Their presence is bigger in all of the programs provided by the youth centers\. All
beneficiaries have great interest in attending the special events organized by the youth
31
centers\. 90% of all interviewed beneficiaries prefer not to be involved only as participants,
but also as planners and designers of programs and projects\.
According to the survey, majority of the beneficiaries have stated they have received
satisfactory knowledge in drug prevention (90%), HIV/AIDS (88%) and other sexually
transmitted diseases (74%)\. With the educational programs for computers and English
language skills beneficiaries have overcome the basic knowledge of these areas and there
is the need for specialized programs of these areas\.
Educators
There are high estimates in the survey for the educators of the youth centers\. The relation
between the beneficiaries and their educators shows great trust (98%), friendship (87%)\.
The beneficiaries are feeling very close with their educators and have ranged them just
after their parents\. The beneficiaries consider that the educators of the youth centers have
solid knowledge of the programs they are teaching and the methods of education are high
satisfactory\.
According to the survey only 3% of the beneficiaries would replace their educators\. The
beneficiaries were asked to give their opinion for each of their educators by name\. More
trust is given to younger educators close in age to the beneficiaries (90%) than to the
older educators more distant in age (54%)\.
32
Annex 6\. Stakeholder Workshop Report and Results
Stakeholders Evaluation Workshop
26-28 July 2006, Ohrid, FYR Macedonia
FINAL REPORT
Written by:
Ivanoska Vesna, facilitator
Arsovski Todor, facilitator
Introduction
The agenda of the evaluation workshop of the "Children and youth development project"
has been designed in order to achieve the following goals:
Evaluation of the work of the Babylon centers
Evaluation of the process of creation of the National youth strategy
Evaluation of the performance of the project implementation unit
Discussion for the next steps of each of BYC and of the BYC network
Hence the agenda included:
Babylon centers - best practices and models for Youth services development 1
Babylon centers - best practices and models for Youth services development 2
Evaluation of the process of the creation of the national youth strategy 1
Evaluation of the process of the creation of the national youth strategy 2
Institutional strengthening and capacity building for civil servants and youth NGO
Future steps, challenges and future activities
Participants - sampling: 52 participants have attended the workshop: 15 of them were
BYC coordinators, 15 BYC beneficiaries, 11 representatives of the municipalities, 1
representative of the Ministry of Culture and 5 representatives of NGOs (members of the
National Youth Strategy Steering Committee), 1 representative of the World Bank, 2
representatives of the AYS, and 2 representatives of the CYDP PMU\. The following
criteria's were used for selection of the participants:
Sustainability of the centers - the PMU has divided the BYC in three categories: fully
sustainable centers (25 out of which 11 selected for participation: Tetovo, Gradsko, Cair,
33
Rostuse, Caska, Sv\. Nikole, Lozovo, Berovo, Negotino, Resen and Struga); partially
sustainable (5 out of which 3 selected for participation: Ohrid, Strumica, and Karpos) and
low sustainability (3 -selected Krivogastani)\. The BYC representatives were selected
respecting this balance\.
Quality of cooperation with local government - the level and the type of cooperation
between the Local government and the BYC is different according to municipalities: high
(Tetovo, Gradsko, Cair, Rostuse, Caska, Lozovo, Berovo, Negotino, Resen), medium (Sv\.
Nikole, Strumica, Struga) and low (Ohrid, Krivogastani, Karpos)\. This fact was
adequately respected in the selection process\. At the evaluation workshop both
representatives of local government and BYC from same municipalities were invited\.
Ethnic representation - ethnic balance of all BYC has been successfully maintained\. BYC
working in 23 communities (Tetovo, Gradsko, Cair, Rostuse, Caska, Resen, Krivogastani,
Struga and Karpos) as well as in communities where one ethnic group is largely
predominant (Sv\. Nikole, Lozovo, Berovo, Negotino, Ohrid, Strumica) have been invited\.
Therefore representatives of both groups of centers were invited in order to analyze the
challenges, weaknesses and to promote the successes\.
New and old BYCs - Since several new centers were created during these project both
representatives of the new and old centers were invited in order to maintain necessary
balance: old ((Negotino, Sv\. Nikole, Strumica, Krivogastani, Karpos), new (Tetovo,
Gradsko, Rostuse, Caska, Lozovo, Berovo, Resen) and transformed (Ohrid, Cair and
Struga)\.
Other guests: The Embassy of the Kingdom of the Netherlands, the World Bank office in
Skopje, the Balkan Children and Youth Foundation, the FOSIM were invited but not
represented\.
Workshop 1, 2 - BYCs, Best Practices and Models for Youth Services Development
Workshop objectives:
Evaluation of social cohesion aspect of the CYDP
Evaluation of youth participation
Evaluation of programs and activities in the BYCs
Evaluation of the community participation
Evaluation of sustainability
34
Within this workshop the working group has analyzed:
1\. Social cohesion:
Rural outreach
Conclusion: Rural outreach can be generally qualified as part of the project that
has provided the best results and acceptance by the beneficiaries and wider
community\.
Description:
BYCs in the rural communities are often the only youth activity that is
happening in the area and in same time is enabling quality usage of the free
time of the young people\.
The BYCs are having more than one satellite centers where they are
conducting their activities\.
Relations with the local authorities in rural communities are on very high
level since the centers are proving to be very valuable part of the community\.
Parents are very positive towards the centers and are frequently
participating in the activities as an audience or even as volunteers\.
The rural outreach is very expensive: more sustainable approach can be
achieved by commuting educators to rural communities than to pay for
organized transport of beneficiaries to BYC premises\. This is especially
important for the rural BC\.
Gender balance
Conclusion: The Project achieved good gender balance among the beneficiaries
and among the staff and the volunteers in all BYCs, young female beneficiaries
being slightly more represented\. The BYC have established focus on Roma
female population, as well as Muslim female over age of 12\.
Description:
All BYCs have achieved gender balance
BYCs in multiethnic communities and communities with Roma population
(Tetovo, Cair, Rostuse, Caska, Berovo, Negotino, Resen, Sv\. Nikole,
Strumica, Struga, Krivogastani) achieved greater focus on Roma female
population as well as Muslim female over age of 12
The BYC are implementing special policy in order to achieve gender
balance and establish more focus on Roma and Muslim females: since the
traditional values that are existing in this communities has been pointed as
a cause for the problem the coordinators and educators of the BYCs are
often working with children's parents that are source of the problem\. They
35
are trying to explain to them through direct contact the importance of a
full social integration of the young people\.
Ethnic balance
Conclusion: BYC perceived multiethnic work as one of the priorities of the
Project ever since the armed conflict in 2001\. Significant progress has been made
in achieving this priority especially in multiethnic communities\. Particular
challenges were presented by the communities where one ethnic group is largely
predominant and where young people are less exposed to other cultures\.
Description
BYCs have achieved their mission of successful promotion of ethnic
integration in local communities
Activities that are implemented in the BYCs are designed in order to
promote joined activities regardless of ethnic background\. Some centers
where the level of mutual appreciation is low like in Tetovo, Kumanovo,
are implementing specially designed programs and activities that are
promoting interethnic work\. They are using debate, sport, multilingual
workshops with translation, and other activities as a method of achieving
social cohesion and good interethnic relations\. In order to achieve this they
are always trying to conduct joined activities of all beneficiaries regardless
of their ethnical background
The best examples is the BYC in Kumanovo where after efforts of the
Babylon team the two separated groups (Macedonian and Albanian)
finally got together and started to work as one center, one group attending
one activity for all\. Ohrid is even better example because the BYC
promoted programs where young people from different backgrounds
worked together to implement activities, learning from each other
naturally and informally
BYC in communities where one ethnic group is largely predominant
worked on promotion of intercultural learning through sport exchanges
and tournaments, cultural exchanges and visits, organization of summer
camps, sightseeing, debate clubs on specific sensitive topics related to the
multi-ethic character of FYR Macedonia\.
Social groups
Conclusion: BYCs agreed that working with youth with special needs is an
exemption of the regular curricula, which came naturally as they represent an
open space for everybody\. Although there are good examples and best practices
of this kind of activities, the BYC are willing to take steps in future promotion
and education in these issues\. Specific challenges represent the physical
conditions of the premises / facilities, the lack of adequate didactic materials and
the required level of expert support\.
36
Description:
Some of the centers are working with youth with special needs by offering
creative workshops and promoting their integration with all other
beneficiaries of the centre
Even if they do not have specialized programs, BYC are actively involved
in promotion of this issue in the local communities (Kumanovo, Tetovo,
Ohrid, Struga, etc\.)
The best practices working with youth with special needs are coming from
the BYC Strumica, Sveti Nikole and Negotino\. They are organizing joined
activities with the regular beneficiaries and the young people with special
needs in order to achieve better social integration
It is much more difficult for BYC to work with youth with special needs
since adequate infrastructure and facilities are required\. Adequate
expertise and specialized organizations in this field are almost non existent
in many municipalities\.
2\. Youth participation:
Conclusion: BYCs have become the link between the local authorities and the
young people in many municipalities\. Trough their activities they are promoting
youth activism and voluntarism as the best way of active participation in the life
of the community\.
Description:
The perception among the young people present at the Workshop is that
their involvement in the BYC can be recognized as participation in the
social life of the local communities
The perception among the representatives of the municipalities is that the
BYC are very valuable resource and partner in design and implementation
of successful programs that attract many young people
BYCs are promoting the voluntarism as a very important aspect of youth
policy\. They are implementing many programs that are youth friendly but
in same time are method troughs which young people are learning and are
realizing their own potentials\. This can be illustrated by the fact that after
few years in the BYCs volunteers are becoming educator and even
coordinators of the centers (all youth centers), members and leaders in
other organizations (all youth centers), improve their relationship with
their families, improve their position and standing in the schools
BYCs also bring the voice of the young people to the local authorities by
organizing special events, public events, round table discussions, debates
with representatives of community stakeholders and youth
BYCs were responsible for the organization of local debate clubs and local
youth parliaments, which represented the basis for delegating youth in the
National Youth Parliament of FYR Macedonia
37
Beneficiaries also are involved or employed in local municipalities (Caska,
Sveti Nikole, Negotino, Rostuse, Cair, Karpos, Berovo, Resen, etc\.),
become local counselors in municipal assemblies (Negotino, Gradsko,
Tetovo, Caska, Resen, Struga, etc\.), etc\.
3\. Relations with local governments
Conclusion:
BYCs have established good communication with local governments in
terms of programs and activities
There is evident difference between the new and the old youth centers and
the ownership of the local governments, which reflects on the level of
local funding for the BYC
There are many examples of cooperation between the BYC and local
governments\. BYCs like Krivogastani, Berovo and Resen have been
included in creation of local development strategies and in the related
SWOT analysis for the work of the municipality's in general
There are municipalities like in Sveti Nikole, Gostivar and Stip where
BYC has regular cooperation with the local government on issues
concerning youth in the municipality\. Some BYCs are working together
with the municipality in implementation of projects concerning the local
community
BYC have also been a useful tool in building up the capacities of the local
governments, offering computer and English language courses, joint
fundraising or maintaining their IT systems and web sites (Rostushe,
Caska, Cair, Sv\. Nikole, Negotino, Struga, etc\.)
Good practice in funding for youth centers has been established for the
new BYC, where through direct contracts with the municipalities, local
governments have obliged to cover for utilities, space, office supplies and
partly or fully the salaries of the educators; as main cause for the high
cooperation level, the BYC consider the fact that the local governments
created as sense of ownership from the very beginning, negotiating and
developing the idea for the youth centers together with the PMU and with
the applying NGO
On the contrary, in the old BYC, as the local governments were not
involved in the time when the youth centers were created, the process of
getting the municipality on board is considered as very slow and with
different results according to the community\. The support given from the
local governments has not moved from the basic coverage of space and in
some cases, utilities
It has been noted that some big parent NGOs of the old BYC are still
supporting the youth center from their own funds, keeping the cooperation
with the local governments on program level\.
38
4\. Programs and activities
Conclusion: BYCs are implementing the traditional programs that has proven as
very effective and needed among young people\. Now they are following the trend
of development among the youth and are creating new types of programs\. There is
a process on the network level of codification of some of the programs offered by
the BYCs\.
Description:
All of the BYCs are implementing the traditional programs such as
learning computer skills, learning English language, sports and life skills
BYCs have started a process of codification of the programs that they are
offering in order to achieve same standards of the quality of both
curricula's and the educators\. This will lead to creation of a Brand of
Babylon not just among local communities but also on a national level\.
There is a process of creation of new, additional programs such as adding
more language courses, computer programming, theater, poetry, working
skills needed for employment, sport etc\. Some BYCs like the one in Cair
have been given the local sport terrains to manage them since they are
perceived by the local authorities as the main mobilizing force between
young people\.
The policy of BYCs when creating new programs is permanent
involvement of their beneficiaries in the creation of the workshops\.
5\. Participation of the community
Conclusion: BYCs are active member of the community\. They are closely
cooperating with the local schools, NGOs and government\. Also they are
involving the parents of their beneficiaries by creation of special type of
workshops or events\.
Description:
BYCs are creating many activities where parents can take part in as
teachers, spectators, volunteers\. There were examples of parent's
volunteering at youth summer school
Schools, municipality's and other local institutions are open for
cooperation with BYCs and are regularly including Babylon beneficiaries
in their activities
BYCs are viewed by the local communities as a very important element in
the local life
There is a great cooperation of the BYCs and local NGO\. They are often
working together on different projects and activities\.
39
6\. Sustainability
Conclusion: With constant and effective work BYCs have proven their value\.
That for membership fee, support from the local governments, and offering of
trainings can be good ground for achieving sustainability\. However in some of the
smaller and rural communities where both people and the local governments are
not financially strong the issue of the sustainability still does exist\.
Description:
Membership fee has been constant fund raiser during this last year in some
centers, although it should be stressed it is small amount of money (1 -1, 5
Euro per month) each beneficiary has to pay\. Some BYCs, like the one in
Kumanovo have achieved a high level of sustainability trough the
membership fee\. But in some centers (mostly in rural areas) this kind of
contribution is not gladly accepted by the children and parents; the current
practice is that membership fees are collected on voluntary basis, keeping
in mind that many young people, especially from rural and Roma
background can not afford it
Each center is working on its own fund raising plan since the
circumstances each BYC is working in is specific and different\. It always
depends on Community interest, community problems and needs
Most of the centers expected help and financial support from their
municipalities\. So far it has been practice only with space, electricity and
other similar costs in almost every BYC and they expect this practice to
continue in the future\. There are centers where Babylon team has started
negotiations for additional financial support such as salaries, supplies etc\.
Berovo is the youngest BYC and already has established permanent
cooperation with local municipality\. The local municipality provides for
them all needed materials, salaries and other expanses\. Also Tetovo and
Cair are examples of substantial support by salaries and materials for the
BYCs\. On the other hand the cooperation brings the BYCs new, very
important functions and by that they are becoming an equal partner in the
local community development
The support of the local municipality is unfortunately privilege for some
centers, while the others like Krivogastani, Veles and Ohrid are still facing
problem and lack of interest in their municipality for cooperation and help\.
Trainings and services are great opportunities for each BYC in order to
maintain its sustainability and therefore many BYCs are focused on
development of new programs and training courses such as advanced
computer programs, language courses, crafts etc\. The municipality of
Sveti Nikole and Babylon center from Sveti Nikole has been promoting
this kind of mutual support in the previous two years in the field of Textile
industry\.
40
Workshop 3, 4: National Youth Strategy of FYR Macedonia -Local Youth Policies
Development
Workshop objectives:
To asses the consultation process and the development of national youth
strategy
To demonstrate the links between the governmental youth strategy and the
cooperation with youth NGOs
Within this workshop the working group has analyzed:
1\. The adequate representation of sides involved in consultation process
Conclusion: Generally, the group is satisfied how the whole process was develop
and, according to their view, every important stakeholder has been adequately
represented (youth NGO, governmental institutions, experts, political parties
juvenile divisions, foundations) and they, as BYCs feel ownership over the whole
process\. The only concern is the non-organized youth should have been more
involved in the process and consulted through questionnaires\.
2\. How well are young people informed about youth national strategy?
Conclusion: There were several attempts within different projects initiatives for
the promotion of Youth national strategy, but still BYCs through the direct
communication with their beneficiaries were the greatest promoters of the strategy
among young people\. Right after the centers were informed about it they
disseminate this information by organizing special events and meetings with
beneficiaries, voluntaries and colleges\. However the opinion that there is a lack of
information and knowledge in YNS still dominate\.
3\. The importance of Steering Committee (Co-management principal)
Conclusion: Since Steering committee is quite new commission the group showed
that they are aware of its main priorities, but still there is lack of information
about its structure, functions, legal competence\. However they find the co-
management principal good formula for future existence of this body (the
Steering committee is conciliated of 12 members from Governmental ministries
and 12 members from youth NGOs and Agency of youth and sport as coordinator
of the Committee)\. The final recommendation from the BYCs representatives was
that the importance of this body for all young people is essential and they will
support it\. In the same time Steering Committee should communicate with all
youth organization and inform them about its steps and decisions\.
41
4\. Youth local strategies as a next step in local youth policies development
Conclusion: The implementation of the national youth strategy is of great
importance, especially trough creation and implementation of local youth
strategies\. This process of creation local strategies has been successfully started in
some municipalities where BYCs are invited to participate and contribute like in
Berovo, Krivogastani and Resen\.
Workshop 5: Institutional Strengthening and Capacity Building for Civil Servants
and Youth NGO
Workshop objectives:
To discus the current position of AYS and its importance for youth
development;
To asses the capacity of local municipalities (human resources, facilities
and awareness and motivation for cooperation;
To asses the local NGOs capacity and possibility for cooperation; and
To emphasize the role of BYCs in capacity building on local level
Within this workshop the working group has analyzed:
1\. The position of AYS as governmental institution and as a link between youth and
Governmental institutions
Conclusion: AYS sport acted not very different from other Governmental
institution but last couple of years, especially after Project office was open, and
Agency has significantly improved its image\. Actually, many BYCs communicate
with the Agency only through Project office because it is most accessible and
youth friendly part of the Agency\. However, the role of the Agency is essential in
youth policy development and its legal strength should be even bigger in the
future\.
2\. The local municipality's capacity (human resources, facilities, awareness and
motivation for cooperation
Conclusion: From the statements of local municipalities representatives present at
this seminar, as well as from the experiences of BYC coordinators it could be
summarize that Local municipalities are interested in Youth sector and they are
aware of it importance for local development, but still only few of them are
paying sufficient attention to this sphere\. Some of them (e\.g\. Municipality of
Krivogastani) are so devoted to Youth NGO sector that are consulting them in
Municipality SWOT analyses and planning\. In others (municipality of Berovo)
municipality has delegated some of its project to the Babylon team\. According to
all within the group, civil servants are not very well prepared with skills and
information in Youth policy and therefore there are no enough efficient in this
42
field\. But thing are being changing and local municipality is more often using the
Babylon and other Youth organization capacities for self - development\. On the
other hand BYCs and local NGOs are not very well informed about local
municipality structure and competences of its servants and authorities\. One
possible solution will be educational workshops informing about municipality's
functions and procedures\. This is how these obstacles could be overcome\.
3\. NGO capacity and possibility for joined future activities
Conclusion: The integrated action among all actors responsible for youth policies
development is needed and therefore it is very important for all youth
organizations to have cohesive approach\. BYCs have good cooperation with
many local and national youth NGOs\. They are usually dealing with common
problems and needs on local level and therefore there is a mutual respect and
support among them\.
4\. Babylon centers and their contribution in capacity building (strengthening)
Conclusion: BYCs have been very useful in their local community especially as
services for trainings and courses\. In many BYCs there are English and computer
skills training for local municipality administration, as well as training and
programs for unemployed young people\. Thanks to these programs young people
are more skilled and prepared for labor market needs\.
Workshop 6: General evaluation of the Children and Youth Development Project:
next steps, challenges and future activities
Workshop objectives:
To demonstrate how prepared are the BYCs for self functioning
To asses current support as well as future cooperation with Local
authorities
To demonstrate sustainability plans and strategies
To asses Babylon needs and expectations from their future integration
Workshop outcomes: The outcomes of this workshop are a summary of all previous
sessions and outline the group's recommendations
BYCs are already recognized as brand and especially as resources centers
within their local communities representing huge number of beneficiaries
BYCs are well equipped with all facilities necessary for future activities
and can offer young people space for high quality self - development and
their focus in the future will be to attract as many as possible young people
and to encourage their active participation in the social life
Local municipality authorities recognize BYCs as great potential and its
partner and they are willing to use them appropriate in order to achieve
43
community development\. The role of BYCs in the process of creation and
implementation of Youth national strategy and especially creation and
implementation of local youth strategies will be crucial
BYCs and local municipality, together, will promote local youth offices
that will improve the communication between local authorities and youth
BYCs are well integrated and linked through Babylon network and can
share their previous experience in their future development especially in
the sustainability plans and strategies\. They are already preparing plans for
self capacity building and for a big public promotion as network of BYCs\.
BYCs can offer each other, as well as toward others Youth organizations,
support and expertise in many fields that could be interesting and useful\.
Already many youth organizations have been Babylon partners in many
projects and activities\. This tendency will continue in the future even with
more interest and dedication\.
Evaluation of Children and Youth Development project office
Workshop objectives:
Evaluation of the all aspects of the work of CYDP PMU office
Institutional strengthening and capacity building for civil servants and
youth NGOs\.
Workshop outcomes:
The most accessible and youth friendly department within the AYS
The staff has been willing and highly motivated to meet the needs and to
respond to BYCs requests
Project office has permanently worked on Babylon team's capacity
providing them with useful trainings and consultation
Project office has permanently followed the Babylon progress and
development and has helped when obstacles and problems appeared
The project office has encouraged the linkage and cooperation among all
BYCs and helped them to stay unified as one big organization when there
are difficulties and challenges
Finally, the project office team has deepened interpersonal communication,
love and respect among all educators, volunteers and beneficiaries\.
44
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
AYS Contribution to the ICR
Project Appraisal
During appraisal, the AYS was offered by the WB mission a lot of information on WB
policies, rules and operations enabling us to more closely understand, fully participate in
the discussions and propose Project components that will best suite the needs and the
interests of the young people and the youth stakeholders in the country\. We have received
specific information related to the compliance and the implementation of the legal
covenants related to reporting, disbursement, procurement, environmental issues\.
Technical assistance provided
During the Project, specific and most satisfactory technical assistance has been provided
for by the WB for the PMU and the AYS staff in the areas of operational manual
development, sustainable development of youth issues on local level, youth employment,
drug prevention programs and monitoring and evaluation\. This has enabled the project as
well as the AYS Youth department to better address the foreseen activities and to
improve the overall AYS strategy for better performance after project closure\.
Supervision missions
The AYS is most satisfied with the WB supervision missions\. They have offered us a
chance to further discuss project implementation and results, as well as to adjust some of
the programs according to the results and according to the discussions\. We have also
benefited from the fact that all missions included WB staff and consultants already
experienced on similar projects in other parts of the world enabling us to learn from their
experience as well\. In the fields of procurement and disbursement, the PMU and the AYS
felt that there is a lack of adequate and timely information sharing, supervision and
communication within the respective WB departments, which sometimes resulted in
bureaucratic delays until satisfactory guidelines and clearances were obtained by the
Bank\.
Disbursement procedures
The AYS met significant difficulties disbursing funds at the very start of the Project as all
withdrawal applications were processed by Washington directly\. It meant in reality that
the project experienced cash flow problems for a month in between applications\. With the
transfer of the processing to Zagreb, the disbursement has significantly improved\. The
project budget was not developed in accordance with the local pricing policies allowing
some categories to suffer from lack of funds\. Although amendments were considered, we
also find the WB policy for amending Credit Agreements very long and complicated\. As
a result, at the end of the Project we had to go through the process of requesting no
45
objection for over-drafting some categories (goods and consultants) which we do not
consider as the best practice\.
The Dutch Grant has been expected in the first two years of the project when the local
government support was almost non existent\. In the reality, it has arrived in the last year
of the implementation (March 2005 - June 2006), when many BYC already managed to
secure their sustainability and support from different funding sources\. Therefore the
impact of the Dutch Grant, although satisfactory, could have been utilized more
appropriately if received in the planned time period\.
Project implementation
We find the Project implementation in particular valuable for the youth sector in FY
Macedonia as it has enabled the AYS to:
Re-organize the youth department in order to better care for youth issues in the
country: small grants program, international development, non-formal education
and training, youth policy development are now the primary sectors of
development in the Youth Department;
Improve its communication and cooperation with the youth NGOs and with the
local governments;
Strengthen the relationship of the AYS with youth donors in the country;
Position the AYS as the key leading institutions for youth issues in the country;
Include youth issues in many sectoral youth policies;
Initiate the development of the EU YOUTH Program national Agency;
Include youth issues into the Government's EU Integration Action Plan;
Develop the national youth strategy;
Introduce the principle of co-management of the youth sector between the
government and the youth NGOs thus giving young people decision-making
participatory powers;
Create funds supporting grass-root youth initiatives;
Initiate the development of local youth policies in the country;
Introduced continuous training cycles for youth organizations and local
governments;
Develop sustainable youth infrastructure on local level for innovative and creative
youth initiatives that support self-esteem and confidence building;
Created local sport infrastructure for youth sport activities\.
BYC represent a well-known brand both within FYR Macedonia and internationally for
successful non-formal education programming\. They are also recognized by donors, other
youth NGOs and by the state\. By using youth as assets in their own learning, and building
on partnerships between different stakeholders in the society, they capitalize on existing
financial, human and social resources\. They show that running a local youth center does
not require enormous external financial support and that a community-driven approach
can prove critical in achieving project success and sustainability\.
46
One important issue that represents an immediate concern and was not tackled by the
Project is the question of youth employment\. We strongly believe that the AYS in the
future should focus more on programs related to entrepreneurship and apprenticeship,
either through the national budget or through a partnership with donors\.
47
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Comments on ICR for Children and Youth Development Project, Embassy of
Netherlands in FYROM
Compared to the other two projects (Community Development Project and Community
Development and Culture), which the Embassy financed under a common TF, this project
PMU (and their Task Team Leader) were the least proactive in their relations to the
Embassy\. At the moment the Embassy provides these remarks, the final narrative report
for the period of January-June 2006 is still pending; neither the PMU nor the Task Team
Leader have reacted to repeated Embassy reminders (last one sent as a letter on 19
December 2006) about this final reporting obligation\. This is not a new situation, as in
the course of duration of the project, the Embassy always had to remind the PMU about
their reporting obligations\.
The implementation of the project when it comes to effectuating of Dutch grant funds
was lagging behind for almost a year, as the ICR states (under 7\.2\. Implementation, p\. 9-
10)\. However, the Embassy stresses the fact that it was the delay in WB and FYR
Macedonian government administrative procedures that led to such a set-back at the very
beginning of the project\. The Administration Agreement between WB and the
Netherlands was the overall TF was signed on 17 March 2004, and the first transfer of
$495,000 on the Dutch side (to the general TF account) took place on 2 June, 2004\.
However, the Grant Agreement between WB and the Macedonian Government was
signed only on 2 December 2004 and 16 December 2004 respectively\. The Embassy is
still not aware of the reasons for this 9 month delay and therefore would appreciate if ICR
makes an effort to refer to this situation more substantially, especially as a lesson learnt
for better effectiveness of donor funds in the future\.
Problems with withdrawal requests of the PMU which also, albeit to a lesser extent,
occurred in the other two PMU-s (Community Development Project and Community
Development and Culture) additionally slowed down the initial spending of the Dutch
grant\. While the Embassy had a definite confirmation of its transfers to the general TF
account, PMU's withdrawal requests were refused by WB administration, with an
explanation that funds were still not available\. The time needed for transfer of funds from
the general TF account to specific project accounts seemed to be significant, and the lack
of understanding of the procedure of the side of PMU and WB administration seemed to
have additionally slowed it down\.
The ICR, as well as previous Aide-Memoires and Mid-Term Progress Report on the
project give quite a positive picture of the overall functioning of the Babylon Centers,
with a very optimistic prognosis of their (self) sustainability\. However, it should be
mentioned that a significant part of the Dutch grant (half of the overall amount!) was
originally requested by WB to substantially reduce the contribution of local governments
to these centers (from $800,000 to $300,000)\. Some of the field visit impressions, for
example the Babylon Centre in Veles, also did not give the Embassy sufficient grounds to
48
share WB sustainability assessment "satisfactory", which was given in the Mid-Term
Progress Report\. Therefore, the Embassy does not fully share the enthusiasm of WB in
this respect, and would like to see some more updated overview/analysis on the current
functioning of the Babylon Centers\.
Part 8\.1\. Relevance of Objectives, Design and Implementation of ICR in its final
paragraph makes a reference to EU Youth Program that is to be open to FYR Macedonia
as of 1 January 2007, and to a direct funding available for EU Youth Agency for FYR
Macedonia (to be set up separately fro AYS but under its supervision)\. This is a new
piece of information for the Embassy, and more elaboration is needed on it, especially as
the Netherlands is a EU member that contributes to all EU funds that will be open for
FYR Macedonia as a candidate country\.
49
Annex 9\. List of Supporting Documents
FYR Macedonia Country Assistance Strategy Progress Report, 2000
FYR Macedonia Country Assistance Strategy, Fiscal Years 2004-06
FYR Macedonia Project Appraisal Document Children and Youth Development Project,
June 7, 2001
Development Credit Agreement, February 5, 2002
Dutch Grant for the Children and Youth Development Project, December 2, 2004
Supervision Aide Memoires and Implementation Status Reports (December 2001-May
2006)
CYDP Beneficiary Assessment 2005
CYDP Beneficiary Assessment 2006
Impact Evaluation Analysis, Stratum Research, 2006
Impact Evaluation Analysis: Preliminary Findings, 2007
Beneficiary Enrollment Form, October 2005
50 | REVIEW |
P007020 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 32527
IMPLEMENTATION COMPLETION REPORT
(CPL-38750 SCL-3875A SCPD-3875S)
ON A
LOAN/CREDIT/GRANT
IN THE AMOUNT OF US$ 28 MILLION
TO THE
DOMINICAN REPUBLIC
FOR A
IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT
June 27, 2005
ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT
CARIBBEAN COUNTRY MANAGEMENT UNIT
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective March 1, 2005)
Currency Unit = Peso
1 Peso = US$ 0\.03
US$ 1 = 29 Pesos
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS AND ACRONYMS
ADESJO Association for the Development of San Jose de Ocoa
CAS Country Assistance Strategy
DR Dominican Republic
ICR Implementation Completion Report
INDRHI National Institute of Water Resources
LN Loan
PPF Project Preparation Facility
PROMATREC Project for the Management of Irrigation and Watersheds
PRYN Irrigation Project Yaque del Norte
QAG Quality Assurance Group
SAR Staff Appraisal Report
SATTT Technical Assistance and Technology Transfer Service
UEP Project Implementation Unit
WUO Water User Organizations
YSURA Irrigation Project Yaque del Sur
Vice President: Pamela Cox
Country Director Caroline D\. Anstey
Sector Director John Redwood
Task Team Leader/Task Manager: Pierre Werbrouck
DOMINICAN REPUBLIC
DO IRRIG LAND & WATERSH (SIM)
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 12
6\. Sustainability 13
7\. Bank and Borrower Performance 14
8\. Lessons Learned 17
9\. Partner Comments 17
10\. Additional Information 18
Annex 1\. Key Performance Indicators/Log Frame Matrix 19
Annex 2\. Project Costs and Financing 22
Annex 3\. Economic Costs and Benefits 24
Annex 4\. Bank Inputs 30
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 31
Annex 6\. Ratings of Bank and Borrower Performance 32
Annex 7\. List of Supporting Documents 33
Annex 8\. Borrower Contribution 34
Project ID: P007020 Project Name: DO IRRIG LAND & WATERSH (SIM)
Team Leader: Pierre Werbrouck TL Unit: LCSES
ICR Type: Core ICR Report Date: June 27, 2005
1\. Project Data
Name: DO IRRIG LAND & WATERSH (SIM) L/C/TF Number: CPL-38750; SCL-3875A;
SCPD-3875S
Country/Department: DOMINICAN REPUBLIC Region: Latin America and the
Caribbean Region
Sector/subsector: Irrigation and drainage (64%); Central government administration
(22%); Agricultural extension and research (14%)
Theme: Other rural development (P); Water resource management (P); Land
management (S); Other environment and natural resources
management (S)
KEY DATES Original Revised/Actual
PCD: 09/21/1988 Effective: 04/29/1997 04/29/1997
Appraisal: 05/23/1993 MTR: 01/15/2000 01/28/2000
Approval: 05/02/1995 Closing: 12/31/2003 12/30/2004
Borrower/Implementing Agency: GOVERNMENT OF DR/Instituto Nacional de Recursos Hidráulicos (INDRHI)
Other Partners: Asociación para el Desarrollo de San José de Ocoa, Inc\. (ADESJO)
STAFF Current At Appraisal
Vice President: Pamela Cox Shahid Javed Burki
Country Director: Caroline D\. Anstey Edilberto Segura
Sector Manager: Mark E\. Cackler Michael Baxter
Team Leader at ICR: Pierre Werbrouck Elizabeth Katz
ICR Primary Author: Pierre Werbrouck
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: U
Sustainability: UN
Institutional Development Impact: M
Bank Performance: U
Borrower Performance: U
QAG (if available) ICR
Quality at Entry: U
Project at Risk at Any Time: Yes
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The objectives were to (i) improve income of the farmers in the project area; (ii) to test
methodologies that can be replicated nationwide both for efficient production support services,
water management and operation and maintenance of irrigation systems and for environmentally
sound watershed management; and (iii) help reduce the fiscal costs of irrigation schemes through
the adoption of appropriate cost recovery policies\.
3\.2 Revised Objective:
The overall development objective of the project was revised in December 2004 to include the
refunding of PPF-341-0-DO and PPF-341-1-DO (US$ 2\.0 Million) related to a Water and
Sanitation Management Project in Tourism Areas\.
3\.3 Original Components:
There were 6 original components:
1\. Irrigation Infrastructure (US$20\.19 million, 47 percent of total base cost): to
rehabilitate, complete and modernize existing schemes, land leveling and drainage in
Nizao-Valdesia, YSURA, and PRYN I irrigation schemes\.
2\. Nizao Watershed Management (US$2\.89 million, 7 percent of total base cost): to
promote improved management systems in selected micro-catchments in the Nizao watershed\.
3\. Agricultural Development (US$5\.0 million,12 percent of total base cost): to support
farmers in irrigated areas and in the Nizao watershed with agricultural support services, adaptive
and applied on-farm research and the diffusion of improved technologies\.
4\. Institutional Development (US$4\.00 million, 9 percent of total base cost): to (i) build up
institutional capacity through training programs on administrative and technical matters for water
user groups and water user organizations; (ii) help farmers obtain access to credit and to provide
them with an incentive to invest in their land via land titling; and (iii) support the implementation
agency INDRHI in the areas of management information systems, monitoring and evaluation, and
financial management\.
5\. Studies: (no separate cost item) * to carry out several technical studies to improve the
overall water management in Nizao-Valdesia, YSURA, and PRYN I, including (i) a technical
study on main canal regulation, canal system management, and the design of distribution systems
in the selected areas; (ii) a detailed study on the layout of the irrigation and drainage system; (iii)
updating of cadastral maps of the irrigated areas; and, (iv) aerial photos to set up an
environmental and evaluation unit\. Project preparation and agricultural policy studies are also
mentioned\.
* The SAR mentions an amount of US$0\.9 million in the text, but no amounts are mentioned in the cost tables\.
- 2 -
6\. Monitoring and Evaluation (no separate cost item): to develop a management
information system to improve the technical and financial management of irrigated schemes at the
level of water user associations and the INDRHI\.
3\.4 Revised Components:
The components were revised in the course of the project implementation and three loan
amendments were made\.
The first amendment to the Loan Agreement was made on December 1, 1998 responding to the
effects of Hurricane George\. An emergency subcomponent was added covering the rehabilitation
of small irrigation schemes, feeder roads, rural aqueducts, dykes, canals, ditches and drainage
systems\. At the same time, several dated covenants were re-scheduled to delay them for between
18 months and four years\.
The second amendment in April 2002 aimed at modifying the disbursement condition for
infrastructure investments\. The requirement that INDRHI would have had to submit to the Land
Tribunal the documentation required for the award of final land titles to at least 80% of the
farmers in each Irrigated Area was clarified to mean that 80% of the farmers have to meet all legal
requirements for the issuance of provisional land possession certificates (Carta de Constancia)
and have filed a petition to the Land Tribunal for the issuance of these certificates\. The
amendment also included a new dated covenant for the implementation of an action plan on cost
recovery such as the preparation of a manual for recovery of operation and maintenance costs and
a manual for capital cost recovery to be applied to each WUO benefiting from the works under
the infrastructure component as well as the implementation of those cost recovery mechanisms\.
The third amendment (with Board approval) was made in December 2004 to allow the refunding
of PPF-341-0-DO and PPF-341-1-DO (US$ 2\.2 Million) related to a Water and Sanitation
Management Project in Tourism Areas (see 3\.2 above)\. Management introduced this amendment
considering the difficult financial situation of the country so that those PPFs could be reimbursed
over a longer time-period\.
In response to the institutional weakness of the implementing agency, the agricultural research
subcomponent (appraised at about US$5 million) was transformed into an agricultural extension
component during the course of implementation\.
- 3 -
3\.5 Quality at Entry:
Unsatisfactory
The project objectives have to be assessed within the framework of a long but often cumbersome
co-operation between the Bank and the Dominican Republic in the 1970 and 80s during which the
Bank's portfolio performed very badly\. The New Economic Policy initiated by the Government in
the 1991 provided a new opportunity for both partners to engage\. The irrigation sector was
important as the DR was opening up to the outside world and privatization was a part of
Government's policy which motivated an emphasis on transferring irrigation management
responsibilities to private Water User Organizations (WUO)\. The 1995 CAS emphasized growth,
poverty alleviation and natural resources management under which this irrigation project was
approved\. The objectives of the project fit conceptually within the Government and Bank
development strategy: increasing productivity in irrigated agriculture through efficiency gains in
water management and improved agricultural practices, developing and strengthening WUO that
could take over the role of the State in irrigation management, initiating sound watershed
management practices in the upper levels of a watershed through participatory community
development and ensuring financial sustainability of irrigation through adequate cost recovery
mechanisms\.
The project components were considered adequate given practice and experience available at the
time to achieve these objectives: rehabilitation of irrigation infrastructure (that had not been
maintained for several years) and introduction of land leveling techniques were expected to
increase water availability, improve water efficiency and support increased productivity and
income; new methods in agricultural research and extension in areas that lacked agricultural
services would also contribute to increased productivity and income; training and strengthening of
WUO would improve overall water distribution and lead to cost recovery and long term
sustainability; the upper watershed management component would develop methodologies for
sound watershed management; and monitoring and evaluation would help to validate the
methodologies and provide feedback on their replicability\. Safeguard issues were taken care of
through an environmental monitoring component\.
The SAR took into consideration the lessons learned from the 1989 Annual Review of Evaluation
Results (OED) and of the 1986 Review of Cost Recovery in Irrigation Projects (OED) and was
aware of the lessons learned from the Bank's earlier project in irrigation in the Dominican
Republic\.
However, there appeared to be little ex ante social analysis and preparation for meeting the
principal strategic objective of the operation: the creation of WUO in a context where little was
known about these emerging organizations\. Moreover, as will be clarified later, most of the
implementation and institutional risks and issues mentioned in PCR Report No 7747 dated May
12, 1989 and Performance Audit Report No\. 11786 of the Nizoa Irrigation Project dated April
12, 1993, were not adequately addressed and resurfaced during the implementation of this project,
including effectiveness delays, delays because of counterpart fund problems, incompliance with
legal covenants, the weak performance of INDRHI and uncompleted infrastructure works\.
- 4 -
Concerning components, insufficient social assessments or preparation of farmers to become
WUO prior to undertaking investments removed the possibility of there being a participatory
approach to infrastructure planning\. In the absence of this, the lack of a clear blueprint and
insufficient pre-design of the irrigation rehabilitation works caused considerable implementation
problems and delays for the weak implementing agency\. The proposed demand driven and
participatory arrangements for the research and agricultural extension component were also too
complex, particularly since INDRHI performed very poorly under previous Bank projects and had
no experience in research and extension\. Moreover, although cost recovery goals were
mentioned in the SAR there was no clear agreement with the Government on the policies and
processes related to collection and levels of water tariffs for operation and maintenance and
investment cost recovery\. The rationale for the land titling subcomponent was poorly explained
and not accounted for as an operational goal\. The SAR presented performance (input) indicators
but no development impact indicators\.
Therefore, in spite of the project's potential to serve significant strategic goals, the quality at entry
of the operation was substandard by today's standards in the following aspects: borrower
commitment, technical preparation, appraisal of institutional capacity, mitigating known risks and
results monitoring\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Project Outcome: Unsatisfactory\.
The project showed some important achievements but fell short of expectations because of
poor implementation of critical components\.
The first objective: "to improve the income of farmers in the Project Area" was only partially
achieved\. A majority of beneficiary farmers claim to have improved their incomes in
end-of-project surveys of participating farmers and rural watershed inhabitants\. The extent of
these perceived gains could not be verified by yield and income data, but were claimed to exceed
15%\. The income improvements result from the agricultural development and watershed
management components and probably also from high inflation in 2003/2004\. Delays in project
implementation of irrigation infrastructure rehabilitation / improvement have however significantly
reduced the income generating potential outcome of the water management subcomponent\. At
the closing of the project none of the infrastructure works (amounting to 36 percent of original
project costs) were fully completed and overall works progress reached only 50 percent of an
infrastructure program that was already significantly reduced to fit the time frame\. This has
reduced the overall impact of the project\. Nevertheless, while this report evaluates what has been
completed at project closing, future completion by the Borrower of the initiated works, together
with sustained training and extension services as well as cost recovery efforts (see below), if
implemented, could have a positive impact on project outcomes\.
The second objective of developing and testing new and replicable methodologies for providing
- 5 -
efficient production support services, water management and operation and maintenance of
irrigation systems and for environmentally sound watershed management was, likewise, only
partially achieved\. Viable interagency coordination and a demand-driven system for the provision
of agricultural research and agricultural support services was not implemented\. Ultimately, after
delays the project only implemented a demonstration field extension system managed under a
foreign consulting firm over a short two-year period\. Further, the training of WUO focused on
standard technical, administrative and financial management issues and very little on management
for financial sustainability (see below), and could not be considered as a methodological advance\.
Likewise, the project was expected to test the participatory design of irrigation works, but the
WUO had little say in the decisions on which works would be carried out\. A community
participation methodology for environmentally sound watershed management was successfully
tested but the methodology involved little or no self management of financial resources and
coordination with municipalities or other important actors in the watershed\. In the end, the
methodologies developed could not fully demonstrate their effectiveness, efficiency and
replicability\. Except for the agricultural and WUO institutional development component, the
project did not collect any data to measure how the methodologies performed or could be
replicated\. Apart from the watershed management component, the project was in fact
implemented following a traditional and outdated practice of a centrally managed operation,
rehabilitating irrigation infrastructure, providing agricultural extension services and strengthening
WUO*\.
* It is significant that the loan agreement did not mention the "testing of methodologies"\.
The objective of reducing the fiscal cost of irrigation schemes through the adoption of appropriate
cost recovery policies** has not been reached\. INDRHI made very little effort to stimulate water
tariff collection and cost recovery\. It neither developed nor implemented a strategy to introduce
appropriate water charges or recover costs from WUO\. The targets for recovery set at appraisal
were in any case, low compared to the real costs and were not met\. Water charges are now about
20 to 30 percent of the real cost of operation and maintenance\. Although WUO formulated
strategic plans to progressively increase irrigation tariffs, the base tariffs were low to start with,
the plans have not been consistently implemented and inflation fully absorbed all increases\. The
lack of real cost recovery by WUO limits the replicability and financial sustainability of the
investments in infrastructure and agricultural development\.
** The loan agreement mentioned cost recovery as a second important objective\.
Overall the financial and economic returns to the partially completed investments are estimated to
be positive (See Annex 3) but are probably marginal\. The returns on the agricultural component
are above expectations and the returns on the watershed management component are also
positive\.
4\.2 Outputs by components:
Component 1\. Irrigation Infrastructure: Unsatisfactory (US$5\.89 million or 29 percent of
appraisal estimate)
The component was designed to finance: (i) the completion or rehabilitation of irrigation
infrastructure (55 kilometers of secondary and tertiary canals and 20 kilometers of elevated
- 6 -
canals), (ii) the upgrading of main canals and control structures, (iii) completion or rehabilitation
of 110 km of surface drainage; and (iv) 7,250 hectares of land leveling\.
The works were mainly small works to be designed with the participation of WUO and
implemented accordingly\. The design was, however, done by an international consultant in a
rather top-down manner for an amount of US$2\.5 million\. During the design process of the
works, INDRHI introduced important changes: it canceled subcomponents (i) and (iii) and
selected to construct four irrigation reservoirs and 13 deep wells instead\. Delays in the design
studies and in the bidding process meant that those works started only in 2003\. The construction
of two reservoirs was not started\. Land-leveling contracts started only in the second half of 2004\.
Moreover construction was slow, interrupted by lack of counterpart funding, fraught with design
flaws, lack of agreement with farmers to stop water flows to carry out the works, and contractual
issues arose because of inflation\. The Bank extended the project for 12 months to allow the
completion of the works, but the initiated works were still only 50 percent completed at project
closing\.
By the loan's closing date, the rehabilitation of 55 kilometers of the Canal Marco A\. Cabral
(subcomponent ii) was close to completion and the construction of one reservoir had been
completed but was not operational\. A second reservoir was 50% completed\. Twelve wells had
been dug but need to be connected to the electricity grid\. The Government has indicated that it
will complete the works with its own financing\. Only 670 hectares of land have been leveled and
the Government will not further finance land leveling\.
The component also financed emergency works for the rehabilitation of infrastructure damaged by
Hurricane George in 1998\. Emergency works amounted to US$1\.2 million and the
implementation is rated satisfactory\.
The works that have been initiated may show positive results in the future, but the lack of
participation by WUO in the selection and financing of the irrigation works is certainly not a
method to be replicated\.
Component 2\. Nizao Watershed Management Systems: Satisfactory (US$2\.6 million or 91
percent of appraisal estimate)
The objective of this component was to promote improved management systems in selected (five)
micro-catchments in the Nizao watershed through a participatory decision-making process that
would later be replicated and adopted\.
To implement the component, INDRHI signed an agreement with "Asociación para el
Desarrollo de San José de Ocoa (ADESJO)", a church-based non-government organization\.
ADESJO was already implementing a particular intervention methodology and adjusted its
methods somewhat to INDRHI's requirements\. The component was implemented in five
micro-catchments in the Nizao River, with an area of 19,500 ha, 21% of the total area of the
watershed\. The component benefited 1,300 families and created 24 community councils\. In each
micro-catchment subprojects were implemented, financed through community matching grants,
- 7 -
including: (a) forest and land management; (b) agro-forestry management; (c) small-irrigation
infrastructure; (d) green-house agriculture; (e) organic production; and (f) assistance to women's
groups engaged in agriculture\.
From the watershed management point of view, the most significant outputs are: 437 hectares
reforested (873 planned), 1,235 (1,762) hectares planted for agro-forestry, 35 (42) community
irrigation systems, 1,046 (1,923) hectares of soil conservation\. Also the project contributed to
the constitution of a community Watershed Council, a fundamental element for people
participation in the watershed management\. Out of the total expenditure under the component,
47% was used for investments in communities, 25% to pay technical assistance and 28% for
administrative support\.
An end of project evaluation survey showed that targeted households reported higher income
increases over a control group (see Annex 3) and a change in the household expenditure structure
in favor of health, education, leisure and savings over food expenditure\. On-farm employment
was also reported to have increased as farmers obtained more income security from farming\.
Nonetheless, some shortcomings were identified; namely, the community councils' weakness to
manage financial resources*, a low level of technology adoption among some farmers, the
absence of economic validation of some proposed technologies and the lack of specific actions to
improve access to markets\. The program also had very little connection with other important
actors in the watershed (municipalities, water companies, etc\.)\. There were further questions
about the replicability of the experience as a great part of the success of the component is partly
due to the prestige of ADESJO and its charismatic church leader\.
* Financial resources of Community Councils were centrally managed\.
Component 3\. Agricultural Development: Satisfactory (US$5\.29 million or 110 percent of
appraisal estimate)
The component was designed to carry out adaptive research using a participatory approach and
covering all aspects of irrigation, drainage, sustainable conservation and production techniques for
the benefit of about 5,000 farmers in the Irrigated Area and about 1,500 small farmers in the
Nizao Watershed Area\. The methodology to be used was the one implemented in several
agricultural technology-oriented schemes in Latin America: using research grants to agricultural
technology organizations to be implemented in the three project areas\. The component proved to
be too complex for an institution that was mainly focused on constructing irrigation schemes\. No
technical assistance was contracted to help implement the component and the research program
was dropped\.
During the Mid Term Review, adaptive research (US$ 5 million) was cancelled, and a substitute
two-year program was agreed with the following features: (i) an extension and technology
transfer program to 30 associations integrated in the three WUO, covering cultural practices, soil
conservation, farming machinery, salinity, integrated management of pest and diseases,
management of irrigation systems and farm economy; (ii) intensive training to approximately
1,550 farmers through 467 demonstration plots, and (iii) training of 63 technicians of WUO,
INDRHI and other entities\. The component also included delivery of heavy earth moving
- 8 -
equipment (US$1\.3 million)\.
The end-of-project survey indicated that the substitute agricultural development program has been
very successful and that the results are spread much more widely than the 1,550 farmers who
received direct assistance\. The survey shows that a high proportion of all farmers have widely
adopted several new technologies such as fertilizing (97% against 86% of baseline situation), pest
and disease control (99% against 83%), weed control (100%, no baseline data available), certified
seeds (68% against 50%)\. Above all the survey showed that 80 percent of the 17,000 farmers
have increased their productivity and 77 percent their income by 15 percent or more (see Annex
3)\. The low level of productivity before the program, the integration of several simple new
technologies into one single extension message and the generally favorable agricultural policies
could explain the fast adoption pace\.
Hence, in spite of the cancellation of the main research program, the component has delivered
important results and is therefore considered satisfactory\. Monitoring data from the implementing
consulting firm indicate that the methodology might be replicable in other irrigation systems\. The
system worked well because, amongst other factors, staff of the Ministry of Agriculture and
INDRHI received financial incentives to assist the farmers\. It is, however, not clear from the
monitoring data how much the Government (Ministry of Agriculture, INDRHI) contributed to
this operation independently, and the above-mentioned cost of the program is only a rough
estimation\.
Component 4\. Institutional Development: Satisfactory (US$5\.6 million or 140 percent of
appraisal estimate)
The component was designed to provide technical assistance to three WUO in the Project Area in
order to strengthen their institutional capacity through training in administration, personnel
management, financing and accounting, operation and maintenance of irrigation systems, and cost
recovery\. The component also included a land titling subcomponent to facilitate access to credit\.
INDRHI was to set up a Project Implementation Unit receiving 41 person months of technical
assistance\.
WUO Strengthening\. Progress was achieved in promoting and mainstreaming the concept and
practices of WUO\. Training of WUO started in 2002 under a contract with the University of Utah
and involved workshops, courses, informal conversations, field visits, etc\. All together 174 events
were undertaken that included 5,261 participants\.
The main outcomes of this WUO strengthening component are: computerized accounting
systems are in place; financial management has improved; staff has been trained on administrative
matters; farmers have been trained in irrigation and production technology; and water tariff
payment collection is being somewhat enforced\. Another project output was the creation of the
National Council of Irrigation Farmers as a national organization of WUO established by
Presidential Decree\. All together, the WUO have improved their management capacity, are now
more active and more problem solving oriented than in the past\.
- 9 -
From a strategic perspective, therefore, the concept of Water User Organizations has been further
mainstreamed in Government's irrigation policy\. However, the institutional strengthening
component had little impact on the costly overlapping functions and responsibilities of the WUO
and INDRHI* While transferring some responsibilities for the management of irrigation systems
to WUO, INDRHI's field staff numbers and responsibilities were not really changed\. Hence in the
field there remains confusion about the role of the WUO and the assignment of responsibilities for
operation and maintenance and other obligations\.
*Iván Pavletich, Recuperación de Costos en los Sistemas de Riego del PROMATREC, December 2004\.
Cost recovery\.** The outcome of the cost recovery subcomponent is weak\. In fact the present
water tariffs remain in real terms at about the same level as they were at appraisal\. The WUO
collect between 60 and 80% of these relatively low tariffs, which is about same percentage as at
appraisal in 1993\. The real costs of management, operation and maintenance are estimated at
US$140 per hectare as an average for the three WUO concerned *** If capital costs were to be
included the figure would increase significantly (see Annex 3)\. Since at the national level there
was no real pressure to recover water charges, the project management did not pay much
attention to this element so crucial for reaching sustainability\. Only during the last months of the
project did INDRHI order a study to estimate real water costs and the significance for water
charges and cost recovery\. Although there was a clear agreement between the Bank and the
Government to recover costs and make larger farmers pay for irrigation investments, no cost
recovery agreements were made with those farmers before initiating the infrastructure works and
there was no intention to charge farmers for the energy cost of operating water wells (now under
construction)\.
* * Cost recovery is mentioned under Institutional development although the SAR did not specify under which
component it was supposed to be implemented\.
*** Iván Pavletich, Recuperación de Costos en los Sistemas de Riego del PROMATREC, December 2004\.
The lack of firm commitment on the part of the Government to cost recovery reduces the
possibilities for sustainability of the gains made by the project\. To its credit, INDRHI promoted
the formulation of Sustainability Strategic Plans, through which each WUO established a program
of activities for the period 2002-2012 including annual budgets and financial sources\. Those
plans, formulated by WUO, envisage a progressive increase in the low water tariffs to improve
operation and maintenance\. Until now, however, inflation has been higher than the proposed
increases\.
INDRHI Institutional Strengthening\. There have been a number of training activities with
INDRHI staff, in the field and in HQ, but the results in terms of improved management or
technical capacities have not been evaluated\. In INDRHI a "Service to Water Users Department"
was created for training and provision of agro-business services to water users\. It is performing
reasonably well\. INDRHI's Agricultural Development Department is still being established\.
The project implementation unit (UEP) staff has been trained on the job through workshops,
courses, and mentoring on general management, procurement, and environmental services\. In
spite of this, project implementation was slow\. The project design included the provision of
technical assistance to INDRHI in several domains (in particular agricultural research and
monitoring)\. This technical assistance was never recruited with the obvious consequences that
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neither a research program nor a monitoring system was initiated\.
Land Titling: The component also included a program of land titling, with the specific objective
of stimulating private farm investments\. The output of the land titling subcomponent is only
somewhat below expectations, but the relevance of the subcomponent is not obvious\. The
subcomponent helped the 4,500 farmers to obtain an intermediate form of land certification ("
Cartas de Constancia") and 588 titles\. There are no indicators showing that those certificates
have had any impact on the capital formation or credit worthiness of individual farmers\. No
studies have been carried out on the impact of this subcomponent\.
Component 5\. Studies: Unsatisfactory (US$4\.5 million)
The component was designed to finance studies on: (a) canal regulation and management of canal
irrigation and drainage systems in the Project Area; (b) layout of the irrigation and drainage
systems in the Project Area; (c) preparation for future agricultural projects; and (d) agricultural
policy issues\.
The design and engineering studies of the irrigation systems took a very long time to complete\.
The terms of reference were over dimensioned and it took about three years to finalize the first
draft of the study\. Moreover, weather difficulties for the aerial photography, INDRHI's
continuous modifications of the content of the studies and the slow performance of the consulting
firm caused a further three year delay in the construction of the subsequent works\. The studies
cost US$2\.5 million for the design of works whose cost would not exceed US$10 million\.
However, one positive aspect of the study was that cadastral maps of the irrigated areas and the
aerial photos of Nizao watershed are available\.
Another consulting assignment was the supervision of construction works\. Although strictly
speaking this is not a study, the supervising engineer had to re-do several detailed designs of the
design study mentioned above\. These modifications as well as the slow implementation of
infrastructure works brought the cost of the work supervision up to some 17% of the
construction costs\.
Three project evaluation studies were prepared, a watershed management study and a water tariff
study were carried out in the last four months of the project\. The quality and outcome of these
studies are rather mixed\. No future agricultural project was prepared\.
Component 6\. Monitoring and Evaluation: Unsatisfactory (US$1\.19 million)
The component included the design of: (a) a management information system of irrigation and
drainage schemes in order to improve the management of such schemes under the control of
INDRHI and the WUO in the Irrigated Area; and (b) an environmental monitoring system for
INDRHI\.
The irrigation and drainage management information system was not developed as planned\. A
Hydro Agricultural Information System was established in INDRHI through another project and
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provides information on the irrigation systems' structure, the irrigation users and the agricultural
plots\.
A consulting assignment to install monitoring and evaluation of the environmental aspects of the
project was carried out, but the outcome of this assignment is negligible as the environmental
monitoring and evaluation system was not implemented\.
As regards regular project monitoring, the Monitoring and Evaluation Unit performed some
occasional reporting activities on the basis of field information supplied by INDRHI staff
(Agricultural Development or Infrastructure Unit) and ADESJO (Watershed Management
component)\. However, the Unit did not conduct regular or independent management support
activities, including analysis of implementation progress, and no monitoring and evaluation
software was implemented although it was designed by a consulting firm\. Almost no annual
progress reports or annual project implementation plans were sent to the Bank\.
The Mid-Term Reviews of 2000 and 2002 focused on the urgent needs to get the project onto a
faster implementation path and could not deal with the strategic issues as much as was required\.
The monitoring and evaluation component was crucial to measure the efficiency, effectiveness,
impact and replicability of the methodologies that were supposed to be tested\. Without a well
functioning monitoring system, the second project objective could not be reached\.
4\.3 Net Present Value/Economic rate of return:
No economic return has been calculated as the works under the infrastructure component were
not finished\. Some economic considerations have been dealt with in Annex 3\. In summary: if the
works would be completed by the Government the infrastructure component might obtain some
marginal return; the agricultural development and the watershed management components show
positive returns\.
4\.4 Financial rate of return:
Same as above
4\.5 Institutional development impact:
Modest
As explained under the evaluation of Component 4, the project has strengthened three WUO over
a relative short period\. The WUO increased their management capacity but remain very much
dependent on INDRHI's assistance at all levels\. As cost recovery has not made significant
progress the sustainability of WUO institution building remains in doubt\. The institution building
within the 24 community councils provided by ADESJO has had positive impacts\. Nevertheless,
as the communities did not handle the project's financial resources, institution building in those
communities remains somewhat limited\. Impact of institution building within INDRHI has also
been modest considering the continuous difficulties to handle project related matters in an
expedient way\.
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5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The project area was affected by Hurricane George (1998)\. In response, the Bank agreed to
modify the loan agreement to allow fast track procurement of heavy equipment and the
implementation of community rehabilitation works\. This gave an impulse to lagging
implementation, but was not sustained\.
During the latter years of the project, the country was plunged into a financial crisis that caused
severe fiscal constraints, depreciation of the currency and high inflation\. This also contributed to
the scarcity of counterpart funds for infrastructure works\.
Finally, effectiveness delays were mainly caused by loan approval delays in Congress\. Such delays
are very common in the Dominican Republic as political criteria determine the speed of loan
approval rather than Government commitment\. Nevertheless, this delay of almost two years was
the longest effectiveness delay in the DR since 1991\.
5\.2 Factors generally subject to government control:
Even accounting for fiscal difficulties, supply of counterpart funds was frequently delayed\. This
problem, together with high inflation, caused contractors difficulties in financing the civil works
and resulted in additional delays\.
The strongly protective nature of the Dominican Republic's agricultural policy has contributed to
the apparently positive impact of the project's agricultural development and WUO institutional
strengthening components\. But the desire to maintain protections has had a negative impact on
water tariff levels and cost recovery, which was considered as not politically feasible\.
5\.3 Factors generally subject to implementing agency control:
INDRHI had difficulties managing this project under the requirements of the World Bank\. Initial
factors were the bureaucratic red tape, the complex decision-making process within the institution
and the lack of administrative independence of the Project Implementation Unit (UEP)\. Long and
cumbersome decision-making processes were major factors delaying implementation\.
5\.4 Costs and financing:
Not taking into account the PPF-refinancing approved in December 2004, the Borrower has only
used 67 percent of the loan over a nine year period\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
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Sustainability: Unlikely
The positive achievements under this project are at risk of being unsustainable, as they depend on
the continuing support and resources of government and agencies facing other issues and
priorities\.
The benefits of works initiated under the infrastructure component were not fully realized, but
could be sustainable if: (i) the works are completed in a timely fashion; and (ii) the Government
introduces a serious and enforced mechanism of water charges and cost recovery\.
The Government confirmed its intention to finish some works under an EXIM-Bank loan
although a timetable and implementation plan for doing so has not been produced at the time this
report was prepared\. The likelihood that more aggressive cost recovery measures will be taken in
the short term is also uncertain as the government has more important problems on hand (financial
and energy crises)\. Nevertheless, in the medium term, if further fiscal constraints are necessary to
stabilize the macroeconomic situation, INDRHI's expensive structure and large subsidies may
come under pressure and adequate water charges and cost recovery systems may be put on the
agricultural policy agenda\.
The sustainability of the watershed management component is largely dependant at the moment
on support from ADESJO\. This is a solid institution that will probably make further contributions
to the sustainability of the community councils and the subprojects that have been financed
provided its financial situation and leadership remain\. Its future is not, however, within the control
of government\. The profitable income subprojects are to a degree dependant on government's
continuing protectionist agriculture policies, but are likely to be sustainable if this continues\.
However, the watershed management and environmental subprojects that provide long term
returns (such land conservation or reforestation) will be sustainable only if a national watershed
management policy rewarding environmental services is put in place or if the economic and social
returns to such activities as tree planting are improved\. The chances that such policies are put into
place will depend on the outcome of dialogue that is about to begin with the World Bank which
has been requested by the Government to finance a follow-up project to expand the ADESJO
experience into other areas requiring more involvement of the municipalities and other actors in
decisions regarding watershed management\.
The productivity gains made so far under the agricultural development component are likely to be
sustainable because of the high adoption rate observed and the simple nature of the technologies
introduced\. Nonetheless, further technological progress will only be possible if a high level of
technical assistance continues to be provided either by INDRHI or by the WUO themselves out of
their own resources (which means charging higher water tariffs)\.
The positive development outcome of the WUO strengthening subcomponent is on the path to
sustainability as it is now institutionalized in legislation and supported with self interest\.
Long-term sustainability will depend on the WUO becoming more independent from INDRHI,
which will depend on INDRHI's deliberate withdrawal from tasks that the WUO should perform\.
Such a withdrawal will require political will as well as time, but is likely if budget pressures and
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dialogue reinforce the transfer\.
6\.2 Transition arrangement to regular operations:
not applicable
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Unsatisfactory
The Bank's performance during preparation had major shortcomings\. As mentioned above
(Quality at Entry), most components were designed to allow flexible project implementation
although insufficient analysis prevented this from being planned properly ex ante\. The design did
not take enough into consideration INDRHI's weak implementation capacity (although the Bank
had worked with INDRHI before)\. In this case, the lack of clear project blueprints for
rehabilitation works opened the door for a long and overly ambitious study\. The Bank also failed
to detect the lack of ownership by INDRHI of the participatory methodologies to implement the
infrastructure works and the research components (in which INDRHI had no experience)\.
Although project preparation proposed levels of cost recovery through water use payments for
irrigation operation and maintenance, preparation did not elaborate the processes to achieve cost
recovery\.
The Bank was also somewhat lax in exercising quality control of the lending process which later
contributed to implementation and supervision difficulties\. For example, there were discrepancies
between the SAR and the loan agreement in objectives and components\. Cost recovery was
treated as being secondary objective in the SAR but in the loan agreement it is considered an
important project objective\. This led to confusion within the Bank and with the Borrower as to
the importance of this objective during implementation\. There were also large discrepancies
between the project costs in the text and in the project cost annexes\. Land titling became part of
the project design without a clear justification and turned into a disbursement condition for the
infrastructure works\.
7\.2 Supervision:
Unsatisfactory
The Bank dedicated most of the supervision effort on getting project inputs into place; including
leading the project to effectiveness, ensuring timely procurement, resolving contractual issues,
project restructuring and component redesign\. There were, however, several Borrower
complaints about the Bank's initial frequent changes in task managers and lack of responsiveness
at a later stage\.
There were an adequate number of supervision missions properly staffed\. But because of slow
implementation, the supervision effort did not approach the project with a strategic ("results")
perspective\. Supervision teams continued to consider a project of a planned eight-year duration
as a "pilot" and did not focus on the project objectives in a comprehensive manner until 2002
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when the loan agreement was amended and Project Development Objective Indicators were
established\. For example, Project Status Reports did not mention cost recovery in the
development objectives until 2002, and did not record any discussion of the risks to sustainability\.
To its credit, the Bank persisted in diagnosing and trying to remedy implementation problems\. It
helped to restructure the project's terms and implementation arrangements in such a way as to
facilitate reaching the main technical outputs\. On three occasions it declared project
implementation unsatisfactory and encouraged the Government to take corrective actions\.
However, the Bank appears to have unrealistically accepted agreements on action plans or
restructuring plans as solutions before the problems were effectively resolved or the actions were
implemented\. Considering that this project was rated "at risk" several times, and taking into
account the Bank's previous experience with INDRHI and in other projects in the Dominican
Republic, the Bank could have been less credulous\. In face of the poor performance of the
implementing agency (see below), the Bank did not hold it or the government accountable for
repeated failings\.
The Bank may also have shown poor strategic and technical judgment in approving the terms of
reference for a long and costly study to identify and design irrigation works to be performed by
consultant engineers, contrary to the expressed goal of the project to engage farmers and WUO in
the design of works, linking this to cost recovery\. The Bank, therefore, allowed the project to
drift away from intended goals\.
The Bank was effective with the reconstruction after Hurricane George and in assisting the
Government to obtain technical advice from FAO/CP when it became clear that this was needed\.
It extended the project for one year to allow the project to reach its objectives\. The Bank took
hereby a calculated risk that the works could be finished by the end of 2004\. At the moment of
that decision (end 2003), however, the national financial and fiscal crises were very pronounced
thereby casting doubt about the availability of fiscal space to implement the works, while 2004
was also an election year which was likely to create delays\. The chances to finish the works
before project closing were not promising\.
Overall, therefore, the Bank allowed short term implementation issues to set the supervision
agenda and did not motivate a results focus\.
7\.3 Overall Bank performance:
Unsatisfactory
Borrower
7\.4 Preparation:
Unsatisfactory
The involvement of the government in project preparation was rather limited\. The project was
prepared by the Bank through FAO/CP funds from 1991 to 1993 and was appraised in 1995\.
Most interest was shown by INDIRHI which had a clear interest in receiving project support\.
However, levels of government with responsibilities for rural development and fiscal management
did not participate actively\. There was a tw-year delay between Board approval and
- 16 -
effectiveness\. Granted that most of the delay was caused by Congress, where loan approvals are
often based on political considerations that have very little to do with the project itself,
government does not appear to have made a strategic case for the project\. This was the longest
effectiveness delay of all Bank projects in the DR since 1991\.
7\.5 Government implementation performance:
Unsatisfactory
Once effective, the Government has supported the project during its implementation providing it
with fiscal space within its control\. It also provided latitude for implementation by INDIRHI,
although this may have dampened INDIRHI's accountability for meeting strategic goals\. It did
not appear to have informed itself, or if informed, take action to reinforce respect of commitments
make by INDIRHI to the Bank\. On the other hand, the financial crises of 2002-2003 delayed the
provision of counterpart funding and interrupted construction of the infrastructure works\. At the
macro-level, the policy of agricultural protection has helped create positive results of the
agricultural and institutional development components\. The same policy, however, has also been
an impediment to introduce serious water tariff levels and cost recovery mechanisms and has
restrained the transfer of water management responsibilities from INDRHI to WUO\.
7\.6 Implementing Agency:
Unsatisfactory
At the onset of the Project INDRHI was not ready for implementation\. With the change of
Government in 2000, a new project coordinator was appointed, the UEP gained some
administrative decision authority and implementation moved ahead but at a different pace in each
component\. Nevertheless, at least initially, there were deficiencies in procurement and the Bank
had to declare misprocurement in 2000 for almost US$300,000\. Internal weaknesses limited the
monitoring and reporting in the project (very few progress reports are available)\.
INDRHI had a very positive response to Hurricane Georges and used good judgment to recruit
good implementation agencies for the institutional and agricultural development and the
watershed management components\. As a result, the sub-contracted parts of the project worked
well\. However, when INDRHI was in charge (tender and supervision of studies, tender and
payment of works) implementation was extremely slow and bureaucratic\. It did not recruit the
technical assistance that was provided for in the project and hence did not implement some
components\. It had difficulties in deciding on the alternatives for infrastructure works, and was
slow in approving bidding documents, contracts (including price adjustments) and payments\. It
made repeated promises to the Bank that the implementation pace would pick up, but did not
follow through\. Finally, when it became obvious that not all funds would be spent, it refused to
ask for cancellation of the outstanding loan amounts until after project closing\.
7\.7 Overall Borrower performance:
Unsatisfactory
8\. Lessons Learned
The project experience has illustrated several lessons that have appeared in previous projects,
- 17 -
most strikingly, the importance of a significant analysis of risks of fulfilling developmental
objectives, particularly when dealing with known agencies in borrowers facing difficult
circumstances\. Among specific lessons are:
Projects that have as an objective testing methodologies for public intervention in the rural
sector need to make sure that baseline studies are available and monitoring and evaluation systems
are in place to evaluate these methodologies prior to beginning activities\.
The transfer of irrigation schemes from the public sector to WUO is a process that
requires political will and adequate transfer policies and processes\. When the Bank assists such
transfers, it should make clear agreements with the Borrower before or during loan negotiations
on those policies and processes and on the support needed to help these processes move forward\.
Private sector performance in project execution (ADESJO's watershed management
program and the State University of Utah's agricultural institutional development program) has
been much better than Government performance\. Governments should be encouraged to involve
the private sector more in implementation (to outsource rather than to reproduce expertise) when
these organizations have a comparative advantage and a proven track record\.
More technical and financial participation of WUO in selecting, designing and
implementing works would have created more ownership and possibly assured greater
effectiveness in the use and maintenance of infrastructure as it has in other countries\. In addition,
it would have facilitated the implementation of works needing farmers' collaboration in arranging
water flow cuts in canals\.
The participatory process of technology transfer requires both agronomic and
agro-economic analyses\. The monitoring system should carry out agronomic and agro-economic
studies to ensure that the technologies and methodologies are profitable and sustainable\.
The costs per beneficiary of training, technical assistance, investment support and
administration should be closely monitored and contained within limits that are acceptable from a
replicability point of view\.
Supervision of civil works using national companies may bring about important savings\.
Design of infrastructure works should be followed promptly by implementation as design
of works close to urban areas become quickly outdated resulting in design changes during
implementation, additional delays and soaring construction costs\.
Bank management should ensure that the PAD, loan agreement (and logical or results
framework) have the same project development objectives and consistent performance indicators\.
9\. Partner Comments
(a) Borrower/implementing agency:
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The Borrower did not provide specific comments on the ICR but referred to its project final
report, a summary of which is presented in Annex 8
(b) Cofinanciers:
n/a
(c) Other partners (NGOs/private sector):
No comments were received from ADESJO
10\. Additional Information
n/a
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Annex 1\. Key Performance Indicators/Log Frame Matrix
The SAR did not include a Log Frame Matrix and there are no impact/outcome indicators
presented in a systematic manner\. There are however key performance indicators\. The outcome
indicators were established in 2002\.
Outcome Indicators
At Target Implementation
INDICATORS Units appraisal (SAR) December
2004
Increased productivity/incomes
Agricultural development component in the Number of 5,000 9000 or 120001
irrigated areas farms
Nizao watershed management Farm families 1,500 1,300
Increased water availability Million of n\.a\.3/3,600 32million
(supply/savings) cubic meters / irrigation, m3/1,300 ha
incremental 1,200 irrigation, 0 ha
hectares of drainage2 drainage
arable land
Cost recovery (water charges per hectare)
YSURA US$/Ha 14 60 21
NIZAO-VALDESIA US$/Ha 16 40 26
PRYN US$/Ha 24 41 12-24
Reduced government subsidies n\.a\. n\.a\.
1The figure of 9,000 was provided by the UEP, estimated on the basis of 1500 farmers assisted directly by the
project and 7,500 neighboring farmers benefiting indirectly (5:1 rate)\. The figure of 12,000 beneficiary farmers
with at least 15% increase in productivity and income is derived from the end-of-project survey (see annex 3 with
more details)\.
2Area estimated at appraisal that would benefit from irrigation/drainage improvements\.
3n\.a\. = not available
- 20 -
Key Performance Indicators
(prepared on the basis of information provided by the Project Implementation Unit)
- 21 -
INDICATORS Units Implementation
(Quantity/%) Target December 2004
1\. Irrigation infrastructure
YSURA
Surface drainage Ha/km 1800/68 0
Wells4 No\. 0 9 (45%)
NIZAO VALDESIA
Rehabilitation of canals 4 Km 55 55
Canals of inter-connection reservoirs-laterals Km 6 6
Reservoirs 4 No\. 2 0
PRYN
Reservoirs4 No\. 2 1
Surface drainage Ha/km 1200 / 42 0
Land leveling (original target was 7,259 ha)
YSURA
Area Ha 1816 347
Final design No\. - 312
Plots leveled No\. - 230
PRYN y NIZAO-VALDESIA
Area Ha 1929 + 369 323
Final design No\. 196
Plots leveled No\. 167
Manual of operation and maintenance No\. 3 3
2\. Watershed management
Plant production in green houses Million units 5\.0 4\.33
Re-forested area Ha 873 437
Land conservation Ha 1,923 1,046
Community irrigation systems No\. 42 35
Agro-forestry systems Ha 1,762 1,235
Training to groups and ADESJO No\. events 246 385
Promotion of rural micro-enterprises No\. 938 976
beneficiaries
Community Councils No\. 24 24
3\. Agricultural Development 5
Training technical staff SATTT 5 No\. staff 60 34
Farmers directly assisted by SATTT 5 No\. producers 1550 1550
Field activities with farmers
Visits 5 No\. 16,000 62,013
Field days No\. 600 380
Educational tours No\. 150 83
Demonstration plots No\. 600 541
- 22 -
- 23 -
INDICATORS Units Implementation
(Quantity/%) Target December 2004
4\. Institutional Development 6
Technical Training Person-days 450 830
Training Water User Organizations (WUO) Person-days 18,890 24,700
Strategic plans of the WUO No\. 3 2
Workshops No\. 2 5
Visits abroad No\. 6 0
Office equipment and computers WUO Units 15 30
Land Titling
Ownership certifications ("Cartas Constancia") No\. 4,491
Propriety Titles No\. 588
5\. Studies 7
Design of infrastructure works % 100
Cadastral maps % 100
Review of legal documents % 100
Other technical studies and studies required for the Unit n\.a\. 6
evaluation of the project
6\. Monitoring and Evaluation
Manual of Operations of Project Unit\. 1 1
Mid-term Review Unit\. 1 1
Final Report Unit\. 1 -
Monitoring and Evaluation System Unit\. 1 -
4Infrastructure
To date 45% of wells has been completed, including drilling, etc\.
Reservoirs replace other works planned originally\.
Construction works completed, missing small sluices and mechanical parts\.
Heavy equipment was acquired under the Emergency Plan for Hurricane Georges\.
5Agricultural Development
Technical staff trained by the "Servicio de Asistencia Técnica y Transferencia de Tecnología (SATTT)"\.
It is estimated that each extension worker SATTT assisted 50 farmers in a direct way\.
This component was revised during the mid-term review (1999), to include technical assistance through three
methodologies: intensive technical assistance, demonstration plots and sporadic technical assistance\.
6Institutional Development
Training staff of INDRHI, WUO and ADESJO, courses, visits, etc\. No detailed information was found regarding
training of INDRHI's staff\.
7Studies
The design of the infrastructure works was finalized with great delay that contributed to the general delay of
project implementation\.
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Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Project Cost By Component US$ million US$ million
Irrigation Infrastructure 20\.19 5\.89 29%
Watershed Management 2\.89 2\.63 91%
Agricultural Development 5\.00 5\.29 110%
Institutional Development 4\.00 5\.60 140%
Studies 0\.00 4\.50 n\.a\.
Monitoring and evaluation 0\.00 1\.19 n\.a\.
Refinancing PPF 0\.00 2\.03 n\.a\.
TOTAL Baseline Costs 32\.08
Contingencies 11\.12
Total Project Costs 43\.20 27\.13 62%
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
ProcurementMethod1
Expenditure Category ICB NCB Other2 N\.B\.F\. Total Cost
1\. Works 11\.90 3\.80 0\.00 0\.00 15\.70
(9\.50) (3\.00) (0\.00) (0\.00) (12\.50)
2\. Goods 2\.50 0\.40 0\.20 0\.00 3\.10
(1\.90) (0\.40) (0\.10) (0\.00) (2\.40)
3\. Technical 0\.00 0\.00 7\.10 0\.00 7\.10
Assistance/Studies/Training (0\.00) (0\.00) (6\.20) (0\.00) (6\.20)
4\. Agricultural Development 0\.00 0\.00 4\.40 0\.00 4\.40
Services (0\.00) (0\.00) (2\.90) 0\.00 (2\.90)
5\. Grants for watershed 0\.00 0\.00 3\.20 0\.00 3\.20
management (0\.00) (0\.00) (3\.20) (0\.00) (3\.20)
6\. Operating costs 0\.00 0\.00 0\.00 9\.70 9\.70
(0\.00) (0\.00) (0\.00) (0\.80) (0\.80)
Total 14\.4 4\.2 14\.9 9\.7 43\.2
(11\.4) (3\.4) (12\.4) (0\.8) (28\.0)
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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
Procurement Method1
Expenditure Category ICB NCB Other2 N\.B\.F\. Total Cost
1\. Works 0\.00 5\.10 0\.79 0\.00 5\.89
(0\.00) (4\.02) (0\.63) (0\.00) (5\.28)
2\. Goods 0\.00 2\.05 0\.27 0\.00 2\.32
(0\.00) (1\.74) (0\.23) (0\.00) (1\.97)
3\. Consulting Services 0\.00 0\.00 8\.27 0\.00 8\.27
(0\.00) (0\.00) (8\.27) (0\.00) (8\.27)
4\. Agricultural development 0\.00 0\.00 1\.30 0\.00 1\.30
Services (0\.00) (0\.00) (1\.30) (0\.00) (1\.30)
5\. Grants for Watershed 0\.00 0\.00 2\.63 0\.00 2\.63
Management (0\.00) (0\.00) (2\.63) (0\.00) (2\.63)
6\. Operational Costs 0\.00 0\.00 1\.00 3\.69 4\.69
(0\.00) (0\.00) (0\.19) (0\.00) (0\.19)
7\. Refinancing PPF 2\.03 2\.03
(2\.03) (2\.03)
Total 0\.00 7\.15 16\.29 3\.69 27\.13
(0\.00) (5\.76) (15\.92) (0\.00) (21\.68)
1/ Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
Appraisal Estimate Actual/Latest Estimate Percentage of
Component Appraisal
Bank Govt\. Other Bank Govt\. Other Bank Govt\.
Infrastructure 12\.30 5\.40 5\.28 0\.61 n\.a\.1 43% 11%
Watershed Management 2\.89 0\.00 2\.63 0\.00 91%
Agricultural 3\.50 1\.50 2\.30 3\.99 66% 266%
Development Services
Institutional Development 9\.31 3\.86 0\.92 3\.75 0\.85 n\.a\. 40% 22%
Studies 4\.50 ~ ~
Monitoring and 1\.19 ~ ~
Evaluation
Other 3\.44 n\.a\.
Refinancing of PPF 2\.03
TOTAL 28\.0 14\.20 0\.92 21\.68 5\.45 n\.a\. 79% 43%
1n\.a\. = not available
- 26 -
- 27 -
Annex 3\. Economic Costs and Benefits
The Project's objective to improve farmers' income in the project area could not be assessed
through a cost-benefit analysis because (i) none of the irrigation infrastructure rehabilitation
works were fully completed; and (ii) the project did not collect comprehensive data on changes in
productivity and income as a result of the agricultural development and institutional strengthening
components\.
During the last three months of the project the Government ordered studies trying to estimate the
likely social and financial impact of some project components\. A rather theoretical study was
done on the possible impact of two works (Canal Marcos A\. Cabral and the La Rapida Reservoir)
and land leveling on water savings\. A survey of 120 farmers of the three project areas was carried
out to collect their perceptions on the changes in productivity and income as a result of the
agricultural and institutional development components\. A third study was done on the social and
economic impact of the watershed management component\.
There are indications that: (i) the rehabilitation works could save substantial amounts of water;
(ii) the agricultural and institutional development components have had a very positive impact on
productivity and income; and (iii) the watershed management component also showed gains in
conservation management and income\. The results of the three studies are analyzed below\.
Irrigation infrastructure
Rehabilitation and water regulation improvements in the canal Marcos A\. Cabral are reducing
water losses and making additional water available to farmers in the extreme ends of the irrigation
system that had irregular or no access to water in the past\. However no measurements have been
done\. The construction of the La Rapida reservoir that hopefully will become operative soon,
was conceived as a way to reduce less efficient night irrigation\. The reservoir will be replenished
during the night and released during daytime and is expected to result in reduced water losses and
increased water efficiency at farm level\. In addition to these two works, 670 hectares of land
were leveled with an average cost double than estimated\. Land leveling may also decrease water
consumption\. According to the infrastructure study, the above works could increase the annual
availability of irrigation water by approximately 32 millions cubic meters Ing\. Franklin Ramírez,
Estudio de Evaluación de Impacto del Componente de Infraestructura del Proyecto PROMATREC, Diciembre de
2004\. The figures are entirely based on data from feasibility studies\.
, enough to irrigate an additional 1,300 hectares\. The reservoir would account for the largest
impact\. If these estimates would prove to be close to reality, the investment cost of providing
water to one additional ha would vary between US$2,911$/ha and US$4,627/ha which is a
reasonable cost compared to international standards for irrigation rehabilitation\. See table 1\.
- 28 -
Table 1
Estimated benefits to be derived from incremental water availability
Potential incremental Potential increase
water supply/savings of irrigation area Investment cost
per year (Cubic resulting from per additional ha
Meter) incremental water (US$/ha)
supply/savings (ha)
Canal MAC, Nizao-Valdesia 9,870,000 387 3,659
Reservoir La Rapida, PRYN I 15,680,000 639 2,911
Land leveling YSURA/Nizao-
Valdesia and PRYN I 6,627,065 276 4,627
TOTAL of nearly completed works 32,177,065 1,302 3,496
Assessing the cost of the infrastructure works in relation to the farmers' capacity to pay the
investments over 30 years shows the following\. Table 2 presents the cost recovery price of water
if the investment costs are discounted over a period of 30 years at 12 percent discount rate, the
average costs of operating and maintaining the irrigation systems and the actual water tariff\. The
annual cost per ha with full cost recovery and payment for operation and maintenance would be
between US$ 507/ha and US$ 667/ha\. This is way above the actual tariff of US$12-26/ha
(varying according to the irrigation system and the crop produced in the irrigated plot)\.
Table 2
Cost analysis of incremental water availability
Average cost of
Cost-recovery price Prospective management, operation Actual
discounted over a annual tariff and maintenance of water
period of 30 years assuming cost- current irrigation tariffs per
(US$/Cubic Meter) recovery ha/year
(US$/ha) 2/ systems (US$/ha -
Cubic Meter) 1/ (US$)
Canal MAC, Nizao-Valdesia 0\.025 637 125 - 0\.007
Reservoir La Rapida, PRYN I 0\.021 507 59 - 0\.003
Land leveling 12 26
YSURA/Nizao-Valdesia and
PRYN I 0\.028 667 242 - 0\.014
1/ Pavletich, Recuperación de Costos en los Sistemas de Riego del PROMATREC, Diciembre del 2004\.
2/ Discounted cost of investment, operation and maintenance over a 30 year period and 12% discount rate\.
How do these figures compare to the actual marginal financial benefits obtained by the farmers
- 29 -
from improved irrigation infrastructure?
The evaluation of the Nizao Watershed Management component Carlos Luis Jiménez Briceño:
Evaluación de impacto de las Acciones del Componente Manejo de Cuenca en las Áreas de Intervención y estudios
de casos en Áreas Demostrativas del PROMATREC and the studies carried out to design the
infrastructure works provide information in that regard\. According to the post-project evaluation
carried out in the Nizao watershed, the annual net income per hectare of the target group and the
control group are on average respectively US$ 1,300 and US$ 800 Taking into account all sources of
family income and an average plot size of 3 hectares\. These income differentials are to a great extent
explained by the differences in the efficiency of the irrigation systems\. Estimations on annual
average net incomes per hectare under the hypothesis of combined improved irrigation methods in
the project area Source Tahal Irrigation Design Study roughly confirm the validity of the net returns per
hectare (US$ 1,020-US$ 1,255) Based on a production structure of vegetables, fruits, cassava and mousaceas,
as it is in general the normal practice in the project area\. \.
Moreover, according to a recalculation of the Nizao-Valdesia farm model at appraisal, the
incremental net income flow per hectare (i\.e\. income flow with project minus income flow without
project) would be about US$500 per ha\.
The above figures suggest that increased irrigation efficiency could have a marginal financial
return in the order of around US$500 per ha, or in other words: a farmer would be willing to pay
(in the margin) up to that amount per ha for irrigation\. This is however slightly less than the
discounted cost per ha of irrigation rehabilitation plus operation and maintenance of the
concerned works (table 2)\. Which means that the discounted costs of rehabilitation plus
operation and maintenance could be equal or exceed the marginal financial returns per ha\. It also
indicates that under an appropriate policy context and efficient water management the water
tariffs could be significantly raised but probably not to the level required for full cost recovery\.
The economic costs and returns are not very much different from the financial ones\. Although the
Dominican Republic has a high protection of domestic production, crops grown in the irrigation
schemes under the project are not very much protected\.
Summing up, even if the infrastructure works are completed within the next few months, and the
water savings would be close to the ones estimated in the post-project infrastructure study, the
financial and economic return of the infrastructure rehabilitation component could be rather
marginal\.
Agricultural Development
The agricultural development component mainly involved training and technical assistance to
farmers\. It comprised the following activities: short courses, visits, technical tours and
demonstration plots (annex 1 provides detailed statistical information on each type of assistance)\.
Apart from the demonstration plots, some farmers benefited also from intensive technical
assistance whereas others only received sporadic assistance\.
- 30 -
According to a survey of 120 randomly selected farmers, most have experienced an increase in
productivity and incomes as result of the component\. As shown in table 3, more than 80% of the
farmers claim they have increased productivity by at least 15%\. Farmers in Nizao and PRYN
systems mention the highest increases whereas those in YSURA mention lower increases\. These
benefits are also linked to increased production costs\. In spite of the increased production costs,
77% of all farmers say they have obtained income improvements greater than 15%\.
Table 3
Impact of the Agricultural Development Component by Irrigation System
NIZAO YSURA PRYN TOTAL
% of farmers in the irrigation system % all systems
> 15% increase in productivity 85 68 80 80
> 15% increase in production costs 84 88 74 83
> 15% increase in income 82 85 60 77
These outcomes were achieved within the framework of an initial situation of low technology
levels, poor water use efficiency and during a period of favorable agricultural prices caused by a
strong currency depreciation and high inflation\. Higher impact was obtained among farmers that
received intensive technical assistance or managed demonstration plots: 83% and 63% of the
farmers with demonstration plots declared increases in productivity higher than 15% and 20%
respectively\. However, sporadic technical assistance was quite successful and achieved 10-15%
productivity increases\.
Table 4
Adoption of technologies
Baseline (percentage After the program
of farmers) (percentage of farmers)
Use of fertilizers 86 97
Certified seeds 50 68
Land levelling 20 46
Drainage 61 78
Weed control 100 n/a
Disease control 83 99
Below surface ploughing 19 43
Contour planting 91 n/a
The financial and economic returns on this component are quite high\. Because of the component
the farmers would have obtained additional net benefits between US$81 and US$260 per ha\.
Considering the initial cost of this component and taking into account the sustaining costs of
accompanying the farmers over the next ten years internal rates of return are estimated to be close
to 175 percent\. Even if this figure would be overestimated because of the weak statistical
material on which it is based, there is no doubt that the agricultural development component has
been highly successful from the financial and economic perspective\.
Some of the technologies introduced (such as land levelling or drainage) can be considered
- 31 -
intrinsically sustainable\. The sustainability of other technology improvements, such as certified
seeds, fertilizing or disease and pest control will depend on the farmers' access to financing\.
Nizao Watershed Management
An NGO (ADESJO) implemented this component with a view to develop and test a methodology
to promote improved watershed management systems for nationwide replication\. Strengthening
community organizations and the adoption of new technologies (conservationist and economically
efficient) are key elements of the methodology\. The component was successful in
organizing/reinforcing 24 Community Councils, establishing revolving funds for community
organizations and made important progress in productive projects such as community irrigation,
agro-forestry, reforestation, organic production and women participation\.
The impact of the component was estimated through a field survey\. The results are as follows: 75
percent of the farming households said they have now a better quality of life and 72% said that
their income improved by 25%\. This outcome contrasts with the 63% of the households in the
control group that mentioned no increase in their income\. On average the beneficiary households
have an income of RD$ 10,032 compared to RD$ 6,145 in the control group\.
The household expenditure structure provides an insight in the differences in the quality of life
between the beneficiary households and the control group\. Whereas the control group tends to
concentrate its expenditure on food (59%) and maintain a minor allocation to education, health
and leisure (20%) and none for savings, the beneficiary families spend less in food (44%) more on
health, education and leisure (25%) and manage to save 9% of their income\. This positive
outcome would result from the higher income situation as well as from higher individual
self-esteem and community interaction\.
The chart below provides an illustration of the people's perception about the future\. It refers to
the expectations about their quality of life: 77 percent of the beneficiary households have higher
expectations now than three years ago while only 25 percent of the control group do so\.
Quality of life expectations now respect to three
years ago
45%
40%
Target group
35%
30% Control group
25%
20%
15%
10%
5%
0%
Much Better Equal Less Much
better less
- 32 -
Regarding environmental impact, although there are no indicators that can show differences in a
irrefutable way, the field evaluators refer to a noticeable higher environment quality in the project
areas and a more environmentally conscious attitude on the part of the beneficiary families\.
There are however some challenges regarding the sustainability of the benefits that would require
an additional time horizon and analysis\. First, some participants never adopted the proposed
technologies\. The reasons for this are not clear, but lack of profitability of the technologies may
be one of them\. Moreover, the process of participatory validation and transfer of technology is
slow and requires long-term commitment\. Second, the project funds were not transferred to the
Community Councils that remained highly dependent on ADESJO´s financial management of their
resources and therefore they have not yet been able to develop sufficient institutional skills to
self-manage resources\. Third, the relationships between the Community Councils and the other
actors in the watershed (municipalities, water companies, down stream water user organizations)
have not been developed\. Fourth, the unit cost (about US$ 1,000 of direct investments and US$
2,000 of total cost per beneficiary household) is relatively high and must be taken into
consideration for the replication of the experience\. The relatively high cost of accompanying the
Community Councils and the communities themselves in this pilot may have been caused by some
administrative problems during contract implementation\. Nevertheless, watershed management
through communities will need to be accompanied by efficient watershed management by the
central and local Governments to become profitable and sustainable\.
- 33 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
Appraisal and
Negotiation
Staff Weeks 68\.58 Irrigation Engineers,
Agronomists, Agricultural
Economists, Financial Analysts,
Procurement Specialists
Supervision
06/95 4 I,I,A,E
09/95 2 I,E S S
01/96 1 E U S
06/06 1 E U S
02/97 1 E U S
11/97 5 A,I,E,E,E U S
05/98 5 A,A,I,FM,L S S
12/98 2 A,I S S
7/99 2 A,I S S
01/00 5 A,A,I,P,M U S
09/00 1 A,I) S S
03/01 1 A S S
09/01 2 A,I S S
02/02 2 A,I S S
10/02 5 A,P,FM,RA,I U S
06/03 5 A,P,FM,RA,I U S
09/03 2 A,I S S
01/04 1 I S S
03/04 4 A,I,E,FM S S
ICR
09/04 4 E,I,AE U U
03/05 2 AE,AE U U
I= Irrigation Engineer; A= Agronomist, AE= Agricultural Economist; E= Economist; RA= Research Analyst;
P=Procurement Specialist; FM= Financial Management Specialist
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 48\.1* 190\.3
Supervision 185\.4 741\.7
ICR 13\.2 65\.7
Total 246\.7 997\.7
*includes Appraisal/Negotiation (37\.1 Staff weeks)
- 34 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 35 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 36 -
Annex 7\. List of Supporting Documents
Recuperación de Costos en los Sistemas de Riego del PROMATREC , Iván Pavletich, Diciembre
del 2004
Evaluación de impacto de las Acciones del Componente Manejo de Cuenca en las Areas de
Intervención y estudios de casos en Áreas Demostrativos del PROMATREC Carlos Luis Jiménez
Briceño, Diciembre de 2004
Consultoría Evaluación ex post del Componente de Desarrollo Agrícola de las Juntas de Regantes
Ysura, Nizao Valdesia y PRYN Pedro Pablo Peña Diciembre 2004
Consultoría sobre Conformación Organismos de Cuencas, Hernán Carmona Atencio , Diciembre
de 2004
Supervisión de la Ejecución de los Trabajos de Rehabilitación, Complementación y
Modernización de los Sistemas de Riego Yaque del Norte, Yaque del Sur y Nizao Valdesia
Informe Final Louis Berger Group, INC, Diciembre de 2004
Estudio de Evaluación de Impacto del Componente de Infraestructura del Proyecto
PROMATREC, Ing\. Franklin Ramírez, Diciembre de 2004
PROMATREC, Resumen Descriptivo de las Obras Ejecutadas, Enero de 2005
Universidad Estatal de UTA, Informe Final Componente de Capacitación, Fortalecimiento
Institucional y Desarrollo Agrícola,
Universidad Estatal de UTA, Estudio diagnóstico del nivel tecnológico de las Juntas de Regantes
Nizao-Valdesia, YSURA y Ulises Francisco Espaillat, 2002
Proyecto Manejo de Tierras Regadas y Cuenca, Informe de Cierre, PROMATREC, Abril 2005
- 37 -
Additional Annex 8\. Borrower Contribution
The Borrower's evaluation diverges at many points from the Bank's evaluation\. The following is
a translated summary of the Borrower's report dated April 2005\. The focus of this summary is on
the assessment of the project by the Borrower\. The Borrower's full report is available in Spanish
in the project files\. The paragraph numbering in the translation refers to the paragraph numbering
in the Borrower's report\.
Borrower Report Summary
2\.1\. Objectives and components: The overall objectives of the project are (a) to improve the
livelihood of the three irrigation systems where the project intervenes and of the peasants in the
watershed of Rio Nizao, and (b) develop and test methodologies at the national level in water
resources management, operation and maintenance of irrigation systems and support services to
the agricultural production under irrigation\.
The specific objectives of the project are to: (a) increase the income of the farmers in the PRYN,
YSURA and NIZAO-VALDESIA irrigation systems and the farmers located in the Rio Nizao
Watershed; (b) rehabilitate and modernize the above three irrigation systems; (c) strengthen the
water user organizations and producer organizations; (d) reduce the fiscal costs of public
investment in irrigation through adequate cost recovery policies; (e) develop methodologies for
sustainable watershed management; and (f) provide agricultural production support services to
improve the management of the water user organizations and the operation and maintenance of
the irrigation systems\.
2\.2\. Revised objective: Overall, the initial project objectives have been maintained with some
variations in the infrastructure and agricultural development components, and some reorientation
of the project targets to implement the emergency rehabilitation plan in response to Hurricane
George (1998)\. As far as specific objective (d) is concerned, this aspect was initially and during
implementation not well accepted\.
2\.3 Original components: The project has six components: (i) institutional strengthening; (ii)
agricultural development; (iii) irrigation and drainage infrastructure; (iv) technical studies; (v)
development of the Rio Nizao Watershed; and (vi) monitoring and evaluation\.
2\.4 Modified Components: the infrastructure component was modified to include an
emergency rehabilitation component after hurricane George (1998)\. The agricultural
development component was modified from a subsidy scheme for private and public entities
involved in agricultural development and research to a technical assistance and technology
transfer program in support of INDRHI's decentralization policy\.
2\.5\. Quality at Entry: The quality at entry is poor, for several reasons: (i) the project became
effective 22 months after the planned date after which the project lingered on for 14 months
without much progress for several reasons: changes in key staff in the Bank and INDRHI, poor
implementation capacity of INDRHI in 1995 and the complexity of the project; (ii) hurricane
- 38 -
Georges (1998) delayed implementation even further; and (iii) the objective of reducing the fiscal
cost of the irrigation systems through adequate cost recovery mechanisms was adopted in the
margin of reality the same can be said about reducing INDRHI assistance to water user
organizations\. On the contrary, INDRHI has focused on the transfer of irrigation systems to the
water user organizations by increasing INDRHI's technical assistance\. Hence this project
objective was unrealistic\.
3\. Assessment per component\.
3\.1\. Institutional Strengthening\. The objective of the component was to improve significantly
the level of understanding of the water user organizations to increase their efficiency in
administration, staff management, democratic decision making, finance, accounting and
marketing\. The training component had as a principal objective to teach the producers a series of
innovations that if adopted would increase productivity\.
The results of this component include among others: (i) the legal establishment of three WUO and
30 associations that are part of the WOU, including statutes and regulations that promote more
democratization, computers and accounting systems, and a digital map of the irrigation district;
(ii) training was provided to the managers and staff of the WUO as well as 200 members of the
directorates of the WUO and 3,000 members; (iii) farmer cooperatives were established; (iv)
under a contract with INDRHI the WUO collected water fees; (v) the existence of an operation
and maintenance mechanism to facilitate water distribution, water measuring and infrastructure
maintenance; (vi) the existence of planning, organization and control mechanisms; and (vii) the
existence of a long-term strategic development plan\.
The impact of this component is evaluated as: highly satisfactory for the following reasons: (i)
65 percent of the water users participated in training; (ii) 80 percent of the farmers participated in
meetings of their organization; (iii) 50 percent of the farmers participated in titling activities; (iv)
land titles were obtained request for provisional titles by more than 80 percent of the farmers;
and (v) 66 percent of the farmers know the decisions of the WUO board of directors\.
3\.2 Agricultural Development\. The general objectives of this component are: productivity
increases, increase the capacity of the farmers through technical assistance and technology
transfer, establish a technical assistance and technology transfer service in the three WUO,
improve farmer incomes, and reduce the irrigation costs through the adoption of adequate cost
recovery mechanisms\.
The results of this component include among others: (i) an increase in the average weighted
productivity of 30 percent in the three WUO; (ii) 80 percent of the farmers obtained productivity
increases of more than 15 percent through their participation; (iii) plantain productivity increased
five fold; (iv) 60 professional staff of INDRHI, the Ministry of Agriculture and the WUO were
trained in technical assistance during two years by an international agro-engineering firm (Utah
University); (v) about 50,000 farmer visits were made, 3,000 groups activities were organized,
1,500 farmers were followed-up in an intensive manner through field days and other events\.
- 39 -
The impact of the component is evaluated as: highly satisfactory because of: (i) 80 percent of the
water users increased their productivity by more than 15 percent; (ii) the use of the "subsolado"
soil improvement technology increased from 19 percent to 43 percent of the farmers; (iii) the use
of plot drainage increased from 61 percent to 78 percent of the water users; (iv) the use of
fertilizers and pesticides increased from 86 percent to 99 percent of the water users; and (v)
increases in average farmer income of RD$13,822 per year in Ysura; RD$ 10,907 in
Nizao-Valdesia; and RD$8,888 in PRYN\. The average income increases were due to the
adoption of technology implemented by the project in the three irrigation systems\.
3\.3\. Irrigation Infrastructure\. The general objectives of this component was the rehabilitation
of 37 km of principal canals, 15 km of secondary canals, detailed engineering designs, the leveling
of 4,114 ha of agricultural land, equipment for the three irrigation systems, and increases in the
water availability through the construction of six water reservoirs and the drilling of 13 wells\.
The results of this component are as follows: (i) the detailed design of the rehabilitation and
modernization of the irrigation schemes; (ii) the construction of the El Llano and the Rapida I
reservoirs; (iii) the rehabilitation of the canal Marco Cabral; (iv) the drilling of 13 wells to be
completed with other financing; (v) about 347 ha have been leveled; and (vi) the works have been
supervised by the Louis Berger Group, Inc\.
The Borrower's report does not evaluate the impact of the infrastructure component but states
the following: (i) well drilling and testing achieved at 45 percent; (ii) reservoir designs completed;
(iii) tender for the construction of a reservoir and complementary works; (iv) the infrastructure
will be completed on time; (v) implementation of 16\.3 percent of the land leveling; and (vi) heavy
equipment purchased under the emergency subcomponent\.
3\.4\. Study Component The general objectives of this component was to implement several
studies to complete the documentation needed to support several investment the project was to
implement\. There were three fundamental studies: (i) the determination of the water costs, (ii) the
determination of the cost of machinery for the conservation of the water distribution systems, and
(iii) the evaluation of the cost recovery of the investment as well as policy studies for the Ministry
of Agriculture
The results of this component are: (i) a study about watershed organizations; (ii) several policy
studies about the modernization of agriculture; (iii) impact studies of the irrigation works; (iv)
cost recovery study; and (v) study on the transfer of financial resources from the lower to the
upper watershed levels\.
The report rates the impact of the studies at several levels\. The studies on training, institutional
strengthening, works supervision, cadastre measurements, cost recovery, establishment of
watershed organizations, transfer of resources from low to high levels in the watershed, the
project impact studies are considered highly satisfactory\. Other studies such as the rehabilitation
and modernization of the irrigation systems study as well as the environmental studies are
satisfactory\.
- 40 -
3\.5\. Watershed Management Component
The principal objective of the component is to obtain sustainable use of the natural and water
resources in the middle and upper watersheds\. The project would realize: the organization and
strengthening of 24 communities in 5 micro-watersheds; the training of the associations in
self-management, the management of development programs and the sustainable use of natural
resources; the provision of modern technologies to facilitate the sustainable use of soils and water
and the establishment of a revolving fund for private investments in agro-forestry, irrigated
agriculture and community investments on public lands\. Another objective was to develop
watershed management methodologies that can be replicated at the national level\.
The results of this component, in terms of physical factors, are not yet available as there are no
measurements\. In visits and conversations with the farmers, one could clearly perceive
achievements at the level of erosion control, improved land and water use, improvement in
employment, productivity and income of the farmers\.
The impact of this component is rated highly satisfactory and an impact table is presented in the
report\.
3\.6\. Monitoring and Evaluation Component\. This component had to monitor all project
activities through an integrated organizational system: (i) general management information; (ii)
establishment of a monitoring and evaluation unit; (iii) environmental monitoring; and (iv)
environmental impact\.
The component is evaluated in general as satisfactory for the following reasons: (i) the joint
monitoring between the Bank and the implementing agency; (ii) the works supervision by the
Louis Berger Group; (iii) the annual reports; (iv) the supervision of the institutional and
agricultural development components; (v) the supervision of the cadastral measurements; (vi) the
establishment and operation of a hydro-agricultural information system\. The monitoring system
itself is considered satisfactory\.
4\. Overall assessment of the achievement of the project objectives
- 41 -
Development of methodologies for sustainable watershed Highly satisfactory
management
Efficient support services for agricultural production Highly satisfactory
Improved water management Highly satisfactory
Adequate operation and maintenance of the irrigation systems Moderately satisfactory
Cost recovery Unsatisfactory
Strategic studies Highly satisfactory
Future project studies Moderately satisfactory
5\. Economic and Financial Evaluation
On the basis of a methodology using an economic water value of US$0\.08 per cubic meter the
Borrower report presents the following benefit/cost ratios:
Infrastructure Work Benefit / Cost ratio
Ysura 13 wells 1\.28
Reservoir "El Llano" 3\.45
Canal Marcos A\. Cabral 4\.06
Reservoir La Rapida 2\.85
Land leveling Ysura Nizao-Valdesia 8\.51
Land leveling PRYN 8\.33
6\. Factors affecting project implementation and results
6\.1\. Factors not under the control of the Government or the Implementing Agency
- Delayed loan approval in Congress
- Unsatisfactory performance of the engineering design company in the contract to design the
rehabilitation and improvement of the irrigation schemes
- Rigidity in the application of the procurement procedures by the Bank
- Late responses from the Bank to the initiatives of the implementing agency
- Successive changes in the management of INDRHI
- 42 -
6\.2\. Factors under the Government control
- Untimely provision of counterpart funds
- Excessive delays in the payment processes
6\.3\. Factors under the control of the Implementing Agency
- Slow decision making
- Slow tender procedures
- Low staff motivation because of low salaries
- Lack of support for the achievement of the project objectives
7\. Sustainability
Only the sustainability of the watershed management component has been evaluated:
sustainability is linked to the relationship INDRHI/NGO/Community, the profitable economic
activities will be sustainable while the environmental activities will need additional follow-up and
support by the Government\.
8\. Bank Performance
Bank performance is considered: fair
The rigidity in the Bank's procedures caused important delays and paralyzed the watershed
management component; there were delays in the approval for tender documents because of
minor issues\. The decision-making process in the Bank is very slow: the task team leader (TTL)
has to consult frequently with other areas in the Bank causing delays in the implementation of the
initiatives, the TTLs have multiple commitments and are absent from the office to fulfill these
commitments, hence they do not respond in a timely manner to communications\.
9\. Borrower Performance
The implementation unit was staffed with experienced people; the performance during the first
two years was not satisfactory and mistakes were made which made it impossible to use the loan
funds to spend on operating costs\. There were also changes in the management\.
10\. Lessons Learned
- To establish a monitoring mechanism to the disbursement system to avoid implementation
delays;
- Absence of a mechanism to recover the invested funds;
- To establish a steady technical support program for all stakeholders in fund management;
- 43 -
- It is evident that no infrastructure works should be started without formalizing the agreements
with the beneficiaries;
- To establish with more clarity the economic impact of the project, indicators have to be used to
measure employment creation, migration and farmer income;
- The inhabitants of the high watershed levels start complaining as those who live in the lower
watershed benefit from their work and compensation mechanisms are being discussed;
- Community members are not interested in practices that do not provide individual benefits; and
- Work undertaken by PROMATREC in the demonstration farms has shown that the local
conditions, the type of society, and the specific needs of the local population are as important as
the production technologies\.
_____________________________________________________
- 44 -
- 45 - | REVIEW |
P090991 | IEG
Report Number: ICRR14909
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 06/01/2016
Country: Indonesia
Project ID: P090991 Appraisal Actual
Project Name: Id-urban Water Project Costs (US$M): 33\.54 29\.27
Supply And Sanitation
L/C Number: Loan/Credit (US$M): 23\.56 20\.49
Sector Board: Water Cofinancing (US$M):
Cofinanciers: Board Approval Date : 07/28/2009
Closing Date: 12/31/2014 12/31/2014
Sector(s): Water supply (100%)
Theme(s): Water resource management (50%); City-wide Infrastructure and Service Delivery (50%)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Ranga Rajan George T\. K\. Pitman Christopher David IEGPS1
Krishnamani Nelson
2\. Project Objectives and Components:
a\. Objectives:
The project development objective as stated in the Loan Agreement, Schedule 1, page 5) and in the Project Appraisal
Document (PAD, page 7) was:
" To improve and expand water supply services in the project areas by strengthening local water utilities to become
operationally efficient and financially sustainable \."
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
The single component planned to finance water sector improvements in the three local water utilities (Perusahaan
Daerah Air Minums or PDAMs)\.
Kota Bogor (estimated cost at appraisal US$9\.06 million, actual cost US$8\.06 million)\. This sub-component aimed at
providing water sector improvements in Kota Bogor in West Java\. Activities included construction of: (i) a new water
treatment plant\. (ii) two additional units of rapid sand filters with new filter back washing facilities for the existing Water
Treatment Plant; (iii) a new water reservoir\. (iv) new water distribution pipelines including new household connections;
and, (v) implementation of a Non-Revenue Water (NRW) reduction program through installing new meters and
replacing old pipelines\.
Muara Enim (estimated cost at appraisal US$4\.15 million, actual cost US$4\.02 million)\. This sub-component aimed at
providing water sector improvements in Muara Enim in South Sumatra\. Activities included:(i) upgrading new river
intakes and building raw water transmission pipelines; (ii) constructing a new Water Treatment Plant (WTP) and
upgrading old plants; (iii) constructing new water reservoirs; and, (iv) expanding and rehabilitating the water
distribution system to improve service delivery and reduce losses to meet the growing demand for water in the urban
areas of Muara Enim and Tanjung Enim\.
Kuala Kapuas (estimated cost at appraisal US$10\.35 million, actual cost at closure US$8\.40 million)\. This
sub-component aimed at providing water supply improvements in Kuala Kapuas in Central Kalimantan\. Activities
included construction of: (i) a new water reservoir; (ii) a new water distribution pipelines including new household
connections; and, (ii) implementing a Non-Revenue Water Reduction program\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project cost\. The estimated cost at appraisal was US$33\.54 million but total cost reported by the ICR at closure was
US$29\.27 million\. Actual project costs in local currency were 99% of the appraisal estimates\. However, fewer US$
were spent because of its appreciation against the Indonesian Rupiah (INR)\.
Project Financing\. The approved IBRD Loan amount was US$23\.56 million\. At completion, US$20\.49 million was
disbursed\. US$3\.07 million was undisbursed and the Loan remains open\.
Borrower Contribution \. The Borrower's contribution was estimated at US$9\.98 million, and at completion their
contribution was US$8\.78 million\.
Dates: A Level-2 project restructuring was approved by the Country Director on December 22, 2013\. It involved
revisions to the results framework, revision of original targets and incorporation of a core sector monitoring indicator\.
The project was completed as scheduled on 12/31/2014\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High\.
The project development objectives are highly relevant to Indonesiaâs development challenges\. Despite the high
growth rate of the economy in the years preceding appraisal, the water supply and sanitation sector had not kept pace
with the country's economic performance\. The sector was characterized by low investments and inadequate service
coverage with only 28% of the estimated population of 220 million having access to piped water\.
At the time of appraisal, nearly half of the population in Indonesia lived in urban areas and only about a third (35%) of
the urban population had access to piped water\. The share of urban population was further projected to increase to
60% by 2025\. Alongside these challenges, with the decentralization process that started in 2001, responsibility for
water sector had devolved from central to local governments\. Local water utilities (PDAM's) which were under the
jurisdiction of the local governments, were made semi-autonomous\. However, most of the water utilities were not
financially viable and unable to recoup costs through tariffs\. And because central government transfers to local
governments for water sector activities were based on their needs and not linked to their performance, there were few
incentives for the local governments to either improve service delivery (including water supply) or for generating their
own revenues to meet costs\. Thus project objectives aimed at improving and expanding service delivery through
improving the operational and managerial capacity of the local urban water utilities to move towards financial viability
were, and remain, highly relevant\.
The project development objectives were and remain relevant to the Government Strategy for Indonesia\. The
National Medium-Term Development Plan issued by the Ministry of Planning for the 2005-2009 planning period,
aimed at increasing the coverage of population with access to piped water from 28% in 2003 to 40% by 2009\. The
National Action Plans on Clean Water and Sanitation issued by the Ministry of Public Works in 2004 addressed the
Millennium Development Goals and Indonesia committed to providing access to safe drinking water and sanitation to
at least 50% of the population by 2015\. In the water sector, the plan included\. investment plans to increase access to
safe drinking water from 75% to 88% by 2015 and to improve access to piped water from 18% to 62% by 2015\.
The project development objectives were and remain relevant to the Bank strategy at the appraisal stage and
continues to be relevant to the Bank strategy for Indonesia to date\. The Country Partnership Strategy (CPS) for the
2009-2012 period highlighted the need for investment in Indonesia's water institutions to improve services to the poor
and addressing the deteriorating conditions of the local water utilities and thereby enabling Indonesia to achieve the
Millennium Development Goal targets\. The project development objective was consistent with the CPS for the
2013-2015 period\. Two of the pillars of the CPS were "infrastructure and strengthening the public sector agenda" and
"improving health outcomes agenda" through, among other things, increasing access to safe water and sanitation\.
b\. Relevance of Design:
Substantial:
There is valid causal link between the project activities and outputs and the intended outcomes\. The outputs
associated with project activities in the three local urban water utilities could be expected to contribute to the project
development outcome of improving and expanding water supply services in the three project areas\. Although the
objective statement included a statement of the means to achieve objectives - by strengthening local water utilities to
become operationally efficient and financially sustainable â there were no activities to support institutional
development and capacity-building in project design because the government would not agree to use Loan financing
for technical assistance\. To overcome the absence of such project activities, the government agreed that such
activities would be implemented through parallel consultancy services financed by counterpart funding (or others),
following government procurement procedures\. The inclusion of standard water utility benchmarking to measure
performance was highly relevant\.
4\. Achievement of Objectives (Efficacy):
" To improve and expand water supply services in the project areas by strengthening local water utilities to
become operationally efficient and financially sustainable \."
There were two objectives: (a) To improve water supply services in the project areas\. (b) To expand water supply
services in the project areas\.
Not all the outcomes can be solely attributed to the Bank's inputs because essential institutional support and technical
assistance was provided by others in parallel\.
Objective a: To improve water supply services in the project areas : Substantial\.
Outputs:
ï¬ 66,567 individual meters were replaced compared to the revised target of 31,350\. This included 56,845 meters in
Kota Bogor, 6,057 meters in Muara Enim and 3,665 meters in Kuala Kapuas as compared to the revised target of
30,000, 750 and 600 respectively in the three utilities\.
ï¬ Technical assistance and capacity-building were provided for specific topics such as Non-Revenue Water (NRW)
Programs and Geographic Information Systems (GIS) to the water utilities\.
Outcomes\.
The volume of water supply improved:
ï¬ Total production capacity in the three local water utilities increased to 2,935 liter/second at project closure, as
compared to the revised and original targets of 3,267 and 2,990 liters/second respectively\. The production
capacity in the three utilities at project closure was as follows: In Kota Bogor, production capacity increased to
2,050 liters/second at closure as compared to the revised and original target of 2,310 liters\. In Muara Enim,
production capacity increased to 508 liters/second at project closure, as compared to the revised and original
targets of 650 liters and 340 liters/second, and in Kuala Kapuas, production capacity increased to 377
liters/second as compared to the revised and original targets of 307 and 340 liters/second respectively\.
ï¬ In all three locations access to piped water increased as discussed under objective (b) below\.
ï¬ A social beneficiary survey was conducted after project closure to assess the quantitative and qualitative impact
of the project\. A total of 409 households were selected using clustered random sampling from the project areas
(including 209 households in Kota Bogor, 80 in Kuala Kapuas and 100 in Muara Enim)\. The main conclusions of
the beneficiary survey are as follows\.
ï¬ Overall, 74% of households reported improvement in service delivery in the three areas\. A majority of survey
respondents stated that there were improvement in the services provided by the water utilities in the last
three years of the project\. The highest was given in Bogor (99\.6%), followed by Kuala Kapuas (92%) and
Muara Enim (85%)\.
ï¬ Continuity of supply improved in all locations\. Overall, respondents reported water services for about 17
hours a day, as compared to the revised target of 18 hours\. In Kota Bogor, respondents had water for 24
hours a day\. In contrast, respondents in Muara Enim had water supply for about eight hours a day although
this could improve as construction was only completed in early December 2014 and the new system was not
fully in operation\. In Kuala Kapuas respondents indicated that they had water supply for about 18 hours a
day\.
ï¬ Water tariffs charged by the three utilities were perceived to be fair and affordable by 87%, 78% and 77% of
the survey participants in Kota Bogor, Muara Enim and Kuala Kapuas, respectively\.
Although the extent to which improved water supply services were realized shows variation in the three project areas,
the revised targets were realized\. The social beneficiary survey indicates that the project contributed significantly to
the objectives of improving water supply and service quality\.
Improved water utility's performance contributed to achieving project objectives\. There were efficiency improvements
to water supply services that contribute to utility's financial sustainability although not all targets were fully achieved:
ï¬ The number of employees per 1,000 connections reduced to 7\.28 on average in the three local water as
compared to 8\.58 at the baseline and the target of 7\.00\.
ï¬ There was reduction in Non-Revenue Water as a result of the capital investments under the project\. Bogor
managed to reduce NRW from 38\.0% to 33\.1%, achieving its original appraisal target of 33\.0% but missing its
revised target of 29\.4%\. Kaula Kapuas reduced NRW from 35% to 32\.8% missing its original target of 30\.0% but
exceeding the revised target (34\.0%)\. Muara Enim reduced NRW from 40\.0% to 30\.3% exceeding its original
target (34\.0%) but missing the revised one (20%)\.
ï¬ Financial analyses was conducted at closure to assess the operational efficiency and financial viability of local
water utilities\. Financial benefits were assumed to come from additional water sales over the 20-year period and
from the connection fees collected during the project period, while costs covered investment cost, costs
associated with incremental power and chemicals and costs associated with payment of salary and other
administrative expenses\. The financial performance of Kuala Kapuas and Muara Enim was negatively affected by
exogenous factors outside the control of the project, such as higher than expected price of electricity because of
increased energy costs\.
ï¬ The operating ratio (operating revenue/operating expenses) of the three water utilities improved on average from
1\.14 at the base line to 1\.08 at project closure, and as compared to the original and revised targets of 1\.0\. The
operating ratio of the three utilities at closure were as follows: The operating ratio for the largest utility Kota Bogor
that accounts for 70% of water supply and 74% of all connections by the project, improved from 0\.91 in 2009 to
0\.76 in 2014\. Kota Bogor was able to achieve operational efficiency by setting tariffs at cost recovery levels and
by reducing operating expenses\. They also had a mechanism for automatically adjusting water tariffs every two
years\. These factors enabled Kota Bogor to reduce its debt to the Ministry of Finance\. The operating ratio for
Kuala Kapuas improved from 1\.31 in 2009 to 1\.3 in 2014 and as compared to the original and revised target of
1\.0\. The ICR (page 21) notes that although Kuala Kapuas is currently on track towards cost recovery, its cost
recovery was affected during the project by a long drought in 2010 that led to a significant disruption to their
services\. The operating cost ratio for Muara Enim remained unchanged from the baseline at 1\.2
Objective b: To expand water supply services in the project areas is rated as Substantial \.
ï¬ The total number of connections increased by 173,547 as compared to the revised and original targets of
173,808 and 162,238 respectively\. In Kota Bogor, the total number of connections increased to 129,312 at
project closure, as compared to the revised and original targets of 129,087 and 114,988\. In Muara Enim, the total
number of connections increased to 27,239 as compared to the revised and original targets of 27,021 and in
Kuala Kapuas, total connections at closure increased to 16,996 as compared to the revised and original targets
of 17,700 and 23,250\.
ï¬ 58,289 new household piped connections - a core indicator added following project restructuring - were provided
by project closure, as compared to the target of 26,650\. The project achieved 190% of its target\. This included
new household piped water connections of 42,745 at Kota Bogor, 10,818 at Muara Enim and 4,746 at Kuala
Kapuas at project closure, as compared to the revised targets of 10,600, 5,450 and 10,600 for the three local
water utilities\.
Outcomes\.
ï¬ Water supply was expanded and the number of people supplied with pipe water increased from 115,258 in 2009
to 173,322 at the end of 2014\. Targets for the number of project beneficiaries were not set at appraisal and there
was no baseline\.
5\. Efficiency:
Substantial\.
Economic Rate of Return (EIRR):
Economic analyses was conducted both at appraisal and at closure for the project component associated with water
supply investments in the three areas\. These components accounted for 70% of the total project cost\. The
methodology entailed comparing the project's incremental benefits with incremental costs\. The benefits were
assumed to come from: (i) increased consumption of water due to improved service delivery of existing customers and
accessibility to new customers; (ii) consumer surplus defined as the amount of water consumed with the new
connections valued as the difference between the price charged and cost of water without connections; (iii) savings
due to improved efficiency; and, (iv) time savings associated with collecting water\. The ex post overall weighted
average of the Economic Rate of Return (EIRR) was 30% as compared to the ex ante EIRR of 36%\.
Operational and Administrative Efficiencies \.
The project was completed within the timeline determined at appraisal despite initial delays\. The project was also able
to generate savings from the loan amount and used these to finance additional activities, such as new packages for
Non-revenue Water Reduction program and new intake and water treatment plant in Kota Bogor, a new reservoir in
Kuala Kapuas and new transmission pipeline in Muara Enim\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 36% 70%
ICR estimate Yes 30% 70%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The project was highly relevant to the Government strategy and the Bank strategy for Indonesia and relevance of
objectives is rated high\. The relevance of design is rated as Substantial\. Efficacy of both objectives is rated
substantial\. The revised targets were met and there is evidence that the project made a significant contribution to
improving and expanding the water supply in the three areas\. Efficiency is rated as substantial\.
a\. Outcome Rating: Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Financial Sustainability : There is a high risk that the ongoing benefits from this project may not be sustained due to
the financial non-viability of the local water utilities\. At project closure, most local governments still did not allow the
local water utilities to set water tariffs at a level commensurate with covering their operating costs\. In the absence of
such self-financing mechanism, there is high risk that the local water utilities may not provide adequately for meeting
the maintenance expenditures and this in turn may contribute to the deterioration of the existing assets and water
supply\.
In addition, there is a high risk that ongoing benefits from this project may not be sustained since there is no
mechanism as yet to monitor the compliance of participating utilities with the Performance Agreements\. The ICR
does not provide information on whether there is an independent authority to regulate the water sector\.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
a\. Quality at entry:
This project implemented by the local water utilities as the final borrowers was the first of its kind in Indonesia\.
Appraisal benefitted from discussions and experiences of other development partners in complementary activities,
such as the Dutch Trust Fund Technical Assistance program (Indonesia- Water and Sanitation Program), water
sector activities financed by the United States Aid Agency (USAID), Australia Aid Agency (AusAID) and Japan
International Cooperation Agency (JICA) and Sanitation activities financed by the Swedish International
Development Agency (SIDA)\. The implementing agency, which had been the lead agency for executing the prior
Bank-financed integrated urban infrastructure project (where water supply was a large component) was
knowledgeable regarding Bank procedures and government requirements\. Several risks were identified at
appraisal including substantial risks associated with delays in project execution due to corrupt practices in
procurement and risks that the local water utilities may sanction illegal connections, billing or other corrupt
practices\. Appropriate risk mitigation measures were incorporated\.
Although the appraisal recognized the need for an approach combining investments with sector reforms, the
project activities were purely capital investments because the Bank knew the government would not use the Loan
for technical assistance\. To overcome the absence of such project activities, it was agreed at the appraisal stage
that such activities would be implemented by the government through parallel consultancy services financed by
counterpart funding (or others), following government procurement procedures\. In addition the appraisal team
obtained agreements on benchmarking to measure performance\.
There, however, were some shortcomings\. The limited capacity of the local water utilities to review technical
designs and manage contracts was not identified at appraisal, and this led to the subsequent need to resolve
Right-of-Way and railway crossing issues and re-bidding of some procurement packages\. Appraisal also
overlooked the fact that government rules did not permit multi-year contracts for consultants\. Consequently,
consultantsâ contracts at all project sites had gaps and all ended prior to the completion of construction activities
potentially jeopardizing the quality of civil works\. Additionally, shortcomings in M&E design had to be rectified
during implementation\.
Quality-at-Entry Rating: Moderately Satisfactory
b\. Quality of supervision:
There were six supervision missions over a four year implementation period, less than the norm of two
missions a year\. This shortcoming was further exacerbated by frequent changes to the composition of the team\.
The Mid-Term Review was conducted in December 2013, a year later than planned and just one year before the
completion of the project\. This allowed very limited time to make changes\. While it failed initially to resolve M&E
issues and formulate measures to generate greater and more sustainable outcomes, these were latterly
addressed and improved in the last two years of the project\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Government commitment to the project was evidenced by the government addressing issues relating to
lending to local governments that facilitated the Board approval for this project\. The Government, however, was
not fully prepared to help the local water utilities carry out water sector reforms and focused more on physical
accomplishments and completion of activities\. Even so, the government also provided counterpart funding in a
timely fashion including that for its own consultants\. It is unclear how far the unwillingness on the part of the
Ministry of Public Works to use project funds for consultants constrained the capacity-building of local
governments and government utilities\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
The Ministry of Public Works was the implementing agency\. Having implemented prior Bank financed projects,
the agency was knowledgeable with the Bank's financial and procurement procedures and requirements\. The
project coordinating unit was established in the Ministry to coordinate the input of the local project coordinating
units\. However, there was poor coordination between the project coordination unit and the project implementing
agency, and there was no provision in the project to assign a specific Project Coordinating unit to manage
safeguards issues\. As a result, there were substantial delays in implementation particularly during project startup
on account of the need to rectify technical design, resolve right-of-way and railway crossing issues and rebidding
procurement packages in Muara Enim\. The lack of technical capacity to comply with the covenants regarding
fiduciary and safeguards issues and M&E also delayed project execution\.
These shortcomings were mostly offset by the commitment of the three local governments and their water utilities
as evidenced by their full compliance with project requirements set up by the Central Governments, fulfilling all
project readiness requirements and providing counterpart funding (Kota Bogor further expanded water supply
investments using own funds)\. Despite the rocky start, most of the revised outcomes were substantially achieved\.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The Ministry of Public Works was in charge of M&E but system design was hindered by the absence of some
indicators and links between project inputs and envisioned project outcomes\. Some indicators at design did not have
baselines or original targets\. The lack of plans for capacity-building and institutional strengthening for M&E
exacerbated the design problem\.
b\. M&E Implementation:
The M&E indicators were not revised in the wake of the Mid-Term Review\. While specific persons were put in
charge for implementing M&E, they worked only on a part-time basis as they were involved in other local water utility
activities\. The M&E structure was particularly weak in Muara Enim\. Data gathering, documentation and reporting both
in terms of implementation progress (technical, fiduciary and safeguards implementation) and achievement of
development objectives (results framework) were a major challenge during the first years of implementation\.
However, intensive supervision to address documentation and reporting significantly improved M&E during the last
two years of implementation\.
c\. M&E Utilization:
There is limited indication that M&E data were utilized to inform project decisions\. The ICR (page 6) notes there are
no indications that the M&E design is fully embedded in the institutional structure of the water utilities\.
M&E Quality Rating: Modest
11\. Other Issues
a\. Safeguards:
This project was classified as a Category âBâ under OP/BP 4\.10 Environmental Assessment and OP/BP4\.12
Involuntary Resettlement was triggered\. Environmental Management Plans (EMPs) were prepared for two of the local
water utilities and appropriately disclosed (the third water utility did not require EMP since investments there
comprised mainly small civil works)\.
Environmental Issues : Potential environmental impacts were addressed during the implementation phase\. However,
a landslide delayed the completion of source development activities as it required clearing and redesigning of the
alignment of transmission pipelines and an access road which consequently introduced variations to the contract and
additional investment cost\. While the source development was completed it does not yet function because the client
counterpart had not yet completed the pipe laying of the transmission pipelines and complications of re-design which
included the cutting of the hillside for slope stabilization and the access road\. Measures to further manage these were
communicated by the Bank to Perusahan Daerah Air Minum (local water utility) management (ICR page 8) but the
outcome is unknown\.
Social Safeguards:\. There were two issues during implementation\. The first related to the delays relating to the
Right-of-Way issues under the Muara Enim sub project where negotiations to use the land for transmission pipes and
the railway enterprise took more than two years\. The second related to the documentation and reporting issues
concerning safeguards related issues including land acquisition in all sites\. Even so, the ICR (page 31) reports that
the project complied with Bank Safeguard policies
b\. Fiduciary Compliance:
Financial Management : The ICR (page 8) reports that the Interim financial reports and audit reports were satisfactory
and of good quality, and were submitted in a timely fashion\. The audits were unqualified\.
Procurement: Procurement risk was rated as high at appraisal because of the limited experience of the local water
utilities in conducting competitive bidding in accordance with Bank procedures, the weak environment for procurement
and collusive practices in past projects\. Several risk mitigation measures were applied including establishment of a
procurement plan for the project for the first year of implementation and subsequent annual updates, provision of
procurement training and establishment of an anti-corruption action plan which included enhanced disclosure
provisions and provisions for transparency\. Civil society oversight was set-up to mitigating collusion, fraud and
nepotism and through a complaint handling mechanism, sanctions and remedies\. The ICR (page 8) notes that there
was compliance with World Bank procurement rules\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Moderately Satisfactory The relevance of objective is rated as
Unsatisfactory High and that of design substantial\.
Efficacy of the two objectives is rated
as substantial\. All the revised targets
were realized and there is evidence that
the project significantly contributed to
improving and expanding the water
supply in the three municipal areas\.
Efficiency is rated as substantial\.
Risk to Development High High
Outcome:
Bank Performance: Moderately Moderately The ICR rated the quality of the Bank's
Unsatisfactory Satisfactory QAE and supervision as moderately
unsatisfactory because it erroneously
classified a means (institutional
development) to achieve desired
outcomes as the second objective that
had no indicators or specified outcomes
and that these were not monitored or
explicitly addressed during supervision\.
This Review rates both aspects of
performance as moderately
satisfactory, albeit with some
shortcomings\.
Borrower Performance : Moderately Moderately Government performance and
Unsatisfactory Satisfactory Implementation Agency performance
are both rated moderately satisfactory\.
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR derived four lessons, and the three most important (with editing) follow:
(1) A standard project model for urban water supply applied to sub projects with widely differing physical , social
and institutional challenges is likely to encounter difficulties \. A more nuanced approach is required tailoring inputs
to local needs and challenges\.
(2)\. The absence of components for institutional reform accompanying public investment may contribute to
non-sustainability of outcomes \. The gains generated through capital investments generally require explicit reforms
to improve the financial and operational capabilities of the local governments and thus project sustainability\.
(3) Loan agreement should clearly mention or include funding or define funding sources for identified
capacity-building activities \. In the case of this project, the loan agreement did not provide funding for
capacity-building activities and the implementing agencies were expected to cover this cost on an ad hoc basis\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR is concise and candidly discusses the problems that were encountered at the execution phase that affected
implementation\. It is also clear in identifying factors that were outside the control of the government or implementing
agencies\.
However, the ICR rated the quality of the Bank's QAE and supervision as moderately unsatisfactory because it
erroneously classified a means (institutional development) to achieve desired outcomes as the second objective that
had no indicators or specified outcomes and that these were not monitored or explicitly addressed during supervision\.
For these reasons it also rated outcome as moderately unsatisfactory even when the evidence clearly indicates a
satisfactory outcome\. Given that the projects were in widely variable geographic areas, with differing terrain,
population density, geology and input costs, a metric better than absolute unit connection cost for household
connections could have been used for assessing the financial performance of the utilities\. The information provided
regarding Bank supervision and Monitoring and Evaluation is very brief and it would have been useful to have more
information on the Non-Water Revenue program\. In addition, some reported baseline data and targets differ from
those stated in the PAD\.
Overall, the ICR has moderate shortcomings in its arguments to determine outcome\. Fortunately this is not a fatal
error as there is sufficient good information to rate relevance of objectives and design and objectively rate
achievement of the Loan Agreement's objectives and efficiency\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P094086 | IEG
Report Number: ICRR14746
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 06/30/2015
Country: Pakistan
Project ID: P094086 Appraisal Actual
Project Name: Pakistan: Balochistan Project Costs (US$M): 23\.55 24\.84
Education Support
Project - Besp
L/C Number: Loan/Credit (US$M): 22\.00 21\.57
Sector Board: Education Cofinancing (US$M):
Cofinanciers: Board Approval Date : 06/22/2006
Closing Date: 01/31/2011 07/31/2014
Sector(s): Primary education (79%); Other social services (21%)
Theme(s): Education for all (33%); Gender (17%); Other Private Sector Development (17%);
Participation and civic engagement (17%); Rural services and infrastructure (16%)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Susan Ann Caceres Judyth L\. Twigg Lourdes N\. Pagaran IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
According to the Project Appraisal Document (PAD, p\. 3), the project development objective was "to promote
public-private and community partnerships to improve access to quality primary education, in particular for girls\."
The same objective is noted in the Financing Agreement (p\. 4), but this document also specifies that the project
is "in Balochistan\."
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
The project included three components\. Appraisal costs are provided in the PAD for the Bank's contribution only;
estimated Government and total costs by component are not specified\. Actual amounts are not provided in the
ICR\.
ï¬ Establishment of New Community Schools in Rural Areas (appraisal cost, US$ 13\.9 million; actual amount
not provided in the ICR) was to create new community schools in rural areas where the community was able
to enroll at least 20 students in a school and there was no girls' school within a two-kilometer radius\. Parent
Education Committees were to be responsible for managing and supervising the schools, with support from
Community School Implementation Partners (NGOs)\. Community School Implementation Partners were to
ensure: (1) community mobilization and selection and registration of Parent Education Committees under
Pakistani law; (2) training of Parent Education Committee members in management and finance so that
they could run the schools; (3) support to teachers; and (4) monitoring of the attendance of teachers and
students, physical conditions in the schools, and quality of learning\.
ï¬ Support for New Private Schools (appraisal cost, US$ 2\.1 million; actual amount not provided in the ICR)
was to promote educational access in semi-urban and urban areas through the establishment of new private
schools\. Private School Implementation Partners were to be given annual subsidies for facilities and
material costs to manage the schools, as well as monthly subsidies linked to attendance\. Schools were to be
established when there were at least 50 children (ages 4-9) out of school, no government primary school or
girls' school within one kilometer, or growing demand or overcrowding in a previously established school\.
ï¬ Capacity Building (appraisal cost, US$ 4,2 million; actual amount not provided in the ICR) had two
sub-components:
1\. Training and Skill Development was to finance inputs such as teacher professional development, textbooks,
and learning materials to ensure quality education in community and private schools\. Parent Education
Committees, Community Implementation Partners, Private School Implementation Partners, and the
Balochistan Education Foundation (BEF) were to be provided with training on school management,
accounting, participatory techniques, gender, and monitoring and supervision\.
2\. Institutional Support to the Balochistan Education Foundation was to provide financial resources for salaries
and operational costs, evaluation studies, and the capital cost of constructing a permanent office for the
BEF, if the Government of Balochistan provided land\.
While the components remained unchanged, the output targets for the number of private schools to be
established was lowered from 300 to 200 at the midterm review, and the target for the number of community
schools to be constructed decreased from 450 to 225 schools\. Key outcome targets were unchanged\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost: The ICR aggregates costs into three categories -- investment, recurrent, and operational costs --
making it impossible to determine actual spending by component\. However, comparing the given information
with appraisal estimates, it is possible to determine that costs related to the Implementing Agency were much
higher than appraisal estimates (furniture and equipment was 174% higher; recurrent costs for the Balochistan
Education Foundation (BEF) were 302% higher; and operational costs for BEF were 137% higher)\. Capital costs
for schools were 170% higher than estimated, as actual costs were nearly three times the appraised estimate
due to escalation in construction costs (ICR p\. 26)\. The ICR (p\. xii) indicates that funds were reallocated from an
unallocated category to finance Community Implementation Partner contracts, equipment for the Balochistan
Education Foundation, operational expenses, and school construction\. Funds originally designated to construct
an office for the Balochistan Education Foundation were used for office equipment and a refresher training
course for community school teachers\. However, the ICR does not explain why the operational, recurrent, and
operational costs for the Implementing Agency were much higher than anticipated\. The ICR also does not explain
why non-salary and recurrent costs for schools were much lower than estimated, but the project team clarified
that this was because the Government only provided recurrent funds for teacher salaries\.
The project team later reported that 70% of project financing was initially to be allocated to establishment of
community schools in rural areas and 10% of project financing for private schools in urban/peri-urban areas\. In
response to Government preferences during the project's lifetime, project financing was reallocated so that 91%
of resources were spent on community schools, while 6% of resources were directed to the private schools
component\.
Financing: The project was financed by an International Development Association (IDA) credit, of US$ 22\.0
million, of which US$ 21\.57 million was disbursed\.
Borrower Contribution : The borrower was anticipated to provide US$ 1\.55 million, but it provided a higher
amount, US$ 3\.27 million\. The project team clarified that the increase was because the Government continued
to fund community teachers' salaries during the three-and-a-half-year project extension\.
Dates: The project closed three years and six months later than initially planned\. A first restructuring on July 15,
2010 extended the closing date from January 31, 2011 to July 31, 2012 to permit completion of construction
activities\. A second project restructuring occurred on July 20, 2012 and changed the project closing date from
July 31, 2012 to July 31, 2014 to complete construction activities\. The ICR indicates that delays were attributable
to the worsening security situation in the province and difficulty in identifying partners to provide technical support
to Parent Education Committees during the construction process\. Given the longer project time frame for
implementation, the midterm review occurred on March 15, 2010, five months later than originally planned\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Substantial\. Balochistan is the poorest of the four provinces in Pakistan\. Service delivery is challenging, as the
population is dispersed in rural areas; only 24% of the population lives in urban localities\. People in Balochistan
have low levels of literacy, and there are large gender disparities in education enrollment\. Issues in the
education sector include low quality, weak public sector capacity, and limited financial resources\.
The development objectives were aligned with the Millennium Development Goals (i\.e\. primary enrollment and
reduction in gender disparities) and the Balochistan Poverty Reduction Strategy Papers (2003 and 2009), both of
which emphasize improvements in human development\. Education is one of the four priority areas of the
Government's Vision 2025 Strategy\. Basic education is aligned with a key pillar in the Bank's Country
Partnership Strategies (FY10-14 and FY15-19), to improve vulnerable lives and inclusion\. Thus, the
development objective continued to be substantially relevant to the Bank's and Government's strategies over the
course of the operation\.
b\. Relevance of Design:
Substantial\. There was a logical alignment between the objectives, activities, and indicators to measure
attainment of the objectives, but there were shortcomings (See Section 10 a)\.
Two service delivery approaches were part of design, which kept design simple\. One approach was community
schools, as communities had limited involvement in education in the province\. These schools were to be set up
in rural areas where there was no girls' school within two km\. Some schools were to receive infrastructure
upgrading such as boundary walls and separate toilets for boys and girls\. To increase female teachers, provision
was made to relax qualifications\. The other approach was the use of NGOs to establish private schools\.
Experience from a previous project indicated that private schools were able to attract students from poor
households\. However, there were few private sector actors in the province\. Accountability was built into design
through the provision of payment to implementing partners on the basis of their achievement of milestones in
agreements\. Also, parent education committees were to be held accountable to communities through disclosure
of school procurement and financial matters\.
The project did not address cultural constraints or incentives for girls to enroll\. Other options to address the
enrollment constraints for girls were not part of the design, such as pre-service training to increase the supply of
female teachers or girls schools\. At the time of preparation there were only 12,000 female teachers out of 40,000
teachers\. At the time of preparation there were only 2,472 primary girls' schools in comparison to 6,862 primary
boys' schools\.
4\. Achievement of Objectives (Efficacy):
To promote public-private and community partnerships to improve access to quality primary education : Substantial
Outputs:
48,354 students were enrolled in community schools and private schools supported by the project, which exceeded the target (35,0
students)\. Schools were supported in all 31 districts of Balochistan\.
25,973 students were enrolled in 633 community schools by the end of the project, which exceeded the target (19,500 students)\. Th
was a decline in the number of enrolled students between 2011 (27,687) and 2014 (25,973) (ICR p 26)\. 17 community schools clos
due to internal community conflict and unavailability of local teachers (ICR p 26)\. The project team explained that most of the declin
was due to students completing school, rather than students dropping out\. Teacher turnover remained high due to low levels of sal
30% less than the minimum wage (ICR p 26)\. The ICR does not specify the number or turnover rate of community teachers\. The IC
reports that community mobilization and selection of parent education committees had a beneficial impact on perception of schoolin
and generated increased demand for education, but no specific data in this areas are provided\.
22,381 students were enrolled in 197 private schools, which exceeded the target (10,000 students, and nearly met the target of 200
schools)\. The target was lowered from 300 to 200 at the midterm review because of the non-availability of private sector partners th
qualified under the selection criteria\. The private school model was implemented for four years and then discontinued, as the mod
was found to be not sustainable due to a lack of private sector partners and poor cost recovery by some private school implementa
partners\. An unspecified number of private schools continued after project support ceased (75% of schools, based on an unspecifie
sample in 2013) (ICR p 19)\.
219 community schools were constructed, which did not meet the lowered target (225; the original target had been 450)\. Boundary
were constructed for 189 out of 219 schools\. However, the majority of community schools are still without a building (ICR p\. 18)\.
1,000 teachers were trained on topics such as multi-grade teaching, which did not meet the target (2100 teachers)\. The ICR (p\. 27)
notes that this target was unrealistic, as appraisal had estimated a higher number of teachers per school\.
An unspecified number of teaching kits were provided to all community schools\.
350 parent education committees were trained in school management, financial management, record keeping, and school construc
The ICR (p\. 18) suggests that this training contributed to improvement in governance at the community level, but no specific data w
provided\.
Outcomes:
Student attendance rates were maintained at 85% in community schools and 86% in private schools, which exceeded the target (70
The target was established based on average attendance rates in public schools\.
Student completion rate was 74% in community schools and 85% in private schools, which exceeded the target (70%)\. The ICR do
not provide completion rates for each grade level\.
Teacher attendance was 95% in community schools and 94% in private schools, which exceeded the target (90%)\.
Overall enrollment in the province increased by 5% due to project-supported schools, according to estimates done by the Balochist
Education Foundation using annual school census data from 2013/14\.
There was a 9\.6% average increase in language assessments in project-supported schools from the baseline assessment (19\.36 m
score) in 2009\. This was based on pre-post testing, not annual testing, suggesting that the target of an annual 3% increase was no
met\. In 2014 an early grade assessment found that fewer than 5% of children in grade two and only 6% of children in grade five co
correctly read a grade-appropriate paragraph\. Only 7% of children in grade two and 13% in grade five had the capacity to write a
sentence in Urdu without a mistake\.
There was an increase by 16\.17% in mathematics scores in project-supported schools from the baseline assessment (13\.75 mean
score) in 2009\. This was based on pre-post testing, suggesting that the target of an annual 5% increase was not met\. Children's ba
computational and problem solving skills remain weak, based on a 2014 assessment\.
To promote access to quality primary education , in particular for gi rls: Substantial
Outputs:
No outputs specific to girls' education are reported, other than the criteria for establishing community or private schools (no existing
girls' school within a certain radius)\.
Outcomes:
In community schools, 42% of enrolled students were girls at project closure, which met the target (40%)\. Household survey data f
2004-2005 indicated that the primary enrollment rate for girls was 49% at that time\. However, according to the ICR, government
primary schools have a female enrollment rate of 39%, based on 2013-2014 annual census data\.
In private schools, 34% of enrolled students were girls, which did not meet the target specified for community schools (40%)\. These
schools were coeducational, which may have caused some girls in higher grades to drop out\. However, the ICR (pp\. 13-14) states
boys and girls had similar drop out rates (between 10% and 9% respectively) in 2010\. Drop out rates for subsequent years are not
reported in the ICR\. Female teachers constituted 53% of the teaching force in these schools (ICR pp\. 14-15)\. Thus, the ICR could
draw conclusions on why the female enrollment rate was lower in private schools than in the community schools\.
Girls' enrollment in the province increased by 5\.3% due to project-supported schools, according to estimations done by the Balochis
Education Foundation using 2013/14 annual school census data\.
The ICR does not provide learning data for girls that would be indicative of improvements in quality of primary education, but it note
that there was a significant differential between boys and girls in grades two and five in basic numeracy in 2014\.
The project team later shared data from a 2013 Early Grade Reading Assessment for a sample of Grade 5 students in public and
community schools\. While the results are not broken down by gender, they show higher scores in letter names and letter sounds fo
students in community schools than those in public schools:
Mean scores for Urdu subtasks for Grade 5 students
Public sector schools Project community schools
Letter names 53\.2 64
Letter sounds 35\.8 57
Nonwords 48\.3 41
5\. Efficiency:
At the appraisal stage, no economic analysis was conducted\. Instead, a fiscal analysis estimated the cost of
service delivery for community and public schools using 2004/2005 data\. This analysis found that community
schools had nearly double the recurrent costs per student than government schools, but that the two models
would be similar in more populated areas and with higher student-teacher ratios\.
No economic analysis was undertaken for the completion report\. The comparison of education delivery models
was re-estimated\. The costs of community schools were found to be lower than government schools
(approximately US$ 70 per student compared with US$ 104), but this calculation is heavily dependent upon the
assumptions used\. Monitoring costs for the implementation partners were included in the figure, but not project
supervision costs by the implementing agency\. When the teacher-to-student ratio in community schools
changes, the cost of delivery matches the figure for government schools\. Also, the value of each model cannot
be stated, as educational quality comparisons were not undertaken\.
There were both positives and negatives in implementation efficiency\. The ICR highlights the use of
roller-compacted concrete structures, which are stronger and less vulnerable to earthquakes\. According to the
project team, 88% of sample schools conformed with design standards\. However, there were shortcomings\. The
project closed three years and six months later than initially planned\. This was partly attributed to the decline in
the security situation, but also to other factors under the control of the implementing agency: delays in hiring staff
and in transferring funds to the parent education committees, lack of qualified procurement staff, and procedural
issues in the implementing agency\. Because of the delays, boundary walls were constructed for only 189 out of
219 schools, as these could not be completed before the project ended and the contracts were closed\.
Recurrent and operational costs for the implementing agency were much higher than anticipated\. Taking all of
this into consideration, the project demonstrated modest efficiency\.
Efficiency: Modest
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Relevance of objectives and design are rated substantial\. Achievement of both objectives was substantially
achieved, while efficiency was modest\. 48,354 students were enrolled in community schools and private schools
supported by the project\. Student and teacher attendance and student completion rates were maintained at
target levels\. Community schools had a higher girls' enrollment rate (42%) than private schools (34%) and public
schools\. Sustainability issues were present with both models\. The private school model was implemented for
four years and then discontinued, when the model was found to be not sustainable due to lack of private sector
partners and poor cost recovery by some private school implementation partners\. Teacher turnover remained
high in community schools due to low levels of salary, and sustainability depended on Government funding of
recurrent costs\.
a\. Outcome Rating: Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Some aspects of the community school model have been adopted by the Government within the follow-up grant
funded by a Multi-Donor Trust Fund to work on access for girls\. An application has been submitted by the
Government for a Global Partnership for Education grant, and it is anticipated that funding to address girls'
enrollment will be secured in 2015\. An unspecified number of private schools remain operational after project
support has ended\. However, there are several risks to maintaining the development outcome\. Community
schools can only continue with Government funding for salary and non-salary expenses, competitive salaries for
teachers, and continued training and capacity building for parent education committees\. Without this
Government ownership of the community model, parent education committees could lose power over recruitment
and retention of teachers\. Also, the security situation creates high risks\. Thus, there is a high risk to maintaining
the achieved development outcomes\.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
a\. Quality at entry:
The Bank built on previous support to the province and learned from a predecessor project to keep
components simple given low capacity; to have community involvement during implementation, as this
increases teacher accountability; and to ensure qualified NGOs were involved in public-private partnerships\.
The Bank team established criteria for the selection of NGOs based on past experience and expertise\.
While the ICR argues that preparation also learned to have a clear strategy and actions to ensure
sustainability of project-supported structures and to create government ownership in the design, these
aspects were not adequately considered\. The Balochistan Education Foundation (BEF) had responsibility for
monitoring performance of the new community schools and community implementation partners\. It also had
responsibility for monitoring compliance of schools with the operation manual and arranging for third-party
monitoring of the schools\. Project design established no role for the Department of Education, even though
sustainability of the community schools would depend on Government resources and ownership\. Capacity
constraints of the public sector (PAD p\. 7) were the reason implementation was to be carried out solely by an
apex organization (BEF) and private sector implementing partners\. Yet, capacity development had to be
targeted to the apex organization and its partners\. The project did not provide for strengthening of
Government capacity, as the operation was to support alternatives to the public sector\.
A Quality Enhancement Review was conducted, which endorsed the design and approach\. Comments
provided during the review related to sustainability, capacity building, and implementation arrangements were
incorporated into the design\. A Quality Assessment of Lending Portfolio (in 2008) rated design as highly
satisfactory, but found shortcomings in relation to economic analysis and lack of use of international firms to
provide technical assistance to the implementing agency and implementing partners\. The completion report
(p\. 20) correctly identifies that few international firms provide support\.
There were a number of foreseeable challenges that were not adequately dealt with during preparation:
availability of private providers and NGOs to become Implementation Partners to provide technical support to
Parent Education Committees; fiscal sustainability of models; and fiscal sustainability of the Government to
assume community schools within its budget\. The appraisal document and completion report were slim in
relation to the analyses conducted on these aspects at the time of preparation\. While the appraisal document
identified that sustaining community schools would imply an increase of 4\.9% of the primary education
budget, there was no explanation of how this shortfall would be covered (PAD pp\. 14-15), given that one of
the major constraints in the sector was lack of financial resources and limited revenue generation capacity
(PAD p\. 2), with non-salary budgets in public schools dwindling to almost negligible levels (PAD p\. 74)\. The
fiscal analysis did not present a review of government revenue to know whether the increase was realistic for
the Government to assume\. The appraisal document lacked estimation and analysis of the number and
demand of NGOs and private providers, but noted that there was limited participation of the private sector\. In
the previous operation, only one rural school became a private school\. The others either closed or remained
open when they became Government schools (PAD p\. 34)\. Eventually constraints on NGOs and private
providers caused implementation delays in the operation, and the private school model was later deemed
unsustainable because of the lack of providers\.
A limited set of options was considered during preparation, rather than considering a range of activities that
would directly address constraints to girls' enrollment: lack of girls' schools, lack of female teachers, and
cultural constraints\. In addition, third-party monitoring of government schools was not considered to address
public service delivery concerns and constraints\.
Quality-at-Entry Rating: Moderately Unsatisfactory
b\. Quality of supervision:
The Bank maintained policy dialogue with the government\. Supervision was active and tried to resolve
challenges quickly through regular dialogue\. The Bank supervision team was composed of specialists in
education, fiduciary aspects, environmental social management, and engineering\. When the security
situation declined, supervision was maintained via video conference, missions to Islamabad or Karachi, or
third-party monitoring\. Project restructuring was appropriately undertaken by the Bank team\. Several options
were discussed and attempted to address the need for technical support to parent education committees
related to school construction\. No additional financing could be secured to bridge shortfalls (ICR p\. 5), as
construction costs were higher than anticipated\. The Bank team utilized supervision ratings to send signals to
the implementing agency\. For example, implementation progress was downgraded from satisfactory to
moderately satisfactory in 2011 with continued construction delays in community schools\. The completion
report does not describe efforts undertaken by the Bank to address the poor cost recovery by private
implementing partners (p\. 7) or address sustainability of the model\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Government demonstrated its commitment to the autonomy of the Balochistan Education Foundation and
private sector participation on its Board by making amendments to the Balochistan Education Foundation Act\.
The Department of Finance and the Department of Education coordinated with the implementing agency\.
There was regular transfer of teacher salaries to Parent Education Committees, with only a few exceptions
(ICR p\. 7)\. The Department of Education recognized community schools, which gave these students the
opportunity to continue their education in public middle schools when they completed project-supported
community schools\. Also, the Department of Education gave codes to community schools so that they would
be part of the province's Education Management Information System\. The government provided free
textbooks to community school students and teacher training in the final year of the project\.
However, the Government did not comply with the legal covenant that it was to take on recurrent costs of
community schools supported by the project from the third year forward\. The Government only provided
funds sufficient to cover teacher salaries, and not recurrent costs\. Non-salary funds were only provided once
in April 2011\. This resulted in communities having to pay recurrent costs or reduce teacher salaries\. This
created problems with retention of teachers, as salaries had not been raised in six years\. Also, land for the
construction of a new building for the Balochistan Education Foundation was not allocated by the Government
as planned\.
Government Performance Rating Moderately Unsatisfactory
b\. Implementing Agency Performance:
The Balochistan Education Foundation was project's implementing agency\. It provided active supervision of
the operation, regularly reporting implementation challenges to the Bank\. It developed procedures to handle
internal community conflict and teacher replacement\. Despite a challenging security situation, supervision
was maintained\. When in-person supervision was not possible, other alternatives were utilized, such as
third-party monitoring\. Smart phones and other technology were experimented with during the operation as a
way to monitor schools and teachers\. The institutional capacity of BEF (as well as implementation partners)
was strengthened through the training that was provided\. While data were collected and analyzed, there
were staffing issues with the Monitoring and Evaluation Unit that were not resolved until 2010, approximately
four years into implementation\.
There were implementation delays in construction due to difficulty in finding community implementation
partners to provide technical support to parent education committees, unavailability of raw materials and
skilled labor in communities, and the worsening security situation\. There were also issues more under the
control of the implementing agency that contributed to delays, such as failure to hire an Environmental
Coordinator (instead these duties were added to the Director and later the Manager)\. Delays also resulted
from occasional long waits for funds to be released from the BEF to parent education committees\. The BEF
ultimately hired engineering consultants under a construction manager to supervise and validate school
construction\. The BEF's lack of qualified procurement staff led to delays in awarding of contracts\. Procedural
difficulties in relation to obtaining approval within BEF also created procurement delays\.
The BEF Board met infrequently in the last two years of the project, resulting in delays in hiring of Foundation
staff, implementation of the satellite monitoring initiative, hiring of an internal audit firm\. As a result, the
Managing Director position remained vacant, which meant that transfers were delayed to parent education
committees, as the Managing Director is the signatory\.
Implementing Agency Performance Rating : Moderately Unsatisfactory
Overall Borrower Performance Rating : Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Indicators were logically aligned to measure attainment of the objectives\. Key Performance Indicators were not
revised during project restructuring\. However, targets for non-key performance indicators were revised during
the project to reflect the lower number of schools constructed and private schools supported\. The completion
report endorses the indicators selected with the exception of one (annual improvement in language and
mathematics), as it was unrealistic to expect annual assessments\. However, proxy measure(s) that
implementation partners could have readily monitored in relation to education quality, as part of their regular
duties, were not employed\. Targets for girls' enrollment were specified for community schools (40% of total
enrollment)\. It is not clear why targets were not specified in relation to girls' enrollment in private schools, as both
service delivery models were expected to contribute to attainment of the objective\.
Indicators were to be measured by the implementing partners and reported to the BEF\. Data collection was also
supported by staff from the BEF who were to verify at least 20% of community schools\. Third-party validation
was built into the monitoring framework to provide another form of verification\.
b\. M&E Implementation:
The BEF was responsible for monitoring and evaluation\. M&E was implemented as planned, with the exception
of the student learning indicator\. Measures were taken to engage expertise in the design and development of
surveys for learning achievement\. This resulted in two rounds of testing (2007 and 2009)\. An Early Grade
Reading Assessment was implemented in 2013\. While this assessment was not comparable with the others, and
thus did not add to the PDO indicator, it provided important data (see Section 4)\.
Implementing partners submitted quarterly data, which were input into the BEF database\. A website was
established and intermittently updated\. It contained information about some of the project activities, but not all of
them\. One area lacking information was on the selection process of implementing partners\. A complaint process
was developed\. Over the course of the project, 44 complaints were received, of which 43 were addressed (the
final one was being investigated at the time of the writing of the completion report)\. Complaints typically related
to performance of parent education committees, school management, or teacher absenteeism\.
c\. M&E Utilization:
A newsletter was disseminated containing project data and information about project activities and achievements\.
Data collected during the project were examined at the midterm review to make adjustments\. The ICR notes that
studies were undertaken during the course of the operation to examine low girls' enrollment, teacher
performance, and sustainability of private school implementing partners\. The ICR does not explain how these
results informed project implementation\.
M&E Quality Rating: Substantial
11\. Other Issues
a\. Safeguards:
Due to construction, the project was classified category B and triggered the environmental safeguard (OP 4\.01)\.
An environmental framework was established that defined roles, responsibilities, and guidelines\. The ICR
indicates that school construction required conformity with earthquake and flood specifications and proper
ventilation and lighting in school buildings\. The PAD (p\. 16) described potential risks to the construction: water
scarcity, contamination of water with improper waste disposal, and loss of natural vegetation, calling these low
negative impact, but mitigation measures were not included\.
The BEF was responsible for providing training and monitoring compliance with the Environmental Framework,
and parent education committees with implementing it\. Compliance was also monitored by implementing
partners\. Engineering consultants validated and supervised construction\. The ICR (p\. 10) indicates that
environmental safeguard compliance was rated Moderately Satisfactory\.
b\. Fiduciary Compliance:
Training in financial management was provided to both the implementing agency and private school
implementing partners\. The ICR does not report whether interim financial reports were submitted regularly, on
time, and without issues, but the project team later stated that there were no issues with submission of financial
reports\. Accountability for implementing partners was developed by providing payment on achievement of
milestones and monitoring by the implementing agency\.
Financial management was adequate over the course of the operation, but there was a persistent issue in
relation to putting in place internal audit arrangements within the BEF\. Parent education committees and
community schools were monitored by implementing partners\. An external audit firm reviewed the accounts of a
sample of implementing partners annually\. However, the external auditor was meant to review a sample of 10%
of schools, but only visited half of them because of security constraints\.
Procurement was carried out in compliance with Bank guidelines and the project procurement plan\. However,
lack of qualified procurement staff in the BEF led to delays in awarding of contracts\. Also, procedural difficulties
in relation to obtaining approval within the BEF created delays in relation to procurement\. There was no
centralized procurement process for building materials or contracting of construction services; instead, parent
education committees were given grants\. The design of community schools was done by a consulting firm hired
by the BEF through competitive bidding\. Engineering consultants provided support to parent education
committees in identifying areas for procurement of labor and materials\.
c\. Unintended Impacts (positive or negative):
None reported\.
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Moderately Moderately
Satisfactory Satisfactory
Risk to Development High High
Outcome:
Bank Performance: Satisfactory Moderately There were significant shortcomings in
Satisfactory the project's preparation\.
Borrower Performance : Moderately Moderately There were significant shortcomings in
Satisfactory Unsatisfactory the performance of both the
Government and Implementing Agency\.
Quality of ICR: Unsatisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR (p\. 22-23) provides a number of lessons, which have been synthesized by IEG as the following:
ï¬ Empowerment of communities can lead to high levels of ownership and accountability \. Communities
raised non-salary recurrent funds in the absence of Government funding, ensured that female students
enrolled and attended, and helped identify and attract teachers to their communities\. Monitoring of
community schools is needed for appropriate implementation\.
ï¬ Adequate analysis during preparation is required to ensure sustainability of service delivery models \.
Community schools are only sustainable with Government fiscal contributions to salary and recurrent
expenses, suggesting that Government ownership is needed up front\. Private sector participation in
low-cost education delivery was not a viable option in Balochistan, given the low propensity of households
to pay\. All of these factors were evident at design, but adequate preparatory analysis of these aspects
was not undertaken\.
ï¬ Increasing girls' enrollment in Pakistan requires specific attention \. While the project optimized the
conditions for girls to enroll, cultural barriers were not addressed\. Girls' enrollment differences were
observed between community schools and new private schools; however, this was not investigated by the
implementing agency or the Bank\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
This ICR is concise, but it is inconsistent in its presentation of content and analysis, contributing to some
differences in ratings between the ICR and this review\. Discussion of student learning and why it did not emerge
as designed is well analyzed, as is the risk to the development outcome\. However, there are aspects of the ICR
that are thin on analysis, particularly relevance of design, efficacy, Bank performance, Implementing Agency
performance, and lessons\. For relevance of design, there is no analysis of the limited options considered, and no
discussion of the project's results chain\. The discussion of efficacy is basically limited to a table of key
performance indicators\. The ICR describes implementation challenges, but many of these challenges are not
subsequently analyzed as part of the rationale for ratings\. The lessons section is not well developed\.
Some information provided in the ICR is not fully explained\. For example, the ICR does not state the impact of
the BEF's failure to hire an Environmental Coordinator, and the consequence of these additional duties for
environmental monitoring on other entities\. The ICR finds that 53% of private school teachers are female, but it
does not inquire why this percentage is so much higher than at Government schools (where, according to the
PAD, only 12,000 of 40,000 teachers were female)\. Some basic information is not addressed in the ICR and had
to be subsequently clarified with the project team (e\.g\. why the operational, recurrent and operational costs for
the Implementing Agency were much higher than anticipated, why non-salary and recurrent costs for schools
were much lower than estimated, why the borrower contributions were double the appraised value, and whether
any audits were qualified)\. Additional important data was later supplied by the project team\. This information
was available at the time of the ICR and should have been included in it\. On balance, the quality of the ICR is
unsatisfactory\.
a\.Quality of ICR Rating : Unsatisfactory | REVIEW |
P045313 | Document of
The World Bank
FOR OFFICLAL USE ONLY
Report No: 20927
IMPLEMENTATION COMPLETION REPORT
(IF-N0350; TF-21083)
ONA
INTERIM FUND CREDIT N035-0 BOS
IN THE AMOUNT OF EQUIVALENT to SDR 7\.7 MILLION
TO
BOSNIA AND HERZEGOVINA
FOR A SECOND EMERGENCY EDUCATION RECONSTRUCTION PROJECT
November 16, 2000
South East Europe Country Unit
Human Development Sector Unit
Europe and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective November 16, 2000)
Currency Unit = Convertible Mark
KM 1 = US$ 0\.4391741
US$ 1 = KM 2\.2770010
FISCAL YEAR
January 1 to December 31
ABBREVIATIONS AND ACRONYMS
BH Bosnia and Herzegovina
CY Calendar Year
DC Direct Contracting
Federation of BiH Federation of Bosnia and Herzegovina
EBRD European Bank for Reconstruction and Development
EC European Commission
ECHO European Community Humanitarian Organization
EU European Union
FY Fiscal Year of the World Bank
GPN General Procurement Notice
IBD International Book Development
ICB International Competitive Bidding
IDA International Development Association
IMG International Management Group
IS International Shopping
LIB Limited International Bidding
MOE Ministry of Education
NCB National Competitive Bidding
NS National Shopping
OECD Organization for Economic Cooperation and Development
OHR Orifice of High Representative
PIU Project Implementation Unit
RS Republika Srpska
SNCB Simplified National Competitive Bidding
SOE Statement of Expenditures
TA Technical Assistance
TFBH Trust Fund for Reconstruction of Bosnia and Herzegovina
TOR Terms of Reference
UNDP United Nations Development Program
UNICEF United Nations Children's Education Fund
UNHCR United Nations High Conumission for Refugees
USAID United States Agency for International Development
Vice President: Johanes F\. Linn, ECAVP
Country Manager/Director: Christiaan J\. Poortman, ECCO4
Sector Manager/Director: James A\. Socknat, ECSHD
Task Team Leader/Task Manager: Zorica Lesic, ECSHD
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
BOSNIA AND HERZEGOVINA
SECOND EMERGENCY EDUCATION RECONSTRUCTION PROJECT
INTERIM FUND CREDIT N035-0 BOS
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 1
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 9
6\. Sustainability 10
7\. Bank and Borrower Performance 11
8\. Lessons Learned 12
9\. Partner Comments 13
10\. Additional Information 13
Annex 1\. Key Performance Indicators/Log Frame Matrix 14
Annex 2\. Project Costs and Financing 15
Annex 3\. Economic Costs and Benefits 17
Annex 4\. Bank Inputs 18
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 20
Annex 6\. Ratings of Bank and Borrower Performance 21
Annex 7\. List of Supporting Documents 22
Annex 8\. Borrower's Contribution to ICR 23
MAP 1BRD28578R
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not be otherwise disclosed without
World Bank authorization\.
Project ID: P045313 Project Name: Education Reconstruction
Team Leader: Zorica Lesic TL Unit: ECSHD
ICR Type: Core ICR Report Date: November 16, 2000
1\. Project Data
Name: Education Reconstruction L/C/TFNNumber: IF-N0350; TF-21083
Country/Department: BOSNIA-HERZEGOVINA Region: Europe and Central
Asia Region
Sector/subsector: EP - Primary Education; EY - Other Education
KEY DATES
Original Revised/Actual
PCD: 04/01/96 Effective: 09/27/97 09/25/97
Appraisal: 11/14/96 MTR:
Approval: 08/28/97 Closing: 06/30/99 06/30/2000
Borrower/Implementing Agency: GOVERNMENT OF BOSNIA AND HERZEGOVINA/FEDERATION/RS
MINISTRIES OF EDUCATION
Other Partners:
STAFF Current At Appraisal
Vice President: Johanes F\. Linn Johanes F\. linn
Country Manager: Christiaan J\. Poortman Christine Wallich
Sector Manager: James Socknat Ralph W\. Harbison
Team Leader at ICR: Zorica Lesic James A\. Stevens
ICR Primary Author: Zorica Lesic; Ilona E\. Szemzo;
James A\. Stevens
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Ouitcome: S
Sustainability: L
Institutional Development Inpact: M
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk atAnv Time:
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
In December 1995, the Federation of BiH established a priority reconstruction program which called for
repair or reconstruction of damaged facilities at all levels of education system\. The total cost of this
program was estimated at US$ 180 million\. This original program did not include school reconstruction
needs for the Republika Srpska (RS) because there was, at that time, no agreed primary school
reconstruction program for the RS\. In 1996, the priority program was expanded to include priority
reconstruction needs in the Republika Srpska\. The total costs of this expanded priority program were
estimated at US$275 million\. The program included 91 primary schools which the Federation aimed to
reconstruct in a first phase of reconstruction, prior to the start of the 1996-1997 school year\. This first
phase was supported by a first Emergency Education Reconstruction Project which was costed at US$32\.8
million\. Of this total, US$10 million was provided by the World Bank\. It was expected that the remaining
US$22\.8 million of project funding would be provided by other donors\. Although there had been firm
commitments from other donors totaling US$82 million for the education sector, relatively little of this
amount - about US$10\.5 million - was provided for specific activities included under the first Emergency
Education Reconstruction Project\. This reflected the donor driven prioritization of reconstruction and the
priority given by the government and other donors to investments in secondary and higher education\.
In order to prevent further delays in implementation of the un-funded portions of the priority program and
to begin to address long term development issues in education, the Bank and the Government agreed to
pursue a two-part strategy\. First, SDR 7\.7 million in additional Interim Fund funding was approved under
a Second Emergency Education Reconstruction Project designed to: a) partially cover the financing gap for
the priority primary school reconstruction program developed under the first project, b) initiate education
reconstruction in the Republika Srpska, c) develop new mechanisms for textbook production and financing
involving private publishers, and d) begin to address the unresolved medium-term questions of education
finance and administration\. Second, the Government, the Bank, and other major donors in the sector
agreed to work together using grant financing to: (i) strengthen institutions, (ii) improve the quality of
textbooks and educational materials, (iii) design new curricula, and (iv) rationalize the govemance and
finance of all levels of education, including higher education\.
The objectives of the Second Emergency Education Reconstruction Project were to improve primary
education access and quality by reconstructing primary schools throughout Bosnia and Herzegovina,
including schools which were ready for tendering but for which financing was not available under the first
Emergency Education Reconstruction Project, and all war-damaged primary schools in the Republika
Srpska\. The project also financed the emergency provision of textbooks\. This financing helped achieve the
first project's objective of helping to restore the delivery of primary education of acceptable quality to the
children of BiH\. In addition to these reconstruction objectives, the project (1) helped build government
implementation capacity to plan and deliver reconstruction and education programs; (2) piloted a
competitive textbook procurement model in which publishers submitted published textbooks for Ministry
evaluation and selection; (3) financed the production of an education governance study; and (4) helped
promote cooperation across the constituent groups\.
The objectives of the project were clear and realistic\. The primary school reconstruction objective has been
exceeded by incorporating additional schools for returning refugees\. The first textbook pilot, as well as the
follow-up training for all Cantons was successfully completed in the Bosniac-majority areas of the
Federation\. The goal of providing shared textbooks across the Bosniac and Croat parts of the Federation
has not materialized due to political resistance on the part of the Croat constituency\. English language
training textbooks were successfully procured for the Bosniac-majority areas of the Federation in a second
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phase of textbook procurement\. The project has, however, met with some success in the sharing of
packages of supplemental reading materials across all parts of the Federation, albeit in translated form (the
Croat and Bosniac language variations)\. The Education Governance, Finance and Administration Study
was completed in mid- 1999 through a joint venture between the Council of Europe and the World Bank\.
Although the study was completed ten months after its original schedule, the delay contributed to increased
dialogue and consensus among all parties\. The recommendations of this study were incorporated into the
design of the Education Development Project (FY00)\.
3\.2 Revised Objective:
Although the overall project objectives remained unchanged, the detailed objective of sharing textbooks
across the two constituencies of the Federation was not an explicit objective in the original project
documentation, but was adopted during project implementation as an important element of promoting
cooperation across the constituent groups\. While the level of cooperation and dialogue within the
Federation and between the Federation and RS did improve significantly during project implementation --
and the project itself provided an important vehicle for such cooperation -- the goal of shared textbooks in
the Federation proved unfeasible within the project time period\.
3\.3 Original Comiponents:
Project components at appraisal were:
* Primary School Reconstruction and Furnishing
The original objective of this component was to finance reconstruction and furnishing of 25 war-damaged
primary schools - 18 primary schools in the Federation of BiH and 7 heavily damaged schools in the RS\.
However, as a reflection of the rapidly changing environment for reconstruction programming in BiH, the
average investment cost per school was lower than expected and the project exceeded its original target of
25 beneficiary primary schools\. The School Rehabilitation and Fumishing component funded civil works
and equipment for 44 primary schools throughout BiH; 25 primary schools were reconstructed in the
Federation of BiH and 19 primary schools in the RS\. This increase in the number of schools benefited
under the project is a reflection of Schools reconstructed under the project were selected on the basis of two
principal criteria: I) war-related damaged (including schools damaged by refugees or military occupation);
and 2) schools in UNHCR priority areas for return of refugees and displaced people\. As the agency
responsible for overseeing the school reconstruction process at the Federation level, the Federation MOE
took the lead in defining criteria for selection and reaching agreement on the criteria with the Bank, as well
as for working with canton-level ministries and other education authorities to apply the criteria to the needs
of the various municipalities\. Selection of primary schools for reconstruction in RS was carried out by the
RS MOE, in cooperation with RS regions/municipalities using the same selection criteria and procedures as
agreed with the Federation\. Civil works were of good quality, and the World Bank supervision effort
benefited from the presence of a full time consultant in the PIU, financed through Dutch Grant financing\.
In the Federation, furniture and equipment were provided to 18 project schools by the Dutch Government\.
and the IDA credit financed fumiture and equipment for the remaining 7 project schools\. In the RS, the
IDA credit financed furniture and equipment for all 19 project schools\.
* Textbooks and Educational Materials
This component was designed to help fill the financing gap under the first Emergency Education
Reconstruction Project for printing of textbooks by financing 20 more of previously agreed textbooks titles\.
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14 new math and science textbooks were published and distributed to schools in the Bosniac-majority areas
of the Federation by four private sector publishers chosen on the basis of competitive procurement (total
contract amounts $445,000)\. In a second phase, English language training books were distributed in the
Bosniac-majority areas of the Federation, and readers and other educational materials were shared to some
extent across all schools of the Federation\.
An OHR led initiative to identify and remove ethnically sensitive or objectionable material from textbooks
and educational materials in the Federation and RS was effectively supported with Interim Fund funding
under the project\.
* Finance, Governance and Administration Study
Given the government's reluctance to use Interim Fund funding for external TA, and the availability of
other funding sources for technical assistance, a decision was made in 1997 to request a PHRD grant to
finance the Education Govemance, Finance and Administration Study that had been originally included
under project financing\. Funds allocated for this work were re-allocated to textbook procurement and to
support local TA and training in the areas of textbooks development\. The contract for the study was
carried out through a joint venture with the Council of Europe, which had previously undertaken a review
of higher education governance and legislation in 21 CEE and FSU countries\. Following a delay based on
the difficulty of collecting data across the 10 cantons and RS, the Education Governance, Finance and
Administration Study was successfully completed in October 1999\. This sector work provided the basis
for development of the Education Development Project (FY00) and should help inform preparation of the
SoSAC II (FY02)\.
3 Project Management
In the Federation, decision making and communications were politically motivated to the end\. Despite
several attempts to overhaul management of the Federation PIU, politics and political patronage prevailed
resulting in a large number of unqualified, but ethnically balanced staff\. Given the weakness of its
management and staff, the Federation PIU had to be supported heavily by Bank HQ and RM staff and by a
civil works implementation consultant\. The consultant's contract was terminated in October 1998 due to
lack of additional funding\. With the replacement of the RS PIU Director in 1997, the professionalism of
the RS PIU increased considerably and their funding was implemented efficiently, without undue direct
assistance from the Bank\.
3\.4 Revised Components:
* Qualitative Initiative in RS
At the request of the RS Ministry of Education, a pilot teacher training initiative was added to the project in
RS\. The Bank was pleased to have the flexibility within the project design to be responsive to this demand
in RS for supporting qualitative improvements in education\. The Bank approved a first phase of technical
assistance and training for the introduction of interactive teaching methodologies in developing
experimental schools in the amount of US$98,000\. The implementation of this pilot started in October
1999 and was successfully completed at the end of the 1999/2000 school year\.
* Components covered by an Italian TF
An Italian Grant in the amount of US$ 1\.5 million was approved in October 1998 and signed in March
1999\. An Administrative Agreement with the Italian Government was signed in June 1999, paving the way
to initiate implementation of the grant funding\. The grant was originally requested to support three
initiatives aimed at both social cohesion and improved educational quality: (1) technical assistance, civil
works, equipment, furniture, textbooks and educational materials for the development of 3-4 "mixed"
(Croat-Bosnian, Bosnian-Serb) experimental schools or, alternatively, teacher resource centers in the
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Federation and RS\. These schools/resource centers were to be focused on improving the quality of teaching
and education materials; (2) design and execution of a quality fund scheme aimed at supporting school
level quality improvements and social cohesion initiatives; and (3) development of a common core
curriculum framework for the Federation\. This third objective was blocked by the Croat leadership of the
Federation MOE and Croat-majority canton MOEs\. It was decided, therefore, to carry out experiments in
shared curriculum development at the school level, essentially combining parts 1 and 3 of the initial design\.
3\.5 Quality at Entry:
Quality at entry is rated satisfactory\. This rating is based on the consistency of the objectives with
the overall reconstruction program, as well as with the governments' priorities\. Since the
signature of the Dayton-Paris Peace Agreement, reconstructing primary schools throughout
Bosnia and Herzegovina has been one of the basic requirements and one of the highest priorities
for the Government of BiH for security, humanitarian and refugee return reasons, as well as for
reasons of improving educational access and quality\. The priority program was designed to
address only the most urgent requirements for restoring minimal operations in the sector in a
coherent fashion, starting with those investments which could have an immediate impact and
benefit the largest possible number of school children\. The assumption about needs,
implementation arrangements, capacity and priorities were realistic and in line with the situation in
the country\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The overall achievement of the project's objectives -- to improve primary education access and quality by
reconstructing primary schools throughout BiH -- is rated satisfactory\.
The flexible project design allowed the Bank to use project funding and co-financing to begin to make the
transition from reconstruction to development-oriented objectives in education\.
4\.2 Outputs byi componzents:
The School Rehabilitation and Furnishing component funded civil works and equipment for 44 primary
schools throughout BiH\. The project significantly exceeded its original target of financing reconstruction
of 25 primary schools\.
In the Federation of BiH: 25 primary schools were reconstructed; furniture and equipment were provided to
18 project schools by the Dutch Government, and the Interim Fund credit financed furniture and equipment
for the remaining 7 project schools\. In RS: 19 primary schools were reconstructed and furniture and
equipment provided to these schools\. A total of 417 classrooms were repaired and furnished through BiH\.
18,206 children in the Federation of BiH and 3,040 in RS benefited from the repairs/reconstruction and
provision of furniture\. At least 30% of refurbished schools contributed to increased capacity in practical
terms, in that these schools were not usable at all prior to benefiting from this project's reconstruction
support\. In the remaining 70% of schools, incremental capacity was increased by restoring unusable
classrooms\. Conditions for leaming were significantly improved in all project-supported schools\.
The unit cost for reconstruction in the Federation of BiH was about US$102 per square meter or US$243
per pupil on average\. This unit cost per m2 was, at average, US$130 less than reconstruction unit cost for
the first Emergency Education Reconstruction Project due to two reasons: first - increased market and
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number of qualified civil works firms in the Federation of BiH; second - the Federal Ministry of Education
chose to reconstruct bigger (approximately 11-12 classroom schools) but less damaged schools in the
priority areas for return of refugees and displaced persons\.
In the RS, the unit cost was significantly higher - US$170 per square meter or US$1,057 per pupil\. There
are several reasons for this: the education reconstruction in the RS was initiated two years after it was
initiated in the Federation of BiH and the civil works market was undeveloped; the RS Ministry of
Education chose to reconstruct smaller size rural schools with the higher degree of damage in the priority
areas for return of refugees, but unfortunately return of refugees did not happen in these areas so far\. In
some of these rural schools (Miljkovac-Doboj, Velijasnica-Ribnik, Milici-Modrica) less than 20 pupils are
attending classrooms at the moment\. The situation in urban schools is somewhat different with higher
number of students per school (Sipovo - 568 students, Novi Grad - 799 students)\.
Number of Number of Number of Total Per pupil Per m2 cost
Entity schools classrooms pupils surface m2 cost US$ US$
Federation of BiH 25 282 18,206 43,186 4,415,537\.00 243 102
Republika Srpska 19 135 3,040 18,745 3,202,874\.85 1,054 170
Total 44 417 21,246 61,931 7,618,411\.85 359 123
Furniture and equipment in the Federation of BiH was mainly financed by Dutch Government through
GEMCO\. From the Project funds, furniture and equipment was provided to 7 schools in the Federation of
BiH\. The average unit cost of school fumiture and equipment provided from the Project funds was about
US$2,900 per classroom\.
In the RS, furniture and equipment for all 19 Project schools was financed from the Credit proceeds\. The
average unit cost in the RS was US$1,601 per classroom\.
Number of Number of Total cost of
Entit, schools classrooms furniture/equipment U P o
Federation of BiH 7 55 160,178\.00 2,912\.32
Republika Srpska 19 135 216,138\.00 1,601\.02
Total 26 190 376,316\.00 1,980\.61
Textbooks and Educational Materials
The pilot project involving competitive selection of private sector developed textbooks was completed
successfully\. This pilot was developed with the support of International Book Development (IBD) under
Dutch Trust Fund financing\. 14 new math and science textbooks were published and distributed to schools
by four private sector publishers chosen on the basis of competitive procurement\. Although the textbook
pilot had been originally planed under this project, due to delays in Board presentation, the pilot was
financed from the proceeds of the First Emergency Education Reconstruction Project (total contract
amounts US$445,000) in order to assure timely distribution of textbooks for the 1998/1999 school year\.
Feedback from sources at various levels was that the pedagogic and physical quality of these books
represented a significant improvement over existing textbooks\.
The second phase of the Bank-supported textbook program was completed by July 2000 following several
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set backs\. Following replacement of the Croat Deputy Federation Minister of Education in 1998, Croat
representatives in the Federation MOE withdrew for political reasons from a previous agreement to enter
into a joint procurement of two textbooks (computer science and English language training) to be used in
all Federation schools\. Book packages were, therefore, evaluated only by the Bosniac representatives of
the Federation\. A contract for English language training books, manuals for teachers and audio tapes for
grades 4-8 of primary schools was signed and 125,000 copies of books; 5,000 copies of manuals, and
1,500 tapes were delivered to the schools by June 2000\. No responsive bids were received for computer
science books, and given insufficient time to re-bid, this procurement was canceled\. Savings from
cancellation of the computer science textbooks procurement were re-oriented to reading materials, which
were shared, to some extent across the Bosniac and Croat-majority areas of the Federation\. The Croats also
rejected a proposal for shared grammars, and this potential procurement was canceled when the Bank
declined to finance Bosniac language only grammars (further contributing to separation between the two
education systems in the
Federation)\. This failure to cooperate within the Federation has left the Croat-majority areas using
language books from Croatia and Bosniac-majority areas using outdated books or, alternatively, pursuing
other sources of financing for books that will, if they are successful, put a high degree of focus on language
differentiation and ethnic separation in the Federation\.
Savings from cancellation of the textbook procurement were re-allocated to reading materials and
geographical maps and atlases, which were shared to some extent across the Federation of BiH\. 77 titles or
122,318 copies of supplemental readers were procured, as well as 8,000 copies of geographical atlas and
5,000 maps\.
An OHR led initiative to identify and remove ethnically sensitive or objectionable material from national
subjects' textbooks and educational materials in the Federation of BiH and RS has been supported with
Interim Fund funding under the Project\. Following some delays, this initiative has met with some guarded
success, although OHR is providing constant follow up and supervision\.
Finance, Governance and Administration Study
The Education Govemance, Finance and Administration Study -- carried out through a unique joint venture
between the World Bank and the Council of Europe -- was completed and presented at a public forum early
in fiscal year 2000\. In addition, the participatory process used for the study was particularly successful in
helping develop public support for the study's findings and conclusions\. An international donor partnership
(WB, Council of Europe, European Commission, UNESCO, Office of the High Representative) helped
bring Serbs, Croats and Bosniacs together in BiH to focus attention on social cohesion issues in education
and develop consensus for needed governance changes\. As a result, World Bank and European Union
funding is currently supporting the establishment of a shared Standards and Assessment Agency for BiH,
as well as a shared Coordinating Board for Higher Education\. These are the first examples of common
inter-ethnic institutions in education following the war\. In addition, World Bank funding under its
Education Development Project is supporting development of a common education management
information system and a jointly-managed Quality Fund for primary education\. All of these initiatives were
developed and promoted under the study initiative\.
Qualitative Initiative in the RS
At the request of the RS Minister of Education, the Bank agreed to finance a small amount of technical
assistance and training aimed at developing "experimental schools" for introducing interactive teaching
methodologies\.
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During project implementation, the Ministry of Education in the RS developed and began to set in motion
an ambitious if somewhat under-analysed program of education reforms\. These reforms cover a range of
issues and initiatives in the areas of curriculum, textbooks, pupil admissions and modernization of teaching
methods\. The "experimental schools" project (a term coined by the Ministry of Education) is one strand of
these reforms and focuses on improving teaching practice\. At the heart of the "experimental schools"
project is the modernization of teaching methods in the RS\. Its chosen method for achieving this aim was
to run a series of teacher conferences and to publish a serious of textbooks of "interactive learning" for
teachers\.
There are six schools in the project, all of them primary schools\. The Ministry chose the schools in late
1998\. The main selection criteria included the geographical spread of the schools across the RS and the
known commitment of the head teachers to modernization\.
The "experimental schools" were to be the pilot schools of the Ministry of Education's reform and
modernization agenda\. The Ministry of Education in RS intends to extend the reforms introduced in these
six schools into all RS schools by 2006\.
A first phase of technical assistance and training for the piloted introduction of interactive teaching
methodologies in RS was completed\. The Government's consultant produced an evaluation which identified
strengths and weaknesses of the pilot initiative and included a serious recommendations for follow up\. RS
authorities have disseminated the report and a British VSO is currently assigned to follow up in the pilot
schools\.
Italian co-financing
Italian co-financing, approved late in the second year of project implementation, is supporting the transition
from reconstruction to qualitative improvements in the education system\. The closing date of the Italian
Grant is October 31, 2001\. As the implementation of this grant is not yet complete, it is too early to fully
assess its impact, although indications thus far are generally positive\. Its implementation will continue
under the Education Development Project, and it will be managed by the Federation and RS Project
Coordination Units for that project\. This initiative supports two major activities:
* Experimental schools - The objective of this component is to demonstrate the conditions required for
delivery of effective and sustainable primary education in mixed catchment areas throughout BiH\.
Priority is given to demonstrating improvement in three principal program areas: (1) effective teaching
and supervision of teaching; (2) development and use of modem instructional materials suitable for use
throughout BiH; and (3) expanded community involvement in school improvement\. A US$700,000
technical assistance contract was signed with the University of Ulster School of Education in Northern
Ireland (UK) to support (a) mixed experimental schools in the Zenica-Doboj Canton, (b) a joint
Teacher Resource Center in Brcko, and (c) mutual understanding programs which have been combined
with the ongoing experimental school work in the RS\. The contract is the first example of a jointly
signed Federation/RS contract in education and one of the only such cooperative Federation/RS
contracts to date\. (The Education Development Project (FY00) was, as a result, designed almost
exclusively around the use of such shared contracts)\. This Bosnia/Northem Ireland cooperation is a
watershed undertaking in terms of post-conflict resolution partnerships which will have a positive
impact on enhanced cooperation and quality improvements in education, as well as attract significant
positive intemational interest\.
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* The Quality Fund Grant Program - This component, also being financed by the Italian Government,
is progressing satisfactorily with political support across BiH\. The three sides have nominated their
respective representatives to the Evaluation Board of the Quality Fund, to evaluate and approve
proposals from the two pilot areas (Herzegovina-Neretva Canton and Banja Luka Region)\.
International technical assistance has supported a team of three local experts to develop manuals and
guidelines for preparation, evaluation and supervision of proposals\. These manuals were approved by
a larger group of educators (21 experts), and have been validated at the school level\.
4\.3 Net Present ValueliEconomic rate of return\.
Not applicable\.
4\.4 Financial rate of return:
Not applicable\.
4\.5 Institutional development inmpact:
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
Implementation of the Second Emergency Education Reconstruction project was generally satisfactory,
despite the fact that project design was carried out in a chaotic post-conflict environment\. Following the
end of hostilities, the education system was re-built at an ambitious pace and - while not achieving levels of
funding and organization that existed prior to the war - teaching and learning at all levels is now being
carried out at minimally acceptable standards in most areas of BiH\. However, the pace of reconstruction,
the multitude of donor funding opportunities, and the general chaos of post-conflict Bosnia tended to
distract all actors in education -- government, stakeholders, donors, etc\. -- from strategic planning and from
re-thinking structures and approaches in the context of the education system's role in economic transition\.
As a result, fundamental policy and strategic issues - such as inadequate methodological training of
teachers, occupational specific training at the secondary level, and the fragmented higher education system
- have not been adequately addressed to date\.
5\.2 Factors generally subject to government control:
Project implementation took place in the context of a continuing political and nationalistic struggle between
the three constituent groups in BiH that is particularly virulent in the education sector for reasons of
national language and culture, as well as for reasons of political patronage\. This struggle has numerous
negative implications in education\. A rational allocation of various functions, such as assigning
performance evaluation and quality assurance to the central level, is not currently possible due to the desire
to maintain educational separation within constituent groups\. To further complicate matters, nationalistic
efforts to differentiate the common language of BiH into three separate languages has become an excuse for
lack of cooperation in developing new curricula, textbooks and educational materials\. This politically
forced separation in education is detrimental in terms of long term nation-building efforts in BiH, the need
for a rational distribution of functions, and the efficient use of resources (class size, facilities utilization and
procuring books and other educational materials, etc\.) The lack of cooperation is also a dis-incentive for
funding agencies which would like to fund educational reforms, but are reluctant to do so in the context of
efforts to re-enforce segregation in the schools\.
Delays rooted in political or ethnic problems did occur over the course of implementation -- such as
decision making regarding grammar textbooks as well as procurement of other shared textbooks -- but did
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not significantly delay the project or affect the achievement of objectives\.
5\.3 Factors generally subject to implementing agenev corntrol:
Project management has been adequate for purposes of this straight forward project\. In the Federation,
decision making and communication was often politically-motivated, causing the Bank to devote significant
supervision resources in order to maintain momentum\. The RS PIU had difficulties during the early
months of project execution, mostly attributable to the appointment of unqualified political appointees to
the RS Project Implementation Unit\. However, after removal of the original PIU Director and his
replacement with competent staff, the RS PIU -- given no political divisions with the PCU as in the
Federation -- managed all aspects of project implementation efficiently and effectively throughout the entire
period of implementation\.
5\.4 Costs andfinancing:
As previously stated, the average investment per school reconstructed tended to be less than originally
anticipated in both the Federation and RS, resulting in a greater number of schools benefiting from project
financing than had originally been programmed\. The cost per school reflected both lower than expected
unit costs, as well as the final selection of schools that required less extensive reconstruction than in the
first project\. Audits of the project's financial statements and procurement and disbursement were issued
without qualification\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The project was conceived and implemented as an emergency reconstruction project\. As such, it dealt
primarily with physical reconstruction activities\. The key question of sustainability for the investments
supported under the project was whether the responsible authorities would have the recourses necessary to
operate the project schools effectively in the future\. In particular, there was a question of whether or not
they would be able to attract and retain qualified teachers, and whether or not they would have the budgets
necessary to pay for utilities, replenishment of educational materials, and school maintenance\.
Although there are exceptions, the physical condition of primary schools within the jurisdiction of the
canton ministries of education is generally good, 75% of them having been reconstructed or refurbished
since the war\. This status is attributed mainly to better economic progress and aid provided by
intemational donors\. In some cases, the new schools provide accommodation for teaching which is
comparable with or better than those found in most western European countries, where such subsidies have
been curtailed\. In comparison, the physical condition of the schools in the Republika Srpska is less
satisfactory, with pupils being taught in generally poorer physical conditions and in overcrowded
classrooms, although the economic situation in RS has been improving somewhat recently\. Overall,
however, the likelihood that schools will be staffed and maintained and that the education system will
continue to deliver a minimally acceptable level of education quality is good\. As over 90% of project
funding was for school reconstruction and equipping, the overall project is given a satisfactory
sustainability rating\. Progress on governance and inter-constituent group cooperation issues have,
however, been less satisfactory\.
The delegation of responsibilities for education financing and governing to the cantons in the Federation of
BiH has proven to be a particular constraint to efficient public sector management and educational reform\.
Canton level ministries of education currently function as mini-centralized bureaucracies which suffer both
the costs of over-centralization and the dis-economies of scale normally associated with decentralization\.
Significant disparities in per student spending at all levels have been identified across the 1 1 jurisdictions
responsible for education in BiH, with the highest spending areas spending more than twice as much per
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student at all levels than the lowest spending areas\. This disparity is predominantly, but not exclusively
explained by differences in revenue collection per capita\. Because public revenue is collected and allocated
to education within the 11 jurisdictions (as mandated under the Dayton Accords), little can be done to
promote equalization across areas without agreement from each of the jurisdictions to transfer funding up
to the Entity level or to assign Federal revenue for education\. Although neither of these solutions was
politically feasible in BiH during the project implementation period, future Bank-supported adjustment
lending may be expected to address these important education finance issues\. Funding equalization should,
however, not be justified solely on an equitable spending mandate, but in the context of equity goals in
education outcomes\. Until consistent system and student performance information exists in BiH, there is
little justification to argue for funding re-allocations on the basis of bringing children in disadvantaged
areas up to acceptable performance standards\. Addressing inequities in education outcomes and the
funding inequities that may or may not be a factor in those achievement inequities can only be addressed
once consistent information on performance is available\. The new Education Development Project is
helping to provide such performance information in the context of a shared-Entity Standards and
Assessment Agency\. While the RS Ministry of Education retains responsibility for the prescribed quality
control functions of a central ministry, the need to consider decentralization reforms which push decision
making authority closer to the service providers applies equally in RS\.
6\.2 Transition arrangement to regular operations:
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7\. Bank and Borrower Performance
Bank
7\.] Lending:
The Bank's performance in the lending phase is rated as satisfactory\. The Bank responded very quickly to
the Borrower's request to proceed immediately with the Second Emergency Education Reconstruction
Project aimed largely at filling the financial gap in the first project and supporting school reconstruction in
Republika Srpska\.
7\.2 Supervision:
The Bank's supervision performance is rated as satisfactory\. Much of the implementation success achieved
under the project can be attributed to the adequate supervision funding for the project, which allowed the
Bank to deal in a more effective and timely manner with the dysfunctionality of decision making in the
Federation, as well as deal with two separate Entities\.
7\.3 Overall Bank performance:
Overall, the Bank's performance can be rated as satisfactory\. The project's reconstruction objectives were
met, and the project team was allowed and encouraged to devote time and resources to the less tangible and
more challenging inter-constituent group cooperation issues\. The project served as a vehicle for constituent
group communication and cooperation, but the dysfunctionality of the Federation of BiH (in terms of
parallel, ethnic-based institutions) was never overcome\. The project and, in particular, the education
governance and finance study partnership with Council of Europe also served as a vehicle for the Bank
team to leverage additional financing for the sector and promote donor coordination and education strategy
development\. The aid coordination effort in education in BiH among the principal donors and advisors
(OHR, UNESCO, UNICEF, EC, World Bank) was an example of best practice for the region, although
such intensive cooperation was certainly facilitated by the high level of resources and attention provided to
BiH by the international community, which is probably not replicable elsewhere\.
Borrower
7\.4 Preparation:
Borrower performance during preparation is rated satisfactory, particularly given the chaotic post-conflict
situation during which reliable information was scarce and strategic planning was difficult\.
7\.5 Government implementation performance:
Given the political context of Bosnia and Herzegovina, Government implementation performance was
satisfactory\. In terms of the reconstruction goals, the implementation units were delegated the authority to
implement the projects well and in a timely manner\. Schools were reconstructed and textbooks and
educational materials were delivered to schools in a timely manner, mostly in the Bosniac-controlled areas
of the Federation\. Continuing political conflict between the three constituent groups, however, impeded
long term development and capacity building goals under the project because the Bank and others donors
were cautious of working with and supporting each constituent group separately at the risk of re-inforcing
and legitimizing their desire to develop three separate education systems within BiH\. The willingness of all
three groups to cooperate on various education goals has increased dramatically under the new Education
Development Project\.
7\.6 Implenmenting Agency:
The performance of the Federation PIU was satisfactory in terms of civil works and textbook procurement
and managing project funding\. However, the dysfunctional nature of the Federation -- particularly in the
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area of education governance -- and the fact that Croat authorities operated a "parallel" PIU in Mostar
during the life of the project, caused delays and mis-communications and generally led to an inefficient
management of staff time and energies\. During the time period 1997-2000, this dysfunction was probably
not preventable in the Federation of BiH\. While the tendency to insist on "parallel" structures continues to
impede initial implementation of the Education Development Project, the outlook for better cooperation
among the three groups is improving\. Such cooperation is the center piece of this new project which
focuses on shared initiatives and building shared institutions\. In contrast, implementation performance in
the RS PIU during the project was highly satisfactory, reflecting the PIU's unified nature and the
professionalism of its staff\.
7\.7 Overall Borrower performance:
The overall Borrower performance is considered satisfactory in the context of the project's reconstruction
goals\.
8\. Lessons Learned
Rapid reconstruction has medium term cost in terms of delayed policy and institutional reform\. The
ongoing focus on reconstruction and the unresolved uncertainty about government roles created under
Dayton is hampering the restoration of an efficient and sustainable education system\. It is also delaying
key decisions about needed reforms in the structure, orientation, management, and financing of secondary
and higher education\.
Better communication and coordination among donors and different levels of government is essential
within the Federation and between Entities\. Mechanisms to strengthen communications among all parties -
particularly in the areas of shared educational standards, curriculum and educational materials -- deserve
priority attention\. However, compromises on the part of donors will be necessary in view of significant
preferences on the part of beneficiaries (students, teachers, parents, etc\. to differentiate language
throughout BiH)\.
Reconstruction in many areas cannot proceed effectively without progress in addressing key policy
issues in the sector\. Moving ahead on reconstruction in secondary and higher education will require policy
decisions soon on the goals and content of these programs\. For example, further investment to support or
complete reconstruction of secondary education in BiH should be contingent on development of a strategy
to reform the secondary system -- which was oriented to producing occupationally trained labor for the old
command economy -- and make it more compatible with the needs of a market economy\. In higher
education, investments should be contingent on agreement to adopt a mechanism for financing higher
education centrally and on agreement to re-structure the fragmented, faculty-dominated management
structures of the universities\.
Finally, it will take time before parties to the conflict accept the role education must play in
promoting reconciliation\. Although there are some promising initiatives in communication within the
Federation and between the Federation and RS, these are ad hoc ventures at the moment\. Continuing
sensitivities on the language issue suggest that progress will be slow and uneven\.
9\. Partner Comments
(a) Borrower/implementing agency:
Borrower's ICR attached as Annex 8 - (at the end of Annex 7)\.
Ministry of Foreign Trade and Economic Relation - reviewed the Draft ICR and had no additional
- 13 -
comments\.
(b) Cofinanciers:
Government of Italy - reviewed the Draft ICR and had no additional comments\.
(c) Other partners (NGOs/private sector):
10\. Additional Information
- 14 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
_ ndjcat~wfldabIx Pro5~ctd in OMP A_tUaVLatet Estimat
1\. Primary schools are refurbished and In the Federation, 25 primary schools were same
refumished by October 1999\. reconstructed\. Fumiture and equipment
were provided to 18 project schools by the
Dutch Govemment\. The Project financed
fumiture and equipment for the remaining 7
project schools\.
In RS, 19 primary schools were
reconstructed and project funds were used
to finance fumiture and equipment\.
2\. Printing and distribution of 12 textbooks is Federation schools, both Bosniac and Croat, same
completed by October 1999\. received 77 titles of readers, many of them
shared titles\. English language textbooks
were also procured and distributed for the
Bosniac areas of the Federation\.
1\. Carry out by November 30, 1998 an Completed in October 1999\. same
Education Finance and Administration Study
under terms of reference satisfactory to the
Association\.
2\. Provide to the Association for comment Completed in October 1999\. same
by December 1998 the findings and
recommendations of the Education Finance
and Administration Study\.
3\. Implement the recommendations of the The Education Development Project (FY00) same
Study, as discussed and agreed with the incorporates the major recommendations of
Association\. the Study\. The Study should also provide
the basis for including education in SoSAC
I\.
Output Indicators:
InA dlc 1atuiM* - ---- Jb st PSR i''-' ' ^ c ' t ~stlm*:
End of project
- 15 -
Annex 2\. Project Costs and Financing
Pro ect Cost by Com onent (in US$ million e uivalent)
School Rehabilitafion and Furnishing 9\.30 8\.00 86
Books and lEducational Materials 0\.80 1\.43 178
Education Finance and Administration Study 0\.50 0\.00
Project Implementation 0\.40 0\.72 180
Qualitative Initiative in RS 0\.00 0\.40 40
Total Baseline Cost 11\.00 10\.55
Total Project Costs 11\.00 10\.55
Total Financing Required 11\.00 10\.55
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
1\. Works 0\.00 3\.90 4\.20 0\.00 8\.10
_ _ l ~~~~~(0\.00) _ (3\.90) _4\.20) (0\.00) (8\.10)
2\. Goods 0\.00 1\.30 0\.50 0\.00 1\.80
(0\.00) (1\.30) (0\.50) (0\.00) (1\.80)
3\. Services 0\.00 0\.00 0\.70 0\.00 0\.70
(0\.00) (0\.00) (0\.70) (0\.00) (0\.70)
4\. Recurrent Costs 0\.00 0\.00 0\.40 0\.00 0\.40
(0\.00) (0\.00) (0\.40) (0\.00) (0\.40)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) _ (0\.00)
Total 0\.00 5\.20 5\.80 0\.00 11\.00
(0\.00) (5\.20) (5\.80) (0\.00) (11\.00)
Project Costs by Procurement Arrangements (ActuallLatest Estimate) (US$ million equivalent)
1\. Works 0\.00 7\.60 0\.00 7\.60
(0\.00) (7\.60) ()(0\.00) (7\.60)
2\. Goods 0\.43 1\.40 l\.00 0\.00 2\.83
(0\.43) (1\.40) (0\.00) (0\.00) (1\.83)
3\. Services 0\.00 0\.00 1\.20 0\.00 1\.20
(0\.00) (0\.00) (0\.42) (0\.00) (0\.42)
-16 -
4\. Recurrent Costs 0\.00 0\.00 0\.71 0\.00 0\.71
(0\.00) (0\.00) (0\.70) (0\.00) (0\.70)
5\. Miscellaneous 0\.00 0\.00 1\.21 0\.00 1\.21
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.43 9\.00 4\.12 0\.00 13\.55
(0\.43) (9\.00) (1\. 12) (0\.00) (10\.55)
' Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\.
D Includes civil works and goods to be procured through national shopping, consulting services, services of contracted
staff of the project management office, training, technical assistance services, and incremental operating costs related to
(i) managing the project, and (ii) re-lending project funds to local government units\.
Project Financin by Com onent (in US$ million e uivalent)
\.____ i;s -at e9 X $|t' ;;; \.Of\. iAppraisal
: = \.~ \._\._-\._=\.__ __ \. __ _____\.Govt CO_,
School Rehabilitation and 9\.30 8\.00 1\.00 86\.0 0\.0 0\.0
Furnishing
Books and Educational 0\.80 1\.43 178\.8 0\.0 0\.0
Materials
Education Finance and 0\.50 0\.50 0\.0 0\.0 0\.0
Administration Study
Project Implementation 0\.40 0\.72 0\.10 180\.0 0\.0 0\.0
Qualitative Initiative in RS 0\.40 0\.0 0\.0 0\.0
Experimental School 0\.90 0\.0 0\.0 0\.0
School Grant Pilot 0\.50 0\.0 0\.0 0\.0
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Annex 3: Economic Costs and Benefits
Not Applicable\.
- 18 -
Annex 4\. Bank Inputs
(a Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g 2 Economists, I FMS, etc\.) Implementation Development
Month/Year Count Specialty PTogress Objecive
Identification/Preparation
08/5-15/1996 4 1 Task Manager/Operations S S
Officer, I Education Economist,
I Operations Officer, I Team
Assistant
Appraisal/Negotiation
10/15-23/1996 5 I Task Manager/Operations
Officer, I Education
Economist, 1 Operations
Officer, I Project Officer,
1 Team Assistant
01/21-22/1997 5 Task Manager/Operations S S
Officer, Operations Officer,
Project Officer, Lawyer, Team
Assistant
Supervision
09/8-12/1997 5 1 Task Manager/Operations S S
Officer, 1 Education
Economist, 1 Operation
Officer, 1 Project Officer, I
Team Assistant
04/14/24/1998 5 1 Task Manager/Operations S U
Officer, 1 Operations Officer, 1
Project Officer, 1 Consultant, 1
Team Assistant
08/27-09/09/1998 4 1 Task Manager/Operations S S
Officer, 1 Project Officer, I
Consultant, I Team Assistant
10/4-10/1998 3 1 Operations Officer, 1 Project S S
Officer, 1 Team Assistant
11/8-14/1998 3 1 Operations Officer, 1 Project S S
Officer, 1 Team Assistant
01/18-30/1999 4 1 Task Manager/Operations S S
Officer, 1 Operations Officer, I
Project Officer, iTeam Assistant
03/7-31/1999 4 1 Task Manager/Operations S S
Officer, 1 Operations Officer, I
Project Officer, lTeam Assistant
05/3-29/1999 4 1 Task Manager/Operations S S
Officer, I Operations Officer, I
Project Officer, iTeam Assistant
09/20-30/1999 4 1 Task Manager/Operations S S
Officer, 1 Operations Officer, I
Project Officer, lTeam Assistant
- 19 -
11/22-12/10/1999 3 1 Task Manager/Operations S S
Officer,l Project Officer, I Team
Assistant
ICR
06/18-22/2000 2 1 Operations Officer, S S
1 Project Officer
(b) Staff
Stage of Project Cycle ActuaVLatest Estimnate
No\. Staff weeks US$ (,000)
Identification/Preparation 24\.7 39\.5
Appraisal/Negotiation 31\.8 89\.3
Supervision 104\.4 236\.5
ICR 14 29\.1
Total 174\.9 394\.4
- 20 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
O Macro policies O H OSUOM O N * NA
O Sector Policies O H OSUOM O N O NA
O Physical * H OSUOM O N O NA
O Financial O H OSUOM O N O NA
O Institutional Development O H O SUO M 0 N 0 NA
LII Environmental OH OSUOM O N * NA
Social
O Poverty Reduction O H OSUOM O N O NA
E Gender OH OSUOM ON ONA
O Other (Please specify) O H OSUOM O N O NA
0 Private sector development 0 H O SU O M 0 N 0 NA
O Public sector management 0 H O SU O M 0 N 0 NA
O Other (Please specify) OH OSUOM ON O NA
- 21 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bankperformance Rating
Lending OHS OS OU OHU
O Supervision OHS 0s OU OHU
a Overall OHS OS 0 U O HU
6\.2 Borrowerperformance Rating
O Preparation OHS OS O u O HU
0 Government implementation performance O HS 0 S 0 U 0 HU
0 Implementation agency performance OHS OS 0 U O HU
0 Overall OHS OS 0 U O HU
- 22 -
Annex 7\. List of Supporting Documents
Bosnia and Herzegovina: Second Emergency Education Reconstruction Project; Technical Annex; Report
Number T-7028-BiH; June 6, 1997
Bosnia and Herzegovina: Second Emergency Education Reconstruction Project; Memorandum and
Recommendation of the President; Report Number P-7028-BiH; June 6, 1997
Bosnia and Herzegovina: Second Emergency Education Reconstruction Project; Development Credit
Agreement (Cr\. N035-0 BOS); September 12, 1997
World Bank Appraisal and Negotiations Aide Memoires: October 1996, December 1996, January 1997
Supervision Documents:
World Bank Project Status Reports, Supervision Mission Aide Memoires: September 1997, April 1998,
August 1998, October 1998, November 1998, January 1999, March 1999, May 1999, September 1999,
December 1999\.
Audit Report on the Project Financial Statements for the year 1999;
PriceWaterhouseCoopers
Audit Report on the Project Financial Statements for the year 1998;
PriceWaterhouseCoopers
- 23 -
Annex 8\. Borrower Contribution to the ICR
IMPLEMENTATION COMPLETION REPORT
BOSNIA AND HERZEGOVINA
SECOND EMERGENCY EDUCATION RECONSTRUCTION PROJECT
INTERNATIONAL DEVELOPMENT CREDIT (0350BOS) AGREEMENTS (IDA II)
APPENDIX B 1 *)
BORROWER CONTRIBUTION TO THE IDA
PREPARED BY THE
PROJECT IMPLEMENTATION UNITS/PIU - EDUCATION / MINISTRY OF EDUCATION,
SCIENCE, CULTURE AND SPORTS OF THE FEDERATION OF BOSNIA AND
HERZEGOVINA
Sarajevo, July, 2000
- 24 -
*) World Bank Mission in B&H has to enclose Appendix B2 related to the
Part of the Project for Republika Srpska
- 25 -
Project Objectives World Bank Document - Memorandum and Recommendation of the
President of the IDA \. For An Emergency Education Reconstruction Project, April 22, 1996\.
Page 5\. The primary objective of the Emergency Education Reconstruction Project (EERP or
Project) is to help continuing of restore formation classroom conditions which permit effective
teaching and learning - particularly, in primary schooling\. A secondary objective is to help
providing minimum of school furniture for the schools which are already reconstructed and
renewed\. And the third objective is to help addendum school libraries with necessary textbooks,
readers, school educational materials\.
Project Description Same as above\. Page 5 and 6\. The Project would promote these objectives
by supporting the components described below:
a\. Primary School Rehabilitation\.
This component would finance (i) the refurbishment of primary schools which can be
made secure and weatherproof which have been selected by cantonal authorities as
priorities for rehabilitation, and (ii) the construction of several primary schools in
areas with no alternative school capacity\.
b\. Primary School Furniture
Thirteen schools were equipped through the Grant of Kingdom of Netherlands and six
of them out of the part of funds planned for civil works\.
c\. Books and Educational Materials\. This component would finance the printing and
distribution some of textbooks, geographical charts and maps, transparencies of natural sciences
and readers for primary and secondary schools in Croatian and Bosnian language\.
d\. Capacity Building and Project Implementation\. In the scope of the II EERP PIU was
established in Banja Luka and they implemented 34 % of the approved loan\.
e\. Project Preparation for the III EDP, EMIS and experimental schools\. FPIU helped in
preparatory works in accordance to the instruction from the Mission of the WB\.
Financing Plan Summary
IDA Credit US$ 6\.9 Million
Dutch Government US$ 1\.0 Million
Italian Grant US$ 1\.0 Million
Total US$ 8\.9 Million
ASSESSMENT and EVALUATION - Federation
Background\. II EERP continued implementation of credits in the same manner as during the I
EERP\.
- 26 -
Since, regarding school furniture the Government of Netherlands provided insufficient funds for
that purpose, part of the loan was allocated to furnish all repaired schools\.
During the II EERP we also tried to print at least one joint textbook for the whole of B&H
territory\. Aided with the Italian Grant and during the preparation process of III EDP certain
suitable schools with mixed teachers and students, placed on the entity lines were looked for, in
order to be nominated as so called "experimental schools" that would have the role of
reconciliation of population in respective areas\.
Suitability of the Project's Objectives
Primary School Rehabilitation
The World Bank, through its credit and the Italian Grant, invested over 8 Million DEM in the
Federation in 24 primary schools rehabilitation, and construction of two new schools as replacing
buildings for completely destroyed ones\. (See attached list and amount per school)
Final result is that 16,876 students are back in the schools that they could not use it before prior
to this project or which they could have used but only under very difficult conditions\. Beyond the
repairs of the physical infrastructure the investment in furniture, books and other learning
materials was vital and equally important part of the project objectives\.
Furniture and school equipment
The World Bank financed this component out of the Dutch Government through the GEMCO\.
Positive experience from the I EERP was successfully used during the II EERP\. This time the
quality of students desks provided by the Dutch was improved\.
Final result is that 256 classrooms were equipped including accessory rooms\.
Textbooks and educafion materials
As it happened during the I EERP so it had happened also during the II EERP - the lack of
understanding of Federal partners as well as the Ministry of Education in RS was present\.
So, only the Bosniaks wanted and needed the use this project for purchase of necessary
textbooks, school material and readers\. The World Bank for this sort of project engaged best
experts from the IBD, London (Henderson and Hunt) that held seminar for publishing houses and
in cooperation with PIU - Education prepared tender documents, based on which this time
FMOE become purchaser of textbooks, school materials and readers\.
Through this way the transition of publishing business onto the qualified publishers in B&H
commenced\. In the mean time the international community via OHR and out of this project
financed the work of expert teams on the overall textbooks revision in B&H, regarding removal
of offensive contents\.
Unfortunately, part of enormous engagement of the PIU - Education, international community,
OHR and the World Bank the realizing the goal to have any of textbooks to be used in complete
- 27 -
B&H was unsuccessful due to political reasons\.
Adequacy of the Project Design and Components
For the civil works component of the project it was envisioned that the Ministry of Education
would engage International Management Group (IMG), supported on a grant basis by UNDP, in
carrying out this task partially\.
For four schools included later on the list IMG did not prepare project documents, because
UNDP stopped financing IMG activities\. For one of the school project document was ordered by
the Design company from Zenica that was selected through biding\. For the remaining three
schools already existing documents supplied by the municipality were used\.
Firstly, the component of furniture and school equipment was foreseen to be funded by Dutch
Government Grant\. Because of the luck of the fund it has been decided to allocate part of the
funds foreseen for the civil works to cover only minimum of needs\.
Following the agreement reached during the implementation of the I EERP special needs for the
books and educational materials were provided in the scope of the funds available for this
category of the Credit\. Although de facto the need for joint textbooks has existed, this project
could not achieve the mutual agreement of all respective partners\.
There is still no central repository of information that gives the exact status on all schools in
B&H\. Small amount was allocated out of II EERP that was used for funding EMIS Pilot project
in Tuzla Canton\.
Overall Quality and Speed of Project Implementation
Civil Works\. As a result the MOE already possessed the staff II EERP could start immediately
after the contract signing\. Related to the I EERP and according to the documents signed
procedures NCB and SNCB were used in the II EERP\.
In order to provide qualified contractors biding was opened for pre-qualification of contractors
and only those qualified ones were invited\.
1\. The PIU project engineer visited the site for at least the first and last payments and physically
inspected the works for quality and completeness\. For supervision local professional companies
were selected through biding\.
Delays related with some of the facilities occurred due to extremely hard winter and afterwards
increased scope of works (for instance Dzepi and Brijesnica)\.
2\. Thanks to the consolidation on the work market many of the works were less expensive than
during the previous project, so more schools were finished than expected\.
As originally planned, IMG provided assessments (specifications and cost estimates) for the
physical reconstruction of schools\. Later on it came out the fact that so many assessments were
not needed, so it was decided to make typical designs for two, four and six classroom schools and
executive designs for two and four classroom schools\.
As mentioned above category furniture and school equipment was funded by Dutch
- 28 -
Government Grant and by part of the fund foreseen for the civil works to cover the needs\.
Modified SNCB procedures were followed for purchase of the school furniture\.
Textbooks\. The World Bank and FMOE used experiences from the I EERP and published
textbooks and other educational materials within this project using the public biding process\.
The World Bank experts and their consultants put an enormous effort to achieve consensus about
at least of one textbook to be published for the use in all schools throughout entire Bosnia and
Herzegovina\. But, it was not achieved\.
Summary Information and Administration
Civil works and school equipping\. Prior to starting this project, the PIU proposed and World
Bank agreed to a priority list of 259 schools for reconstruction\. These 28 schools were repaired
using I EERP amount of US$ 7,245,343 from World Bank Trust Funds and IDA credits\.
During the II EERP 25 schools were repaired for the amount of US$ 4,415,537\. apart from the II
EERP encompassed school furniture, equipment, textbooks, readers and school materials for the
amount of US$ 1,508,111 using IDA credit\.
Procedure applied for civil works and textbooks were standard SNCB and NCB during the II
EERP\. For furniture was used a simplified SNCB\. For each of the contract no objection of the
World Bank was provided\. The Mission was continuously informed about all the steps of
pre-contracted activities\.
Books and Educational Materials\. As it was stressed in the I EERP report overall survey
showed that about 450 titles (approx\. 8 mill\. books) were required within the approximate value
of US$ 15 mill\. During the war via the I EERP only 78 titles of which 1,4 mill\. copies were
purchased, valued approx\. US$ 1,7 mill\., which was supported by the World Bank with SDR
724,900\. From the II EERP was purchased 126 titles (approx\. 273,397 copies) valued US$ 1,34
mill\. (that includes 5 textbooks, 5 teachers notebooks of English for Primary schools, 99 readers,
6 geographic maps of continents and B&H and 1 Atlas for both primary and secondary schools)\.
As mentioned above this category has been highly politicized and also de facto the need for joint
textbooks has existed, this project could not achieved the mutual agreement of all respective
partners\.
This problem of reaching consensus was the only reason for extension of the project
implementation\.
Finance\. The same problem, as it was during the I EERP, is the internal government procedures
for signing withdrawal applications - they are very cumbersome and this has slowed down
payments to contractors remained\.
The local banks were consolidated in the mean time so the cash flow was not problem any more\.
Reallocation of Project Funds\. As a result of redefining priorities, the PIU and Minister of
Education (in agreement with the World Bank) reallocated fund credit 4,890,000 SDR to better
- 29 -
meet the needs of the education sector\. The table below shows the changes\.
CATEGORIES Original Allocation Approved Final
(SDR) reallocation (SDR)
(SDR)
Civil Works 3,200,000 2,900,000 3,234,735
Goods 1,040,000 1,447,000 1,098,636
Consult Service & Train 350,000 203,000 210,515
Increment Op Costs 210,000 340,000 346,114
Unallocated 90,000
TOTAL 4,890,000 4,890,000 4,890,000
Key Lessons learned:
I ) In the civil works part of the project we have success in preserving the number of facilities
from further decay thanks to understanding of the World Bank, that gave up from standard
procedure according which gyms were not be considered for repair\. Although gyms were not
completely repaired, contract calculation including winterizing this part of the school (roof and
facade)\.
2) For the success and speed of execution of contracted civil works pre-biding meeting in
situ of all bidders, designers and PIU architects appeared to be very useful one\.
3) Reconstruction of schools without furnishing does not lead to success, because besides the
building students have to have at least desks, chairs and blackboards\.
4) In case that post-war project is being implemented by "former war enemies", which is the
case in B&H, the World Bank has opportunity through the usage of funds to impose cooperation
within the envisaged project amongst the parties\. That means that the usage of funds should be
restricted to malevolent partner of the Borrower\.
- 30 -
REPUBLIC OF SRPSKA
MINISTR Y OF ED UCA TION
Project Implementation Unit
Banja Luka
REPORT ON FINALIZATION OF THE IMPLEMENTATION OF THE NAMED
"SECOND EMERGENCY ED UCA TION RECONSTR UCTION PROJECT"
- 31 -
Banja Luka, June 30, 2000\.
- 32 -
CONTENT
1\. CREDIT MEANS AND CREDITING CONDITIONS
3
2\. PROJECT BACKGROUND
3
3\. PROJECT TASKS
4
4\. DESCRIPTION OF THE SECOND PROJECT
4
5\. REALISATION OF THE PROJECT
5
6\. CONCLUSIONS
6
- 33 -
1\. CREDIT MEANS AND CREDITING CONDITIONS
Project name: Second Emergency Education Reconstruction Project - EERP-II
Credit name and number: IDA credit No\. 0350
Credit amount: SDR 2\.8 10\.000
Date of signing: 12\.09\.1997\.
Date of effectiveness: 25\.09\.1997\.
Closing date: 30\.06\.2000\.
First repayment date: 15\.10\.2007\.
Last repayment date: 15\.04\.2032\.
2\. PROJECT BACKGROUND
The education system in Republic of Srpska is organised on three levels:
First level of education presents primary education, which is legal obligation of whole
population\. Before the war was ensured a high scope of children with this kind of education
(almost 100%), and during the war (except in areas with war activities) was retained so high
scope of children\. The primary education lasts for eight years, and the students attending the
classes in 192 primary schools\. The number of students from I to VIII grade in the year 1997\. was
131\.684\.
Second level of education presents secondary education\. On this level exist three types of
schools: gymnasiums, three- and four- years specialists' schools\. According to data from year
1997\., the number of students was 54\.757, and the classes were attended in 92 secondary schools\.
The secondary education is not compulsory\.
Third level of education presents high education\. On the level of high education work 27
institutions of the faculties and high schools\. The total number of students in 1998\. was 14\.679\.
After war in BiH, in Republic of Srpska one approached to the review of school buildings and
found out three levels of damage as follow:
- burned, crushed or destroyed school buildings - 5%;
- buildings damaged during the war (by bombing or war activities) - 30%;
- buildings damaged because of army of refugee stay - 40%\.
From such conditions have raised two kinds of needs:
a) Sanitation and reconstruction of buildings, and
b) Construction of new buildings\.
The sanitation and reconstruction are referring to the buildings damaged by bombing or war
actions, as well as buildings damaged by military or refugee stay\. The burned, crushed or
destroyed school buildings can be compensated only with new school buildings\. The impact, on
the need for constructing of new school building, had also the migration of the population because
of war actions\. All of that presented big load for Republic of Srpska\. Such thing will be big load
- 35 -
even for developed countries, not to mention a state which, on the beginning of 1997\., had
operative only 15% of industrial capacities\.
The PIU - education made, after review of conditions of school buildings, a rank-list of the
schools for reconstruction\. From that list, large numbers of schools were reconstructed by the
International organisations, which, through their offices in BiH, implemented donor means\. The
PIU formed, with WB agreement, a list of schools for reconstruction as follows:
1\. OS " Vuk Karadzic" Kravica, Bratunac;
2\. OS " Nemanja Vlatkovic" Sipovo;
3\. OS " Petar Kocic" Kopljevici, Mrkonjic Grad;
4\. OS " 2\. osnovna Skola" Grcica-Dizdarusa, Brcko;
5\. OS " Sveti Sava" Milosevac, Modrica;
6\. OS " Sveti Sava " Misici, Modrica;
7\. OS " Veselin Maslesa" Brod, Srbinje;
8\. OS " Petar Kocic" Veliko Palanciste, Prijedor;
9\. OS " Obudovac" Obudovac, Samac;
10\. OS " Petar Kocic" Sitnica, Ribnik;
11\. OS " Desanka Maksimovic" Velijasnica, Ribnik;
12\. OS " Dositej Obradovic" Miljkovac, Doboj;
13\. OS " Stevan Dusanic" Pribinic, Teslic;
14\. OS " Dositej Obradovic" Koraj, Lopare;
15\. OS " Kosta Todorovic" Skelani;
16\. OS " Vuk Karadzic" Novi Grad;
17\. OS " Vojislav Ilic" Krupa na Vrbasu, Bocac;
18\. OS " Donji Zabar" Loncari, Srpsko Orasje;
19\. OS " Vuk Karadzic" Gornji Petrov Gaj, Prijedor\.
3\. PROJECT TASKS
The objectives of the Second Emergency Education Reconstruction Project in Republic of Srpska
were to make reconstruction of school buildings that were suffering from destruction during the
war\. With its reconstruction, we ensured a decent education for students from the respective
school area, and we're also ensured the acceptance of the students-returnees\. For the same
schools we provided necessary classroom furniture\.
4\. DESCRIPTION OF THE SECOND PROJECT
The Second Emergency Education Reconstruction Project in Republic of Srpska was intended
for:
- sanitation of primary schools damaged during the war;
- procurement of the furniture and equipment for classrooms;
- training of teachers for work in experimental schools;
- ensuring of consultants' services for study of alternatives for education financing and
administration; summing of the study's results through the preparation of reports and presentation
- 36 -
of the same, and assisting in building of consensus for suggested measures through the local
seminars and study travels\.
5\. REALISATION OF THE PROJECT
The realisation of the project was by stages\. In the beginning was some delay because of
organisational problems, and later on, the implementation was conducted in accordance with the
plan\.
The project means were realised for:
- civil works;
- consulting services in civil engineering;
- procurement of furniture for equipping of schools that were reconstructed from the credit
sources;
- consultant services for study, analysis and apprising in education;
- procurement of the equipment for Project Implementation Unit\.
The major part of the project means was spent for civil works in amount of KM 5\.622\.284,57, as
well as for consulting services and procurement of the classroom furniture\.
For the training of the teachers for work in experimental schools and textbooks review under the
OHR order was spent KM 233\.090\.
The following table is giving the amount spent by beneficiaries:
SCHOOL AMOUNT (KM)
1\. " Vuk Karadzic" Kravica, Bratunac; 751,974\.15
2\. " Nemanja Vlatkovic" Sipovo; 589,486\.74
3\. " PetarKocic" Kopljevici, Mrkonjic Grad; 139,831\.32
4\. "2\. osnovna Skola" Grcica-Dizdarusa, Brcko; 363,530\.53
5\. " Sveti Sava" Milosevac, Modrica; 270,990\.00
6\. " Sveti Sava " Misici, Modrica; 256,672\.39
7\. " Veselin Maslesa" Brod, Srbinje; 251,001\.89
8\. " Petar Kocic" Veliko Palanciste, Prijedor; 231,486\.73
9\. " Obudovac" Obudovac, Samac; 409,909\.02
10\. " Petar Kocic" Sitnica, Ribnik; 314,042\.32
11\. " Desanka Maksimovic" Velijasnica, Ribnik; 277,240\.16
12\. " Dositej Obradovic" Miljkovac, Doboj; 267,319\.47
13\. " Stevan Dusanic" Pribinic, Teslic; 232,807\.57
14\. " Dositej Obradovic" Koraj, Lopare; 322,933\.30
15\. " Kosta Todorovic" Skelani; 247,217\.82
16\. " Vuk Karadzic" Novi Grad; 367,609\.92
17\. " Vojislav Ilic" Krupa na Vrbasu, Bocac; 125,888\.97
18\. " Donji Zabar" Loncari, Srpsko Orasje; 320,712\.31
19\. " Vuk Karadzic" Gornji Petrov Gaj, Prijedor\. 240,305\.89
- 37 -
FINANCE:
The financial tasks were performed by the employed person (full-time basis) that pass the World
Bank training on payments, withdrawal of means, justification of expenses and other items needed
for managing with World Bank's finance\. The same person performed financial tasks for Pilot
project EERP-I, so the experience from EERP-I was precious for successful financial managing in
EERP-II\.
The withdrawal of means from the credit account was done in traditional manner, with
withdrawal applications, based on SOE forms, on the monthly basis\. All contracted payments for
contractors and consultants were made via Special Account in ING BANK in Vienna, and
disbursements for operative cost were made from project account at local commercial bank\. The
direct payments form the credit account were not possible, for the portions for contracted
payments were to small to fulfil conditions for direct payment from the credit account\.
The withdrawals of special account on the project account were done monthly and in amounts of
15,000\.00 to 30,000\.00 USD, and the status on the project account in the local bank never gone
over 20,000\.00 USD\. All disbursements were done in KM\.
Regarding that during the project we had unbalanced spending comparing to the original
allocation by categories, it was submitted a request for re-allocation of means, and World Bank
approved it\.
Its opinion on financial management and project success gave the independent auditor
PricewaterhouseCoopers from Holland\. According to their opinion, which is in the Report on the
Project Financial Statements dated on June 19, 2000\., the financial statements give true and fair
view of the financial position of Republic of Srpska part of the Second Emergency Education
Reconstruction Project and its Sources and Uses of Funds at December 31, 1999, for the year
then ended in accordance with World Bank requirements\.
Besides the financial auditing, the Economical Institute from Banja Luka performed Procurement
monitoring and auditing, and the report was positively graded\.
ADMINISTRATION
The PIU was staffed by: director who was responsible for the overall operations of PIU and
approving all expenses; a project manager for civil works who was responsible for managing the
preparation of tender documents, their review, supervision of the bidding process and examination
of bids, and supervision and final acceptance of work; a financial manager responsible for all
bookkeeping, financial reporting, payments and withdrawal applications, and lawyer/interpreter
who was responsible for document review, translations, bid evaluation, procurement under World
Bank's methods and general office affairs\.
6\. CONCLUSIONS
Thanking to the project, there were created a better conditions for work in 19 schools damaged
during the war, as well as the conditions for more quality and undisturbed classes for more than
- 38 -
250 teachers and more than 3000 pupils\. At the same time, it was ensured facilitated acceptance
of the students-returnees in these schools\.
A good co-operation was established with local community for all kinds of items regarding
implementation of the project and with mutual satisfaction\. After expiring of guaranteed
deadlines, all the school buildings are in good condition and until now were not objections on
performed reconstruction\.
Under the project of the Experimental Schools was realised a successful co-operation with the
British Council and Faculty of Philosophy from Banja Luka, on the training of the teachers for
work in experimental schools\.
There weren't problems and delaying in withdrawal of money from the credit account from the
moment when the application arrives in World Bank, but the problem was that lot of time pass
until the application is signed by the authorised in the Ministry of foreign trade and economical
relations BiH\. Therefore, we were made applications on a monthly basis, not to be in situation of
missing means\. A much faster procedure would be if the authorised persons were on the level of
Ministry of foreign trade and economical relations RS, or entity\.
There weren't problems in utilisation of the means from the project account for account payments,
as well as for cash withdrawal\. In one moment there was one problem of cash withdrawal and
than we opened a new account in other commercial bank in Banja Luka, which we continue to
use for it\.
For having as better as possible a financial management, during the project realisation, we
implemented all of recommendations and advice of the financial specialist of World Bank\.
This team worked very well together with the World Bank offices in Banja Luka and in Sarajevo\.
The PIU and Ministry of Education are very satisfied with their relationship with the World Bank
and look forward to continuing their work in the same manner\.
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OCTOBER 1997 | REVIEW |
P004809 |  ICRR 10479
Report Number : ICRR10479
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID :
OEDID: C2084
Project ID : P004809
Project Name : Second Development Bank Project
Country : Tonga
Sector : Financial Sector Development
L/C Number : C2084
Partners involved : ADB
Prepared by : Elliott Hurwitz, OEDCR
Reviewed by : John Johnson
Group Manager : Rene Vandendries (acting)
Date Posted : 08/09/1999
2\. Project Objectives, Financing, Costs and Components :
Objectives : The project objectives were to : (1) implement interest rate policy reform; (2) increase production capacity
in the agricultural, industrial, tourism, and service sectors (by providing funding which the GOT could on -lend to
Tonga Development Bank to enable it to make sub -loans to enterprises); (3) support TDB's institutional
development\. Costs and Financing : As a cofinancier, IDA planned to contribute US$ 3 million to supplement US$5
million from ADB, which took primary responsibility for identification, appraisal, and supervision \. Actual project
expenditures totaled US$6\.7 million, of which US$2\.3 million was from IDA and US$4\.4 million was from ADB\. IDA
cancellations were US$1\.2 million\. The project was signed on March 7, 1990, became effective on August 9, 1990,
and closed (after 2 extensions granted by IDA) on December 31, 1995\. The IDA project was closed after IDA
declined a request from the government for a third extension (due to slow disbursement and TDB violation of ADB
covenanted financial limits)\. ADB extended the project a third time until its closure in September, 1996\.
3\. Achievement of Relevant Objectives :
Interest rate reform : The government of Tonga removed interest rate ceilings on July 1, 1991, in accordance with
their commitment under the project; Increase production capacity : 2,105 sub-loans were made--55 percent in
services, and 32% in agriculture--which utilized around 84% of the funds available under the project, and according
to ADB estimates created 521 jobs; Support TDB institutional development : TDB did not fulfill project expectations
that it implement new internal procedures and diversify its portfolio \.
4\. Significant Achievements :
The government liberalized interest rates, which had previously been subject to a ceiling \.
5\. Significant Shortcomings :
Despite lagging disbursements and long -held concerns regarding the financial health of TDB, the project
received uniform ratings of "satisfactory" for both IP and DO from the beginning of supervision in 1990 until the
project closed in 1995\. These ratings do not appear to be justified \.
The subprojects supported by the credit were weak; of 110 subloans reviewed by an ADB mission, 30 were in
arrears and 4 had been rescheduled; of the 47 that had been fully repaid, just 37 companies remained
operational
The weakness of the subprojects appears to have contributed to the deterioration of TDB's financial health \. As
of September 1995, TDB's "hard-core arrears" (12 months or longer) comprised 9\.8% of its portfolio,
compared with a maximum of 2\.5% under ADB covenants\.
The weak subprojects appear to have resulted from a worse business environment than expected (recessions
in Tonga's main trade partners--Australia, New Zealand, and Japan --and a shortfall in tourism)\. Despite this
inauspicious environment, TDP loaned funds to companies that ADB assessed as having inadequate
commitment to the projects, insufficient working capital, a poor sense of demand, and weak management \.
TDB violated its own operational policy by accepting the foreign exchange risks of a foreign currency
denominated loan\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory
Institutional Dev \.: Not Applicable Negligible TDB did not diversify its portfolio, and
remains overly dependent on a few,
poorly-performing sectors\. Collection
efforts remain weak\.
Sustainability : Unlikely Unlikely
Bank Performance : Deficient Unsatisfactory These ratings are essentially equivalent
Borrower Perf \.: Not Rated Unsatisfactory There were numerous covenant
violations, and TDB failed to act
expeditiously on recommendations for
improved portfolio and operational
procedures\.
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
Even when IDA acts as a cofinancier, it should play an active role in project preparation and supervision to
help ensure project effectiveness
If it chooses to use a government -owned development bank as an intermediary for a FIL, IDA should have a
strong justification, and should carefully monitor the operation
Sound market analysis of potential long -term loan demand is essential in designing an effective FIL operation
8\. Audit Recommended? Yes No
9\. Comments on Quality of ICR :
IDA did not participate in the final supervisory mission, so the ICR is based mainly on information provided in the
ADB Project Completion Report\. Given that information base, the quality of the ICR is satisfactory, although it would
have been useful to have information on : IDA's strategy in collaborating with ABD, and in utilizing a
government-owned investment bank as an intermediary; why collaborating with TDB was continued for an extended
period when the quality of its portfolio was not improving and its financial condition was deteriorating \. | REVIEW |
P082412 | Document of
The World Bank
Report No: ICR0000631
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-73150)
ON A
LOAN
IN THE AMOUNT OF 30\.16 MILLION
TO THE
REPUBLIC OF CHILE
FOR A
SANTIAGO URBAN TRANSPORT
PROGRAMMATIC DEVELOPMENT POLICY LOAN
August 11, 2009
Sustainable Development Department
Argentina, Chile, Paraguay and Uruguay Country Management Unit
Latin America and Caribbean Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective 06/18/2009)
Currency Unit =
1\.00 CLP = US$ 0\.0018
US$ 1\.00 = 551\.25 CPL
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
AFT Financial Administrator of Transantiago
BRT Bus Rapid Transit
CAS Country Assistance Strategy
CBD Central Business District
Committee of Committee of Ministers for Urban Transport in Metropolitan
Ministers Santiago (established through Presidential Decree no\. 001 of
March 2002)
CONAMA National Commission for the Environment
CONAMA-RM Metropolitan Region CONAMA
CLP Chilean Peso
CMU Country Management Unit
DICTUC Department for Engineering of the Catholic University of Chile
DPL Development Policy Loan
FDI Foreign Direct Investment
GDP Gross Domestic Product
GEF Global Environment Facility
GHG Greenhouse Gases
GoCH Government of Chile
GPS Global Positioning System
IADB Inter-American Development Bank
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion Report
IFC International Finance Corporation
IMF International Monetary Fund
L&D Libertad y Desarrollo, a think tank
MBN Ministry of Public Goods
MOP Ministry of Public Works
MIDEPLAN Ministry of Planning
MINVU Ministry of Housing and Urban Development
MODEM Model to Calculate Vehicle Emission developed by SECTRA
MOPTT Ministry of Public Works and Transport and Telecommunications
MTT Ministry of Transport and Telecommunications
NGO Non-Governmental Organization
O-D Origin-Destination Survey
PD Project Document
PDO Project Development Objective
PM Particulate Matter
PUC Catholic University (Pontifica Universidad Católica)
SEA Strategic Environmental Assessment
SECTRA Chile's Inter-Ministerial Transport Agency under MIDEPLAN for
Strategic Transport Modeling and Planning
SEREMITT Regional Ministerial Secretariat for Transport and
Telecommunications
SERVIU Regional Service for Housing and Urban Development of MINVU
SIAUT User Information and Customer Service Provider for Transantiago
SIL Sector Investment Loan
TAL Technical Assistance Loan
Transantiago Public Transport Component of the Santiago Urban
Transport Plan 2000-2010
Transantiago-SE Executive Secretary in charge of the Implementation of
Transantiago
Vice President: Pamela Cox
Country Director: Pedro Alba
Sector Manager: Aurelio Menendez
Task Team Leader: Jorge Rebelo
ICR Team Leader: Jorge Rebelo
ICR Primary Author: Elisabeth Goller
Republic of Chile
SANTIAGO URBAN TRANSPORT
PROGRAMMATIC DEVELOPMENT POLICY LOAN
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Program Performance in ISRs
H\. Restructuring
1\. Program Context, Development Objectives and Design \. 3
2\. Key Factors Affecting Implementation and Outcomes \. 11
3\. Assessment of Outcomes \. 23
4\. Assessment of Risk to Development Outcome \. 29
5\. Assessment of Bank and Borrower Performance \. 31
6\. Lessons Learned\. 38
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 42
Annex 1\. Bank Lending and Implementation Support/Supervision Processes\. 43
Annex 2\. Beneficiary Survey Results \. 45
Annex 3\. Stakeholder Workshop Report and Results \. 45
Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 46
Annex 5\. Comments of Cofinanciers and Other Partners/Stakeholders \. 51
Annex 6\. List of Supporting Documents \. 52
Annex 7\. Project Development Objectives, Monitoring Indicators and Achievement of
Expected Outcomes \. 54
Annex 8\. Milestones Of Project Implementation And The Future Outlook \. 66
Annex 9\. Policy Areas and Building Blocks of Transantiago \. 71
MAPS
This ICR was prepared by a World Bank team composed of: Elisabeth Goller, Jorge
Rebelo, Sivan Tamir, Emmanuel James, and Lucia Mejia\. Comments were received
from: Laura Tuck, Jose Luis Irigoyen, Pierre Graftieaux, Sam Zimmerman, Arturo
Ardilla, Felipe Saez, Franz Drees-Gross, and Pedro Alba\.
A\. Basic Information
CL -Santiago Urban
Country: Chile Program Name:
Transport Adj
Program ID: P082412 L/C/TF Number(s): IBRD-73150
ICR Date: 08/13/2009 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: DPL Borrower:
CHILE
Original Total
USD 30\.2M Disbursed Amount: USD 30\.2M
Commitment:
Revised Amount: USD 30\.2M
Implementing Agencies:
Ministry of Finance
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 10/02/2003 Effectiveness: 11/03/2005
Appraisal: 03/18/2004 Restructuring(s):
Approval: 07/05/2005 Mid-term Review:
Closing: 12/31/2006 12/31/2006
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Moderately
Quality at Entry: Government: Moderately Satisfactory
Unsatisfactory
Implementing
Quality of Supervision: Moderately Satisfactory Moderately Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Moderately Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA):
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General transportation sector 100 100
Theme Code (as % of total Bank financing)
Access to urban services and housing 29 29
Injuries and non-communicable diseases 14 14
Other urban development 29 29
Participation and civic engagement 14 14
Pollution management and environmental health 14 14
E\. Bank Staff
Positions At ICR At Approval
Vice President: Pamela Cox Pamela Cox
Country Director: Pedro Alba Axel van Trotsenburg
Sector Manager: Aurelio Menendez Jose Luis Irigoyen
Program Team Leader: Jorge M\. Rebelo Jorge M\. Rebelo
ICR Team Leader: Jorge M\. Rebelo
ICR Primary Author: Elisabeth Goller
F\. Results Framework Analysis
Program Development Objectives (from Project Appraisal Document)
The main development objectives of this DPL for Santiago will be to contribute to its
transformation into a highly competitive world city, improve its quality of life through
upgrading the level of transport services to the residents (particularly low income
residents) and businesses, reduce resource costs, and increase environmental quality\. The
specific objectives are to:
ii
1) Reduce transport costs in their financial, travel time and environmental dimensions
and increase transport efficiency;
2) Improve the coordination of public sector activities in land use, transport planning,
infrastructure investment, traffic management, and bus franchising;
3) Address urban poverty through improving access to jobs and economic
opportunities; and
4) Enhance social inclusion through improved access to schools, health facilities, and
wider social interaction\.
Revised Program Development Objectives (if any, as approved by original approving
authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Due to space limitations in this table, the indicators are presented in detail in
Indicator 1 :
annex 7 of the ICR\.
Value
(quantitative or n\.a n\.a n\.a
Qualitative)
Date achieved 07/05/2005 12/31/2006 06/30/2009
Comments
(incl\. %
achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Due to space limitations in this table, the indicators are presented in detail in
Indicator 1 :
annex 7 of the ICR\.
Value
(quantitative or n\.a n\.a n\.a
Qualitative)
Date achieved 07/05/2005 12/31/2006 06/30/2009
Comments
(incl\. %
achievement)
iii
G\. Ratings of Program Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 01/20/2006 Satisfactory Satisfactory 30\.16
2 05/31/2006 Satisfactory Satisfactory 30\.16
3 12/05/2006 Satisfactory Satisfactory 30\.16
Moderately
4 06/14/2007 Moderately Satisfactory 30\.16
Unsatisfactory
5 12/12/2007 Moderately Satisfactory Moderately Satisfactory 30\.16
H\. Restructuring (if any)
Not Applicable
iv
1\. Program Context, Development Objectives and Design
Framework for evaluation
1) On 5 July, 2005, the World Bank's Board approved a US$30\.16 million
Programmatic Development Policy Loan (DPL) in support of the Santiago public
transport reform (known as Transantiago)\. This programmatic DPL provided for Bank
support for a total amount of US$100\.16 million to be implemented during the period
2005-07\. The proposed Bank intervention consisted of two sequenced single tranche
operations designed to underpin the policy and institutional reforms envisaged to bring
Transantiago into full operation\. In addition, a technical assistance loan in the amount of
US$4\.8 million was made to assist in the implementation of the reform arrangements\.
Only DPL1 was finally approved since the Government of Chile (GoCH) did not seek the
approval of the second DPL\. The GoCH did, however, follow through with the
implementation of the totality of the Transantiago reform, albeit with some initial severe
difficulties\. Consistent with Bank guidelines in the evaluation of programmatic DPLs,
this Implementation Completion and Results Report (ICR) evaluates the degree to which
the program achieved its development objectives as set out in the Program Document
(PD), including a separate assessment of the contribution made by the sole loan, DPL1,
that the Bank made in support of Transantiago\.
1\.0 Introduction
2) In the late 1990s, as part of its plans to mark the pending 200th anniversary of Chile's
independence, the GoCH formulated an ambitious nation-wide urban transport program\.
The key objectives of the GoCH were to improve the quality of life in Chilean cities, and
to address poverty and inequality problems\. In the case of Santiago, probably the most
significant tool to attain those objectives was the proposed decade long (2000-2010)
Santiago Urban Transport Plan, of which the public transport part is known simply as
Transantiago\. The latter was conceived as a plan of unprecedented scope and complexity
for a Latin American city since it applied to the whole city and affected all public
transport modes\. Unlike Bogota with its well-regarded TransMilenio Bus Rapid Transit
(BRT) corridors performing just over 20% of public transport trips while operating side-
by-side with a chaotic mix of traditional informal sector buses that carry the bulk of the
passenger traffic, Transantiago called for a complete transformation of the public
transport system from a generally informal service provision to an integrated city- and
system-wide network more typical of an advanced OECD country\. Even the passenger
payment and transfer systems were to become integrated via a SmartCard system\. Once
preparatory activities had been completed, this transformation was to take place during a
very short period that had been described in the popular press as 'the big bang'\.
3) Hence, Transantiago had a very complex and comprehensive transport systems
rationalization agenda, and the scope of its investments in the metro and bus system was
vast\. Just the bus system modernization alone was expected to cost upwards of US$900
million as it included bus infrastructure (US$330 million), fare collection equipment and
user information system (US$100 million), and rolling stock (US$460 million)\. Another
3
major investment included the doubling of the extension of the subway system compared
to the 2000 level\. In addition to the bus transport investments already mentioned, there
was a further long term objective of building a total of 300 km of busways by 2026,
which is very important not only for growing transport needs but also for the City's Air
Quality and Climate Change Mitigation agenda\. It is worth mentioning that the
development of the proposed transport system would enable Santiago to be competitive
on a global basis\.
4) In order to help increase the chances for a smooth transition, the launch window for
the 'big bang' had three optimal prerequisites (i) strong political support, (ii) launch at a
time of the year in which ridership was low, usually the school summer break period1,
and (iii) managerial and technical readiness in the sense that the system building blocks,
which ranged from ticketing systems to segregated busways, needed to be fully prepared
and substantially in place\. At the time of launch on February 10, 2007, as detailed in the
ICR, many of the building blocks that comprised item (iii) were not fully in place but the
GoCH decided to go ahead since the conditions were appropriate in terms of items (i) and
(ii), and a postponement implied a delay of a year or more and substantial contractual and
reputational costs\. Unfortunately, the launch of Transantiago unveiled some severe start
up problems derived from shortcomings in the network and financial sustainability design
assumptions and because the various building blocks, considered critical for a successful
launch of the system, were not in place\. While Santiago's public transport system has
now stabilized and Transantiago should meet its 2010 goals as planned, operationally it
became associated with many shortcomings including public discontent, major political
problems, and a negative image\.
5) On the positive side, the GoCH immediately reacted to address the start up problems
and today the new public transport system is considered one of the best in Latin America\.
The transformation laid the blueprint for seamless, citywide, public transport system
coverage due to the installation of an extensive, widely dispersed hub and spoke bus
route structure together with its integration, via Smartcard, with the metro\. The majority
of buses are modern, air conditioned, Euro3 standard (environmentally cleaner), with
uniformed drivers who have been trained to provide a high level of service to riders\.
Today, poor residents can take multi-leg trips from often distant neighborhoods to the
central business district while paying only once\. At the other end of the passenger
spectrum, the managers of Transantiago may now be in a position to think about
formulating programs to attract people away from their dependence on the automobile for
daily commuting purposes\. Both of these developments would not have been possible
before the reforms\. However, on the other hand, even in the medium term there is some
lingering public resentment because the current system implies a substantial increase in
the need to use transfers (around 50% of trips) in the daily commute\. This factor is in line,
however, with the trip experience on similar systems in advanced countries\. The current
main challenge is the system's operating deficit\.
1
Summer vacation in Chile is February\. This prerequisite was not originally considered but became apparent after the
first postponement of the launch from August 2006 to February 2007\.
4
6) For the implementation of Transantiago, the GoCH requested Bank assistance to
support the system modernization and rationalization agenda placing special emphasis on
the policy and institutional reforms required to bring Transantiago into operation\. No
Bank support was envisaged on the infrastructure components of the program\. The GoCH
expected to develop concession schemes with the private sector to provide most of the
infrastructure investments\. Hence, in July 2005, the Bank approved a programmatic DPL
consisting of DPL1 for the amount of US$ 30\.162 million that was disbursed in January
2006 after the triggers/prior actions related to policy and institutional initiatives - had
been complied with\. The Bank's PD had been dimensioned on the basis of a
programmatic DPL with two separate loans (DPL1 & DPL2) for a total of $100\.16
million\. In the end, due to its strong fiscal position, the GoCH did not follow through
with the second DPL\. It should be noted also that this programmatic DPL was
accompanied by the Santiago Urban Transport Technical Assistance Loan (TAL
P086689), that has faced significant implementation difficulties derived from the start up
difficulties faced by Transantiago\. This project is being reformulated so that it can play a
more direct supporting role in achieving an efficient and sustainable urban transport
system\.
7) The contribution of DPL1, although important, must be viewed in terms of having
provided the key policy and institutional basis for the initiation of the activities that were
to conclude in the big bang launch of the system\. The role of the Bank in this initial stage
was envisaged mostly as that of an external actor that would ensure institutional
continuity in the follow up of a program that encompassed a change in administration\.
The DPL2 focus would be in ensuring that the actual launch of the system would indeed
take place\. The TAL's role was envisaged mostly for the post launch stages of program
implementation to address some medium and longer term issues related to the
implementation of the new transport system\.
8) Given the breadth and the pioneering nature of the public transport reform that took
place in Santiago, the project team considered it necessary to feature a more detailed
discussion than usual in this ICR in order to provide a full accounting of the operation
and the critical information needed to understand the reform's initial shortcomings and
subsequent adjustments\. The assessment also benefited from two independent reviews
commissioned by the Bank (see annex 6 List of Supporting Documents)\.
1\.1 Context at Appraisal
9) When this project was appraised between 2004 and 2005, Chile had a sustained and
solid macroeconomic and fiscal performance and had been carrying out an ambitious
structural reform program3\. This program had to a large extent protected the country from
regional crises and had allowed for continued growth\. The GoCH had also been
supporting its growth foundations by promoting an impressive reform agenda to tackle
the domestic obstacles to rapid growth and to place itself in a stronger position to reap the
benefits of the global upturn\. In the case of Santiago, probably the most important reform
2
The amount of US$160,000 was the estimated front end fee for this loan\.
3
As recognized in the IMF's Annual Article N Process (Article N Review of August 2004)\.
5
tool was the 2000-2010 Santiago Urban Transport Plan, which is composed mostly of
Transantiago\.
10) The main problems of Santiago's urban transport sector were the following:
explosive increase in car trips, which more than tripled between 1991 and 2001, while
the population of the metropolitan area increased by only 28%;
steady and steep decrease of public transport modal share, which had been going
down from 83\.4% and 70\.5% in 1977 and 1991, respectively, to 51\.9% in 2001;
high levels of traffic congestion on city streets;
increasing road accidents that disproportionately involved buses (almost 25% of
deaths on urban roads occurred in accidents involving a bus);
relatively low passenger satisfaction with the public bus system;
limited affordability for the poor, especially those who had to use more than one
public transport vehicle per trip and consequently paid more than one fare;
economically inefficient overlapping and concentration of bus routes along the main
roads of the city center, which generated local oversupply and congestion;
tortuous bus itineraries elsewhere, whereby buses weaved in and out of main arteries
to cater for relatively minor pockets of demand (average route length of 63 km); and
neglect of non-motorized transport and unpleasant walking and cycling conditions\.
11) Additionally, air quality in the metropolitan region was very poor\. There was a very
high fraction of fine particulates, which was of particular concern since the annual
average values in Santiago were nearly twice the norms existing in Europe and the U\.S\. It
was caused in part by high bus frequencies with low levels of occupancy in off-peak
periods\.
12) This context triggered the design of the 2000-2010 Santiago Urban Transport Plan as
a means to reverse the previously mentioned trends and improve the urban environment\.
This Plan was comprised of 13 programs, of which the public transport reform
(Transantiago) was the most important and ambitious one because it was designed to
effect profound changes in the way residents moved within Santiago\.
13) The key reforms of the 2000-2010 Santiago Urban Transport Plan were:
1) Allocating and managing road space to maximize social gains through traffic
management schemes that give priority to public transport\. This included
establishing: peak time exclusive public transport lanes that could be gradually turned
into full time physically segregated bus lanes, limitation of the number of taxis, and
parking restrictions;
2) Replacing the previous approach to bus service contracting, from one with several
thousand mostly informal owner-operators to one based on gross-cost contracting4 of
15 relatively large operators, each with 200 to 500 vehicles;
3) Providing incentives to operators to acquire high-standard buses (easy-to board,
low-floor "city" buses meeting at least Euro3 emission standards);
4
Gross cost contracting means that revenue risk is borne partially by the authority\.
6
4) Redesigning the route network into a trunk and feeder system (hub-and-spoke)
with trunk services provided by the subway and main bus lines\. In the long run, it was
expected that all trunk bus lines would operate on segregated busways\. It was also
expected that initially this new system would increase the proportion of trips
requiring a transfer from 17\.3% to 80% (including the metro) and require 4,500
buses5;
5) Introducing a unified fare system, with fares set to achieve financial breakeven for
the system as a whole even without increasing the original average fare level;
6) Separating fare collection as a competitively awarded concession and
commissioning a public transport management/information center to control the bus
flow;
7) Setting up coordinated transport and infrastructure planning mechanisms at the
metropolitan level;
8) Providing training, certification, and other transition assistance for displaced
transit workers;
9) Coordinating land use and urban transport policies;
10) Improving conditions for cyclists and pedestrians;
11) Rationalizing freight-related traffic and reducing its environmental footprint; and
12) Promoting a culture of rational car use so that trip makers perceive the real cost of
car travel, possibly through a congestion pricing scheme\.
14) The urban transport reforms were expected to be complemented by a comprehensive
infrastructure program, including: (a) the doubling of the extension of the subway system
compared to the 2000 level, (b) the construction of urban toll roads on the basis of public-
private partnerships, and (c) the construction of 20 km of segregated busways to be ready
for the complete implementation of the new public transport system (the long term
objective to be achieved by 2026 was 300 km), and bus stops, interchange stations,
terminals, and underpasses\.
15) Prior to appraisal, the implementation of Transantiago was envisaged as occurring all
at once\. This decision was reconsidered because of the complexity of the changes
involved and at appraisal it was decided to include a preparation period prior to the actual
launch\. Because of the status of readiness of the main bidding processes and the
expectation that the program be initiated by the incumbent administration, this
preparation was set to begin on August 27, 2005 with the new bus concessionaires
starting to operate under a `cohabiting arrangement' i\.e\. use of a portion of the new bus
fleet on bus routes that remained unchanged\. In addition, new subway lines were to be
opened, and on-board payment in the new buses using a contactless smart card was to be
introduced\. This cohabiting was expected to last about 1 year, until August 26, 2006, and
would culminate in: the introduction of a new citywide trunk and feeder network, the use
of the smart card as the main means of payment, and fare integration between buses and
the subway system\. In addition, it would also encompass the replacement of an additional
part of the bus fleet, the provision of public transport service only through corporations,
5
The original design envisaged 4,500 buses\. 5,100 was envisaged for the launch of Transantiago in February 2007\. It
was later increased to 6,400 as part of the correction of the startup problems\.
7
and a strong information campaign\. As seen in paragraph 28), the actual implementation
of Transantiago experienced some delays\.
16) While the total bus related investment to support the complete implementation of
Transantiago was quite large (US$ 330 million, for details see paragraph 3), the public
portion was expected to be small (US$103 million)\. The remainder was expected to come
from the private sector through concession schemes\. The operation was designed to be
financially self-sustainable under a given set of assumptions\. The approach to bus
infrastructure financing was different from Bogota's TransMilenio, where the basic bus
infrastructure was financed by the public sector\. The difference is explained by the strong
confidence in the private sector that existed in Chile because of the successful
implementation of a large road concession program in the 1990s/beginning of 2000 and
the fact that in an environment of strict fiscal discipline, the subway extension would
have absorbed most of the public resources6\.
Bank Assistance
17) The Bank's support to the implementation of Transantiago was expected to mainly
consist of promoting the development of the institutional background for the continuity
and sustainability of Transantiago, fostering more integrated coordination among
transport, land-use, and environmental issues, and supporting the difficult process of
reallocating scarce street space to the exclusive use of non-motorized and public transport\.
It was also expected to ensure the incorporation of safeguard, pro-poor and citizens'
participation considerations, among others\. Finally, the Bank was expected to provide
professional advice, facilitate coordination among actors, and ensure adequate program
monitoring\.
18) This operation was consistent with the goals and strategic approach set out in the
2002 Country Assistance Strategy (CAS)\. Transantiago was expected to (a) enhance
sustained economic growth and social progress; (b) foster the inclusion of the most
vulnerable groups through improved access at affordable prices and reasonable travel
times, hence contributing to socially inclusive growth; (c) improve environmental
conditions; (d) promote public-private partnerships through a renovated concession
mechanism for public transport services and infrastructure; and (e) modernize the State
and build its technical capacity\.
1\.2 Original Program Development Objectives (PDO) and Key Indicators (as
approved)
19) The broad development objectives of the full reform program and as part of it, the
DPL1, were: to contribute to the transformation of Santiago into a highly competitive
world city, improve its quality of life by upgrading the level of transport services to the
residents (particularly low income residents) and businesses, reduce resource costs, and
increase environmental quality\. The specific objectives were to:
6
A Critical Look at Major Bus Improvements in Latin America and Asia: Case Studies of Hitches, Hic-Ups and Areas
for Improvements; Synthesis of Lessons Learned and Case Study Transantiago, Diaro Hidalgo, PhD, Transport
Consultant, Paolo Custodio, Transport Consultant, Pierre Graftieaux, Senior Transportation Specialist, April 2007\.
8
1) Reduce transport costs in their financial, travel time and environmental
dimensions and increase transport efficiency;
2) Improve the coordination of public sector activities in land use, transport planning,
infrastructure investment, traffic management, and bus franchising;
3) Address urban poverty through improving access to jobs and economic
opportunities; and
4) Enhance social inclusion through improved access to schools, health facilities,
and wider social interaction\.
20) The Policy Matrix in the PD indicated prior actions and triggers together, which are
the following for DPL1:
Concessions for 14 main packages of bus services awarded
Concession of the Financial Administrator of the system fare box revenues awarded
Maintenance of a satisfactory macroeconomic framework, consistent with reform
program objectives, including domestic and external debt sustainability
21) The expected benefits of the operation were:
5) Efficiency improvements which will contribute to the city's economy and hence
to economic growth;
6) Resource savings from transferring the bus flows in major corridors to an
exclusive space, the reduction of bus vehicle-km on the street system, the
rationalization of the route network, and the reduction of revenue risks of operators;
7) Environmental improvements (higher air quality and less noise) due to better
quality buses and fewer bus-km;
8) Increased quality of service for passengers who live in the catchment areas of the
metro extensions and the new metro line;
9) Increased comfort, safety and reliability for passengers on the bus network;
10) Comprehensive coverage of bus feeder routes particularly in poor neighborhoods\.
This was expected to help address problems of social exclusion for the poor;
11) Savings stemming from the implementation of a unified fare system, i\.e\.
passengers not having to pay when transferring among bus and metro lines; and
12) Reduced use of `road space' by cars contributing to a reduction in congestion and
more equitable distribution of road space\.
22) It was decided to keep the triggers/prior actions in the PD to a minimum\. Therefore,
most of the triggers/prior actions originally proposed were transformed into monitoring
indicators\. The monitoring indicators listed below are found in the PD Policy Matrix
(annex 2) and included in the more extensive supervision guidelines in the PD section
VI\.B:
Adoption of the Santiago Urban Transport Plan as the transport policy for the
Metropolitan Area of Santiago through approval by the Committee of Ministers;
Adoption of a policy to control the number of taxis in Santiago;
Inclusion of reduced mobility provisions in the functional requirements of buses;
Inclusion of citizens' participation in Transantiago design, including:
- Closing seminar with the 34 municipalities of the metropolitan area
- Workshops with local NGO's;
9
Segregated public transport lanes on at least 19 km of the bus trunk routes network;
Reduction in the number of bus-km by 30% in relation to the case before the
implementation of Transantiago;
Implementation of specific measures in public transport facilities and vehicles for
people with reduced mobility, including at least:
- Signaling for blind people
- Ramps to access stations, and
- Reserved seats in buses;
Design of an integrated public transport network through which at least 90% of the
households in each of the 10 service areas will be located at less than 800 m from a
stop served at least by 5 buses per hour and/or a metro line (from 6am to 10pm); and
Application of a program to promote formal companies and offer training for current
public transportation drivers that request it, so as to facilitate their reinsertion into the
labor market\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators,
and Reasons/Justification
23) The PDOs and the monitoring indicators were not revised\.
1\.4 Original Policy Areas Supported by the Program (as approved)
24) The Program and this operation supported the implementation of the Santiago public
transport reform\. The main public transport-specific policy areas of the 2000-2010
Santiago Urban Transport Plan included:
Public transport priority treatment;
Gross-cost contracting of relatively large bus operators;
Public transport fleet renewal;
Route network redesign;
Fare collection system concessioning and fare system unification;
Bus fleet management/control concessioning;
Concessioning of Transantiago's information system and user information;
Training, certification, and other transition assistance for displaced transit workers;
and
Land use and urban transport policy coordination\.
25) Each of these policy areas contained a set of building blocks without which the
reform program might not proceed optimally and are essential to the proper functioning
of the new public transport system\. In addition, they are interdependent\. For instance,
public transport fare unification required access to smart cards, which in turn need the
installation and proper functioning of ticket validators and the proper software\. Section
2\.1 and annex 9 provide details on these building blocks and their planned and actual
implementation\. The annex also outlines the dates by which the building blocks were to
be implemented, and demonstrates the delay (or only partial achievement) of virtually all
of these building blocks by the agreed launch date\.
10
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Program Performance
Compliance with Triggers/Prior Actions
26) Due to the design of DPL1, the prior actions were fully complied with before loan
signature (see table below) and the Bank disbursed the US$30\.16 million\. It is important
to highlight that the trunk route concessions (under the first trigger) were bid through
international competitive bidding without preference for existing operators, which is rare,
at least in the Latin America and Caribbean region7\. This led to the award of two
concessions to foreign operators (for about 30% of the total bus services)\. Furthermore,
the GoCH honored a large number of the monitoring indicators agreed at appraisal (see
annex 7)\.
DPL1 Description Amount Expected Release Date: (As of Status : Released
Single-tranche loan US$ 30,160,000 approval) 02/28/2006 on 01/10/2006
Conditions Description Status
Trigger 1 Concessions for 14 main packages of bus services awarded Met
Trigger 2 Concession of the Financial Administrator of the system fare box revenues awarded Met
Trigger 3 Maintenance of a satisfactory macroeconomic framework, consistent with reform Met
program objectives, including domestic and external debt sustainability
27) The GoCH also met the triggers for the second DPL (see table below), even though
technically they were not required since they did not request this second Bank loan as
originally planned\.
DPL2 Description Amount Status : Not
Single-tranche loan 70,000,000USD requested
Number of triggers:
Trigger Description Status
Trigger 1 Start of the operation of the rationalized bus routes network Met on 02/10/2007
Trigger 2 Implementation of fare integration between the bus system and the subway Met on 02/10/2007
Trigger 3 Maintenance of a satisfactory macroeconomic framework, consistent with reform Met, but not
program objectives, including domestic and external debt sustainability formally assessed
Implementation of Transantiago
28) The Government of Chile (GoCH) implemented the full planned program to reform
the public transport situation in Santiago, despite the absence of the second DPL\. Indeed,
the GoCH went ahead with the preparations in 2005 and the complete launch of the
reform in February 2007\. This timing was as a result of the requirement to launch the
system when the 3 factors, the political, technical and seasonal windows of opportunities
were aligned (paragraph 4)\. The reform transformed the existing system at a citywide
level; a transformation, which until then, was unprecedented in the developing world
7
The bidding of the feeder area services did not require the use of new buses\.
11
(only Seoul, Korea, had tried something similar)\. Such a widespread transformation was
expected to have start-up problems\. However, the initial chaos in Santiago was much
worse than expected due to the fact that some network and financial sustainability design
assumptions did not materialize and because the GoCH had not completed the crucial
building blocks of the new public transport system in a timely manner\. Indeed, during the
first months, the public transport situation in Santiago was confusing during morning and
evening peak commutes\. Users felt deceived because the government had promised a far
better system than the old one\. The start-up problems had dire political consequences (the
Transport Minister and the Coordinator of Transantiago-SE had to resign, the approval
rating of the President declined, and a parliamentary investigation commission pinned the
political responsibility on a large number of actors involved in the design and the
implementation of Transantiago) as well as large financial costs (the adjustments to the
planned system have been costly, the government is currently funding the operating
deficit of the system, and some concessionaires incurred huge fines), and strong negative
impacts on the image of the system\.
29) The preparation of the implementation of Transantiago was expected to allow the
incumbent operators to start organizing themselves as commercial companies (as opposed
to owner-operators) and to provide an opportunity to test the smart card on the ground\.
Unfortunately, the incumbent operators who had won concessions for nearly half of the
network continued to operate as usual and the testing and implementing of the new fare
collection system was delayed\. Additionally, drivers continued to race to compete for
passengers causing the new buses to deteriorate quickly and the users did not perceive
any real benefits in the changes\. Also, since the bus routes had not changed yet at this
stage, some of the existing infrastructure was unsuitable for large buses and required
costly adjustments\. Other shortcomings that occurred included the falsification of paper
tickets and the violation of busways by private vehicles, both signs of weak enforcement
capacity by the authorities\.
30) The advantages of the preparation towards the launch were limited\. The retirement of
part of the old bus fleet and its replacement with new buses had positive environmental
impacts and reduced noise levels\. Nevertheless, in hindsight, the operation of the new bus
concessions on the old routes and under the old remuneration rules did not provide a
smooth transition from the old to the new system\. Instead, it hurt the image of the new
system before it really began, and caused some of the new operators to lose money\. The
latter was one of the factors against any additional postponement of the launch until all of
the building blocks were in place\.
31) The launch of Transantiago or `the big bang' largely meant the introduction of a new
trunk and feeder network and full fare integration8 between buses and with the subway\.
Additionally, the new system meant the formalization and regulation of the sector, i\.e\. a
switch from an unregulated market situation in which each operator provided public
transport services with a minimum of regulation and control to a situation in which the
8
Trunk and feeder network necessarily means more transfers\. Fare integration stops users from being penalized by
paying separate fares for each transfer\.
12
authority established and controlled the level of services to be provided by the
concessionaires\. However, the essential building blocks to support this new system were
not in place in time for the system launch\. The lagging building blocks are explained
below and mainly relate to: fare integration and operator remuneration, government
enforcement, user information and education, busway support infrastructure, and service
coverage\. The reasons that generated the initial shortcomings and problems are found in
section 2\.2\.
32) Regarding fare integration, the installation of on-bus Smart Card reading equipment
was not completed nor did many of the card reading equipment work correctly, and there
were limited places to acquire and charge Smart Cards\. This created great confusion and
the GoCH was obligated to allow users to ride for free during the initial days\.
33) Furthermore, the payment software as developed by a Chilean firm did not allow
distinct charging for separate trip segments, as originally planned\. Consequently, the
GoCH was obligated to use a flat fare9\. Additionally, this flat rate had to be relatively low
to not penalize passengers who made short trips in only one transport mode\. Later,
mainly due to the annoyance caused to users by the severe initial start-up problems, it
was no longer politically feasible to apply the automatic fare increase mechanism in the
concession contracts\. The resultant fare-freeze was the main factor that led to the
operating deficit\.
34) Also, a guarantee fund, called Reserva Técnica Operativa, designed as a temporary
buffer against fare increases, did not function as originally envisioned\. This guarantee
fund was designed to be fed by initial contributions from operators expected to total
approximately US$ 184 million, and eventually by any operating surpluses\. However,
part of the initial operators' contributions was delayed because of contract renegotiations,
and no operating surpluses materialized because fares were fixed at a low rate\. The
resources in this fund were exhausted to cover the deficit in the initial months of
operation of Transantiago\.
35) Furthermore, remuneration of operators took place according to the reference demand
indicated in the bidding documents rather than on actual number of passengers since the
clearing software10 was not ready\. This change in the basis for remuneration meant that
operators had a lower incentive to: (a) provide the contractual number of buses, (b)
respect frequencies, and (c) assist in deterring fare evasion (which initially reached more
than 20%) since they were not paid by actual passenger counts\.
36) In terms of government control and enforcement, the GoCH did not have the
necessary tools and human resources to carry out an effective control of the service: GPS-
based fleet control system did not work and contractual fines were inadequate\.
Additionally, the fleet management system was not ready\. This system would have
9
The original fare structure had changed to one of a flat fare for trunk and feeder services and no charge for return trips
within the time window of validity of the ticket (120 minutes)\.
10
The function of the clearing software is to distribute fare revenue among operators based on the passenger count\.
13
allowed: (a) decreasing waiting times by avoiding bunching11 of buses at stops and
ensuring better integration between services, and (b) reducing the number of buses or
increasing service frequencies by managing the use of the existing fleet more efficiently\.
37) It was obvious that a total transformation of the public transport system required good
information and adequate user education\. However, the information campaign for
Transantiago only started in the second half of 2006 due to procurement problems (the
first bid was voided and had to be re-bid)\. Moreover, the information campaign was
strong in marketing style but less effective in educating users about the new system\.
Consequently, most inhabitants of Santiago were faced with confusing information about
the new bus routes and stops, which added to the chaos, especially in the subway, and
caused disappointment and resentment\.
38) The new system was also launched with an insufficient amount of support
infrastructure, a crucial building block related to the technical preparedness of the reform\.
Due to construction delays12, an important part of the segregated busways scheduled for
the launch was not ready\. The provision of enclosed pre-payment areas for off-board fare
collection was not considered\. Both types of infrastructures contribute to an increase in
commercial speeds of buses, the first by increasing travel speeds and the second by
speeding-up boarding/alighting\. This, in turn, helps to alleviate the burden of transfers,
decrease waiting times and reduce the number of buses required to operate the system or
improve service quality\. Enclosed pre-payment areas are also a very efficient way to
reduce fare evasion in buses\.
39) Finally, the coverage of the bus network and the frequencies were inadequate,
especially in peripheral areas\. Some initial mismatch between demand and supply is
normal and the contracts with the operators provided for a three month-period to adjust
the network coverage and frequencies\. However, in this case, the problem was
exacerbated by the fact that (a) the commercial speed of buses was lower than expected
because of the limited amount of available segregated busways, (b) transfer burdens were
higher than originally envisaged, and (c) the operators did not operate the contractual
number of buses and respect the frequencies agreed in their contracts13\.
40) The inadequate coverage forced certain passengers to walk long distances and
increased waiting times\. It led to the formation of long queues at stops and contributed to
11
Bunching means that buses do not arrive at regular intervals at stops but in groups of two or more and this increases
the waiting times between these groups\. Bunching is mainly due to traffic conditions but may be exacerbated by bad
dispatching\. However, in the case of Santiago bunching was initially mainly due to bad dispatching since bunching
occurred all day, not only during peak hours\. Since the authorities have started monitoring and penalizing bad
dispatching, there has been a marked increase in the regularity of dispatching\. The compliance with the regularity index
for the system went up from around 75% in August 2008 to close to 90% in May 2009 for morning peak hours\. Some
operators have now regularity in dispatching of over 90%\.
12
In many cases, these delays were caused by legal problems outside the GoCH's control\.
13
During the supervision missions in 2006, before the implementation of Transantiago, the Bank project team pointed
out that the incumbent operators, who won about 40% of the concessions, operated as unorganized groupings of
individual bus owners and not as real companies and that there was a danger that they would not be ready to comply
with their contractual obligations\. This problem was solved in 2008 when the concession of the main incumbent
operator was sold\. The Bank also indicated that there were too many delays in completing the segregated busways\.
14
severe overcrowding, especially in the subway system because users flocked to it since it
was the most reliable means of transport\. In this context it is important to highlight that a
sharp increase in subway demand was an expected and desirable outcome of the
integration with the bus system, and measures had been taken to prepare for it\. The
overcrowding, however, brought the system several times close to the point of collapse
and created great inconvenience to users\.
Correction of the Start-up Problems
41) The GoCH took the start-up difficulties seriously and the President stood fully behind
the reform and promised to fix the problems14\. Since February 2007, many actions have
been taken to adjust some of the network design problems that became apparent and to
complete the building blocks agreed at appraisal to attain the stability of the system\.
These include: (a) resolving the main issues with the fare collection and clearing systems;
(b) increasing the number of buses to compensate for lower operating speeds and
increased coverage; (c) renegotiating the concession contracts with the operators, mainly
to introduce flexibility to change routes and frequencies and to create incentives to ensure
the availability of buses and the compliance with operational programs; (d) renegotiating
the contract with the Financial Administrator of Santiago (AFT) to ensure the delivery of
the technical systems; (e) correcting network design shortcomings, especially in
peripheral areas; (f) installing GPS in buses and operationalizing the fleet control system;
(g) implementing a provisional fleet management system (final system to be ready by
2010); (h) implementing measures to increase subway productivity and decrease
overcrowding; (i) building the missing bus stop/shelters and provisional enclosed areas
for prepayment and completing the segregated busways and stations; (j) accelerating the
construction program of the most important remaining busways; (k) dedicating 30 km of
main thoroughfares for bus operations during peak hours and 77 km permanently to
public transport; (l) improving busway lane enforcement; (m) starting an aggressive
campaign against fare evasion; and (n) ensuring the availability of sufficient resources to
finance the operating deficit\.
Main Outcomes of the Reform
42) At the time of the preparation of this ICR, Transantiago was operating almost as
expected\. The system was in a fine-tuning phase which included, among others, (a)
network optimization; (b) improvements in information provision; (c) fare evasion
control; (d) contract renegotiation with operators and strict enforcement; and (e) the
completion of the necessary support infrastructure, such as final pre-paid off-board fare
collection areas and the extension of the segregated busway network and their
enforcement to avoid the invasion by private cars\. With the start up problems under
control, it is perceived that the system is one of the best in the major Latin American
cities\. Furthermore, the outlook for the medium to long run is very promising and the
achievement of the final results expected from the system is likely15\.
14
Speech of the President to the Nation, March 2007\.
15
Sam Zimmerman, World Bank Urban Transport Advisor, Observation of Transantiago, November 2008\.
15
43) Some of the achievements of the GoCH in the public transport sector in Santiago
were considerable\. From a system perspective, the changes and reforms that took place
were profound and substantial\. The most important accomplishment consisted of
discontinuing the dual practice of offering erratic and disorganized bus services alongside
the formal services through the structural transformation of delivering a citywide public
transport under an integrated approach16\. While the achievements in Bogota and Quito,
largely considered as best practices, were significant and highly praised, they did not
fully address the dual practice of the formal and informal service provision and thus, did
not resolve the public transport problem at a citywide level (for more detail, see
paragraph 126)\. Other achievements included:
a) the creation of an institution responsible for public transport in Santiago17;
b) the regulation of the sector;
c) the elimination of competition in-the-market, for which there is evidence that it does
not adequately work in the public transport market18;
d) the introduction of international competitive bidding to concession bus routes;
e) the dismantling of the powerful bus lobby and formalization and professionalization
of the sector;
f) the rationalization of bus routes and services;
g) priority for public transport and the redistribution of road space between modes;
h) (h) a slight increase in the commercial speed of buses during peak hours from 18
km/hour to 19 km/hour;
i) the extension of the subway system at a relatively low cost and within a short
timeframe19 and the full utilization of this transport mode with a significant increase
of low-income riders; and
j) the use of fleet management systems and other technologies that once fully functional
will provide better control over operational data, improve planning, enable
adjustments to make the system more efficient, and provide the users with reliable
information on public transport services\.
44) From the users' perspective, the achievements are mixed\. On the one hand, the new
system means (a) integrated and lower fares, which also permit people from poorer
households to use the (high quality) subway system; (b) the elimination of bus operators'
discriminatory behavior of not collecting those who pay reduced fares (since now
operators receive the same remuneration for all passengers); (c) the use of a smart card
16
Dario Hidalgo, one of the Independent Reviewers for this ICR, e-mail of April 28, 2008\.
17
The Committee of Ministers and Transantiago-SE as its executive secretariat to implement the reform were created\.
Additionally, following an international conference on metropolitan transport authorities organized through the TAL, a
draft law was submitted to Congress in May 2007 to create such authority for Santiago\. According to this draft, the
authority defines the rules and conditions for the operation of public transport services, establishes the condition for the
use and operation of the road space needed for the operation of public transport services, carries out and evaluates the
bids for the provision of public transport services, signs, manages and supervises the concession contracts, defines the
public transport network and determines the restriction or limitation in the use of road space for certain transport modes,
decides on traffic management measures, coordinates and fosters the definition of lines for rail-based services and other
investment in public transport infrastructure, authorizes the establishment of stops and terminals, and provides input to
road capacity studies, transport studies and urban planning instruments\.
18
A\. Gómez-Lobo (2007), `Why Competition Does Not Work in Urban Bus Markets: Some New Wheels for Some Old
Ideas', Journal of Transport Economics and Policy, Volume 41, Number 2, May 2007, pp\. 283-308 (26)\.
19
Between 2000-2006 building of 45 km of new subway at an average cost of 36\.45 million/km, www\.metrosantiago\.cl\.
16
which also has the potential to provide targeted subsidies or credit; (d) improved
accessibility for elderly people and people with reduced mobility; (e) reduced overall
travel and in-vehicle times, especially for passengers who benefit from the new busways
or for new subway users; (f) reduced waiting times, (g) extended operating hours of the
subway and the introduction of skip-stop operation in two lines which decreases travel
times; (h) new bus stops, most of them with shelters; (i) improved physical integration
between public transport modes through new transfer infrastructure terminals like the La
Cisterna interchange station; and (j) greater in-vehicle safety because of improved
driving behavior20\.
45) On the other hand, the new system (a) includes more transfers21, and there are
insufficient data to conclude whether the additional inconvenience arising from transfers
may be compensated by the reduction in overall travel time; (b) has more crowding
mainly in the subway system during peak times despite important productivity increases
and a slight reduction in demand; and (c) may still experience slightly longer walking
times for buses despite the impressive improvements made since the launch (no
conclusive data exist)22\. Moreover, some people are not yet satisfied with the services
provided by the new system and the image of Transantiago suffered so much that it will
take time to eventually restore it and to regain the confidence of the users\. Nevertheless,
as shown in annex 8, public transport services in Santiago are equal or better when
compared to other large Latin American cities and it is likely that the full benefits of the
new system will be achieved in the medium and long run23 and recognized by its
inhabitants\.
46) Public transport workers gained from the new system because of (a) the regularization
of their working hours and conditions, including training; (b) a breakaway from the
informal nature of the sector allowing access to social security benefits and credit, among
others; (c) no need for drivers to handle cash, thereby decreasing on board theft and
assaults and ensuring safer driving; (d) a large demand for drivers and other public
transport workers created by the new system; and (e) a relatively positive transformation
of bus drivers' image\.
47) From the point of view of the society as a whole, the new system means (a) a
reduction in bus-related noise and atmospheric pollution due to a reduction in vehicle-km,
continuous bus fleet renovation and a focus on cleaner technologies; (b) significantly
fewer accidents involving buses because of an end to fierce racing to compete for
passengers; and (c) a reduction in bus-related congestion\. However, the capital cost of the
public transport system is significantly higher mainly due to (a) some unforeseen
20
For details see Annex 7 (a)\.
21
Transfers are a typical feature of a trunk and feeder network and so they necessarily increased under the new system\.
While it was originally estimated that the trips with transfers would increase from 17\.3% to 80%, in mid-2008 only
about 50% of trips implied transfers\. This figure probably overestimates the percentage of trips implying transfers for
two reasons: (1) because of the ongoing route changes and extensions and (b) due to the fact that non-paying trips due
to fare evasion are likely to imply less transfers than average paying trips\. Additionally, since 61% of all trips with
transfers use the subway for at least one transfer, the overall travel time may be lower\.
22
For details see again Annex 7 (a)\.
23
See Dario Hidalgo (one of the independent project reviewers), "Open Assessment of Transantiago", page 17\.
17
additional investments in the subway; (b) the absorption by the public sector of the
payments to bus infrastructure concessionaires originally expected to be paid with system
revenues; and (c) the shortened construction period of the segregated bus infrastructure24,
which was key to the proposed Transantiago concept\. Also, as previously mentioned, the
operation of the system runs a deficit, and it is likely that permanent public funds will be
required\.
48) A full assessment of PDO achievements is found in section 3\.2 and annex 7, and a
description of the milestones of project implementation and the future outlook is given in
annex 8\.
2\.2 Major Factors Affecting Implementation:
Enabling Factors and Causes of Problems
49) The main factors that enabled these wide-ranging reforms included, among others, (a)
the long-term vision at the highest political level and the strong commitment by two
consecutive administrations; (b) the extensive Chilean experience in private participation
in the provision of infrastructure and utilities as well as previous experience with public
transport service concessioning (bidding of routes that crossed the city center in the
1990s and the Metrobus services in 2002); (c) an ongoing regulatory and institutional
process in the sector and more than a decade of studies on public transport reform; (d)
government commitment demonstrated through strict law enforcement to deal with the
violent opposition of incumbent bus operators (2002, 2005); (e) open competitive bidding
to award the concession for bus routes; (f) a positive economic situation that ensured the
availability of funds and provided the necessary conditions for foreign direct investment
and long term concessions; and (g) the large scope of the project that was attractive for
bus manufacturers, who offered financing at attractive terms to concessionaires\.
50) The immediate causes for the start-up problems can be derived from both network
design shortcomings and primarily from the partial advance of the building blocks,
corresponding mainly to (a) the unpreparedness of the technical support systems (the
AFT systems' contractor decided to design the support systems instead of relying on
existing and proven technologies available in other countries); (b) the non-compliance of
the bus operators25 in providing the contractual number of buses and frequencies\. This
unwanted development was facilitated to a large extent by the fact that the control
technologies to monitor the compliance were not ready; (c) excessive reliance during the
network design process on theoretical models and underestimation of certain variables,
such as the time of transfers, and insufficient validation of the new network on the ground
with the participation of the main stakeholders (e\.g\. municipalities, users); (d) too few
segregated busways to ensure the envisioned bus speeds that would impact the required
fleet; (e) poor user information and education; and (f) changes in the original concession
24
The completion date for most of the segregated corridor program was anticipated from 2026 to 2014\.
25
Mainly, but not exclusively, the incumbent operators who had not managed to establish themselves as real companies\.
18
contracts to compensate the bus concessionaires for the delays in the implementation of
the system26\.
51) Many of these immediate causes were byproducts of other deeper issues, mostly of an
institutional nature\. One such issue was the weak coordination and contract supervision
within Transantiago-SE, aggravated by constant leadership and key technical staff
changes, particularly after approval of DPL1\. Due to the nature of Transantiago-SE's
structure as a technical coordination unit, it also lacked decision making authority and
autonomy\.
52) A second issue was that during the preparation there was insufficient attention paid to
the incumbent operators who had major problems in complying with their contractual
obligations as they were not ready to function as structured bus companies\. Other issues
were the weak enforcement capacity (limited human resources because the system was
heavily dependent on technology), the inadequate contractual27 and legal28 frameworks
for enforcement, and the relatively short implementation period, especially considering
the problems and consequent delays in the bidding processes of the different system's
components\.
53) The implementation of this reform was also negatively affected by the government's
original position that the system had to be financially self-sustainable insofar as it limited
the service design options (e\.g\. number of buses, bus occupancy standards, etc\.)\. In
addition, in the opinion of some observers29, fiscal restrictions generated limitations on
the overall reform design, such as arranging the construction of the support infrastructure,
mainly segregated busways, over a long time frame and the exclusion of enclosed pre-
26
The bus service concessions focused on attracting sufficient competition and the incentives to carry more passengers
(by putting the correct number of buses on the street, complying with frequencies and improving service quality) were
insufficient\. This was partially corrected in the course of the different contract renegotiations that took place after the
launch of Transantiago\. A main shortcoming in the AFT bidding document was not to require (a) experience in dealing
with the number of transactions similar to those expected for Transantiago (according to the Conclusions of the
Investigation Committee of the Concertación, 7 million transactions a day compared with 750,000 daily transactions of
the financial system in Chile) and (b) the use of proven fleet control and management technologies\.
27
The bus concession contracts allowed for little flexibility, especially to change routes\. Moreover, for severe non-
compliances, they envisaged the possibility of cancelation; however, re-bidding would have taken time and in the
meantime the city would have remained without transport\. Notwithstanding, in 2008 one concession was canceled and
successfully re-tendered\. Additionally, in May 2007 a law was approved that in case of cancellation of a concession
contract, the GoCH had the right to nominate an administrator to temporarily manage the company until a new
concession for the same service was awarded\.
28
Inspectors are authorized to pass fines, but only the police have the legal authority to require identification documents
from individuals\. Therefore, inspections must be carried out with the assistance of the police\. In other countries, staff of
transport companies or authorities do not need the assistance of the police to control fare evasion, and monetary fines
are generally relatively high to constitute real deterrents\.
29
See footnote 6\. In the opinion of the authors, funding for the bus component was limited because of the priority given
to the subway investment agenda\.
19
payment areas30\. Others argue that construction capacity limitations rather than financial
constraints were the cause of these shortcomings31\.
54) In hindsight it is clear that due to the technical, institutional, and policy factors
described above, the launch of the system should have been delayed\. However, at that
moment, there were equally good reasons for not postponing the launch: (a) the operators
were losing money; (b) there were big contractual fines for the GoCH (US$ 1 million for
each day of delay); and (c) about 1,400 buses had reached their legal service life and had
to be taken out of the system (the new system was projected to work with about 2,000
fewer buses)\. Additionally, it was clear that the launch of the new system could optimally
take place during the summer vacation period (Jan/Feb), implying a one year delay from
Feb 2007, which at that point seemed unacceptable to the decision-makers\.
55) Although the political window of opportunity existed, the technological elements and
the necessary building blocks were simply not in place\. As a result of the divergence
between the political desire, appropriate time of the year, and technical readiness, a great
deal of problems ensued, some of which turned out to be financially and politically costly\.
Relevance of identified risks at appraisal and effectiveness of mitigation measures
56) As shown in the table below, most of the risks included in the risk matrix of the PD
were very relevant, and most mitigation measures were at least partially effective\.
Risks included in the PD (page 38) Relevance and effectiveness of mitigation measures
It is therefore important that the new This risk was extremely relevant\. The proposed mitigation measures focused on the
contracts are well enforced, particularly in new technologies that Transantiago was expected to implement\. Therefore, since the
respect to the coverage and levels of feeder system was launched without these technologies, the enforcement problems could not
service in the lower income municipalities be avoided\.
(PD para 112)
To gain public acceptance for the trunk This risk was very relevant, but some of the mitigation measures were general in nature,
and feeder system it thus becomes more and hence they were not sufficiently effective\.
critical than ever to ensure that all of the
elements of the plan are combined to yield
benefits, and to avoid costs, from the
outset (PD para 114)
Low income residents of poorer areas, This risk was very relevant, and the proposed mitigation measures (to impose minimum
even in the event of full and immediate service density and frequency conditions on bus operators and to carry out a study to
implementation of all elements of the assess the impact of the new system on poor households and design of mitigation
program, may sustain increase in waiting measures, if necessary) would have been appropriate had there not been other problems,
and access times which offset the benefits such as the inability of some operators to comply with the operational programs\. At the
that they obtain in improved trunk travel date of ICR preparation, the system required some fine-tuning and the impact
times, particularly for non-work journeys assessment study of the new system on poor households has yet to commence\.
off peak
De-linking introduction of the segregated This risk was extremely relevant, but the amount of infrastructure considered necessary
busways from the route restructuring may for the success of the reform was insufficient and there were delays in the provision of
accent any adverse effect on the poorer the infrastructure considered necessary\.
peripheral areas\. Three busways (Pajaritos,
Alameda, Santa Rosa) and two road
connections (Blanco-Arica and Suiza-
Departamental) were considered essential
to the first phase success
30
The Bank team discussed these shortcomings with the GoCH during the preparation of this operation, but only after
the launch of the system did the GoCH recognize their importance\.
31
According to the Report of the Investigation Commission, Alianza por Chile, 2007, page 34, capacity constraints
rather than fiscal restrictions were the reasons for the limited initial infrastructure and for spreading the segregated
busway construction program over a very long time period\.
20
Risks included in the PD (page 38) Relevance and effectiveness of mitigation measures
The initial system may only be in financial This risk was also very relevant, and the proposed mitigation measures would have
balance with higher fares than those been effective had the fares not been set at a lower level than originally planned and
currently intended temporarily frozen\.
Existing transit workers and operators may This risk was already evaluated as relatively low at appraisal since more than half of the
become opposed to a change in the status concession contracts were awarded to local operators and because the new system
quo and will oppose resistance to the absorbed a large part (if not all) of the existing transit workers\. This evaluation proved
proposed public transport reforms accurate since the reform provoked relatively little protest or opposition from these
stakeholders (although there were some short strikes of workers to increase their salary
levels and rumors that the incumbent operators initially did not put the buses into the
street to boycott the system)\. There is insufficient information available to assess if the
social mitigation plan for transit workers (suggested as a mitigation measure) was
effective or if the problem was relatively minor\.
The informal sector, particularly shared This risk was relevant, and the proposed mitigation measure of developing a strategy
taxis, may expand services to replace for shared taxis and controlling the number of licenses as well as designing local and
longer distance direct services lost in the short taxi routes as feeders to the bus network proved largely successful\. Nevertheless,
route restructuring some incidents of informal taxi service provision, especially after the launch of
Transantiago, were reported in the press\.
Location of interchange stations is delayed This risk was relevant and the proposed preventive measure to have pro-active
by local opposition consultation with the municipalities proved efficient\. No opposition to the location of
bus stops and interchange stations took place\. However, some bus operators
encountered problems placing their bus depots in the optimum place to minimize empty
bus-km\.
Bus service concessionaires cannot fulfill This risk was extremely relevant, but the proposed mitigation measure (applying fines
the commitments taken through the for non compliance with concession contract requirements, passing the contract to the
concession contracts second bidder or cancelling the concession and starting a new bidding) was not
completely sufficient\.
The transition period between May 2005 This risk was not very relevant because the preparatory period did not imply major
and August 2006 will entail substantial changes that could have caused difficulties for users to adapt\. However, users had high
changes that users may find difficult to expectation of the preparation and were disappointed because they did not perceive any
adapt to visible improvements (except for the new buses, which were considered uncomfortable
due to the high number of passengers) which damaged the image of Transantiago\. The
communication and dissemination campaign, suggested as a mitigation measure, was
not effective to overcome the negative perceptions during the preparatory period\.
Commitment of the next administration of The risk was very relevant since a change in government always constitutes a risk for
Transantiago the implementation of reforms started by a previous government\. No concrete measure
to mitigate this risk was suggested\. However, the new government continued with the
reform efforts\.
57) Moreover, the Bank identified additional risks in an earlier comprehensive risk list32,
which included, among others: (a) technical failures and delays in ticketing equipment
installation; (b) high fare evasion in buses; (c) potential public disappointment regarding
system improvements; (d) higher generalized cost of travel; (e) institutional setting
difficulties and cross-sectoral collaboration requirement; (f) loose arrangements between
incumbent operators; and (g) conflicts between old and new buses in the street during the
preparation\. However, since Chile is one of the most sophisticated Latin American
countries with a demonstrated record of successful implementation, the Bank team in
discussion with Transantiago-SE considered the additional risks as too pessimistic or not
sufficiently relevant and did not include them in the final risk matrix of the PD\.
Consequently, both the GoCH and the Bank team underestimated the challenges the
launch entailed and overestimated the government's implementation capacity\.
58) In summary, despite knowing the magnitude of the reform, the depth of the proposed
changes, and the novelty of a citywide approach to public transport reform, the overall
risk of this operation was underestimated\. This occurred probably because of Chile's
excellent track record in economic management, program implementation and
32
See e-mail of November 19, 2004 in IRIS\.
21
transparency, as recognized in the PD, and/or underestimation of some of the
abovementioned project risks\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:
59) The operation had many PDOs which were broad in scope mainly due to the fact that
the project supported very large reform efforts\. Furthermore, the PDOs were not
differentiated with respect to the scope of the two proposed DPLs versus the supported
program as a whole\.
60) Given the chaotic nature of the system prior to the reform, information for preparing
adequate monitoring indicators and baselines for system performance and costs was
virtually non-existent\. Furthermore, many of the indicators were originally triggers/prior
actions in the Policy Matrix and later were transformed into monitoring indicators\. As a
result of these issues, some baseline values were absent and the monitoring indicators
often represented requirements for actions rather than measurable outcomes/outputs and
were not directly linked with the PDOs\.
61) Nevertheless, the monitoring indicators did provide a comprehensive coverage of the
reform effort, including areas such as institutional coordination, urban improvement,
citizens' participation, and inclusion of vulnerable groups (see PD pages 31-35)\. Each
indicator also included a detailed description of the expected outcomes (although
sometimes the direct causal relationship between the indicators' associated actions and
the described intended outcomes was unrealistic)\.Target values were realistically set
when values were available\.
62) During supervision, the indicators were useful in examining the implementation
progress of Transantiago and the completion of critical complementary measures\. They
also constituted the basis for the dialogue between the Borrower and the Bank\. In
addition, some critical indicators were designated to specifically monitor the progress
toward complying with the triggers of DPL1 and DPL2 (see PD annex 2 Policy Matrix,
pg\. 48-50)\.
63) Data collection for the PDOs achievement assessment was challenging because of (a)
the inexistence of good data on the performance of the old system due to its informal
nature; and (b) the confidential nature of certain information\. Consequently, it was
sometimes necessary to rely on second hand information, non-official sources, and
informed estimates or assumptions when information was missing\. As a result, the
assessment was mainly qualitative\.
64) The policy matrix triggers captured some of the key building blocks of Transantiago
and ensured that some crucial pillars of this reform were set\. In retrospect, given the
extent of the reform, the number of triggers/prior actions appears too small and possibly
too easy to adequately address the required building blocks necessary for the launch\.
22
2\.4 Expected Next Phase/Follow-up Operation (if any):
65) As already mentioned, the GoCH did not request the second DPL\. However, the Bank
continued its engagement with the GoCH through the TAL\. The TAL's implementation
progress was marginal in the past but since 2008 the GoCH has shown great interest in
the Bank's assistance and the TAL is currently being restructured so that it can meet the
changed technical assistance needs\. The TAL is expected to provide the Bank with the
opportunity to further monitor the reform's performance and draw lessons that are
important for urban transport operations in the region and elsewhere\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
66) The PDOs, the design, and the implementation of Transantiago are fully consistent
with the current development priorities of the GoCH\. As previously mentioned, the
GoCH made considerable efforts to correct the shortcoming and provided necessary
financing to stabilize the system, including the operating deficit\. According to the
Government Program of President Bachelet33, transforming Santiago into a highly
competitive world city and to improve its quality of life by upgrading the level of
transport services to residents (particularly low income residents) and businesses,
reducing resource costs, and increasing environmental quality, are considered essential to
achieving a more equal, competitive and livable Chile\. The Program also considers a
modern, efficient, and less polluting public transport system as fundamental to creating
the government's vision and desired development leap\. It not only envisages the
completion of the urban transport reform in Santiago, but also explicitly refers to the
importance of coordination among land use planning, housing and transport, user
participation in public transport, and the creation of a metropolitan transport authority\.
Additionally, the improvement of the quality of public transport systems is among the
strategic objectives of the Transport Ministry34\.
67) Finally, the PDOs remained in line with the current Country Partnership Strategy
(CPS)35 since they aim at competitiveness/growth, equality of opportunity, improved
quality of life, and poverty reduction\. The project also meets the current principles for
Bank engagement in Chile, which are based on development needs (mainly to alleviate
poverty and reduce inequalities), client demand, flexible and innovative responses to
client requests, and sharing valuable lessons with Bank member countries and the
international community\. Based on the above, the relevance is rated as high\.
3\.2 Achievement of Program Development Objectives
68) The PDOs referred to the full programmatic DPL and as shown in the assessment
below, they were achieved with moderate shortcomings\. DPL1, which was finally the
only Bank loan in this programmatic initiative, made the expected contribution towards
33
Estoy Contigo, Programa de Gobierno Michelle Bachelet, 2006-2010, October 18, 2005\.
34
Ficha de Identificación Año 2007, Definiciones Estratégicas, Ministerio de Transporte y Telecomunicaciones\.
35
IBRD and IFC Country Partnership Strategy for the Republic of Chile for the Period 2007-2010, April 24, 2007\.
23
the implementation of the program by focusing on two critical steps in the launch of
Transantiago, namely the competitive bidding of the bus service concessions and the
system's financial administration\. It was expected that as part of the preparations of
DPL2, aimed at supporting the launch of the new system, the Bank would have
thoroughly reviewed the preparations for this launch\. The absence of DPL2 albeit
related to financial considerations limited the level of involvement that the Bank would
have otherwise had in the run up towards making the system fully operational\. However,
this absence does not exempt the Bank from the requirement under the ICR guidelines to
assess compliance of Transantiago's PDOs\.
69) The objectives in the PDO of transforming Santiago into a highly competitive world
city and improving its quality of life were considered as higher level objectives of the
program, which were beyond the scope of the Bank's intervention\. Yet the substantial
achievement of the specific objectives, and success in having one of the best transport
systems in Latin America, may be considered as important factors in realizing these
higher level objectives\. In order to assess the remaining objectives of the PDO and
ensure that they address relevant aspects of the operation, they were grouped into the
following four main objectives36: (a) upgrade transport service levels; (b) increase
environmental quality; (c) reduce transport costs and increase transport efficiency; and
(d) improve the coordination of public sector activities\. The objectives of "enhancing
social inclusion through improved access to schools, health facilities, and wider social
interaction" and "addressing urban poverty through improved access to jobs and
economic opportunities" did not include specific measures in the PD and were not
considered separately\. However, they were assessed within the first objective since they
all share a common dimension of accessibility/availability of transport services to reach
employment, health facilities, schools, etc\.
70) The PDOs' achievement was assessed in relation to the monitoring indicators,
intended outcomes from compliance with the monitoring indicators, expected benefits of
this operation, or the expected outcomes of the reform in general (see PD Summary,
Section VI\.B, and Annex 2)\. The assessment evaluated the achievements and the
situation in Santiago on the basis of the latest data available\. If the indicators had target
values (only a few of them did), the assessment verified whether the target values were
achieved\. If no target values were given, the assessment compared the pre-Transantiago
situation with the current system if pre-Transantiago information was available\.
Otherwise the assessment was qualitative (for full details of the assessment including
current status and expected future achievements, see annex 7)\.
71) (a) Upgrade transport service levels\. The PD did not define public transport service
level/quality, which entails many dimensions\. Generally, at a minimum, it includes
accessibility, affordability, safety/security, travel convenience, and availability, among
others\. In the absence of a definition and a broad set of indicators, the assessment of
36
In evaluating the achievement of the PDOs using the monitoring indicators, the guidelines for ICR preparation
indicate that should PDOs be so broad as to preclude meaningful evaluation, intended objectives inferred from outcome
targets may be used\.
24
improved service quality was limited to the quality dimensions mentioned in the PD\.
They included: coverage and frequency, reliability, comfort, travel/waiting/access time,
safety, system integration, accessibility, especially inclusion of people with reduced
mobility, vehicle quality, affordability and image\.
72) As shown in detail in annex 7 (a), there is evidence that under the new system,
service is provided consistently on a citywide level and quality improved in most of the
above-mentioned dimensions\. Coverage improved compared to the old system\. For
frequencies there is no ex-ante data, but the current frequencies meet the target value of
the respective indicator and further frequency improvements are still likely with contract
renegotiations and strict enforcement\. There is very limited hard evidence to compare
reliability and comfort of the old and the new system, but it seems reasonable to conclude
the reliability improved under most aspects and that comfort at least reached the level that
was expected from the reform\. Overall travel, waiting and in-vehicle times went
considerably down compared to the ex-ante situation\. Safety levels improved, among
others, because buses are not anymore racing to pick up passengers, drivers have
regulated and shorter working hours, and buses are in better safety conditions\. Fare
integration was a success and the indicator on physical integration was complied with,
therefore system integration was achieved\. The target in terms of accessibility for people
with reduced mobility was complied with and this contributed to the objective of
reaching a more inclusive public transport system, accessible for seniors and people with
disabilities\. Vehicle quality improved with about 60% of the fleet being new and 500
buses still to be replaced in 2009\. The affordability of the public transport system
significantly increased\.
73) There are no conclusive data on walking times: according to the available
interview/perception-based data, walking times increased slightly37\. These data seem in
contradiction with the data that show coverage increases under the new system and a
current average walking distance of 2\.7 blocks, corresponding to approximately 300 m\.
The number of passengers that have to transfer increased significantly\. It is important to
note that: (a) walking time is still declining with the currently ongoing service changes,
(b) overall travel and waiting times would have likely increased without the project
because of more congestion reflected in the increased travel times for private vehicles,
and (c) an increase in walking and the number of transfers were expected outcomes of the
reform (which in hindsight were not adequately communicated to users)\. In comparison
with other systems in Latin America, service quality in Santiago is equal or better and the
outlook for service quality improvements is promising38\.
74) Finally, although there are no data to compare the image of the previous system with
the one of the new system, recent surveys have shown that user satisfaction and the
perception about Transantiago have improved considerably since its launch\. Therefore,
given that the old system was considered as very bad in terms of service quality, the
37
Since coverage improved, this is probably due to the walking necessary to make `additional transfers\.
38
See Dario Hidalgo, independent project reviewer, "Open Assessment of Transantiago", 2008, page 17\.
25
image of the new system may well be better now than the one of the previous system, but
no conclusive evidence exists\.
75) (b) Increase environmental quality\. The PD included an indicator for emission
reductions and mentioned lower noise as an expected outcome from the reform, both to
be achieved through better quality buses and fewer bus-km\.
76) In terms of emission reductions, the expected outcome of meeting the pollution
reduction target from public transport within a safety margin of 20% was achieved\. Noise
reductions are only known through anecdotal evidence (in some main avenues, such as
Alameda O'Higgins, one can now easily converse at normal levels while before this was
impossible given the prevailing noise levels) and an ex-ante estimate\. Nevertheless, the
fact that the reform reduced bus-km by 22% and that the system now works with close to
60% newer and better quality buses is a strong indication that noise reductions were
achieved\. In the medium to long term, further emissions and noise reductions are likely\.
For details see annex 7 (b)\.
77) (c) Reduce transport costs in their financial, travel time and environmental
dimensions and increase transport efficiency\. The PD did not define transport costs,
specify indicators or identify expected outcomes in quantitative terms because there were
no base data due to the informal and chaotic nature of the previous system\. Furthermore,
there were no cost data for the old system\. However, existing fares and level of
government support were known\. Therefore, the achievement of the cost reduction
objective was evaluated in qualitative terms from the perspective of the system's main
stakeholder groups: users, government (society) and public transport operators\. A number
of monitoring indicators referred to increases in transport efficiency as their expected
outcome and these were used to assess the objective's achievement\.
78) In terms of transport cost reduction, insufficient quantitative data are available to
conclude whether transport costs increased or decreased\. Indeed, as shown in detail in
annex 7 (c), users enjoyed significant out-of-pocket savings and reduced externality costs,
but the generalized costs of travel may have increased slightly because of a higher value
attributed by users to transfers (no conclusive quantitative data exist to confirm this)\.
79) The GoCH benefited from increased tax and social security revenues and reduced
costs of externalities\. However, in 2008, the system was running an operating deficit\. It is
worth noting that from the outset there was no consensus as to the system's financial self
sustainability\. Indeed, according to the initial design, the GoCH planned a fund to
compensate for possible initial operating requirements (independent from the Reserva
Técnica Operativa in paragraph 34)\. This fund was not created, and instead, the GoCH
included in the bus concession contracts a number of mechanisms to ensure their
financial self-sustainability, mainly a monthly maximum fare increase of CLP 20\. Had
this mechanism been applied, the user fare would offset the costs of the system but would
have a negative impact on user costs\. Thus, the current operating deficit is a result of: the
political decision to freeze fares during two years, the technical difficulties to charge
return trips, high degree of fare evasion especially in the first 12 months, and increased
service coverage\.
26
80) Public transport operators probably experienced operating cost savings through
economies of scale (e\.g\. less costly vehicles and spare parts), but the costs that were
previously not accounted for due to the informal nature of the sector (e\.g\. taxes, social
security, vehicle amortization, unregulated working hours for drivers) were internalized
and there were additional costs related to professionalization of the sector (e\.g\.
technology, professional management)\.
81) In addition, mainly by reducing the number of buses and bus kilometer, exclusively
dedicating road space to public transport and using efficient transport modes, overall
transport efficiency improved\.
82) (d) To improve the coordination of public sector activities in land use, transport
planning, infrastructure investment, traffic management, and bus franchising\. As it
was known that the institutional responsibility for public transport in Santiago was highly
fragmented, it was anticipated that implementation and management of the public sector
reform would require extensive coordination\. Two of the four monitoring indicators
related to this objective were fully achieved: (a) to create an institutional mechanism to
implement Santiago's Urban Transport Plan, which was accomplished through the
creation of the Committee of Ministers for Urban Transport in Santiago and the
submission to Congress of a law to create a Metropolitan Transport Authority39; and (b)
to establish a separate control and technical inspection department for concession
contracts\. This was accomplished through the creation of a fleet monitoring center that
monitors the compliance with the concession contracts\. Please see details in annex 7 (d)\.
83) The GoCH set up a technical committee to coordinate infrastructure planning and
construction for Transantiago, made progress in revising land use planning instruments,
and prepared two laws on transport and land use, which may contribute to the expected
outcome of reducing the likelihood of uncoordinated land-use and transport policies\. Also
intermodal coordination has increased significantly with the implementation of
Transantiago\. However, although substantial, these actions by themselves may not
completely fulfill what the PD intended in terms of coordinated transport and
infrastructure planning mechanisms at the metropolitan level and multi-sector
coordination mechanisms for land-use and transport policies\.
84) In summary, (a) although nearly all dimensions of service quality improved in the
new system, and continue to do so every day, some users still believe service quality is
worse in the new system; (b) environmental quality improved and more improvements
are still likely; (c) insufficient quantitative data are available to conclude whether
transport costs increased or decreased, though transport efficiency improved; and (d) in
terms of coordination between public sector transport activities, the achievements were
39
The Committee of Ministers for Urban Transport in Santiago unites ministries responsible for land use, expropriation,
infrastructure, concessions, planning and traffic management\. Transantiago-SE is the executive secretariat of this
Committee\. The law to create a Metropolitan Transport Authority is expected to create an authority with a stronger and
more formal role in public sector activities coordination\.
27
partial\. Therefore, the rating for the PDO achievement at this stage is moderately
satisfactory\. Additionally, it is acknowledged that the public transport system in Santiago
is today one of the best in the large Latin American cities, following the earlier setbacks
that have generally been addressed\. Since more service improvements are expected in the
near future, a field visit is recommended in one year to re-assess advances in the
achievement of the objectives\. This may be carried out under the ongoing TAL operation\.
3\.3 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
85) The moderately satisfactory rating is based on the combined assessment of relevance
(rated as high) and the achievement of the PDOs (rated as moderately satisfactory)\.
3\.4 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
86) Although some public transport users are not yet satisfied with the new system, there
are some positive contributions in terms of poverty impacts:
Lower out-of-pocket costs for public transport (see annex 7 (c)), which benefit
particularly poorer households from remote suburbs who previously transferred and
paid two fares (17\.3% of users had to pay more than one fare and 60% of them were
from the lowest income category)\. A study by the Planning Ministry (Mideplan)
published in September 200840 showed that transport expenditure as a proportion of
income is 5\.4% for the lowest of the five income groups\. This value would increase to
8\.5% if the calculation included inflation and fuel price increases in the fare;
Access by low-income people to the subway, considered a high quality, rapid and
reliable service, made possible through fare integration and the current low flat fare,
which is paid once, independently of the mode used\. Transantiago maximized the use
of the subway increasing patronage from 820,000 at appraisal to 2\.2 million on
working days\. A large portion of the new users are low income people41;
Longer operating hours of the subway and the bus system, which are especially
important for poor people that live far away, work at night or weekends, and have no
alternative to public transport;
Reduction of direct emissions from public transport vehicles; and
Greater benefits from reduced air pollution in low-income areas since they suffered
from the highest pollution levels, especially in terms of ultrafine PM (the most
dangerous pollutant for human health)\.
87) Other benefits of this reform in terms of social development include:
Decrease in accidents involving buses;
Fewer attacks on drivers since they no longer handle cash on board;
40
"Hasta $14\.000 al mes se elevaría gasto en viajes si Transantiago subiera a $600", in La Tercera of September 7,
2008, page 52\.
41
According to the "User Satisfaction Survey", December 2007, Metro de Santiago, Collect GfK, with the introduction
of Transantiago, subway users from the two lowest socio-economic categories (D and E) increased from 10% in 2004
and 2005 and 13% in 2006 to 25% in 2007\. See also "2007: El año más difícil en la historia del tren metropolitano", La
Nación, January 24, 2008\.
28
Ending bus operators' discriminatory behavior of not collecting those who pay
reduced fares (usually students) since the remuneration to operators does not vary for
different user groups;
Inclusive transport, including low-floor vehicles, better accessibility for people with
reduced mobility, reserved seating and other support equipment for people with
special needs; and
Improved working conditions for public transport workers, especially drivers, who
received training, work under a formal structure with regular working hours, a fixed
salary and benefits\.
(b) Institutional Change/Strengthening
88) The implementation of Transantiago implied important institutional changes\. Bus
operators had to merge and form corporations\. Concessions for the fare
collection/clearing system, information system, and infrastructure provision were
awarded\. Moreover, the Committee of Ministers, with Transantiago-SE as its executive
secretariat, was created, and a draft law to establish the Santiago Metropolitan Transport
Authority was sent to Congress (see annex 7 (d))\.
(c) Other Unintended Outcomes and Impacts (positive or negative, if any)
89) None\.
3\.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
90) As per ICR guidelines, this is mandatory for Intensive Learning ICRs\. As such, no
surveys or workshops were conducted in the framework of this ICR\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
91) The public transport reform is among the strategic priorities of the current
government, and the President made the correction of the start-up shortcomings and
stabilization of the system two of the priorities\. The President declared that all required
measures would be taken and the necessary resources would be made available for this
purpose\. After February 2007, the new Transport Minister was given full powers and has
made impressive efforts to correct the shortcomings of the new system, which at ICR
preparation, is nearing full stabilization\.
92) While Transantiago-SE continues to be the executive secretariat of a ministerial
committee with limited autonomy, its capacity has been heavily strengthened by doubling
its key staff, restructuring the organization, and training, among others\. As already
mentioned, a Metropolitan Transport Authority with real autonomy is planned, into
which Transantiago-SE could eventually be incorporated\. Additionally, a major study to
increase Transantiago-SE productivity and efficiency through procedures, systems and
staffing arrangements, is being procured under the ongoing TAL\.
29
93) The transformation can be deemed as sustainable in the long term\. A return to the
previous system would be very difficult to imagine because Transantiago was completely
implemented, and some deep and wide-ranging changes took place\. The bus industry was
transformed and the contracts for most operators will be in force until 2011 for feeder
services and 2016 for trunk services, with the possibility to extend them for an additional
three-year period if they invest in early fleet renewal\. The working conditions of transit
workers were formalized and regularized, and bus related pollution and noise was
reduced\. The whole public transport system, including the subway, is now integrated\.
Hence, even if surveys show that some people are not yet fully satisfied with the new
system, it is acknowledged that a return to the old system would be difficult (if not
impossible)\.
94) Nevertheless, there are a number of challenges ahead\. Transantiago is currently not
financially self-sustainable as originally planned and runs an operating deficit\. A law to
create permanent subsidies is pending in Congress\. However, additional fare increases
and other measures under discussion, such as a better match between demand and supply
and a change in the incentives for operators, are likely to reduce the size of the operating
deficit\. In this context it is interesting to note that during the first months of 2008 many
articles on congestion pricing and the use of at least part of such revenues for public
transport improvements appeared in the Chilean press42\. Also, a report prepared by a
bipartisan expert group appointed by the Transport Minister to propose solutions for
Transantiago43 listed congestion pricing as the first measure\. However, opinions diverge
in Santiago over congestion pricing44\.
95) Despite rumors in the press that operators of Transantiago were losing money (and
this might jeopardize the sustainability of the system), the market appears to remain
profitable45 and rather appealing: various investments and acquisitions have taken place46,
and there was strong interest in the re-bidding of trunk line No\. 3\. Although the short
term financial viability of the system relies heavily on public funds, the variety of
measures to increase revenue and reduce costs, coinciding with a positive outlook for the
sector, may improve the medium to long-term financial sustainability\.
96) The main remaining challenge from a technical standpoint is the implementation of
the definitive fleet management system by the end of 2010\. Since all operators and many
experts were involved in the definition of the technical characteristics of this system and
42
For instance, "La tarificación vial suma apoyo parlamentario", in El Mercurio, April 7, 2008, page 8 and "El MOP
avala la tarificación vial en Santiago", in El Mercurio, April 8, 2008, page 5\.
43
Diagnostico, Análisis y Recomendaciones sobre el Desarrollo del Transporte Publico en Santiago, March 2008\.
44
For instance, "Tarificación vial", in El Mercurio, April 16, 2008, page 2\.
45
According to the financial information sent to the Chilean "Superintendencia de Valores y Seguros", except for one
operator, all companies made operational surpluses in 2007 and 2008\. Profits in 2008 were negatively affected by the
currency devaluation that influenced non operational results\.
46
International companies have been keen to buy routes, which they did not win when the contracts were concessioned,
for instance, Veolia, a French operator, bought the company Redbus (feeder service operator)\. Mr\. Miguel Nasur
bought a 33\.3% stake in the company Ovalle-Negrete, which owned part of Buses Metropolitana (traditional operator)\.
There were partial changes in the ownership of the Colombian operators in Transantiago; and the company STP (a
feeder service operator) acquired a majority stake in Buses Gran Santiago and a minority stake in Buses Metropolitana
(both traditional operators)\.
30
the bidding documents required that the technology was tested in places similar to
Santiago, no major problems are expected\. There are still some other technical
applications missing, such as alarms in buses and the information system, but their
implementation should not cause major difficulties\.
97) From an operational standpoint, the remaining challenges are the completion of the
bus network optimization exercise to improve cost-efficiency and continuous updating to
respond to user needs\. This process is underway and currently relies heavily on input
from municipalities, operators and user representatives; therefore the risk is considered
moderate\. The construction program of a significant part of the segregated busways was
brought forward and the necessary resources were made available\.
98) In conclusion, the main risk to the development outcome is the uncertainty of the
long-run financial sustainability of the system, which is considered moderate\. Therefore,
the overall risk is also considered moderate\. The Bank will continue to support the
consolidation, continuous planning, and improvement of Transantiago through the
ongoing TAL and the GEF Sustainable Transport and Air Quality Project (P073985)\.
These operations will also provide an opportunity to monitor progress towards the final
stabilization and draw valuable lessons from this unique experience for Bank urban
transport operations elsewhere\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Unsatisfactory
99) The Bank team spent a considerable amount of time and resources in the preparation
of this operation, which lasted more than two years as it was appraised twice\. The first
appraisal resulted in two loans that were withdrawn from Board submission in May 2004
due to GoCH's indication that they would substantially revise the scope and
implementation pace of the urban transport reform\.47 On the whole, the preparation
involved bimonthly missions to Chile, and consisted of a highly experienced and
qualified team: the second appraisal was led by a seasoned lead transport specialist and
supported by a highly qualified multidisciplinary team of experts, including the Bank's
urban transport advisor, a number of very senior urban transport specialists, a senior
poverty expert, environmental and social specialists, procurement and financial
management specialists as well as a lawyer\. The sector manager also participated in one
of the preparation missions\. The outcome of this effort was an active knowledge
47
A request for a Santiago Urban Transport Deferred Drawdown Sector Adjustment Loan (SECAL) and a Santiago
Urban Transport SECAL to support the implementation of Transantiago was originally presented for Board approval in
May 2004 (see PD of April 28, 2004, Report no: 28520-CL), but the GoCH asked to withdraw the loans because they
decided to substantially revise the scope and implementation pace of the urban transport reform\. Major changes
included assignment of demand risk to operators and in the last instance to users, elimination of the planned fund for
revenue shortfalls, and inclusion of a preparatory period prior to implementation of the reform\.
31
contribution in the initial formulation of one of the most innovative and complex system-
wide public transport reforms, an accomplishment only matched in South Korea\.
100) During these two years, the Bank team conducted reviews, critical evaluations,
discussions and research on many of the operation's aspects, such as: (a) network
analysis and the socio-economic evaluation of the new transport system carried out by
SECTRA as well as the financial analysis; (b) reform design concept, helping identify
building blocks (see paragraph 25) and annex 9), and the different alternatives
considered; (c) pre-project and estimated post-project travel times; (d) trip matrix per
municipality; (e) distribution of trips and transfers according to socio-economic
categories; (f) urban road concessioning program; (g) project alternatives; (h) subway
extension program; (i) bidding program, schedules and documents; (j) impacts on the
labor force and low income users; and (k) macroeconomic and fiscal situation\.
101) In terms of analyzing the safeguard aspects, the team reviewed the environmental
analysis carried out through the MODEM model and revised the participation plan\. They
also examined the two sets of environmental guidelines of MOP and SERVIU and the
resettlement framework and assisted the Borrower in the improvement of these
documents\. Additionally, during project preparation, the team reviewed and provided
input to the terms of reference for the strategic environmental assessment of Transantiago
commissioned under the GEF Sustainable Transport and Air Quality Project\. Finally, the
Bank team performed fiduciary assessments and satisfactorily reflected lessons learned
from previous projects in the design\.
102) Based on the reviews and evaluations, the Bank team prepared an exhaustive risk
matrix and advised the Borrower on possible mitigation measures\. However, in
discussions with the GoCH, some of the risks were considered as too pessimistic and not
sufficiently relevant, and not all risks identified in this risk matrix were included in the
PD (see paragraph 57)\.
103) In evaluating the appropriate lending instrument, the alternatives were also
discussed at length during preparation, and the programmatic DPL instrument appeared
to be the best option at the time\. It was chosen because it addressed: a) the GoCH's
requirement for the Bank's knowledge and follow up capability; b) the GoCH's
expectation that the Bank would not participate in the financing of specific components
of the program, but rather contribute to its overall financing needs; c) the fact that the
program to be supported was ongoing; and d) the focus on reform rather than investment
by supporting the objective to formalize and regulate the public transport sector in
Santiago and introduce international competition\.
104) One of the main challenges for the team's evaluation was the scarce amount of data
that could be obtained or that was readily available on the existing public transport
system\. The informal bus arrangements and chaotic management of piecemeal operations
made the identification of reliable ex-ante data difficult\. In addition, transforming the
original operation of a DPL with two tranches into two separate DPLs (see paragraph
140) without the appropriate M&E modifications made it difficult to establish direct links
32
between the indicators and the PDOs\. Although the existing monitoring indicators were
sufficient to examine the implementation progress of Transantiago, at times it was
impractical to quantitatively evaluate their ex-ante and ex-post performance\.
105) In evaluating the Bank's program preparation, the steps taken by the team to
analyze the operation, the methods by which they chose to undertake such analyses and
disseminate best practices, due diligence was carried out\. In hindsight, however, it would
seem that the project team relied markedly on the high reputation and impressive
technical capabilities of the government counterparts\. In addition, the decision by the
GoCH not to pursue the second phase of the programmatic DPL limited the interest of the
authorities to maintain an intensive dialogue with the project team during the period
leading to the full implementation of the program\. Finally, the high technological
complexity and the innovative nature of the reform proposal presented the Bank team a
specially challenging situation since there was limited information on Santiago's highly
informal transport system and no comparable international benchmarks against which to
assess the proposed implementation strategy\. These factors prevented the Bank team
from having a more in-depth understanding of the weaknesses that became apparent in
the chaotic launching of the system in February 2007\. Thus, although it must be
acknowledged that the quality at entry challenges presented by Transantiago were
extraordinary and the dialogue limitations placed the Bank team in a difficult position, it
can be concluded that there was general over optimism by the Bank team regarding the
smooth launch of the new system\. In this context, the quality at entry for the work
conducted by the Bank team in the appraisal of the Transantiago reform, including the
preparation of DPL1, is considered moderately unsatisfactory\.
(b) Quality of Supervision
Rating: Moderately Satisfactory
106) Given the absence of the second DPL, the Bank's assistance, though valuable, is
considered as having had a limited role in the outcomes of this operation and should be
evaluated in this context\. Therefore, project supervision after the disbursement of the first
DPL was technically related to the associated TAL\. This said, after the disbursement of
the first DPL in January 2006, the Bank team maintained regular dialogue with the
Borrower to identify potential problematic issues and shortcomings and offered
assistance to resolve them\.
107) During that period, the team strongly recommended the creation of a metropolitan
transport authority supported through the organization of an international conference on
this topic financed by the TAL\. This eventually led to the submission to Congress of a
draft law for a metropolitan transport authority\. The team also provided technical advice
and international experiences on issues, such as enclosed pre-payment areas and fare
evasion control, enforcement, and fostering passenger loyalty\. The team alerted their
Chilean counterparts of the dangers of having a non cohesive group of operators as
concessionaires, and the negative impact of delays in the busway infrastructure\.
108) The Bank team carried out regular supervision missions to Santiago and met with
the different actors of the system, including government officials, bus operators, different
33
departments of Transantiago responsible for infrastructure, concession contracts, AFT
contract, SIAUT contract, and bus operations, the team responsible for facilitating the
reinsertion of displaced workers into the labor market, consultants, academics, and
representatives from the Transport and Finance Ministries\.
109) The Bank team also used extensively the public transport system to check on its
operations (and for mission visits on a regular basis) and carried out visits to work sites to
identify potential problems and shortcomings in the preparation for the implementation of
Transantiago, assess the causes of the start-up difficulties and suggest solutions (as
documented in the aide memoires)\. At the end of each mission, the Bank team briefed the
Borrower on its findings, provided advice, and repeatedly and formally offered whatever
additional technical and financial support, through the TAL or any other instrument48\.
110) Following the November 2006 mission, the implementation agency indicated they
would not have time to receive another mission prior to the launch of the new system
since they were deployed to meet the target date set for the launch\. Nevertheless, on a
daily basis from Washington, the team followed closely the developments in Santiago
through conversations with operators, planners and other key players in the operation of
the system and also through the press\. This continued until April 2007, when visits
resumed\. After the start-up difficulties occurred, the team provided regular briefings to
Bank management\. Finally, the Bank team monitored the macroeconomic situation;
however, given the good economic performance of the GoCH and the fact that the second
DPL was not requested, no formal assessment took place\.
111) The supervision environment especially before and after the launch of the system
was challenging, in particular with (a) the Borrower overwhelmed by the challenges of
this reform, (b) a continuous change in the leadership of Transantiago-SE, which made it
very difficult to maintain the strong rapport established during the appraisal of the project,
and (c) a decision by the Borrower not to go ahead with the second DPL and limited
interest in the TAL in the past49\. Additionally, in the intense run-up to the launch of the
new system, information sharing between the Bank team and the Borrower was
incomplete\. The information made available to the Bank team did not suggest that there
would be major start-up problems, particularly because Transantiago-SE indicated that all
dry-runs of the crucial technical system (GPS, smart card) had been undertaken
successfully, the building blocks were ready and the agreed infrastructure would also be
available\. All these factors precluded the team from becoming more deeply involved
with the implementation of Transantiago\.
48
After the launch of Transantiago, during several missions the team was not able to meet with the Transport Minister,
so they offered their support and assistance in writing through the Country Management Unit (CMU), but these letters
remained without response\.
49
The GoCH showed limited interest in the TAL partly because they were extremely busy and partly because a TAL
was not a suitable instrument to quickly respond to the pressing operational needs since the project description was
very detailed and allowed for little flexibility to adapt to the changed technical assistance needs\. Also, a TAL is a
Sector Investment Loan (SIL) and hence government cannot really react to fast-breaking events via such a modality,
especially with a hostile and skeptic public\.
34
112) The situation has changed dramatically with the GoCH showing renewed interest in
obtaining Bank advice by requesting information on world class expertise, best practices,
and restructuring the TAL to more fully address challenges that arose during the
Transantiago implementation\. The project team has responded positively and expects to
continue with this favorable working relationship throughout the implementation of the
TAL\.
113) In conclusion, the Bank team might have underestimated the magnitude of the start
up problems and could not position itself to have a stronger role in the initial correction
efforts\. The fact that by then DPL1 had long been disbursed also reduced the team's
leverage\. Yet, there was due diligence in project supervision and the eventual reactivation
of fruitful dialogue with the Borrower which once again regarded the Bank as a
repository of knowledge despite the challenging supervision environment\. As such, the
Bank's performance during this phase is rated as moderately satisfactory\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
114) The Bank's performance was rated as moderately unsatisfactory in ensuring quality
at entry and moderately satisfactory for quality of supervision\. Therefore, the Bank's
overall performance is rated as moderately satisfactory\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
115) Transantiago was a priority during the past two administrations\. The previous
administration which initiated the idea for a new public transport system championed this
comprehensive and pioneering reform\. Unlike in many other countries, the reform had a
citywide scope and a strong focus on reducing the negative externalities of urban
transport\. The government showed its determination and courage to implement this
massive transformation by exercising its authority to tackle a very powerful bus lobby50
to undertake the proposed reforms\.
116) During the planning and preparation period, the GoCH frequently changed the
Transport Minister, the coordinator of Transantiago-SE, and important key technical staff,
which led to modifications in the reform, caused delays and jeopardized its quality\. The
GoCH underestimated the infrastructure needs for correct functioning of the system and
may have spread the overall segregated busway construction program too long\. They also
overestimated the capacity of the implementation agencies\. Moreover, it is recognized
that requiring the system to be financially self sustainable restricted the design options in
order not to negatively impact fares and affordability (high enough fares to support a
35
good quality service), a fact pointed out by the Bank in the extensive risk list (see
paragraph 57)\.
117) In hindsight, the decision to replace the old buses with the new Transantiago buses
on the old network during the preparatory period, probably motivated by the urgency to
see some tangible changes on the ground, appears unnecessary and counterproductive
because it eventually tarnished the image of the reform and made another postponement
of the system launch more difficult\. Failure to postpone this launch despite recognition of
the unpreparedness of the system in February 2007 was probably the largest mistake by
the GoCH\. Launching the ill-equipped system provoked chaos in Santiago, caused
inconvenience for many commuters, and had dire political and economic consequences\.
118) However, once the severe implementation shortcomings occurred, the GoCH
showed total commitment and a very proactive attitude\. The President made the
stabilization of the new system one of the priorities and appointed a Transport Minister
whose credibility and acceptance by all parties was a major asset in bringing back the
system to operational stability\. Since then great efforts have been made and many
resources spent to fix the problems, and the system is close to becoming stable\. In this
respect, the GoCH did a very good job, even though there is still some room for
improvement\.
119) In view that after a chaotic start up, the GoCH (a) has been able to introduce
significant adjustments to the operation of Transantiago to the point that today the PDOs
established for the program have been largely complied with or there is substantial
progress towards their achievement: (b) persisted with the bold decision to go ahead with
such a comprehensive and innovative reform effort despite the substantial investments in
political and financial capital it has required, (c) recognized its mistakes and devoted
itself to correcting the shortcomings and improving the services, and (d) the fact that the
improvements in the system are likely to be sustainable, government performance is rated
as moderately satisfactory\. Although normally, the level of achievements of such a
program would have been rated as satisfactory, the distress caused to the users by the
serious launch-related shortcomings during the initial months of operation and the
persistence of some remaining challenges has led to a one step downgrading of the rating\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately Satisfactory
120) During project identification and preparation, Transantiago-SE, the implementation
agency, and other government agencies, such as SECTRA and CONAMA, supported the
Bank team in the appraisal of the reform program and the preparation of the project
documents\.
121) With the exception of the period immediately before and after the launch, during
loan supervision, the implementation agency provided the Bank team with the necessary
support\. They monitored the compliance with the supervision indicators, provided
36
progress reports, assisted the Bank team in the supervision missions, and on a daily basis
forwarded to the Bank press clippings on Transantiago\.
122) In the months immediately before Transantiago's launch and especially the period
following it, the implementation agency was fully absorbed with activities related to
reform preparations and the correction of major shortcomings\. In that period the Bank
team limited its information requests to the agency on the status of the reform, but even
the basics were difficult for the implementing agency to provide\. It should be noted that,
at this point the DPL had long been disbursed, and there was less incentive for the
implementing agency to continuously communicate with the Bank team\. As a result of
the lack of information from the implementing agency on the real problems of the
reform51 and the reasons why it was highly inconvenient to postpone the launch once
more, the Bank team had no viable way to actually know that there were critical issues
underlying the launch\.
123) Also, in retrospective it is clear that Transantiago-SE did not have enough staff and
lacked the necessary experience, flexibility and autonomy to implement a reform of such
magnitude, and its decision making process was lengthy and cumbersome\. Mistakes were
made in the preparation for the implementation of the reform and in its actual launch and
there were considerable delays in the building blocks\. This said, it is necessary to
acknowledge that, once the start-up problems occurred, staff in Transantiago-SE, and
other agencies involved in the reform worked around the clock and made incredible
efforts and (personal) sacrifices to bring Transantiago to where it is today\.
124) Were the implementing agency to be assessed exclusively for the period leading up
to system launch, its performance might well be assessed as moderately unsatisfactory\.
The outstanding efforts made subsequently to correct initial problems and improve
system performance, would, by themselves, deserve a satisfactory or even highly
satisfactory rating\. On balance, weighing both periods, implementing agency
performance is rated as moderately satisfactory\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
125) Considering the moderately satisfactory ratings of the government's and the
implementation agency's performances, the overall Borrower performance is rated as
moderately satisfactory\.
51
According to the Report of the Investigation Committee only very few people in Chile were informed\. Report of the
Investigation Commission, "Conclusiones elaborados por los parlamentarios de la Concertación", 2007\.
37
6\. Lessons Learned
REFORM SCOPE, PHASING AND TIMING
126) Ending Dual Networks: A citywide network brings the benefits of organized
operations to all commuters simultaneously (e\.g\. fare integration, improved service,
safety and security) as well as reductions in congestion, noise and air pollution for users
and non-users\. Dual networks represent the coexistence of modern, organized, regulated
corridor services together with traditional, chaotic and often informal services\. This
dualism is a serious structural flaw in the urban transport sector in developing countries
and challenges the sustainability of reforms and diminishes the positive impacts of the
efficient corridors even in cities like Bogota (Transmilenio) and Quito
(Trolleybus/Metrobus/Ecovía) that are considered as models\. Thus, despite the problems
that occurred, the systemic/citywide approach to public transport modernization deployed
in Santiago is still likely to become the true best practice\.
127) Nevertheless, a citywide or systemic network encompasses very large technological,
organizational, and communication challenges and requires considerable amounts of
financing\. It also requires that the physical infrastructure (both rail and road based)
planned for the launch be operational\. Hence, developing cities should evaluate the
degree to which a full citywide network is possible given the required capacity and
resources, but without neglecting the entrenched conditions, namely the existing systems
around these corridors\. Perhaps implementing a citywide reform on a pilot basis in a
smaller city, such as Valparaiso in the case of Chile, would have helped GoCH to better
conceptualize and anticipate the gravity of the problems that occurred in Santiago\.
128) Big Bang vs\. Phasing of the Implementation of the Reform: Despite the fact that
the implementation of the reform in Santiago had a preparation period, most of the
important changes to the system occurred simultaneously at the moment of its complete
launch in February 2007\. Such a one time approach (big bang) adds great complexity and
risks to a project since it requires all the different components of the system to be ready
together\. However, it has the advantage of offering the benefits of the new system at once\.
On the other hand, the phasing approach leaves open the possibility for amendments (and
more than likely negative aspects), allows for testing, and increases the likelihood that the
necessary inputs, such as infrastructure, technology, route network, payment, etc\. are
ready for the reform\. Yet it also runs the risk of policy reversal\. To ensure the best result,
the objectives to be accomplished by a reform should be in line with the method/timing
of implementation\. And of course, the government must be absolutely confident in its
preparedness for either approach\.
129) Timing of the Reform: A political window of opportunity is an imperative pre-
requisite\. Such a large scale and important project has little chance of success, regardless
of the type of implementation approach, if it does not have political support (preferably
multiparty support)\. While the window of opportunity is essential, the convergence
between the technical and political timing of a project is also extremely important and
sacrificing the technical readiness to match the political timing may result in very costly
mistakes\. Conversely, if there is no political window of opportunity, technical readiness
is a moot point\. While political deadlines for a project are perfectly understandable,
38
especially because governments have only a short time window to implement their
programs, it is the task of the technicians to ensure coherence within a project and
determine the order and the minimum requirements for success\. Political transition
periods, that in the case of Chilean elections in 2005 took longer than initially expected,
have a major impact on reform agendas as new leadership requires additional time to
resolve the problems from commitments it inherited from a previous administration\.
PLANNING AND REFORM DESIGN
130) Trunk and Feeder Network: This type of network has been utilized in various
metropolitan areas because it can offer citywide coverage at least cost and minimizes
congestion and pollution\. However, given the likelihood for additional transfers with this
type of network, the number and duration of transfers must be carefully evaluated\. The
support infrastructure needs to be ready because higher commercial speeds and good
transfer facilities compensate for the burden of transfers\. Additionally, whenever justified
by demand or much lower travel times, a trunk and feeder network should be
complemented by direct/express routes (even if this means an infringement of the
exclusivity of an operator and is more complicated to handle within the contractual
relationship)\. Of course, the increase in direct routes must be weighed against congestion
and the resulting environmental impacts\.
131) Network Design Process: Travel and network models are excellent tools to
evaluate network designs, but over reliance on normative analytical tools that "optimize"
a network subject to a set of assumptions, especially in areas that assume behavioral
changes, should be avoided\. The modeling exercise also needs to include "bottom up"
inputs, such as information on the importance in terms of overall weight people give to
transfers, waiting and walking\. The Santiago experience showed that it is not advisable to
redesign the public transport network without considering the existing information on
travel demand and origin/destination available through the operators\. Additionally,
stakeholders' involvement in the network design process, especially the municipalities
comprising the metropolitan area (transport and planning/land use departments),
operators and users, is essential, and the design concept for the network needs to be
extensively modeled before implementation\.
132) Environmental (Climate Change) Agenda vs\. Service Quality: Lack of a holistic
approach may result in emphasizing one concern over another, for example, focusing
mainly on environmental/economic considerations may lead to a design with
unnecessarily fewer and larger buses\. However, fewer and larger buses reduce comfort
(e\.g\. more crowding, less seating possibilities) and increase waiting times\. Such a
decrease in service quality is a disincentive for public transport use and will, at least in
the long run, go against environmental/economic considerations\. Hence, it is important
that a design that includes user participation finds the right balance between
environmental/economic considerations and service quality\.
SYSTEM FINANCING
133) Balance between Public and Private Investment: Increased public finance
participation encourages private participation due to perceived reduction of risk\. If public
39
investment is too low, other financial incentives and guarantees must be found to attract
private investment, and they may cause undesired results\. Though not easy to achieve, a
balance between public and private investment is desirable\. In the case of Transantiago,
the contractual incentives and guarantees (for instance, a minimum payment to operators
independent from the number of passengers carried) attracted private investment, but
these mechanisms constituted a disincentive for operators to comply with the provision of
the required number of buses or facilitate the fight against fare evasion\. A second lesson
in this respect is that insufficient investment for a project of this magnitude may result in
higher social costs (e\.g\. excessive travel, walking and waiting times, lack of comfort) and
subsequently additional expenditures\. Estimates of the economic viability of the system
should consider potential social costs given different investment phases\.
134) Public Transport System Financing: The new public transport system still uses a
financing structure based on cross-subsidies\. First, public transport users today, as in the
past, cross-subsidize the reduced student fares52\. Second, the flat fare results in cross
subsidies between passengers making short off-peak trips and those making longer peak
period trips\. The second point is unsustainable in the long run since with the increase in
wealth and greater car availability, short public transport trips in less congested periods
are the easiest to replace by car\. For large scale reforms like Transantiago, analysis of the
financing and its impact on different income groups is imperative; financing structure
should include consideration of congestion pricing, and fare structure analysis should
differentiate between travel time, trip length, trip frequency, and mode\.
PUBLIC TRANSPORT INSTITUTIONS
135) Decision Making Autonomy of the Implementation Agency and Institutional
Continuity: It was recognized in Chile that a line ministry could not prepare and
implement a reform of the magnitude of Transantiago's through its regular functions\.
Consequently, a special Committee of Ministers and Transantiago-SE, as the reform's
executive secretariat, were created\. While Transantiago-SE is a separate entity, its
function as a coordinating unit precluded it from having the necessary financial,
executing and decision making powers and autonomy53\. Critical decisions were made by
the members of the Committee of Ministers, who represented different authorities and
had distinct interests\. The case of Transantiago demonstrated the necessity of involving a
strong implementation agency with a) greater authority than specific ministers and
municipalities, b) real powers over investments, operation, maintenance and regulation of
the urban transport system, and c) participation in defining urban planning instruments\.
Although the Bank recommended the creation of a Metropolitan Transport Authority
early in the process, this recommendation was only accepted after the current President
was and resulted in sending a draft law to create the Urban Transport Authority to
Congress\. The case of Transantiago also highlights that institutional continuity is
essential for maintaining political support, leadership and key technical staff\.
52
This will change if the new law on subsidies is approved\.
53
According to the Investigation Committee Report "Conclusiones elaborados por los parlamentarios de la
Concertación, 2007, the second of the eight Coordinators of Transantiago resigned because of "lack of attributions"\.
40
136) Supervision and Enforcement: Supervision and enforcement are crucial when
replacing informal and unregulated owner-operators competing over service supply with
a system where competition occurs only through the contract bidding process\. It is
essential to include, as part of the preparation, adequate institutional capacity building,
necessary staff and technical resources, and an appropriate legal framework to supervise
and enforce the concession contracts, limit fare evasion, guarantee the exclusive use of
bus lanes and busways, and prevent illegal transport from operating, etc\.
CONTRACTING
137) Concessions for Bus Operations: The concession contracts did not include
sufficient incentives for operator compliance or flexibility for service adaptation, and
consequently, had to be renegotiated several times at an increased cost to the system\.
Therefore, it is important to establish early the right incentives, for instance, larger
operator participation in the risk, some limited form of competition, and payments
schedule in accordance with operational compliance level\. It is also necessary to create
mechanisms that allow for sufficient flexibility, such as modifications to an operator's
exclusivity, when required for service changes\.
138) Fare Collection and Operational Control and Management: The fare collection
and operational control/management systems are linked, and thus, joint contracting of
these services may be advisable\. Technology acquisition should be sub-contracted
(instead of part of a joint contract) in order to provide flexibility to change the provider in
case of non-compliance\. Bidding documents must require the technology provider to
have the necessary experience with successfully proven technologies in similar places\.
The operator of the fare collection system must demonstrate experience in handling a
similar number of expected daily transactions\. For a service large enough to attract
international competition, award based on a single bid, as occurred in Santiago for the
contract for fare collection and operational control and management, should be absolutely
avoided\.
139) Information System: In Santiago the user information system and the information,
education and communication activities were contracted jointly\. In hindsight, this was a
mistake because very different experiences and qualifications are required and there is a
risk that one element of the contract will be sacrificed for another\. In Santiago
insufficient attention was paid to user education and information activities, which were
limited and delayed54\. For a reform like Transantiago, which implies important
behavioral/cultural changes, it is essential to provide frequent and clear public awareness
and information during the entire reform process, which includes both teaching (use) and
awareness (expectations) objectives\. Furthermore, good ex-ante and ex-post data on
system performance are very important\.
54
The contract for the provision of user information was only signed in May 2006, seven months after the start of
preparation and only 10 months before the full implementation of the new system (due to bidding problems)\.
41
NATURE OF BANK OPERATION
140) Nature of the Operation: A DPL seems an appropriate instrument to support a
public transport reform provided that the triggers/prior actions capture the essential
building blocks that ensure the success and irreversibility of the reform\. In the case of
Santiago, DPL1 was disbursed very early in the reform process and consequently the
respective triggers/prior actions, though important, were instrumental mainly at the outset
of the reform\. Additionally, while initially the objective was to have one DPL with two
tranches, the client insisted on having two separate DPLs in order to avoid the
commitment fee on the undisbursed amounts\. This resulted in a decrease in the Bank's
influence on the implementation of the reform supported since the Borrower was no
longer interested in the second DPL\. The Bank's role as partner in this reform was even
further reduced considering that the Borrower had limited interest in the TAL that
accompanied the DPL\. The choice of one DPL with two tranches would have been better
because the Bank would continue to have leverage over the implementation of the system
after the first tranche was disbursed\. Nevertheless, even in such a case, the conditions to
release the second tranche would have had to capture all the essential building blocks so
as to ensure the irreversible success of the reform\. Another lesson from this operation lies
in the recognition that there is a basic mismatch in the timing between a DPL (short term)
and an urban transport reform, which requires a longer period for fine-tuning and
achieving the desired outcome, and as such, the ICR should only be prepared following
the stabilization of the reform in the case of an operation of this magnitude\. Finally, this
operation also showed that there are advantages of closely coupling financing with
technical advice, which may better be done through a combination of a SIL and a DPL\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/Implementing agencies
141) The Borrower had no comments on the ICR\. The Borrower's own completion
report is included in Annex 4\.
(b) Cofinanciers
142) There were no co financiers\.
(c) Other partners and stakeholders
143) Not applicable\.
42
Annex 1\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Jorge Rebelo Lead Transport Specialist LCSTR Transport
Pierre Graftieaux Sr Transport Specialist AFTTR Transport
Consultant: Transport Economist Transport
Kenneth Gwilliam
and ex Urban Transport Advisor
Consultant: Lead Transport Transport
Slobodan Mitric
Specialist
Judy Baker Senior Economist FEU Poverty Issues
Zeinab Partow Senior Country Economist
Andres Pizarro Senior Transport Specialist LCSTR Transport
Consultant: Lead Transport
Gerhard Menckhoff Transport
Specialist
Jose Ramon Guerrero Consultant
Elisabeth Goller Transport Specialist LCSTR Transport
Financial
Antonio Leonardo Blasco Financial Management Specialist LCSFM
Management
Ana Maria Grofsmacht Procurement Analyst LCSPT Procurement
Environmental
Juan Lopez-Silva Consultant ENVCF
Issues
Andres Mac Gaul Sr\. Procurement Specialist LCSPT Procurement
Luz Meza-Bartrina Senior Counsel Legal Issues
Senior Social Development Social and
Elena Correa SDV
Specialist Safeguard Issues
Margarita de Castro Consultant Safeguard Issues
Supervision
Jorge Rebelo Lead Transport Specialist LCSTR Transport
Elisabeth Goller Transport\. Spec\. LCSTR Transport
Pierre Graftieaux Sr\. Transport\. Spec\. AFTTR Transport
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY03 8 65\.45
FY04 36 186\.49
FY05 13 62\.40
FY06 2\.57
FY07 0\.00
FY08 0\.00
43
Total: 57 316\.91
Supervision/ICR
FY06 6 36\.65
FY07 7 48\.11
FY08 8 54\.77
FY09 5\.98 28\.40
Total: 26\.98 167\.93
44
Annex 2\. Beneficiary Survey Results
(if any)
As per ICR guidelines, this is mandatory for Intensive Learning ICRs\. No beneficiary
surveys were conducted in the framework of this ICR\.
Annex 3\. Stakeholder Workshop Report and Results
(if any)
As per ICR guidelines, this is mandatory for Intensive Learning ICRs\. No stakeholder
workshops were conducted in the framework of this ICR\.
45
Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR
SANTIAGO URBAN TRANSPORT
PROGRAMMATIC DEVELOPMENT POLICY LOAN
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-73150)
Borrower's ICR Comments on Draft ICR
1\. Background\.
In order to implement the reform of the public transport system of Santiago
(Transantiago), the Government of Chile requested the financial and technical support of
The World Bank\. To this end, the Bank approved a Programmatic Development Policy
Loan (DPL) in 2005, and the loan was disbursed in 2006\. This DPL was accompanied by
a Technical Assistance Loan for the Santiago Urban Transport system (TAL P086689)\.
It was planned but not carried out a second DPL following the one approved in 2005\.
2\. Implementation of Transantiago
The reform of Santiago's public transport system was unquestionably very pioneering in
nature and scope\. There were no experiences in the developing world of a citywide public
transport reform before Transantiago\. Thus, although good practice was available on
specific aspects of the reform, such as busways, concessions and other issues, the reform
did not benefit from the lessons of previous international experiences in the developing
world that could have guided the overall design and implementation phase\.
This is explicitly recognized in this Implementation Completion and Results report (ICR)\.
It was an ambitious project designed to overcome the serious deficiencies of the
traditional public transport model that characterize cities in Latin America and other
developing countries\. In particular, the reform had a city-wide coverage and integrated all
the public transport modes (buses and metro)\. In contrast, other experiences in Latin
America, particularly Bogota, have been much more limited\. As a result, the
implementation was more difficult than expected\. The initial design and start-up
problems are well documented in this ICR report\.
After more than two years, it can safely be said that the public transport system in
Santiago has not only stabilized but it is starting to offer the benefits of a clean, orderly,
safe, fast and dependable transport system\. The ICR recognized these achievements and
explicitly suggests that the Santiago public transport system is fast becoming one of the
best in the region\.
3\. Main outcomes of the reform
The ICR presents an exhaustive list of the main outcomes of the reform to date\. We agree
with most of these outcomes\. However, we would like to emphasize some of the concrete
46
social and economic benefits that the reform has provided now that the initial start-up
problems have been overcome\. Among these are:
A marked reduction in accidents involving the public transport system\. These have
fallen from 7,164 during the last full year before the reform (2004) to 3,291 in 2008
(source: CONASET)\.
Air pollution attributable to the public transport system has also fallen\. Just
comparing the winter of 2006 with the winter of 2007, particulate matter from buses
fell by 30% and NOx by over 50% (Centro Mario Molina, 2008)\. It is likely that these
figures underestimate the reduction since a major part of the fleet was renovated after
this study was concluded\.
Average travel times are now lower than with the old system\. In part this was
achieved thanks to the more intensive use of the metro and the operational
improvements --including skip-stop operation-- introduced in this mode\. The new
dedicated infrastructure for buses has also increased commercial speeds by over 30%
in those corridors (64 kilometers to date)\.
Waiting times are now much lower than when the new system began operating\.
Operators are close to meeting 100% target of required fleet in the streets, frequency
compliance is close to 95% during the morning peak hours with some operators close
to 100% compliance and regularity (even spacing between buses) compliance is 85%
for the system during morning peak hours, again with some operators with over 90%
compliance with service regularity during this period\.
The new system has allowed for people with reduced mobility to travel\.
An integrated fare system that increase people's mobility potential by allowing them
to reach any part of the city by paying just one fare\. Fare integration has also opened
up the metro system to new users, particularly members of poor income households\.
The dedicated bus ways and bus only streets and lanes, and the express services
introduced are among those features that are highly valued by users
One of the positive side-effects of the new electronic payment system is the sharp fall
of assaults on drivers\. These fell from 1,657 in 2006 to 147 in 2008 (source:
Carabineros de Chile)\.
These are just some of the benefits achieved by the new system\. Naturally, there are still
areas where improvements can be made\. In particular there is an ongoing evaluation of
improvements to the route network to reduce unnecessary or undesirable transfers,
increase coverage and improve the match between supply and travel demands\.
Concession contracts need to be further improved\. To date six of the nine feeder services
have signed new improved concession contracts and the new trunk 3 contract which is
currently being tendered also has the new contract features\.
47
4\. Remaining challenges
Among the most important remaining challenges is the current operational deficit of the
system\. However, this deficit is not excessive by international standards\. In the United
States, fares on average cover only 35% of transit authorities operational costs (National
Transit Database, National Transit Authority, 2006) while in Europe the equivalent figure
is closer to 50%\. Even in this politically sensitive area advances are being made\. Tariffs
were increased by 5% in February 2009 and there is a bill currently being discussed in
Congress that would fund the transition to a sustainable financial position during the next
few years\.
However, it must be recognized that the current system is also somewhat more expensive
than the old system\. In part this is related to some hidden subsidies present in the old
system, particularly the informal working conditions of drivers\. In the previous system
drivers would work up to 15 or 16 hours a day, in informal conditions\. Under the new
system, workers have formal working contracts\. Naturally, this change increased the
number of drivers required per bus, increasing labor costs compared to the old system\.
Other characteristics of the system have also entailed costs which did not exist in the
previous system\. For example, the modern fleet which makes up close to 60% of the total
and the new technological elements, such as the electronic payment system and the fleet
management technology\.
5\. Bank Performance
Considering the activities undertaken by the bank team, the methods used and the effort
expended in disseminating best practices in this field, we judge the banks performance
and quality at entry to be satisfactory\. This evaluation takes into account the pioneering
nature and magnitude of the reform, and the informal nature and lack of data regarding
the pre-reform public transport system\.
The bank team undertook regular missions to supervise the project and met all the
relevant stakeholders of the system\. At the end of each mission the Bank team informed
its assessments and conclusions to the borrower\. Also, the Bank team was very
forthcoming to provide information and offer advice to the borrower when the difficulties
associated with the initial stages of the reform became apparent\.
Now that the initial start-up problems have been resolved and the system is beginning to
show its benefits, the Government of Chile is still very interested in the assistance that the
Bank can provide in improving Santiago's public transport system within the framework
of the GEF Sustainable Transport and Air Quality Project and the TAL\. This last loan is
currently being restructured to take into account the new conditions and necessities of the
public transport system\. The interaction with the Bank team in all theses activities has
been very fruitful\.
48
6\. Borrower performance
The Government of Chile recognized its responsibility in the problems related to the
design and implementation of this reform, and reacted quickly to resolve these problems
with the outcome that now Santiago's public transport system is arguably one of the best
of the region\. This has been explicitly recognized in this ICR report\.
7\. Lessons learned
There are many policy lessons to be learned from Santiago's public transport reform\.
Among the most important is the speed and scale at which a major reform of the public
transport system should be undertaken\. As Transantiago shows, any disruption or
problems that arise in a citywide public transport reform can have dire consequences for
the city and its citizens\. Thus, Santiago's experience would suggest that a more
piecemeal and gradual approach is advisable for future public transport reform and for
other countries intent on similar projects\. Also, good information regarding the existing
public transport system is required before a successful reform can be designed\.
Also critical for a reform such as Transantiago, is to have key infrastructure (segregated
bus ways, bus only lanes, boarding stations, etc\.) built before the implementation stage\.
The same can be said for the technological elements required for the correct functioning
of a modern transport system (electronic payment mechanism, fleet management system,
etc\.)\. This may call for the contracts providing the infrastructure and the technological
elements to be tendered well in advance of the actual operational contracts (bus operation
contracts)\.
Transantiago's experience also shows the importance of contract design, incentives and
proper enforcement\. Related to this last point, is the need to consider in any reform the
creation of a strong institution capable of monitoring and enforcing the diverse contracts
related to the system and to coordinate the different government bodies that are related to
urban and transport issues\.
Finally, the financial aspects surrounding a reform of this nature should be carefully
assessed for future reforms\. The original intention of radically transforming and
modernizing the public transport system in a city of the size of Santiago without
introducing public subsidies was, with hindsight, unrealistic\. It was also contradictory
with the international experience, particularly in developed countries, where subsidies are
ubiquitous, and with the academic literature that expounds the social welfare benefits of
subsidizing public transport\.
The policy lessons from the Transantiago experience are many and require a detailed
analysis that goes beyond the scope of this contribution\. However, it is important to also
note some lessons learned regarding the loan instrument used in this particular operation\.
First, although a DPL is considered to be an adequate instrument to assist a public
transport reform, in this particular operation it is recognized that disbursement was too
early\. Second, the fact that the DPL was divided into two tranches had the paradoxical
49
effect of diminishing the interaction of the Bank team with the Chilean counterpart,
especially when the Government of Chile decided not to request the second tranche\.
These lessons should be born in mind when considering future Bank operations in Chile
as well as in other countries\.
50
Annex 5\. Comments of Cofinanciers and Other Partners/Stakeholders
There were no co financiers or other partners\.
51
Annex 6\. List of Supporting Documents
Transantiago and TransMilenio: two different urban public transport approaches, by
Pierre Graftieaux and Nicolas Serrie, World Bank, 2007
Transantiago: una reforma en panne, Andres Gomez-Lobo, TIPS Trabajos de
Investigación en Políticas Públicas, Departamento de Economía Universidad de Chile,
N4, June 2007
Transantiago: el remedio que está matando al paciente, Felipe Morandé L\., Juan Esteban
Doña, TIPS Trabajos de Investigación en Políticas Públicas, Departamento de Economía
Universidad de Chile, N5, Agosto 2007
La experiencia de un año en Transantiago, Oscar Figueroa for The World Bank, March
2008\.
Why Competition Does Not Work in Urban Bus Markets: Some New Wheels for Some
Old Ideas, Gómez-Lobo, Journal of Transport Economics and Policy, Volume
41, Number 2, May 2007, pp\. 283-308 (26)
A Critical Look at Major Bus Improvements in Latin America and Asia: Case Studies of
Hitches, Hic-Ups and Areas for Improvements; Synthesis of Lessons Learned and Case
Study Transantiago, Diaro Hidalgo, PhD, Transport Consultant, Paolo Custodio,
Transport Consultant, Pierre Graftieaux, Senior Transportation Specialist, April 2007
Mensaje de S\.E\. la Presidenta de la Republica N\. 212-355 con el que inicia un proyecto
de ley que crea la autoridad metropolitana de transportes, May 17, 2007
Proceedings of the Investigation Commission (http://www\.camara\.cl/comis/main\.htm)
Conclusions of the Investigation Committee of the Concertación
Encuesta CEP, Encuesta Nacional de Opinión Publica, www\.cepchile\.cl,
November/December 2007
Study carried out by Libertad y Desarrollo on travel and walking times, 2007 and 2008
Department for Engineering of the Catholic University of Chile (DICTUC) travel times
surveys, on behalf of the Ministry of Transport, 2007 to 2009
Santiaguinos no cree que Transantiago siga mejorando, Escuela de Ingeniería Industrial,
Universidad Diego Portales UDP, November 2007
Encuesta Evaluación Gestión del Gobierno, ADIMARK GFK, 2007 - 2009
52
User Satisfaction Survey for the Subway, Metro de Santiago, Collect GfK, December
2007
User Satisfaction Survey carried out by Collect GfK on behalf of Transantiago-SE,
March/April 2009
Collect GfK Survey on walking distances, on behalf of Transantiago-SE, March/April
2009
Draft final report of the Strategic Environmental Analysis of the Public Transport
Program, March 2008
Ficha de Identificación Año 2007, Definiciones Estratégicas, Ministerio de Transporte y
Telecomunicaciones
"Estoy Contigo", Program of the Government of Michelle Bachelet 2006-2010
Agenda Pro Participación Ciudadana 2007, Intervención de la Presidenta de la Republica,
Michelle Bachelet, en el lanzamiento de la agenda pro participación ciudadana, Santiago,
September 29, 2006
Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can be
Done?, Nicolás Estupiñán, Andrés Gomez-Lobo, Ramón Muñoz-Raskin, Tomás
Serebrinsky, Policy Research Working Paper 4440, The World Bank, 2007
Operating Reports of the Metro of Santiago
IBRD and IFC Country Partnership Strategy for the Republic of Chile for the Period
2007-2010, April 24, 2007
Project Document, Aide Memoires of preparation and supervision missions, and Progress
Reports prepared by Transantiago-SE in IRIS
53
Annex 7\. Project Development Objectives, Monitoring Indicators and
Achievement of Expected Outcomes
Dimensions Supervision Current Status Achievement of Expected Outcomes to Expected Future
of PDO55 Indicators and Date Achievements
Targets (Page 31-
35 of PD)
(a) TO UPGRADE THE LEVEL OF TRANSPORT SERVICES
Coverage To implement an Coverage: According to the Collect GfK Despite the different format of the available Frequencies are
and integrated public study56, in March/April 2009 the average data to assess the compliance with the expected to improve
Frequency transport network walking distance was 2\.7 blocks, which indicator, it seems reasonable to conclude further in the short run
(Availability through which at corresponds to less than 300 m\. No surveys on that it was fully met\. due to contract
of Services) least 90% of the distances of households from public transport renegotiations and strict
households in each stops and stations for the old system are enforcement (the worst
of the 10 service available\. However, while the previous system performing concession
areas will be located had 303 bus services and 2,335 route-km, the contract was cancelled
at less than 800 m current system has 326 services and 2,454 and rebid)\.
from a stop served at route-km (September 2008)\. This means an
least by 5 buses per improvement in coverage compared to the old
hour and/or a metro system\.
line (from 6AM to
10 PM) Frequencies: Currently, between 6\.30 AM
and 10 PM the scheduled minimum frequency
is 5 buses an hour\. Only for a limited and
justified number of services the frequency
between 5\.30 and 6\.30 AM may be as low as 2
buses an hour\. Moreover, the average
compliance with the operational programs for
the system was around 95%57 in November
2008\. Additionally, the subway further
extended the operating hours early in the
morning and late in the evening (now from
5\.40 AM to 11\.30 PM) and during weekends\.
Reliability None There is anecdotal evidence that, under the Despite the limited hard evidence to As soon as the
previous system, if there was a demand, there compare the previous and the current performance of the bus
was a bus service even during night hours systems, it seems reasonable to conclude operators improves
because drivers were allowed to keep the that the reliability of the public transport further, the final fleet
vehicles and make some extra money\. system improved under most aspects, but management system
Therefore, in spite of the absence of fixed still constitutes a certain challenge during becomes operational
timetables or minimum frequencies, it is said off-peak hours due to irregular bus arrivals\. and more of the new
that users could generally rely on the segregated busways will
availability of services (which came at the be in place, operations
expense of long working hours for drivers and are expected to become
a very informal system)\. However, the old even more regular\. Also,
system worked with relatively old buses, so systems are being tested
breakdowns were more frequent\. The latter, by operators to permit
together with a considerably higher number of users to get information
accidents, reduced the system's reliability\. on bus departure times
via cellular phone\. The
Under the new system, the operators must implementation of a
55
Identified from the Benefit Section, the Indicator Table on pages 31-35 on the overall content of the reform supported
by the Project\.
56
The Collect GfK study was carried out on behalf of Transantiago-SE\. The study is based on bimonthly user surveys
and considers a sample of 1212 people\.
57
This means that about 5% of the scheduled trips are currently not or not correctly carried out, which is relative low at
least for Latin America\.
54
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comply with the frequencies determined in the real-time information
operational programs, and since August 2008 system with pre-trip and
there has been a remarkable compliance on-trip travel
improvement (compliance with established information is planned\.
frequencies increased from 75% in August
2008 to 95% in May 2009 and the morning
peak regularity index increased from 75% to
close to 90%)\. Accidents are much lower and
it is also assumed that breakdowns have
decreased (more than half of the bus fleet is
new and vehicle maintenance of most
companies has improved)\. However, the still
limited amount of segregated busways and
lack of a final fleet management system, is
causing some bunching of buses\.
Comfort None A large part (close to 60%) of the bus fleet isDuring the early days of operation of the With (a) the measures
new, less polluting and noisy, and has low new system, for a number of passengers, still being implemented
floors and better driving comfort\. However, comfort improved, but for others, mostly the by the subway operator,
some of the new buses (the articulated ones) previous subway users during peak hours, it (b) the greater price
decreased\. This conclusion was confirmed differentiation between
have relatively less seating availability, which
is of particular concern for people traveling by the CEP survey60\. Since then, more new subway and bus fares
from the further neighborhoods\. buses have been introduced and crowding in during peak hours, (c)
The subway ridership has nearly doubled, so the subway during peak hours has been the expected further
more people have now access to this relatively reduced\. Additionally, an increased use of improvements in the
comfortable and high quality transport mode\. the subway system and the consequent reliability of the bus
Initially, however, this greatly reduced reduction in comfort due to crowding during system, and (d) a greater
passenger comfort during peak hours\. Since peak hours was an intended outcome of the familiarity of the users
then, the subway operator has made great reform and average peak occupancies with the overall public
efforts to reduce crowding and increase between 5 and 6 passengers per sqm are transport system,
comfort (for details see Annex 8), and 79% of rather normal in rail-based systems around subway occupancy
all trips in the subway are made with a densitythe world\. In the case of Santiago, the during peak hour is
of less than 3 passengers per sqm58\. The mistake was not to prepare the users for this expected to go down
average occupancy in May 2009 was below change61\. Therefore, it seems likely that for somewhat more and
5\.8 passengers per sqm during morning peak most passengers, comfort improved as hence further improve
hours and below 5\.3 passengers per sqm originally expected\. comfort\. Additionally,
during evening peak hours59\. more than 500 buses
will be replaced by new
ones still in 2009\.
Travel Time None According to the DICTUC study62, the average While data from observations indicate that With the operation of
overall travel time during morning peak hours overall travel and waiting times went the final fleet
in March 2009 was 44\.4 min\., which is slightly considerably down compared to the ex ante management system at
below the overall travel time during the same situation, users do not yet necessarily the end of 2010 and the
peak period in 2001 (46\.7 min\. according to perceive this positive evolution\. This is completion of the
58
Figure provided by Metro de Santiago (see e-mail of June 26, 2009 in IRIS)\.
59
May 2009 Operating Report of the Santiago Metro\.
60
According to this study 18% of the interviewees considered that they traveled more comfortably in the new system,
62% felt no change, and 18 % mentioned that they traveled less comfortably\. See footnote 72\.
61
For instance, see Alamys, Comite de Operaciones, www\.alamys\.org\.
62
The study by the Department for Engineering of the Catholic University of Chile (DICTUC) was carried out on
behalf of the Ministry of Transport\. The DICTUC study is based on 2211 observations of people actually making the
trip carried out over the period June 2007 to March 2009\. The sampling error is 7% with a confidence interval of 90%\.
The 2001 baseline refers to the 2001 O-D survey results and the 2006 baseline was obtained by simulating the travel,
waiting and walking times with an assignment model on the multimodal network\. The commercial speeds for bus
services were estimated on the basis of data on the evolution of system speeds\. This study also looked at walking,
waiting and in-vehicle times\. For walking times, people that made the journey registered the time for each trip leg\.
55
Dimensions Supervision Current Status Achievement of Expected Outcomes to Expected Future
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the 2001 O-D survey) and considerably lower likely at least in part due to the fact that planned segregated
than the 2006 morning peak travel time (52\.6 Transantiago started so badly and it has not busways, further
min\.)\. Considering that average travel times yet been possible to change the users' initial reductions in the in-
for private vehicles have gone considerably up perception\. It probably also depends on the vehicle and waiting
since 200663, the public transport travel time fact that the number of transfers increased, times, thus overall travel
reductions are even more significant\. which are valued higher by users than in- times, are expected\.
According to the same study, the average vehicle and overall travel time\. Since an
waiting time during morning peak hours went increase in transfers was an expected
down from 6\.5 min\. in 2006 to 6 min\. in outcome of this reform, this clearly
March 2009 (but it is still higher than 4\.6 min\. highlights a communication shortcoming\.
in 2001)\.
Again, according to the same study, the
average walking time increased slightly from
6\.9 min\. in 2001 and 7\.2 min\. in 2006 to 8\.2 in
March 2009\. However, normally there are
great variances in walking times depending on
who makes the trip, and walking time
perceptions are not totally reliable\. A more
objective measure is the average walking
distance, which, as seen previously, is
currently 2\.7 blocks or approximately 300 m\.
Such a distance can normally be covered in
about 6 minutes, hence today's average
walking times could well be similar or even
lower than under the old system\.
According to the L&D study64, overall travel
times increased from 62 min\. in October 2006
to 72 min\. in March 2008\. Average waiting
times went up from 15 min\. in October 2006
to 19 min\. in March 2007 and 19 min\. in
March 2008\. Average walking times also
increased from 15 min\. in October 2006 to 16
min\. in March 2008\.
Safety To complete The fierce competition for passengers in the Safety levels improved, among others, No significant further
competitive bidding streets stopped, and drivers get fixed salaries, because buses are not anymore racing to reductions in safety are
processes for a have regular working hours, and received pick up passengers, drivers have regulated expected\.
limited number of training\. This drastically changed their driving and shorter working hours and buses are in
big size concession behavior and significantly improved safety better safety conditions\.
contracts, for feeder levels\. In 2005, there were 6,366 accidents
and trunk services involving buses in Santiago\. This number went
(competition for the down to 3,291 in 2008 (by 48%)\. In the same
market instead of in period, the number of injuries decreased by
the market) 39%, and the number of deaths by 29%65\. For
2007, this corresponded to a reduction in
63
According to data from the Unidad de Control de Transito (UOCT), average morning and evening peak travel times
for private vehicles in the 15 most important streets in Santiago increased by 8\.13% from 2006 to 2007, 3\.1% from
2007 to 2008, and 11\.3% in the first trimester of 2009, compared to 2008\.
64
The study by Libertad y Desarrollo (L&D) also looked, among others, at walking, waiting and in-vehicle times\. It
used a sample of only 455 households and was based on interviews, which means the interviewees' estimations of time\.
Given (a) the somewhat differing conclusions of both studies, (b) the fact that the L&D study is based on interviews
and not on observations, and (c) that there was no survey after March 2008, in this report we rely on the information
from the DITUC study, which was officially provided by the Borrower\.
65
Source: Carabineros de Chile and Comisión Nacional de Seguridad de Transportes (CONASET)\.
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generalized costs of accidents of
approximately US$ 16 million66\.
System To implement full Full fare integration was implemented and Fare integration was a success and the With the construction of
Integration fare integration, users are very satisfied with the smart card and indicator on physical integration was the definitive enclosed
which will ease the new fare and payment system67\. complied with, therefore integration was pre-payment areas, the
transfers among bus achieved\. Nevertheless, since the new trunk construction of
routes and with the and feeder network increased the number of additional transfer
metro system trips that require transfers from 17\.3% to stations with the new
68
To construct transfer Transfer stations: 37 ready and 4 planned (to around 50% (instead to 80% as originally corridors and additional
stations for urban be constructed together with the bus expected), further improvements in terms of improvements in terms
transport passenger corridors)69\. physical integration are desirable\. of bus stop location,
Intermodal stations: La Cisterna ready; the physical integration will
works in Quinta Normal are paralyzed because be further improved\.
the new subway extension made it necessary
to redesign the station\.
Accessibility To adopt and Standards for new Transantiago vehicles were The indicator was complied with and this With the conclusion of
for People implement rules and established in article 7 of Decreto Supremo contributed to the objective of reaching a the fleet renewal, a
with norms for public 122 of 1991 of the MTT and subsequent more inclusive public transport system70, possible reduction of
Reduced transport facilities modifications, and in the bidding documents accessible for seniors and people with subway ridership during
Mobility that will enable for bus operations\. Additionally, the Manual disabilities\. Nevertheless, old buses and peak hours (see above)
access for users with of Graphical Norms for Transantiago includes facilities were generally not retrofitted and the construction of
disabilities, norms for signaling in buses, at stops and in (except for reserved seating and signalizing new public transport
including at least (a) stations\. All Transantiago buses have reserved for vision impaired people in buses) and in facilities, the
signaling for vision- seats for seniors and those with reduced certain areas of the city and during peak accessibility and
challenged people; mobility and signaling for vision-impaired hours the public transport system, especially inclusiveness of the
(b) ramps to access people\. All new buses (about 60%) have low the subway, is now more crowded (although system will be further
stations for mobility- floor and all new public transport facilities as seen above, crowding has been enhanced\.
challenged people; have access ramps for people with reduced importantly reduced over the last year and
and (c) reserved mobility and signaling for vision-impaired further improvements are expected)\. This
seats in buses people\. reduces the benefit of global accessibility
because there may be simply no space, for
instance, for a wheelchair\.
Vehicle To establish new New standards were established (Article 7 of All new buses (about 60% of the overall With the conclusion of
Quality standards for buses Decreto Supremo 122 of 1991 of the fleet) have low-floor and their transmission the fleet renewal,
including: (a) access Ministerio de Transportes y and suspension systems provide better vehicle quality will be
level (low-floor Telecomunicaciones and subsequent riding comfort\. More than 500 buses will be further improved\.
buses); (b) automatic modifications)\. They apply to all new buses replaced with new ones in 2009\.
transmission and and constructions in the Transantiago system\.
pneumatic
suspension; and (c)
emissions standards
Affordability None The average fare of the system in December The affordability of public transport Additional fare
66
Source: Comisión Nacional de Seguridad de Transportes (CONASET)\.
67
For instance, see the study by Libertad and Desarrollo (L&D)\.
68
For the reasons pointed out in footnote 21 this figure may be overestimated\. Additionally, since 61% of all trips with
transfers use the subway for at least one transfer, the overall travel time may have decreased\.
69
It is not totally clear how many transfer station had been envisaged for the original launch\. The PD does not include
any figure and the Report of the Investigation Commission of Alianza por Chile mentions 112 or 36; however,
according the TRANSANTIAGO-SE all transfer stations planned for the launch of the system were ready at the
moment of the preparation of this ICR\.
70
Inclusion was also enhanced for (a) public transport workers because the new system meant an escape from
informality, providing them with access to credit and other social benefits and (b) students and other groups who pay
reduced fares because the use of smart cards as a means of payment eliminated the discrimination against them\.
57
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2007 was CLP 318 compared to CLP 354 in significantly increased\. increases over time are
January 2007 (10% lower in real terms) 71\. likely, so the current
Additionally, contrary to what was originally benefits in terms of
planned, passengers who transfer between affordability may be
different modes are not charged for the somewhat reduced\.
additional portion of their journey, except for Nevertheless, the
transfers from the bus to the subway during submission to Congress
peak hours\. This especially benefited those of a law to permanently
passengers who had previously to transfer subsidize the system
(17\.3% of all passengers and mostly low aims at ensuring the
income people) and are now paying affordability of public
approximately 50% less\. transport services in the
long run\.
Image None Due to the severe start-up problems of There are no data to compare the image of With time, the ongoing
Transantiago, the image of the public transport the previous system with the one of the new improvements to the
system suffered very strongly, but has since system\. However, since the old system was system and good
been improving considerably72\. considered as very bad in terms of service communication, the
quality, the image of the new system may image of Transantiago is
now well be better than the one of the likely to improve
previous system\. No conclusive evidence further\.
exists\.
(b) TO INCREASE ENVIRONMENTAL QUALITY
Air Quality To adopt binding Targets were established through the The indicator was complied with and the Further air quality
emission reductions Environmental Prevention and Clean-Up Plan expected outcome of meeting the 2005 improvements are likely
targets against which (Plan de Prevención y Descontaminación pollution reduction targets fixed by with the completion of
Transantiago's Ambiental PPDA) for the metropolitan CONAMA and SESMA for public transport the fleet renewal
environmental region, and the 2008 MP10 level was 184t and (162t of PM10 and 6,579t of Nox) within a program, the operation
success will be the Nox level was 3\.710t 73\. safety margin of 20% was achieved\. The of the fleet management
objectively assessed second expected outcome of reducing the system and the
number of alert, pre-emergency, and introduction of
emergency days was not achieved due to additional segregated
reasons external to public transport busways\.
(interruption of the gas supply from
71
Since then, a fare increase of about 5% was applied, but no calculation of the average fare was available\.
72
According to a survey carried out by Collect-GfK, a market research company, on behalf of Transantiago-SE, the
overall satisfaction rating for the public transport services increased from 3 in March 2007 to 4\.5 in March 2009 (on a
scale of 1 to 7, with 4 being considered as a positive rating)\. According to the Encuesta Nacional de Opinión Publica,
Encuesta CEP, www\.cepchile\.cl, 2009, public transport is not anymore among the principal worries of the Chileans\.
Indeed, it ranked 12th out of 15 topics\. Finally, according to Encuesta Evaluación Gestión del Gobierno, ADIMARK
GFK, the approval rate of how the government of President Bachelet is handling Transantiago was progressively
increasing from 9\.6% in October 2007 to 25% in March 2008\. It fell again steeply to 11% in August 2008 and was 24%
in June 2009\. However, it should be noted that ADIMARK GFK is a national survey and 60% of the interviewees live
outside Metropolitan Santiago\. The same is true for the CEP survey\.
73
According to estimations by CONAMA-RE that take into account the increase in the number of buses and service km
after February 2007\. A very recent study carried out by the Centro Mario Molina Chile ("Evaluación del Impacto de
Transantiago en la Calidad del Aire de la Region Metropolitana, año 2007", Resumen Ejecutivo, May 2008), which
focused on street-level transport-related pollution, confirmed that the new public transport system has considerably
reduced its NOx emissions as well as the level of ultra-fine particles (which pose a high health risk) and soot; however
because of the increase in private transport this has not led to a reduction of the total NOx concentrations at street level\.
The study also concluded that the reduction in NOx likely means a reduction in the responsibility of public transport in
the formation of nitrates, an important component of the secondary PM present in Santiago\. The study does not provide
overall values for the current PM10 and NOx emissions of the public transport system\. It is likely that the study
underestimates the current public transport emission reductions since an important part of the fleet was renewed after
its completion\.
58
Dimensions Supervision Current Status Achievement of Expected Outcomes to Expected Future
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Argentina and consequent use of more
polluting fuels, growth in industrial
activities, and winter weather conditions\.)
Noise None No data on post-Transantiago noise levels are There is anecdotal evidence that the new Once the fleet renewal
available\. Nevertheless, noise reductions were public transport system decreased its noise program is completed,
reported in the press in the period immediately levels\. the final fleet
after the launch of the new system and in management system is
major avenues, such as O'Higgins, it is now operational and the
possible to converse without shouting, which system is fully stabilized
was not the case before\.74 (the latter two are both
expected to reduce the
number of buses serving
the system), some
additional noise
reductions are likely\.
(c) TO REDUCE TRANSPORT COSTS AND INCREASE TRANSPORT EFFICIENCY
User costs None Out-of-pocket costs: The average fare of the It is likely that out of pocket savings and With the full
system in December 2007 was CLP 318 reduction in the cost of externalities offset a stabilization of the
compared to CLP 354 in January 2007 (10% possible higher time cost, but there is no system, user cost in their
lower in real terms) 75\. Additionally, contrary quantitative data to conclude so with travel time dimension is
to what was originally planned, passengers certainty\. likely to further
who transfer between different modes are not decrease; however, the
charged for the additional portion of their current out of pocket
journey, except for transfers from the bus to savings may somewhat
the subway during peak hours\. This especially shrink due to future fare
benefited those passengers who had previously increases/differentiation\.
to transfer (17\.3% of all passengers and mostly
low income people) and are now paying
approximately 50% less\.
Costs of externalities directly borne by
users: The reduction in bus-related air
pollution, noise and accidents means fewer
medical expenses and financial losses due to
health problems\. No quantitative data are
available\.
Generalized cost of travel: Even if in-
vehicle, overall travel times and waiting
decreased with respect to the ex-ante situation,
the generalized cost of travel of users may still
be slightly higher due to the higher value
generally attributed to transfers\. No
quantitative data are available\.
Government None As is the case with many transport systems There is no quantitative data to conclude The current deficit is
fiscal costs which attempt to minimize the financial whether or not the costs of the system are expected to decrease
(Society as a impact on passengers by offering low fares balanced by increased government with the aggressive
Whole) with high service, so is the case of collection and savings (through campaign against fare
Transantiago\. Providing such a service at a externalities) to society or how the present evasion (estimated at
low cost does have a fiscal impact - the situation compares with the ex-ante around 20% for bus
74
Additionally, an ex-ante study (Strategic Environmental Analysis of the Public Transport Program, Draft Final
Report, March 2008) shows that the new bus system (if implemented as originally planned) would have reduced the
percentage of streets in Santiago with the highest noise levels (from 75\.0 90\.0 dBA) by 13%\. The overall reduction of
noise would have been 1\.7 dBA\.
75
Since then, a fare increase of about 5% was applied, but no calculation of the average fare was available\.
59
Dimensions Supervision Current Status Achievement of Expected Outcomes to Expected Future
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Targets (Page 31-
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government is currently supporting this service situation\. services in March
by covering part of the operating deficit76\. 2008), through network
However, this outflow is weighed against \. optimization and fare
government benefits from the new system, increases\. Under the
such as higher tax revenues and social security current financing
contributions from the formalization of the structure, normally
sector, and non quantifiable externalities such richer students are
as improved safety, reduced medical subsidized by the public
requirements, and increased productivity\. transport users, which
Since no quantitative data exist, both due to are mostly the poorer
the nature of the pre-launch system and the segments of the
nature of the externalities, it is impossible to population 77\. Therefore,
accurately evaluate the ultimate fiscal impact according to the draft
on the government\. law on public transport
subsidies submitted to
Congress, a significant
part of the future
subsidies would come
from government
compensations for
reduced student fares\.
Additionally, according
to projections of the
IADB, considering fare
increases, the current
deficit is expected to
decrease by half by
201478\.
Costs of None It is assumed that the public transport There is no data to conclude whether or not In the long run, with the
public operators experienced operating cost savings the operating cost savings offset the cost of new biddings of the
transport (e\.g\. cheaper vehicles, reduced fuel costs professionalization and formality\. public transport
operators because of fewer, larger and less fuel intensive concessions, the cost of
vehicles, better maintenance), but there are public transport
now additional costs due to the operators may go down\.
professionalization of the sector (e\.g\. taxes,
professional management, training, regular
maintenance of vehicles, new technologies)\.
Moreover, the sector internalized the cost of
informality previously borne by the
owner/drives or the society as a whole (e\.g\.
long working hours, lack of tax revenue and
76
It is necessary to point out that the current operating deficit "pays" for the political decision to freeze user fares until
the full stabilization of the new system (for two years) and the technical difficulties to apply the original fare structure
(i\.e\. differentiated fares for feeder and trunk services and charging of returns)\. If the original fare increase mechanism
envisaged in the concession contracts would have been maintained, the user fare in 2008 would have been about 80%
higher (at around CPL 700 or US$ 1\.4) and would have offset the operating deficit\. In February 2009, there was a fare
increase of close to 5%\. In addition, input costs have decreased by 8,1% during the first semester of 2009\. Since
nominal fares have remained unchanged, this is equivalent to an increase of 5% in real fares\. Therefore, the revenue
shortfall is gradually being corrected, and it is expected that in the next few years the average fare of the new system
will converge to the average fare of the previous system\. For cost and revenue projections see IADB document "Ley
sobre Subsidio Nacional para el Transporte Publico Remunerado de Pasajeros", June 5, 2008\.
77
Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can be Done?, Nicolás Estupiñán,
Andrés Gomez-Lobo, Ramón Muñoz-Raskin, Tomás Serebrinsky, Policy Research Working Paper 4440, The World
Bank, 2007\.
78
Proyecto de Ley sobre Subsidio Nacional para el Transporte Publico Remunerado de Pasajeros, June 5, 2008\.
60
Dimensions Supervision Current Status Achievement of Expected Outcomes to Expected Future
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social security, and no vehicle amortization)\.
Transport To exclusively Segregated busways ready: 60 km (End of By significantly exceeding the project target With the conclusion of
Efficiency dedicate to public 2008)79 in terms of segregated busways, the construction of the
transport at least 19 Acceleration of the segregated busway accelerating the construction of the most new segregated
km of lanes on the construction program: a total of 90 km to be important remaining busways, and busways, these
bus trunk routes completed by the end of 2009 (which is dedicating some of the main thoroughfares efficiency benefits will
network about the size of the subway system) and of the road network during peak hours or be fully available\.
225 km by the end of 2014 some lanes permanently to public transport,
Segregated lanes permanently dedicated to the GoCH allocated road space efficiently
public transport: 77 km and clearly showed its priority for energy
Streets dedicated to public transport during and space efficient transport modes\.
peak hours: 30 km
Slight increase in bus commercial travel
speeds from 18 km/hour before
Transantiago to 19 km/hour in April 2008)
To reduce the Appraisal: 7,700 buses With the introduction of the new trunk and It is likely that there will
number of buses by December 2007: 6,400 (17% reduction) feeder system, public transport supply was be additional reduction
20% in relation to rationalized even though the reduction in in bus-km when the
the pre-Transantiago bus-km was 27% lower than expected\. The final fleet management
situation regulation of taxi supply reduced the system is operational
To reduce the Appraisal: 53\.9 million monthly bus-km number of taxis circulating without and all infrastructure is
number of bus-km April 2008: 42 million monthly bus-km passengers and eliminated the competition in place\.
by 30% in relation to (22 % decrease) between taxis and larger public transport
the pre-Transantiago vehicles\.
situation
To adapt a policy to The number of taxis permitted to circulate in
control the number Santiago was regulated and all taxi services
of taxis in Santiago were bid in 2004\.
To complete a 5 concessions for trunk routes and 9 Since public transport services are now
competitive bidding concessions for feeder service areas were provided by a limited amount of large
process for a limited awarded through open competitive bidding80\. companies, which manage public transport
number of big size services in a professional way, using fewer,
concession larger and less fuel intensive vehicles,
contracts, for feeder maintaining them better, etc\., it is expected
and trunk services that operating costs savings through
(competition for the economies of scale and better supply
market instead of in demand match have occurred (but no
the market) quantitative data are available)\.
(d) TO IMPROVE COORDINATION OF PUBLIC SECTOR ACTIVITIES
To create an The Committee of Ministers for Urban The coordination of public sector activities With the creation of the
institutional Transport in Santiago and Transantiago-SE as improved since within the Committee of metropolitan transport
mechanism to its executive secretariat were created in 2002\. Ministers public transport decisions are authority (which seems
implement An international seminar on metropolitan taken jointly by several ministries and likely), the coordination
Santiago's Urban transport authorities was organized in 200681 agencies\. Nevertheless, this implementation of transport and other
Transport Plan and a draft law to create a metropolitan mechanism is ideal and the creation of a public sector activities is
transport authority for Santiago was submitted metropolitan transport authority is desirable\. expected to further
to Congress on May 17, 2007\. improve
79
This does not include the partially segregated Alameda corridor of 7 km and about 4 km of road connection\.
80
The concession for the trunk service no\. 3 expired, was temporarily extended, and is currently under bidding\. A study
is ongoing to assess if it is necessary to bid the feeder service area no\. 10 (the central area of Santiago) because in
September 2007 it was decided to extend some of the routes of the adjacent feeder service areas until the city center to
reduce the number of transfers in the system\.
81
Financed through the TAL\.
61
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To establish a A fleet monitoring center was established A specific purpose entity was created, and
Control and within Transantiago-SE to monitor and ensure the concession contracts (in their modified
Technical Inspection compliance with concession contracts\. This versions) are now strictly enforced\. Hence
Department for center is assisted by the Inspection- the first indicator was complied with and the
concession contracts Supervision Department of the Transport expected result achieved\.
Ministry (Departamento de Fiscalización del
Ministerio de Transportes), which supports
Transantiago-SE in the field inspections, and
various consulting firms\. At the moment of the
preparation of this ICR the complete bus fleet
was equipped with a GPS and the fleet control
system was working, so the compliance with
the operational programs could be checked in
real time\.
To set up A technical committee for infrastructure was The responsibilities of the technical It is possible that the
coordinated set up to coordinate the implementation of the committee for infrastructure are limited to metropolitan transport
transport and infrastructure necessary for Transantiago\. This the coordination of the infrastructure authority will get a
infrastructure committee is composed of SERVIU, necessary for Transantiago, hence the stronger role in
planning Transantiago, MINVU, Secretaría Regional indicator was not fully met\. Nevertheless, coordinating transport
mechanisms at the Ministerial of MINVU, SEREMITT, the stated objective in the PD of making a and infrastructure
metropolitan level SECTRA, Concession Department of MOP, first step towards decentralization and planning issues\.
and Mideplan\. Additionally, a draft law for the coordination of urban transport policies at
creation of a metropolitan transport authority the metropolitan level was achieved\.
was submitted to Congress in 2007, which Overall, it is also likely that with this
envisages a certain degree of influence of the committee the coordination of public sector
metropolitan authority in urban planning activities improved\.
matters if they are related to public transport\.
To design multi- No multi-sector coordination mechanisms The indicator was not fully complied with,
sector coordination were designed, but MTT participated in but the participation of MTT in the revision
mechanisms, preliminary working groups (mesas de trabajo of land use instruments may contribute to
including at least a preliminares) to revise land use planning the expected outcome of reducing the
coordination instruments, such as the General Law on likelihood of contradictory land-use and
agreement among Urbanism and Construction and the "Plan transport policies\.
key agencies, Regulador Metropolitano" for Santiago\.
including MINVU,
Transantiago, the
municipalities
Additional Supervision Status Achievement of Expected Results
Indicators
General Urban Transport
To adopt an Urban Transport The plan was approved in March 2002, and Transantiago was With the approval of the plan the expected result of
Policy for the Santiago fully implemented in February 2007, but had huge start-up clearly defining the priorities and policy goals in the urban
Metropolitan Area through problems and shortcomings\. transport sector (i\.e\. to keep public transport modal share
approval by the Committee of stable) was achieved\.
Ministers (by March 2002)
To secure executive This was partially achieved: Bidding documents for bus Through the inclusion of this obligation in the bidding
endorsement of congestion services (article 2\.9) include an obligation for the GoCH to documents the GoCH took the first step in complying
pricing as a way to co-fund submit to Congress a draft law to rationalize car use if feeder with this indicator\. However, the expected results of
public transport in case fares services fares were higher than CLP 360 (readjusted)\. Such a making road pricing applicable to cushion potential fare
reach a predefined maximum law was already submitted to Congress in 1997 and is still increases, internalizing external costs related to car use
level (feeder route pending approval\. A study on congestion pricing is currently and reducing congestion go beyond the reach of this
fares>CLP$360) (by in its final stage\. This study could be the basis for a new draft indicator\. Nevertheless, the conditions in Santiago seem
November 2004) law on congestion pricing\. currently rather favorable for a possible new law on
congestion pricing\.
62
Additional Supervision Status Achievement of Expected Results
Indicators
Elaborate proposals for the This was partially done through a study that looked at As in the previous case, the expected results had no direct
recovery of road space freed in mobility and accessibility measures for the recuperation of causal relationship with the indicator since to elaborate
the process of urban transport the central area of Santiago82\. The study led to the proposals does not necessarily mean that they will be
modernization, especially in development of a master plan with recovery proposals and the implemented\. Hence it was unrealistic to expect urban
the city center (without preparation of engineering designs for some of the proposals environment improvements and non-motorized transport
deadline) considered as priority according to the selection criteria of the and public space promotions as a result of this study\. This
study\. However, these priorities do not match with the current said, since appraisal many measures have taken place to
political priorities of the different municipalities of improve the urban environment and foster non-motorized
Santiago's, except for the pedestrianization of a central transport in Santiago, such as the improvements around
avenue in Miraflores, which partly coincides with one of the the main square of the municipality of Ñuña and the
proposals of the study\. construction of more than 120 km of bikeways\.
Regulatory Framework
To offer concessionaires Envisaged in the bidding documents for bus operations of With the provision of this minimum revenue guarantees,
minimum revenue guarantees November 2004 (articles 2\.9, 3\.4\.4 and 3\.5\.2\.1\.2)\. the expected result of reducing the risk level perceived by
that cover between 60 to 85% operators was achieved and no concessionaire charged a
of the required payment, i\.e\. risk premium, which would have negatively impacted fare
all operating costs (plus debt levels\. However, this was not sufficient to ensure the
service in the case of financial sustainability of the system, which is currently
concessions requiring new jeopardized: (a) due to the lack of readiness of the
vehicles)\. Said guarantee, if technical components at the moment of the launch of
called upon, is expected to be Transantiago fares were set at a lower level than originally
implemented through fare planned and kept unchanged until February 2009, (b)
increases (by end of 2004) there is a high level of fare evasion in buses, (c) the
system is more costly than originally expected (e\.g\. more
buses, enclosed pre-paid areas, more vehicle-km), and (d)
passenger demand for trunk bus services is lower than
expected\.
To concession through a The fare box revenue collection and administration was The three indicators have been complied with and the
competitive process farebox contracted on July 28, 2005 (AFT), and the public transport expected results were achieved\. Fare integration through
revenue collection and information and management center was contracted on smart cards (and the installation of enclosed pre-payment
administration and the public May 26, 2006 (SIAUT)\. areas) eased/speeded up boarding\. Fare integration also
transport information and opened up the subway system to all public transport users
management center (more than doubling of subway passengers) and benefited
To implement full fare Full fare integration started on February 10, 2007 and the especially users who live in remote areas and used to take
integration, which will ease initial problems and shortcomings were resolved\. more than one bus and pay several fares\.
transfers among bus routes and
with the metro system Rules set in clauses 28 to 38 of the contract with AFT\.
To set rules to share farebox
revenues between public
transport services providers
and infrastructure
concessionaires (by end of
2006)
Public Participation
Formal commitment of MOP The formal commitment was sanctioned through the The indicator has been complied with, and the objective
and MTT to citizens' Instructivo Presidencial of 2002, through which the of promoting participatory approaches in government
participatory process government stated its interest in having efficient channels and sponsored infrastructure projects was achieved (even
sanctioned via Presidential mechanisms of information and participation in government though these approaches do not yet seem sufficiently
Instruction (by end of 2002) programs and actions that benefit citizens and communities\. efficient)\.
For the Urban Transport Plan for Santiago, the Instructivo
Presidencial establishes a formal compromise of the MOP
and MTT to engage in participatory processes\. Additionally,
82
Financed through the GEF Sustainable Transport and Air Quality Project for Santiago (P073985)\.
63
Additional Supervision Status Achievement of Expected Results
Indicators
the Agenda Pro Participación Ciudadana 2007 envisaged a
number of specific obligations of the Transport Minister in
relation to citizens' participation under Transantiago\.
To organize (a) continuous This formal commitment sanctioned at the presidential level The indicator was complied with, but the intended
technical discussions with the led to a serious of participatory processes, including among outcomes of "including citizens' participation in
participation of the 34 others: Transantiago's design" and "dialoguing with all
municipalities; (b) workshops Regular technical discussions with the 34 municipalities of stakeholders" were not fully achieved\. The participatory
with NGOs; (c) at least 50 the metropolitan region have taken place (especially after activities that took place during the design process were
public workshops to assess the start-up problems) to discuss topics such as: route more informative than participatory and considered as
user's satisfaction (without design, bus stops, corridors, etc\. insufficient\. This is particularly evident as far as fine-
deadline) Public meetings with the citizens of each municipality and tuning the network design and preparing the users for the
specific meetings with shop keepers, collective taxi owners, new system are concerned\. It is also unlikely that
and other stakeholder Transantiago dialogued with all stakeholders\.
Office for Information, Complaints and Suggestions
(Oficina de Información, Reclamos y Sugerecias - OIRS)
at ministerial level that receives complaints from the public
and answers to requests for information
Transantiago Informa (SIAUT) has a call center/website
through which they provide information, receive
suggestions and handle complaints of the public
Workhops with NGOs, especially between 2003 and 2005,
mainly to inform them about Transantiago and get their
input for the design, presentations of Transantiago in
neighborhood organizations, universities, schools and
during public events
Special attention during the design and implementation of
Transantiago given to people with reduced mobility, people
affected by the infrastructure works, public transport
musicians, and street and market vendors
To organize (a) press A press conference to disseminate Transantiago and initial With the organization of a press conference and the
conference to publicize workshop to launch Transantiago took place in December launch of workshop this indicator was complied with and
Transantiago; and (b) 2003\. Since mid-2006 Transantiago Informa (SIAUT) has this certainly contributed somewhat to the expected result
launching workshop for been disseminating information on Transantiago through of disseminating information about Transantiago\.
Transantiago (by end of 2003) media campaigns, website, call center, 10 information
centers, and informants at bus stops, stands during events, in
a special office in all 34 municipalities, etc\.
Executive branch to send the Draft law on public participation sent to Congress in June The draft law was sent to Congress, but it has so far only
draft law on public 2004, approved by the House of Representatives on October been approved in the House of Representatives\. Hence,
participation to Congress (by 31, 2007 and currently for approval in the Senate\. the expected result of promoting and strengthening public
end of 2005) participation at the national level through the approval of
such law has not yet been achieved\. Nevertheless, it is
unrealistic to expect that sending a draft law to Congress
would strengthen public participation\.
Land use
Preparation of a draft law that Draft law not established\. The indicator was not complied with and the result of
establishes incentives for slowing down urban sprawl and densification of the areas
efficient location of housing, well served by public transport (which should in turn lead
schools, and activities in to shorter trips, increase in public transport modal share,
metropolitan urban areas (by and to less contamination and congestion) was not
end of 2006) achieved\. However, again it is unrealistic to expect that
this can be obtained simply though the presentation of a
draft law\. Additionally, slowing down of urban sprawl
and densification are long term effects\.
Social Dimension of
Transport
64
Additional Supervision Status Achievement of Expected Results
Indicators
To execute a program to University "Alberto Hurtado": in 2003 training of 93 bus The requirements of the indicator were met and two of the
promote formal companies, owners and 42 drivers intended outcomes were fully achieved (facilitating the
and to offer training and "corporatization" process of the bus industry and ensuring
reinsertion into the labor DICTUC (Department for Engineering of the Catholic regular working hours for bus drivers, eliminating their
market for current public University of Chile): in 2004 training of 320 drivers stress of having to attract a large number of passengers
transportation drivers that 1st semester of 2006: MTT created the Labor-Social Support and benefiting them from current labor laws)\.
request it, to facilitate Unit, which elaborated a social mitigation program for public Regarding the third intended outcome, mitigation of social
reinsertion into the labor transport workers aiming at facilitating the reinsertion of impacts for displaced bus workers, the available
market (by end of 2006) public transport workers into the labor market and their information does not permit to judge how effectively this
access to the generic social benefits (unemployment payment, outcome was achieved\. As a matter of fact, the measures
health care, etc\.)\. Among others, this unit has carried out the adapted by the GoCH came relatively late; however, since
following training activities: the new system needed many more workers than
For trade union representatives and bus owners in the originally expected (thus it is likely that it has absorbed
development of a business plan and support in the most of the available labor force) and considering that the
implementation of the same press did talk very little about this issue (in general, the
For workers over 55 in setting up their own business press was and still is very hard on Transantiago), it is
Retraining for workers between 40 and 54 and for those concluded that the social impact of this reform was
younger than 40 to acquire training to obtain the new relatively low\.
driving license necessary for Transantiago
65
Annex 8\. Milestones Of Project Implementation And The Future Outlook
Milestones in the Bank Project and the Implementation of Transantiago
The following table provides an overview of the principal activities in the implementation
of Transantiago:
March 2002 Approval of the Santiago Urban Transport Plan by the Committee of Ministers
2002 Implementation of some immediate measures to improve urban transport, consisting of the introduction of exclusive
bus lanes during morning peak, reversible streets for cars, etc\.
2004 Award of 14 concession for the operation of the bus services (5 trunk and 9 feeder service packages)
2005 February Award of a concession to AFT for the smartcard, fare collection/clearing system, and communication, fleet control
2007 (preparation) and management systems and other minor technical equipment in buses (passenger counting system, alarm button,
cameras, etc\.)
BOARD APPROVAL (July 2005)
Start of operations by the new operators on the old bus route network (without fare integration between buses and
the subway) and under the old fare system
Retirement of some of the old buses and introduction of part of the new fleet
DISBURSEMENT OF FIRST DPL (January 2006) AND LIMITED INTEREST IN SECOND DPL
Award of the concession to SIAUT for the user information and customer service system (May 2006)
Gradual completion of part of the segregated bus lanes (19 km by December 2006)
Pavement rehabilitation and the improvement of bus stops/shelters (about 3,000 by February 2007)
Gradual completion of part of the transfer stations
Inauguration of about 40 km of new subway (the total extension of the subway in 2006 was 85 km)
Creation of a Labor-Social Support Unit for public transport workers (May 2006)
Start of the information campaign carried out by SIAUT (August 2006)
Installation of some of the ticket validators in buses and testing of smart cards (September 2006 February 2007)
February 2007 full Introduction of new city-wide trunk and feeder network, reducing overlaps between bus routes but increasing the
implementation number of transfers
(entrada en regimen) Introduction of a smart card as unique means of payment for buses
Introduction of fare integration between buses and the subway system
Retirement of more old buses
Main urgent Installation of the remaining ticketing equipment in buses
measures between Urgent measures in the subway systems to cope with overcrowding ("Clone" buses on the same routes as the
February 2007 and subway system, passenger flow management, additional trains, express trains, station expansion, etc\.)
May 2009 Introduction of some point to point connection served by express buses
Gradual introduction of additional buses (totaling to 6,400 by December 2007)
Gradual introduction of pre-payment areas (totaling to 155 by May 2009)
Gradual construction of additional bus stops/shelters (totaling to 8,600 by December 2007)
Resignation of the Transport Minister (April 2007) and approval rating of the President decreases
Creation of a Parliamentary Committee to investigate on the causes of Transantiago's problems and establish
responsibilities (the final report was issued in December 2007)
Start of operation of the "La Cisterna" intermodal station (May 2007)
Sending a law to Congress to create a Metropolitan Transport Authority (May 2007)
Approval by Congress of a law to subsidize the system in 2007 (to avoid fare increases)
Fixing of the ticketing/payment/clearing system (May July 2007)
Renegotiation of the contracts with operators to introduce more buses, increase incentives to comply with the
contractual obligations and introduction of flexibility in the network design (February 2007 ongoing)
Modification/extension of existing bus routes and introduction of new services (over 300 modifications by the end
of 2007)
Provision of operational support to operators through a team of experts and fixing most of the problems with the
fleet control system
Resignation of the Coordinator of Transantiago and nomination of an interim coordinator (August 2007)
Introduction of additional exclusive lanes for buses and dedication of some of the main thoroughfares to public
transport during peak hours
66
Improved efforts in terms of enforcement (e\.g\. use of GPSs to control compliance with frequencies, use of cameras
and manual enforcement (300 inspectors and 80 police agents) to ensure compliance with dedicated bus lanes)
Approval of a loan in the amount of US$ 160 million to cover the deficit of Transantiago during the first months of
2008
Renegotiation of the contract with AFT to link the payment to the degree of compliance with the contractual
obligations, the creation of an expert panel to evaluate this compliance, the creation of a technical committee of
operators to advise on the technology (in particular final fleet management system)
Nomination of a new coordinator of Transantiago (February 2008)
Operation of the Santa Rosa busway (11 km March 2008)
Submission of a draft law to Congress to create a stable subsidization mechanism for public transport (April 2008)
Testing of the provisional fleet management system (July 2008)
Fare evasion campaign (July 2008)
Intensifying enforcement of concession contracts and segregated bus corridors
Introduction of measures to decrease crowding in the subway (e\.g\. additional extension of the operating hours early
in the morning and late in the evening as well as during weekends, express services with limited stops, investments
in stations to increase capacity, purchase of new trains to arrive in September 2009)
Use of the constitutional fund to cover the operating deficits of the system
Fine-tuning and optimization of bus service provision
Small fare increase (about 5%) and greater differentiation between the fares of the subway and the bus system
during peak hours (February 2009)
Future milestones Introduction of the remaining technical equipment in buses (communication system, passenger counting system,
alarm button, cameras, etc\.)
Approval of the law on public transport subsidies
Operation of the final fleet management system (end of 2010)
Introduction of greater flexibility in bus operations by permitting feeder operators to cross the limits of their
concessions and trunk line operators to operate on route originally not defined as trunk routes
Likely further fare increase (and possible also payment for different trip segments and reduction of time window
during which passengers are allowed to transfer for free)
Extension of the subway system, investment in rolling stock, expansions of a number of stations, and other
operational improvements
Gradual conclusion of fleet renovation
Creation of a metropolitan transport authority
Gradual operation of additional segregated busways (to total 225 km by 2014 and the remaining program by 2020
or later)
Latin America Comparison of Public Transport Systems
City Santiago Sao Paulo Brasilia Bogota
Integrated Bus and subway Municipal bus and subway No integration between TransMilenio (the rest
transport modes (inter-municipal are not municipal bus, inter- of the city is not
integrated) municipal bus and integrated)
subway
Number of daily 6 million 13 million approximately 950,000 in 2000 Public transport system
public transport (360 million monthly as a whole: 5\.8 million
trips boardings) of which 65% TransMilenio: 1\.4
(boardings) by municipal bus and 35% million
by rail mode
% of journeys 50% 45% Main municipal bus Public transport system
that imply at service (no information as a whole (not
least one available for other integrated): 19%
transfer modes): 21% TransMilenio: 51%
Average fare CLP386 (US$ 0\.7)* R$ 2\.45 (US$ 1\.46) R$ 3\.11 (US$ 1\.85) Not available
per trip (only
passengers
paying full fare)
Integrated fare CLP400 (US$ 0,76) for bus, R$ 2\.3 (US$ 1\.37) for bus- Not available TransMilenio: COP
subway, bus-bus or bus- bus integration (up to 4 1400 (US$ 0,8)
subway integration during vehicles)
normal off-peak (up to 4 R$ 3\.65 (US$ 2\.17) for
67
City Santiago Sao Paulo Brasilia Bogota
vehicles/modes), CLP 380 bus-bus integration (up to
(US$0\.69) early morning or 4 vehicles) and one
late in the evening in the additional trip leg on the
subway, and rail mode
CLP460 (US$ 0,83) for the
subway or bus-subway
integration during peak (up to
4 vehicles/modes)
Period of 2 hours 2 hours The ticket is valid as The ticket is valid as
validity of the long as the user does long the user does not
integrated fare not leave the leave the TransMilenio
bus/subway system
Operating Substantial operating deficit In 2007 R$ 392 million None for bus services, None
deficit (US$ 233 million) for the operating subsidies for
bus system only subway
Average 8\.2 minutes in March 2009 7 minutes 8 minutes (for main Public transport system
walking time to according to the DICTUC municipal bus service) as a whole: 5\.4 minutes
bus study, 16 minutes in March
stop/subway 2008 according to the L&D
study, and 2\.7 blocks in
March/April 2009 according
to the Collect GfK study,
which corresponds to
approximately 300 m or
about 6 minutes
Average in- 30\.2 minutes in March 2009 60-65 minutes 49 minutes (for main Not available
vehicle time according to DICTUC study municipal bus service)
and 37 minutes in March
2008 according to L&D
study
Average 6 minutes in March 2009 Not available 68% of users wait more Public transport system
waiting time according to DICTUC study than 15 minutes at a bus as a whole: 8\.6 minutes
(only 6\.4% of the users wait stop (for main (per vehicle)
more than 10 minutes at municipal bus service)
stops), and 19 minutes
according to L&D study
Data sources Transantiago-SE, DICTUC SPTRANS Sao Paulo Pesquisa Domiciliar Plan Maestro de
study (see footnote 62), L&D Transporte: 2000, Movilidad para Bogotá
study (see footnote 64), and Brasilia: CODEPLAN D\.C\. 2005
Collect GfK study (see footnote 2002: Pesquisa de
56) Satisfação do Usuário do
Transporte Público do
Distrito Federal 2007
*This does not include the 5% average fare increase in February 2009\.
Outlook
1) Over the last two years the GoCH has made impressive efforts to fix the start-up
problems and improve the system, which is currently very close to being stabilized\.
Nevertheless, there are still some challenges ahead\. The issue of the operating deficit will
have to be solved\. Many of the initial measures, such as the introduction of new services
or the location of prepayment areas, had to be taken in a hurry to solve the most urgent
problems\. These measures will have to be revisited and fine-tuning is necessary\. The
leadership of Transantiago is currently in the hands of the Transport Minister to whom
the President provided full powers\. However, this is a temporary solution and the creation
of an autonomous entity to manage the system is an important undertaking\. There is a
need to further cut down on fare evasion in buses and ensure service regularity\. The final
fleet management system will only be ready by the end of 2010, and some of the
68
infrastructure, notably the segregated busways that will reduce travel times and further
improve the level of service, will only be ready by 2014 or at a later stage\. An overview
on the situation of public transport in Santiago before Transantiago, today and the future
outlook is given in the table below\.
Situation before Transantiago Current situation Outlook
Steady and steep decrease of public No current data on public transport modal The ongoing improvements in public transport
transport modal share (83\.4% of share is available but it is likely that it quality and possible additional measures, such
motorized trips in 1977, 70\.5% in continued to decrease as congestion pricing, may stabilize public
1991 and 51\.9% in 2001) transport modal share (or even increase it)
Very fragmented institutional Committee of Ministers for Urban The creation of a metropolitan transport
responsibilities for public transport Transport in Santiago responsible for the authority is likely (the respective law was sent
in Santiago and a lack of inter- implementation of Transantiago to the Congress in May 2007)
institutional coordination Transantiago-SE, its executive secretary,
with very limited powers and autonomy
and inadequate inter-institutional
coordination
Transport Minister currently with full
powers to stabilize the new system
Competition for passengers in the Competition for the market The introduction of an additional degree of
market (street) (competitively tendered concessions) "controlled" competition, especially for feeder
services, is possible
Only services crossing the city All bus services concessioned to 5 trunk Renewal of concessions
center were competitively tendered, and 9 feeder service providers
while the others were provided in a
situation of free competition
Services provided by about 3,000 Services provided by 10 companies, Some concentration in this market through
individual operators or small professional management of bus acquisitions or re-bidding of concessions is
companies, informality, very strong operations, dismantling of bus lobby but possible
bus lobby still relative large negotiation power of
each of the companies
Significant overlapping of bus Rationalized the bus network, reduced Further reductions in the overall bus-km are
routes and their concentration along overall bus-km, and less routes passing likely once the fleet management and the new
the main roads of the city center through the city center segregated busways are in place
(80% of bus routes passed through
the seven main arteries of the city)
Very long bus routes (63 km on Shorter bus routes (average 32\.2 km,
average) trunk routes 36 km, feeder routes 18\.6
km)
Oversupply of bus services mainly Improved match between supply and Further improvements in the match between
during off peak hours demand supply and demand are likely
Rapidly increasing bus fares (more Lower average fares than before the Fares are expected to increase but without
than 100% between 2000 and 2006) launch of Transantiago and fare freeze jeopardizing affordability\. It is also likely that
between February 2007 and February they will be differentiated according to trip
2009 segments
No fare evasion (but drivers were High levels of fare evasion in buses Fare evasion is expected to be further cut
not handing in all revenues to the (about 20% in March 2008) down with strict enforcement
vehicle owners)
No operating deficit Operating deficit A stable mechanism to subsidize public
transport operations will be devised
Large and polluting bus fleet Reduced (more than 1,000 vehicles less) Bus fleet renewal will be completed by 2010
and renewed bus fleet (about 60% new
vehicles)
High levels of bus-related air Reduced bus-related emissions and noise Further emission reductions are expected with
pollution and noise the completion of the fleet renewal program,
the use of filters, and the operation of the
additional busways
High number of accidents Substantially fewer accidents involving Accidents may further go down when the new
buses (for accident reduction study see busways are introduced
Annex 7 (a) Safety)
69
Situation before Transantiago Current situation Outlook
High levels of congestion High (possible even higher) levels of Talks about the introduction of congestion
congestion due to increased car pricing and hence possible decrease in
ownership prompted by the favorable congestion
economic situation
Heavy bus congestion Reduced bus congestion With the operation of the final fleet
management system and the new busways bus
related congestion will further decrease
Low commercial speeds of buses Slight increase in commercial speeds of Additional increases in commercial speeds
(18 km/hour) buses (19 km/hour in April 2008) with the implementation of the final fleet
management system and the segregated bus
infrastructure
Very ample coverage Slightly more ample coverage Additional adjustment to bus routes may
further improve coverage
Mostly point-to-point services with Trunk-feeder network completed by point
few transfers (only 17\.3% of all to point services with an increase in the
public transport trips, including the amount of trips that require transfers
subway, required a transfer) (from 17\.3 to 50%)
No integration between buses and Full fare integration between buses and Improvement of operational and physical
with the subway system the subways system, still incomplete integration through the new fleet management
physical and operational integration system and improved transfer infrastructure
Underutilized subway system Doubling of the length of the subway Possible additional extensions of the subway
system (from 46 to 85 km) and its full system, injection of new trains and
utilization (from 820,000 to 2,300,000 improvement of the current system to improve
passenger per working day) service quality
Drivers working 12-15 hours a day, Regulated working times and conditions, The provision of some incentives to drivers (a
no regulated working times and fixed salaries variable element), mainly to curb down fare
conditions, informality, wages evasion and improve service quality to
depending on the number of tickets passengers, is possible
sold
70
Annex 9\. Policy Areas and Building Blocks of Transantiago
Timing for the Implementation of the Building Blocks of Transantiago
Timing
Policy areas supported Planned at Real
and main building appraisal
blocks of Transantiago
2005 2006 Launch of March- May- July- Sept- Nov-Dec 07 Jan- March- May-July 08 August- Nov 2008 Outlook
system Feb April 07 June 07 August Oct Feb April 08 October
07 07 07 08 08
1\. PUBLIC TRANSPORT PRIORITIZATION
Construction of 19 km of By launch 15\.6 km 60 km plus
segregated busways of system temporary
preferential
treatment of
PT
Construction of 240 km of After 90 km by 2009
segregated busways launch of and 225 km by
new system 2014
2\. GROSS-COST CONTRACTING OF BUS OPERATIONS
Concessioning of public 2005 Concessioned
transport service provision
to 14 operators
Incumbent owner- By launch Incumbent
operators function as of system operators
structured companies function as
structured
companies
3\. PUBLIC TRANSPORT FLEET RENEWAL
Fleet renewed Gradually Gradually as planned Expected to be
starting in continued as
2005 planned
4\. ROUTE NETWORK REDESIGN
Construction of 2 By launch 1 2 in medium-
intermodal stations of system Intermod\. term
station
Bus stops and transfer By launch Transfer All stops
station of system stations, but available
limited no\. of
stops
Adequate user information By launch Limited user Acceptable Continuous
of system information user improvements
information
5600 buses in the street By launch Less than 6000 6400
of system 4000
Fare integration By launch Fare
of system integration
71
Timing for the Implementation of the Building Blocks of Transantiago
Timing
Policy areas supported Planned at Real
and main building appraisal
blocks of Transantiago
2005 2006 Launch of March- May- July- Sept- Nov-Dec 07 Jan- March- May-July 08 August- Nov 2008 Outlook
system Feb April 07 June 07 August Oct Feb April 08 October
07 07 07 08 08
Introduction of redefined By launch Redefined Adaptation and improvement of network Network
route network (initial 3 of system route revision
month-period to fine-tune network finalized end of
route network envisaged) (initial 2009
problems)
5\. FARE COLLECTION SYSTEM CONCESSIONING AND SYSTEM UNIFICATION
Concessioning of the 2005 Concessioned
provision of the fare
system
Use of Smart cards June 2005 Use of
smart card
Validators in buses By launch Validators
of system in buses
Differentiated fares for By launch Probably in
trunk and feeder services of system 2009
Software to differentiate By launch Software
fares for trunk/feeder serv\. of system ready**
Software to compensate By launch Software
operators for passengers of system ready
carried
Off-board prepayment Not 20-30Prov\. 155 Prov\. Final pre-
areas envisaged Pre- Pre-payment payment areas
payment areas in 2009-10
areas
Adequate user information By launch Limited user Acceptable Continuous
of system information user improvements
information
Fare integration By launch Fare
of system integration
6\. BUS FLEET MGT\./CONTROL SYSTEM CONCESSIONING
Fleet mgt\. system By launch Provisional Final system
functioning of system system ready end 2009
Fleet control system By launch System
functioning of system ready
Concessioning of the 2005 Concessioned
provision of the fleet
control and mgt\. system
7\. INFORMATION SYSTEM CONCESSIONING
72
Timing for the Implementation of the Building Blocks of Transantiago
Timing
Policy areas supported Planned at Real
and main building appraisal
blocks of Transantiago
2005 2006 Launch of March- May- July- Sept- Nov-Dec 07 Jan- March- May-July 08 August- Nov 2008 Outlook
system Feb April 07 June 07 August Oct Feb April 08 October
07 07 07 08 08
Provision of adequate user After the Limited user Acceptable Continuous
information/education launch of information user improvements
system information
Real time user By launch Medium-term
information of system
8\. ASSISTANCE FOR DISPLACED TRANSIT WORKERS
Social mitigation activities 2006 and Implementation of social mitigation activities
for transport workers also after
launch of
system
9\. LAND USE PLANNING AND TRANSPORT POLICY COORDINATION
Coordination mechanism Gradually, Medium to
for transport and land use also after long term
planning in place launch of
system
Grey Blocks indicate triggers
73 | REVIEW |
P078088 | Document of
The World Bank
Report No: 30744
IMPLEMENTATION COMPLETION REPORT
(FSLT-72020)
ON A
LOAN
IN THE AMOUNT OF US$200 MILLION
TO THE
REPUBLIC OF CHILE
FOR A
SOCIA PROTECTION SECTOR ADJUSTMENT LOAN
June 27, 2005
CURRENCY EQUIVALENTS
(Exchange Rate Effective November 23, 2004)
Currency Unit = Chilean Peso
Ch$ 1 = US$ 0\.0016903
US$ 1\.00 = Ch$ 589\.25
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
BPF Conditional cash transfer for participants in Puente Program (Bono de Protección
Familiar)
CAS Country Assistance Strategy
CASEN Chile's national household survey, conducted every two years (Caracterización
Nacional)
DDO Deferred Draw Down Option
DIPRES Budget Office, Ministry of Finance (Dirección de Presupuesto, Ministerio de Hacienda)
Ficha CAS Questionnaire based targeting instrument used to prioritize recipients of social transfers
FOSIS Chile's social investment fund (Fondo Solidario de Inversión Social)
GDP Gross Domestic Product
IBRD International Bank for Reconstruction and Development
IMF International Monetary Fund
MIDEPLAN Ministry of Planning and Cooperation (Ministerio de Planificación)
NGO Nongovernmental organization
OECD Organisation for Economic Cooperation and Development
PASIS Non Contributary, Social Assistance Benefit to Elderly Indigent (Pensiones
asistenciales)
Puente Entry Program to Chile Solidario, Administered by FOSIS
SECAL Sector Adjustment Loan
SUF Non Contributory Single Subsidy to Poor Families (Subsidio Unico Familiar)
VAT Value Added Tax
Vice President: Pamela Cox
Country Director Axel Van Trotsenburg
Sector Manager Helena Ribe
Task Team Leader/Task Manager: Theresa P\. Jones/Truman Packard
CHILE
Social Protection Sector Adjustment Loan
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 8
6\. Sustainability 9
7\. Bank and Borrower Performance 10
8\. Lessons Learned 11
9\. Partner Comments 12
10\. Additional Information 12
Annex 1\. Key Performance Indicators/Log Frame Matrix 13
Annex 2\. Project Costs and Financing 18
Annex 3\. Economic Costs and Benefits 19
Annex 4\. Bank Inputs 20
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 21
Annex 6\. Ratings of Bank and Borrower Performance 22
Annex 7\. List of Supporting Documents 23
Annex 8\. Partner Comments - Informe de Evaluación 24
Project ID: P078088 Project Name: Social Protection Sector Adjustment
Loan - DDO
Team Leader: Theresa Jones TL Unit: LCSHS
ICR Type: Core ICR Report Date: June 27, 2005
1\. Project Data
Name: Social Protection Sector Adjustment Loan - DDO L/C/TF Number: FSLT-72020
Country/Department: CHILE Region: Latin America and the
Caribbean Region
Sector/subsector: Other social services (75%); Central government administration
(10%); General education sector (5%); Health (5%); Sub-national
government administration (5%)
Theme: Social risk coping (P); Poverty strategy, analysis and monitoring (P);
Participation and civic engagement (S); Administrative and civil
service reform (S); Law reform (S)
KEY DATES Original Revised/Actual
PCD: 02/26/2003 Effective: 12/15/2003 01/08/2004
Appraisal: 09/22/2003 MTR:
Approval: 11/25/2003 Closing: 01/06/2007 04/29/2004
Borrower/Implementing Agency: GOVERNMENT OF CHILE/MIDEPLAN; DIPRES
Other Partners:
STAFF Current At Appraisal
Vice President: Pamela Cox David de Ferranti
Country Director: Axel van Trotsenburg Axel van Trotsenburg
Sector Manager: Helena Ribe Christopher Chamberlin
Team Leader at ICR: Theresa Jones & Truman Theresa Jones and Truman Packard
Packard
ICR Primary Author: Jorge C\. Barrientos
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: HL
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The development objectives of the Chile Social Protection Sector Adjustment operation were to support
efforts by the Government of Chile to improve the access of the neediest households to the social protection
system, and increase the effectiveness of this system in alleviating poverty\. This one-tranche loan was
designed to support Government actions to (1) maintain a satisfactory macroeconomic framework that
continued to be consistent with the objective of sustaining economic growth to further reduce poverty; and
(2) reform Chile's poverty reduction and social protection policies, to reduce poverty and exclusion by
creating greater access to social protection and wider social services for the neediest households (the Chile
Solidario initiative)\. In addition, a separate Technical Assistance loan was provided to support actions
aimed at (1) increasing the efficiency and efficacy of social policy and programs, through improved
targeting and better use of information, by integrating, gathering and exchanging publicly and privately
held data on households relevant for social policy into a national information system; (2) strengthening
regular monitoring and impact evaluation of social programs and policies; and (3) increasing the
sustainability of reforms to poverty reduction and social protection policies, through clear assignment of
roles and division of responsibilities between central government, municipal authorities and civil society\.
In May 2002, the Lagos Administration announced the Chile Solidario initiative, a package of legislative
and administrative reforms to Chile's poverty reduction and social protection policies\. The Chile Solidario
policy initiative has several features that distinguish it from other poverty reduction strategies in the region\.
The starting premise of the intervention is that the principal asset (and perhaps the only capital) held by
needy households, is their desire to live as a family and the complex web of intra-household mutual support
that this entails\. Thus, the preferential access to Chile's social protection system created with the Chile
Solidario reform package is targeting households/families, rather than individuals, currently classified as
poor or indigent\. At the same time, it is shifting away from a piecemeal approach of separate, targeted
social assistance and social insurance programs, by bundling existing social services and cash transfers and
creating a new conditional cash transfer for the poorest families that choose to participate\. Additionally, it
is eliminating quotas and the rationing of benefits and services for the neediest, connecting excluded groups
to the public and private network of services, reducing the number of intermediaries between providers and
beneficiaries of social protection interventions, and acting as a catalyst for targeted interventions in other
social sectors\. This active promotion of social services, similar to practices prevailing in OECD countries,
was considered appropriate given Chile's low levels of poverty and indigence, and greater administrative
capacity relative to other countries in the region\. When set against the history of social policy in Chile, the
changes to the social protection system particularly, with respect to social assistance, implied by this policy
shift are as significant as the reform of welfare in the United States in the mid 1990s\.
This operation was based on the Bank's broad knowledge of the Chilean poverty situation and the
Government's policies and programs to address it\. Although Chile had achieved substantial success in
reducing poverty since 1987, associated with economic growth and an increase in targeted social
expending, indigence has hardly declined since the early 1990s\. The Bank had argued in its 2001 Poverty
Report that given persistent rates of extreme poverty the Government should take a more proactive stance
in its poverty reduction and social protection policies\. Relatively lower rates of poverty and indigence than
in most countries in the region make a proactive approach more viable in Chile than in other developing
countries\. Both the Poverty Report, and the more recent report on Household Risk Management and Social
Protection (World Bank, 2003), had indicated that despite the remarkable gains in eradicating poverty in
the past decade, a new set of policies and interventions - buttressed with institutional reforms to correct
targeting errors and to mainstream monitoring and evaluation practices - were required to reach Chile's
poorest groups and increase the effectiveness of poverty reduction and social protection policies\. This
- 2 -
analytical work provided a solid base to assess the Government's Chile Solidario initiative and structure
achievable development objectives consistent with the country's needs and ability to implement policy
reforms and establish the associated practices and instruments\.
The stated objectives of the loan are considered appropriate\. These objectives supported the Country
Assistance Strategy (CAS) and they were appropriate, realistic, and responsive to the Government's
priorities\. The SECAL represented the culmination of the Bank's analytical work on poverty issues that
led to a meaningful and productive policy dialogue with the Government\.
The choice of the DDO (deferred draw down option) was based on the support for the instrument provided
in the CAS, based on the external risks being faced by Chile\. The argument made in the Program
Document was that sustained and rapid growth has been at the heart of the country's past success in
reducing poverty\. However, Chilean exports, dominated by primary products, were highly sensitive to
changing trends in global markets introducing new requirements in terms of technology, skills, and
knowledge\. Additionally, foreign direct investment and external financing, important in the 1990s, now
might not be as forthcoming because of heightened regional uncertainties\. Faced with these increased
external uncertainties, the Government of Chile wanted to expand and diversify the set of risk management
instruments at its disposal\. The Government was seeking ways to manage risks pro-actively, especially in
the event of higher volatility in international financial and commodity markets beyond what could be
cushioned by the country's present risk management tools\. As pointed out in the CAS, conditions in Chile
were consistent with the Bank's prerequisites for use of the DDO instrument\. Macroeconomic policies and
program implementation had been highly satisfactory\. This operation supported core structural reforms in
the area of poverty reduction and social protection in a country that was eligible for IBRD assistance, but
was not making full use of the Bank's financial resources\. Additionally, the social protection adjustment
loan with a deferred draw down option provided a formal basis for continued engagement in policy dialogue
with the Bank\. The government requested the Deferred Draw Down Option (DDO) for this operation
because it offered the possibility of not tapping into the resources until there was a need, as well as the
absence of a penalty for non-use\. Another attractive feature for the government was that, being a
single-tranche loan with upfront conditions, all funds became readily available upon loan effectiveness\.
However, after the loan was declared effective in early January 2004, the Government decided to
drawdown the full amount immediately\. Instead of the risk hedging objectives pursued with the DDO
instrument, the Government opted to use the DDO resources as part of its overall financing requirements,
including reducing the overall cost of the debt portfolio\.
3\.2 Revised Objective:
N/A\.
3\.3 Original Components:
The social protection reform program under the SECAL consisted of actions in five key policy areas, as
detailed below and in the Policy Matrix (see Annex 1)\.
l Economic Management\. It was important to maintain a satisfactory macroeconomic framework that
continued to be consistent with the objective of sustaining economic growth to further reduce poverty\.
l Poverty Reduction and Social Protection\. A need had been detected for reforming policies to reduce
poverty and exclusion by creating greater access to social protection and wider social services for the
neediest households (the Chile Solidario initiative)\. This component was aimed at introducing
substantial changes in Chile's social policies including (1) the introduction of a pro-active approach and
- 3 -
focus on the family unit; (2) the consolidation of the principal social assistance transfers and subsidies;
(3) the creation of a new conditional cash transfer; (4) the consolidation of the policy initiative under
MIDEPLAN; (5) guaranteed primary health care and the creation of a new school-retention voucher
for at risk children and youth in beneficiary households; and (6) measures to bundle the supply of
public services to the country's neediest\.
l Targeting and Information Management\. Although the Government of Chile had more information
and better data on social protection programs at its disposal than most other countries in the region,
what was missing were critical links between data bases on receipt of social transfers, employment and
earnings, taxation and compliance, and the civil registry\. Such links allowed governments in OECD
countries to accurately identify the poor, weed out tax evasion, and monitor the impact of their policies\.
The current information systems failed to identify many individuals and households at risk largely
through failure to coordinate an enormous amount of data that is already being collected publicly and
privately\. In addition, there was a need to revise the proxy means instrument and improve its
administration, particularly at the municipal level\. This component was designed to increase the
efficiency and efficacy of social policy and programs through improved targeting and better use of
information\. In the area of targeting and information management, the loan supported (1)
improvements in Chile's targeting instruments and phased adoption of a more effective targeting tool;
(2) the integration of publicly held data immediately relevant to the efficient and effective
implementation of the Chile Solidario initiative managed by MIDEPLAN; (3) the full implementation
of a National Social Protection Information System under the inter-ministerial and inter-agency
"Gobierno Electrónico" initiative; and (4) the development of legal safeguards to protect individual
privacy and ensure individual household access to personal information held in the public domain\.
l Institutionalize regular monitoring of implementation, and impact evaluation of social policies and
programs\. Chile's monitoring and evaluation structures were relatively limited, leading to a
proliferation of sometimes overlapping, redundant and poorly targeted programs in the line ministries
that were only subject to some review within budgetary processes\. A well equipped and trained
monitoring and evaluation unit had been installed in the Finance Ministry, but only a handful of
programs had been evaluated to date\. This component was included to strengthen the government's
ability for monitoring and performing impact evaluation of social programs\. In this area, the loan
supported (1) measures to mainstream and institutionalize regular monitoring and evaluation of the
social policies and programs that make up the core of the Chile Solidario initiative; (2) clearly assign
MIDEPLAN a key role and responsibility for evaluation of these core programs; (3) public
dissemination of evaluation results including internet availability of results, data and methodology; and
(4) clearly assign responsibility for regular evaluation of "non-core" programs critical to the success of
Chile Solidario\.
l Wider Participation and Better Coordination\. Although the formulation and implementation of
social policy and programs was considerably more centralized in Chile than in neighboring countries,
municipal authorities were at the front line and in most cases were the only level of government in
contact with the poor\. The policy and program priorities of municipal authorities could often be at
odds with those of the Central Government with the potential for implementation difficulties and
problems\. Greater efficiency and political sustainability could be brought to the social protection
system by a clearer allocation of powers, roles and responsibilities between central and municipal
authorities in the formulation and implementation of social policy and programs\. Additionally, there
were few formal links between Chile's social protection programs and policies, and nongovernmental
community organizations, particularly those operating at the local level\. Civil Society in Chile could
play a greater role in implementing social programs and policies, especially in bridging the divide
- 4 -
between the poorest and the publicly supplied transfers and services to which they were entitled\. Civil
Society organizations were already largely in contact with the population the Government would like to
target with its social policies and interventions, and they could play a key role helping the Government
to correct some of the targeting and monitoring problems, and to expand access to the social protection
system\. This component aimed at increasing the sustainability of reforms to poverty reduction and
social protection policies, through reaching a clearer assignment of roles and division of responsibilities
between central government, municipal authorities and civil society\. In the area of wider participation
and better coordination, the loan supported (1) measures to ensure greater impact and political
sustainability of the Chile Solidario initiative, through a clear assignment of roles and division of
responsibilities between central and municipal governments and civil society; (2) consultations with
municipal authorities and civil society organizations on the implementation of Chile Solidario; (3)
reforms to provide tax incentives for private contributions to organizations in civil society involved in
poverty reduction; (3) the formation of a regular forum at which the central government, municipal
authorities and civil society could exchange views and form joint strategies for implementing and
improving social policies and programs; and (4) measures to ensure that municipal authorities and civil
society remained closely involved in the Chile Solidario initiative, and that these agencies also benefited
from improvements in the information infrastructure\.
3\.4 Revised Components:
The five key policy areas were not revised\.
3\.5 Quality at Entry:
Satisfactory\. The CAS set out three broad goals: (1) sustain economic growth and social policy; (2)
increase inclusion, especially of rural populations and vulnerable groups; and (3) modernize the state as the
underpinning for the two previous objectives\. The adjustment loan responded directly to these three
objectives\. The loan supported Chile's reform of poverty reduction and social protection policies and
programs directed to the neediest households, which also ranked quite high in the government's priorities\.
Additionally, this operation incorporated initiatives to modernize the management of the state in order to
facilitate the reform process, specifically by better managing information, mainstreaming impact
evaluation, and clearly defining the roles of central and municipal government as well as civil society in the
formulation and implementation of social policy and programs\.
Based on its consistency with CAS objectives and government priorities, quality at entry is considered
satisfactory\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The achievement of objectives and outputs is considered Satisfactory\. However, since very little time
passed between the approval of the loan and the drawdown, it needs to be recognized that it is not possible
yet to see of the major expected outcomes\. Nevertheless, the discussion below by component demonstrates
that in spite of delays in some areas, the reform program supported by the loan seems to be on a good
footing\. Based on current information, it would appear that the lending operation provided a sound basis
for establishing a modern social protection system in Chile under an environment of good macroeconomic
management\. Progress in each component of the loan is summarized below\. Detailed information is
contained in the table: Milestones in the Implementation of Chile Solidario and Related Reform Program\.
Macroeconomic framework
- 5 -
Chile continued to demonstrate a sound policy framework and strong macroeconomic fundamentals\.
Recent data on macroeconomic performance confirm the positive assessment made in the Program
Document\. Growth for 2003 stood at 3\.3% and is expected to rise to about 5% in 2004\. Inflation in 2003
reached only 1\.1%, the lowest rate achieved over the last 6 decades\. A fiscal surplus of GDP is currently
estimated for 2004, spurred by strong exports and strengthening domestic demand\. This is an improvement
over the fiscal deficit of GDP registered in 2003, and remains consistent with Chile's 1% structural fiscal
surplus rule\. Monetary policy continued to play an important counter-cyclical role\. During January 2004,
the reference interest rate was reduced 100 basis points to 1\.75%, although it was increased to 2\.0% in
September\. With public external debt projected to decline from 13% to 10\.5% of GDP, international
reserves at almost US$ 16 billion, and a well regulated and deeply capitalized financial sector (the capital
adequacy ratio is close to 14%), the economy has many cushions against potential external shocks,
including against regional contagion\. The credibility of macroeconomic policy has been further increased
by the Government's continued strict control over expenditures, the increase in revenues through a
temporary 1% increase in the VAT in order to offset the tariff revenue forgone through recent trade
agreements and to finance additional outlays associated with social programs (including Chile Solidario),
and the use of most of the surpluses accumulated by Copper Stabilization Fund to repay more
expensive debt\.
Faster growth in 2004 is expected to stem from both external factors improved terms of trade and a
generally favorable external environment and domestic factors higher investment and consumer demand
in response to low domestic interest rates and improved overall confidence\. Despite the exchange rate
appreciation vis-à-vis the US dollar, Chile's exports are expected to continue growing at a fast pace,
favored by the recently signed Free Trade Agreements (most recently with the United States), continued
strong demand from trading partners and the US dollar depreciation vis-avis other currencies\. Chile's
main sources of vulnerability are its insufficiently diversified export structure, dominated by
resource-based products (copper) and agro-industry; a relatively high level of corporate debt, regional
instability and a sharp increase in global interest rates or oil prices\. However, these risks are mitigated by:
low public debt levels, a strong net international asset position, a track record of prudent macroeconomic
policy, a structural reform program backed by broad political consensus, strong institutions, and proven
resilience during recent shocks\.
Other Components
In addition to the maintenance of a satisfactory macroeconomic framework, the Loan supported
Government actions in four key areas: (1) reforms to Chile's poverty reduction and social protection
policies, to reduce poverty and exclusion by creating greater access to social protection and wider social
services for the neediest households (the Chile Solidario initiative); (2) increasing the efficiency and
efficacy of social policy through improved targeting and better use of information by gathering,
exchanging, and integrating into a national information system, publicly and private held data on
households and relevant to social policy; (3) strengthening regular monitoring and impact evaluation of
social programs and policies; and (4) increasing the sustainability of reforms to poverty reduction and
social protection policies, through clear assignment of roles and division of responsibilities between central
government, municipal authorities and civil society\.
Reduce poverty and exclusion by creating greater access to social protection and wider social services\.
There was good progress in this component of the reform program\. First, on December 10, 2003, the
Senate approved unanimously the Government's proposal on Chile Solidario\. In March 2004 a law for
Chile Solidario was approved by the National Congress and enacted two months later\. The law provided
- 6 -
powers to the Ministry of Planning and Coordination (MIDEPLAN) to coordinate and implement Chile
Solidario, to create the national information system for social programs, and to consolidate cash transfers\.
The only item expected to be included in the law, but not approved, was the transfer of SUF and PASIS
administration from the Ministry of Labor to MIDEPLAN\. The financing for this and other critical social
programs have also been approved through recently enacted legislation\. Second, the number of families
participating in Chile Solidario has risen from the 80,000 mentioned in the Program Document to 126,271
as of August 2004, as compared to the target of 117 thousand\. Moreover, the rates of refusal to participate
or interruptions in participation continued to be low (5% or less)\. Third, the Ministry of Planning and
Cooperation (MIDEPLAN), the agency responsible for coordinating Chile Solidario, has signed 14
agreements with public and private agencies to transfer resources for Chile Solidario and 25 additional
working agreements with other programs to gain preferential access to their services for Chile Solidario
beneficiaries\.
Increase the efficiency and efficacy of social policy and programs through improved targeting and better
use of information\. Progress in this area was less than planned, although several important actions were
carried out\. Databases relevant to Chile Solidario as well as data for 11 social programs were integrated
into the national social protection system The Government decided not to apply the revised proxy means
instrument (ficha CAS) to the Puente Program\. MIDEPLAN did decide on a plan of costs and a timeline
for the switch to the new ficha\. The expected study on the optional balance between privacy and efficiency
was not carried out nor were protocols drawn up for the access and use of information, due to delays in
contracting the needed technical support for the design and installation of the national information system
for social protection\.
Institutionalize regular monitoring of implementation, and impact evaluation of social policies and
programs\. The Program continued to be well-monitored by the Borrower, including the progress being
achieved among the participant families\. In addition, in the area of monitoring and evaluation, the field
work for the household survey, the primary source of data for the impact evaluation of Chile Solidario, was
completed during November-December 2003\. The instrument added questions needed for the impact
evaluation\. Work to design the follow-up survey was carried out on time and the field work commenced as
scheduled in November 2004\. There were delays in carrying out the impact evaluation of core social
policies and programs, which instead of being completed in 2004, are now expected during 2005\.
Greater sustainability of reforms to poverty reduction and social protection policies, through clear
assignment of roles and division of responsibilities between central government, local government and
civil society\. Not all the actions identified in the Program Document were carried out\. The "instancias de
trabajo" proposed to be created with the participation of the central government, municipal authorities, and
civil society organizations to coordinate implementation of Chile Solidario policies and programs were not
created\. Working groups comprised of municipal authorities and civil society organizations do exist at the
municipal level\. There were no events hosted by the central government to exchange implementation
experience between municipalities\. Although municipal governments did not receive access to the ficha
CAS on line in 2004, training had started to roll-out this instrument and was expected to be completed in
2005\.
Furthermore, a beneficiary assessment was carried out, in two regions, by the Faculty of Social Sciences of
Universidad de Chile, during February March 2004, with highly positive results\. 88% of participants
considered the program a success, highlighting its multidimensional approach and the personalized support
received\. Three aspects of the program had a particularly positive recognition by beneficiaries: (1) social
recognition, where participants feel they are considered as persons who can participate in conversations
about themselves; (2) a social protection scheme with several programs actually reaching them in a
- 7 -
coordinated way, and support providers becoming simultaneously and information link and a contact
person with social services institutions; and (3) social mobility where they now feel that they have a
concrete program of actions for coming out of indigence\.
A complementary technical assistance loan was approved by the Bank in December 2003 to support the
efforts of the government implement Chile Solidario and lay the foundation of a national system of social
protection\. The loan became effective June 18, 2004\. The project supports actions in four key areas: (1)
increasing the efficiency and efficacy of social policy through improved targeting and better use of
information by integrating, gathering and exchanging publicly and privately held data on households and
relevant to social policy into a national information system, including improvements to the country's
primary targeting instrument, the Ficha CAS; (2) strengthening regular monitoring and impact evaluation
of social programs and policies; and (3) increasing the sustainability of reforms to poverty reduction and
social protection policies, through clear assignment of roles and division of responsibilities between central
government, municipal authorities and civil society\. Implementation of the technical assistance project
started in late 2003 and is currently well underway\. Project teams are in place and the initial actions to
design and begin implementation of the integrated information system and the impact evaluation of Chile
Solidario have already started\. The technical assistance project is expected to be completed by December
2006\.
4\.2 Outputs by components:
The Social Protection Reform
See Table of Milestones in the Implementation of Chile Solidario and Related Reform Program\.
4\.3 Net Present Value/Economic rate of return:
N/A
4\.4 Financial rate of return:
N/A
4\.5 Institutional development impact:
The institutional development impact is considered substantial\. The Chile Solidario Secretariat created by
the Government in May 2002, when the program was launched, is now consolidated\. It is currently playing
a key coordinating role with several ministries and agencies involved in the program\. Most importantly,
after the Chile Solidario law was approved, the Secretariat was given authority to manage the budget
approved for the program, irrespective of the ministry or agency actually making disbursements for
subsidies or other operating expenditures under the program\. This feature became, in practice, a tool for
ensuring that resources are being used to reduce gaps in coverage under a wide range of programs favoring
Chile Solidario beneficiaries\. Furthermore, the role given to MIDEPLAN under the law ensures that there
will not only be support to complete the Chile Solidario program as originally envisaged but also to
establish a solid basis for implementing a modern social protection system in the longer-run\.
Another key feature in institutional development is the implementation of the social protection information
system, supported by the Technical Assistance loan and currently underway\. This system would enable to
implement a social protection system on a decentralized basis, supporting municipalities in their key role
interacting directly with beneficiaries\. Having access to an information system, with supporting data from
ministries and agencies involved in social protection programs, is a key element need in order to provide a
sound basis for implementing a decentralized system\.
5\. Major Factors Affecting Implementation and Outcome
- 8 -
5\.1 Factors outside the control of government or implementing agency:
While passing the Chile Solidario law, the Congress refused to include the consolidation of all transfers
under MIDEPLAN\. Two critical subsidies within the program, for assisting poor families (SUF) and the
elderly (PASIS), were kept under the social assistance agency within the Ministry of Labor\. The argument
given in Congress was that such reforms belonged to a different initiative dealing with streamlining
management of public expenditures\. This has imposed an additional burden on the Secretariat for
coordinating subsidies for Chile Solidario beneficiaries\. The government is currently planning to include
transfer of these subsidies to MIDEPLAN under the proposed law for public expenditures management\.
One factor that has had a positive effect on implementation has been the bipartisan support that the
program has had both in Congress, for approval of the laws, and within municipalities for its
implementation\. The program has been very well received and accepted by all relevant stakeholders\.
Particularly remarkable was the support to the program coming from mayors even from opposition parties,
who have provided managerial and operational staff and, in some cases, additional financial resources to
accelerate implementation of the program\.
5\.2 Factors generally subject to government control:
Perhaps the most salient characteristic has been the political commitment to the program reflected in the
passage of the laws (both financing and Chile Solidario)\. The good macro-economic management by the
Government has also not only facilitated the availability of adequate budget resources but also enabled a
favorable socioeconomic environment for its implementation\. Another key factor in the satisfactory
implementation pace of Chile Solidario has been the strong implementation capacity of FOSIS which
enabled the targets on inclusion of families to be met\. One factor which contributed to some weaknesses
and delays in implementation of the Program were the lack of sufficient cooperation and of close working
relationship between the Social Division of MIDEPLAN and both the Executive Secretariat of Chile
Solidario and FOSIS\. More recently, there has been an improvement in the are which is expected to
strengthen implementation of the Program\.
5\.3 Factors generally subject to implementing agency control:
N/A\.
5\.4 Costs and financing:
N/A\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The sustainability of the program is considered highly likely\. Several factors support the sustainability of
the program\. Both key laws were passed providing the institutional and legal framework, as well as the
financial resources to implement the Chile Solidario program\. Additionally, the Technical Assistance
Project, financed under a separate loan, has ensured support for critical implementation activities, such as
the establishment of a consolidated social protection information system in the public sector, monitoring
and implementation of the program, and institutional strengthening of MIDEPLAN\.
Additionally, several key activities demonstrate already good progress towards sustainability of the
program\. As of June 30, 2004, MIDEPLAN had signed 14 agreements to transfer resources for Chile
Solidario beneficiaries\. These resources would ensure that programs would have adequate resources and
coverage of the public network of services, facilitating the completion of the minimum conditions for the
families in the Program\. In addition, MIDEPLAN had concluded agreements with 25 institutions or public
programs for providing preferential services to the families of Chile Solidario\. These arrangements are
- 9 -
working to promote the needed changes in the design and delivery of social programs to better serve the
extremely poor in Chile\. Already some programs (for example, FOSIS, and educational scholarships) have
been major institutional changes to bring this about\. The link with budget resources is critical - both for
the leverage it provides to the Executive Secretariat of Chile Solidario and for the focus on the results
achieved with the financing\. The full support of the DIPRES in the Ministry of Finance is a major factor
which should improve the chances for sustainability\. MIDEPLAN has also signed an agreement with
FOSIS to cover, with Chile Solidario resources, the requirements for the housing dimension of the
minimum conditions\. Furthermore, implementation of the plan to switch to a new "Ficha CAS" began in
early 2004\. MIDEPLAN has decided to combine the implementation of the new Ficha CAS and the
CAS-on-line project which would substantially improve management of government subsidies by
municipalities and, at the same time, enable better updated information on the geographical distribution of
poverty which would improve policy making\. Another key element to ensure sustainability of the program
lies in the proposed strengthening of MIDEPLAN's capability for monitoring and conducting impact
evaluation of social policies and programs\. Albeit too early to judge results, the work on the impact
evaluation for Chile Solidario has gotten off to a strong start\.
6\.2 Transition arrangement to regular operations:
N/A
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Bank performance in preparing the operation was satisfactory\. In the opinion of the Borrower, the
assistance provided by the Bank team during preparation and appraisal was very helpful, in large measure
because it built on the comprehensive sector work that had been carried out\. The availability of the
Household Risk Management and Social Protection report provided a sound basis to help the government
to put together the reform program\. As a result, the loan was able to ensure linkage of priority
macroeconomic concerns with key elements to be strengthened in the social protection system - improving
access to social protection and wider social services, mechanisms to improve targeting and the use of
information, and strengthening of the monitoring and impact evaluation of social programs\. At the request
of the Government, the Bank mobilized consultant resources to jump-start the initiative on the social
protection information system\. The Bank also made important contributions in the key areas of impact
evaluation and in promoting civil society involvement in social programs\. Bank input and participation had
an important influence in the design of these aspects of the project\. Cooperation within the team on
macroeconomic and sectoral issues was close\. This was the first Bank operation to be prepared as a DDO,
and the only one to be drawn down\.
7\.2 Supervision:
Approval of the Government of Chile's two requests (January and February, 2004) for drawdown of the
loan's resources were handled in a timely and efficient manner, although it was the first time that these
procedures had been implemented in the Bank\. Performance by the Bank is considered to be satisfactory\.
7\.3 Overall Bank performance:
Considering performance in both lending and supervision, Bank performance is considered satisfactory\.
Borrower
7\.4 Preparation:
Borrower performance is considered to be highly satisfactory\. Governments inputs were well organized
and provided in a timely manner\. During preparation work for the DDO, Bank staff pushed to include
- 10 -
more controversial, deeper social protection reforms in the operation but government staff insisted that the
core content of the operation be strictly limited to changes in policy and institutions that would ensure
success of Chile Solidario\. They believed that by maintaining this strict link and disciplined focus, wider
changes to the social protection system would eventually take place in a way that was more politically
possible and sustainable\. The Government's ability to ensure a design that they believed would be more
effective is considered to be a positive factor for the project\.
7\.5 Government implementation performance:
Government performance is considered to be satisfactory\. The Government has made substantial progress
to implement the reform program envisaged under the Social Protection Adjustment Loan, although there
have been delays in some areas (implementation of the national social protection information system and
social program impact evaluations)\. Key achievements were the passage of the Chile Solidario legislation,
achieving the target for inviting additional families to join the Chile Solidario program, and carrying out
the work necessary for the impact evaluation of Chile Solidario\. The current status of actions envisaged as
milestones for 2004-5 is summarized in Table 2\. The slow start to the technical assistance loan
contributed to some of these delays, but more recently implementation has picked up\. In most cases, the
actions expected to be carried out in 2004, but not realized, are expected to be completed during 2005\.
7\.6 Implementing Agency:
N\.A\.
7\.7 Overall Borrower performance:
Overall Borrower performance is considered to be satisfactory\. The Borrower was highly committed to the
adjustment program, as demonstrated by the personal involvement of President Lagos in ensuring approval
of the Chile Solidario legislation\. The government commitment had already been demonstrated with their
request for, support for, and participation in the preparation of the Household Risk Management and Social
Protection report, in the two years prior to start of preparation of the DDO\. This commitment was also
shown by their work in designing and launching the pilot PUENTE program in February April 2002, the
announcement of the President to upscale Puente into Chile Solidario in the presidential address of May
2002, their request for an adjustment operation in August 2002, and their close participation and
cooperation in the preparation of the DDO operation\. The time required to implement the national social
protection information system and to carry out the impact evaluations for social programs turned out to be
greater than planned, but there has been no change in commitment in these areas\. The identification of the
appropriate mechanisms to involve civil society more closely in the implementation of Chile Solidario also
has been slower than expected, but some lessons should be available by the end of 2005\. More effort is
needed to analyze the municipal experience in the implementation of Chile Solidario\.
8\. Lessons Learned
1\. Poverty Focus\. While many of the recent adjustment operations in the social sectors have been of
the multi-sector, programmatic variety, this was an adjustment operation focused surgically on poverty
reduction policies\. The nature of the changes required by the new policies, are likely to have beneficial
external spill-over effects on the quality of public services in the social sectors that will benefit groups
beyond just the poor\.
2\. The DDO Instrument\. This was only the second DDO in the Bank, but the first DDO to be
prepared as such from the earliest stages of identification\. It should be highlighted, that it was the client
who requested to use this new instrument\. It was clearly an advantage that the Bank was supporting a
- 11 -
reform program which is already underway, ensuring that there is already substantial government
commitment and thus reducing the risks associated with a reform program\.
3\. Conditionality\. The reduced number of conditions for the single tranche was a positive feature
reflecting the nature of the DDO instrument\. Additionally, most of the conditions included under this
operation were focused on establishing or strengthening "good processes" (data integration, evaluation and
monitoring, division of responsibilities between various levels of government and NGO's, etc\.), which were
converted into matters of "good policy"\. One special feature associated with a DDO is that the
commitment fee (1 percent on undisbursed amounts) only begins to be applied 60 days after the loan
agreement is signed\. Since all conditions are met before Board presentation, there is a strong incentive for
fast disbursing as it did happen in this case\.
4\. Technical Assistance Project\. The link with the Technical Assistance loan will ensure continued
Bank involvement, regardless of whether the DDO is the draw down quickly, as it was the case\. The
Technical Assistance Project would also help to support sustainability of the reform program\.
9\. Partner Comments
(a) Borrower/implementing agency:
The Borrower has provided to the Bank their own Implementation Report which has been added as Annex
8\.
(b) Cofinanciers:
(c) Other partners (NGOs/private sector):
10\. Additional Information
ICR Team:
Theresa Jones, ICR Task leader
Truman Packard, co-Task Leader
Jorge C\. Barrientos, Consultant
Febe Mackay, Program Assistant
- 12 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Policy Objective Policies/Policy Reform Prior to Board Presentation
Maintenance of a satisfactory Satisfactory macroeconomic 1\. Satisfactory
macroeconomic framework\. framework macroeconomic framework, reflected
in IMF Article IV report ad World
Bank Staff assessments\.
Reduce poverty and exclusion by Reforms to Chile's poverty reduction 1\. Presidential decree No\.144,
creating grater access to social and social protection policies: The launching the Chile Solidario
protection and wider social services Chile Solidario policy initiative initiative, and creating an
inter-ministerial and advisory
committee\.
2\. Inclusion of financing of
Puente and Chile Solidario initiative
in budget proposal for 2004\.
3\. Adoptions of Chile
Solidario financial legislation\.
4\. Adoption of legislation
creating targeted school retention
vouchers
5\. Agreements signed between
MIDEPLAN and at least 25
ministries and agencies for
cooperation I the implementation of
Chile Solidario\.
6\. Presentation of Chile
Solidario reform legislation, setting
foundations for a social protection
system by formally transferring
administration of SUF and PASIS to
MIDEPLAN, and institutionalizing a
new conditional cash transfer (the
BPF) for participating households\.
- 13 -
Milestones in the Implementation of Chile Solidario and Related Reform Program
Year 1 (2004) Actual Performance Year 2 (2005) Actual
Performance
I\. Maintenance of a 1\. Satisfactory macro 1\. Chile demonstrated a Satisfactory macro
satisfactory framework reflected in sound policy framework\. framework, reflected
macroeconomic IMF Article IV report and Growth expected to rise to in IMF Article IV
framework, consistent World Bank Staff 5% in 2004\. A fiscal surplus report and World
with the objectives of the Assessment\. of 1\.5% of GDP estimated Bank Staff
program of reforms, for 2004, consistent with 1% Assessment\.
including domestic and fiscal surplus rule\. Public
external debt external debt projected to
sustainability\. decline from 13% to 10\.5%
of GDP\.
II\. Reduce poverty and 2\. Enactment of Chile 2\. Chile Solidario legislation Smaller CASEN PanelSurvey in
exclusion by creating Solidario Legislation\. passed by Congress in March to monitor coverage November 2004 of
greater access to social 2004 and the law (19\.949) indicators Chile Solidario
protection and wider promulgated on May 14, 2004\. beneficiaries and
social services\. controls which will
provide
information on
coverage
indicators\.
3\. Transfer of SUF and 3\. Not accomplished\. 175 thousand families
PASIS administration to been invited to enter
MIDEPLAN Puente
4\. Complete baseline of 4\. Complete baseline
coverage indicators from indicators for coverage from
CASEN 2003 (SUF, CASEN 2003 (SUF, PASIS,
PASIS, Agua Potable) Agua potable) published in
August 2004)
5\. 117 thousand families 5\. 126,271 families invited
been invited to enter to participate in Chile
Puente Solidario as of August 31,
2004
6\. Additional working 6\. and 7\.
agreement signed with
(Ministries and As of September 2004,
government agencies) MIDEPLAN had signed 17
granting priority access toagreements to transfer
Puente beneficiaries budget resources in order to
guarantee preferential access
for Chile Solidario
beneficiaries to 21 social
programs\. In addition,
MIDEPLAN had concluded
7\. Working agreements agreements with 21
between MIDEPLAN and institutions or public
participating government programs to give preference
ministries and agencies to the families of Chile
fully operational Solidario without specific
budget transfers\. An
- 14 -
agreement has been signed
with FOSIS to cover with the
resources of Chile Solidario
the requirements for the
housing dimension of the
minimum conditions\.
8\. Completed study of the 8\. Study carried out\.
costs and benefits
extending access to
private pensions,
disability and survivor
coverage to participants
in Chile Solidario
III\. Increase the efficiency Implementation of
and efficacy of social 9\. Databases relevant to 9\. Databases relevant to Chile Implementation of the plan to switch
policy and programs Chile Solidario integrated Solidario have been integrated plan to switch to new to new Ficha CAS
through improved in the national social in the national social Ficha CAS
targeting and better use of protection information protection information system began during
second half of
information\. system\. 2004\.
10\. Apply lessons from 10\. Decision made not to Integration of By end 2005, an
pilot of proposed new apply new Ficha CAS to additional public additional 8-10
Ficha CAS to targeting for Chile Solidario\. databases (data data bases
Puente\. administered by expected to be
municipalities) incorporated
11\. Present a plan of costs 11\. MIDEPLAN has decided Publication and To be prepared as
and timeline for full switch to "roll-out" the dissemination of part of study
to new Ficha CAS implementation of the new "access protocols" starting at the
Ficha CAS and the CAS on for use of publicly beginning
line simultaneously over the administered data of 2005
last part of 2004 and the early
part of 2005\. Plan is to collect
information necessary for both
the old and revised versions of
the ficha CAS\. In a period of
no more than 2 years
(2005-2006) for all families
with a ficha CAS it will be
possible to calculate both the
old and new scores\. This
reflects the need to update the
ficha CAS every two years\.
Once this point is reached, a
decision will be made on how
and when to make the change\.
The entry of Chile Solidario
families will not be affected
by the transition\.
12\. Publication of study on 12\. Discussion postponed to Integration of Contract for the
optional balance between follow the analysis of legal additional public design and
privacy and efficiency aspects of integrated national databases construction of a
social protection system\. structure for
interchange of data
and a model for
standardization of
data organization
- 15 -
under preparation
would begin early
2005
13\. Public awareness 13\. Workshop scheduled for Define rules for Contract for legal
campaigns of benefits of October 2004 in order to both public, individual work related to
integrating databases and publicize and deliver training access to personal social protection
citizen protections and on the social protection data information system
privacy safeguards under information system\. to start early 2005
new system\. Participants would be
Government staff working in
the programs that are included
in the Government's
informatics initiative\.
14\. Integration of data on 14\. Data integrated for 11
beneficiaries of social programs via CD's (not
programs and policies automatic, pending
additional work)\.
15\. Results of study of 15\. Data on coverage of the
coverage of Ficha CAS Ficha CAS analyzed in broad
terms\. More detailed
analysis to take place during
first half of 2005\.
16\. Define a strategy for 16\. Would be done after
"difusión y comunicación" completion of legal analysis,
public awareness campaign which is being contracted to
on benefits of integration start work in early 1995\.
and privacy protection
17\. Draw up protocols for 17\. Contract for legal work
access and use of related to social protection
information to protect information system under
individual privacy preparation to start early 2005\.
IV\. Institutionalize Evaluation of non-coreSpecific programs
regular monitoring of 18\. Impact evaluation of 18\. CASEN survey of social programs to be evaluated
implementation, and Puente/Chile Solidario November 2003, as well as completed would be decided
impact evaluation of underway application of questionnaire to in early 2005
social policies and sample of Chile Solidario
programs beneficiaries, carried out\.
Questionnaire included
questions related to Chile
Solidario\. Work in progress to
select control group, do first
set of analysis, and prepare
questionnaire for the follow-up
survey of both beneficiaries
and controls in November
2004\. The process of
contracting the survey is
underway\.
19\. Impact evaluation of 19\. Terms of reference Results, methodology
core social policies and prepared to contract and data used
programs complete and evaluations of 5 programs for available on internet
lessons incorporated which convenios have been
signed with the Executive
- 16 -
Secretariat of Chile
Solidario\. Expected
completion date: mid-2005
20\. Results, methodology 20\. Studies not yet
and data used in impact completed\.
evaluation of core
programs available on
internet
21\. Assign responsibility 21\. Studies to be defined at
for impact evaluation of be beginning of 2005
"non-core" social programs
(i) school retention
voucher; and (ii) primary
health attention for
Puente/Chile Solidario
Beneficiaries)
22\. Create "Instancia de 22\. Not fully carried out\.
trabajo" with the Working groups exist at the
participation of the central municipal level with those
government, municipal authorities and the civil
authorities, and civil society organizations
society organizations, to participating in the network
coordinate implementation of services\. Extent of
of Chile Solidario policies participation of civil society
and program\. organizations varies among
municipalities\.
23\. Exchange of 23\. Not carried out\. An
implementation experience exploratory workshop is
between municipalities, planned in late 2004 in a few
hosted by the central municipalities to collect
government\. information on municipal
views on sustainability of
Chile Solidario\.
24\. Access given to 24\. Training scheduled to
municipal governments to start in August to "roll-out"
CAS on line the CAS on line\. Training
will be carried out gradually
to cover all municipalities by
mid-2005
25\. Assistance to 100 25\. MIDEPLAN coordinating
poorest municipal with SUBDERE
governments to upgrade
technological capacity, and
ensure access to integrated
information system\.
26\. Protocols granting 26\. Contract for legal work
access and establishing related to social protection
responsibilities of information system to start in
municipal governments in early 2005\.
use of integrated database\.
- 17 -
Annex 2\. Project Costs and Financing
N/A
- 18 -
Annex 3\. Economic Costs and Benefits
N/A
- 19 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
01/2003 3 Economist/Task Manager (1)
Operations Officer (1)
Social Development Sp\. (1)
3/2003 6 Economist/Task Manager (1)
4-5/2003 Economist (1)
Operations Officer (2)
Social Development Sp\. (1)
Integrated Inf\. Sys\. Sp (1)
Appraisal/Negotiation
7/2003 6 Economist/Task Manger (1)
Operations Officer (2)
Country Economists (2)
Financial Management Sp
(1)
9/2003 3 Economist/Task Manager (1)
Operations Officer (1)
Lawyer (1)
Supervision
1/04 1 Operations Officer S S
2/04 1 Operations Officer S S
ICR
5/04 3 Economist/Task Manger (1) S S
Operations Officer (2)
11/04 1 Economis/Task Manager
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 28\.81 107,076\.88
Appraisal/Negotiation 21\.59 74,840
Supervision 1\.16 6,425
ICR 3\.88 14,534\.10
Total 55\.44 121\.692,24
- 20 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 21 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 22 -
Annex 7\. List of Supporting Documents
N/A\.
- 23 -
Additional Annex 8\. Partner Comments
INFORME DE EVALUACIÓN
SOCIAL PROTECTION ADJUSTMENT LOAN
I\. Antecedentes
Durante el año 2002 el Ministerio de Hacienda de Chile inició conversaciones con el Banco Mundial con el
propósito de firmar un crédito de ajuste bajo la modalidad de Deferred Draw Option (DDO), asociado a las
reformas requeridas para la efectiva implementación del Sistema de Protección Social Chile Solidario\. Las
reformas asociadas a la implementación de este sistema habían sido anunciadas por el Presidente Lagos en
mayo de 2002 y se orientaban a generar un sistema integrado de apoyo a las familias más pobres del país,
a cargo del Ministerio de Planificación y Cooperación (Mideplan)\.
De acuerdo a los antecedentes que había entregado el Banco Mundial al Ministerio de Hacienda, el nuevo
instrumento financiero, estructurado en la forma de una línea de crédito, estaba destinado a apoyar en sus
necesidades de liquidez a países que presentan estabilidad financiera, y sus desembolsos no se encontrarían
sujetos a los gastos de un proyecto en particular, sino que a la mantención de condiciones
macroeconómicas estables y avances en áreas específicas de reforma a acordar\.
Ambas características resultaban atractivas para el Ministerio de Hacienda\. Por una parte, la posibilidad de
tener acceso expedito a financiamiento del Banco Mundial sin que éste estuviera sujeto al desarrollo de un
proyecto de inversión específico, entregaba una alternativa interesante para diversificar las fuentes de
financiamiento del Gobierno Central, que en los últimos años se ha basado preferentemente en la emisión de
bonos comerciales de la República\. Tan significativamente como lo anterior, el Ministerio de Hacienda
también estimó importante contar con el apoyo de los equipos técnicos del Banco Mundial en el
seguimiento de la implementación de Chile Solidario por parte de Mideplan\.
Bajo esta perspectiva, el Gobierno de Chile trabajó con el Banco para acordar la firma de un crédito bajo
esta modalidad sujeto a (i) el mantenimiento de una política macroeconómica consistente con los objetivos
de la instalación de un sistema de protección social y (ii) avanzar en la instalación del sistema de
protección social Chile Solidario y el desarrollo de acciones y políticas consistentes con los objetivos de la
instalación de este sistema\. Como preparación al establecimiento del DDO, durante el año 2003 se
sostuvieron diversas reuniones de trabajo entre profesionales del Banco Mundial y de la Dirección de
Presupuestos del Ministerio de Hacienda, con el objeto de determinar la matriz del crédito que permitiera
definir los requisitos previos para el establecimiento del mismo así como las variables a monitorear una
vez establecida la relación crediticia\.
II\. Comentarios al Proceso
El proceso de trabajo conjunto y negociación previo a la firma del crédito fue, en general, fluido, y se
ajustó en términos temporales a las necesidades del Ministerio de Hacienda\.
En lo que se refería al marco de políticas y reformas asociadas al desarrollo del sistema de protección
social, el proceso fue ampliamente facilitado por el muy buen nivel técnico de los funcionarios del Banco
Mundial encargados del mismo, y el trabajo previo de investigación conjunto realizado entre 2001 y 2002
- 24 -
entre la Dirección de Presupuestos y el Banco Mundial en el área de protección social en Chile\.
Tal vez el elemento menos armónico del proceso se dio en la discusión del marco macroeconómico\.
Precisamente por haber alcanzado las condiciones de estabilidad económica y financiera que lo hacen
elegible para este tipo de instrumento financiero (DDO), hace muchos años que Chile no tiene un programa
con el Fondo Monetario Internacional ni programas de ajuste que requieran de una matriz de condiciones
macroeconómicas a ser monitoreadas por instituciones externas\. La sugerencia inicial por parte del Banco
de un marco muy detallado de condiciones y metas macroeconómicas asociadas al crédito parecía, por
tanto, más un retroceso que un avance para el país en términos de sus relaciones con las entidades
financieras internacionales\.
El alcanzar un acuerdo respecto de qué significaba específicamente mantener un marco de política
macroeconómica consistente con el desarrollo del sistema de protección social, por tanto, fue un proceso
interactivo y de aprendizaje para ambas partes\. Finalmente, se acordó un marco que parece a nuestro juicio
el más apropiado para un instrumento de este tipo\. Esto es, que se mantengan las condiciones generales que
le han dado al país la estabilidad que lo ha hecho elegible para el instrumento en el primer lugar, sin que
esto involucre un marco detallado de metas macroeconómicas distintas al marco de metas
macroeconómicas que el país autonomamente se ha dado\.
III\. Comentarios respecto del Instrumento
Como decíamos, el crédito de ajuste con un deferred draw option, presentaba para el Ministerio de
Hacienda de Chile una serie de elementos atractivos, tanto en términos financieros como de gestión pública\.
En lo puramente financiero, el acceso a una línea de financiamiento con el Banco Mundial, abierta para
cubrir requerimientos de liquidez no anticipados, aparecía como un instrumento interesante para
complementar las fuentes de financiamiento que el gobierno ha venido abriendo en los últimos años en los
mercados de financiamiento privados (externos e domésticos)\.
Las condiciones financieras del crédito, por otra parte, aparecían relativamente atractivas, aunque nos
parece que la estructura de cobro del instrumento resulta en incentivos algo distorsionadores para los
objetivos del mismo\. En efecto, la existencia de una comisión (sobretasa) por no uso de la línea, genera un
fuerte incentivo a girar rápidamente el saldo de la línea, lo que hace que la opción de diferir el giro sea más
bien teórica por el costo involucrado\. Esto influyó en la decisión del gobierno de Chile de girar prontamente
el monto total de la línea\.
En lo que se refiere al marco de condiciones de política, el condicionar el crédito al desarrollo del sistema
de protección social Chile Solidario resulta en un apoyo muy útil para el Ministerio de Hacienda, porque
asegura la participación de técnicos del BM en el monitoreo de los resultados administrativos y de gestión
del Ministerio de Planificación en el desarrollo del sistema de protección social Chile Solidario\. Este es un
elemento que el Ministerio valora mucho y podría extenderse a otras áreas de reforma\.
- 25 -
- 26 - | REVIEW |
P097974 |  ICRR 14489
Report Number : ICRR14489
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 11/03/2014
Country : Burundi
Project ID : P097974 Appraisal Actual
Project Name : Multisectoral Water US$M ):
Project Costs (US$M): 91\.0 85\.33
And Electricity
Infrastructure Project
L/C Number : CH370 Loan/ US$M):
Loan /Credit (US$M): 50\.0 46\.7
Sector Board : Water Cofinancing (US$M):
US$M ):
Cofinanciers : Board Approval Date : 05/13/2008
Closing Date : 06/16/2013 06/16/2013
Sector (s): Power (61%); Water supply (33%); Renewable energy (3%); Energy efficiency in power
sector (2%); Central government administration (1%)
Theme (s): Urban services and housing for the poor (33% - P); Infrastructure services for private sector
development (33% - P); Climate change (17% - S); Regulation and competition policy (17%
- S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Nestor Ntungwanayo Robert Mark Lacey Christopher David IEGPS1
Nelson
2\. Project Objectives and Components:
a\. Objectives:
According to the Financing Agreement (p\. 6), the project development objectives (PDO) were to: (i) increase
access to water supply services in peri-urban areas of Bujumbura; (ii) increase reliability and quality of
electricity services; (iii) increase water supply quality and reliability in Bujumbura; and (iv) strengthen
REGIDESOâs [the Water and Electricity Utility] financial sustainability\. The statement of objectives in the
Project Appraisal Document (PAD, p\.11) is substantively the same\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
The project had three components:
1\. Electricity (Cost at appraisal: US$29\.5 million, actual cost US$28\.6 million): This component was to
focus on restoring a quality electricity supply by financing major rehabilitation of the backbone transmission
and distribution grid and increasing generation capacity, while financing demand side activities to increase
efficiency and reduce consumption at peak hours\. In addition, the component intended to address medium
to long-term energy needs by supporting technical studies on alternative energy sources, particularly for
small, run-of-the-river type, hydropower plants\.
Specific activities included: (i) an operational subsidy for thermal generation of electricity, (ii) rehabilitation of
the transmission and distribution networks, (iii) pre-feasibility and feasibility studies of small sized
hydropower plants, (iv) improved revenue collection, (v) demand side management program targeting the
distribution and promotion of compact fluorescent lights (CFLs), a utility energy audit, and the promotion of
energy efficiency (EE) investments to large consumers\.
2\. Water (Cost at appraisal of US$14\.1 million, actual cost US$15\.9 million): This component focused
on reducing non-revenue water (NRW), expanding production facilities and networks, and extending service
to under-served northern and eastern peri-urban areas of Bujumbura\. Specific activities were: (i) a program to
reduce NRW, (ii) expansion of water treatment capacity, (iii) expansion of the northern primary distribution
network, (iv) extension of secondary distribution networks and expansion of stand-posts, and (v) engineering
services for the detailed technical designs and the supervision of works\.
3: Institutional strengthening of the water and electricity company and of the Ministry of Water,
Energy and Mines\. (Cost at appraisal of US$3\.3 million, actual cost of US$1\.8 million): The objective
of this component was to enhance sector capacity, efficiency and effectiveness enabling the water and
electricity company (REGIDESO- Project Coordinating Unit-PCU) and the Ministry of Water, Energy and
Mines (MWEM) to deliver improved electricity and water services\. Specific activities to support the water and
electricity company aimed to: (i) meet specific performance indicators to improve operational and financial
performance (ii) provide institutional strengthening of REGIDESO; (iii) improve the planning and
monitoring capacities of the MWEM and its ability to provide support guidance to REGIDESO and other
service providers; (iv) assist REGIDESO in launching a delegated stand-post kiosk management program in
the periphery of Bujumbura to improve service delivery at existing and new stand-posts; and (v) finance the
operational costs and capacity building needed to run the Project Implementation Unit (PIU) within
REGIDESO\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Costs: According to the ICR, total project costs amounted to US$85\.33 million, 6% less than the appraisal
estimate of US$91\.0 million\. However, the ICR (Annex 1) only provides costs broken down by component
for those activities financed by IDA (US$46\.7 million, including the front-end fee)\. The total cost must
therefore be derived by calculating the total of the financing: US$46\.7 million from IDA, US$8\.12 million
from the African Development Bank (AfDB), US$5\.81 million from the Netherlands, US$9\.85 million from
the Borrower (the Government), and US$14\.85 million from REGIDESO\. IDA-financed activities were
carried out according to appraisal estimates, except for resources earmarked for institutional strengthening
(mainly of of REGIDESO), which were under-utilized, and channeled to the water sector, which spent
beyond appraisal estimates\. Resources from the AfDB, the Netherlands and the Borrower were coordinated
with the IDA grant, and aimed to fund specific activities and outputs identified in the electricity sub-sector\.
Financing: At appraisal, it was estimated that external financing would be US$76\.0 million, comprising an
IDA grant of US$50 million (93\.4% disbursed), an AfDB grant of US$11 million (74% disbursed), and a
grant from the Government of the Netherlands of US$15 million (39% disbursed)\. A total of US$60\.6
million (80%) from these sources was actually disbursed\. The respective outstanding balances were
cancelled\.
Borrower Contribution: There was no planned contribution from the Government at appraisal, but the
Burundian Authorities in fact contributed US$9\.85 million, mostly in the electricity sub-sector\. REGIDESO
provided resources in the amount of US$14\.85 million, slightly below the appraisal estimate of US$15\.0
million\.
Dates: The project was approved on May 13, 2008, made effective on September 29, 2008, and closed on
schedule on June 16, 2013\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
The objectives were relevant to the first pillar of the World Bank Groupâs Country Assistance Strategy (CAS)
for Burundi for the period 2013-2016, the goal of which is to improve competitiveness, notably through
reducing infrastructure related bottlenecks\. The CAS (as stated on p\. 23) specifically aims to increase the
generation and efficient transmission of electricity, and to extend the water distribution network in order to
attract private investment and improve competitiveness\.
The objectives are also consistent with Burundiâs second Poverty Reduction Strategy Paper (PRSP) adopted
in 2012, which concludes that electricity shortages and unreliability represent a major constraint to achieving
the Governmentâs ambitious growth objectives\. The PRSP stated that the first priority in improving access to
better quality economic infrastructures was to increase electricity production, restore financial soundness to
REGIDESO, and promote renewable forms of energy\. In the water sector, the PRSP identified the main
hurdles to better performance as being: (a) the inadequacy of the legal and institutional framework; (b)
insufficient mobilization of resources; (c) an inappropriate rate system; and (d) limited planning and
programming capacity\. This project aimed to help address and mitigate the shortcomings in all the above
areas\.
The objectives were also relevant to the Bankâs Interim Strategy Note (ISN), adopted in 2005, and with
Burundiâs first PRSP of 2006, although the main focus of these documents was on poverty reduction and
post-conflict assistance\.
b\. Relevance of Design:
Substantial
The project objectives were clearly stated, and project components were carefully selected\. The project
results framework was sound\. There was a logical chain between identified activities, an adequate results
matrix, the proposed M&E system (Annex 3 of the PAD), and the project outcomes\. A sub-objective to
strengthen the financial sustainability of REGIDESO was key for the progress of the entire reform agenda,
and the establishment of a performance contract between the Government and the water and electricity
utility, to be audited by an external qualified firm, was a sound arrangement in the pursuit of project
objectives\. Finally, a limited number of key outcome targets were easily measurable\.
4\. Achievement of Objectives (Efficacy):
Efficacy is assessed against the results achieved under the four project sub-objectives:
⢠Increase access to water supply services in peri-urban areas of Bujumbura: Substantial
Outputs
57 kilometers of water pipes were installed to extend the system towards the Northern peri-urban area of
Bujumbura\.
The water transmission and distribution systems were rehabilitated\.
The secondary distribution networks were extended, primarily to reach additional stand-posts\.
Additional storage reservoirs and a new pumping station were constructed, and existing pumps replaced\.
130 public stand-posts were constructed\.
Outcomes:
The project succeeded in increasing access to water supply services in the peri-urban areas of Bujumbura\.
The rate of access to water in urban areas rose from 53 percent of urban population in 2008 to 56\.2
percent in 2011, according to REGIDESO data\. Given that more prosperous city center areas were
mostly already connected, this would, to a large extent, represent an increase in access in peri-urban
areas\. To support this, the ICR cites three pieces of evidence: (i) the number of people served with
stand-posts or private connections in selected peri-urban and other areas of Bujumbura reached a total
of 117,640 against a target of 114,950; (ii) the number of piped household water connections benefiting
from rehabilitation works under the project was reflected by the 10,000 water meters installed; and (iii)
the number of unconnected persons per water stand-post in selected project areas fell from 2,946
persons per stand-post in 2008 to 843 in 2013\.
⢠Increase reliability and quality of electricity services: Modest
Outputs
Project supported outputs included:
An operational subsidy for thermal generation and rehabilitation of the existing 5\.5 MW thermal plant\.
Funding of fuel and critical parts purchases through a declining yearly subsidy over two years\.
Rehabilitation of transmission and distribution networks, including foreseen investments in 110, 70, and
30 kV substations\.
Feasibility studies of Jiji-Mulembwe hydropower plant\.
Installation of 15,000 pre-paid electricity meters for household consumers and public institutions\.
Installation of a system for management of pre-paid meters\.
An energy audit of REGIDESO on: (a) technical loss reduction in the electricity grid; (b) efficiency of
pumping systems in use by the utility; and (c) losses occurring from the low power factors generated by
larger industrial consumers [In an electric power system, a load with a low power factor draws more current than a load
with a high power factor for the same amount of useful power transferred\. The higher currents increase the energy lost in the
distribution system, and require larger wires and other equipment ]\.
The following three additional outputs (presented in the ICR as intermediate outcomes) were achieved:
(i) 22 substations were rehabilitated against a target of 20, (ii) 40,234 pre-paid electricity meters were
installed against a target of 40,000 and (iii) the 200,000 targeted CFLs were distributed to REGIDESO
customers\.
Outcomes:
By re-establishing the back-bone grid supply function to channel power from the hydro sites into the key
load centers around Bujumbura, the improvements helped to improve supply security, reduce outage times
and increase the quality of supply\. The number of unplanned power interruptions diminished from a
baseline of 3,100 in 2008 to reach 703 in June 2013 against a target of 800\. This result is, however, partly
attributable to network rehabilitation works financed by the African Development Bank, which were ongoing
when the project under review was appraised\. The target of increased power generation from additional
sources was widely missed\. Although the project was able to reduce the supply gap as expected in the first
two years through subsidizing the operation of the 5\.5 MW thermal power station, this financing did not
continue after that, and there had therefore to be greater reliance on REGIDESOâs own resources\. As a
consequence, only 5\.6 GWh were generated in 2012, compared to a target of 11 GWh\. Together with
reduced hydro output due to rain shortages, this led to higher than expected load shedding\.
⢠Increase water supply quality and reliability in Bujumbura: Modest
Outputs
The project generated the following outputs:
Development of a comprehensive action plan for the reduction of technical and commercial losses in the
system\.
Implementation of the action plan through (a)the purchase of leak detection equipment, water flow
meters, regulator pressure valves, and pressure reducing valves, (b) purchase of equipment for the
standardization of the connections, (c) installation of a Geographic Information System for
interconnection of meters and the customer centers, and (d) procurement and installation of 10,000
water meters\.
Construction of a slow sand filter system\.
Building a storage reservoir of 2,000 cubic meters\.
Providing additional pump units for the existing raw water pumping station\.
Construction of 58 new stand-posts and rehabilitation of 35 pre-existing stand-post\.
57\.09 kilometers of water pipes were installed against a project target of 30 kilometers\.
Outcomes
Water production capacity increased from 66,000 cubic meters per day to 96,000 cubic meters per day in
2012, in accordance with the target\. However, there was no evidence provided in the ICR about actual water
production, nor of its quality and reliability\.
⢠Strengthen REGIDESOâs financial sustainability: Substantial
Outputs
Provision of technical assistance to REGIDESO and MEWM to monitor the performance contract as
well as external audits of the performance contract\.
Provision of technical assistance and training to REGIDESO on project management, technical,
administrative and commercial functions\.
Provision of technical assistance for stand-post management\.
Completion of a tariff study\.
Provision of office equipment and vehicles and training in procurement and financial management to the
Project Implementation Unit housed in REGIDESO\.
An audit on the use of fuel and spare parts for the 5\.5 MW thermal central\.
Outcome
REGIDESOâs financial situation has been much enhanced thanks to project interventions\. The entity's
situation has been transformed from what the ICR describes as one of virtual bankruptcy to one in which
sufficient resources are generated to cover operating and maintenance costs\. Nevertheless, there are a
number of areas where further improvement is still needed:
Operating and maintenance costs of REGIDESO (including depreciation) were fully covered through
revenues in 2012\. Net profit after tax reached US$2\.4 million in 2012 compared with net losses of
US$0\.4 million and US$0\.6 million in 2011 and 2010 respectively\. REGIDESOâs combined water and
electricity operations generated net cash inflows amounting to US$1\.9 million in 2012 and US$2\.3
million in 2011\.
The improvement was driven mainly by: (a) revisions in water and electricity tariffs in May, 2007, and
again in September, 2011, and March, 2012; and (b) a restructuring of REGIDESOâs balance sheet as of
December 31, 2008, undertaken with a view to clearing or writing-off overdue amounts owed by the
Government, unpaid electricity import bills from other utilities and loans related to investments financed
by donors\. With regard to the latter, however, it should be noted that arrears in accounts payable by
Government and other public entities have accumulated again in recent years\.
Tariffs are now subject to an adjustment mechanism to allow REGIDESO to maintain its assets and pay
for power imports from regional hydro-power plants\. The revised tariff structure reflects the cost of
service while providing protection for the poor through the provision of a tariff block and adopted tariff
scheme for public water stand-posts\. However, the Government has yet to provide clear direction
concerning the future role of the regulatory entity that was legally established in 2000\.
REGIDESO now has a unit dedicated to reducing water and electricity losses\. Technical and
non-technical electricity losses per year fell from 24\.4 percent in 2008 to 18\.82 percent in 2013, slightly
missing the target of 18\.00 percent\. Non-revenue water fell from 46 percent in 2008 to 28\.6 percent in
2012, but remains substantially above the target of 20 percent\.
The ICR pinpoints the urgent need to upgrade REGIDESO's finance department: The reporting of
operational and financial performance within the utility is unsatisfactory\. The accounting systems are
outdated, and there is an urgent need for the installation of a new computerized accounting system that
is integrated with other software applications such as commercial and inventory systems\. Accounting
staff require training\. Coordination within the finance department and across REGIDESO needs to be
strengthened\.
Collection efficiency has barely improved -- from 82% in 2008 to 82\.67% in 2013, compared to a target
of 95%\. The commercial department is in need of modernization\. The recording of billing collection and
customer accounts in the billing system for both water and electricity operations is still combined,
making it difficult to separate the underlying collection performance and customer accounts between the
two operations\. The auditors of REGIDESO have persistently expressed many reservations about the
reliability of commercial data\. The accounts receivable in the billing system have accumulated again in
recent years and this remains an issue despite the balance sheet restructuring of 2008\. A large part of the
recorded debt is not collectable\. The records of the commercial departments need to be reviewed and
old irrecoverable balances written off\.
5\. Efficiency:
A comprehensive economic and financial analysis was carried out at appraisal and was repeated at closure\.
The ex-post analysis shows that the actual Economic Internal Rates of Return (EIRRs) for the electricity and
water components were 17\.6 percent for project investments of, respectively, US$28\.6 million in electricity
and US$15\.9 million in water\. The analysis covered 95 % of all project costs\. The analysis for the electricity
sector is based on the total investments that contributed to sector performance; for the water sector, only
project-funded activities are included, as they are easily separated from other investments\. The expected
EIRRs at appraisal were 13\.3 percent (electricity) and 11\.6 percent (water)\. Sensitivity analysis was done for
the ICR to show the effect of not adjusting tariffs for inflation, which lowers EIRRs to 14\.8 percent and 16\.1
percent respectively for electricity and water\. The better results compared to appraisal expectations are due to
the combination of increased electricity generation and water production resulting from the investment
programs and the implemented tariff adjustments, which are used as proxies for the economic benefits\. The
tariff adjustments during project implementation had not been factored into the analysis at appraisal; the
expected key contribution was rather the consumer surplus in water and electricity\.
The ICR did not conduct a cost effectiveness analysis of the project to complement the economic analysis,
but overall , project resources were used in a cost-effective manner, given the post-conflict context of the
country\. One key example is that the project was implemented without a new and separate Project
Implementation Unit, which represented a saving\. Rather, a unit inside REGIDESO benefitted from the
support of experts who strengthened the institutionâs technical capacity\.
Other than procurement-related delays in the initial phases of implementation, there were few operational
and administrative inefficiencies, and the project closed on schedule\.
Efficiency is rated substantial\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 13% 95%
ICR estimate Yes 17\.6% 95%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The project objectives were highly relevant, while relevance of design was substantial\. Efficacy was
substantial for two out of the four sub-objectives and modest for the other two\. Water supply capacity and
access to water services increased due to the projectâs contribution, but its volume, quality and reliability were
not well documented\. Electricity rehabilitation works improved electricity supply and reduced outage times,
but electricity generation was not expanded as planned, thereby adversely affecting reliability and
performance\. Financial sustainability improved significantly, but issues remain, including high non-revenue
water (NRW), weak collection efficiency, and finance and commercial departments in need of strengthening\.
Efficiency was substantial because the actual EIRR for combined water and electricity investments was
higher than at appraisal, and there were comparatively few administrative and operational inefficiencies\.
Outcome is assessed as moderately satisfactory\.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The outputs supported by the project will likely be maintained and continue to provide benefits, based on
the achieved financial surpluses of the water and electricity utility\. However, the project implementation
process was marked by difficult tariff reforms implemented with some delay and resistance\. The new
performance culture and tariff adjustments, along with the volatile political situation around the institutional
setup for REGIDESO, adds a level of uncertainty and risk going forward\.
While the need for tariff revisions to reflect costs is now generally accepted by Government and utility
management and staff, more has to be done to communicate clearly any future revisions with a view to
obtaining popular acceptance\. The reform is recent, it has not been accepted by all stakeholders, and there
remains a risk that reforms supported by the project might be reversed\. The further accumulation of arrears
by the Government and municipal entities towards REGIDESO is also a warning sign, although utility
management is actively addressing this issue through increasing the number of pre-payment electricity
meters towards this category of consumers\.
The audit of the performance contract continues to be supported by the ongoing IDA Emergency Electricity
Project (EPP), but the Government has yet to make a decision on the way forward for the permanent
regulatory entity legally established in 2000\. The audit of the performance contract is costly, and would
almost certainly not be continued in the absence of external support (according to the ICR, there is a very
strong likelihood that it will be discontinued after the EPP closes, unless an alternative source of financing is
found)\. Reforms to strengthen the water and electricity utility need to be deepeued and sustained, because of
the uncertainty and doubts that surround the progress already achieved\.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
a\. Quality at entry:
The project design drew on limited analytical work, because of the prolonged civil war that limited
Government's and external partnerâs analytical activity in the water and electricity sector\. To offset this,
project preparation drew on lessons learned from the Bank's extensive experience in reforming water and
electricity utilities in Africa and elsewhere\. The Bank facilitated the contributions of other external
partners, and the Bank team established a good dialogue with the country authorities\. A pragmatic
approach to deal with a delicate reform with social implications in a post-conflict environment was
adopted\.
The Bank team identified a number of risks associated with the project (financial viability of
REGIDESO, accounting, lack of implementation capacity, fluctuation of fuel prices, accumulation of new
arrears to REGIDESO, and drought), and prepared appropriate mitigation measures\. These included
ex-ante settlement of arrears, technical measures to reduce losses, and adjusted tariffs to contribute to
financial viability, with financial management and procurement strengthening of REGIDESO, transitional
subsidies for thermal generation and diversification of production sources\. However, limited procurement
capacity in REGIDESO could have been better addressed through procurement training during
preparation, and acquiring qualified procurement personnel made a condition of project effectiveness\.
Implementing arrangements were appropriate\. In particular, the option not to set up a PIU separate from
REGIDESO, and to select a technical auditor, instead of a monitoring committee were appropriate\.
M&E design and provisions for safeguards and fiduciary compliance were adequate\. In particular, the use
of specialized consultants to strengthen REGIDESOâs weak procurement capacity was to prove itself to
be beneficial during implementation\.
at -Entry Rating :
Quality -at- Satisfactory
b\. Quality of supervision:
The Bank provided strong implementation support for the construction and rehabilitation of the
infrastructure\. To catch up with implementation delays in the early stages, a fast track approach to
supervision was adopted by holding monthly progress reviews in the field, complemented by bi-monthly
video-conferences between the country-based Task Team Leader (TTL) and specialists not based in the
field\. The sustained presence of the TTL and other key task team members in the field and the
coordination with other external partners involved in the sector, along with the audit of the performance
contract for REGIDESO, were important in assuring positive project outcome \.
However, the reallocation of resources away from institutional strengthening in favor of water and
electricity infrastructure was ill-advised, because at project closure, key departments of the water and
electricity utility were still weak\. The Borrower could have been encouraged to seek additional resources
from other donors to build infrastructure, while continuing to tap the Bank's comparative advantage in
institutional strengthening\.
There were some weaknesses in M&E implementation (see Section 10b below)\. The mid-term review was
delayed, and only took place in June 2012 (one year before closure), too late to effect meaningful changes
in the M&E framework\. It was used mainly to cast greater light on the financing of the sectors, to discuss
the Government decision to keep one entity for water and electricity, and to consider future
developments\. The annual household and business surveys were not carried out due to financing
constraints\.
Safeguards and fiduciary compliance were generally adequate\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Government introduced successfully the key major reform of tariff adjustments which was
politically sensitive\. But it was slow in the implementation of recommendations of the annual audits of
the performance contract and and once again allowed arrears in payments due to REGIDESO to
accumulate in the latter years of the project\.
The steering committee set-up by the Government to monitor implementation of the recommendations
of the external auditor of the performance contract performed poorly and the results were not
disseminated effectively\. Overall, Government engagement during the entire project was lukewarm as
illustrated by frequent turnover in REGIDESO management\. A new Board set up in 2012 was more
committed to following up on recommendations, but would likely have needed increased backing from
the Government to achieve more positive outcomes\.
Government Performance Rating Moderately Unsatisfactory
b\. Implementing Agency Performance:
The project was implemented by REGIDESO\. The utility established an internal project coordinating
(PCU), the staff of which remained unchanged for the duration of the project\. The Unit successfully
coordinated implementation, associating the relevant company departments\. REGIDESO was slow to
process procurement in the project start-up phase and did not, at that time, have adequate capacity to
monitor safeguards, but during implementation the entity recruited additional expertise in these areas and
performance improved, enabling the project to close on schedule, with safeguards compliance fully
respected (see Section 11 below)\.
REGIDESO also acquired good knowledge on investment planning, which was applied during project
implementation\. A more diligent implementation of recommendations of the annual audits of the
performance contract between the Government and REGIDESO in general, and on cost recovery
efficiency in particular, could have further strengthened results\. The high turnover rate in REGIDESO
management affected the continuity of project oversight\.
M&E implementation was weak\. The company's internal reporting systems did not always provide reliable
figures directly, and data had often to be corrected by the annual audit of the performance contract
carried out by external auditors\.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Responsibility for M&E rested with REGIDESO\. The project M&E framework had adequate outcome
indicators and appropriate intermediate results indicators to support evaluation\. Baselines and targets were
available for all indicators, with the exception of (i) the indicator baseline on the operating cost coverage ratio
of REGIDESO, because the accounting practices of REGIDESO precluded the provision of a reasonably
reliable figure at appraisal, and (ii) the indicator to measure progress reliability of the electricity supply\.
Project design also planned household and business surveys to monitor energy and water consumption
practices, sanitation practices, and satisfaction with water supply services\. Also, a mid-term review (MTR)
was scheduled in the Financing Agreement to take place 30 months from effectiveness\.
b\. M&E Implementation:
While key outcome indicators were not revised, a level-2 restructuring took place in 2009 to introduce
some core indicators designed to capture and report better on corporate goals\. The ICR indicated that
reporting on progress toward outcome was generally candid and regular, but was not always accurate
regarding indicator values\. There was imprecision in updates to the supervision reports with confusion
between total and additional people having access to water, and progress reported in the text\. Some reports
showed fluctuations in results that were unexplained (for example, with regard to the power generation and
water connection indicators)\. The annual household and business surveys were not carried out due to
financing constraints, and valuable qualitative information, which would have enabled adjustments to be
made to the project implementation schedule, and support the evaluation of outcomes, was consequently
unavailable\. The MTR was delayed and only took place in June 2012 (one year before closure), too late to
effect meaningful changes in the M&E framework\.
c\. M&E Utilization:
Data generated by the M&E system were used to report on project progress, and served to develop
corrective measures to implementation shortcomings\. When, for instance, the procurement of works took
too long to get under way, the project rating was downgraded on implementation progress and development
objectives and additional technical assistance was recruited to get the project back on track\. The production
deficit forecasts fed into dialogue with Government and other external partners on the development of new
hydro-power production on the Jiji and Mulembwe Rivers\.
M&E Quality Rating : Substantial
11\. Other Issues
a\. Safeguards:
The project was classified as category "B" for Environmental Assessment purposes\. As well as the
Environmental Assessment safeguard (OP 4\.01), OP 4\.12 on Involuntary Resettlement was triggered\. The
PAD indicated that an Environmental and Social Management Framework and a Resettlement Policy
Framework were prepared, approved by the Bank, and disclosed before project appraisal in the country and
in the Bankâs Infoshop\.
During the project launching mission, the Bank trained staff of REGIDESO, the Ministry of Water, Energy
and Mines, and local NGOs on project safeguards instruments\. According to the ICR (p\. 10), the
environmental and social impacts of activities financed by the project were mitigated in a satisfactory manner
as a result of the guidelines developed and through implementation of the environmental and social
management plans\. The bidding documents and contracts included relevant safeguard mitigation measures,
which, according to supervision reports, were correctly implemented during civil works\. Following the
mid-term review in July 2012, the Borrower carried out an environmental and social audit for all completed
and ongoing sub-projects\. The ICR reports that the Borrower took into account in a satisfactory manner the
recommendations and mitigation measures resulting from the audit\. The Bankâs safeguards team rated the
mitigation measures for activities financed by the project satisfactory\.
The ICR does not report on compliance with OP 4\.12
b\. Fiduciary Compliance:
Procurement\. REGIDESO was responsible for all procurement tasks under the project, supported by
consultant specialists\. Slow procurement processing was responsible for substantial delays in the start-up
phase of the project, but on the Bankâs recommendation, REGIDESO hired additional procurement
expertise to support the PCU\. The Bank also provided several rounds of procurement training to the PCU,
and by the end of year two of the project, the delays had been substantially reduced\. Post procurement
reviews by the Bank did not reveal any irregularities and the ICR reports that Bank procurement procedures
were complied with\.
Financial management \. The PCU was in charge of financial management, and benefited from the support
of a consultant specialist\. According to the ICR, the project complied with the obligations of financial
reporting and auditing\. Audit reports and Interim Financial Reports (IFRs) were submitted to the Bank on
time and there were no overdue external audit reports\. All audit reports and IFRs were reviewed by the Bank
and comments provided to the borrower\. The ICR reports that the project fully complied with Bank financial
management procedures\. There is no statement as to whether external audits were qualified or not\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Moderately There were moderate shortcomings:
Satisfactory water volume, quality and reliability
were not well documented, electricity
generation was not expanded as
planned, and while REGIDESOâs
financial situation improved
substantially, issues remain, including
high non-revenue water (NRW),
weak collection efficiency, and
finance and commercial departments
in need of strengthening
Risk to Development Non-evaluable High The ICR provided an invalid rating
Outcome : (Substantial)
Bank Performance : Satisfactory Moderately Reallocation of resources away from
Satisfactory institutional strengthening in favor
of water and electricity infrastructure
was ill-advised, and there were M&E
weaknesses\.
Borrower Performance : Satisfactory Moderately There were moderate shortcomings
Satisfactory in Quality of Supervision, including
reallocation of resources away from
needed institutional strengthening,
and weaknesses in M&E
implementation\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The first three lessons are taken from the ICR with some adaptation of language, the fourth is drawn by
IEG:
Field-based key staff members are critical in fragile and post-conflict countries: The Bank
provided strong support to this project through field-based presence of key team members, who
continuously convened other external partners in the two sectors and coordinated interventions\. There
was good collaboration between these partners, REGIDESO, and the Government throughout
project implementation\.
Well-prepared performance contracting can be a sound approach: Having a contract with clearly
specified performance criteria known by management and staff was instrumental in improving the
performance of REGIDESO\. The establishment of an internal control unit contributed to the good
results\. To have the full effect, however, management evaluation and motivation could have been tied
to the performance contract, and audit results could have been published to assure transparency and
oversight by the public as part of the reform element\.
Specific attention to procurement is needed when the Borrower has a small market for
international suppliers : Few suppliers and contractors participated in tenders and some replacement
parts for HV and MV stations had to be custom-made\. These difficulties need to be factored into
project design\. Attention could advantageously be paid to packaging procurement of goods and works
to increase contract amounts and incorporating ongoing maintenance beyond the project period if
needed\. This would be accompanied by appropriate training for the staff involved\.
For infrastructure projects, an appropriate balance between construction and institutional
strengthening has to be maintained\. In this case the key objective of boosting the technical capacity
of key institutions was, to a degree, sacrificed to infrastructure\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR provided a candid account of the project design and implementation\. There was good evidence on
most of the project's achievements\. In particular, the ICR reflected most of the findings and
recommendations of the audits of the performance contract established during preparation between the
Government and REGIDESO\. The ICR devoted special attention to achievements in water and electricity
infrastructure, and to the impact of the contract performance on the entire project outcome\. Finally, the
economic analysis of the project was treated in depth\.
However, the ICR didn't make sufficient linkage between the reallocation of project resources from the
institutional component to infrastructure and the shortcomings in building capacity within REGIDESO\. The
ICR does not state whether external audits of the project were unqualified\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P095460 |  ICRR 14496
Report Number : ICRR14496
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 09/29/2014
Country : Brazil
Project ID : P095460 Appraisal Actual
Project Name : Bahia Integrated US$M ):
Project Costs (US$M): 156\.2 210\.9
State Highway
Management Project
L/C Number : L7411 Loan/ US$M):
Loan /Credit (US$M): 100\.0 100\.0
Sector Board : Transport Cofinancing (US$M):
US$M ):
Cofinanciers : Board Approval Date : 11/15/2006
Closing Date : 09/30/2013 10/14/2013
Sector (s): Roads and highways (87%); Sub-national government administration (10%); General
agriculture fishing and forestry sector (3%)
Theme (s): Infrastructure services for private sector development (40% - P); Municipal governance and
institution building (20% - S); Trade facilitation and market access (20% - S); Regulation and
competition policy (20% - S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Jeffrey Balkind Robert Mark Lacey Christopher David IEGPS1
Nelson
2\. Project Objectives and Components:
a\. Objectives:
The Loan Agreement between the State of Bahia and the IBRD (Schedule I, page 9) states the project's objective as
follows: "to increase effective use of the Borrower's road infrastructure, through : (a) rehabilitation and maintenance of
key sections of the Borrower's paved road network; and (b) provision of support for institutional improvements in the
Borrower's road sector, while fostering greater integration among the Borrower's regions and with the rest of the
country\."
According to the Project Appraisal Document (PAD, page 8): "The Project's ultimate development objective is to
increase effective use of the Borrower's state road infrastructure, with an aim at stimulating higher economic growth \.
The objective is to be achieved through (a) rehabilitation and maintenance of key sections of the state paved road
network, so as to contribute to the decrease of road transport costs on selected corridors, and to the increase in the
use of the state road transport infrastructure, and (b) support to a set of key institutional improvements in the road
sector to ensure the sustainability of physical achievements, as well as the fostering of a greater integration within
the stateâs regions, and of the state with the rest of Brazil \."
This evaluation uses the Loan Agreement version \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
There were two components:
Component 1: Rehabilitation of State Paved Road Sections (appraisal cost $ 140\. 140 \.6 million, actual cost
194 \.1 million )\. The component supported the introduction and execution of long -term, performance-based road
$194\.
maintenance and rehabilitation contracts on 2,000 km of the State of Bahia's paved road network (15 percent of the
state highway network)\. The project listed 11 road sections initially totaling 1,177 km according to an agreed set of
readiness criteria\. The remaining 823 km of roads were to be identified late r\. All State road sections rehabilitated
under the project had to be part of the road sections identified for maintenance and /or rehabilitation in the State
Government's main logistics program (PELTBAHIA 2004), as suitably updated, and be part of road corridors
connecting strategic cities or connecting the economically dynamic regions of the state to markets or ports for
exports/imports from other states or countries \. Investments also needed to demonstrate a minimum internal rate of
return of 20%\. Prior to Board presentation of the Bank loan, road sections totaling about 1,200 km for a first phase
were identified, and the remainder were expected to be identified afterwards \. It was these 1,200 km of works that
became subject to performance -based maintenance contracting \.
Component 2: Institutional Strengthening (appraisal cost US$ 15\. 16 \.8 million )\. There were
15 \.6 million, actual cost $ 16\.
five sets of activities to be financed by the component :
Support the Government's efforts to optimize the role of transport services in order to de -concentrate economic
growth, reduce logistics bottlenecks, and integrate the transport dimension into the planning of state -wide
education and health services \.
Implement the Stateâs logistics program (PELTBAHIA)\.
Strengthen the State road administration and planning system \.
Strengthen the road administrationâs technical capacity to support the various municipalities in maintaining their
road networks and in improving transport services for the poor \.
Preparation of the project works engineering designs and the carrying out of technical supervision, as well as
support the road administration to coordinate implementation\.
In September 2010, a Level 2 Restructuring increased the percentage of expenditures to be financed by the Bank
loan from 50 to 90 percent\. This addressed the issue of delays in counterpart funding \. Also, a new outcome indicator
was introduced: the reduction of unit vehicle operating costs on selected itineraries or road sections \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost \. The total cost of Phase 1 paved roads sections was US$ 194 million versus an appraisal estimate of
$140 million\. Actual investment costs on the 1,196 km that were completed under the project were 38 percent higher
than estimated at appraisal\. The costs of the Institutional Strengthening Program were 8 percent higher than the
appraisal estimate\. The principal cause of the higher cost of the investment component was the use of outdated
estimates during preparation that remained uncorrected at appraisal \. In addition, a year's delay in loan effectiveness
led to cost increases, as did the depreciation of the US dollar against the Brazilian Real (the PAD had estimated an
exchange rate of 2\.16 R$/US$, but the average exchange rate over the project implementation period was 1\.76
R$/US$)\. Due to the cost increases, a financing gap of $ 77 million emerged, leading to a significant shortfall in
physical outputs -- only 1,196 km (about 60 percent) of the planned 2,000 km of road network identified for road
rehabilitation and maintenance were completed under the project \.
The ICR (page 8) attributes $40\.7 million of the civil works cost increase to "a heavier technical solution " (4 cm of
asphalt skimming and replacement, instead of 2 cm) and inflation\. It attributes $33\.7 million to unfavorable exchange
rate changes during the project period, and $ 2\.9 million to additional km in PREMAR's first phase\.
Financing \. The Bank loan of US$100 million became effective on December 6, 2007 (13 months after Board
approval)\. The loan was fully disbursed\. There were no other external sources of financing \.
Borrower Contribution \. According to Annex 1 of the ICR, this was US$112\.1 million, compared to an appraisal
estimate of $86\.0 million\.
Key Dates \. As noted above, the loan became effective in December 2007, 13 months after Board approval\. The
project closed on schedule on September 30, 2013,
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High
The project remains highly relevant to current conditions and priorities in the country and in Bahia State \. The
Brazil-World Bank Country Partnership Strategy (CPS) for FY2012-2015, which was approved by the Board in
November 2011, focuses on three developmental pillars : equity, sustainability, and competitiveness \. The project is
an important part of achieving sustainability and maintaining competitiveness of the transport sector \. Specifically, the
CPS includes among its strategic objectives, the following sub -objective (diagram, page 18) "improving transport and
logistics supply chains is critical both to increase export competitiveness and to promote economic development in
lagging regions\." To address these various challenges, the Government updated its National Plan for Logistics and
Transport, which has among its main objectives the need to improve the efficiency of the productive sectors and help
reduce regional inequality, thereby rebalancing Brazil âs transport matrix, in order to obtain higher efficiencies in the
movement of goods and freight sector \.
Bahia State's Multi-Year Plan ("Bahia 2020 Plano") attaches high priority to the road rehabilitation program \. Located
in the North East, Bahia State, with its important port of Salvador, is key to achieving a more equitable distribution of
transportation services (first pillar of the CPS) in the country as a whole\.
b\. Relevance of Design:
Rating : Substantial
The results framework had a clear causal chain, linking the investment components and the institutional
strengthening activities to be financed by the project to the expected outputs and outcomes \. Inputs, expected
outputs, and expected outcomes were logically spelled out, using an approach that drew on state -level financed
projects in large federally administered countries that also have extensive decentralization mechanisms in place \.
However, three exogenous factors were not sufficiently anticipated \. Firstly, economic growth was occurring quite
rapidly in Brazil and especially in the north -east corridor that was not a result of transport investments, but of
developments in other infrastructure sectors, especially energy, Secondly, the more efficient flow of traffic which the
project intended to achieve depended also on key logistical enhancements in and around the Port of Salvador, such
as improved containerization, inter -modal transport, and traffic handling systems \. These, in turn, required a well
trained pool of skilled labor, which was outside the control of the project \. Thirdly, the project design revolved critically
around the introduction of performance -based incentives for road maintenance, which required a change in mentality,
in both private and public sectors, and a greater speed of contract execution than was evident, especially in the first
few years of the project\. Planning systems were overstretched in Bahia, and this constraint contributed the shortfall
of highway kilometers that were able to be rehabilitated under the project \.
4\. Achievement of Objectives (Efficacy):
The project had two objectives : (i) to increase effective use of the Borrower's state road infrastructure, through
rehabilitation and maintenance of key sections of the Borrower's paved road network; and (ii) to increase effective
use of the Borrower's road infrastructure through provision of support for institutional improvements in the Borrower's
road sector, while fostering greater integration among the Borrower's regions and with the rest of the country \.
Objective 1: Increasing effective use of the road infrastructure through rehabilitation and maintenance \. Modest \.
Outputs
⢠1,196 km of roads were rehabilitated under performance based maintenance contracts, against a target of 2,000
km\. About 800 km of roads were not rehabilitated under the project, because they were not identified at appraisal
and were not firmed up during implementation \.
Outcomes
Average land transport freight rates on selected itineraries fell by 10\.8 percent over the life of the project versus
a target reduction of 6 percent\. However, this is a poor indicator as many factors can influence freight rates,
such as intra and inter-modal competition (competition in the trucking industry and road freight versus rail
freight), political campaigns and public pressure to keep freight rates low, and imperfect
administrative/regulatory oversight at the State level \.
Average annual daily traffic on the project sections increased by 9\.5% per annum over the life of the project \.
However, not all of this increase can be attributed to the project, as economic growth was accelerating in the
country, and especially in Bahia State \.
Unit vehicle operating costs (VOCs) are estimated to have decreased by 12\.5 percent on the project roads
versus a target of 8 percent\. This is a leading indicator, even though other factors besides the condition of the
road surface can influence the VOCs, such as the condition of the vehicles themselves and newer technologies
that were being built into vehicles \.
Objective 2: to increase effective use of the Borrower's road infrastructure through provision of support for
institutional improvements in the Borrower's road sector \. Modest \.
Outputs
The project financed 41 consultancy contracts, of which 17 were for individual consultants
The Integrated road planning and management system for the state transport Infrastructure Department
(DERBA) became operational (partially)\.
The number of regional offices (residencias) operating information systems on -line was 20, versus a target of
10\.
The number of staff weeks of training for the highway agency's staff was 1,527, which represented a large
increase over the target of 200 staff weeks\.
Ten technical audits per year were completed versus a target of five \.
Four feasibility studies of specific road sections were completed as per the target \.
The state's multi-modal strategy was defined, including he state airport plan, the inter -municipal passenger
transport plan, the transport survey for Salvador metropolitan area, and the state waterways transport
infrastructure and services plan \.
Four planned outputs were not achieved : (i) the data warehouse system for one of the highway agencies did not
become operational; (ii) the plan to optimize logistics impact on the Salvador Metropolitan area was not
developed; (iii) the geo-referenced social and economic database did not come into operation; and (iv) the
regulatory body's (AGERBA) supervision capacity was not strengthened because planned training was not
delivered\.
Outcomes
⢠Two results were achieved through the institutional strengthening activities : (i) better transport and logistics
planning (transport and logistics masterplan, inter -municipal transport master plan, and the Salvador metropolitan
area transport surveys, which formed the basis for the State to set out its vision and define priorities for better
intra-state connectivity, as well as Bahia âs integration within the country âs corridors and freight flows): and (ii)
implementing an effective road program would not have been possible without an effective road agency whose
capacity was enhanced by the project \. This provided a more solid basis for planning and use of public funding for
roads\.
⢠However, four planned outputs were not implemented (see above), and this inevitably impacted negatively
on the achievement of the institutional strengthening objective \.
5\. Efficiency:
The ICR calculates an ex-post internal economic rate of return (IERR) of 74 percent, well above the already high
appraisal estimate of 46 percent\. The major causal factor, according to the ICR, was that traffic volumes were much
higher than estimated at appraisal \. While it is recognized that the improved roads that were rehabilitated under the
project did help to accommodate the higher traffic flows that occurred during the project period, these flows were not
all on account of the project Rapid economic growth in the Bahia region was a driving factor \. Rehabilitated roads did
contribute to higher economic growth through more efficient distribution of freight \. Annex 3 of the ICR discusses the
various factors affecting the economic analysis, such as vehicle modal distribution (car and trucks) and heavier road
solutions versus lighter rehabilitation works, The calculations were done for 1,177 km of the road network, or 59
percent of the estimated project network at appraisal \.
Administrative and operational inefficiencies (such as inadequate cost estimates, misunderstanding of Bank
procedures, and procurement -related delays) played a role in the cost overrun and physical shortfall of the
investment component\.
Efficiency is rated as Substantial\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 46% 100%
ICR estimate Yes 74% 59%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Relevance of Objectives was High, while that of Design was Substantial \. Efficacy was Modest in view of moderate
shortcomings, but Efficiency was Substantial \. The Project Outcome is rated Moderately Satisfactory,
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
In this project, the key factors affecting Risk are technical, financial /economic, and political/governance\.
The technical risk is moderate, Although the performance -based contracting approach has been adopted and
implemented within the context of the project, nevertheless the concept had not fully taken hold by closure, and the
ICR (page 22) acknowledges that some time will pass before it does so \. The ICR also notes that all six road
maintenance performance-based contracts supported by the project are still ongoing \. They include only routine
maintenance services, and it is anticipated that they will be completed by August 2014\. The State of Bahia will bear
the full cost of these contracts \.
The financial risk is moderate\. In order to receive continued budgetary allocations, an approved State Plan has to be
in force\. The ICR notes that the flagship study meant to lay out Bahia âs transport and logistics master plan
(PELTBAHIA) has been delayed\. Several other studies (State Airports Master Plan, new regulations for waterborne
transport, and re-estimation of reductions in freight transport rates, stemming from road rehabilitation ) have helped to
provide stability in planning tor the sector \. The 2013 state budget includes a particular allocation of about R$ 720
million in the road subsector only \. However, there appears to be no soundly based estimate of annual maintenance
requirements\. Moreover, while the roads budget for 2013 is substantially higher than that for the previous year, the
risk of falling back to pre-2010 level of investment remains\. Whether, since 2010, the declining trend of transport
expenditures within the total State of Bahia expenditures will continue or stabilize is an open question (ICR, page 18)\.
On political and governance aspects, the risk of policy reversal regarding the priority given to the transport
sector among other State programs is considered to be low \. In its latest mid-term planning documents
(Planejamento Pluri-Anual â PPA 2012-2015), the State committed itself to the development needs of the core
infrastructure required to foster development and growth \. In its 2013 budget, the State allocated R$ 720 million to the
road subsector\.
Regarding institutional support, the State highway agencies have adequate technical managerial capacity, even
though there have been some weaknesses as noted \.
On the environmental front, the project does not pose any risks, nor on the social front, as land acquisition is not
required for road rehabilitation\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The project team drew on extensive Bank involvement in Brazil's transport sector, including policy dialogue
and six Bank-financed public transport projects, as well as Bank support for decentralization from the federal
transport agency (CBTU) to state and municipal agencies in Sao Paulo, Rio de Janeiro, Belo Horizonte, and
Bahia\. The Bank played an important role in highlighting the strategic relevance of the project \. It displayed a good
understanding of the technical, financial, and economic factors \. The Project Appraisal Document included an
annex that analyzed the fiscal situation of the Bahia State Government, as a basis for determining the extent of
counterpart funds required for project implementation \.
The ICR states (page 6) that technical preparation was quick (seven months), but this probably led to the use of
outdated cost estimates, which were not revised at appraisal and were a major contribution to the significant cost
overrun (55 percent higher than the appraisal estimate )\. The Bank team over-estimated the capacity of the
agencies to execute the project within the time -line required, which also contributed to the significant shortfall in
road rehabilitation output\. The appraisal underestimated the time needed to overcome the cultural barriers to the
adoption of Performance-Based Maintenance, especially when account is taken of the fact that this project
pioneered the approach in the North East of Brazil (ICR, page 22)\.
There was a long delay (13 months) between Board approval and effectiveness \. This was on account of
unfamiliarity at the State level with Bank procedures (see Section 9 below), a factor that could have been
foreseen and addressed, especially since this was a new Borrower \.
There were important weaknesses in M&E design (see Section 10a below)\.
at -Entry Rating :
Quality -at- Moderately Unsatisfactory
b\. Quality of supervision:
The team focused closely on the development impact, It displayed a broad view of the role of the
transportation sector in the local economy \. The team was pro-active and maintained continuity -- there was only
one change in task team leadership over an 8-year period (including preparation)\. Although a whole year was lost
before contracts could be bid out, due to the effectiveness delay, the task team got things on track after that \. The
QALP-2 assessment of July 2010 judged the project implementation to have been moderately satisfactory \. It
pointed to lack of readiness of the project on account of insufficient preparation of procurement bidding
documents\.
Nevertheless, the rate of contract execution was slow \. The ICR (page 10) states that six civil works contracts
procured through International Competitive Bidding (ICB), and the eight goods contracts (four through ICB, and
four through shopping) were satisfactorily carried out \. However, there were significant procurement delays,
especially in the first two years of project implementation \. The main factor was the re-estimation of costs, as it
turned out that the appraisal estimates were based on outdated (2004) cost estimates\. Also, the detailed
engineering designs (completed only in 2008) specified costlier solutions (thicker asphalt overlays) than the ones
anticipated in the initial road assessments, carried out at the end of 2004\. Apparently, roads deteriorated
substantially in the four years 2004-2008\.
The task team initiated two Level -2 restructurings during implementation -- in September 2010 to raise the loan
financing percentage to solve the counterpart funding constraint, and again in April 2013, which reallocated loan
proceeds between categories \.
Supervision reports were comprehensive, but did not firm up the cost estimation of the 800 km of road network
that had been left unidentified at appraisal \. This should have been a priority task of supervision \. The
Development Objectives rating was stated as 'Satisfactory' in all reports, except for once in 2010, and in the last
two reports, in all of which it was rated Moderately Satisfactory \. Implementation Progress, after being rated
Moderately Unsatisfactory in 2007 and 2008, was rated Moderately Satisfactory from 2008 to 2010, and fully
Satisfactory after that through the closure of the project \. These ratings do not fully reflect the reality of the delays
and the impact of cost overruns on the rate of physical completion \.
There were significant shortcomings in M&E implementation, which the supervision reports did not fully address \.
The monitoring of the project focused on physical implementation and left the traffic surveys and other indicator
analyses until the end (see section 10 below)\.
There were significant shortcomings in M&E implementation (see section 10 below)\.
There were no reported unresolved issues of safeguards or fiduciary compliance \.
Quality of Supervision Rating : Moderately Unsatisfactory
Overall Bank Performance Rating : Moderately Unsatisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
Government ownership of the project was strong \. The enabling environment was cohesive, with high priority
attached to the freight transport sector, utilizing the road network \. However, readiness of the project in the initial
two years of implementation presented an issue, and the effectiveness delay contributed to subsequent cost
overruns\.
The Government waited until loan effectiveness before having the state road agency bid out the engineering
designs\. This decision proved costly â it adversely impacted the actual commencement of project implementation,
as well as contributing to the cost escalation \. The Government made this decision, despite the Bank âs
preparation mission having recommended the commencement of the technical work as soon as possible within
the preparation phase\.
Although the Bank had indicated that Additional Financing (AF) of about US$80 million to cover the cost overruns
would be available, the State Government decided not to request it, because it considered that it did not have
sufficient borrowing capacity for the AF, given the State's planned expenditures in other sectors in that period
(2011-2013)\.)\. The global financial crisis of 2008 severely affected the fiscal position of the State of Bahia \. Thus,
in 2009-2010, when the project financing gap became apparent, the State indicated that it could not afford any
additional financing for this project -- either from the Bank or from its own fiscal resources \. Also, there was a push
from the state towards social expenditures \.
However, the AF could have enabled the target of 2,000 km of rehabilitation using performance based contracts
to be reached\. Although the State is rehabilitating an additional 2,500 km of paved road, using its own funds, this
is being done under traditional, input -based contracting\. The Government thus fell short of meeting the 2,000 km
target for performance-based rehabilitation\.
Government Performance Rating Moderately Unsatisfactory
b\. Implementing Agency Performance:
The outcome of the project was mainly dependent on the implementing agencies, not the Government âper se\.
â The Department of Transport Infrastructure (DERBA) and its Project Coordination Unit performed satisfactorily,
especially given that this road rehabilitation and maintenance program was the first of its kind in Brazil âs northeast
region\. The Project Coordination Unit kept things moving forward, coordinating with the various beneficiaries and
providing technical contributions throughout the project phases, by supervising the development of the
engineering designs and the execution of the works; and undertaking the monitoring and evaluation of activities \.
Semi-annual progress reports were submitted to the Bank \. However, an initial misunderstanding from DERBA âs
procurement office led to the insistence that bidding processes were also subject to the State of Bahia âs
procurement rules, thereby triggering additional administrative burdens and delays \.
SUPET (SEINFRAâs transport studies superintendent function ) and SEI (SEPLANâs economic and social studies
superintendent function) carried out the technical assistance component \. SUPET delivered more products than
initially planned (the Inter-municipal Transport Plan, the Salvador Metropolitan Region Origin and Destination
Survey, and the Stateâs Airports Master Plan)\.
As the state's transport, energy and communications regulatory agency, AGERBA could have benefited from
training and exposure to modern regulatory concepts and techniques \. However, AGERBA did not carry out its
technical assistance activities \. Efforts to organize a Masters in Business Administration training program did not
materialize, nor did AGERBA send staff to existing MBA programs in Bahia State, or elsewhere in Brazil \. The
reasons for this were: (i) weak institutional capacity and numerous changes in the leadership of the agency; and
(ii) the impossibility of concluding a contract between DERBA and the Rio Grande do Sul University, which had
been identified to deliver the training to AGERBA \. Thus, after about 2 years of unsuccessful contract
negotiations, the Bank deleted this activity and reallocated the funds to other activities within the project \.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The Monitoring and Evaluation system incorporated outcome indicators, However, the framework provided no
means of attributing changes in key indicators (traffic growth, freight rates and unit vehicle operating costs ) to the
project\. Baseline data were sketchy (Annex 3 of the PAD, Result framework and Monitoring ) and relied on federal
and state-wide transport sector information \. This annex did not include intermediate project outcome targets for
Years 1-5, which meant that the Bank and implementing agencies teams did not have intermediate benchmarks to
guide them\.
The annual and semi-annual monitoring activities focused on physical progress of the project and not on
implementing the extensive surveys that were intrinsic to the specification of the results framework âs indicators (traffic
flows, vehicle operating costs, etc \.)\. Although the full benefits of the project and its resultant traffic flows are only fully
apparent at completion, building the monitoring system along the way to capture this impact would have been helpful \.
Some of the institution building activities were insufficiently monitored (e\.g\. the Plan to optimize transport logistics in
the Salvador Metropolitan Region was not formulated )\.
b\. M&E Implementation:
The baseline data were augmented in the first few years of the project and are shown in the Data Sheet of the ICR
\. This generated summary information for supervision reports, but did not permit the monitoring and evaluation of the
three outcome indicators, which were, in fact, not monitored during most of the implementation period \. The
calculation of land transport freight rates on ten selected roads of the project emerged from a study that was carried
out only in 2013 -- during the last nine months of the project \. Average reductions in freight transport rates were
calculated and were extrapolated backwards to provide an annual freight charges reduction rate for the 2008-2013
period\. Similarly, the average annual daily traffic increase rate was calculated at the end of the project and was also
extrapolated backwards to 2008-2013 to provide an annual rate of increase \. The same was done for vehicle
operating costs\. The monitoring and evaluation system, therefore, did not guide project implementation from year to
year, but rather generated only an ex post view \. DERBA monitored from year to year only the physical outputs of civil
works construction\.
c\. M&E Utilization:
M&E data generated during project implementation were adequate for monitoring what the project financed, and
they have proven useful in helping design a follow -on project that, if approved, would have the necessary baseline
information\. The Implementation Status Results Reports made effective use of the data, as did the Mid -Term Review\.
The cost-benefit study carried out later on used site -specific survey results and traffic studies to supplement the
aggregate data\.
M&E Quality Rating : Modest
11\. Other Issues
a\. Safeguards:
The project was classified as Category "B" for purposes of Environmental Assessment \. Four Safeguards policies
were provisionally triggered: OP/BP 4\.01 (Environmental Assessment), OP 4\.11 (Cultural Property), OP/BP 4\.12
(Involuntary Resettlement), and OP/BP 4\.10 (Indigenous Peoples)\.
Accordingly, the Road Agency prepared the following documents, which were found to be acceptable by the Bank :
(i) the Indigenous People Plan
(ii) the Resettlement Framework;
(iii) Guidelines for the Program's Environmental Evaluation \.
Cultural property turned out to not be present in project -supported sections of road rehabilitation \.
The ICR states that there were no involuntary resettlements, nor was there any impact on indigenous people's
territories, as roads were rehabilitated on existing rights of way \. Since this was a highway rehabilitation and
maintenance project within the State's existing domains, the project did not involve any land acquisition \.
According to the ICR, no critical safeguards issue emerged during implementation \. The Bank's environmental/social
specialists carried out supervision missions annually \. DERBAâs environment unit visited the various road sections
four times a year, including after the rehabilitation works were completed \. The only environmental issue that arose
related to clean-up of work sites, which according to the ICR had been addressed at all road sections by closure \.
b\. Fiduciary Compliance:
Financial Management
Financial management was carried out in accordance with the arrangements agreed upon in the Loan Agreement
and the Operational Manual\. The project had an acceptable financial system in place at the outset of project
implementation, relying on the Road Agency's systems \. Specific financial management missions were carried out
once or twice a year during implementation; no critical issues were reported \.
Supervision reports, including the last one of September 24 2013, rated financial management Satisfactory, except
during January-May 2010, when it was Moderately Satisfactory, due to counterpart financing issues \. As noted, this
issue was addressed, in mid-2010, by increasing the Bankâs share of financing for civil works and goods under the
project\.
The last report on Financial Management Performance of September 24, 2013 stated that the FM rating was
Satisfactory\.
Annual Audited Financial Statements were reviewed by the Bahia State Court of Account, which were then submitted
to the Bank\. Bank reviews produced no issues regarding fiduciary compliance \. Auditors' opinions were unqualified \.
Procurement
The Project financed six works contracts (ICBs), eight goods contracts (including four ICBs) and 41 consultancy
contracts, out of which 17 were for individual consultants \. Consulting services were contracted through Quality and
Cost Based Selection\. All procurement processes were subject to prior review, in order to maintain a tight control
over selection (that it be sound and transparent )\.
However, delays in procurement became a major factor in the cost overrun and physical shortfall \. The average
procurement process duration for Quality and Cost Based Selections was 2 years and 4 months (between
preparation of the requests for proposals and contract signing )\. Reasons include: (i) an initial misunderstanding from
DERBAâs procurement office, which led to the insistence that bidding processes were also subject to the State of
Bahiaâs procurement rules, thereby trigge ring additional administrative burden and delays; (ii) delays between the
Project Coordination Unit and other State entities beneficiaries; (iii) overall poor initial quality of procurement
documents, requiring back and forth between the Project Coordination Unit and the Bank; and (iv) difficulty to come
up with short-lists of two consultancies maximum per country \. There were no reported cases of misprocurement \.
Disbursements
There were no issues, Disbursements followed eligible expenditure categories \.
c\. Unintended Impacts (positive or negative):
\.
d\. Other:
None
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Satisfactory Moderately There were significant shortcomings in
Unsatisfactory both Quality at Entry and Quality of
Supervision, including severely
inaccurate cost estimates, the
non-identification of 800 km of the road
network, and the lack of priority given
to resolving this issue during
implementation\. Design and
implementation of the M&E system had
important shortcomings\.
Borrower Performance : Satisfactory Moderately There were significant shortcomings in
Satisfactory Government performance, including
the decisions to wait until effectiveness
before having the State Road Agency
bid out the engineering designs \.
Implementing Agency performance
was moderately satisfactory\.
Quality of ICR : Unsatisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
Of the following lessons, the first two are taken from the ICR, and the others are drawn by IEG :
A performance-based approach to highway improvement projects takes time and requires cultural change \.
Combined lending instruments and interventions across the Bank Group help to leverage sector results \. The
project included institutional strengthening activities, which proved conducive to fostering the sector dialogue \.
Project development objectives and outcome indicators need to be closely aligned, tracing a strong causal
link\. This proved to be difficult in this project \. Weak attribution resulted from exogenous factors driving the
outcome indicators\. It is important to design a results framework that links inputs -outputs-outcomes clearly,
and through which outcomes can be attributed to the project \. This should not be restricted to annual
monitoring of only the physical progress, but needs to encompass the specified results /outcome indicators\.
The full and effective financing of road rehabilitation programs needs a clear time horizon, a realistic appraisal
of technical capacity, and updated estimates of the cost of civil works \. The financing gap that emerged in this
project, and the shortfall in physical output, reflected the absence of these elements \.
14\. Assessment Recommended? Yes No
Why? To verify the ratings and document lessons learned \.
15\. Comments on Quality of ICR:
Quality of Evidence: the ICR presents a body of evidence that allows one to understand the history of the project
and the problems it encountered \. However, some of the information on key actions taken by the Bank and the
State Government, including its implementing agencies, is too brief \.
The quality of analysis has several major weaknesses : it lacks a critical view of the physical shortfall in output
and the inability of the Bank and the Government to estimate a realistic program and time period in which to
execute 2000 km of road rehabilitation (this was a design issue)\. The report summarizes the factors that caused
the cost overrun, but over -emphasizes the effect of the exchange rate changes \. The ICR could have explained
more clearly that at appraisal only the first 1171 km were identified and therefore there were no cost estimates
on the remaining 829 km of road network\. The latter were therefore an approximation used in determining the
original loan amount\.
The weaknesses in the M&E system (design, implementation, and utilization ) are not sufficiently analyzed \.
The report is excessively narrative driven, tracing a story -line of implementation that does not come together in
key parts\. For example, the map shows key sections that appear to be unfinished \. The project team later
clarified that the segments of roads that were rehabilitated were in fact connected by an east -west national
highway in good condition\.
Scant information is given in the ICR on what transpired between the February 2011 supervision report and the
closing date of the loan some 30 months later\.
a\.Quality of ICR Rating : Unsatisfactory | REVIEW |
P074850 | Document of
The World Bank
Report No: ICR0000615
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H0660)
ON A
GRANT
IN THE AMOUNT OF SDR 12\.2 MILLION
(US$ 16\.6 MILLION EQUIVALENT)
TO THE
REPUBLIC OF BENIN ON BEHALF OF THE FIVE WESTERN AFRICAN STATES
FOR A
HIV/AIDS PROJECT FOR ABIDJAN/LAGOS TRANSPORT CORRIDOR
June 25, 2008
Transport Sector
Country Department AFCRI
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective January 31, 2008)
Currency Unit = CFA franc
1 CFAF = US$ 0\.002268
US$1 = 441CFAF
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
AIDS: Acquired Immune Deficiency Syndrome
ALCO: Abidjan-Lagos Corridor Organization
ARV: Antiretroviral drug
BCC: Behavior change communication
CAS: Country Assistance Strategy
CBO: Community-Based Organization
CSO: Civil Society Organization
ECOWAS: Economic Community of West African States
EU: European Union
FCFA: Franc of West African Monetary Union
GTZ: Gesellschaft für Technische Zusammenarbeit (German Agency for International
Cooperation)
HIV: Human Immunodeficiency Virus
IEC: Information, Education and Communication
IEG: Independent Evaluation Group
ISR: Implementation Status Report
MAP: Multi-Country HIV/AIDS Program
M&E: Monitoring and Evaluation
MTR Mid-Term Review
NGO: Non-governmental Organization
OI: Orphans Infected
OVC: Orphans and Vulnerable Children
PAD: Project Appraisal Document
PHRD: Japan Policy and Human Resources Development Trust Fund
PDO: Project Development Objective
PLWHA People Living with HIV/AIDS
PPF: Project Preparation Facility
RAP+AO: Réseau Africain des Personnes vivant avec le VIH/SIDA en Afrique de l'Ouest
(Network of Africans living with HIV/AIDS in West Africa)
RIAS: Regional Integration Assistance Strategy
STI: Sexually Transmitted Infection
UNAIDS: Joint United Nations Program on HIV/AIDS
VCT: Voluntary Counseling and Testing
Vice President: Obiageli Katryn Ezekwesili
Country Director: Joseph Baah-Dwomoh/Mark Tomlinson
Sector Manager: C\. Sanjivi Rajasingham
Project Team Leader: Siélé Silué
ICR Team Leader: Nadeem Mohammad
AFRICA
HIV/AIDS PROJECT FOR ABIDJAN-LAGOS CORRIDOR
TABLE OF CONTENTS
Data Sheet
A\. Basic Information\.
B\. Key Dates\.
C\. Ratings Summary\.
D\. Sector and Theme Codes \.
E\. Bank Staff\.
F\. Results Framework Analysis\.
G\. Ratings of Project Performance in ISRs \.
H\. Restructuring (if any)\.
I\. Disbursement Profile\.
1\. Project Context, Development Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes \. 3
3\. Assessment of Outcomes\. 7
4\. Assessment of Risk to Development Outcome\. 11
5\. Assessment of Bank and Borrower Performance \. 12
6\. Lessons Learned \. 14
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 15
Annex 1\. Project Costs and Financing\. 16
Annex 2\. Outputs by Component \. 17
Annex 3\. Economic and Financial Analysis\. 21
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 22
Annex 5\. Beneficiary Survey Results\. 24
Annex 6\. Stakeholder Workshop Report and Results\. 25
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 26
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 28
Annex 9\. List of Supporting Documents \. 30
Annex 10: Statistical Annex \. 31
Annex 11: Key Lessons Learned from ALCO Experience \. 1
A\. Basic Information
HIV/AIDS PROJECT
FOR ABIDJAN -
Country: Africa Project Name:
LAGOS TRANSPORT
CORRIDOR
Project ID: P074850 L/C/TF Number(s): IDA-H0660
ICR Date: 06/26/2008 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: SIL Borrower:
BENIN
Original Total
XDR 12\.2M Disbursed Amount: XDR 12\.2M
Commitment:
Environmental Category: B
Implementing Agencies:
EXECUTIVE SECRETARIAT
Cofinanciers and Other External Partners:
B\. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 07/19/2001 Effectiveness: 02/18/2004 02/18/2004
Appraisal: 11/18/2002 Restructuring(s):
Approval: 11/13/2003 Mid-term Review: 01/23/2006 01/23/2006
Closing: 07/01/2007 12/31/2007
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Low or Negligible
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank Overall Borrower
Performance: Satisfactory Performance: Satisfactory
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Performance Indicators (if any) Rating
Potential Problem Project Yes Quality at Entry
None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 27 13
General transportation sector 8
Health 41 60
Other social services 32 19
Theme Code (Primary/Secondary)
HIV/AIDS Primary Primary
Other communicable diseases Secondary Secondary
Regional integration Secondary Secondary
Social risk mitigation Secondary Secondary
Trade facilitation and market access Secondary Secondary
E\. Bank Staff
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo
Country Director: Mark D\. Tomlinson Antoinette M\. Sayeh
Sector Manager: C\. Sanjivi Rajasingham C\. Sanjivi Rajasingham
Project Team Leader: Siele Silue Stephen J\. Brushett
ICR Team Leader: Siele Silue
ICR Primary Author: Jerome F\. Chevallier
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The PDO is to increase access along the Abidjan # Lagos Transport Corridor to
HIV/AIDS prevention, basic treatment, support and care services by underserved
ii
vulnerable groups with particular attention to transport workers, the migrant population,
commercial sex workers and the local populations living along the corridor, especially at
the border towns\. It is expected that the project will contribute to the reduction of the
spread of HIV/AIDS and to the mitigation of the adverse social and economic impact of
HIV/AIDS along the transport corridor\.
Revised Project Development Objectives (as approved by original approving authority)
The objective was not revised
(a) PDO Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Revised Achieved at
approval Target Completion or
documents) Values Target Years
Indicator 1 : By end of 2006, at least 90% of the corridor commercial vehicle drivers can
identify at least two ways in which to prevent HIV/AIDS
Value
quantitative or 68 percent At least 90 percent 82\.7 percent
Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments
(incl\. % 92 percent of the target value achieved\. To address the issue of target population
achievement) high mobility, the project initiated special information days\.
Indicator 2 : By the end of 2006, at least 90% of local population residing along the corridor
can identify at least two ways in which to prevent HIV/AIDS
Value
quantitative or 50 percent At least 90 percent 84\.4 percent
Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments
(incl\. % 94 percent of the target value achieved due to many changes among the local
achievement) population residing along the corridor during the various surveys\.
Indicator 3 : By end of 2006, at least 90%, of the sex workers along the transport corridor can
identify at least two ways in which to prevent HIV/AIDS\.
Value
quantitative or 59\.5 percent 90 percent 87\.9 percent
Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments
(incl\. % 98 percent of the target value achieved\. The project led many IEC activities for
achievement) sex workers, including training for peer educators\.
By end of 2006, reduce by 30%, compared with the first year of the project, the
Indicator 4 : incidence of reported sexually transmitted (urethritis) infections among male
commercial vehicle drivers working along the corridor\.
Value
quantitative or 6\.7 percent 4\.7 percent 11\.5 percent
Qualitative)
iii
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments -244 percent of the target value achieved\. The STI incidence has gone up because
(incl\. % of improved diagnostics and availability of treatment may have attracted more
achievement) utilization of those infected with STIs\.
(b) Intermediate Outcome Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
By 2006, increase by at least 50%, compared with the first year of the project, the
Indicator 1 : proportion of commercial vehicle drivers using a condom in their last act of
sexual intercourse with a non-regular partner in the previous 12 months\.
Value
(quantitative 59\.3 percent 90 percent 78\.8 percent
or Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments 88 percent of the target value achieved\. The condom distribution benefited a
(incl\. % large number of highly mobile people and also the restrictive interpretation
achievement) given by commercial vehicle drivers to what is a non-regular partner can explain
this result\.
Indicator 2 : By end of 2006, at least 80% of commercial sex workers along the transport
corridor report using condoms with their clients of the previous week\.
Value
(quantitative 58\.8 percent 80 percent 70\.5 percent
or Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments 88 percent of the target value achieved\. The sex workers move very frequently
(incl\. % from an area to another with lot of new arrivals\. These movements can explain
achievement) this result\.
By end of 2006, increase by 50%, compared with first year of the project, the
Indicator 3 : number of condoms distributed through social marketing along the transport
corridor\.
Value
(quantitative 0\.97 million 1\.46 million 8\.8 million
or Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments 602 percent of the target value achieved\. The project has produced its own
(incl\. % condom #The MIGRANT# distributed in the kiosks put in place by the project
achievement) along the corridor\.
Indicator 4 : By end of 2006, each border crossing point of the corridor has at least one
voluntary counseling and testing (VCT) center on either side of the border\.
Value
(quantitative 3 8 16
or Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments 200 percent of the target value achieved\. The project undertook strong IEC
iv
(incl\. % campaigns\. To satisfy the huge number of people interested by the test, the
achievement) project doubled the number of the VCT centers\.
By end of 2006, increase by at least 50%, compared with first year of the project,
Indicator 5 : the number of people who use voluntary counseling and testing centers along the
transport corridor\.
Value
(quantitative 1,000 1,500 27,639
or Qualitative)
Date achieved 02/15/2005 07/30/2007 12/31/2007
Comments 1,856 percent of the target value achieved\. The successful IEC campaigns led by
(incl\. % the project, including traditional chiefs, religion leaders, transport unions,
achievement) PLWHA to promote VCT\.
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 12/12/2003 Satisfactory Satisfactory 0\.00
2 06/02/2004 Satisfactory Satisfactory 1\.24
3 12/03/2004 Satisfactory Satisfactory 1\.76
4 05/11/2005 Satisfactory Satisfactory 3\.18
5 10/15/2005 Satisfactory Satisfactory 5\.72
6 03/17/2006 Satisfactory Satisfactory 8\.81
7 10/12/2006 Satisfactory Satisfactory 12\.79
8 03/25/2007 Satisfactory Satisfactory 15\.75
9 11/30/2007 Satisfactory Satisfactory 17\.41
H\. Restructuring (if any)
Not Applicable
v
I\. Disbursement Profile
vi
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
1\. In West Africa, major regional travel routes extend along the north-south directions
between land-locked and coastal countries on one hand, and east-west directions (mainly the
Abidjan-Lagos corridor) between the coastal countries on the other hand\. National borders often
divide populations from the same ethnic group\. About 30 million people live along the Abidjan-
Lagos corridor and 14 million people travel on the corridor annually\. Travel along the major
transport routes in the region is an essential requirement for its socioeconomic well-being; it also
offers opportunities for faster transmission of sexually transmitted infections (STIs), including
Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS), among
the people in the region\. Commercial vehicle drivers, commercial sex workers, migrants and the
people, who live in border areas along the major transport routes, are among the vulnerable
groups that may be affected by HIV/AIDS\. According to the social assessment done in 2001,
about 300,000 HIV positive people were traveling along the corridor every year\.
2\. UNAIDS estimated that the HIV prevalence rates among the adult population in the five
countries along the Abidjan-Lagos corridor ranged from 9\.7 percent in Côte d'Ivoire and 3
percent in Ghana in 2001 (see Annex 10, Table 1)\. High prevalence rates among truck drivers and
commercial sex workers were reported in the large cities along the corridor\. For instance, 33
percent of the truck drivers and 80 percent of commercial sex workers in Lomé, the capital of
Togo, were reported to be infected with HIV in 1992\. Long delays in clearing border formalities
along the corridor led to risky behavior by truck drivers\. Experience demonstrates that prevention
is more effective when it is carried out in places, where such risky behavior occurs\.
3\. The Country Assistance Strategies (CAS) of the five countries concerned (interim CAS
or progress report as applicable) identified HIV/AIDS as an issue requiring Bank support\.
Country-specific programs for combating HIV/AIDS in the five countries were either being
supported by ongoing projects under the Multi-Country HIV/AIDS Program (MAP) or were
being prepared\. The transport corridor project was designed to complement national efforts by
addressing cross-boundary issues, such as HIV/AIDS, and targeting vulnerable groups that are
not easily covered through country projects because they are highly mobile\. The central focus of
the regional integration assistance strategy for West Africa (RIAS), reviewed by the Board in July
2001, was the creation of a West African open, unified, regional economic space\. Its secondary
focus was on addressing issues that span borders, such as preventing communicable diseases,
where there can be gains from greater regional cooperation\. The project was fully aligned with
the RIAS\. It would complement national efforts in HIV/AIDS prevention and make a contribution
to facilitating trade along the corridor\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators
4\. The objective of the project was to increase access along the Abidjan-Lagos transport
corridor to HIV/AIDS prevention, basic treatment, support and care services by underserved
vulnerable groups\. Particular attention would be given to transport sector workers, migrant
population, commercial sex workers and local populations living along the corridor, especially at
border towns\. The project was expected to contribute to the reduction of the spread of HIV/AIDS
and the mitigation of the adverse social and economic impact of HIV/AIDS along the transport
corridor\.
5\. Five outcome indicators were proposed\. The first three had to do with knowledge about
HIV/AIDS (at least 90 percent of the local population, the commercial vehicle drivers and the
commercial sex workers residing and working along the transport corridor could identify at least
two ways to prevent HIV/AIDS)\. The last two had to do with the reduction of the incidence of
Sexually Transmitted Infections (STIs): reduce by 30 percent the incidence of STIs among male
commercial vehicle drivers, and by 50 percent the prevalence of gonorrhea among commercial
sex workers\. Nine output indicators were proposed, including the establishment of one voluntary
counseling and testing center on either side of each border, attendance at these centers; the use of
condoms by commercial vehicle drivers and sex workers; and the reduction of the average time
for clearing border formalities and of the number of informal checkpoints along the corridor\.
1\.3 Revised PDO The objective was not revised\.
1\.4 Main Beneficiaries
6\. The project targeted the vulnerable populations along the Abidjan-Lagos transport
corridor, with particular attention to: a) commercial vehicle drivers; b) People Living with
HIV/AIDS (PLWHA); c) commercial sex workers; d) migrants; e) customs, police and
immigration employees based at border towns along the corridor; f) local residents along the
transport corridor, especially those in border towns\. Public sector entities in the health, transport
and trade sectors were expected also to benefit from the project\.
1\.5 Original Components
7\. The project included three components, prevention, care and support, and project
implementation and capacity building\.
The first component, HIV/AIDS prevention, included two sub-components: a)
implementation of an integrated Information, Education and Communication (IEC) and
Behavior Change Communication (BCC) program, and b) social marketing of condoms
in the eight border communities and along the transport corridor\.
The second component, HIV/AIDS treatment, care and support services, included three
sub-components: a) strengthening public and private health care facilities along the
corridor to provide Voluntary Counseling and Testing (VCT) services and treatment of
STIs and HIV/AIDS opportunistic infections; b) provision of grants to Civil Society
Organizations (CSOs, including Community-Based Organizations - CBOs) to undertake
community-based initiatives in HIV/AIDS care and support; and c) safe disposal of
medical waste related to the project\.
The third component (project coordination, capacity building and policy development)
included: a) the development of strong HIV/AIDS inter-country coordination among
governments and other stakeholders; b) capacity building among participating partners; c)
implementation of transport sector policies aimed at expediting border crossing and
removing informal barriers to the movement of people and goods, which would in turn
help reduce the importance of sex markets at border towns\.
1\.6 Revised Components\. The components were not revised
1\.7 Other significant changes
8\. Two reallocations of funds were approved in July 2006 and in July 2007\. Allocations to
categories 2 (consultant services and training) and 4 (equipment and drugs, tests and medical
supplies) have been increased to take account of (a) key studies to address waste management
issues and adopt the HIV/AIDS regional strategy, and (b) the need to provide medical supplies to
a larger number of health facilities than initially envisaged\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
9\. The project was fully consistent with the MAP2 eligibility criteria for sub-regional
projects\. It was consistent with the HIV/AIDS strategies of the five countries concerned and
addressed cross border HIV/AIDS issues, which were beyond the reach of national programs\. It
was endorsed by the five heads of state, through a joint declaration\. During project preparation,
appropriate procedures were put in place to enable sub-regional and national stakeholders to
participate effectively in project implementation and to ensure that IDA's safeguards
requirements were met\.
10\. The project was also fully aligned with the RIAS\. It was designed to complement
national HIV/AIDS programs by mitigating a negative cross border externality and focusing on
people not reached by national programs\. It would also complement ongoing transport sector
operations in three of the five countries concerned (Cote d'Ivoire, Ghana and Nigeria, which had
all HIV/AIDS components)\. To facilitate trade and transport, the project included the surveillance
of abnormal practices at borders, the effective application of Economic Community of West
African States (ECOWAS) agreements governing transit and movement of goods and people, and
the dissemination of information to commercial vehicle drivers\. Transport facilitation was not
mentioned as an objective of the project, however, even though indicators were proposed to
measure improvements to the flow of traffic along the Abidjan-Lagos corridor\.
11\. The background analysis on the transport corridor was adequate\. In the framework of the
West Africa Initiative, an UNAIDS team carried out extensive assessments of vulnerable groups
along the corridor and more specifically in border towns, which had high HIV prevalence rates
and almost no services\. A number of alternatives were considered, including relying on national
programs to address the specific issues of the transport corridor\. A range of options were explored
concerning the institutional arrangements for project implementation, in close consultation with
ECOWAS\.
12\. Lessons learned from international experience in fighting HIV/AIDS, and especially,
country specific MAP1 projects, were fully incorporated in the project design\. These lessons
included addressing the regional implications of HIV/AIDS, insisting on strong political
leadership and commitment at the highest levels, focusing on vulnerability factors, empowering
local communities, designing a multi-sectoral response to HIV/AIDS, recognizing the complexity
of MAP project supervision and the need to put in place a robust Monitoring and Evaluation
(M&E) system, avoiding a culture of command and control in HIV/AIDS Secretariats, providing
assistance to help CSOs prepare and implement their interventions and sequencing interventions
to match the development capacity in the countries\.
13\. The objective of the project was well defined\. Its design was straightforward\. In addition
to the complexity of MAP projects, the regional dimension of this project made it more complex
than national projects\.
14\. The institutional framework for project implementation was elaborate\. An assessment of
the ECOWAS Secretariat showed that it did not have the capacity to implement the project\. The
Abidjan-Lagos Corridor Organization (ALCO) was established for that purpose\. A Governing
Body, including the heads of the national HIV/AIDS programs and the Transport Directors from
each country, was responsible for the adoption of annual action plans, the supervision of their
implementation and liaison with national HIV/AIDS programs\. The Executive Secretariat,
supported by a management consultant firm, was responsible for coordinating project
implementation by CSOs and public sector organizations\. An Advisory Body, with half of its
members from private sector organizations, was also created to provide technical and policy
advice to the Governing Body\. It made comments on the draft annual work programs before their
review by the Governing Body\. Community-based border HIV/AIDS committees were created
for coordinating the local response to HIV/AIDS in border areas\. Finally, Inter-country
Facilitation Committees, with representatives from all stakeholders, were established at the four
border towns\. An operational manual was prepared and adopted before Board presentation\.
15\. The commitment of the five governments to the project was strong\. Stakeholders from all
five countries, including civil society and public sector representatives, participated in project
preparation through a series of workshops\. In August 2001, representatives of the five
Governments agreed to the basic principles of the project, and, in October 2001, the detailed
institutional arrangements for the project\. In April 2002, through a joint declaration, the
presidents of the five countries confirmed their commitment to joint action to fight HIV/AIDS in
the corridor, and to put in place the institutional framework for project implementation\. They also
agreed to a distribution of responsibilities among the five countries as follows: Nigeria would
hold the Presidency of the Governing Body and Ghana the Vice Presidency\. Benin would host the
Executive Secretariat, which would be headed by an Ivorian\. Togo would chair the Advisory
Body\. Finally, they agreed that Benin would be the recipient of the grant on their behalf\.
16\. The risk analysis, including mitigation measures, was adequate\. The project was
considered as high risk, because, on top of the risks usually associated with multi-sectoral
HIV/AIDS projects, there was the additional risk stemming from the need to maintain a strong
commitment from five governments throughout project implementation\. All risks, including weak
capacity of CSOs, poor cooperation among stakeholders, weak support from national HIV/AIDS
programs to the Executive Secretariat, limited behavior change despite improved awareness of
HIV/AIDS among the corridor population, and waning support from one or more governments
concerned were rated as high or substantial\.
2\.2 Implementation
17\. The Grant was declared effective 3 months and five days after Board approval, which
underlines the commitment of the governments and of ALCO to the project\. All effectiveness
conditions were met on time, thanks to the preparatory work financed by a Project Preparation
Facility (PPF) advance, PHRD grant and grants from other sources\. Effective start up of project
activities was delayed, however, because it took time and training to establish local organizations,
which could participate in project activities and build capacity in border towns\.
18\. Project implementation took place in a difficult context\. A severe political crisis was
unfolding in Côte d'Ivoire and Togo, which hampered project implementation and supervision in
these two countries, which were on non accrual status\.
19\. Procurement, involving a number of organizations in five countries with different
procedures, was complex\. Procurement officers in the Bank country offices provided well
appreciated support\.
20\. The financial management of the project was rated unsatisfactory by the November 2004
Implementation Status Report (ISR), because the project was unable to ensure that participating
CSOs would receive payment for their activities within a reasonable period of time (three months
maximum)\. However, it is important to underline that these delays were mostly due to the
absence of banking agencies in project sites and these problems were overcome\. The
unsatisfactory rating was changed after the next supervision mission\.
21\. Counterpart funding was contentious\. The five countries agreed that they would each
provide counterpart funding in an amount of US$50,000 per annum\. The contribution amount in
US$ was translated into national currency value at the time of the grant agreement\. At the end of
2004, only Benin had paid its contributions for 2003 and 2004\. Côte d'Ivoire, Ghana and Togo
had paid their contribution for 2003, but not for 2004\. Nigeria had not started paying\. From 2005
to the closing date of the credit, the five countries paid all their dues, including Côte d'Ivoire and
Togo, despite their non-accrual status\. With the devaluation of the dollar, the three FCFA
countries complained that they were paying more than the other two countries (US$80,000
equivalent, versus US$50,000 equivalent for the Anglophone countries)\. Eventually, it was
agreed that the US$50,000 would be converted to local currency at the rate prevailing at the time
of payment\. The total contribution by the five countries to project cost amounted to US$1\.41
million\.
22\. Initially, National programs were considered better positioned to provide anti-retroviral
(ARVs) drugs\. But during the Mid-Term Review (MTR) of the project attended by many donors,
PLWHA associations requested that the project finance the ARVs and opportunistic infections
drugs as well\. The Bank agreed to that request in order to provide ARVs, principally to
commercial vehicle drivers who tested positive in the health centers rehabilitated at border towns
and ensure also the continuity of drug provision along the corridor\. National programs would
provide ARVs and be reimbursed by the project\. The Bank's agreement facilitated the decisions
made successively by all five countries, in 2006 and 2007, to make ARV available to PLWHA for
free (Ghana continues to impose a nominal price, however)\.
23\. The grant amounts were reallocated two times in line with the recommendations made
during the MTR and the closing date was also extended by six month to December 31, 2007, to
take account of the delays in launching actual implementation of project activities\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
24\. A M&E manual was prepared during the first year of project implementation\. Project
outcomes were to be measured employing data from HIV surveillance, baseline, and end-point
population-based surveys on knowledge, attitudes practices and behavior\. Regular surveys were
to be carried out to assess progress in reducing the time required for border crossing and
harassment of commercial vehicle drivers along the transport corridor\. The baseline survey was
completed in 2005 only due to the fact that two calls for bids were unsuccessful\.
25\. The Executive Secretariat was responsible for monitoring overall project implementation
through the management consultant, according to terms of reference agreed upon before Board
presentation\. The Secretariat was expected to organize annual reviews in a participative manner\.
Activities of CSOs and CBOs were to be monitored taking into account their contractual
obligations\. Adequate indicators were selected to monitor progress towards the development
objectives of the project\.
26\. A strong M&E system was put in place led by the M&E specialist in the Financial
Management Agency\. The 87 agencies involved in project implementation produced monthly
reports on their activities, which were used in the planning process\. Five NGOs, one in each
country, were recruited to monitor the activities of local NGOs supported by the project, and to
prepare monthly and annual reports to the Executive Secretariat\. During the mid-term review of
the project in January 2006, it was agreed that M&E specialists in each of the national HIV/AIDS
programs would provide support to the collection and analysis of data\. A total of 141 people were
trained in M&E in the project implementation agencies\. Two consulting firms were selected to
monitor progress for (i) the HIV/AIDS program; and (ii) the transportation facilitation component\.
The first consulting firm carried out three surveys at the eight border crossing points during one
week each, in February 2005, December 2005 and in August 2007\. The second consulting firm
collected data on transport issues seven times from July 2005 to September 2007\.
2\.4 Safeguard and Fiduciary Compliance
27\. During project preparation, it was agreed that the new agency responsible for
coordinating project implementation would not handle procurement and financial management\.
These activities would be outsourced to a management consultant\. The recruitment of the
consultant was a condition of grant effectiveness\. On February 12, 2004, an international
consultant was appointed but his performance in financial management was weak in the first year
and a half of project implementation under difficult circumstances\. Reporting was late and
inadequate, in part because of the difficulty of working in both an Anglophone and Francophone
environment\. With Bank prodding, the consultant changed its management process, and its
performance improved and was eventually considered as fully satisfactory, by both the Executive
Secretariat and Bank supervision missions\.
28\. The project was not expected to generate substantial adverse environmental effects\. It
was classified in category B\. Possible environmental risks included inappropriate handling and
disposal of medical waste\. A medical waste management plan was prepared in consultation with
different stakeholders before project appraisal\. The third sub-component of project component 2
included the implementation of medical waste disposal requirements for all health facilities
supported under the project, the training of health care professionals and community workers, and
a public awareness campaign\. The Executive Secretariat recruited an environment specialist to
monitor implementation of the medical waste management plan\.
2\.5 Post-completion Operation/Next Phase
29\. During project implementation the five governments concerned contributed to the
financing of the project but it was clear from the outset that they would not be able to fully
finance the HIV/AIDS program after project completion\. Therefore contacts were established
with a number of external partners for additional financing\. As a result, based on the satisfactory
achievements of the project, in May 2007, the Global Fund to Fight AIDS, Tuberculosis and
Malaria agreed to provide US$45\.6 million to finance a five-year follow-up program\. The
transport facilitation component of the project needs to be continued also\. A comprehensive
project is being prepared under the well established corridor approach, which combines physical
investment to bring road conditions to acceptable standards and a package of transport facilitation
measures\. The personnel employed by the management consultant for the fiduciary and M&E
aspects of the project have been transferred to the Executive Secretariat\. Local capacity generated
by the project will be used for implementation of the new HIV/AIDS program\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
30\. The objective of the project is highly relevant today, as it was when the project was
approved\. HIV/AIDS along the Abidjan-Lagos corridor remains a major threat to the vulnerable
populations, which benefited from the project\. The fight against HIV/AIDS remains a high
priority in the five countries along the corridor, as well as in the Bank's country assistance
strategies for these countries\. The design of the project was sound and its main features have been
adopted under the new project financed by the Global Fund\. Activities financed under the project
will continue and expand with assistance from the new project, which will consolidate and
amplify the results already achieved\.
3\.2 Achievement of Project Development Objectives
31\. The project has achieved its objective\. Access by underserved vulnerable groups along
the Abidjan-Lagos transport corridor to HIV/AIDS prevention, basic treatment, support and care
services has considerably increased\. Access to prevention and basic treatment services increased
much beyond original targets, as shown in three output indicators (number of condoms distributed,
number of VCT centers and number of people using the services provided in these centers)\. On
the other hand, out of four "outcome indicators", four were under target, slightly below for the
three indicators concerned with identification of ways in which to prevent HIV/AIDS, well below
for the incidence of STDs among truck drivers, but above for incidence of STDs among sex
workers (see paragraph 33, below)\. These achievements are clearly attributable to the project, as
national programs were not active in border areas\. It is important to underline that increased
access to services was the project's objective, accordingly, outcome indicators should have
focused on that dimension, not on the impact of better services\.
32\. The project was expected to contribute to the reduction of the spread of HIV/AIDS\.
Prevalence rates are no longer used as indicators of success in HIV/AIDS project for a variety of
reasons\. It is useful, however, to provide information on this important dimension of the
pandemic\. Prevalence rates have been on a declining trend during the project implementation
period (see table 1 Annex 10)\. The HIV prevalence rate observed among commercial vehicle
drivers and sex workers, who voluntarily tested for HIV when the three surveys were carried out,
is on a declining trend (see Table 3, Annex 10)\. The samples used are small, however, and the
results should be taken with caution\. The prevalence rate in the population who underwent
voluntary testing during 2006/07 in project-rehabilitated health facilities was 7\.4 percent\. The
project did not monitor new HIV infections\. It is important to underline the difficulties to do so in
a static population and almost impossible in a cohort of highly mobile population\. However,
ALCO agreed to track this indicator within Global Fund project and the Bank follow up project
under preparation\.
33\. Three indicators were used to measure the impact of prevention messages\. In the Project
Appraisal Document (PAD) it was expected that at least 90 percent of commercial vehicle drivers,
sex workers and the local population residing along the corridor would be able to identify at least
two ways in which to prevent HIV/AIDS\. The baseline value for these indicators, which came out
of the February 2005 survey was respectively, 68 percent, 60 percent and 50 percent\. In August
2007 the percentages were 83 percent, 88 percent and 84 percent respectively (local population
aged 15 to 24)\. Two other impact indicators had to do with the reduction by at least 30 percent of
the incidence of reported STIs among male commercial vehicle drivers, and by at least 50 percent
of the prevalence of gonorrhea among commercial sex workers\. While the second indicator was
achieved beyond expectations, the first one was not\. The incidence of STIs among male
commercial vehicle drivers is reported to have increased by over 70 percent\. The worsening of
the indicator does not mean that the health situation has deteriorated, however\. It may reflect the
improvement of quality of diagnostics and health services available to commercial vehicle drivers
at border towns with project's assistance\. It may also be the result of differences in sampling\.
34 As shown in Table 2 in Annex 10, most process indicators and several output indicators
(number of condoms distributed, number of VCT centers and number of people using VCT
services) are much higher than targeted\. Two output indicators gauged behavioral change among
the target population\. The proportion of commercial vehicle drivers and commercial sex workers
using condoms (with non-regular partners in the previous 12 months for the former and with their
clients of the previous week for the latter) was expected to increase by 50 percent for the former
and by 80 percent for the latter\. These targets were set during appraisal without the benefit of a
baseline survey\. Actually, the proportion increased by 33 percent in the case of the drivers and 20
percent for the sex workers\. This increase was achieved in less than two years, which is quite
remarkable\.
35\. Indicators used to gauge the success of the first component (HIV/AIDS prevention)
included the use of condoms by commercial vehicle drivers and clients of commercial sex
workers, the number of condoms distributed through social marketing along the transport corridor,
and the holding of an annual rally at each border crossing point to mark World AIDS Day\.
Progress in this area is somewhat paradoxical\. Indeed, while the number of condoms distributed
has soared far beyond expectations during project implementation (it was multiplied by a factor
of about 6 instead of a doubling), the two indicators concerned with the use of condoms (see
paragraph 34 above) were lower than targeted\. On the other hand, the proportion of people aged
15 to 24 using condoms increased by 80 percent\. The apparent paradox can be explained by three
factors: condom distribution benefited a large number of highly mobile people, the restrictive
interpretation given by commercial vehicle drivers to what is a non-regular partner, and the
success of the condom brand designed for the project\.
36\. Three indicators were proposed to measure progress under the second component,
(HIV/AIDS treatment, care and support services) including the existence of at least one voluntary
counseling and testing (VCT) center at each border crossing point, the increase by 50 percent of
people using VCT services, and adequate supply of antibiotics for the treatment of STIs in 90
percent of health facilities along the corridor\. These indicators have been met beyond
expectations\. Indeed, the project has rehabilitated and/or equipped 16 centers close to the border
crossing points to enable them to provide VCT services\. The number of people who benefited
from HIV testing increased from a negligible number (about 1,000) at project's inception to
27,639 in 2007\. With the project's assistance 36 health facilities, including 8 hospitals, have
received an adequate supply of drugs and equipment for treatment of STIs and opportunistic
infections\. All facilities continue to be adequately supplied thanks to the synergies developed
between national programs and the project\.
37\. Three indicators, all addressing transportation facilitation issues, were proposed to gauge
progress under the third component (project coordination, capacity building and policy
development services)\. Following the recommendations made during the mid-term review, the
formulation of indicators proposed in the PAD changed, but not the substance\. The first two had
to do with the reduction of average time for commercial vehicles to clear border formalities along
the entire corridor for the first, and, more specifically, at the Nigeria-Benin border for the second\.
The reduction of the number of informal checks along the corridor was the third indicator\.
38\. The average time for clearing border formalities at one crossing point by a heavy truck
declined from 162 minutes during the mid-term review to 128 at project completion\. While this is
a substantial progress, it is still higher than the objective of 90 minutes\. In any event, this
indicator does not convey the full picture, because, for various reasons, which remain to be
adequately analyzed, the time spent for clearing border formalities is a small fraction of the time
wasted by truck drivers in front of a border\. Parking spaces at borders are saturated and waiting
trucks clog the roadway\. At the Benin/Nigeria border several hundred trucks are stranded in
chaotic conditions for weeks and even months\. Police forces are overwhelmed and helpless\. The
target of 3 checkpoints every 100 km has not been reached, but the total number has been reduced\.
Authorities in the five countries are reluctant to remove controls on the ground that it might
threaten their security by facilitating the trafficking of weapons and drugs\. This situation
contributes to increase the costs of transport in the corridors\.
3\.3 Efficiency
39\. Funds provided under the project by the Bank and the five governments concerned were
managed with due consideration to results and efficiency\. All implementing agencies which
received funds under the project for activities at community level submitted quarterly technical
and financial reports to the Executive Secretariat\. These reports were reviewed by the five
country accountants, who systematically visited all implementing agencies each quarter\. The
management consultant reviewed all reports provided by the implementing agencies to check that
funds were used for project purposes, with due consideration to economy and efficiency\. Overall,
operating costs remained below initial allocations
3\.4 Justification of Overall Outcome Rating
40\. The project achieved its objective\. Access by the beneficiary populations to HIV/AIDS
prevention, care and support services has considerably increased\. Most people along the corridor
have been sensitized\. The social marketing of condoms was highly successful\. The gains
achieved are clearly attributable to the project, which focused sharply on the beneficiary groups
identified at appraisal\. As a result, knowledge on HIV transmission and prevention improved
substantially, risky behaviors (unprotected sexual relations among young population) are
changing and the incidence of STIs declined sharply among sex workers\. The PLWHA reported
that discrimination against them is being reduced\. The increase of STI among commercial vehicle
drivers does not indicate a worsening of the STI situation among truck drivers, however, as
explained earlier\.
Rating: Satisfactory
Outputs by component
41\. HIV/AIDS prevention services\. The project supported 66 implementation agencies for
the development and implementation of IEC/BCC activities at the community level\. An
integrated IEC/BCC strategy was formulated, validated by the five countries and widely
disseminated\. Messages were broadcast through 32 radio networks\. The AIDS world day was
celebrated by the eight border AIDS committees, and, with support from the Coca-Cola
Foundation, two itinerant information and sensitization campaigns on HIV/AIDS (called Love
Life Caravans) were organized along the corridor\. A large number of information materials were
disseminated\. The social marketing of condoms was contracted out\. The project established 625
sales points along the corridor, including at the 8 border posts\. Commercial sex workers were
given preference in manning these sales points\. A new brand of condoms (called Migrant and
Femigrant) was established, mostly because each country had licensed a brand of condoms and
did not accept that condoms in use in other countries be imported in their countries\. As indicated
above, the number of condoms distributed far exceeded expectations\.
42\. HIV/AIDS treatment, care and support services\. The project supported the adoption and
dissemination of a common reference document on the continuum of care and the policy for
access to STI/HIV/AIDS treatment\. As indicated above, 36 public, private and community-based
health facilities were upgraded, equipped and provided with an adequate supply of drugs and
other pharmaceuticals\. Staff in these facilities was trained\. The project renovated 16 facilities
close to the 8 border posts to provide VCT services\. In close coordination with the five
HIV/AIDS national programs, it financed antiretroviral (ARV) drugs for about 100 PLWHA in
each of the five countries concerned\. In partnership with the West African Network of People
Living with HIV/AIDS (PLWHA), the project provided grants to a total of 21 organizations for
community support to PLWHA and Orphans and Vulnerable Children (OVC)\. Finally, under this
component, the project prepared and implemented a medical waste management plan\. Nine
incinerators and nine skeptic tanks were installed at the health centers located close to border
points, and the staff was trained\.
43\. Project coordination, capacity building and policy formulation\. The Executive Secretariat
established strong HIV/AIDS inter-country coordination and partnerships with a large number of
organizations and community leaders\. It organized training sessions for customs and security
agents for an effective application of ECOWAS transport regulations\. It established an
Observatory of Abnormal Practices along the Corridor, to monitor obstacles to the free movement
of people and goods\. It also helped establish the Association of Professional Truckers and Drivers,
which played an important role in disseminating messages on HIV/AIDS prevention and transport
facilitation\. Training sessions were organized for uniformed agents and commercial vehicle
drivers, and information materials on border crossing were widely disseminated\. A large number
of training sessions was also organized for building the capacity of implementing agencies in
project management, IEC, health issues, and transport (see Annex 2, table 1 for details)\. The
project helped local organizations build capacity\.
3\.5 Overarching Themes, Other Outcomes and Impacts
44\. (a) Poverty Impacts, Gender Aspects, and Social Development: The project's
objective was to improve access to HIV/AIDS prevention and care services by underserved
vulnerable groups, with particular attention to commercial sex workers, truck drivers, out of
school youth and the migrant population\. A study along the transport corridor showed that (i)
HIV/AIDS aggravated gender inequities and discrimination; (ii) the impact of HIV/AIDS differed
markedly along gender lines: the stigma against HIV infected women was stronger than for men,
reducing their access to social services; and (iii) the epidemic increased women's economic
vulnerability and dismantled their social network\. The decline of the HIV prevalence rate among
commercial sex workers during project implementation is significant, and is expected to continue
under the follow-up project\. Such decline has a substantial impact on poverty reduction\.
45\. People living with HIV/AIDS and their associations received support from the project, as
well as orphans and other vulnerable children\. ARVs were made available to 539 people; this
number is expected to increase under the follow-up project\. PLWHA associations are in place and
prepared to expand their activities\.
46\. (b) Institutional Change/Strengthening:\. The project helped establish an institutional
framework, which has demonstrated its effectiveness, and is being used under the follow-up
project\. A large training program has been implemented under the project, in particular to help
participating civil society organizations deliver services to their members and manage projects\.
Local associations have been empowered\. This is the case in particular of the Association of
Professional Truckers and Drivers, which will continue to play a key role in HIV/AIDS
prevention and transport facilitation\.
47\. (c) Other Unintended Outcomes and Impacts (positive or negative): A positive
outcome of the project is the establishment of a regional capacity to undertake activities of
common interest to the five countries concerned\. The project made the demonstration that
regional programs can work when countries are highly committed to their success, take
appropriate measures to ensure that the implementing agency receive adequate support, and do
not interfere in its management\. Similar corridor projects in other parts of Africa and the world
have been prepared\. The Great Lakes Initiatives on AIDS (GLIA) and Southern Africa Transport
Corridors HIV/AIDS Project (SATCA) have benefited from the experience learned from the
Abidjan Lagos corridor project\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
48\. A completion workshop was held in early February 2008 with representatives from main
project organizations\. It endorsed the completion report prepared by the Executive Secretariat and
stressed that the results achieved were due in large part to extensive community mobilization
efforts, a strong appropriation of the project by all participating organizations and a highly
efficient Executive Secretariat\. Further support is required for strengthening local capacity,
however\. The workshop recommended that local authorities in border towns be closely involved
in providing support to and monitoring project activities, and national and local budgets gradually
increase their contribution to the project's budget\. The workshop stressed that the high turnover
of agents at borders is a problem\. Finally it emphasized that a regional program should
complement, not substitute national programs\. Annex 6 provides more details on the workshop\.
4\. Assessment of Risk to Development Outcome
49\. Lack of adequate funding for the continuation of project activities, including the
operation of health facilities rehabilitated under the project and of civil society organizations
involved in HIV/AIDS prevention and care, would undermine the sustainability of results
achieved\. This risk is small, however, as the five governments concerned have confirmed their
strong commitment to the project, and the Global Fund has agreed to finance a follow-up
operation to support the continuation and expansion of activities undertaken with assistance from
the Abidjan-Lagos corridor project under review\. The Bank new transport facilitation project
under preparation will include a HIV/AIDS component1\.
50\. Continuous support from the national HIV/AIDS programs to the transport corridor is
dependent on these programs receiving adequate funding from the international community and
being strengthened\. This is the case for the national programs in Benin, Ghana and Nigeria, which
are financed by the Bank, and Togo, which is financed by the Global Fund\. A project is being
prepared in Cote d'Ivoire for Bank financing\. Table 1 in Annex 10 provides information on HIV
prevalence rates and availability of funds for HIV/AIDS programs in the five countries concerned\.
51\. A weakening of the capacity built under the project would sap the momentum obtained
with project support in fighting HIV/AIDS along the corridor\. GTZ and ALCO did a good job in
capacity building\. Their project staff was trained in procurement, financial management and
M&E\. The GTZ contract ended in June 30, 2007 and since then, its staff has been successfully
transferred to ALCO\. As a result, the momentum obtained has been maintained\.
Rating: low
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
52\. (a) Bank Performance in Ensuring Quality at Entry: The project was seen as an
excellent entry point for promoting regional cooperation on two critical issues, HIV/AIDS
prevention and transport facilitation\. Project issues were correctly identified\. The objective of the
project was well defined and the indicators selected were appropriate, with the reservation noted
in paragraph 31 above\. Measuring progress during project implementation would have been
easier; however, had the baseline indicators been available before appraisal\. The baseline survey
was delayed, however, due to two failed attempts to contract a firm to do the work under the
PHRD funding provided for the project\. The lessons from experience were fully incorporated in
the design of the project\. The preparation team worked extensively with the governments
concerned to reach agreement on basic principles and establish the institutional framework before
project approval\. It insisted that the project coordination unit remained a lean organization\. The
operational manual was adopted before project approval, but project implementation was delayed
because there was little capacity on the ground for initiating project activities\. The risk analysis
was fully adequate\.
Rating: Satisfactory
53\. (b) Quality of Supervision: Supervision missions visited the countries at regular
intervals\. They were issues and results oriented\. Their focus on fiduciary and environment issues
was fully adequate\. Bank managers were proactive\. Despite the fact that the project was managed
by the Transport Sector, the issues were correctly identified and actions taken on time to address
them\. The mid-term review in January 2006 was well prepared and was carried out in a highly
participative manner\. It focused in particular on all activities required to complete the project and
achieve its objective, on measures to ensure the sustainability of the operation and on
1 The five countries agreed to contribute about US$1 million each to finance the activities of this
component\.
strengthening the M&E system\. In retrospect, more efforts should have been invested in
improving the quality of the surveys carried out by consultants for monitoring project's outcomes\.
The Bank should have also insisted that the time required for border clearance formalities be
placed in the broader context of the time wasted in front of a border\. There was a remarkable
continuity in the Bank's core team from inception to completion\. Country offices provided
valuable support\.
Rating: Satisfactory
54\. (c) Justification of Rating for Overall Bank Performance: The project was innovative\.
It combined fighting HIV/AIDS with transport facilitation\. The Bank saw an opportunity to
support progress on these two fronts along the Abidjan-Lagos transport corridor, a major link
between key ECOWAS members\. It emphasized the establishment of an appropriate institutional
framework for program implementation\. It provided strong support to implementing agencies to
ensure that the objective of the project would be achieved in an efficient way and on time\. Bank
management provided the budget required for a thorough preparation and intensive supervision of
the project\.
Rating: Satisfactory
5\.2 Borrower Performance
55 (a) Government Performance: The five governments concerned were highly committed
to a regional approach to HIV/AIDS prevention and care, but less so to removing obstacles to the
free flow of people and goods along the Abidjan-Lagos transport corridor\. The five governments
provided adequate support to the Executive Secretariat for project implementation through the
Governing Body and paid regularly their counterpart funding after initial delays\. Their national
HIV/AIDS secretariats were closely involved in project activities in their respective countries\.
Benin played a leadership role by agreeing to provide the facilities required for the Executive
Secretariat and making commitments on behalf of Cote d'Ivoire and Togo, which were in non-
accrual status\. The Governing Body played a most useful role in ensuring continued support from
the five governments concerned and coordination with national HIV/AIDS programs\. The
Ministers of Health and Transport of the five countries were closely involved in project
supervision, particularly during the mid-term review\. Heads of States participated in the project
activities, particularly in the two caravans organized jointly with the Coca Cola Foundation\.
Rating: Satisfactory
56\. (b) Implementing Agency or Agencies Performance: The Executive Secretariat was
able to coordinate the implementation of an impressive work program by a large number of
public and private sector organizations and ensure its completion within the agreed upon
timeframe\. It managed to establish and maintain a consensus among the five countries concerned
on priorities, common policies and operational programs\. It remained a lean organization\.
Contrary to the situation found too often elsewhere, its actual operating cost was lower than
initially allocated\. It prepared a well documented completion report on time and best practice
toolkit which can help in the preparation of similar projects\.
Rating: Satisfactory
57\. (c) Justification of Rating for Overall Borrower Performance: The five governments
and the institutions established for project coordination and implementation performed well\. The
governments provided strong support to the Executive Secretariat and greatly facilitated project
implementation at border crossing points\. The Executive Secretariat identified a large number of
public and private organizations for implementation of project components and organized a large
capacity building program to help them deliver results\. Thanks to the strong institutional
arrangements set up, the complexity of the project was overcome\.
Rating: Satisfactory
6\. Lessons Learned
58\. Complementarily with national AIDS programs: Regional HIV/AIDS programs are most
useful when they complement national programs and focus on border areas and target vulnerable
groups associated with the trucking industry\. They should not substitute national programs\.
Developing synergies between 5 national AIDS programs and a sub-regional program was
challenging, particularly in the areas of operational level harmonization of clinical aspects,
referral system, and communications strategy\. The Governing Board greatly facilitated the
process\. A program combining the fight against HIV/AIDS with trade facilitation offers strong
opportunities for synergies, though it is easier to reach a consensus among governments on the
former than on the latter, as emphasized in the Independent Evaluation Group (IEG) assessment
of regional programs\.
59\. Design of the project: There was no precedence of a sub-regional HIV/AIDS project
addressing the threat of HIV on the transport sector and transport sector's contribution in
checking the spread of the epidemic\. The project design was innovative and heavily relied on a
participatory process that engaged a variety of stakeholders\. This approach resulted in strong
ownership from the heads of states down to the community levels\. The project design was
realistic, simple and based on the key results to be delivered\. The beneficiaries were clearly
identified and the project kept its focus on the target groups throughout implementation\. The
project incorporated the five design features, which the IEG found vital to regional programs'
success, namely - strong commitment to regional cooperation, objective matching regional
capacity, clear delineation and coordination of the roles of national and regional institutions,
accountable governance arrangements and planning for sustainability of project outcomes\.
60\. Sustainability, Bank's role and partnership\. The Bank played a catalytic role in
supporting an innovative initiative by taking high risks\. The project documents indicate that at
initiation, with the exception of UNAIDS, other development partners did not show interest in
joining the project\. On the other hand, UNAIDS, on behalf of other UN agencies, provided a solid
technical and financial support to bring the project concept to fruition\. Strong partnership
between the Bank and UNAIDS was a critical factor in the design and delivery of the project\. It is
critical that strong partnership is built prior to initiating the project design\.
61\. Institutional arrangements: Establishing the institutional framework for program
implementation is an essential step during the preparation phase, but this requires time,
particularly in the case of a regional program\. Government ownership and leadership is a core
requirement for successful institutional arrangements\. Participating member governments should
be in the forefront of decisions related to which country would house the headquarters, how its
management would be staffed to ensure openness, transparency and equal opportunity to all
nationalities\. The responsibilities of the project were successfully shared by all the five countries\.
The offer made by Benin to provide the office space for the Executive Secretariat greatly
facilitated reaching an agreement\.
62\. Coordination: Emphasizing the facilitation and coordination role of the Executive
Secretariat was essential for ensuring that civil society organizations be empowered\. Contracting
out the fiduciary and M&E aspects of project implementation to a management consultant proved
highly positive\. The Executive Secretariat focused heavily on community development, training
staff and disseminating management tools\. This was the recipe for success and highly appreciated
by all stakeholders\.
63\. Challenge of easing the flow of persons and goods across borders: Accelerating border
clearing formalities may not be sufficient to reduce significantly the time spent by trucks in front
of a border\. A comprehensive program, combining physical investment and regulatory and
behavior change, is urgently required to address the root causes of the chaotic conditions
prevailing at some borders, in particular the Benin/Nigeria one\. The ministries of transport in all 5
countries recognize the challenge, but they have no responsibilities over key issues, such as
differences in customs duties and security concerns\. Other ministries should be associated to the
dialogue and ECOWAS should play a more active role in pushing the regional integration agenda\.
64\. Baseline survey: Preparation of the baseline survey was delayed for a variety of reasons,
including two failed attempts to contract consultants before project appraisal and, the delay to set
up the institutional framework for project implementation\. In the absence of a survey before
appraisal of the project, it was difficult to set a realistic value for project indicators in the PAD\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
65\. (a) Borrower/implementing agencies: The Executive Secretariat sent written comments
on the draft ICR\. It agreed with the assessment, but suggested that more consideration should be
given to the pilot nature of the project and the constraints encountered\. It suggested a very
satisfactory rating for the first and second components of the project and a better recognition of
the commitment of the governments concerned and of the role played by the Governing Body\.
Most comments have been taken into account in the revised version\. See Annex 7 for details\.
66\. (b) Co-financiers: The Director of UNAIDS Regional Support Team for West & Central
Africa sent her comments on the project\. She indicated that the success of this project was mostly
due to the institutional framework, in which all five countries were equitably involved and also
it's complementary with national HIV/AIDS programs\. She also highlighted UNAIDS' role
during the preparation and implementation stages\. Finally, she raised five challenges to be
addressed to sustain the achievements of the project, notably information sharing and
development of local response\. See Annex 8 for details\.
67\. (c) Other partners and stakeholders: Community leaders, traditional chiefs, uniform
personnel, people infected and affected by HIV/AIDS openly testified on the accomplishments of
the project in their lives\. The Mayors of Krake Plage and Sanvee Condji, who were closely
involved in the project, underlined the important role played by the corridor project in filling the
gaps of the national programs at the borders\. Most stakeholders recommended that the Bank
continue its support to HIV/AIDS programs\.
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Estimate Actual/Latest
Components Percentage of
(USD millions) Estimate (USD
millions) Appraisal
1\. HIV/AIDS PREVENTION
SERVICES FOR THE 2\.20 4\.60 210
TARGETED POPULATION
2\. HIV/AIDS TREATMENT,
CARE AND SUPPORT
SERVICES FOR THE 7\.90 6\.90 88
TARGETED POPULATION
3\. PROJECT COORDINATION,
CAPACITY BUILDING AND 6\.60 7\.60 115
POLICY DEVELOPMENT\.
PHYSICAL CONTINGENCIES 0\.60
PRICE CONTINGENCIES 0\.60
Total Baseline Cost 17\.90 19\.10 107
(b) Financing
Appraisal Actual/Latest
Source of Funds Type of Estimate Estimate Percentage of
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower Grant 1\.30 1\.40 108
IDA GRANT FOR HIV/AIDS Grant 16\.60 17\.70 105
Annex 2\. Outputs by Component
Output indicators are in Table 2, Annex 10\.
Component 1: HIV/AIDS prevention services for the targeted population
1\. Implementation of an integrated IEC/BCC policy for fighting HIV/AIDS along the
transport corridor\. The project supported 66 implementing agencies for the development and
implementation of IEC/BCC activities at the community level\. An integrated regional IEC/BCC
strategy was developed, validated by the five countries and widely disseminated\. Through the
IRIN Radio station network, partnerships were established with 32 radio stations in the five
countries national radio stations as well as community radios for the production and
broadcasting of radio programs on the project\. Over 30 million people were sensitized\. All major
events were used as opportunities for mass dissemination of information, including the
celebration of the AIDS World Day by the 8 Border AIDS Commissions in all sites of the project\.
In collaboration with the Coca-Cola Foundation, the project organized two itinerant information
and sensitization campaigns on HIV/AIDS along the corridor, called "Love Life Caravan"\. These
events enabled to reach directly 3 million people along the corridor, and indirectly many more
thanks to the mobilization of national and international media\. A large number of IEC/BCC
materials were produced and distributed along the corridor to support and consolidate awareness
raising activities on STI/HIV/AIDS\. These included large double-face billboards, leaflets, posters,
stickers, wallets, log books, etc\.
2\. Social marketing of condoms along the corridor\. The project contracted Moriah Trust
Limited for the implementation of the social marketing of condoms\. It established 625 new sales
points along the corridor including 16 kiosks at the 8 border posts, which increased the condom
distribution network to 784 sales points\. Moreover, 20 automatic condom dispensers were
installed at the 5 borders of the 3 francophone countries of the corridor\. Specific brands of male
condoms (Migrant) and female condoms (Femigrant) have been developed by the project\.
Promotional materials were produced and distributed, including: 28,000 leaflets, 158,000 stickers,
3,640 T-shirts, 7,750 calendars, 6,600 posters, 2,810 caps and 1,094 bags\. The following IEC
materials were put in place: 8 giant billboards, 8 signboards indication information centers, 400
signposts for sales points and 400 streamers\. For mass media, 4 radio commercials and 4 TV
commercials were produced, each of them in French and English\. These commercials were
broadcasted on the local and national radio stations and TV channels of the five countries of the
corridor, with a total of 2,978 radio commercials, 54 TV commercials and 18 educational radio
and TV programs broadcasted\.
Component 2: HIV/AIDS treatment, care and support services for the targeted population\.
3\. Strengthening of public and private health care facilities identified along the corridor to
provide services in the areas of VCT, treatment and HIV/AIDS\. The project developed a common
reference document on care and access to STI/HIV/AIDS treatment\. Since its validation, this
document became the reference in terms of care and treatment for the whole corridor\. It helped 36
health facilities along the corridor improve their capacity to diagnose and provide treatment of
STIs and opportunistic infections\. They received drugs and other materials (STI kits, reagents and
audio visual materials)\. Blood transfusion facilities also received reagents and consumables\. In
each off the 36 healthcare facilities selected, health service providers were given pertinent
training in the area STI/HIV/AIDS care\. The number of people benefiting from care for STIs
increased from 3,572 in 2005 to 14,202 in 2007\. In regards to VCT services, the project renovated
and equipped 8 health centers at border posts and 8 reference hospitals to bring them up to
standard\. Staff was trained\. The demand for VCT services, which was negligible in these
facilities increased by a factor of 27\.
4\. Provision of grants to CSOs to undertake community based initiatives in HIV/AIDS care
and support\. Through a partnership with the West African Network of PLWHA (RAP+AO), the
project provided support to a total of 21 organizations: 5 national networks of PLWHA; 6 VCT
organizations and 10 organizations (associations and NGOs), in the five countries of the corridor,
for community support to PLWHA and OVC, and fight against stigma and discrimination on the
8 border sites\. Overall, 73 people from these organizations benefited from capacity building in
these areas\. These organizations reached 3,177 PLWHA and provided care and support to 1,248
PLWHA and 1,084 OVCs\. The project supported a broad range of activities in favor of these two
categories\. The project financed the provision of ARVs to 539 PLWHA, in close coordination
with national programs to avoid duplications\.
5\. Disposal of medical waste related to the project\. The project developed and implemented
a medical waste management plan\. All concerned stakeholders were involved in the preparation
of the plan and the drafting of a regional policy document, which was validated by the five
countries\. The project developed and disseminated a standardized training plan and a manual for
medical waste management\. The project provided appropriate material and equipment to 25
health facilities for appropriate sorting and storage of medical waste and their disposal\. The
project established 9 incinerators and 9 skeptic tanks\. These incinerators use butane instead of
wood to reduce pollution\. In each of these sites, an NGO was selected to take care of the
collection and transport of medical waste\. They were provided tricycles for that purpose\. At the
end of 2007, each border site had a medical waste management plan, which is implemented by
the community and health centers\. A total of 348 people were trained in medical waste
management\. The NGOs organized 142 public awareness sessions, which reached over 1,200
people\. A total of 12,000 leaflets and 6,000 posters were produced\.
Component 3: Project coordination, capacity building and policy development\.
6\. Development of strong HIV/AIDS inter-country coordination and partnerships among the
governments and other project stakeholders of the five participating countries\. The project
promoted exchanges and dialogue between institutions, professional organizations and NGOs,
particularly during the development of harmonized policies and strategies, but also during the
implementation and monitoring of the activities\. Through these activities involving advocacy,
policy formulation and partnership development, the Executive Secretariat established solid links
with the networks and associations of PLWHA, religious and community leaders, trade unions in
the transport sector, as well as national, sub-regional and international institutions\. The project
collaborated closely with the health authorities of the five countries concerned\. A large number of
studies were produced with project's assistance\.
7\. Implementation of policies and programs for smooth movement of commercial traffic
along the corridor\. The Executive Secretariat organized training sessions and high-level meetings
with customs, police, immigration and transport directorates and conducted advocacy activities in
the five countries for an effective application of the various ECOWAS regulations\. It also pointed
out inconsistencies between national and ECOWAS regulations\. The project established an
observatory of practices along the corridor\. It is an effective instrument for monitoring obstacles
to the free movement of goods and people along the corridor\.
8\. The project established four Inter-border Facilitation Committees; all managed by
officials working at border points, including representatives from police, immigration, transport
unions, etc\. These committees helped train 97 persons on HIV prevention and implementation of
ECOWAS regulations concerning the free movement of people and goods\. IEC campaigns were
launched to provide information to all concerned on requirements for border crossing\. A total of
120,000 leaflets, 35,000 posters, 1,200 folders, 45,000 stickers and 15,000 bags were produced
and disseminated, which have considerably improved the knowledge on rules concerning the free
movement of people and goods\. Billboards were installed to facilitate border clearance
formalities\. At each of the 8 border crossing point, an information unit was established, including
an office, a meeting room and a shelter with a capacity to accommodate about 100 people\. These
units have been extensively used to disseminate information on HIV/AIDS and formalities for
crossing borders\.
9\. Capacity building among implementing partners\. The project organized a number of
training sessions, which benefited to a total of 3,762 people\. Table 1 below shows the number of
people who have benefited from the various training sessions organized by the project\.
Table 1: Training for capacity building
Area Content Profile Number
Coordination Planning and management of
sub-projects Members of focal units 37
Young girls in border areas,
Training of peer educators truckers, CSWs, uniform 1,460
personnel
IEC Capacity building for the
dissemination of information on Journalists of partner radios 46
the media
Distribution of condoms Managers of sales points, NACs,
members of NGOs 625
Health Syndromic management of
STIs Health center providers 101
Medical care of OIs Health center providers 80
Voluntary Counseling and Health center providers
testing 100
MTCTP Health center providers 97
Psychosocial care and support Health center providers
services for PLWHA 97
Laboratory Health center providers 35
Prescription of ARVs Health center providers 93
Medical doctors, nurses,
Health Care Waste pharmacist, lab technicians,
Management traditional birth attendants, 348
artisans
Psychosocial advisers for
community care and support Members of PLWHA 223
services for PLWHA and OVCs associations and PEC NGOs
Transport Principles of free movement of
goods and people Uniform personnel 97
Observatory of practices at
borders (data collection & Youth living in border areas\. 100
management)
Financial Training on the simplified
management manual for financial Members of NACs and NGOs
management, procurement and subsidized by the Project 225
M&E
Annex 3\. Economic and Financial Analysis
Not applicable
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Stephen Brushett Sr\. Transport specialist AFTTR Former TTL
Siélé Silué Sr\. Transport Specialist AFTTR TTL
Bachir Souhlal Lead Operations Specialist
Development AFTHV
Hitoshi Shoji Sr\. Transport Specialist AFTTR Former Co-TTL
Karen Hudes Sr\. Counsel LEGAF
Agnes Albert-Loth Finance Officer LOAG
Jocelyne do Sacremento Operations Analyst AFTTR
Antoine Lema Consultant AFTTR
John Stephen Osika Consultant AFTTR
Nadeem Mohammad Sr\. Operations Officer AFTHV
Linda Patnelli Team Assistant AFTTR
Hugues Agossou Sr\. Financial Management Specialist AFTFM
Itchi Gnon Ayindo Procurement Specialist AFTPC
Sylvie Charlotte Ida do Rego Team Assistant AFMBJ
Supervision/ICR
Siélé Silué Sr\. Transport specialist AFTTR TTL
Hugues Agossou Sr\. Financial Management Specialist AFTFM
Itchi Gnon Ayindo Procurement Specialist AFTPC
Ayite-Fily D'Almeida Sr\. Operations Officer AFTH2
Alexandre K\. Dossou Sr\. Transport\. Specialist AFTTR
Assiata Houedanou Soro Disbursement Assistant AFMCI
Karen Alexandra Hudes Sr\. Counsel LEGST
Pamphile Kantabaze Sr\. Operations Officer AFTH3
Alain L\. Labeau Lead Specialist AFTTR
Nadeem Mohammad Sr\. Operations Officer AFTHV
Africa Eshogba Olojoba Sr\. Environmental Specialist AFTEN
Farida Khan Operations Analyst AFTTR
Pepita Hortense C\. Olympio Team Assistant AFMBJ
Juliana Victor-Ahuchogu Monitoring & Evaluation Specialist HDNGA
Bertille Mapouata Team Assistant AFTTR
Aissata Soro Houedanou Disbursement assistant AFMCI
Sylvie Charlotte Ida do Rego Team Assistant AFMBJ
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY02 17 224\.38
FY03 25 157\.69
FY04 7 90\.56
Total: 49 472\.63
Supervision/ICR
FY04 21 187\.96
FY05 40 165\.85
FY06 37 127\.32
FY07 18 68\.41
FY08 15 90\.11
Total: 131 639\.65
Annex 5\. Beneficiary Survey Results
1\. A beneficiary assessment was prepared by CEFORP in December 2007\. The
survey was carried out in four of the eight border points\. Beneficiaries included PLWHA,
commercial sex workers, youth and truckers\. In each site four focus groups were
organized, including 8 to 12 participants each\. Overall, 17 focus groups were organized
and 12 individual interviews were conducted during the period December 12 to 18, 2007\.
2\. Participants were well aware of project activities, mainly those concerning STI
treatment, condom distribution, voluntary testing and support to PLWHA\. Most
participants were satisfied with services provided\. Despite efforts made by the project,
however, ignorance on HIV transmission and risky behavior persisted, particularly
among truckers\. PLWHAs signaled that some delays were incurred by health facilities in
getting drugs\. They also indicated that they needed more food aid\. Stigma persists,
particularly at border towns\. Youth are generally well informed on HIV transmission\.
They like the condom dispensers installed at the borders but commercial sex workers
mentioned that, despite prevention campaigns, many men refuse to use condoms\.
3\. In the area of transport facilitation, participants indicated that much remains to be
done to reduce time loss, insecurity and racket\. They also requested larger parking areas
and recommended that forwarding agents in uniform be present at the borders\.
Annex 6\. Stakeholder Workshop Report and Results
1\. A completion workshop was held in Cotonou on February 4 and 5, 2008\. Representatives
of main beneficiaries (local authorities, CSOs, PLWHA, commercial sex workers, customs agents,
etc\.) were invited, as well as representatives of international organizations (WHO, UNAIDS,
ECOWAS) and Foundations (North Star)\. The main beneficiaries expressed their satisfaction for
the support received from the project\.
2\. Participants emphasized the following positive features of the project\. Its objective was
simple\. It was a regional project, which complemented national HIV/AIDS programs\. Directors
of national HIV/AIDS programs were members of the Governing Body\. Border committees were
established to facilitate and monitor project implementation\. Civil society organizations were
mobilized\. The operating cost of the Executive Secretariat remained below projections\.
3\. The project achieved its objective (improved access to HIV/AIDS prevention and care by
vulnerable groups)\. The workshop reviewed all project indicators\. Some of them were below
target value, but the HIV/AIDS prevalence rates in the five countries and among target groups
appear to have declined\. ALCO played a major role in improving key indicators\. Testimonies by
representatives of vulnerable groups indicated that behavior is changing\. A large number of
truckers, commercial sex workers and youth use testing services provided by the project\.
4\. Harmonization of treatment protocols is a major achievement\. Capacity building was
strongly pursued by the project\. Gender was not sufficiently emphasized initially\. This was
corrected, however during project implementation\. For instance commercial sex workers were
recruited for the sale of condoms and a female condom has been developed and promoted by the
project\.
5\. The workshop made a number of recommendations, including the need to (a) improve
coordination with national institutions and programs; (b) ensure that ECOWAS rules be applied
by all states; (c) associate local elected officials to the project as early as possible; (d) increase
gradually counterpart funds provided by national and local governments; and (e) reduce work
mobility of border agents\. A single project cannot achieve sustainable results\. Follow-up projects
are needed, in particular a transport corridor project to facilitate trade along the corridor\.
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
1\. In January 2008, ALCO prepared a well documented completion report, which is
available upon request\. Its executive summary is here below:
2\. Thanks to the social marketing of condom (SMC), the demand and use of condoms have
greatly increased along the corridor\. Another significant result of the project is the improvement
of the availability, functional capacity and quality of the services of diagnostic and STI treatment
and management of OI, and of voluntary counseling and testing (VCT)\. This is followed by a
significant increase in the attendance of public and private health centers for the treatment of STI
and OI, and for the HIV test\.
3\. Through a partnership with the West African Network of PLWHA (NAP+WA), the
Project supported communities activities that enabled to significantly improve the quality of life
of PLWHA and OVC, by reducing discrimination and stigmatization which they suffer\. Thanks
to the support of the Project, an innovative, effective and original system of healthcare waste
management has been developed, then applied not only at the 8 border sites of the Project, but
even beyond\.
4\. The coordination of the project is one of its major strengths\. The project facilitated and
favored at both the inter-country level and intra-country level collaboration and dialogue among
institutions, professional organizations and NGOs\. Even if the component related to the
facilitation of transport has not achieved all its objectives, major progress has been made\. The
capacity building of implementing institutions and various service providers has been central to
the implementation strategy of the Project\. Thus, thanks to the Project the capacities of 3762
people were built in various areas (coordination, IEC, health, transport, fiduciary management)\.
5\. The project has been implemented between February 2004 and December 2007, at an
original cost estimated at US$17\.9, out of which US$16\.6 (equivalent to 12\.2 million of DTS)
represents the IDA grant amount\.
6\. The assessment of the financial performance of the Project is on the overall very positive\.
Towards the end of the project, the disbursement rate was very close to 100 percent\. On the
whole, the Requests for Funds Withdrawal (RFW) after disbursement were handled in a
satisfactory manner\. The level of mobilization of the counterpart of the States has passed the 100
percent bar\. The accounting procedures used were conformed to the procedures of the Bank\. The
respect of measures taken throughout the project has enabled the finance team to produce all the
expected reports within the required deadline, and the Executive Secretariat (ES) to regularly and
in a transparent manner make report on the use of the funds\.
7\. In accordance to the directives related to procurement funded on the IDA Funds,
principles of equity, transparency, equality of opportunities, economy and efficiency governed the
procurement procedures during the implementation of the project\. In spite of the multi-country
aspect of the project, the various activities identified for procurement during the period 2004-
2007 were 100 percent achieved\.
8\. The different functions which the different stakeholders (IDA, UNAIDS, Governments,
ALCO and its ES) were all satisfactory\. Also, their overall performance can be considered as
satisfactory\.
9\. The sustainability of the project can be considered as very likely\. The interventions and
strategies initiated during the project continue to be of a capital importance to the new paradigm
"Transport/Health"\. The progress made thanks to this project are a testimony of the anchoring of
this pilot cross-border initiative, and of its added value, hence the need has received funding for
the consolidation and extension of: "Joint Regional STI/HIV/AIDS project in the Abidjan-Lagos
transport corridor"\. Moreover, in September 2007, ALCO was chosen to implement the new
"Abidjan-Lagos transport and transit facilitation project" (ALTTFP) of the World Bank, under
the supervision of ECOWAS\.
10\. The executive secretariat sent written comments on the draft ICR\. It agreed with the
assessment, but suggested that more consideration should be given to the pilot nature of the
project and the constraints encountered\. It suggested a very satisfactory rating for the first and
second components of the project and a better recognition of the commitment of the governments
concerned and of the role played by the Governing Body\. Most comments have been taken into
account in the revised version\.
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
1\. The following paragraphs are a summary of a note sent by the Director of UNAIDS
Regional Support Team for West & Central Africa, on the project\. She highlighted the role of
UNAIDS during the preparation and implementation stages, the key dates of the project and the
challenges to be addressed to sustain the project achievements\.
2\. Correlation between migratory movements and STDs: The Abidjan Lagos Transport
Corridor links the major economic centers in West Africa\. About 63 percent of economic activity
in ECOWAS takes place in the areas served by the corridor\. About 30 million people live along
the corridor and 14 million people travel on the corridor annually\. The West African Initiative
identified a high correlation between migratory movements and STDs, including HIV\. Travel,
involving long time spent away from home, increases the likelihood of unsafe sex\. In 2005, the
HIV prevalence rate among the highly mobile population living at border towns was estimated at
8\.8 percent\. The high HIV prevalence rate observed among commercial vehicle drivers and
commercial sex workers pointed to the need to strengthen prevention and care services along
transport corridors, including the Abidjan-Lagos one\.
3\. The key events of the project: Preparation of the Lagos-Abidjan corridor project was
initiated during a regional workshop organized by UNAIDS in July 2000\. Main events were as
follows:
July 2000: first meeting with UNAIDS support in Accra
May 2001: first Bank preparation mission
July 2001: first meeting of the Ministers of Health of the five countries, facilitated by
UNAIDS, which established a working group and a provisional secretariat in Benin, and
reached a consensus on the institutional framework for the project
April 2002: Joint Declaration of the five Heads of State
March 2003: Negotiations of the grant
November 2003: Approval of the project by the Board of the Bank
December 2003: Launch of the project by the President of Benin
February 2004: Effectiveness of the grant
August 2004: Signature of the Headquarters Agreement
February 2006: Mid-term review
July 2006: Mobilization of additional resources with the help of UNAIDS
October 2007\. Meeting of the representatives of the five countries with the Global Fund
to agree on the institutional framework
4\. UNAIDS played an important role: The success of the project is mostly due to the
institutional framework, in which all five countries are equitably involved\. It was designed to
complement national HIV/AIDS programs\. UNAIDS has helped initiate, prepare and implement
the project\. It has contributed to the definition of vulnerable people, particularly among mobile
people, through a study conducted in 1997\. It has helped design the institutional framework and
supported its establishment\. It has contributed to the development of the monitoring and
evaluation system, including the formulation of indicators\. It has worked closely with CSOs to
help them participate in project activities\. Finally it has provided technical assistance for the
preparation of the project document for Global Fund financing\.
5\. Main challenges and opportunities: UNAIDS raised five important issues which need to
be addressed carefully:
Sustainability of project achievements at the end of Global Fund financing,
Information sharing with national programs in real time,
Ensuring that the principles of equity, transparency and project performance are applied,
Development of local response, and
Extension of the approach to other transport corridors\.
Annex 9\. List of Supporting Documents
1\. ALCO: Joint Regional Project for STI/HIV/AIDS Prevention, Care and Support along the
Abidjan-Lagos Transport Corridor\. Completion Report, January 2008
2\. HIV/AIDS and Transport, Best Practices in the Abidjan-Lagos Corridor, December 2007
3\. Arc Ingenierie: Mission de Conception et Mise en Place des Observatoires de Suivi des
Déplacements le long du Corridor de Migration Abidjan-Lagos, Rapport d'Etude,
Novembre 2007\.
4\. CAC : Evaluation de la stratégie IEC/BCC, January 2006
5\. CEFORP : Synthèse des études de base, May 2005
6\. CEFORP : Evaluation à Mi-Parcours du Corridor, Volet Biologique, January 2006
7\. CEFORP : Etude sur la Satisfaction des Bénéficiaires, January, 2006
8\. CEFORP : Audit des indicateurs, January 2006
9\. CEFORP : Evaluation a Mi-Parcours, February 2006
10\. CEFORP : Rapport Final Volet Biologique , December 2007
11\. CEFORP: Audit des indicateurs, December 2007
12\. CEFORP: Etude sur la Satisfaction des Bénéficiaires, December 2007
13\. Global Excel: Evaluation des ONG, January 2006
14\. Global Excel: Audit de la gestion des médicaments et condoms, September 2007
15\. The Global Fund : Program Agreement, July 2007
16\. Kaseka and al: Etude sur le tourisme sexuel le long du corridor, November 2005
17\. Moriah Trust : Etude sur les obstacles à l'utilisation du condom féminin, February 2007
Annex 10: Statistical Annex
Table 1: HIV prevalence rates and funding for national HIV/AIDS programs (US$ million)
HIV prev\. Global Fund PEPFAR World Bank Total
Country rate 2003 - 03/07 2004-2006 2001- 12/08 funding
2001 2006
Benin 3\.6% 1\.8% 39\.0 0 58\.0 97\.0
Cd'I 9\.7% 7\.1% 51\.0 115\.3 0 166\.3
Ghana 3\.0% 2\.3% 45\.8 0 45\.0 90\.8
Nigeria 5\.8% 3\.9% 74\.4 344\.8 140\.3 559\.5
Togo 6\.0% 3\.2% 25\.7 0 0 25\.7
Source: World Bank\. PEPFAR (President's Emergency Plan for AIDS Relief) is a US
Government initiative
Table 2: Project Indicators
Indicator Baseline Target Value
(2005) (2007)
PDO Indicators
By end of 2006, at least 90% of the corridor commercial 68% 90% 82\.7%
vehicle drivers can identify at least two ways in which to
prevent HIV/AIDS
By end of 2006, at least 90% of local population residing 50\.4% 90% 84\.4%
along the corridor can identify at least two ways in which to
prevent HIV/AIDS (people aged 15 to 24)
By end of 2006, at least 90% of commercial sex workers 59\.5% 90% 87\.9%
along the transport corridor can identify at least two ways in
which to prevent HIV/AID
By end of 2006, reduce by 30%, compared with the first year 6\.7% 4\.7% 11\.5%
of the project, the incidence of reported sexually transmitted
(urethritis) infections among male commercial vehicle drivers
working along the corridor
By end of 2006, reduce by at least 50%, compared with the 8\.9% 4\.5% 3\.8%
first year of the project, the prevalence of gonorrhoea among
commercial sex workers along the corridor\.
Output Indicators
By 2006, increase by at least 50%, compared with the first 59\.3% 90% 78\.8%
year of the project, the proportion of commercial vehicle
drivers who report using a condom in their last act of sexual
intercourse with a non-regular partner in the previous 12
months\.
By end of 2006, at least 80% of commercial sex workers 58\.8% 80% 70\.5%
along the transport corridor report using condoms with their
clients of the previous week\.
By end of 2006, increase by 50%, compared with the first 0\.97 1\.46 8\.8
year of the project, the number of condoms distributed million million million
through social marketing along the transport corridor
By 2006, each border crossing point along the transport 0 16 24
corridor annually organizes a rally to mark World AIDS Day
with the participation of residents, commercial truck drivers
and civil society organizations from both sides of the border
By end of 2006, each border crossing point of the corridor 3 8 16
has at least one voluntary counseling and testing (VCT)
center on either side of the border\.
By end of 2006, increase by 50%, compared with the first 1,000 1,500 27,639
year of the project, the number of people who use voluntary
counseling and testing centers along the transport corridor
By end of 2005, at least 90% of the health facilities along the 30% 90% 100%
corridor report adequate supply of antibiotics for the
treatment of antibiotic-sensitive sexually transmitted
infections, over the previous six months
By end of 2006, average time for trucks to clear border 180 90 128
formalities does not exceed 90 minutes on average
By end of 2006, average time for busses to clear border 105 45 81
formalities does not exceed 90 minutes on average
By end of 2006, the number of checkpoints per 100 km along 9 3 5
the entire corridor reduced by at least 50%, compared with
the first year of the project
A project progress report is prepared at least once every six 0 1 1
months
Process Indicators
By the end of 2004, all the countries along the transport 0 5 5
corridor have adopted a common HIV/AIDS strategy for the
transport corridor
By end of 2006, train at least 500 residents of border towns 37 500 1,460
along the transport corridor as key community HIV/AIDS
IEC activists
By 2006, increase by at least 50%, compared with first year 4 8 173
of the project, the number of trained HIV/AIDS counselors
working in voluntary HIV/AIDS counseling and testing
centers along the transport corridor
By end of 2005, at least 40% of total disbursements to sub- 0% 40% 66%
projects will have been through civil society organizations
By 2005, at least fifty people from civil society organizations, 0 50 225
working on HIV/AIDS along the corridor, have been trained
on financial management of sub-projects
By 2005, at least fifty people from civil society organizations, 0 50 223
working on HIV/AIDS along the corridor, have been trained
on community HIV/AIDS care and support
By 2005, at least fifty staff of health facilities along the 0 50 287
transport corridor, have been trained on basic management of
PLWHA
Source ALCO\. The three output indicators for transport facilitation are not strictly those of the
PAD\.
Table 3: HIV positive rates among truck drivers and commercial sex workers, size of
sample and date of data collection
Feb\. 2005 Dec\. 2005 Aug\. 2007
No truck drivers 260 334\.0 533\.0
% HIV positive 5\.0 2\.7 1\.7
No CSW 93\.0 142\.0 188\.0
% HIV positive 30\.1 12\.7 20\.7
Source: CEFORP
Annex 11: Key Lessons Learned from ALCO Experience
1\. The following sections highlight key lessons learned from design to the implementation
completion of Abidjan-Lagos HIV/AIDS Transport Corridor Project, financed by the Bank under
its Multi-country HIV/AIDS Program (MAP)\. These lessons may be useful for other ongoing and
future sub-regional HIV/AIDS projects or programs\. The project was a high-risk undertaking
which adopted innovative approaches during its implementation and benefited from the
leadership of the 5 governments\. Bank's Transport Sector (AFTTR) demonstrated an exemplary
dedication and ownership of the project\. The project greatly benefited from significant technical
and financial support of UNAIDS, ACTafrica (AFTHV), HDNGA and AFTTR during its
preparation and implementation that resulted in overall a better design and impressive
implementation performance\.
2\. The PDO, Strategic Alignment and Focus\. The project development objective was realistic,
simple and was developed based on evidence and recognition of the complexity of the challenge
to address HIV/AIDS in the mobile settled populations along the Abidjan-Lagos corridor,
especially at the border areas\. The foundation of the PDO was based on assessments done in 2001
at the border areas that estimated about 300,000 HIV positive persons traveling across 5 borders
annually and the time to clear cargo trucks at the border areas that resulted in delays from a few
days to months, in some cases\. Considering that the corridor provided about 65% of trade facility
to the 5 West African countries, the affect of HIV on the mobile populations and settled
populations along the corridor was enormous\. Stakeholders recognized that the traffic flow must
be improved, number of checkpoints should be reduced, and customs clearance procedures be
streamed lined\. These challenges were considered during the PDO design\. However, considering
that the improvement of traffic flow, customs clearance and border security issues, which
engaged several agencies and sensitive border policies the project design team did not include
traffic facilitation as one of the objectives in the PDO but addressed this challenge in the project
implementation as a project activity\. The PDO should be developed based on evidence and
well informed estimates of what can be realistically achieved\. Objectives that are critical but
their achievement is too risky can still be part of the project design but do not necessarily be
part of the overall PDO\. A wider and earlier stakeholder consultation in the development of
the PDO and KPIs is critical\. The project narrowly identified the target groups and
beneficiary populations and kept its focus on the target throughout its implementation\.
3\. Project design\. There was no precedence of a sub-regional HIV/AIDS project addressing the
threat of HIV on the transport sector and transport sector's contribution in the spread of the
epidemic\. The project design was innovative and heavily relied on a participatory process that
engaged a variety of stakeholders\. This approach resulted in strong ownership from the head of
the states down to the community levels\. The project design was realistic, simple and based on
the key results to be delivered (in prevention, care, treatment and coordination areas)\. A simple
project design that is focused on outcomes and well defined target beneficiary groups
results in successful implementation including better monitoring\. A simple project design
does not warrant less preparation effort and budget, rather much higher preparation fund
that is primarily required for gathering evidence\.
4\. Sustainability, Bank's role and partnership\. The Bank played a catalytic role in supporting
an innovative initiative by taking high risks\. The project documents indicate that at initiation,
with the exception of UNAIDS, other development partners did not show interest in joining the
project\. It is well documented that UNAIDS provided an extraordinary technical and financial
support to bring the project concept to fruition\. \. Strong partnership between the Bank and
UNAIDS was a critical factor in the design and delivery of the project\. After the Mid-Term
Review, ALCO qualified to receive $45 million from the Global Fund for 5 years\. Fiduciary
management and M&E was contracted out to a management firm on the build-operate-transfer
basis\. The BOT approach worked well and by the time project closed, ALCO successfully took
over the fiduciary and M&E roles\. It is critical that strong partnership is built prior to
initiating the project design\. ALCO project confirms that Bank can play a catalytic role,
undertake high risks, build effective institutions, attract substantial financing and deliver
results\. Subcontracting critical but routine tasks pays off in terms of time and money,
especially for a new organization in a complex setting\.
5\. Mainstreaming in the Transport Sector\. The project sets an impressive example of
mainstreaming HIV/AIDS in the Transport sector in the Bank operations\. This has significantly
raised awareness of the impact of HIV on the sector's development and high risk of sector's
contribution to the spread of the epidemic\. The ministries of transport in all 5 countries recognize
the challenge and have been fully engaged in the project (evident from stakeholder consultations)\.
However, evidence of key results delivered by the transport ministries in terms of improved
partnership with the border entities to streamline customs formalities and facilitating traffic flow
has not been significant\. It is critical to actively engage the transport sector, customs and
uniformed services to mitigate the impact of stagnant traffic at the borders\. Without
adequate parking facilities/infrastructure, access to the basic health services and
information the mobile populations may not only be contributing to the spread of HIV but
other diseases including TB and respiratory illnesses\. Bank financed transport
infrastructure operations should address such challenges as a safeguard issue at the borders
as well as in-country main road arteries\. Future operations should be designed with critical
thinking that transit facilitation (including infrastructure and customs clearance) are key to
the success in curtailing the epidemic\.
6\. Innovative implementation approaches (not envisaged during the project design)\. It is
evident that the project has been innovative in seeking solutions to various key challenges\. The
support of the Governing board (head of the national AIDS program managers) has been
exemplary in supporting such innovations:
Establishment of border committees and training them for peer-to-peer learning\. Border
communities were mobilized and trained for community mobilization and awareness\.
ALCO coordinated the training not only to support the community level subprojects but
also for peer-to-peer learning\. This approach proves to be cost efficient and giving a clear
mandate and operational objective to the committee members\.
Harmonized communications strategy\. Considering 5 countries, two foreign languages,
several local dialects, multiple cultures, conflict in Cote d'Ivoire, non-accrual status of
Togo; the project was impressively successful in developing a sub-regional
communications strategy including standardizing key terms and messages along the
border\. The impact of the harmonized communication strategy is evident from behavioral
survey and direct observations\.
Localized radio channels\. An integrated regional IEC/BCC strategy was developed,
validated by the five countries and widely disseminated\. At the operational level, various
approaches were used depending on the targets\. Through the IRIN Radio Station,
partnerships were established with 32 radio stations for the five countries national radio
stations as well as community radios- for the production and broadcasting of radio
programs in 17 local languages\. In 15 months of activities, over 30 million people were
sensitized through the radio programming approach\. The initiative resulted in significant
increase in demand for VCTs\. The established radio coverage can be used to promote
other awareness on PMTCT, TB/HIV\.
Condom social marketing and alternate job opportunities for CSWs\. The approach to the
social marketing of both male and female condoms was innovative\. Special brand for the
corridor was created and registered in all 5 countries, cost were reduced by localizing the
adverts\. CSWs were mobilized to protect themselves as well as to adopt alternate means
of income by selling the condoms\.
Observatories at border behavioral monitoring and traffic flow time recording\.
Observatories were installed at all borders for direct monitoring of behavior of various
target groups as well as sample recording of time required to clear the border formalities\.
Observatories were critical in a constant data flow allowing ALCO management to focus
on the areas requiring more attention\.
Subcontracting M&E\. M&E was subcontracted to the management firm\. Despite initial
slow start, the M&S system was built, operated and then transferred to ALCO by the end
of the project\. Development of an M&E system from the scratch and ensuring data flows,
synthesis and its utilization in stakeholder consultations and action planning has been
impressive\. Include the identification and contracting to 5 local NGOs as intermediary
agents for supervision, quality assurance, M&E and technical assistance to NGOs\.
ART referral system\. The project soon learned that access to ART for non-citizens was a
challenge\. ALCO negotiated with all countries on a referral system\. A non-citizen, when
tested positive was issued a referral slip through which s/he could have access to ART in
any member country\. At the end of each month, the referral records were consolidated
and ALCO would reimburse the cost to that country where ART was provided\. The
system helped MoH in all countries to harmonize ART for the mobile populations and
non-citizens\. This approach also facilitated the national AIDS programs to better plan for
the ART needs and services\.
Waste management\. ALCO retroactively developed a corridor waste management
strategy and plan and hired a fulltime environment and waste management officer\.
Incinerators were installed at all border posts meeting or exceeding WHO standards\.
Community sensitization on waste management was integrated in the IEC programs\.
Increase in CYP\. The annual number of couple year protection (CYP) resulting from all
condoms distributed through the social marketing component increased from 9,778 in
2003 to 109,319 by the end of 2007\.
7\. Institutional arrangements\. The institutional arrangement for the complex implementation
challenge was simple and lean\. Having project targets well defined and target groups well
identified it was comparatively easier for the institutions to focus on the deliverables\. A lean
management group with routine accounts management, procurement management and
monitoring and evaluation system development contracted out has proven to be cost
efficient and resulted in an efficient management\. Government of Benin volunteered, agreed
by all 5 countries, to house the ALCO headquartered and offered to finance the overhead and
housing of the ALCO Secretariat\. The government also offered to receive the project funds on
behalf of all 5 countries including Togo (non-accrual) and Cote d'Ivoire (rapidly slipping into
conflict)\. Government ownership and leadership is a core requirement for successful
institutional arrangements\. Participating member governments should be in the fore front
of decisions related to which country would house the headquarters, how its management
would be staffed to ensure openness, transparency and equal opportunity to all nationalities\.
8\. ALCO succeeded in developing a strong coalition and partnership among the countries on
HIV/AIDS\. This partnership is largely due to early engagement of the political leadership (head
of the states) from all countries\. Top level engagement and commitment greatly facilitated in the
preparation and implementation of the project\. The governing body members included the head of
the national AIDS programs to ensure synergies between the national programs, respective
ministries of health, transport and uniform services and the sub-regional project\. High level
political engagement of participating countries and reaching a broad consensus consumes
time but this is time well spent\. Once there is a political level consensus other operational
and institutional aspects of the projects are much easier to develop and implement\.
9\. Stakeholder engagement\. ALCO management and the approach to the coordination of the
project were highly participatory at all stages from project concept inception to the project
completion\. Reviews and action planning were consulted with the stakeholders and agreements
were reached for implementation priorities\. It is evident that participatory processes and
stakeholder engagement plays a key role in creating strong ownership and responsibilities
among the stakeholders and partners\.
Key challenges were faced during implementation
10\. The successes came with challenges\. Most of these challenges resulted in innovative
approaches by ALCO mentioned above\. The following provide key challenges during the project
implementation:
Project coordination was highly labor intensive with significant diplomatic and political
risk\. Coordination among five countries (1022km of corridor) was difficult due to two
languages, multiple cultures and local dialects, multiple religious believes, and believes
on traditional and spiritual healings, engagement of 5 Ministries of health, transport and
uniformed services\.
Developing synergies between 5 national AIDS programs and a sub-regional program
was challenging\. Although the Governing Board facilitated the process, operational level
harmonization of clinical aspects, referral system, and communications strategy was
difficult\. Subcontracting fiduciary management and M&E greatly facilitated ALCO to
focus on programmatic and thematic harmonization\.
Developing M&E from the scratch for the corridor, considering that only a few countries
had a national M&E system, was a daunting task\. Bringing 5 countries to agree on the
M&E standards, software, data collection and reporting took time in the beginning\.
The objective of addressing different border closing policy at different borders and
several check points on the 1022km corridor (especially in Cote d'Ivoire during the
conflict) was not achieved\. According to the border security agencies, such initiatives
would have compromised the national security\. Nevertheless, the border agencies fully
cooperated in the dissemination of the IEC interventions\.
Border areas are estimated to have prevalence as high as twice the national figures\.
Changing behavior in the mobile population is more difficult than the settled population\.
Special strategy and approach is required to make behavioral change interventions in the
mobile populations\.
Building grassroots capacities has been exhaustive and should not be underestimated\.
Changing behavior, especially in CSWs, to alternate income generation opportunities is
equally difficult without a longer term vision and consistent support\.
It has been very challenging to monitor/surveillance of mobile target groups\. In a mobile
target group it was difficult to have absolute data\. Monitoring of new incidents is the
settled population is doable but in a mobile target group would require high investments,
an implementable methodology and medium-long term consistent financing\.
In order to allow for flexibility, it is better to keep financing expenditure categories to a minimum
in complex projects\. Expenditure categories need not be elaborate maximum amounts may be
allocated to an unallocated category so that the project could benefit from the flexibility and
allocate resources based on the previous 12 months of implementation progress, and allocating
costs to the next 12 months of priority interventions\. | REVIEW |
P049477 |  ICRR 11822
Report Number : ICRR11822
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 08/18/2004
PROJ ID : P049477 Appraisal Actual
Project Name : Kerala Forestry Project Costs 47\.00 36\.00
US$M )
(US$M)
Country : India Loan/ US$M ) 39\.00
Loan /Credit (US$M) 29\.30
Sector (s): Board: RDV - Forestry Cofinancing
(74%), Central government US$M )
(US$M)
administration (26%)
L/C Number : C3053; CP960; CQ082
Board Approval 98
FY )
(FY)
Partners involved : Closing Date 12/31/2002 12/31/2003
Prepared by : Reviewed by : Group Manager : Group :
John English Roy Gilbert Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The objectives of the project were to :
(i) assist the Government of Kerala (GOK) in arresting the retrograde trend in forest cover development; and
(ii) improve forest productivity in an environmentally and socially acceptable manner \.
In addition, the project aimed to improve the standard of living of rural poor in and around forest areas, the
majority of whom belonged to the poorest and weakest sections of society (including tribal people)\.
These objectives were to be achieved through :
(i) improving the forest policy framework and strengthening forest institutions;
(ii) increasing the stocking and productivity of natural and plantation forest on forest and non -forest land; and
(iii) conserving biodiversity\.
b\. Components
The project was to be implemented through three major components and numerous sub -components:
Strengthening of sector management (Appraisal cost - US$6\.20 million\. Actual cost - US$6\.6 million)\. This
comprised:
- strengthening policy reform, institutional and human resource development;
- introducing a forest management information system (FMIS); and
- supporting project management\.
Strengthening of forest management ( Appraisl cost - US$31\.5 million\. Actual cost - US$25\.8 million )\.
- improving management of natural forests;
- imrpoving participatory forest management of degraded natural forests;
- improving management of industrial plantations;
- introducing improved quality planting stock and adapted research;
- strengthening support for homestead forestry and associated activities; and
- introducing an improved fire management system \.
Strengthening of biodiversity conservation (Appraisal cost - US$ 4\.80 million \. Actual cost - US$3\.0 million)\.
- establishing a state wide strategic approach to conservation;
- strengthening sustainability of the protected area (PA) system;
- improving scientific knowledge and public support; and
- expanding village eco-development\.
c\. Comments on Project Cost, Financing and Dates
The closing date was extended by one year, but at completion US$ 9\.3 million of the credit remained undisbursed
and was cancelled\. Reasons for the reduced cost include favorable exchange rates, rationalization of activities
(some consultancies were dropped or reduced in scope ), reductions in the costs of equipment, reduction in
international training, and non-utilization of contingency provisions \. GOI requested a further extension, but the Bank
declined to do so (See Section 5)\.
3\. Achievement of Relevant Objectives:
The project has substantially achieved its objectives \. It provided a substantial institutional base and developed
improved processes, systems and skills required for the implementation of the new Government of Kerala (GOK)
forest sector policy, and laid the framework for investments in the sector \. Significant progress has been made
towards arresting the retrograde trends in forest cover through a series of treatment practices (such as augmentation
of natural regeneration over about 23,000 has, more intensive rehabilitation of about 15,000 has, integrated
management of about 23,000 has of degraded micro-watersheds), and towards laying the bases for improved
productivity through measures such as improved management of plantations on reserved lands, (including
development of improved planting material )\. Significant progress has also been achieved in developing the
participatory management of degraded natural forests and sustainable activities utilizing forest products, as a means
of improving livelihoods of low-income groups (including tribal peoples)\.
4\. Significant Outcomes/Impacts:
The forestry policy framework has been improved and institutions strengthened through:
(i) the adoption and implementation of a sector wide strategic forestry plan that provides comprehensive policy
guidelines for the forestry sector \. Action plans for sector reform have been completed :
(ii) a revolving fund was set-up (including contributions from teak and other hardwood sales ) that is providing
funds for plantations and their maintenance;
(iii) the adoption and implementation of the 2002 Human Resource Development (HRD) plan and the
earmarking of annual KFD budget funds to carry out the plan; and
(iv) the establishment of a Forest Management Information System (FMIS) and an FMIS cell that has resulted in
the potential for much improved data compilation and management \.
The stocking and productivity of natural and plantation forests have been increased through the implementation
of a series of treatment practices \. Although it is early to assess the full impact of the treatments on the forests, there
is, nevertheless, clear evidence from sample plots showing a significant increase in regeneration \. There has been at
least a 50% increase in fresh and established seedlings in over 50% of the sites, while many sites show an increase
of over 100%\. Nursery technology and management have been upgraded and sources established for improved
genetic material for teak and pulpwood species \. Increases in expected yields and lower costs than projected, lead
the ICR to estimate the ERR of the project at 25%, compared to 12% at appraisal\.
The introduction of a participatory approach to forest protection and management has not only shown a positive
contribution to improving forest cover and potential yield, but has already given indications of a sustained
improvement in the livelihoods of the rural communities involved \.
Despite initial difficulties, the project has made reasonable progress in implementation of the biodiversity
conservation program\. The development of a state wide strategic approach to conservation provides an excellent
prioritization of conservation areas and actions and could serve as a valuable tool for future decision making in the
state\. All Protected Areas (PAs) in the state have approved management plans that provide the basis for scientific
management of these areas\.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
There were no significant shortcomings in project performance \.
Note
The project was described in the PAD as the first stage of a "strategic plan for IDA to support the sector over a
period of about 10 years"\. The first phase was to include a project of about four years duration, designed to allow
KFD and the other stakeholders to develop the new processes, systems and skills necessary for the implementation
of the new GOK forestry sector policy, and to provide for limited investments in the sector in support of the change
process\. A second stage project would support larger -scale investments\.
However, IDA support for this second phase will not now be forthcoming \. The ICR does not discuss this, but it is
understood that Bank strategy toward India has been changed to place primary emphasis on support to states with
lower incomes and weaker governmental structures and institutions than Kerala \. At the time of project
implementation, the Bank also had a policy of not extending project closing dates \. In this case, the closing was
extended once, by a year, but about 25% of the credit was undisbursed at the new closing date and was cancelled \.
While a desire to avoid endless extensions is understandable, this operation had been designed as the first stage of
longer support, in a sector with production cycles of generally 20 - 50 years, and seasonal constraints on operations \.
Given that there was to be no follow -on, that credit funds had been well utilized to date, and that the ICR reports that
"delays in the release of counterpart funds due to chronic fiscal problems within the State adversely affected
time-bound forestry field operations on several occasions ", the decision to close and cancel 25% of the credit seems
ill-advised and likely to harm morale in the implementing agency \. The ICR provides no justification for the action
taken\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
The ICR notes a number, the most generally relevant of which are :
Community participation, if established on a sustainable basis with adequate and equitably distributed
benefits, has proved to be a highly effective and efficient means of ensuring protection of natural forests from fire
and biotic influences, and managing fragile ecosystems \.
Site specific, bottom-up planning provides not only a more realistic approach to forest and plantation
management, but engenders a greater sense of involvement and responsibility amongst divisional and field
staff\.
Early and transparent agreement on policy reforms and immediate emphasis on agreed institutional
strengthening are key to underpinning successful project implementation and sustainability \.
8\. Assessment Recommended? Yes No
Why? To assess the impact of withdrawal of IDA support on the momentum of program activity, and to
review the sustainability of the operation \.
9\. Comments on Quality of ICR:
The ICR provides a detailed and balanced assessment of the outcome of a complex operation, but would have
been improved by a discussion of the termination of IDA's program support \. | REVIEW |
P039876 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 36179
IMPLEMENTATION COMPLETION REPORT
(TF-28324)
ON A
GLOBAL ENVIRONMENT FACILITY TRUST FUND GRANT
IN THE AMOUNT OF SDR 5\.2 MILLION (US$ 7\.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF COSTA RICA
FOR THE
BIODIVERSITY RESOURCES DEVELOPMENT PROJECT
June 29, 2006
Environmentally and Socially Sustainable Development Sector Management Unit
Central America Country Management Unit
Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 16, 2006)
Currency Unit = Colones
511\.85 Colones = US$ 1\.00
US$ 1 = 1
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
CBD Convention on Biological Diversity
GEF Global Environment Facility
GBIF Global Biodiversity Information Facility
IABIN Inter-American Biodiversity Information Network
INBio National Institute of Biodiversity (Instituto Nacional de Biodiversidad)
MINAE Ministry of Environment and Energy (Ministerio del Ambiente y de Energía)
NGO Nongovernmental Organization
NORAD Norwegian Agency for Development Cooperation
PAD Project Appraisal Document
PCU Project Coordination Unit
SINAC National System of Conservation Areas (Sistema Nacional de Áreas de
Conservación)
UBI Basic Unit of Information (Unidad Básica de Información)
Vice President: Pamela Cox
Country Director Jane Armitage
Sector Director Laura Tuck
Task Team Leader: Douglas J\. Graham
COSTA RICA
BIODIVERSITY RESOURCES DEVELOPMENT PROJECT
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 10
6\. Sustainability 11
7\. Bank and Borrower Performance 12
8\. Lessons Learned 13
9\. Partner Comments 14
10\. Additional Information 17
Annex 1\. Key Performance Indicators/Log Frame Matrix 19
Annex 2\. Project Costs and Financing 21
Annex 3\. Economic Costs and Benefits 23
Annex 4\. Bank Inputs 25
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 27
Annex 6\. Ratings of Bank and Borrower Performance 28
Annex 7\. List of Supporting Documents 29
Annex 8\. Borrowers Summary Evaluation 30
Annex 9\. Map 41
Project ID: P039876 Project Name: BIODIVERSITY RESOURCE
DEVELOPMENT (GEF)
Team Leader: Douglas J\. Graham TL Unit: LCSEN
ICR Type: Core ICR Report Date: June 29, 2006
1\. Project Data
Name: BIODIVERSITY RESOURCE DEVELOPMENT L/C/TF Number: TF-28324
(GEF)
Country/Department: COSTA RICA Region: Latin America and the
Caribbean Region
Sector/subsector: General agriculture, fishing and forestry sector (87%); Central government administration
(13%)
Theme: Biodiversity (P); Environmental policies and institutions (P); Rural non-farm income
generation (S)
KEY DATES Original Revised/Actual
PCD: 05/03/1995 Effective: 07/14/1998 07/14/1998
Appraisal: 05/01/1997 MTR: 06/18/2001 06/18/2001
Approval: 03/03/1998 Closing: 06/30/2005 12/31/2005
Borrower/Implementing Agency: INBIO/INBIO
Other Partners:
STAFF Current At Appraisal
Vice President: Pamela Cox Shaheed Javed Burki
Country Director: Jane Armitage D-M Dowsett-Coirolo
Sector Director: Laura Tuck Marita Koch-Weser
Team Leader at ICR: Douglas J\. Graham Thomas B\. Wiens
ICR Primary Author: Gunars Platais; Douglas J\.
Graham; Teresa M\. Roncal
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: HL
Institutional Development Impact: H
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The global environmental objective of the Biodiversity Resources Development Project was to demonstrate
that increased species knowledge benefits conservation and the sustainable use of globally important
biodiversity\. Benefits would be achieved by enabling more sustainable use and by raising awareness of
biodiversity\.
Costa Rica is at the forefront of biodiversity conservation and management\. Recognizing that its biological
resources are an important national asset, Costa Rica has pursued a policy of conservation and protection,
and has encouraged innovation in environmental financing and administration\. In 1992, with the signing of
the first National Biodiversity Institute (INBio) and National Conservation Area System (SINAC)
Cooperation Agreement, an official alliance was established between the Ministry of Environment and
Energy (MINAE) and INBio\.1 SINAC is the regulatory agency that implements natural resource
management decisions in the country's conservation areas\. SINAC receives technical input from INBio
(e\.g\., preparation of joint projects, consultancies, technical assistance, capacity building, and information
exchange) that culminated in the elaboration of the National Strategy on Conservation and Sustainable Use
of Biodiversity\.
The GEF-financed project was designed to be a central part of the INBio-managed Integrated Development
of Biodiversity Resources Program (hereafter the "Integrated Program")\. This program originated as a
result of the above-mentioned National Strategy and through the integration of three inventory initiatives
financed by the governments of Norway (through NORAD, the Norwegian Agency for Development
Cooperation), the Netherlands, and by the GEF\. The government of Costa Rica was represented in the
program through SINAC\. The Integrated Program develops and promotes mechanisms that integrate
conservation in development through enhancing knowledge of sustainable use of biodiversity\. It contributes
to the fulfillment of the National Strategy by supporting the latter's main lines of action: (i) establish large
areas for conservation, (ii) improve knowledge about the biodiversity of those areas, and (iii) integrate
sustainable use of biodiversity into the intellectual and economic fabric of society\.
________________________________
1
The National Biodiversity Institute (INBio) of Costa Rica is a private research and biodiversity management
institution established in 1989 to support efforts to gather knowledge on the country's biological diversity and
promote its sustainable use\. INBio collaborates closely with government institutions, universities, the private sector
and other public and private organizations inside and outside Costa Rica\. The government of Costa Rica has
divided the entire country into "conservation areas", constituting a decentralized structure through which protected
areas are managed\.
3\.2 Revised Objective:
The objectives were not revised\.
3\.3 Original Components:
The project financed the following four components:
3\.3\.1 Inventory Framework (US$0\.7 million, 6\.4% of total project cost)\. This component financed
consultants; transportation, travel-related expenditures and materials for consultations with scientists;
consultations with representatives of different user groups, communities, and other stakeholders; and the
work of the Commission on the Use of Indigenous Knowledge and Sharing of Benefits\.
3\.3\.2 Biodiversity Inventory (US$8\.0 million, 73\.4% of total project cost)\. This component financed the
collection of specimens for priority subgroups of the then-estimated 144,000 species of Hymenoptera,
- 2 -
Coleoptera, Diptera, and Fungi in the Conservation Areas of Tempisque, Arenal-Tilaran, Osa, Amistad
Pacifico, and Amistad Caribe; cataloging of the specimens collected; and information management
activities such as specimen databases\. The two subcomponents were:
(i) Collection activities\.This subcomponent financed incremental costs of salaries for new
parataxonomists and research coordinators in the three conservation areas that did not have research
coordinators; equipment; maintenance; supplies; transportation and training programs for local
parataxonomists and technicians; collection of specimens of Hymenoptera, Coleoptera, Diptera, and Fungi
in the five conservation areas; preliminary sorting of specimens in the field; recording of relevant specimen
natural history information; and transfer of the specimens to INBio for further processing\.
(ii) Cataloging activities\.This subcomponent financed incremental salaries for technicians and
curators; international taxonomic consultants; equipment; training programs; recurrent costs on a declining
basis at INBio for activities and equipment related to cataloging and information management; and travel
and per diem for international and national taxonomists working in Costa Rica who volunteered their time\.
The work of the taxonomists enabled the processing and storage of the millions of specimens that the
collection activities generated, identification and cataloging of each specimen, and recording relevant data
in a computerized information management system\.
3\.3\.3 Sustainable Uses of Biodiversity (US$0\.9 million, 8\.3% of total project cost)\. This component
financed consultants, studies, equipment, materials, publications, seminars, and other expenses to develop
applications based on the inventory\. Its intention was to demonstrate which knowledge-based applications
were the most feasible for generation or revenue or other benefits\.
3\.3\.4 Institutional Strengthening (US$1\.3 million, 11\.9% of total project cost)\. This component financed
incremental costs of additional personnel, equipment, and recurrent costs on a declining basis for the
Project Coordination Unit (PCU)\. Given the special handling and storage needs of Fungi, this component
also financed the infrastructure, equipment, and maintenance costs of a Fungi laboratory\.
Project design was consistent with ongoing activities of the implementing agency and other donors involved
in conservation in Costa Rica\. The government of Norway funded activities through a US$0\.4 million grant
in April 1995 and a follow-up grant of US$1\.4 million in October 1997, which laid the foundation for the
project\. This support enabled a series of participatory workshops with scientific Taxonomic Working
Groups and potential clients and users to determine the methodologies and protocols that should be used for
collection and cataloging\. The Norwegian funding also permitted limited collecting and cataloging
activities, piloted the development of products, and developed INBio's institutional capacity\. In 1996, the
government of Canada provided a US$3\.4 million grant to strengthen management capacity at INBio,
finance infrastructure for the bio-prospecting laboratory, and finance meetings with indigenous
communities\.
While these donor-funded activities were being undertaken, the government formed several working groups,
in which INBio and SINAC participated, to discuss the role of biodiversity in Costa Rica's sustainable
development\. As a result of these discussions and the donor-funded project work, it became apparent that
the sustainability of the protected areas depends on the benefits they generate for society and the local
communities\. As a result, SINAC focused on developing a decentralized system of conservation areas that
takes an ecosystem approach to conservation (see Map A9\.1, Appendix 9) and involves local communities
in the development of strategies for sustainable development\. INBio and SINAC agreed that inventory
activities should be based on community demand-driven criteria and should cover a range of ecosystems
and geographic locations\.
- 3 -
Based on this approach, in December 1997 the government of the Netherlands approved a four-year grant
of US$8\.2 million, to finance: (i) the collection and cataloging of five taxonomic groups including plants,
mollusks, nematodes, Lepidoptera, and vertebrates; (ii) ecosystem mapping of the Conservation Areas; (iii)
further development of the biodiversity information management system; (iv) projects based on sustainable
uses and applications of the inventory; and (v) infrastructure, training, and institutional strengthening of the
Conservation Areas and INBio\. These Dutch-funded activities strongly complemented the GEF-financed
project, complementarities which were ensured by both falling under the Integrated Program\. The latter was
further strengthened with a second Dutch donation of US$5\.38 million which started in July 2002 and ran
until October 2005\.
3\.4 Revised Components:
Following a recommendation made by the donors, in November 2001 the Integrated Program was
redesigned to have four components based on the original components of the GEF-financed project,
incorporating the eight components of the Dutch-financed project and NORAD-financed activities\.
Comparing the Integrated Program structure to the original structure of the GEF-financed project, only the
name of the first component changed from Inventory Framework to Planning and Participation\.
There were no major formal revisions of any component\. However, during the mid-term review, INBio
proposed that the Lepidoptera (moths and butterflies) be included in Component 2 of the GEF-financed
project\. This revision was justified due to the end of direct Dutch financing for Lepidoptera and the
availability of Dutch financing to cover parataxonomist costs that the GEF-financed project would have
otherwise covered\. The World Bank accepted this reassignation of project funds in November 2001\.
3\.5 Quality at Entry:
The rating for this aspect is considered Satisfactory\. Before approval, the project met accepted quality at
entry standards in applying World Bank procedures, policies, and safeguards\. The project objectives were
consistent with the CAS, donor program, and government priorities\.
Six project risks were appropriately identified:
1\. The resource base could be depleted through over-sampling\.
2\. Knowledge gained during the project might not be disseminated or used globally\.
3\. INBio's absorptive capacity could be overwhelmed due to the projected 25 percent increase in the
resources and activities that INBio would manage annually\.
4\. The project objectives might not be met due to financial and human resource constraints in the selected
project areas\.
5\. Coordination between INBio and SINAC might be inadequate\.
6\. INBio might not be able to negotiate binding agreements with international taxonomists\.
These risks were taken into account during project implementation\. Depletion of the resource base through
over-sampling was determined not to be a concern given the minimal sampling effort and dispersed
geographic locations of sampling areas\. The risk of inadequate dissemination of knowledge gained during
the project was not realized given the emphasis accorded to scientific and practical biodiversity use
publications\. Regarding INBio's capacity to absorb the 25 percent increase in the amount of resources and
activities, the institution was able to adjust and accommodate this increased demand on staff time\. In close
collaboration with SINAC, the project was able to address the potential and real financial and human
resource constraints in the five Conservation Areas\. Finally, the risk that INBio would not be able to
negotiate binding agreements with taxonomists was unfounded as the number of participating international
taxonomists eventually exceeded all expectations\.
- 4 -
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The project's outcome is rated as Satisfactory\. INBio hosts an extraordinary archive of biological
information for biodiversity conservation and sustainable use as one result of the project\. The project
focused on five taxonomic groups (Hymenoptera, Coleoptera, Diptera, Lepidoptera, and Fungi) and
indirectly supported inventories of three other groups (plants, nematodes, and mollusks) as a part of
INBio's broader Integrated Program\. The project promoted and improved biodiversity conservation and
sustainable use by: (i) contributing and generating information used for decision-making in the conservation
areas of the country (e\.g\., basic inventory information, specialized technical reports, and ecological
studies); (ii) supporting the organization and administration of biodiversity information and making it fully
accessible via the Internet; (iii) publicizing and transferring biodiversity information to the public at large
through electronic and printed materials and training; and (iv) supporting the negotiations of new projects
in sustainable biodiversity use through INBio's bioprospecting program\.
The most salient project benefits of global significance are: (i) practical methodologies for biodiversity
inventories that have been recognized by global initiatives such as the Global Biodiversity Information
Facility (GBIF) and by regional efforts such as IABIN; (ii) contribution to scientific knowledge of five
taxonomic groups in the Neotropics, as indicated by the identification of on average one new species every
day for the last three years; (iii) public access to all inventory information accessible on an acclaimed
easy-to-use website (http://atta\.inbio\.ac\.cr); (iv) legal, contractual, and financial models for the use of the
information from biodiversity inventories; (v) new successful working modalities between the public sector
and NGOs to promote the sustainable management of biodiversity; and (vi) facilitation of the contributions
of 350 taxonomists from research centers, museums, and universities worldwide\.
No one project indicator unambigously links the biological inventories and research with improved
biodiversity conservation, a key objective of the project\. However, the qualitative and quantitative
indicators taken together, high performance of the executing agency, its success in reaching and influencing
the public and policymakers, and qualitative feedback from officials of the National System of
Conservation Areas (SINAC), support the conclusion that this objective was satisfactorily achieved\.
SINAC representatives were emphatic in defending the value of the project-generated information in having
influenced a variety of important national conservation decisions\. Additonally, by more clearly establishing
these links, the project made an important contribution to addressing the "taxonomic impediment"the
widely recognized global lack of basic taxonomic expertise that limits many efforts to find applied uses for
biodiversity\.
4\.2 Outputs by components:
4\.2\.1 Inventory Framework
This component is rated Highly Satisfactory\. The project was successful in establishing the methodologies
and protocols for taxonomic work and involving the international scientific community in these endeavors\.
INBio has established itself as a worldwide leader in taxonomic inventories and far exceeded the original
goals in terms of the number of taxonomists trained in the use of the methodologies, participation in
workshops, visits to INBio, and requests for inventory information\.
- 5 -
The mixed results of the consultative efforts with local communities and indigenous groups are attributable
to project design, which overestimated the degree to which local communities and stakeholders would be
interested in, and could define their biodiversity needs\. Adapting to this reality, INBio supported a dialogue
with local communities that would stand to benefit from the information being generated\. The project
supported the National Indigenous Conference (Mesa Nacional Indígena) in a participatory process with
indigenous groups and local communities on generating information and capacity building\. The
consultations helped generate the ideas and general principles on the nature, scope, and requirements of
communal intellectual property rights that would comply with that stipulated in Costa Rica's Biodiversity
Law, the Convention on Biological Diversity, and the International Treaty on Plant Genetic Resources for
Food and Agriculture\.
Based on extensive local outreach and workshops, the project crafted a constructive approach to address
the needs of local and indigenous communities that focused on cooperation and consultation with the
National System of Conservation Areas (SINAC)\. This approach included strong community
representation and partnerships with the National Indigenous Conference that provided input on the specific
needs and rights of indigenous communities\. Toward the end of the project, INBio also conducted a greater
number of ecological studies targeted at narrowly defined local issues\. These studies were supplemental to
the original taxonomic focus of the project but were considered highly relevant and useful by local
communities and conservation area managers\.
4\.2\.2 Biodiversity Inventory
This component is rated Highly Satisfactory\. INBio's taxonomic collection is one of the best in the
Neotropics and is of such high quality and scientific interest that international scientists contributed more
than five times the anticipated amount of voluntary taxonomic work for analyzing and classifying
specimens\. By the end of the project, more than 40,000 volunteer taxonomist-days had been contributed, an
astonishing global contribution\. In collaboration with other donors and INBio programs, this information
has been made accessible through inclusion in the online biodiversity information database, Atta, as well as
through the growing number of in-depth species pages (UBIs)\.2 Atta receives an average of 20,000 hits a
day and has received four international prizes in the last three years\.3 It has been a model for other systems
being installed in Central American herbaria and others across the world\. The inventory work is critical to
support INBio's scientific research and bioprospecting efforts, institutional credibility and authority, and
educational and public outreach missions\.
The initial targets for numbers of specimens identified and new species described were recognized early in
project implementation to be unrealistic\. Although even revised targets were not fully achieved, by any
other objective measure the results of the component were exceptional, given the discovery of more than
2,000 new species for science, and the cataloging of approximately 3 million specimens (of which
approximately one third at the species level)\. An internationally recognized expert from the Museum of
Natural History in London, contracted during the mid-term review to evaluate the Inventory Component,
reported that: "the inventory process at INBio is efficient and effective\. Specimens are collected in the
protected areas by highly trained parataxonomists, and are further sorted by technicians and curators at
INBio\. Specimens are sent to international experts, not only those working directly with the project, but
increasingly to a wide variety of experts all over the world\."4 INBio has been the first institution in the
world to fully implement a barcoding system in its collection\. Barcoding has expedited data entry and
reduced errors, thus significantly reducing collecting costs\. INBio also has developed and is implementing a
sustainability plan for continuing taxonomic activities and maintaining the inventory\.
INBio is the largest provider of vouchered specimen data to the Global Biodiversity Information Facility
- 6 -
(GBIF) and is the official representative of GBIF in Costa Rica\. INBio also was chosen by GBIF to lead
mentoring programs with Argentina, Nicaragua, and Peru\. INBio is also a founding member of the
Smithsonian-led Encyclopedia of Life initiative, and INBio staff sit on the Steering Committee\. At a
hemispheric level, INBio has recently been chosen to be the coordinating institution for the Species and
Specimens Thematic Network of the Inter-American Biodiversity Information Network (IABIN)\.
4\.2\.3 Sustainable Uses of Biodiversity
This component is rated Satisfactory based on the increased use of information from the project to support
conservation management plans and measures; the number of pilot agreements with companies, research
institutions, and NGOs to develop and implement applied uses for biodiversity; the prolific output of
publications and scientific articles using information from the project (see Section 10); and qualitative
assessments of the conservation value of project activities by officials of the Conservation Areas System\.
From the beginning of the project, it was anticipated that most "real world" applications based on the
inventory likely would not be realized during the duration of the project\. However, pilot agreements to
develop applied uses of biodiversity exceeded proposed targets\. A sample of project-supported initiatives,
in some cases pursued in conjunction with other donor resources, include:
l Discovery of a new species of fungus that could fight pathogens in the vanilla plant
l Identification of 60 edible mushrooms with cultivation and marketing potential
l Improved management practices for butterfly breeders and diversification of commercially available
species
l Ongoing research into vector control for dengue fever
l Inventory of pests affecting forest health
l Greater understanding of both the positive and negative roles of insects in coffee plantations\.
In addition, responding to demand for activities from SINAC and communities, the project supported
investments, not strictly speaking related to the inventory, in management of other species such as the
White-winged Dove\. Project activities supported INBio's role in public outreach and education, raising
conservation awareness, and influencing conservation policy\. By raising awareness of the value of
biodiversity among decision-makers, tourists, educators, students, and the general public, changes were
introduced in their perceptions and behavior that will benefit biodiversity conservation\.
Information gathered by the project has been disseminated through many scientific and educational
publications produced by their in-house publishing group, Editorial INBio; through their public educational
facility, INBioparque; and through the frequent presence of INBio on television, radio, and in print media\.
8
The project made a special contribution through printing books and children's games, as well as teaching
materials (posters, compact disks, and a video) for children and adults (see Section 10 for a list of
project-sponsored material)\. In addition to its frequent presence in the media--including a weekly one-hour
program on Radio Nacional--INBio has become an authority for journalists on environmental issues,
which ensures significant newspaper, radio, and television coverage\.
INBio is widely known and respected in public, political, and scientific circles\. Politicians, environmental
specialists, media, educators, students, religious leaders, and NGOs were interviewed in a recent study
commissioned by INBio\. Those interviewed concurred that INBio was influential in promoting and
implementing environmental conservation efforts\. This influence was due to INBio's scientific and
technical strength, to which the project contributed substantially\. The study also identified a perception that
INBio had not liaised sufficiently with local communities nor with the direct users of biodiversity resources\.
INBio is addressing these concerns by readjusting and strengthening its outreach program\.
- 7 -
Interviews in December 2005 and April 2006 with SINAC officials elicited a very favorable assessment of
the project's contribution to conservation measures and policy, both the inventory activities and targeted
ecological studies\.
4\.2\.4 Institutional Strengthening
This component is rated as Highly Satisfactory\. Facing challenges in financial sustainability and a need to
transition to a new management team, the institution took important strides in restructuring, instituted new
administrative and financial systems and procedures, and developed a serious strategy for institutional
sustainability\. Only a few years ago, given that Dutch and World Bank financing constituted half of
INBio's revenue stream, the end of the project loomed ominously\. However, INBio's well-articulated plan
to continue project activities, which are now fully integrated into INBio's institutional activities, is being
implemented\. Because of very aggressive fundraising and diversification, at the end of the project, INBio's
post-project annual revenues are expected to decline only from $6\.4 million to approximately $6\.2 million\.
INBio's staff, particularly its managers and procurement/financial personnel, explicitly recognize that
having to satisfy stringent World Bank policies and procedures considerably strengthened their capacity\.
________________________________
2The UBI, or Basic Information Unit (Unidad Básica de Información), provides general data on a species such as
taxonomy, distribution, life history, conservation status, plus a picture or drawing\.
3
These awards include: (i) Tech Museum of Innovation Award in the Conservation category, 2003; (ii) Augusto
Gonazález de Linares environmental prize of the Universidad de Cantabria, Spain, 2004; and (iii) the best website
prize of Costa Rica, given by the Ministry of Science and Technology\.
4 Knappp, Susan\. June 2002\. Detailed Comments on INBio Inventory Component, Document Associated with
World Bank Mid-Term Review Mission, 18-24 June 2002\.
5Not directly financed by the project, INBioparque is a tourism- and education-oriented facility that introduces
visitors to a range of Costa Rican ecosystems and biodiversity\. A key conclusion of a recent analysis of the facility
is that a greater depth and breadth of public interest could be generated by bringing more of INBio's scientific work
into INBioparque\.
4\.3 Net Present Value/Economic rate of return:
N/A
4\.4 Financial rate of return:
N/A
4\.5 Institutional development impact:
The project's institutional development impact is considered to be Substantial\.
The project played a significant role in improving INBio's ability to make effective use of its human and
financial resources to manage natural resources and conserve biodiversity\. Project-generated information
influenced a variety of important conservation decisions and was an important factor in INBio's
contribution to the fulfillment of the National Conservation Strategy\. The NGO's partnership with SINAC
enabled the use of information to support park management\.
Recognizing that its biological resources are an important national asset, Costa Rica has pursued a policy
of conservation and protection and has encouraged innovation in financing and administration\. Through its
contribution to the Integrated Development of Biodiversity Resources Program, the project supported
INBio in assessing its sustainability as an institution\. Funded by the Dutch government, INBio produced
two documents\. The first, "The Essence of the Institution," was inward looking\. It asked probing questions
about the institution and produced a vision statement\. The second document, "Towards Sustainability:
- 8 -
Experiences of the Instituto Nacional de Biodiversidad", enabled INBio to define a strategic action
framework on how to implement its vision\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
There were no major factors outside the control of the government and of INBio that negatively affected
achievement of the project outcome and objectives/outputs\.
5\.2 Factors generally subject to government control:
Key decisions taken over the last years by the government enhanced the positive impact of the project\. The
1998 Biodiversity Law confirmed Costa Rica's commitment to the Convention on Biological Diversity
(CBD) and provided the legal framework for future work related to biodiversity in the country\. The
delegation of the National Biodiversity Inventory to INBio was a positive contribution to the success of the
project and to the success of the broader Integrated Program\.
5\.3 Factors generally subject to implementing agency control:
INBio arguably is one of the best run nongovernmental organizations in Central America, if not Latin
America\. With its visionary leaders, efficient administration, and motivated staff, which experienced almost
no turnover during the lifetime of the project, INBio has produced lasting results for biodiversity
conservation in Costa Rica\. Its contributions are felt across the region and the world\. Over a decade, the
project, with those of other donors, contributed more than US$11 million to raise knowledge on biodiversity
and its uses\. This project enabled the institution to test itself and to discover how far it could progress in
innovative areas\.
A positive outcome in the development of the project was INBio's initiative to integrate three major donor
initiatives (of the Netherlands, Norway, and the GEF) under the umbrella Integrated Program\. This
integration enabled synergies to be exploited more efficiently so that each partner was able to leverage mroe
impact per dollar invested\.
5\.4 Costs and financing:
There were no significant cost changes or in financing of the project\. INBio has an efficient administration
that delivered on its procurement and fiduciary responsibilities with no changes to the costs\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The project's overall sustainability is rated as Highly Likely\.
The main project activities have been incorporated into INBio's institutional programming, which provides
for other future sources of financing\. This additional funding will enable the continuation of knowledge
generation and processing and transferring information on biodiversity in the five taxonomic groups
(Diptera, Hymenoptera, Coleoptera, Lepidoptera, and Fungi) financed by the project\. INBio will be able to
continue with the specialized collection of biological material; managing collections (nearly three million
specimens); working with international taxonomists; managing the database; preparing and disseminating
scientific publications; providing identification and technical assistance services; and identifying and
developing new data applications\.
Half-way through completion of the 1997 Dutch-funded grant, a review suggested the importance of
focusing on the sustainability of INBio\. This suggestion originated from the realization that external
- 9 -
funding was anticipated to decline and successors to INBIo's founding members and senior management
would soon need to be identified\. This suggestion galvanized INBio to look inward and ask fundamental
questions: "Who are we? What do we do? Where do we come from? Where do we want to go?" This effort
resulted in two strategic documents\. The first, entitled "The Essence of the Institution" was inward looking,
while the second, "Towards Sustainability: Experiences of the Instituto Nacional de Biodiversidad (Costa
Rica)" was forward looking\. These efforts have laid the groundwork for an institutional plan that defines
targets by strategic objective, through which project objectives are integrated in institutional planning\. This
strategic plan, with scientific and technical capacity generated in part through the GEF-financed project,
has served as the basis for the institution to seek new sources of financing and cooperation\. This process
has been complemented by a significant increase in its own-generated funds from goods and services\.
6\.2 Transition arrangement to regular operations:
The strategic planning initiatives mentioned above have permitted INBio to transition to regular operations
without the major external donations that the institution received over the lifetime of the project\. For
example, the Arthropod and Fungus units have the staffing to maintain the biological collections and handle
projects in different areas that respond to the institution's mission\. The Arthropod team is composed of 20
people (6 technicians, 5 curators, 2 artists, and 7 parataxonomists) with a budget of over US$200,000\. The
Fungus team will be composed of 6 people (3 technicians, 2 curators, and 1 parataxonomist) with a budget
of approximately US$50,000\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
The Bank's overall performance in project identification, preparation, and appraisal is rated Satisfactory\.
The project was consistent with the World Bank's Country Assistance Strategy (CAS)\. The Bank team
included recognized specialists in key technical subject areas\. The project followed applicable Bank
safeguard policies and met financial management and procurement requirements\.
7\.2 Supervision:
Bank supervision is rated Satisfactory\. The Bank carried out close supervision with an average of two
missions per year\. The supervision mission teams were a mix of international and local professionals\.
Although task management changed three times during the lifetime of the project, the Bank's supervision
was technically and administratively consistent through the lifetime of the project\.
7\.3 Overall Bank performance:
Overall Bank performance is considered Satisfactory\. The Bank complied satisfactorily with its role as
GEF implementing agency\.
Borrower
7\.4 Preparation:
Preparation performance was Satisfactory with excellent participation of INBio staff from the outset\.
Being a private research and biodiversity management organization with seven years' experience
implementing agreements with national and international organizations, INBio had sufficient administrative
flexibility to adjust to the Bank's requirements\. While the grantee correctly analyzed the issues and
challenges for each component, some indicators were poorly or unclearly formulated, which could however
be just as easily attributable to the Bank project team\.
The project was consistent with the National Strategy on Conservation and Sustainable Use of
Biodiversity\. The INBio-SINAC Cooperation Agreement built on complementarities between the two
- 10 -
institutions\. However, during project preparation, some differences needed to be resolved that were caused
by coordination and communication problems\. It is worth noting that both institutions had recently gone
through restructuring\. Although these differences eventually were resolved, they impeded SINAC playing a
more active role in project preparation\.
7\.5 Government implementation performance:
The government's implementation performance is considered Satisfactory\. The government's early
decision to make INBio the technical and scientific arm of SINAC set the stage for a very successful
outcome\. While SINAC was the regulatory agency, INBio provideed technical input to SINAC's natural
resources management decisions\.
7\.6 Implementing Agency:
The performance of INBio as the implementing agency is considered Satisfactory\. INBio was able to
adjust to the Bank's procedures in a timely manner, and the Project Coordination Unit was well organized
and accountable\. Annual implementation reports and operational plans were of high quality and submitted
on time\. The suggestions from the supervision missions were taken into consideration, with the exception of
addressing problems with indicators, which were only addressed near the end of the project\.
7\.7 Overall Borrower performance:
The overall rating for Borrower performance is considered Satisfactory\. This rating reflects the flexibility
that INBio demonstrated in adjusting to multiple donor requirements\. INBio also demonstrated a mature
commitment to finding long-term solutions to its financial future and investing in preparing a cadre of
future managers\.
8\. Lessons Learned
l Select a mature institution as the project executing agency\. INBio had years of experience in
biodiversity research and management, as well as in working with other international organizations and
donors\. Financially, it was sufficiently sound to have attracted a good depth of human resources\.
l Socialize scientific information\. The world-class collections held at INBio represent the results of 10
years of hard work and have a high scientific value\. It was important however to also translate this
scientific information into practical information for the nonscientist and general public\.
l Do not overestimate local communities' abilities to know their biodiversity needs\. The project
overestimated the degree to which local communities and stakeholders would be able to understand or
define their needs for biodiversity information\.
l Create an enabling environment for science to work with local and international communities\.
Breaking barriers for communities (national or international) to work with INBio opened important
doors\. Many times, breaking down simple logistical barriers (for example, paying for airfare) went a
long way to generate a willing attitude to cooperate\.
l Prioritize\. Biodiversity information is so vast that no one institution can specialize in all groups or all
areas\. Prioritizing the areas of focus was fundamental for INBio to show important results not only to
donors but also to the scientific community\.
l Product-based thinking is important for the sustainability of knowledge-based institutions\.
Marketable biodiversity products (e\.g\., books, magazines, and educational materials) are important to
generate revenue\.
l Publicize benefits of conservation to local communities and society\. The discussions and
donor-funded work revealed that the sustainability of the conservation areas depends on the benefits
generated for society and the local communities\. These benefits must be communicated to the public\.
- 11 -
l Involve staff\. INBio staff are motivated and committed to the success of the institution\. Their
involvement through participatory discussions is an important element in the future success of the
institution\.
l Foster parataxonomists\. Training local individuals, such as park rangers and hunters, to become
parataxonomists empowered them to become one of the most successful elements of the biodiversity
development program\.
9\. Partner Comments
(a) Borrower/implementing agency:
The President of INBio conveyed to the World Bank the Institute's comments on the ICR in a letter dated
June 2, 2006 to the ESSD Sector Leader of the Central America Country Management Unit for Central
America\. The following is a summary of the translated version of the section of the comments pertaining to
their review of the evaluation\.
"We have received the Implementation Completion Report (ICR No\. 36179) of the Biodiversity Resources
Development Project financed through a GEF grant of US$ 7 million to the National Biodiversity Institute
(INBio)\. The World Bank was the executing agency for the GEF\.
Having reviewed the evaluation, INBio as the organization responsible for executing the project, expressed
its total agreement with the results of the evaluation of the project's performance\."
- 12 -
- 13 -
(b) Cofinanciers:
(c) Other partners (NGOs/private sector):
- 14 -
10\. Additional Information
Books published by INBio produced through the Biodiversity Resources Development Project
Title Source State
Abejas de orquídeas de la América tropical INBio BM/GEF For Sale
Orchid Bees of Tropical America
Dípteros de Costa Rica 2da edición INBio BM/GEF For Sale
Dípteros of Costa Rica\. 2nd Edition
Escarabajos de Costa Rica, 2da edición INBio BM/GEF For Sale
Beetles of Costa Rica 2nd Edition
Escarabajos fruteros de Costa Rica INBio BM/GEF For Sale
Fruit Beetles of Costa Rica
Libélulas de Mesoamérica y el Caribe INBio BM/GEF For Sale
Mesoamericna and Caribbean Dragonflies
Líquenes de Costa Rica INBio BM/GEF For Sale
Costa Rican Lichens
Macrohongos de Costa Rica, Vol\. I, 2da edición INBio BM/GEF For Sale
Mushrooms of Costa Rica, Vol I, 2nd Ed\.
Macrohongos de Costa Rica, Vol\. II INBio BM/GEF For Sale
Mushrooms of Costa Rica, Vol II, 2nd Ed\.
Mariposas diurnas y nocturnas de Costa Rica INBio BM/GEF For Sale
Moths and Butterflies of Costa Rica
Membrácidos de la América tropical INBio BM/GEF For Sale
Membracids of Tropical America
- 15 -
Educational Material Published by INBio Editorial through the Biodiversity Resources Development
Project
Title Source State
Afiche Insectos de Costa Rica / Avispas, abejas y INBio BM-GEF For Sale
hormigas (Poster Wasps, bees and ants)
Afiche Insectos de Costa Rica / Ciclos de vida de las INBio BM-GEF For Sale
mariposas diurnas y nocturas (Poster Butterfly and moth life
cycles)
Afiche Insectos de Costa Rica / Mariposas diurnas y nocturnas INBio BM-GEF For Sale
(Poster Butterflies and moths)
Afiche Insectos de Costa Rica / Moscas, mosquitos, tábanos y INBio BM-GEF For Sale
afines
(Poster Flies, mosquitoes, deer flies and allies)
CDR Bosque tropical seco (español) INBio BM/GEF For Sale
CDR Dry Tropical Forest (Spanish) España/AECI
CDR Bosque tropical húmedo de Centroamérica (español inglés) INBio BM/GEF Holanda -
Tropical Humid Forest of Central América (Spanish-English) NORAD
Coloreando la naturaleza INBio BM/GEF For Sale
Nature Coloring Book
Juego Trivia INBio BM/GEF For Sale
Trivia Game (biodiversity theme)
Serie de guías didácticas Rostros de la Naturaleza (1 Guía) INBio BM/GEF For Sale
Series of Educational guides Nature's Face
- 16 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
1
Indicator/Matrix Projected in last PSR Actual/Latest Estimate
Number of management measures applied to 30 78
biodiversity conservation inside official
protected areas that use information
generated by the project
Number of new legal, contractual, and 47 57
financing models created to support the
generation of knowledge about and
sustainable use of biodiversity
Output Indicators:
1
Indicator/Matrix Projected in last PSR Actual/Latest Estimate
Number of international scientists familiar 80 329
with the methodologies and protocols
developed by the project, and who are
capable of adapting and applying them to
other national or local biodiversity inventories
Number of specimens in the target taxa Original target 1,191,270 Total 700,000
identified at the species level and entered into Revised target 614,000 Hymenoptera 60,769
the Biodiversity Information Management Hymenoptera 55,000 Coleoptera 250,858
System Coleoptera 215,000 Diptera 50,883
Diptera 290,000 Lepidoptera 327,095
Lepidoptera 45,000 Fungi 10,018
Fungi 9,000
Number of parataxonomists, technicians, and 55 50
curators trained
Number of agreements with companies, 47 57
research centers, small and medium
enterprises, NGOs, and grassroots
organizations that incorporate or use
information (generated by the project) in
activities aimed at sustainable use of
biodiversity
Number of new applications of the 15 16
biodiversity database generated by the
project that are available on the web (new
indicator)
Copies of information products (field guides, 100,000 142,109
educational material) sold or donated that
were created using information from the
project (new indicator)
Number of media pieces or citations using 1200 1,581
information generated by the project (new
indicator)
Number of hits on web sites featuring 16000/day 15,946/day
information generated by the project (new
indicator)
- 17 -
Amount of budget provided from INBio's own $3\.6 million $3\.3 million
resources rather than from donors (new
indicator)
Marginal cost of processing specimens (new $4\.25/specimen $3\.67/specimen
indicator)
1End of project
- 18 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Component US$ million US$ million
1\. Inventory Framework 0\.70 0\.40 52
2\. Biodiversity Inventory
a) Collection Activities 1\.40 1\.40 100
b) Cataloging Activities 6\.70 21\.00 314
3\. Sustainable Use of Biodiversity 0\.90 1\.00 113
4\. Institutional Strengthening 1\.30 1\.80 140
Total Baseline Cost 11\.00 25\.60
Total Project Costs 11\.00 25\.60
Total Financing Required 11\.00 25\.60
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost
Other
1\. Works 0\.00 0\.00 0\.06 0\.00 0\.06
(0\.00) (0\.00) (0\.05) (0\.00) (0\.05)
2\. Goods 0\.35 0\.17 0\.81 0\.00 1\.33
(0\.31) (0\.15) (0\.70) (0\.00) (1\.16)
3\. Services 0\.00 0\.00 4\.34 2\.98 7\.32
(0\.00) (0\.00) (4\.34) (0\.00) (4\.34)
4\. Training 0\.00 0\.00 0\.96 0\.00 0\.96
(0\.00) (0\.00) (0\.96) (0\.00) (0\.96)
5\. Incremental Recurrent 0\.00 0\.00 1\.33 0\.00 1\.33
Costs (0\.00) (0\.00) (0\.49) (0\.00) (0\.49)
Total 0\.35 0\.17 7\.50 2\.98 11\.00
(0\.31) (0\.15) (6\.54) (0\.00) (7\.00)
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost
Other
1\. Works 0\.00 0\.00 0\.10 0\.00 0\.10
(0\.00) (0\.00) (0\.10) (0\.00) (0\.10)
2\. Goods 0\.20 0\.10 1\.30 0\.00 1\.60
(0\.20) (0\.10) (1\.10) (0\.00) (1\.40)
3\. Services 0\.00 0\.00 4\.60 17\.20 21\.80
(0\.00) (0\.00) (4\.40) (0\.00) (4\.40)
4\. Training 0\.00 0\.00 0\.50 0\.00 0\.50
- 19 -
(0\.00) (0\.00) (0\.50) (0\.00) (0\.50)
5\. Incremental Recurrent 0\.00 0\.00 1\.60 0\.00 1\.60
Costs (0\.00) (0\.00) (0\.60) (0\.00) (0\.60)
Total 0\.20 0\.10 8\.10 17\.20 25\.60
(0\.20) (0\.10) (6\.70) (0\.00) (7\.00)
1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
Percentage of Appraisal
Component Appraisal Estimate Actual/Latest Estimate
Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\.
1\. Inventory Framework 0\.74 0\.00 0\.00 0\.40 0\.00 54\.1 0\.0 0\.0
2\. Biodiversity Inventory
a) Collection Activities 1\.20 0\.16 0\.00 1\.30 0\.10 108\.3 62\.5 0\.0
b) Cataloging Activities 3\.25 0\.45 3\.00 3\.20 0\.60 17\.20 98\.5 133\.3 573\.3
3\. Sustainble Uses of 0\.88 0\.04 0\.00 0\.90 0\.10 102\.3 250\.0 0\.0
Biodiversity
4\. Institutional 0\.93 0\.35 0\.00 1\.20 0\.60 129\.0 171\.4 0\.0
Strengthening
Total 7\.00 1\.00 11\.00 7\.00 1\.40 17\.20 100\.0 140\.0 156\.4
- 20 -
Annex 3\. Economic Costs and Benefits
Incremental Costs and Global Environmental Benefits
The global environment objective of the project was to demonstrate the benefits of investing in a collection
of biological material in a small number of sites and to develop a cost-effective methodology to do this\. The
project was limited to an inventory of at first four and then, with the inclusion of Lepidoptera, five major
taxonomic groups at various sites in five conservation areas\. The project contributed to: (i) expanding the
inventory by establishing a widely applicable framework; (ii) increasing human capacity; (iii) developing
applications that illustrated the benefits derived from the enhanced knowledge base provided through
biodiversity inventories; and (iv) establishing the direct link of collection activities to observed demand for
educational, conservation, and commercial purposes\. The project with GEF funding (which in the
definitions used in the GEF incremental costs analysis is defined as the "GEF Alternative") permitted
SINAC and INBio to undertake a ambitious program on an accelerated timetable that addressed these
global biodiversity objectives\.
The scope and costs of carrying out the GEF Alternative over the seven-year lifetime of the project (table
A3\.1) were: (i) park management costs for protection and biodiversity conservation in the 5 conservation
areas (US$21\.0 million - same as Baseline); (ii) planning and participation, which established and
monitored a framework for collecting and cataloging species (US$0\.9 million); (iii) biodiversity inventories
of five taxonomic groups (US$27\.9 million); (iv) sustainable use applications: tested potential revenue and
non-revenue-generating applications of the emerging biodiversity knowledge (US$4\.1 million); and (v)
institutional strengthening: increased institutional capacity to manage the scaling up of biodiversity
development (US$4\.6 million)\. Over the seven years, these activities totaled US$58\.5 million, an amount
significantly larger than the original US$43\.8 million\. This difference is accounted for in a contribution
from INBio of US$1\.4 million and the US$14\.2 million derived from the more than 40,000 volunteer
taxonomist-daysa significant global contribution\.
This increase in the final amount of the project shows the leverage that the GEF alternative had in
generating other donor interest and financial support\. The INBio initiative of consolidating various donor
activities under the umbrella Integrated Program substantially benefited all involved\. Synergies were
exploited resulting in better use of donor monies\. The project was able to benefit from the complementary
financing of US$15 million from the Dutch and Norwegian governments\. This funding was fundamental
because it enabled the project to start with basic infrastructure, equipment, and information systems in
place, thus complementing the project's activities\.
- 21 -
Table A3\.1 Incremental Cost Matrix
Cost Category (US$millions)
GEF Incremental
Component Base- Alternative Global Benefit
line Ori- Actual Ori- Actual
ginal ginal GEF Other Total
Biodiversity 21\.0 21\.0 21\.0 0\.0 0\.0 0\.0 0\.0Conservation of globally significant
Conservation at 5 biodiversity in the five conservation areas
Conservation Areas
Planning and 0\.5 1\.2 0\.9 0\.7 0\.4 0\.0 0\.4
Participation
(formerly Inventory
Framework)
Biodiversity 5\.5 13\.5 27\.9 8\.0 4\.5 17\.9 22\.4Practical methodologies for biodiversity
Inventory inventory have been recognized and are
being used in global initiatives
The inventory of the 5 taxonomic groups
has greatly contributed to scientific
knowledge of these groups in the
Neotropics\.
One new species for science every day
(over the last three years)
Public access to all inventory information
accessible on an acclaimed easy-to-use
website
Legal, contractual and financial models for
the use of the biodiversity inventory
Facilitation of the contributions of 350
taxonomists from across the world
Sustainable Uses of 3\.1 4\.0 4\.1 0\.9 0\.9 0\.1 1\.0New successful working modalities
Biodiversity between the public sector and NGOs to
promote the sustainable management of
biodiversity
Institutional 2\.8 4\.1 4\.6 1\.3 1\.2 0\.6 1\.8
Strengthening
Total 32\.9 43\.8 58\.5 11\.0 7\.0 18\.6 25\.6
Notes:
a\. Includes government and cofinanciers\.
b\. Differs from the original US$42\.9 million in the Incremental Cost Analysis in the PAD document, reflecting INBio's contribution of US$0\.9
million\.
c\. Reflects an actual contribution from INBio of US$1\.4 million and US$14\.2 million computed as international taxonomists' time\.
- 22 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
1995-1996 5 ECONOMIST (2);
PROCUREMENT ANALYST
(1)
Appraisal/Negotiation
1997 10 ECONOMIST (3); AGR
ECONOMIST (2); ENVT
ECONOMIST (1);
SOCIOLOGIST (1);
PROCUREMENT
ANALYST (1);
Supervision
11/24/1998 2 TASK MANAGER (1); HS HS
BIOLOGIST (1)
11/23/1999 4 TASK MANAGER (1); HS HS
PROCUREMENT ANALYST
(1); OPERATIONS ANALYST
(1); CONSULTANT (1)
06/23/2000 4 TASK TEAM LEADER (1); HS HS
ASSISTANT (1);
BIOSTATISTICIAN (1);
PROCUREMENT (1)
11/21/2000 5 TASK TEAM LEADER (1); HS HS
ASSISTANT (2); ECONOMIST
(1); INDIGENOUS
SPECIALIST (1)
11/21/2001 4 TASK TEAM LEADER (1); HS HS
OPERATIONS ANALYST (1);
PROCUREMENT (1);
INDIGENOUS SPECIALIST (1)
05/24/2002 3 PROCUREMENT SPECIALIST HS HS
(2); DISBURSEMENT
SPECIALIS (1)
06/25/2002 2 TASK TEAM LEADER (1); S HS
OPERATIONS ANALYST (1)
11/17/2003 2 TASK MANAGER (1); HS HS
PROGRAM ASSISTANT (1)
11/12/2004 3 TASK MANAGER (1); HS S
PROGRAM ASSISTANT (1);
PROCUREMENT ANALYST
(1)
12/16/2005 2 TASK MANAGER (1); HS S
- 23 -
PROGRAM ASSISTANT (1);
ICR
04/07/2006 1 ENV ECONOMIST (1) HS S
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 42 114
Appraisal/Negotiation 18 51
Supervision 97 303
ICR 9 37
Total 167 505
- 24 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 25 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 26 -
Annex 7\. List of Supporting Documents
Global Environment Facility\. January 1998\. Costa Rica, Biodiversity Resources Development Project
(Report No\. 17207-CR)\. Project Document\. Washington, DC\.
Government of Costa Rica\. Estrategia Nacional de Conservación y Uso Sostenible de la Biodiversidad\.
Hilje, Luko\. 2005\. Independent assessment\. Independent Final Evaluation of the Biodiversity Resources
Development Project\. 1 August 15 December, 2005\. luko@ice\.co\.cr, lhilje@catie\.ac\.cr\. Heredia,
Costa Rica\.
Knapp, Susan\. 2002\. Detailed Comments on INBio Inventory Component\. Document Associated with
World Bank Mid-Term Review Mission, 1824 June 2002\.
Ugalde, Jesús, Randall García\. 2002\. The Essence of the Institution\. Santo Domingo de Heredia, CR\.
Instituto Nacional de Biodiversidad\.
Unimer\. Research Internacional\. 2004\. Conocimiento, uso de información e imagen\. Estudio Cuantitativo y
Cualitativo para el INBio\.
van de Putte, Bert, and Randall García\. 2002\. "Towards Sustainability: Experiences of the Instituto
Nacional de Biodiversidad (Costa Rica)\." Santo Domingo de Heredia, CR\. Instituto Nacional de
Biodiversidad\.
World Bank\. 1993\. Costa Rica - Third Structural Adjustment Loan\. Document P-5912-CR\.
_____\. 1998\. Staff Appraisal Report
- 27 -
Additional Annex 8\. Borrower's Summary Evaluation
Final Assessment by Project Beneficiary (Translation of Document in Spanish received
from INBio)
Project Background: The National Biodiversity Institute (INBio) requested and agreed to
execute the Biodiversity Resources Development Project, which was financed by the Global
Environment Facility (GEF) (Grant No\. 28324) and administered by the World Bank (WB) which
acted as the GEF's implementation agency, in accordance with Grant Agreement TF028324
(dated March 6, 1998) between INBio and the WB\.
Since its start, it was executed as part of the Integrated Biodiversity Resources Development
Program whose objective was to develop and promote mechanisms that integrate conservation
with development, utilizing knowledge for the sustainable use of biodiversity and thus
contributing to compliance with the National Conservation Strategy's three lines of action: a)
saving representative samples of forest biodiversity; b) improving knowledge of the rich
biodiversity that exists; and c) seeking sustainable, intelligent uses of this biodiversity\.
This program's local partner was the National System of Conservation Areas (SINAC) in Costa
Rica\. It also had the financial support of the Governments of Holland and Norway, and the
technical collaboration of numerous international experts in the areas of taxonomy and
systematics\. It was concentrated in five of the ten existing Conservation Areas: Tempisque
(ACT), Arenal-Tilarán (ACAT), Amistad-Caribe (ACLAC), Amistad-Pacífico (ACLAP), and Osa
(ACOSA)\.
The project's general objective was to demonstrate that an increase in knowledge of species
produces a greater impact on the conservation and sustainable use of globally important
biodiversity (through the sustainable management of biodiversity resources and the promotion of
environmental values)\.
Thus, it was divided into four specific objectives: a) generation of knowledge in select taxonomic
groups (Coleoptera, Diptera, Hymenoptera, macro-fungi, micro-fungi, and lichens) to which
Lepidoptera was added in 2002; b) facilitation of biodiversity management through the use of
select taxonomic groups; c) encouragement to improve environmental values and awareness; and
d) institutional strengthening\. In turn, these objectives, in operational terms, were structured in
the following four components: a) planning and participation; b) inventory of biodiversity; c)
sustainable uses of biodiversity; and d) institutional strengthening\.
Outstanding achievements and findings
In summary, the project has made a great contribution to the country with regard to the
generation of knowledge about biodiversity, particularly in five taxonomic groups (Hymenoptera,
Coleoptera, Diptera, Lepidoptera, and fungi) and support to three other groups (plants,
nematodes, and mollusks) as part of the integrated biodiversity management program\.
It has contributed to promoting and improving the conservation and sustainable use of
- 28 -
biodiversity through the contribution and generation of information to support conservation
measures in conservation areas (basic information stemming from the inventory, specialized
technical reports, and ecological studies)\. It aided in the organization and administration of
Web-accessible (Atta) information on biodiversity\. It allowed the dissemination and transfer of
biodiversity knowledge to society, utilizing electronic and print media, training, and sharing of
experiences\. It also contributed to the process of negotiating new projects aimed at seeking
sustainable uses of biodiversity through the Bioprospecting Program\.
The globally important benefits that the project contributed include: development of practical
methodologies to carry out biodiversity inventories that have been learned in global initiatives
such as ALL and GBIF and at regional scale; and new species for science (an average of one
species every three days)\. Inventory results are available online (http://atta\.inbio\.ac\.cr) for
consultation by the world scientific community and the general public\. The inventory of the five
taxonomic groups includes species that are widely distributed in Central and South America;
opportunities for quick training in methodologies for parataxonomists, technicians, and curators;
contribution of legal, contractual, and financial models for biodiversity inventory uses, whether or
not they generate revenue; new modalities for joint work by the public sector and NGOs to
promote the sustainable management of biodiversity; and integration of nearly 350 taxonomists
from various research centers, museums, and universities around the world\.
1\. Contribution of increased taxonomic knowledge to the conservation and sustainable use
of biodiversity
The project addressed SINAC's direct management and decisionmaking needs related to the
conservation and sustainable use of biodiversity within conservation areas\. This includes aspects
such as: scientific-technical criteria and methodologies for the creation or expansion of areas;
establishment of hunting seasons (vedas); determination of the ecological and genetic status of
populations; estimation of volumes of resources for use by neighboring communities; payment of
environmental services; definition of guidelines for ecotourism development in specific areas, etc\.
Ecological studies ("monographs" on species, habitats, or ecosystems) constituted a substantial
achievement of the project\. These studies were carried out through external consultancies,
capitalizing on the unique strengths of other institutions (UNA, UCR, ITCR, and CATIE), which
made it possible to strengthen INBio's linkages with national scientists and in turn favored its
image as a promoter of valuable environmental initiatives\. The 42 ecological studies addressed
SINAC's specific demands, classified in the following categories:
i\. Sustainable management of plant populations and assessments of their populations' risks
or possible use (tree species, palm trees, moss, and lianas)\.
ii\. Population studies of endangered mammals or of species that indicate environmental
status (tapir, squirrel monkey, howler, sloths, marine mammals, etc\.)\.
iii\. Population studies of endangered birds (green and red macaws, aquatic birds, songbirds,
etc\.)\.
iv\. Use of habitats and resources (butterfly areas) and populational impact of hunting on bird
and mammal populations\.
v\. Management of aquatic habitats and species (green turtles, parrot turtles, and leatherback
- 29 -
turtles, lobsters, crocodiles, green clams, and marine mammals)\.
In terms of inventory per se, the project focused on four orders of insects (Coleoptera, Diptera,
and Hymenoptera, plus Lepidoptera since 2002), as well as on three "types" of fungus
(macro-fungi, micro-fungi, and lichens)\. There is no doubt about the potential importance of the
insect groups inventoried, whether as pests, of ornamental value, as indicators of the health of
certain ecosystems (Coleoptera, Lepidoptera, and Diptera), or as biological control agents
(Hymenoptera, as well as several Diptera and Coleoptera)\.
From information collected from other latitudes, the possible use of fungi was clear from a
nutritional or pharmaceutical standpoint, as was the use of some lichens as bioindicators of the
health of various ecosystems, as well as the use of micro-fungi as biological control agents of
insects (entomopathogens) or other microorganisms (antagonists)\.
The project's contributions to the biodiversity inventory (19882005)
1,500 new species for science\.
Insect Order Collection:
22% increase in collection
277% increase in identified species
312% increase in accepted species
Fungus Collection:
1,665% increase in collection
1,375% increase in identified species
367% increase in accepted species
Printed and electronic publications
190 scientific publications
10 educational publications
5 field guides
1,036 Basic Information Units
30 technical reports to support decision making
Over US$17 million in free support from over 300 international taxonomists
However, beyond any strictly "utilitarian" vision, the great scientific value of the information
generated is undeniable\. Thanks to the project, this knowledge was extended to other taxonomic
groups, not only insects\. In this regard, INBio has been able to respond to resolving the problem
of "taxonomic impediment" (i\.e\., the lack of solid, reliable taxonomic knowledge in order to
properly utilize biodiversity) that was presented in The Darwin Declaration\.
INBio's scientific effort has truly been immense\. It collected over 3,100,000 specimens of insects
and other arthropods, mollusks, nematodes, fungi, and plants, corresponding to nearly 23,000
duly catalogued species, with some 2,300 new species for science\.
Nevertheless, in addition to the use of this information in the production of original, innovative
educational materials (see items 2 and 3) and--already systemized and inputted--as a resource
for consultation by students and experts (especially through species pages or UBIs on the
- 30 -
Internet), it has been a great support for ecotourism (currently the country's principal source of
foreign exchange)\. The latter is clear in light of the numerous field guides, but it also makes
"visible" to tourists various species of insects and micro-fungi, lichens, etc\. that are not
"emblematic" or "charismatic" (such as certain birds or mammals)\. In turn, this "revelation" has
made park rangers and other SINAC personnel more aware of the value of the forests they
protect because, with this increased knowledge, they find their daily work of preserving the biota
contained in these forests even more meaningful\.
But finally, as was expected, there are various examples of a more "applied" use of the
information generated by the project, in some cases made possible by other funds such as those of
the IDB (FOMIN), both in the conservation (in protected areas) and practical use of biodiversity
in agriculture and forestry, as well as in ecotourism\. The following are some examples:
i\. Change in category from Diriá Wildlife Refuge to National Park, due to the detailed
documentation of the wealth and unique features of fungus, plant, insect, or vertebrate
species\.
ii\. Definition of priority zones for payment of environmental services in ACOSA, based on
biotic, abiotic, and sociocultural criteria\.
iii\. Contribution of biological information to justify biological corridors and payment of
environmental services in ACT, ACLAP, and ACAT\.
iv\. Hunting seasons [vedas] for Band-tailed and White-winged doves in ACLAP and ACT, as
well as restrictions on the extraction of various forest species (bitter cedar [cedro amargo
], ceiba, rosewood [cocobolo], skeels [espavel], guanacaste blanco, guapinol, ron ron,
and tempisque) in ACT\.
v\. More detailed knowledge of species, habitats, and ecosystems used by local groups
dedicated to ecotourism\.
vi\. Discovery and promotion of a new species of the micro-fungus Trichoderma sp\., which
acts as an antagonist of various pathogens that affect vanilla; this gave rise to a project of
practical value with the company La Gavilana S\.A\.
vii\. Registry in the country of over 60 species of fungi, edible in other countries, and with the
potential to be artificially cultivated by small and medium producers' organizations\.
viii\. Improvement of the management of butterfly sites per se--for which overseers of these
sites have been trained--as well the expanded supply of pupae of a greater diversity of
species with ornamental value, with a view toward a chain of production\.
ix\. Proper knowledge of mosquitoes (Culicidae) that are vectors of dengue, as well as of
entomopathogenic fungi, which has led the Pfizer Company to finance a project focused
on the use of these agents for the biological control of such vectors\.
x\. Improvement in the management of coffee leaf scorch [crespera] (caused by the Xylella
fastidiosa bacteria), thanks to prior knowledge about leafhoppers [chicharritas]
(Cicadellidae), which has made it possible to better pinpoint their role as vectors of this
disease in Costa Rica\.
xi\. Identification, thanks to the support of INBio taxonomists, of the large majority of insect
species that are forest pests (Coleoptera and Lepidoptera) in Costa Rica (and perhaps in
other Central American countries), registered in the "Catalogue of forest pests and
diseases in Costa Rica," for use by forest producers and prepared by the
Inter-Institutional Forest Protection Program (PIPROF)\.
- 31 -
xii\. Inventory, with the support of an international taxonomist collaborating with INBio, of ant
species present in Costa Rica's coffee plantations and, through additional efforts by
CATIE, determination of which of these species are predators of the coffee berry borer (
Hypothenemus hampei), a serious pest\.
2\. Global dissemination and utilization of knowledge generated
In reality, since its inception, it was clear that the information generated by the project should be
made available in various modalities and formats so that it would be accessible to various types of
users with unique characteristics\.
Thus, the rich wealth of specialized taxonomic information (description of numerous new species
as well as summary articles on the systematics of certain groups) has been disseminated to the
world's scientific community in more than 1,000 publications in specialized journals, which
represents an extraordinary achievement in the tropical arena\.
Furthermore, it is important to indicate that--encouraged by the project--in the case of Diptera
the publication of a specialized work focused on the tropics has been proposed (it will be
completed in one year)\. It would be analogous to the Manual of Nearctic Diptera (the latter is in
two volumes), and would be a joint effort of some 60 collaborating taxonomists\. In addition, there
is a commitment (for 2007) by about 10 specialists to produce a book on lichens in Costa Rica,
with a mixed focus (with codes, color photos, and information on natural history), for use by
specialists and by a broader public\.
Moreover, it should be noted that formal scientific information is added to other types of
publications stemming from the project, aimed at various, less specialized users such as experts
and students of biological and environmental sciences, tourists, secondary teachers and students,
primary school teachers and students, and the general public\.
Since it began, the project has financed the process of editing all published materials and has also
financed numerous publications and guidebooks\. Moreover, it clearly enabled the initially modest
publishing activity that was initially in place (with fewer than 10 titles) to expand and consolidate,
giving rise to a formal and robust agency, Editorial INBio, which is economically self-sustaining\.
This consolidation has generated enough trust that other entities have become involved in joint
editorial efforts with INBio; this in turn has strengthened editorial activity\. Some 106 titles have
been published (including books, children's games, teaching materials, and compact disks)\.
Added to these efforts is electronic dissemination whose coverage and scope have been unusual\.
The taxonomic data generated by the project, instead of being stored statically in internal
databases, have been "mobilized" through their transformation and structuring into very
affordable formats for various types of users, freely accessible and flexible enough to be updated
at any time\.
As part of the Integrated Program, the project facilitated numerous innovations in the content and
design of a new biodiversity data management system\. This process culminated in the
- 32 -
implementation of the Atta system\.
Thus, making use of multimedia and Internet technologies, Atta represented a qualitative leap by
surpassing the initial scheme of keeping long lists of specimens (always duly georeferenced) and
placing them in a broader, more comprehensive biological and ecological context\. Using the
"systemic" data generated by ecomaps, it was possible to achieve a more holistic view and
understanding by integrating in a single system three levels of complexity: specimens, species, and
ecosystems\. Today Atta is one of the largest data providers for the international initiatives in
which INBio participates, such as the GBIF and the World Biodiversity Information Network
(REMIB)\.
However, it should also be noted that Atta does not limit its view and relevance to the scientific
community\. Its aim is to meet the demands of other types of users through various modules\. For
example, these include the 3,670 pages of plant, fungus, mammal, bird, reptile, amphibian, insect,
spider, mollusk, and nematode species (formerly called UBI or basic information units), each of
which refers to one species and contains photographs or sketches of each species and a map of its
distribution, as well as information on its biology and natural history, its uses, and its conservation
status\.
Finally, although both INBio and the project had a mandate or national coverage--limited to
Costa Rica--the program enabled the development of numerous regionwide activities, especially
training and exchanges in Central America (and other Latin American countries), which included
workshops with technicians and specialists, training courses, and the distribution of thousands of
copies of educational materials\. This not only projected INBio beyond the country's borders but
also generated a valuable network of relationships and collaborators that was very useful in
developing regional initiatives, some of which have already become a reality (such as support to
national herbariums) and others that are on the horizon\.
3\. Improvement in environmental values and awareness
The improvement of environmental values and awareness is such a broad and complex task that it
far exceeds INBio's scope, because numerous national and international entities participate in it\.
However, since its mission is "to promote greater awareness of the value of biodiversity to
achieve its conservation and improve the quality of human life," in this area the project
contributed to help INBio carry out this mission\.
Besides increasing taxonomic knowledge and its uses, arising from the inventory, and
disseminating and utilizing the knowledge generated (see items 1 and 2), the project made it
possible to significantly expand popularization or bio-literacy efforts\. These efforts are aimed at
sharing information and knowledge so that by raising awareness of the value of biodiversity
(among decision makers, tourists, educators, students, and the general public), changes can be
introduced in their perceptions and behavior that will benefit the conservation of biodiversity\.
In this regard, the project made a special contribution through the printing of various books and
children's games, as well as teaching materials (posters, compact disks, and a video) for children
- 33 -
and adults\.
It should be noted that in addition to its constant presence in the media--it even has a weekly
one-hour program on Radio Nacional (SINART)--INBio has become an almost obligatory
authority for journalists on environmental issues, which assures significant newspaper, radio, and
television coverage\. For example, the term "biodiversity" is now commonly used and is not
thought of by the general public as something that is esoteric\. The description of new species is
often a relevant news item\.
Finally, beyond the existing internal perceptions--which could generate risks of
self-complacency--through the Knowledge, use of information and image survey assigned to
UNIMER, an effort was made to capture these perceptions from a broad group of information
users (politicians, biodiversity managers, resource users, the media, and educators, students,
religious leaders, and conservation NGOs)\.
In reality, the balance was highly positive in terms of influencing politicians, biodiversity
managers, and the general public to contribute to the promotion and implementation of
environmental conservation efforts, thanks to INBio's scientific and technical strength, to which
the project contributed substantially\. However, the perception remains that INBio has not liaised
sufficiently with local communities--to respond to their environmental needs--or with the direct
users of biodiversity resources, whether or not they generate economic income\.
4\. Correlation of the project's objectives with those of the institutions involved
The project was a joint initiative by INBio and SINAC, and was presented as such to the Global
Environment Facility (GEF)\. Thus, from the start there was a correlation between the objectives
of both institutions\.
In historical terms, it should be remembered that the embryo of what later became INBio arose
within the former MIRENEM (now MINAE)\. Although INBio would later acquire the legal
status of a private, nonprofit, public-interest association, its promoters visualized and conceived it
as the scientific-technical agency or "arm" of what is now SINAC\. In other words, although
SINAC acts a regulatory agency, INBio complements it by contributing technical inputs for
SINAC's natural resource management activities\.
This alliance was formed in 1992 through the signing of the first INBioSINAC Cooperation
Agreement, and was expanded in 1997 with the establishment of the Conservation Program for
Development which initially received support from Holland\. Thus, SINAC began to receive
technical inputs from INBio (joint project preparation, advisory services, technical assistance, staff
training, and information sharing) for its activities, culminating in the preparation of the National
Strategy for the Conservation and Sustainable Use of Biodiversity\.
However, the relevance and magnitude of this collaboration increased in an exceptional manner
since 1998 when, under the framework of this Strategy, it became possible to align and integrate
the three inventory initiatives (financed by Holland, Norway, and the GEF) in the integrated
- 34 -
Biodiversity Resources Development Program\. A decision was made to expand its scope to five
of the conservation areas\. Moreover, besides contributing a substantial amount of funds to enable
this, the program arose during a most timely period for SINAC because, besides constituting a
focal point as part of the Biodiversity Agreement initiative (for which it had to carry out
taxonomic research), in those years it was undergoing a process of institutional restructuring that
required strengthening\.
In terms of the World Bank's objectives, as a financial entity it fulfilled its agreed role as the
implementing agency of the GEF, whose objective is to contribute to protecting the global
environment and to promote environmentally and economically sustainable development\. More
specifically, consistent with the guidelines of the Third Conference of Parties (COP3), by
supporting the project the GEF contributed to increase taxonomic capacity (information, human
resources training, and institutional strengthening), prioritizing species important in pollinization
(Hymenoptera and Coleoptera) or in soil fertility (Coleoptera and fungi)\.
5\. Recipient's (INBio) response capacity during project evolution and execution
Since its inception, and due to its organizational nature (nongovernmental, but of public interest),
its management intended for INBio to have enough administrative flexibility to sign agreements
with national, foreign, and international entities, which it did even in its first years\.
Thus, the practice acquired in the first seven years of the institution's life made it possible to
confidently propose the project to the GEF and then to assimilate it in organizational terms\. In
other words, the project did not require that drastic changes be made to the institution's
organization, although there certainly was a learning cost to be paid (see item 6)\. However, this
was adapted and properly absorbed as the project evolved, and it was complemented by the two
similar projects financed by the Governments of Holland and Norway (see item 7), thus achieving
a high level of synergy that resulted in considerable institutional strengthening\.
In terms of relationships with donor agencies, it is acknowledged that there were some difficulties
at first with the World Bank due to procedural issues, but these were detected and corrected in a
timely manner (see items 6 and 7)\.
For its part, in its relationship with SINAC there is consensus on the full complementarity of both
institutions' activities, although at the beginning of the project some problems arose stemming
from a lack of timing and communications, partly because both were undergoing a major and
nearly simultaneous restructuring\. But it is acknowledged that there was a lack of involvement
and participation by SINAC in the project's inception, resulting in large part from the dynamics of
both entities: INBio is an agency specializing in research, in attracting funds from international
donors, and with a streamlined management, while SINAC must respond to multiple, varied
demands on a daily basis and is less flexible in administrative and organizational terms\.
However, following several "catharsis" workshops facilitated by a psychologist, which helped
identify bottlenecks, firm progress was made in joint planning as well as in a new collaboration
mechanism, based on more open, ongoing dialogue\. Two concrete outcomes of this collaboration,
- 35 -
which are also evidence of mutual evolution in terms of scientific-technical and operational
concepts, are the numerous ecological studies carried out (see item 1) and the fact that
parataxonomists later had the same prerogatives as SINAC personnel (even wearing their
uniform), although they were paid with project funds\.
In addition, with regard to INBio's attractiveness as a partner for international taxonomists, the
latter perceive it as an excellent ally (see item 7) and express their complete satisfaction with the
strong commitment of its staff and with the quality of its infrastructure (buildings, collections,
availability of modern technologies, etc\.), logistics (collection permits, transportation,
organization of field trips, support by parataxonomists, etc\.), and other services, all of which were
strengthened and expanded under the project\.
6\. Response capacity of the implementing agency (WB) during project evolution and
execution
There is gratitude toward the GEF for financing INBio in a manner that was both unusual--it
normally gave direct support to state entities--and generous; INBio was one of world's first
NGOs to receive this type of contribution\. There no doubt as to the project's significance with
regard to the strengthening of institutional capacity, not only in terms of valuable infrastructure
but also in the construction and equipping of the fungus laboratory (which in turn has made it
possible to now undertake several of the activities listed in item 1) and as indicated in the above
pages\.
Furthermore, in its role as implementing agency, the World Bank collaborated in numerous ways
to ensure that the project never deviated from its originally planned objectives and activities, while
understanding that a good amount of adaptability was required to adjust to changing situations
stemming from the dynamics of the project's evolution\. It also cooperated with other donors in
the program's supervision; it accepted the inclusion of a taxon (Lepidoptera) that was not
originally considered; it allowed a reasonable redistribution among budget line items; it agreed to
extend the project completion period in order to meet INBio's various institutional and financial
needs; it facilitated the presence of specialists to help consolidate the project's technical basis; and
it promoted efforts to improve the project's administrative and financial management, institutional
sustainability, and indicators\.
As previously indicated (see item 5), at the beginning INBio faced various difficulties in its
relationship with the WB due to procedures (procurement, disbursements, hiring, etc\.) that
differed markedly from those it had worked with in the past\. Moreover, due to the Bank's
complex structure, different departments are in charge of specific tasks (budgets, contracts,
technical aspects, etc\.) which affect the flow of various processes and created some tensions
within INBio\.
However, it should be noted that in negotiations there was always great respect and trust for
INBio\. It is acknowledged that INBio kept careful disbursement records, followed procurement
procedures, updated its administrative and financial management systems to achieve greater
efficiency and response capacity, developed a plan for its institutional sustainability, was able to
integrate the reporting and supervision activities of the three project that composed the program
- 36 -
in order to achieve greater collaboration and efficiency, modified work processes and
responsibilities as circumstances warranted, and responded immediately and efficiently to World
Bank requests\.
It may be concluded that the experience gained by INBio under this project helped to significantly
improve its capacity to negotiate and manage future projects\.
7\. Contribution of other donors (Governments of Holland and Norway) and technical
partners (international taxonomists) to compliance with project objectives
There is no doubt that in many aspects the projects financed by the Governments of Holland and
Norway created the foundation for the successful development of the new GEF/WB project,
Biodiversity Resources Development\. These were Development of knowledge and sustainable use
of biodiversity (19972002) and Toward a Sustainable INBio (20022005), financed by Holland,
and Contribution to knowledge and sustainable use of biodiversity in Costa Rica (19982001)
and Biodiversity as an instrument for the development of Central America (20022004), financed
by Norway\.
Furthermore, although the particular approaches of each donor were somewhat different, they
served to achieve complementarity and synergy, which led to the creation of a joint initiative,
represented by the Integrated Biodiversity Resources Development Program\. Thus, from the start
activities were planned jointly and joint missions were held to evaluate the program, to the point
that since 2003 the program's operational plan became INBio's operational plan as a whole\.
This had definite repercussions on INBio's institutional strengthening, not only in terms of its
managerial-administrative capacity and efficiency but also with regard to the quality of its
scientific-technical contributions\. In fact, since the first half of 2002 an institutional reformulation
was carried out, as described in the document, Toward a Sustainable INBio, establishing targets
to achieve institutional sustainability by 2006 and currently being executed\.
In turn, with regard to the contribution of international taxonomists, the inventory represented a
unique initiative\. The project made it possible to capitalize on INBio's prior experience with its
many contacts to achieve a truly surprising taxonomic effort: over 350 experts from about 170
entities (museums, universities, etc\.) contributed their specialized knowledge and broad
experience, and in many cases their resources\. But this multi-institutional and multinational
effort--which will be remembered as a milestone in tropical biological research, together with the
monumental initiative Biologia Centrali-Americana from 1879 to 1915--was also carried out at a
relatively low cost because, thanks to the generosity of these specialists and/or institutions, INBio
saves several million dollars each year\.
Furthermore, in addition to the amount of valuable and original knowledge generated, it was
possible to strengthen, in an unusual manner, the national capacity in terms of the taxonomy and
natural history of various groups of agencies\. In reality, a joint, properly structured, and
well-linked effort was made by parataxonomists, technicians, curators, and taxonomists\. It was
also characterized by the fluid, ongoing, and smooth interaction among all those involved in this
- 37 -
process\. This led to a high level of self-confidence or empowerment among members of the first
links in this chain\.
Finally, one highly relevant achievement was to successfully address the initial challenge of
developing practical methodologies to carry out large-scale biodiversity inventories whose
protocols and specific methods could be tested and adjusted continuously for seven years\. Highly
valuable lessons were learned for future biodiversity inventories in other countries or
macroregions, as part of local or global initiatives\.
- 38 -
Additional Annex 9\. Maps
Map A9\.1 - Costa Rican Ecosystems and Conservation Areas
- 39 -
- 40 - | REVIEW |
P112635 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CM-Agricultural Competitiveness Project (P112635)
Report Number : ICRR0020844
1\. Project Data
Project ID Project Name
P112635 CM-Agricultural Competitiveness Project
Country Practice Area(Lead)
Cameroon Agriculture
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IDA-46120 30-Nov-2015 82,000,000\.00
Bank Approval Date Closing Date (Actual)
18-Jun-2009 31-Dec-2016
IBRD/IDA (USD) Grants (USD)
Original Commitment 60,000,000\.00 0\.00
Revised Commitment 59,399,672\.94 0\.00
Actual 59,940,270\.80 0\.00
Prepared by Reviewed by ICR Review Coordinator Group
Hassan Wally John R\. Eriksson Christopher David Nelson IEGSD (Unit 4)
2\. Project Objectives and Components
a\. Objectives
The Project Development Objective (PDO) in the Project Appraisal Document (PAD, p\. 4) was identical to the
one in the Financing Agreement (FA, p\. 5) and aimed to:
"increase the competitiveness of eligible producer organizations working on Target value chains\."
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b\. Were the project objectives/key associated outcome targets revised during implementation?
No
PHEVALUNDERTAKENLBL
c\. Will a split evaluation be undertaken?
No
d\. Components
The project included four components\.
1\. Rehabilitation of Key Rural Infrastructure (appraisal cost: US$30\.00 million, actual cost:
US$17\.70 million)\. The component would finance the rehabilitation of key rural infrastructure\. It included
two sub-components:
1\.1\. Rural Roads\. The Project would finance the rehabilitation of about 500 km of rural roads (100-150 km
of heavy rehabilitation, 350-400 km of light rehabilitation), and related studies, with the main purpose of
connecting high-potential production areas to markets\.
1\.2\. Irrigated perimeters\. The project would finance the rehabilitation of about 11,500 hectares of existing
irrigated schemes with the purpose of supporting national rice production\. Target areas would include
about 10,500 hectares at Maga and Yagoua (Far North Region), and possibly about 1,000 hectares on the
sites of the Upper Nou Valley Development Authority in the North- West Region\. Rehabilitation of irrigated
perimeters would be accompanied by capacity building and investment activities, (as per Components 2
and 3) specifically targeted to the rice Producer Organizations (POs)\. At the first restructuring, the irrigation
rehabilitation aspect of Component 1 was transferred to an emergency operation (the Cameroon Flood
Emergency Project), and the focus shifted to institution building for the irrigation authority, introduction of
land preparation equipment, as well as use of agricultural inputs by POs, and strengthening of their
organization\.
2\. Economic Partnerships (appraisal cost: US$32\.70 million, actual cost: US$31\.70 million)\. This
component would support POs working on target value chains and areas in establishing and implementing
investment sub-projects linked to Economic Partnerships (EPs)\. The component would finance economic
projects intended to address production, marketing and/or processing bottlenecks in the target value
chains\. It included two sub-components:
2\.1\. Support to the establishment of Economic Partnerships\. This sub-component would support the
development of linkages and coordination between different groups of stakeholders and help them
analyze, and propose solutions to, specific bottlenecks to the development of competitive value chains\.
This would include technical assistance, training, and operational support for market and value-chain
studies, information and communication campaigns, and coordination between different stakeholders\.
2\.2\. Co-financing of PO investment projects\. This sub-component would co-finance (on a matching-
grant basis) POsâ investments concerning production, collection, marketing, processing, and/or other
services along a value chain\. Co-financing from the Project can reach 70% of the total cost of the
subproject and a maximum of FCFA30 million (about $60,000 equivalent)\.
3\. Institutional Support and Capacity Development (appraisal cost: US$5\.70 million, actual cost:
US$3\.20 million)\. This component would develop the capacity of actors at different levels and would
include three sub-components:
3\.1\. Developing the capacity of apex producer organizations\. Support would include capacity building
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of PO leaders and officers, preparation of institutional and organizational audits, preparation of strategic
plans, elaboration of procedural and organizational guidelines, as well as limited support in terms of
logistical and office equipment\. This sub-component would also provide support to multi-stakeholders'
value-chain associations for the targeted value chains, particularly in terms of facilitating the exchange of
information and the collaboration between the different actors involved in each value chain (POs, private
and public sectors, NGOs) at different geographical levels (departmental, regional and national)\.
3\.2\. Strengthening core functions of sectoral public services\. To support smallholdersâ productivity
and access to the markets (seeds certification and control, formulation and analysis of sectoral policies,
food safety standards, veterinary services, monitoring of sectoral resources)\. Under this sub-component
3\.2 (in particular its veterinary services dimension), unforeseen targeted assistance was provided by the
project during its last six months of implementation to assist the Government in its response to the
outbreak of avian influenza in May 2016 which had affected poultry production in Cameroon, particularly in
the western part of the country\. This was the subject of the (fourth) restructuring (extension and
reallocation), together with the extension of the implementation period for the rural roads rehabilitation\.
3\.3 Supporting the establishment of sectoral legal and regulatory framework\. The sub-component
would support technical assistance, studies, workshops, and training aimed at supporting the development
and/or the implementation of specific regulatory instruments conducive to the sustainable development of
agricultural value chains including: the fertilizers act, seed legislation, regulation of the veterinary
profession, agricultural tax code, duties on agricultural inputs\.
4\. Project coordination, monitoring and evaluation (appraisal cost: US$9\.20 million, actual cost:
US$15\.90 million)\. This component would support the establishment, equipment and operations of the
Project coordination team, at both national and regional levels, responsible for project implementation,
procurement, financial management and overall monitoring and evaluation (M&E)\. The component would
also support the establishment and operations of an M&E system, including a baseline study and an
impact evaluation study, as well as the operational costs of the national Project Steering Committee\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost\. The project total cost was expected to be US$82\.00 million\. Actual cost reported in the ICR
(Annex 1) was US$69\.2 million or 84\.4% of the appraisal estimate\. The difference stemmed from lower
than expected disbursements under components 1 and 3 where disbursements were 59% and 56% of
their appraisal estimates, respectively-due to scaling down of activities\. It is worth noting that the cost of
component 4 (Coordination and M&E) reached US$15\.90 million representing 172\.8% of its appraisal
estimate of US$9\.20\.
Financing\. The project was to be financed through an IDA Specific Investment Loan (SIL) worth
US$60\.00 million over a period of six years\. Actual amount disbursed according to the ICR (Annex 1) was
US$57\.60 million or 96% of the expected amount at appraisal\.
Borrower Contribution\. The Government was expected to commit US$12\.50 million to the cost of the
project, including taxes\. Also, local beneficiaries were expected to contribute US$9\.50 million\. Actual
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CM-Agricultural Competitiveness Project (P112635)
amounts per the ICR (Annex 1) were US$6\.60 million (52\.8% of the appraisal amount) and US$5\.10
million (53\.70% of the appraisal amount) for the Government and local beneficiaries, respectively\.
Dates\. The project was expected to be completed by November 30, 2015, but it was extended twice, its
actual completion date was 13 months later on 31 December 2016\.The project was restructured five times
(all level 2) as follows:
1\. On October 10, 2013, when the amount disbursed was US$31\.77 million, in order to scale down the
rehabilitation of rice irrigated perimeters and reallocate funds to institutional support for the irrigation
authorities\. Results framework was modified accordingly\.
2\. On July, 10, 2015, when the amount disbursed was US$64\.61 million, in order to extend the closing
date from end November, 2015 to end March 2016\.
3\. On March 29, 2016, when the amount disbursed was US$58\.50 million, in order to extend the closing
date to June 30, 2016 and reallocate funds\.
4\. On June 29, 2016, when the amount disbursed was US$60\.25, in order to extend the closing date to
December 30, 2016 and reallocate funds\.
5\. On December 23, 2016, when the amount disbursed was US$59\.68 million, in order to allow partial
cancellation of undisbursed balance of SDR 440,755 (equivalent to US$605,016\.70) due to persistent
implementation delays in the rural road rehabilitation\.
The Mid-term Review was carried out on December 3, 2012 compared to a planned date on November
12, 2012\.
3\. Relevance of Objectives & Design
a\. Relevance of Objectives
Agriculture in Cameroon is a key element for both growth and poverty reduction\. It contributes more than half
of Cameroon non-oil export revenues and employs almost 60% of the economically active population\. 90%
of all rural households are to some extent engaged in agriculture and approximately one third of them earn
their living from export crops\. Increasing growth in agriculture would play a pivotal role in reducing poverty,
sustaining growth, and achieving food security, in a country that also needs to reduce its dependency on
volatile oil revenues, which accounts for more than 50% of the value of exports\. Agriculture faces a number
of constrains including: poor infrastructure (production, marketing, and transportation), limited organization of
producers, weak linkages to markets, limited financial resources, and poor coordination of interventions\.
At project appraisal, objectives were highly relevant and in line with the Government's growth and poverty
reduction strategy\. The second pillar of the Poverty Reduction Strategy Paper (2003) highlighted the
importance of economic diversification with a strong focus on agricultural development as the key income
generating activity and the main source for future economic growth and poverty alleviation in rural areas\.
Objectives were also in line with the National Rural Sector Development Strategy (2007) that specifically
targets four key challenges: poverty reduction; food security and self-sufficiency; sustainable management of
natural resources; and increased regional and international trade\. Objectives were in line with the
Bank's Agricultural Value Chain Analysis ESW (2008) which recommended actions aiming to increase the
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CM-Agricultural Competitiveness Project (P112635)
technical, managerial and logistic capacity of producer organizations, increase access to agricultural inputs
and high-yielding plant material, and improve the network of feeder roads and wholesale markets\. Objectives
were also in line with the Bankâs Interim Strategy Note (2006) which featured making agriculture more
productive and sustainable as a priority objective\.
At project completion, objectives continued to be highly relevant and in line with the Government's Growth
and Employment Strategy for the period 2010-2020\. The strategy covered several objectives pertaining to
agriculture, among which were growth of the agriculture sector, increase in rural revenues, rural employment,
and increase in the share of agricultural products in exports\. Objectives were also in line with the Rural
Sector Development Strategy (2012) which focused on institutional development, the modernization of rural
infrastructure, and productivity enhancement of agricultural value chains\. Objectives were in line with the
Bank's Country Assistance Strategy (CAS, FY10-FY13) which included among its strategic pillars support to
agriculture and the promotion of high potential value chains\. Also, the objectives are in line with the current
Country Partnership Framework (CPF, FY17-FY21) where the first objective of the first focus area called
for increasing productivity and access to markets in the agriculture and the livestock sectors in an
environmentally sustainable way (CPF, p\. 26)\.
While the statement of objectives was focused, the eligibility criteria for targeted value chains needed more
clarity\. The PAD (p\. 44, footnote11) listed three eligibility criteria: "POs should have been in operation for at
least three years immediately preceding effectiveness, be legally established, and satisfy a technical and
institutional audit\." However, it was not clear what technical and institutional aspects that the POs needed to
satisfy to become eligible beneficiaries of the project\.
Rating
High
b\. Relevance of Design
The Results Framework reflected clear links between project inputs, outputs and expected outcomes\.
However, the causal link between road rehabilitation and reducing post-harvest losses was weak\. To achieve
the stated objectives, design focused on the promotion of competitive value chains and market-based
development\. The project aimed to finance economic projects intended to address production, marketing
and/or processing bottlenecks in the six targeted value chains (rice; maize, plantain, palm oil, pig farming, and
poultry)\. These chains were considered strategic both for food security and for their comparative advantage
on the regional markets\. The project also sought to address gaps in infrastructure through investing in the
rehabilitation of rural roads and irrigation perimeters\. Improving roads would connect high-potential production
areas to markets while rehabilitation of rice perimeters would improve rice yields in targeted areas\. Design
would also provide capacity building and institutional development in order to create an enabling environment
for producer organizations, who constitute the main beneficiaries of the project\. These activities were relevant
and directly connected to the objectives of the project and were expected to lead to increased value of
marketed production through increased productivity, quality, and marketing of targeted chains\.
However, design focused more on the production side of the value chains and should have put more
emphasis on strengthening processors\.
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CM-Agricultural Competitiveness Project (P112635)
Rating
Substantial
4\. Achievement of Objectives (Efficacy)
PHEFFICACYTBL
Objective 1
Objective
PDO: to increase the competitiveness of eligible producer organizations working on target value chains\.
Rationale
Outputs
⢠250 Km of rural roads were rehabilitated compared to a target of 500 Km (achievement rate: 50%)\. The
ICR (p\. ix) noted that cost estimates were underestimated due to lack of necessary engineering studies\.
⢠1,555 Producer Organizations (target: 1000) were engaged in economic partnerships\. 100% of Producer
Organizations had contracts with input suppliers, 22 % with marketing bodies, and 32 % with agricultural
credit institutions\.
⢠89\.76% of Producer organizations (target:80%) held regular meetings, recorded their decisions, opened
and managed a bank account and have had regularly elected officials\.
⢠267 Producer Organizations (target: 500, achievement rate: 53%) were receiving support services
through apex organizations\. The ICR (p\. xi) noted that the outreach capacity of apex organizations, while
improved under the project, was still limited\. Only 39\.40% (target: 80%) of Producer Organizations in
targeted areas were satisfied with support services received from apex organizations\.
⢠1,250 sub-projects applications (target: 2000) were presented\. Resources allocated to sub-projects were
exhausted as of 2014\. Therefore, the number of sub-project applications remained at 1,250 (ICR, p\. xi)\.
⢠1,500 tons (target: 500 tons, achievement rate: 300%) of certified seeds were produced as a result of
the collaboration with the Seed Certification Department\.
Outcomes
⢠Increasing the competitiveness of targeted value chains (rice, maize, plantain, palm oil-dropped at MTR,
pork, and poultry) was expected to be achieved through increasing productivity, improving quality,
and increasing marketing, all of which would be expected to lead to increased value of marketed
production\.
⢠To improve service delivery to farmers, the project supported two apex POs, namely Concertation
Nationale des Organisations Paysannes du Cameroun (CNOPCAM) and Plateforme Nationale des
Organisations Professionnelles Agro-sylvo-pastorales du Cameroun (PLANOPAC) to strengthen their
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organization and service delivery capacity\. However, the ICR (p\. 40) reported that the afore mentioned
organizations were not sufficiently established and their services were not well developed to carry out their
mandate\. In addition, they suffered from weak absorption capacity with regards to the project funds
earmarked to their support\. The ICR (p\. 41) reported that institutional support was scattered across
different organizations, with limited indication on how improved institutional capacity benefitted the value
chain actors in real terms\.
⢠The project financed and implemented 831 sub-projects supporting production, collection, and marketing
along the targeted value chains\. However, most sub-projects related to the improvement of production (as
the target beneficiaries were organizations of agricultural producers)\. Further development of the value
chain required strengthening business linkages with processors (ICR, p\. 38)\. The value of marketed
production from beneficiary POs increased by 69% compared to a target of 20% (ICR, p\. viii)\. This
increase was achieved through increased production and productivity and increased marketed volumes
and enhanced access to market by Producer Organizations (ICR, p\. 12)\. The ICR (p\. 13, table 3)
compared value of production marketed in POs surveyed between 2009 and 2014 for three value chains
(rice, maize and plantain)\. However, baseline figures for beneficiary POs were already significantly higher
than for non-beneficiary POs, which raises a question about the consistency of the data\. In a further
communication, the project team explained that "a large part of the implementation of subprojects was
delayed until late 2011", and "the first sale by beneficiary POs after project intervention should be in 2012,
or late 2011 for some value chains\. Therefore, the 2010 data serves as baseline for the analysis\."
⢠The ICR (p\. 12, table2) reported that average marketed quantities of rice, maize, banana plantain,
poultry and pork in targeted regions all saw increments when comparing 2009 to 2014 figures, for
example, rice increased from 63\.8 tons to 185\.13 tons, maize increased from 1\.48 to 1\.78 tons, banana
plantain increased from 4\.21 to 5\.12 tons, poultry increased from 13\.73 tons to 17\.03 tons, and pork
increased from 2\.78 tons to 3\.36 tons\. Average yields for target value chains were calculated based on
performance averages of all POs/subprojects by value chain and by region\. Except for rice it seems the
marketed quantities for the targeted value chains remained overall low, and the ICR did not report on the
situation in non-project areas\. Therefore, it is difficult to assess the contribution of the project given the
absence of a relevant control\. In a further communication, the project team shared with IEG results of the
final impact analysis study that included a comparison to non-beneficiary POs for the targeted value
chains\. The results revealed that targeted POs showed an overall increase in the value of marketed
production compared to non-beneficiary POs through the period starting from 2010 up to 2014\. The team
also explained that the project contributed to productivity improvements through increasing access of
beneficiary farmers to improved irrigation and technologies, farmer training and capacity building of POs in
terms of the technical aspects of production and farming practices\.
⢠The project supported rice production and productivity through improving maintenance for 6,500
hectares instead of irrigation perimeter rehabilitation in 11,500 hectares as originally planned\. The
irrigation rehabilitation aspect of Component 1 was transferred to an emergency operation (the Cameroon
Flood Emergency Project)\. The focus of the project shifted to institution building for the irrigation authority,
introduction of land preparation equipment, as well as use of agricultural inputs by POs, and strengthening
of their organization\. The ICR (p\. 14) reported that farmers in the project areas achieved an average yield
of 6\.9 t/ha for rice exceeding the target of 6\.1 t/ha from the baseline of 5\.2t/ha\. The ICR (p\. 12) attributed
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CM-Agricultural Competitiveness Project (P112635)
improvements in rice productivity to "better technical packages promoted by the two rice irrigation
authorities (i\.e\. application of recommended fertilizers as well as adherence to the timetable for crop
management) positively affected the overall production as well as the productivity of rice production by
related POs\." That said, the attribution of improvements in rice productivity to project activities was not
clear, specifically in relation to the 71 sub-projects financed by the project\. The ICR (p\. 33) stated that
reporting did not include information on the actual utilization of the equipment purchased for the two rice
irrigation authorities, such as proportion of the irrigation perimeter under production or length of canals
maintained since the arrival of the equipment\. Ina further communication, the project team explained that
"yield increasing and sustainable cultivation techniques have been promoted through a series of trainings
supported by PACA through the two irrigation authorities\. As a result, beneficiary POs' compliance with
post-harvest operations and other technical aspects of rice production and farming practices have
improved significantly\." For example, 100% of the rice farmers in the funded sub-projects (beneficiary
POs) applied the recommended doses of fertilizers at the recommended rate compared to 60% for non-
beneficiary POs\.
⢠According to the ICR (p\. 13) the impact assessment study found that post-harvest losses incurred by
POs with access to rehabilitated roads were reduced by 30% relative to the 2009 baseline and exceeding
the target of 20% reduction\. More specifically, for rice, post-harvest losses were reduced by 94% in 2014
against a 20% reduction forecast at the end of the project; for maize, this reduction was 82% against a
forecast of 20%, the mortality rate reduction was around 4% to 7% in egg laying farms, less than 5% in
broiler farms, and about 5% in pig meat farms (ICR, p\. 13)\. Comparison was not available for banana
plantain\. While these achievements in the reduction of post-harvest losses were encouraging, they were
not attributable to rehabilitation of rural roads\. Among the targeted POs less than 6% benefitted from road
rehabilitation, and these revealed in a survey that post-harvest loss happened primarily on-farm (weight
loss due to spoilage and other on-farm factors), rather than during transport\. In addition, 86% of the
surveyed POs could not comment on the usefulness of rehabilitated roads in terms of post-harvest
reduction\. Furthermore, only 50 km of the targeted roads were completed in 2013 and the remaining 200
km were completed after extension of closing date towards the end of the project in 2015-16 (ICR, p\. 31)\.
Based on this information, it is evident that the impact or rural roads on reduction of post-harvest losses
was minimal; and that achievements in this area were possibly due to other project activities\. In a further
communication, the project team explained that "96\.3 % of rice POs adopted post-harvest storage as a
post-harvest reduction technique compared to 0% prior to PACA\. Beneficiary POs, through Economic
Partnerships with buyers, signed delivery agreements for marketing their production\. These supply
contracts eased product flow and saved time in marketing, which can also contribute to reducing post-
harvest losses associated with more organized sales and delivery arrangements\."
⢠Based on the afore mentioned information, efficacy is rated substantial despite some shortcomings\.
Rating
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Substantial
PHREVDELTBL
PHREVISEDTBL
5\. Efficiency
Economic and Financial Efficiency
ex ante
⢠Financial analysis\. The financial analysis showed net profitability for project beneficiaries, which
confirms the soundness of activities identified for project support along the selected supply chains\.
Additional gross margins on rice production range from:US$48 to US$98 per ha on already cultivated
areas; US$620 to US$970 per ha on extended cropped areas thanks to the rehabilitation of perimeters that
would allow the application of water to currently unexploited land\. Financial internal rates of return (FRR) of
livestock activity models are given as examples of sub-projects ranging from 13 to 339%\.
⢠Economic analysis\. A cost-benefit analysis was carried-out to assess the economic viability of the
proposed project\. The analysis was conducted over a 25-year period\. Financial prices and costs were
transformed into economic values eliminating taxes and calculating import parity price for rice and
fertilizers\. Quantified economic benefits are mainly derived from: (i) the increased value added of rice
production through the rehabilitation of irrigated schemes (which represents 57% of total benefits);
(ii)economic cash-flows from sub-projects (29%); and (iii) benefits from rural roads rehabilitation (14%)\.
Taking into account all costs, the project would yield an Economic internal rate of return (ERR) of 26% and
a Net present value (NPV) of US$52 million (at a 12%discount rate)\. The ERR and NPV were estimated at
31% and US$61 million, respectively, if only the costs of components 1 (infrastructure) and 2 (economic
partnerships) were considered\.
⢠The sensitivity analysis indicates a good resilience to important changes in costs or reduction in benefits,
with the project maintaining an ERR of 20% in case of a diminution of benefits by 30%\.
ex post
⢠The ex-post economic and financial analysis relied on a sample of 108 sub-projects spread over the rice,
maize, poultry and pork farming subsectors\. The analysis covered the project period 2011-2016, including
projections up to 2020\. The Economic Rate of Return (ERR) was estimated at 3\.7%\.
⢠The analysis showed a major variation between the NPV of crops and livestock production value chains
covered by the project\. The maize, plantain and rice value chains each had positive NPV of respectively
17\.70 million FCFA, 127\.00 million FCFA and 143\.00 million FCFA\. However, NPV was negative for both
the pig farming and poultry value chains due to the occurrence of animal diseases that resulted in the loss
of animals and reduction in production benefits\.
⢠Comparing the results under the project to the situation prior to the project intervention was not possible
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due to the lack of data on the situation prior to project\.
⢠The Economic and Financial Analysis (EFA) showed a cost-benefit ratio of 2\.7% for the period 2011-2020
as regards the support under Component 1 (rural infrastructure); as regards Component 2 the average
cost-benefit was below 1 (0\.95) yet estimated to be positive as of 2017; for Component 3 this average ratio
was below 1 (0\.40), yet estimated to be positive primarily as of 2017; finally, regarding Component 4 the
ratio was 1\.23\.
⢠No quantitative data were available to calculate the economic impact of the project's support to avian flu
emergency response, such as, in terms of avoided loss of animals\.
Administrative and Institutional Efficiency
The project closed thirteen months later than expected\. The lack of engineering studies at appraisal
stage resulted in underestimation of costs for sub-components 1\.1 and 1\.2 and delays in actual rehabilitation
works\. Lengthy procurement procedures affected the ability of the project to reach its targets within the given
time frame especially for activities under Component 1\. There were also delays in the availability of
counterpart funding\. Finally, an amount equivalent to about US$0\.61 million was cancelled as a result
of persistent implementation delays in the rural road rehabilitation (ICR, p\. 3)\. Finally, the cost of Component
4 (Coordination and M&E) reached US$15\.90 million representing 172\.8% of its appraisal estimate of
US$9\.20\.
Overall, efficiency is rated modest due to substantially low ERR and underestimation of costs for component
1 and delays in procurement\. Implementation efficiency was also negatively impacted due to a series of
disease outbreaks in the livestock sector\.
Efficiency Rating
Modest
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
76\.00
Appraisal ï¼ 26\.00
ï¨Not Applicable
45\.80
ICR Estimate ï¼ 3\.70
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Relevance of objectives was rated high while relevance of design was rated substantial\. Efficacy was rated
substantial, despite some shortcomings, because the evidence provided in the ICR and later by the project team
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revealed that the project contributed to improvements in productivity and sales of the targeted value chains\. The
project also contributed to reducing post-harvest loses\. However, there were shortcomings on achieving the
target on road rehabilitation and shortcomings in developing the capacity of apex producer organizations\.
Efficiency was rated modest due to a substantially low ERR and underestimation of costs for component 1 and
delays in procurement\.
a\. Outcome Rating
Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating
Risk to the Development Outcome is rated substantial based on the following issues raised in the ICR (p\. 22 &
p\. 23):
⢠Sustainability of sub-projects at the level of individual Producer Organizations (POs)\. The project
helped the POs through cost sharing arrangements that made the POs the actual owners of the sub-projects
in which they have invested\. While the sustainability of the efforts at the level of individual POs is likely, there
are several factors that could affect the degree to which the business of the POs continues to grow\.
First, conflicts could arise among PO members about the distribution of growing benefits particularly with the
absence of project oversight (post completion) of POs activities\. Second, it might be challenging for the POs
to secure reliable markets for their increased production due to weak contractual arrangements\. This would
lead to eventual reduction in sales prices as a result of increased supply as well as limited processing
capacity\. Third, weather related factors such as drought could negatively impact crop yields particularly in the
North of the country\.
⢠Avian flu and swine flu outbreaks\. The outbreak of avian flu in May 2016 negatively impacted the
poultry sector\. This was reflected in lower demand for end products, supply of day old chicks, as well as
lower demand for animal feed\. Also, poultry producers were negatively impacted by the disease due to
the loss/destruction of their animal stock, higher costs incurred from farm disinfection and forgone income as
farm buildings need to remain vacant for a period before restarting production\. This situation also impacted
POs in this sector as they operated at much lower capacity with new buildings financed in the context of sub-
projects remaining unused or under-utilized for some time\. Despite the project efforts to combat the avian flu,
new cases were recorded in 2017\. The same risks apply to pig farming given recurrent outbreaks of swine
flu\.
⢠Low sustainability of the support delivery mechanisms under the project\. The multi-sectoral apex
Producer Organizations demonstrated limited capacity to deliver effective services to their members and the
inter-profession organizations such as these for pig farming still need strengthening\. Support delivery through
Local Support Operators was not institutionalized and therefore, was not expected to continue post
completion\.
⢠Maintenance of rehabilitated roads and irrigation infrastructure\. 250 km of rehabilitated roads are
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expected to be maintained as part of the national road maintenance scheme\. However, it is not clear whether
the national road maintenance scheme has enough budget allocation to cover the necessary maintenance
operations\. Maintenance of irrigation infrastructure depends on the ability of the POs to improve their
payments for services rendered by the irrigation authorities\.
a\. Risk to Development Outcome Rating
Substantial
8\. Assessment of Bank Performance
a\. Quality-at-Entry
⢠The Government of Cameroon considered the agriculture sector crucial for its growth and was particularly
interested in receiving financial and technical support from the Bank\. The Bank prepared the project as
a logical follow-up to the Agricultural Value Chain Analysis ESW realized in FY08\. This
report identified several value chains (palm oil, maize, plantain, cassava, rice, onions, fruits and
vegetables, dairy, poultry) that could develop their considerable growth potential if structural constraints
and weaknesses in market linkages were adequately addressed\.
⢠The project design was based on the findings and recommendations of the Agricultural Value Chain
Analysis conducted in 2008\. These included: technical assistance to producer organizations (POs) to
coordinate their demand and purchase of inputs and planting material; expansion of the rural transport
system by investing in the rural roads network; and provision of organizational and managerial training for
farmers\.
⢠The project was prepared in less than 8 months from the Concept Review to Board approval compared to
an average processing time of 17 months from concept to approval in Cameroon\. This rushed preparation
process might have played a role in undermining the project design in some aspects (see below)\.
⢠Design benefitted from lessons and experience of past Bank-funded and other donor operations in the
agriculture and rural development sectors in Cameroon and other countries and regions\. Notable lessons
reflected in the project design included: complementing capacity-building with investments and designing
and implementing clear mechanisms and transparent processes\.
⢠Design suffered from notable shortcomings including: poor preparation of the rural infrastructure
component as it lacked important aspects of design prior to project effectiveness, for example, plans for
preliminary studies that were needed for rehabilitation of rural roads and rehabilitation of irrigated
perimeters were not included in the implementation plan prior to effectiveness\. Also, assessments of the
institutional capacity of the two irrigation development authorities were not carried out\. These failings in
design resulted in underestimated costs and unrealistic timelines (ICR, p\. 4)\. Also, the benefits expected
from road rehabilitation were overlooked in design because these would only materialize when the road
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segments selected for rehabilitation were in the proximity of the targeted POs\. Finally, the availability
of local service providers for POs and institutional capacity of apex organization were not pre-identified\.
⢠Nine risks were identified at the preparation stage, all of which were rated substantial\. While the risk of
poor sectoral coordination was identified, the suggested mitigation action that "the project would stimulate
inputs from the sectoral ministries by creating a multisectoral steering committee and defining clear
mechanisms and decision making processes" (PAD, p\. 13) was not adequately carried out in the project
implementation\. This resulted in limited inter-ministerial coordination and collaboration\. Also, complex
procurement guidelines and the weak capacity of the Project Coordination Unit (PCU) and Producer
Organizations to comply was identified as a substantial risk, however, the design lacked a clear strategy to
build capacity and monitor the procurement process\. Finally, disease outbreaks such as swine fever and
avian influenza were not clearly factored in among the risks identified at appraisal despite recorded
outbreaks in the Country\.
⢠M&E suffered from design shortcomings and weaknesses at the implementation stage (see section 10 for
more details)\.
Quality-at-Entry Rating
Moderately Unsatisfactory
b\. Quality of supervision
Supervision missions were carried out at regular intervals\. The project benefitted from posting a TTL in the
country from the end of 2010 until mid-2014\. This arrangement improved proactivity and continuity in task
management\. During this period, the team met every two weeks with staff of the PCU and other stakeholders
to follow up on project implementation and address any issues\. The team also ensured that the PCU staff
would carry out necessary field visits to the Regional Coordination Unit and visit sub-project sites of Producer
Organizations\. The project benefitted from the recommendations of the MTR with regards to irrigation
rehabilitation sub-component, and reallocation of resources among disbursement categories\. The supervision
team leveraged resources from a trust fund to implement some activities including organizing local fora for the
mobilization of credit from micro-finance institutions, and implementing two pilots for fully washed coffee and
cassava processing in collaboration with international agricultural research institutions\.
While monitoring environmental safeguards was consistent, social safeguard issues (especially with regards to
the indigenous peoples plan) did not receive the expected attention by the Bank team (ICR, p\. 24)\. A notable
shortcoming on behalf of supervision was the ineffective supervision of the road component due to the lack of
technical knowledge and expertise in the team\. The ICR (p\. 24) stated that "the Bank was not candid in
admitting this deficiency of skills and did not examine the team composition critically\." The ICR (p\. 41) reported
that there was no effective link between Bank supervision missions and National Steering Committee
meetings; and that by 2015 the Bank and PCU seemed more focused on preparation of the next round of WB-
funded projects rather than on adequately closing the project\. Finally, M&E suffered from implementation
weaknesses and procurement issues contributed to significant implementation delays\.
Quality of Supervision Rating
Moderately Satisfactory
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Overall Bank Performance Rating
Moderately Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
According to the ICR (p\. 25) the Government fulfilled its obligations at the start of project implementation
including the establishment of the Regional Coordination Units, Regional Selecting Committees, and Field
Focal Points\. However, there were delays in the availability of counterpart funding, and the volume of
counterpart funding was significantly lower than expected (52\.8%)\. The Ministry of Public Works (MINTP)
and its Rural Roads Department (DRR) was not fully committed to road rehabilitation, paid insufficient
attention to its implementation, and was unable to prevent the long delays\. Also, inter-ministerial
coordination and collaboration was less effective than was needed for successful implementation of the
project (ICR, p\. 5)\. Finally, the agreement to support indigenous people was signed by the Ministry of Social
Affairs in October 2013, limiting the time available for implementation of the planned activities to only two
years towards the end of the project\.
Government Performance Rating
Moderately Unsatisfactory
b\. Implementing Agency Performance
The project implementation mechanism was comprised of a Project Steering Committee, a Project
Coordination Team, and a Project Coordination Unit (PCU) at the national level, and at regional levels
included Regional Coordination Units (RCUs) and Regional Selection Committees for the approval of sub-
projects and partnership agreements\. Focal points were selected among the field staff of the sectoral
ministries and Local Support Operators supported the implementation at the field level\. The PCU was
expanded as additional M&E staff was hired to support the monitoring of the 831 sub-projects\. The PCU
experienced some staff turnover and two RCUs had a change in core staff members based on misconduct -
which was reported to the Bank (ICR, p\. 25)\. The PCU and POs suffered from weak capacity and the
project lacked a clear strategy for building capacity\. The implementation of sub-projects involved multiple
actors, however, division of labor among them was unclear in actual operations\. Implementation of the
rehabilitation of rural roads was weak and suffered from lengthy delays\. The social action plan was not
implemented due to inter-ministerial non-collaboration and limited funding\. Finally, procurement capacity
was weak and contributed to considerable implementation delays\.
Implementing Agency Performance Rating
Moderately Unsatisfactory
Overall Borrower Performance Rating
Moderately Unsatisfactory
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10\. M&E Design, Implementation, & Utilization
a\. M&E Design
⢠The M&E of the project was overseen by the Project Coordination Unit (PCU) through an M&E specialist\.
All data related to sub-projects was collected by Local Support Operators at the field level and sent to
regional coordination units and then consolidated at the PCU level\. The Project was expected to carry out
specific results studies, as well as a baseline study before the beginning of field implementation and an
independent impact assessment not later than at midterm, and six months before project completion\.
⢠The Results Framework (RF) included baseline and target values for the indicators described in the PAD\.
These were based on a baseline study (2009) covering data on 360 POs and 15 apex organizations\. The RF
included four key outcome indicators\. These PDO indicators measured the degree in which the
project activities translated into increase in yields, in value of marketed products as well as in reduction in
post-harvest losses\. However, quality as an aspect of competitiveness was not captured by any of the
indicators\. While these indicators were relevant and linked to the PDO, yields and value could also be
influenced by other factors beyond project control including weather conditions and price fluctuations\.
Therefore, progress on achieving targets on yield and value (or lack thereof) may or may not be fully
attributable to project interventions\. Also, the causal link between road rehabilitation and reduction of post-
harvest losses was weak\.
⢠The RF included also fourteen intermediate outcome indicators\. Most of these were relevant to assess the
different activities supported by the project\. However, there were no indicators to cover some aspects
targeted by the project including irrigated perimeters, core functions of public services, and establishment of
legal and regulatory framework\. Also, it was not clear in the RF how some indicators would be measured, for
example, average yields for target value chains would be established through sample surveys or through
averages of aggregate performance of all POs/sub-projects by value chain and by region\. Indicators for
component 3 were input based except for the quantity of certified seeds produced\.
b\. M&E Implementation
The software purchased to facilitate M&E activities faced problems and its usage was not consistent across
regions\. As a result, the software was not used and data was collected in Excel sheets\. Average yields for
target value chains were calculated based on performance averages of all POs/sub-projects by value chain
and by region\. Data was checked for validity at the level of samples of POs\. The ICR (p\. 8) reported that
explanations were required in case of data deviations\. However, it was not clear whether data with deviations
were fed into the project's M&E system\. According to the ICR (p\. 8), two impact studies were conducted in
2012 and 2015, two PO satisfaction surveys in 2012 and 2013, two environmental and social audits in 2014
and 2015, and the Borrowerâs completion report was prepared in June 2016\. Monitoring of rehabilitated
roads was expected to be carried out through GIS under the Ministry of Public Works\. However, this was not
implemented due to lack of capacity and commitment on behalf of the Ministry of Public Works (ICR, p\.
8)\. Rehabilitation of rural roads was reported only in terms of the number of kilometers covered with no
information on the proportionate degree of complexity of the road works (heavy or light rehabilitation, as
specified in the PAD)\.
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c\. M&E Utilization
The data collected through the projects M&E system fed into annual consolidated project reports\. Local
media was used to communicate project achievements to beneficiaries and to the public\. Implementation
benefitted from the lessons learned from financing in terms of the under-estimation of costs in the
preparation of sub-projects during the first batch of POs\. This resulted in reviewing and adjusting reference
costing for new sub-projects\.
Overall, M&E suffered from major design shortcomings and implementation weaknesses, therefore M&E is
overall rated modest\.
M&E Quality Rating
Modest
11\. Other Issues
a\. Safeguards
⢠The project was classified as environmental category B\. It triggered the following safeguard policies:
Environmental Assessment (OP/BP 4\.01), Pest Management (OP 4\.09), Involuntary Resettlement
(OP/BP 4\.12), Indigenous Peoples (OP/BP 4\.10), and Projects on International Waterways (OP/BP 7\.50)\.
⢠To limit the environmental impact of the project infrastructure activities were limited to rehabilitation of
existing infrastructures\. Potential negative environmental impacts of project activities were likely to
include: water and soil pollution due to construction activities, increased use of pesticides and herbicides,
and agro-processing activities such as milling and processing of palm oil; loss of trees and water pollution
due to land clearing and fruit processing for palm oil production; soil erosion and silting due to the
rehabilitation of water management structures for irrigated schemes, as well as to poor agricultural
practices; and loss of flora and fauna due to the use of quarries as sources of construction materials\.
⢠To address these issues effectively, the Borrower prepared an Environmental Management Framework
and a Social Management Framework (ESMF), both dated March 16, 2009; a Pest Management Plan
dated March 11, 2009; an Indigenous People Planning Framework dated March 31, 2009; a Resettlement
Policy Framework (RPF) dated April 1, 2009\. All of the five documents were approved and disclosed in
Cameroon and at the Bank's Infoshop on April 9, 2009 and April 10, 2009, respectively\. Consistent with
OP 7\.50, the riparian states were notified on February 27, 2009, and no objection was raised by the
deadline of March 31, 2009\.
⢠Environmental safeguards\. According to the ICR (p\. 9) "the project achieved 100% compliance with
environmental and social safeguards requirements\." All 831 sub-projects implemented under the Project
were screened for environmental and social impacts before implementation\. The risk of water and soil
pollution occurring due to land clearing and fruit processing for palm oil production did not materialize
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because the oil palm value chain was dropped during the MTR and there were no oil palm sub-projects
implemented\.
⢠Social\. There was no incidence of displacement and OP 4\.12 (involuntary resettlement) did not
materialize and only very few benefited from the project with regards to indigenous communities (OP
4\.10) (ICR\. p\. 9)\. However, the social action plan was not implemented as planned due to inter-ministerial
non-collaboration and inadequate budget\.
b\. Fiduciary Compliance
Financial Management\. The financial management unit at the PCU benefitted from well trained and
professional staff whom according to the ICR (p\. 9) were "adequate for the tasks\." However, there were
initial delays due to the decentralized nature of the project\. A total of 28 financial statements were produced
during the life of the project on a regular basis and within acceptable time limits\. Only two audits were qualified
one in 2010, and another in 2011\. In both cases, the qualifications were due to the existence of unjustified
expenditures\. Both incidences were resolved after the borrower provided acceptable documents in time for the
next audit\.
Procurement\. Procurement activities were problematic and contributed to considerable implementation
delays\. Sub-component 1\.1 (rural roads) and sub-component 1\.2 (irrigated perimeters), experienced
procurement problems due to poor definition of plans for both sub-components combined with the absence
of preliminary and final engineering studies\. Also, the selection of bidders and bid awards took much longer
than expected for rural roads and in some cases the bidding process was repeated because the selected
bidders failed to perform their obligations\. Procurement of goods and services also face delays
because Producer Organizations and Local Support Operators were not familiar with World Bank procurement
procedures\. This situation improved overtime with adequate information and training\.
c\. Unintended impacts (Positive or Negative)
---
d\. Other
---
12\. Ratings
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Reason for
Ratings ICR IEG
Disagreements/Comment
Moderately Moderately
Outcome ---
Satisfactory Satisfactory
Risk to Development
Substantial Substantial ---
Outcome
Moderately Moderately
Bank Performance ---
Satisfactory Satisfactory
Government Performance and
Moderately Moderately Implementing Agency
Borrower Performance
Satisfactory Unsatisfactory performance suffered from
significant shortcomings\.
Quality of ICR Substantial ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the
relevant ratings as warranted beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as
appropriate\.
13\. Lessons
The ICR included five lessons\. The following are emphasized with some adaptation of language:
⢠Assessment of the availability and sustainability of service providers and key stakeholders is a
necessary step prior to launching a decentralized support delivery model in agriculture\. It is important
to assess the availability of the appropriate service providers; and the likelihood of sustainability of the
approach\. Based on these assessments, the project should select the key stakeholders based on their
mandate and capacity\.
⢠To ensure the success of project implementation there is a need for a clear definition of respective
roles and responsibilities of the different parties and their inter-linkages\. The project's experience
showed that involving a multitude of players (among which were National/Regional Coordination Units, teams
of experts, OALs and Focal Points) added to the projectâs complexity\. In this context, an unambiguous
division of labor would have eliminated the possibility of mismatching skills with tasks\.
⢠Successful rehabilitation of rural roads needs to follow a thorough plan from identification to
maintenance\. The project's experience demonstrated that it is important to concentrate on the roads that are
priorities in a limited geographic area; and carefully assess the type of rehabilitation needed and the capacity
of local contractors (depending on the state of the road, commensurate with its actual/expected use to
connect producers to inputs and markets)\. Also, ensure that engineering studies are ready at the start of
projects that include road rehabilitation works; and formally involve a road engineer in the Bankâs supervision
team\. Finally, define modalities for medium and long-term maintenance\.
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14\. Assessment Recommended?
Yes
Please explain
To verify results on the ground and assess the success of the value chain approach\.
15\. Comments on Quality of ICR
The ICR is well written\. It reported thoroughly on project activities and candidly on most shortcomings\.
However, discussion of outcomes was centered around achieving outcome indicators rather than achieving the
PDO\. Most sections of the ICR were well structured and concise\. The ICR also included five lessons that
reflected the project's experience\. Finally, the ICR did not sufficiently report on improvements in quality as an
aspect of competitiveness\.
a\. Quality of ICR Rating
Substantial
Page 19 of 19 | REVIEW |
P073649 | Document of
The World Bank
Report No: ICR0000576
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-37310 IDA-H0190)
ON A
DEVELOPMENT CREDIT
IN THE AMOUNT OF SDR 43\.5 MILLION
(US$ 57\.6 MILLION EQUIVALENT)
AND DEVELOPMENT GRANT
IN THE AMOUNT OF SDR 24\.5 MILLION (US$ 32\.4 MILLION EQUIVALENT)
TO THE
REPUBLIC OF GHANA
FOR A
HEALTH SECTOR PROGRAM SUPPORT PROJECT II
December 21, 2007
Human Development Sector Management Unit
Ghana Country Management Unit
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 21, 2007)
Currency Unit = Cedis
Cedis 1 = US$0\.0001079
US$1\.00 = Cedis 8375\.0
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
ADHA Additional Duty Hours Allowance ICR Implementation Completion Report
AIDS Acquired Immune Deficiency IDA International Development
Syndrome Association
ANC Antenatal care IGF Internally generated funds
BMC Budget Management Center M&E Monitoring and evaluation
CAS Country Assistance Strategy MMR Maternal mortality ratio
CHAG Christian Health Association of MOFEP Ministry of Finance and Economic
Ghana Planning
CHPS Community-based Health Planning MOH Ministry of Health
Services NGO Non-governmental organization
CSO Civil society organization NHIS National Health Insurance Scheme
DAIA Deprived Area Incentive Allowance ORT Oral re-hydration therapy
DCA Development Credit Agreement PAD Project Appraisal Document
DFA Development Financing Agreement PDO Project Development Objective
DHS Demographic and Health Survey PNC Prenatal care
DP Development partner POW Program of Work
GHS Ghana Health Service PRSC Poverty Reduction Strategy Credit
GOG Government of Ghana SWAp Sector-wide approach
GPRS Ghana Poverty Reduction Strategy TB Tuberculosis
HIV Human Immunodeficiency Virus TTL Task Team Leader
IBRD International Bank for U-5MR Under-five mortality rate
Reconstruction and Development
Vice President: Obiageli Katryn Ezekwesili
Country Director: Ishac Diwan
Sector Manager: Eva Jarawan
Project Team Leader: Laura L\. Rose
ICR Team Leader: Laura L\. Rose
GHANA
Health Sector Program Support Project II (HSPSP-II)
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
Executive Summary\. 1
1\. Project Context, Development Objectives and Design\. 8
2\. Key Factors Affecting Implementation and Outcomes \. 13
3\. Assessment of Outcomes\. 20
4\. Assessment of Risk to Development Outcome\. 37
5\. Assessment of Bank and Borrower Performance \. 38
6\. Lessons Learned \. 42
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 43
Annex 1\. Project Costs and Financing\. 44
Annex 3\. Economic and Financial Analysis\. 55
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 56
Annex 5\. Beneficiary Survey Results\. 57
Annex 6\. Stakeholder Workshop Report and Results\. 58
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 59
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 69
Annex 9\. List of Supporting Documents \. 70
Annex 10\. Sector-wide Indicator Comparison Table \. 75
Annex 11\. Sector-wide Indicators 1998 2006 \. 80
MAP
Project Data
A\. Basic Information
Second Health Sector
Country: Ghana Project Name: Program Support
Project
Project ID: P073649 L/C/TF Number(s): IDA-37310,IDA-H0190
ICR Date: 12/21/2007 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: SIL Borrower:
GHANA
Original Total
XDR 68\.0M Disbursed Amount: XDR 68\.0M
Commitment:
Environmental Category: B
Implementing Agencies:
Ministry of Health, Ghana
Cofinanciers and Other External Partners:
B\. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 10/03/2001 Effectiveness: 05/22/2003 05/22/2003
Appraisal: 11/25/2002 Restructuring(s):
Approval: 02/06/2003 Mid-term Review: 12/31/2005 03/31/2006
Closing: 06/30/2007 06/30/2007
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Unsatisfactory
Risk to Development Outcome: Moderate
Bank Performance: Moderately Unsatisfactory
Borrower Performance: Moderately Unsatisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately
Unsatisfactory Government: Moderately Satisfactory
Quality of Supervision: Moderately SatisfactoryImplementing Moderately
Agency/Agencies: Unsatisfactory
Overall Bank Moderately Overall Borrower Moderately
Performance: Unsatisfactory Performance: Unsatisfactory
1
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Performance Indicators (if any) Rating
Potential Problem Project No Quality at Entry
Satisfactory
at any time (Yes/No): (QEA):
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Health 100 100
Theme Code (Primary/Secondary)
Child health Secondary Secondary
HIV/AIDS Secondary Secondary
Health system performance Primary Primary
Population and reproductive health Secondary Secondary
Public expenditure, financial management and
Secondary Secondary
procurement
E\. Bank Staff
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo
Country Director: Ishac Diwan Mats Karlsson
Sector Manager: Eva Jarawan Alexandre V\. Abrantes
Project Team Leader: Laura L\. Rose Francois Decaillet
ICR Team Leader: Laura L\. Rose
ICR Primary Author: David H\. Peters
Jessica St\. John
2
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The overall objective of the 2002-2006 MOH Program of Work (POW-II) is to improve
the health status of the population while reducing the geographical, socioeconomic and
gender inequalities in health outcomes\. This will be achieved by improving access,
quality, and efficiency of health services\. Specific elements of the strategy include
enhancing the existing infrastructure and support services; reforming the organization and
financing of the health system and increasing overall financing for the sector;
strengthening management information systems, and in particular improving financial
managment and monitoring of performance of the system; developing human resources
for the sector; strengthening links with traditional and alternative medicine; and fostering
partnerships with other stakeholders\.
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Revised Achieved at
approval Target Completion or
documents) Values Target Years
Indicator 1 : Infant mortality rate (IMR)
Value
quantitative or 56\.7/1000 50/1000 71/1000
Qualitative)
Date achieved 12/31/1998 06/30/2007 12/31/2006
Comments
(incl\. % As explained in the main text, this was not an appropriate indicator to have been
achievement) chosen to measure progress towards the PDO
Indicator 2 : Under 5 mortality rate (U5MR)
Value
quantitative or 108 95 111
Qualitative)
Date achieved 12/31/1998 06/30/2007 12/31/2003
Comments
(incl\. %
achievement)
3
(b) Intermediate Outcome Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Target Completion or
documents) Values Target Years
Indicator 1 : Supervised deliveries
Value
(quantitative 44% 60% 44\.5
or Qualitative)
Date achieved 12/31/1998 12/31/2006 12/31/2006
Comments
(incl\. %
achievement)
Indicator 2 : % of GOG recurrent budget spent on health
Value
(quantitative 11% 15% 18%
or Qualitative)
Date achieved 12/31/2003 12/31/2006 12/31/2006
Comments
(incl\. %
achievement)
Indicator 3 : Outpatient visit per capita
Value
(quantitative 0\.49 0\.6 \.52
or Qualitative)
Date achieved 06/30/2001 12/31/2006 12/31/2006
Comments
(incl\. %
achievement)
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 06/30/2003 Satisfactory Satisfactory 0\.00
2 08/20/2003 Satisfactory Satisfactory 8\.35
3 01/30/2004 Satisfactory Satisfactory 8\.35
4 10/12/2004 Unsatisfactory Satisfactory 31\.61
5 10/27/2004 Unsatisfactory Satisfactory 46\.89
6 01/27/2005 Satisfactory Satisfactory 49\.95
7 11/16/2005 Satisfactory Satisfactory 94\.32
8 12/23/2005 Satisfactory Satisfactory 98\.28
9 06/29/2006 Satisfactory Moderately Satisfactory 100\.21
10 02/13/2007 Satisfactory Satisfactory 100\.26
11 06/29/2007 Moderately
Unsatisfactory Moderately Satisfactory 100\.72
4
H\. Restructuring (if any)
Not Applicable
I\. Disbursement Profile
5
Executive Summary
This Implementation Completion Report evaluates the Government of Ghana's 2002-2006 Health
Sector Program of Work (POW-II) and World Bank support to this sector wide approach (SWAp)
through the Second Health Sector Support Project (HSPSP-II)\. The POW-II outlined a vision to
improve the health status of all Ghanaians while reducing the geographical, socioeconomic and
gender inequalities in health outcomes, building on strategic pillars to improve access, quality,
efficiency, partnerships, and financing of the health sector\.
Ghana's progress towards realizing the vision of the POW-II has been mixed, in contrast to the
high expectations\. Health status was tracked by measurements of infant and under-five mortality
and childhood malnutrition\. Overall reductions in infant and under-five mortality have stagnated,
though most malnutrition indicators have shown substantial improvements\. Disparities in
mortality have been significantly reduced for the poor compared to less poor and for rural
compared to urban groups\. The majority of malnutrition indicators also show improvements for
the poor and a reduction in relative inequality\. Most of the lost ground in mortality occurs
because of recent increases in neonatal deaths (under 1 month of age), particularly for wealthy
and urban groups\. Whereas this finding raises questions about the validity of the mortality data
used to track progress and the need for better measurement, it also calls for more focused
attention on maternal and neonatal health\.
There were important gains in achieving the strategic objectives, notably related to improvements
in access to health services, equity of services, and the introduction of the National Health
Insurance Scheme (NHIS)\. Changes in overall access to health services and equity of access
during the POW-II have been largely positive, with most indicators of access showing an increase
or maintenance of high levels\. There is less information concerning changes in the equity of
health service delivery, but the available data show that there have been reductions in Regional
disparities in access to some priority health services (e\.g\. immunizations, skilled birth attendance
and family planning), though for other indicators the results are less clear (e\.g\. outpatient and
hospital use)\. The data on changes in disparities of health services access for the poor also show a
largely positive picture\. There were reductions in disparities for most health services that could be
measured (use of oral rehydration therapy (ORT) for diarrhea, DPT3 immunization coverage,
antenatal care coverage, and maternal tetanus toxoid vaccination coverage), but not for skilled
birth attendance and family planning use\.
There were also considerable shortcomings in some areas of strategic importance, notably those
related to quality of services, efficiency, and partnerships\. Despite the importance of quality of
health services delivery, there was a lack of focus on strategies for institutionalizing quality
improvement, and little attention paid to tracking changes in quality of services\. Similarly,
efficiency in the health sector was not well monitored despite being a strategic pillar of the POW-
II\. There were large increases in public expenditures on health worker salaries that may have
slowed down the exodus of health workers from Ghana, though studies of health workforce
productivity demonstrated declines in productivity, and data on hospital occupancy showed
substantial unused capacity\. At the same time, the expansion of community services and delivery
of priority interventions were hampered by a lack of funding for recurrent expenditures, while
capital expenditures did not reflect stated priorities and were not well managed\. In the area of
partnerships, there were gains made in working with donors and developing common
management arrangements, though there was limited progress in collaborations with the private
health sector and communities\. The re-launching of the Ghana Health Service (GHS) in 2003 also
6
led to institutional conflict and duplication of efforts with the Ministry of Health, which diverted
attention and resources away from the task of implementing the POW-II\.
The report also highlights some important lessons for future work\. One lesson is that a stronger
analytic base is needed even when things appear to be going well, as was the case when the
POW-II was initiated\. In-depth analysis and debate concerning equity of health services and
outcomes, efficiency of health services, and institutional analyses would have been particularly
helpful in anticipating problems and finding ways to assure implementation of the POW-II\.
Donor behavior is also important, and the report notes that even shifts to general budget support
by some donors can contribute to disruptions in financing, increases in off-budget project funding,
and an overall increase in fragmentation of health sector support\. There were design flaws that
were not well addressed during the POW-II, and the Bank's conceptualization of investment
lending helped to reinforce some of the design flaws\. The dialogue between MOH and
development partners spent considerable time dealing with unmet expectations of inappropriately
defined project development objectives, even though the expected results could not have been
measured during the POW-II period, much less have been attributable to the POW-II\. There was
also inordinate attention on results that were not under control of the health sector, using a
monitoring and evaluation system that was not sufficiently aligned with strategic priorities,
limiting the opportunity to move towards a performance-based health system\. These factors can
seriously undermine achievement of sector objectives, and require attention to technical design,
institutional and political factors\.
7
1\. Project Context, Development Objectives and Design
(this section is descriptive, taken from other documents, e\.g\., PAD/ISR, not evaluative)
1\.1 Context at Appraisal
(brief summary of country and sector background, rationale for Bank assistance)
Since embarking on economic reforms in the mid-1980s, Ghana has made considerable progress
in laying the foundation for sustainable growth and poverty reduction\. This has resulted in
sustained per capita growth and increased private sector activity and investment\. Social indicators
have also improved\. In parallel with the economic reforms, the country completed the political
transition, moving to a democratic reform of Government\. Overall, progress in social and
economic developments has been compromised by periodic interruptions of weak
macroeconomic management associated with the electoral cycle\. With improved fiscal discipline
and a growing economy, improvements in the country's macroeconomic performance have been
anticipated\.
Given this background, the Second Health Sector Program Support Project (HSPSP-II) fit clearly
within the context of the Bank's Country Assistance Strategy (CAS) of 2000, which was designed
to support the Government of Ghana's (GOG) strategy to reduce poverty\. The need to provide
sector-wide support to the health sector was highlighted as a key part of that strategy\. After
elections in 2000, a new Government took office in January 2001, adopted the HIPC initiative,
and formulated a new Ghana Poverty Reduction Strategy (GPRS) which further reinforced the
approach\. The GPRS aimed to eliminate hard-core poverty, with a specific strategy to redefine
the role of the state to provide public goods and services and ensure equitable distribution of
those benefits\. In 2003, the GPRS highlighted improving human service delivery as one of its
five strategic pillars\. Health-specific components included: (a) expanding access to health
services and enhancing quality; (b) improving the efficiency and equity of health services; and (c)
ensuring sustainable financing arrangements that protect the poor\. In 2004, the Bank's strategy to
support the GPRS was articulated in the CAS as focusing on: (a) sustainable growth and jobs
creation; (b) service provision for human development; and (c) governance and empowerment\.
The Government of Ghana and the World Bank have been working together in the health sector
since 1986\. This includes a number of projects focused on improving health systems, including
service delivery, management, and financing\. During the implementation of the Second Health
and Population Project, which was rated as having a positive impact, the GOG sought support
from the World Bank in developing and implementing one of the first sector-wide approaches
(SWAp) anywhere\. This created a new way of doing business for the GOG and other
development partners, involving a common policy and strategic framework, a coherent financing
plan, and development of common implementation and review arrangements\. The SWAp served
to strengthen the Government's sector stewardship by developing institutional, management, and
system capacity\. In this way, by bolstering national capacity and leadership, the Government was
better equipped to address national priorities and improve health outcomes\.
The Health Sector Program Support Project (HSPSP-I), which was also known as the Health
Sector Support Program, operated from 1997 to 2001, and was the first SWAp in Ghana\. Building
on the perceived success Ghana was experiencing in improving overall national health indicators
(e\.g\., under-five mortality and infant mortality rates) as well as health service indicators (e\.g\.,
percentage of family planning acceptors), the HSPSP-I was designed to improve institutional
capacity and strengthen the sector to improve health outcomes, reduce inequalities, and improve
service delivery and quality\. HSPSP-I's stated objective was to support the GOG's Program of
8
Work (POW-I) for 1997-2001, which aimed to improve service delivery, quality, and efficiency,
as well as foster intersectoral linkages to improve health outcomes, such as malnutrition, and
other outcomes such as girls' education achievement\. The HSPSP-I was considered successful in
improving institutional capacity, particularly in improving procurement; budgeting, planning, and
financial management; and improving health financing\.
The Second Health Sector Support Project (HSPSP-II) built on the HSPSP-I and supported the
Government of Ghana's (GOG) second five-year Program of Work (POW-II) for 2002-2006\. The
Bank's decision to design another SWAp to support POW-II was reasonable, given the perceived
successes of the first SWAp in capacity building, donor collaboration, and improving the
predictability and availability of health financing through the pooled funds\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
Project Development Objectives
The Project Appraisal Document (PAD) describes the Project Development Objectives by
indicating that the HSPSP-II will support the Government of Ghana's efforts towards
implementing the Government's 2002-2006 Health Sector Program of Work (POW-II), described
in Partnerships for Health: Bridging the Inequalities Gap\. The POW-II outlined a vision
statement and set of five strategic pillars (see Box 1), which was translated by the Bank in the
PAD as an "overall objective\.to improve the health status of the population while reducing the
geographical, socioeconomic and gender inequalities in health outcomes\." In addition, the POW-
II's "five strategic pillars" were also identified in Annex 1 of the PAD as project development
objectives\. It would be inappropriate to consider a clearly defined vision statement alone as the
benchmark for achievement of the project development objectives, even though this appears to be
the case during implementation of the POW-II\. In assessing the PDOs, this ICR attempts to be
consistent with the intentions of the PAD and the POW-II, which involves assessing progress
towards fulfillment of a vision, and the achievement of strategic pillars and their related
objectives\.
Box 1\. POW-II's Vision, Mission, Policy Goal, and Five Strategic Pillars
Vision
Improved overall health status and reduced inequities in health outcomes of people living in
Ghana
Mission statement
"The Ministry of Health will work in collaboration with all partners in the health sector to ensure
that every individual, household and community is adequately informed about health; and has
equitable access to high quality health and related interventions\."
Policy goal
Working together for equity and good health for people living in Ghana
The five strategic pillars
To improve quality of health delivery
To increase access to health services
To improve the efficiency of health service delivery
To foster partnerships in improving health
To improve financing of the health sector
9
The PAD describes the five strategic pillars/objectives of the POW-II as the following:
(i) to increase (geographical, financial, and sociocultural) access to health services;
(ii) to improve quality of health delivery, improving health-worker-performance and
responsiveness to client needs;
(iii) to improve the efficiency of health service delivery, improving cost effectiveness
and planning, management, and administration;
(iv) to foster partnerships in improving health (with households and communities,
between public and private providers, other ministries, departments, and agencies)
with development partners; and
(v) to improve financing of the health sector through increased financing and
increasing financial access of the poor to health care by extending prepayments
schemes to replace "cash and carry" systems, while developing an appropriate
policy and regulatory environment for health insurance, as well as increasing public
expenditure on the poor and vulnerable\.
Key Indicators
The PAD is inconsistent in its identification of the key indicators for HSPSP-II\. For instance,
Annex 12 of the PAD makes reference to twenty-five sector-wide indicators that were identified
for monitoring implementation of the HSPSP-II and POW-II (Table 1\.5\.1)\. However, twenty-nine
sector-wide indicators are also listed in the same Annex, and additional project indicators and
recorded in Annex 1 of the PAD\. Although there is a great deal of overlap among these
indicators, they are often worded differently and are thus inconsistently defined\.
The MOH and its development partners (including the World Bank) often refer to the "agreed
upon twenty-five sector-wide indicators for POW-II\." However, the number of the sector-wide
indicators varies depending the document one refers to\. Annex 10 highlights the different sector-
wide indicators used in the PAD, the POW-II, the annual POW for 2006, and the Review of
POW-2005\. There were often more than twenty-five indicators and some of these indicators
evolved over time\. These indicators are largely based on the categories of the five strategic
objectives (access, quality, efficiency, partnership, and financing)\. Because data is more
comparable, this report uses the sector-wide indicators that were reported in the reviews of the
annual POWs as the key indicators by which the HSPSP-II and POW-II are assessed\.
10
Table 1\.5\.1 Sector-wide indicators for POW-II (as identified in the PAD)
Health Status Infant mortality rate
Under-five mortality rate
Maternal mortality rate
% under-five years who are malnourished
Access Number of outreach services carried out by specialist from tertiary,
secondary and district hospital by region
Population to doctor and nurse ratio by region
Outpatient visit per capita
Hospital admission rate
Number of community resident nurse per district/region
Quality % of maternal audits to maternal deaths
Under-five malaria case fatality rate
% tracer drug availability
Efficiency HIV seroprevalence (among reproductive age, 15-19, 20-24)
Tuberculosis cure rate
Number of guinea worm cases
AFP non-polio rate
% family planning acceptors
% ANC coverage
% PNC coverage
% supervised deliveries (skilled attendants)
Bed occupancy rate
EPI coverage (DPT3, measles)
Partnership % recurrent budget from GOG and Health Fund used by private
sector, NGOs, CSOs, and other MDAs
Financing % GOG budget spent on health
% GOG recurrent budget for health
% of earmarked/direct donor funds to total donor funds (per partner)
% of IGFs coming from pre-payment and community insurance
scheme
% recurrent and capital expenditure by level, by region, and by
source
Total amount spent on exemptions by exemption category
Note: Sector-wide indicators are identified in Annex 12 of the Project Appraisal Document
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
The project development objectives and key indicators were not formally revised in Bank
documents, though as discussed in Sections 1\.2 and 2\.3, the descriptions and indicators of the
POW-II changed from year to year\.
11
1\.4 Main Beneficiaries
(original and revised, briefly describe the "primary target group" identified in the PAD and as
captured in the PDO, as well as any other individuals and organizations expected to benefit from
the project)
Based on the POW-II, the PAD identifies the main beneficiaries as:
1\. All Ghanaians, who will benefit from improved management, financing, and quality of
health care delivery;
2\. The poor, particularly the rural poor and women, due the focus on priority health
interventions, provision of basic health services, and reducing geographical,
socioeconomic, and gender inequalities\.
3\. Ministry of Health (MOH), Ghana Health Service (GHS), and Budget and
Management Center (BMC) staff, and those health workers in the non-state sector, due to
capacity building activities\.
1\.5 Original Components (as approved)
The HSPSP-II was designed to support the POW-II, which did not define project components\.
The definition of components was done by the Bank in order to fit its own design templates, but
was done in an inconsistent way\. The ICR structure also requires an assessment of the outputs
from a set of components, even though this does not fit well with the design of the POW-II\. The
PAD and the Development Financing Agreement (DFA) highlight ten areas of focus that are
consistent with the ten chapters of the POW-II that follow the POW-II definition of the strategic
vision\. These areas are also treated as components in the logical framework of the PAD and in the
DFA\. However, the PAD also identifies each year's overall Program of Work as a component
when describing the financing components of the program\.
The description of focus areas changed substantially by the 2003 Program of Work, and
continued to be modified annually\. However, they were not treated as components in the POW-II,
and they were never formally revised with the Bank\. To be consistent with the Bank's evaluation
methodology and the spirit of the program, outcomes and outputs of the program are assessed
according to the five strategic pillars of the POW-II (described in Section 1\.2), and the original
ten focus areas of the DFA and PAD logical framework\. The ten focus areas that will serve as
"components" for this evaluation are:
1\. Strengthening priority health interventions;
2\. Developing human resources for health services;
3\. Enhancing infrastructure and support services;
4\. Fostering partnerships for health;
5\. Improving regulation;
6\. Reforming institutions arrangements;
7\. Improving the health sector financing;
8\. Improving financial management systems;
9\. Further strengthening management; and
10\. Linking with traditional medicine\.
12
1\.6 Revised Components
The POW-II was not organized around project components\. The components were an artifact of
Bank documentation for the PAD of HSPSP-II (one set of components for describing the
financing components, another set for the description of the program)\. They were not formally
revised during implementation, even though the identified "components" changed considerably
during implementation of the POW-II\.
1\.7 Other significant changes
(in design, scope and scale, implementation arrangements and schedule, and funding allocations)
The strategic objectives outlined in the POW-II set priorities that remained main themes
throughout implementation of the project between 2002 and 2006\. However, the Ministry of
Health produced and implemented annual Programs of Work with its partners, which served as
the main strategy document for the health sector for each respective year\. The annual POWs
generally maintained the strategic objectives outlined in the POW-II, but the articulation of the
focus areas changed from year to year\. This was particularly true of the articulation of activities
and schemes planned to achieve objectives each year\. The focus areas became the main thrust of
the annual POWs, with the strategic objectives providing a general overview of the sector's
direction\. For instance, "human resources development" was treated as a part of "health sector
investments" within each POW until 2006, when POW 2006 made "human resources" its own
primary area of focus\.
An indisputably crucial change to the implementation arrangements during HSPSP-II was the re-
launching of the Ghana Health Service in 2003\. Under powerful and capable leadership, the GHS
came into direct conflict with the MOH over the authority to make policy and management
decisions related to service delivery\. This conflict created gridlock at the central level and
diverted attention and resources away from the task at hand--implementing the POW-II\. The
conflict also caused a great deal of confusion, including the failure to track capital expenditures
and follow through on implementation arrangements with non-governmental providers, such as
CHAG\.
In terms of funding allocations, the following trends have affected health sector financing: (a)
establishment of the National Health Insurance Scheme in 2003 changed implementation
arrangements, as the National Health Insurance Fund became another fiduciary mechanism to
capture IGF and replace the exemptions policy; (b) the proportion of donors contributing to the
Health Fund have increasingly moving to earmarked and off-budget project financing; and (c)
some donors contributing to the Health Fund have moved to general budget support\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
(including whether lessons of earlier operations were taken into account, risks and their
mitigations identified, and adequacy of participatory processes, as applicable)
Soundness of background analysis
The Second Health Sector Support Project (HSPSP-II) for Ghana was designed as a health SWAp,
based on the perceived successes of HSPSP-I and the strong demonstrated leadership of the
Ministry of Health\. Early evaluations of the first health SWAp (HSPSP-I) documented marked
13
improvements in government system capacity, both at the regional and district level, particularly
with regard to procurement and financial management systems\. The first health SWAp achieved
decentralization of financial resources with the certification of budget management centers
(BMCs) and appeared to have a significant effect in improving health outcomes, particularly in
priority areas\.
The Bank's decision to continue supporting the SWAp was based on the rationale of continuing
to support a Government-led process of improving the health sector\. Engaging in the SWAp
allowed the Bank to continue its close collaboration with other core donors to build upon the
progress of using national systems and procedures and strengthening institutional capacity to
achieve health outcomes\.
One of the important outcomes of the POW-I was the documentation and political recognition of
some important lessons for improvement\. The overall objective of POW-II and its strategic pillars
were based on these lessons and were devised to overcome shortcomings, namely: (a) the
persistence of deep inequalities in health; (b) the chronic under-funding of the health sector; (c)
the intense brain drain and unequal distribution of staff; (d) the untapped potential contribution
from private providers; and (e) the potential devastating impact of HIV/AIDS on the heath sector,
the economy\.
Notwithstanding these understandings of the limitations from the POW-I, the POW-II was largely
accepted as a continuation as "business as usual\." In retrospect, this should have been questioned
more seriously\. There was insufficient attention to the analytic basis for dealing with equity and
efficiency dimensions of the program, and particularly on the institutions needed for
implementation of strategies to address them\. Although the potential for "turbulence" caused by
the split of the MOH and GHS was recognized as a substantial risk, there was a clear need for
institutional analyses and more pro-active risk reduction strategies that were not undertaken\.
The Bank promised to support the SWAp and pay particular attention to the areas of:
i) Reducing inequalities in health--particularly to define and implement a more
balanced capital development program with a clear focus on basic health services for
the poorest and most deprived; and a new strategy to attract and retain health staff in
the most deprived areas\.
ii) Improving physical and financial accessibility of health care--define and
implement a more adequate and equitable allocation formula for the allocation of
public resources; and develop a definition and implementation plan for insurance and
prepayment schemes for both the formal and informal sectors\.
iii) Better exploit the public sector comparative advantage--define and implement
contractual arrangements with both mission and private sectors for the provision of
core health services\.
iv) Enhance access to, quality, and efficiency in the delivery of priority health
interventions with a major focus on HIV/AIDS--support the Government to focus
on financing services that tackle the major public health priorities, particularly those
that disproportionately affect the poor and the vulnerable\.
v) Improve public service management--continue to help the MOH improve its
procurement and financial management procedures; provide oversight on
procurement and day-to-day implementation support; and contribute to the
preparation of the annual procurement and financial audit reports\.
vi) Performance monitoring--assess the quality of reporting on performance indicators\.
14
However, the Bank did not undertake more rigorous or systematized analysis of these areas as
part of its background analysis, and appeared to rely on the information generated from the
routine SWAp review processes as its primary source of evaluation\.
Assessment of project design
The HSPSP-II was designed to support the strategies of the POW-II to improve the population's
overall health status and reduce inequities in health access, quality, and efficiency\. The rationale
for continuing with the overall SWAp at the beginning of the POW-II was sound, particularly to
support Government's strong ownership over the program, to continue the good relationships
between MOH and donors, and to follow-through on the stated vision and strategies of the
Government\.
Adequacy of the Government's commitment
The Government of Ghana and, more specifically, the Ministry of Health's commitment to
implementing the POW-II was exemplary\. The MOH was involved early on in international
discussions and conceptualizations of the first health sector SWAp\. Thus, the MOH's
commitment was unswerving during the implementation of POW-I, even after a new political
party took office in 2001\. The GOG exemplified good capacity and leadership in overseeing the
donor-pooled Health Fund and made substantial progress in achieving institutional strengthening
and capacity development\. In addition, the GOG engaged all of its development partners in
establishing priorities for the POW-II and in devising its strategies\. This inclusive process was
largely successful and a testament to the GOG's leadership capacity\.
Assessment of risks
The sustainability of HSPSP-II was gauged by two parameters: (i) ownership; and (ii) availability
of financial resources (including donor funds)\. Taking into consideration the successes of the
HSPSP-I and the evident commitment of the GOG, international partners, and other stakeholders
(including civil society, the mission, and the private sector), risks to achieving ownership of the
SWAp were appropriately considered to be low\. The availability of financial resources was
deemed to be a potential risk due to macroeconomic factors, the unpredictability of GOG
allocations to the health sector, and the potential volatility of donor funds\. These risks were
assessed to be potential but low threats to sustainability since the financial viability of the GOG
looked promising and the GOG and donors' commitments to health seemed stalwart and steady\.
However, as discussed above, there was insufficient attention to the institutional risks posed by
the split of the GHS and the MOH, and consequently to the way in which the strategies could be
implemented\. As a result of the conflict between the two agencies, there ensued conflict over
control of resources, duplication of roles and responsibilities, a breakdown in the partnerships that
were to be developed, and a undermining of the performance management basis needed to
implement many of the strategies\. Whereas not all of these outcomes could have been anticipated
when HSPSP-II was approved, a closer analysis of the incentives framework and institutions
involved would likely have helped\.
At the time of appraisal, the risks involving human resources were considered in terms of brain
drain and staff attrition\. It would have been difficult to anticipate all risks in the labor market that
followed, but more attention to the institutional analysis might have pointed to the risks involving
labor strife and the financing of the wage bill, both of which became major problems for the
health sector during the POW-II\.
15
2\.2 Implementation
(including any project changes/restructuring, mid-term review, Project at Risk status, and actions
taken, as applicable)
Implementation of the HSPSP-II in terms of the Bank's supervision of implementation went
largely according to plan, with satisfactory oversight and engagement\. There were no project
changes, restructuring, or project at risk status changes\. During the early years of HSPSP-II
implementation, the Bank responded to early calls for a greater field presence and by moving the
task team leader (TTL) of the project from headquarters in Washington, DC to the Ghana Country
Office\.
Disbursement of project funds differed greatly from the disbursement plan determined at the time
of appraisal (see Section A, Annex 1)\. Funds did not disburse until 2004 and then almost all of
the remaining funds were spent in 2005 due to an unforeseen budget shortfall in the MOH\.
Because Bank financing was part of the Health Fund, this pattern of funding is unlikely to have
dramatically affected financing the health sector, yet this was a less predictable, more volatile
type of aid\.
Implementation of the HSPSP-II in terms of supporting implementation of POW-II encountered a
number of unforeseen challenges\. An evolving political climate and Parliamentary Acts to
address health sector challenges created a number of moving pieces that significantly challenged
the MOH's ability to carve out a real strategic plan for POW-II implementation\. The years of
POW-II implementation (2002-2006) were marked by institutional conflict in defining the roles
and responsibilities between the MOH and Ghana Health Service (GHS)\. In addition, a
reorganization of the public health sector in 2003 by the MOH and the passing of the wage bill in
2004 changed the landscape of the health sector, creating significant financial burdens on the
MOH to cover the Additional Duty Hour Allowance (ADHA) and Deprived Area Incentive
Allowance (DAIA) for health workers\. Dialogue with development partners also experienced a
shift during implementation\. In the early years of POW-II, collaboration between development
partners (DPs) and the MOH was both respectful and productive with a focus on mutual
achievement; later in implementation, some DPs became more adversarial, adopting a
"watchdog" attitude to expose Government inefficiencies and shortcomings\. Previously, during
POW-I and the early part of POW-II, such matters would have been viewed as joint challenges to
be faced and addressed by DPs and Government together\. This shift in development dialogue was
observable, and implementation of the HSPSP-II was consequently affected by this change\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Design
Progress towards meeting the objectives of POW-I was monitored by twenty sector-wide
indicators that were agreed upon by stakeholders and the MOH\. The list served as the basis for
annual performance reviews\. At the conclusion of the POW-I, an assessment carried out in 2001
deemed many of the indicators not sufficiently focused on measuring outputs or outcomes\.
In the M&E design for POW-II, a new set of sector-wide indicators were identified to track
progress in achieving the strategic objectives\. However, the number of the sector-wide indicators
varies between sector documents, highlighting inconsistencies in identifying the sector-wide
indicators for POW-II\. Annex 10 documents how the sector-wide indicators changed over time,
outlining the indicators that were originally designed in the PAD and POW-II as well as those
that were actually used for reporting for progress made in achieving the 2006 POW\. Although the
16
sector-wide indicators changed over time, about twenty-five to thirty sector-wide indicators were
repeatedly monitored and evaluated between 2002 and 2006\. Data for these indicators are
presented in Annex 11\.
The sector-wide indicators were based on the strategic objectives of the POW-II: (a) health
outcomes (e\.g\., infant mortality and maternal mortality rates); (b) access to health services (e\.g\.,
immunization coverage, outpatient visits per capita); (c) quality of health services (e\.g\., under-
five malaria case fatality rate, tracer drug availability); (d) efficiency (e\.g\., antenatal coverage,
number of guinea worm cases); (e) partnership (e\.g\., % of recurrent budget from GOG and Health
Fund used by private sector, etc\.); and (f) financing (e\.g\., the proportion of GOG budget spent on
health)\.
Although the sector-wide indicators reflected the objectives of POW-II, the design of the results
framework did not sufficiently enable accurate and timely monitoring of valid and reliable
measures of the sector's performance\. For instance, population-based mortality indicators based
on relatively small surveys are not suitable to be used to monitor progress on an annual basis (e\.g\.,
under-five mortality is measured every five years and gives an estimate over the previous five or
ten years), as these indicators are rather insensitive to changes in performance of health services,
often depend on other determinants of health, and are less affected by changes in performance
alone\.
Most notably, the sector-wide indicators insufficiently measure equity, especially geographic
differences in health services and health outcomes\. Regional differentials for health service
indicators are relatively easy to monitor and evaluate, yet these were not captured in the M&E
design\. Furthermore, financial protection, a key indicator of equity, was not included as an
indicator in the M&E framework\.
The sector-wide indicators did not adequately identify the links between building capacity and
improving service delivery\. For example, tracking vacancy rates for human resources would have
been one way to measure improving capacity that has a direct impact on service delivery\. More
attention and effort should have been spent ensuring that appropriate measures of equity and
intermediate outcomes were in place to inform the policy dialogue\.
Implementation
The MOH and Ghana Health Service were responsible for collecting, aggregating, and reporting
on the sector-wide indicators\. There are still variations in data quality and management, as with
implementation of POW-I, despite significant investment and improvements in information
systems\.
As mentioned earlier, reporting on the sector-wide indicators has been inconsistent, with
definitions of some indicators changing over time\. Such inconsistencies compromise the
opportunity to identify trends over time and create confusion among stakeholders over which
indicators are valid measures of objectives\. Indicators for health financing are often subject to
change, oftentimes with the definition of the denominator differing over the years and subject to
interpretation\.
Utilization
Despite delays in data collection and reporting, the MOH and GHS have developed systems to
collect detailed health service use and outcome data at both regional and district levels\. However,
17
regional and district-level data, originally envisioned to inform regional priorities and serve as
equity indicators, were hardly ever used in annual reports\. All too often external reviews were
required to collect, aggregate, and present health data, while this could have been done by the
MOH's agencies\.
Despite the lack of effective use at the national level of regional and district-level data, there is
evidence that some regions have made progress in this area\. For instance, a few regions have
developed league tables to create a performance-based system of evaluating district performance
and improvement\. Resources, thereby, may be allocated to reward performance and/or to address
an identified need of a poorly-performing district\. Such use of data monitoring should be
encouraged and brought to national scale\.
However, on the national level, there was little evidence that data monitoring was used to
improve resource allocation\. Furthermore, relevant operational research that was undertaken on
some of the new policies and programs were not used to inform their implementation\. For
example, an independent review of the information management system led to a relevant
evaluation paper but there is little indication to demonstrate this paper's recommendations were
used to reform the information system\. These missed opportunities should be of high concern to
the MOH/GHS, especially with the development of new annual POWs and the possibility of
using data to inform regional health priorities and resource allocations\.
2\.4 Safeguard and Fiduciary Compliance
(focusing on issues and their resolution, as applicable)
There were two safeguards policies triggered by this project: (i) environmental; and (ii)
involuntary resettlement\. The environmental assessment considered the impact of the project in
terms of health waste management and impregnation of bednets with insecticides\. The Ghana
Environmental Protection Agency (EPA) developed and disseminated guidelines on proper
procedures for handling health care waste and the MOH agreed to use environmentally-friendly
insecticides in bednets\. The risk of involuntary resettlement was mitigated by issuing the
Environmental and Resettlement/Compensation Framework to stakeholders within the MOH,
GHS, academic institutions, NGOs working in environment, as well as to development partners\.
The project was in compliance with these safeguard measures throughout implementation of
HSPSP-II\.
2\.5 Post-completion Operation/Next Phase
(including transition arrangement to post-completion operation of investments financed by
present operation, Operation & Maintenance arrangements, sustaining reforms and institutional
capacity, and next phase/follow-up operation, if applicable)
The Bank provided an adequate transitional arrangement when support to the health SWAp
(through the HSPSP-II) ended on June 30, 2007\. The last year and a half of the Bank's support to
the SWAp was largely transitional, as the Bank had already moved to general budget support in
2006 after almost all of the remaining HSPSP-II funds were spent in 2005 due to an unforeseen
budget shortfall in the MOH\. The Bank remained involved in technical discussions and reviews
during this last year, in addition to maintaining its role of reviewing procurement contracts\.
During this transitional year, it became obvious that the MOH faced a number of new challenges
due to changes in the sources of revenue for health and new institutional arrangements, namely:
(i) the National Health Insurance Scheme, established in 2003, has in principle replaced the "cash
18
and carry system" and the internally generated funds (IGF); (ii) some donors have shifted
financial support from the Health Fund to budget support; and (iii) there has been a reduction in
the proportion of contributions to the Health Funds, particularly in relation to earmarked funds\.
The MOH still needs to learn how to deal with MoFEP budgeting and disbursement procedures
that are more cumbersome, and less flexible and accessible to BMCs than the Health Fund\. The
Government and development partners need to be concerned that the capacity gained in
developing BMCs to utilize and report on financing is not lost\. Furthermore, as general budget
support increases, the role of BMCs needs to be carefully considered\. If BMCs will continue as
the district level financing modality, the sustainability of this system and its adequacy in
advancing performance-based incentives should be considered\.
The Bank's new IDA-financed Health Insurance Project, approved on July 3, 2007, will serve as
an important link to strengthening institutional capacity in order to carry out the NHIS, including
its coverage of exempt categories\. This project builds on the institutional capacity that was
established during HSPSP-I and HSPSP-II and will hopefully provide another opportunity for the
Government to implement performance-based management and financing systems, while
improving equitable access to quality health services\. The logic of a project-support to initiate a
new institution (the NHIS) is well reasoned\.
The Bank is also supporting a new Nutrition and Malaria Control for Survival Project (US$25
million in IDA financing), approved on July 3, 2007\. Although clearly addressing priority needs,
the rationale for project-based support in these areas is more complicated\. With the recognition of
stagnating infant and under-five mortality rate, an unexpected increase in available IDA funds
and the possibility of leveraging more funds from other donors, the Bank was opportunistic in
creating a project focused on improving health outcomes through improved nutrition and malaria
prevention and treatment\. The new project is quite innovative in using existing financing
modalities (i\.e\., no earmarked funding, but using the Health Fund) to create a results-based
financing model\. Although the Bank has gone to great lengths to design a relevant project that is
harmonized with the international aid agenda, it is uncertain whether this financing will be a
better alternative to the sector-wide approach or if it is a regression towards specific, project-
based funding\.
In addition to these two new projects, the Bank has planned on continued involvement in the
health sector dialogue through its support of the Poverty Reduction Strategy Credit (PRSC),
which states strengthening health systems as an objective\. The Bank plans to focus its support of
the PRSC in the areas of health financing, human resources for health, and budget planning and
management, which are consistent with Bank's areas of expertise\. In this way, the Bank has tried
to maintain its sector-wide dialogue in health despite the shift to project lending\.
The Bank has also actively participated in the discussions concerning the development of the next
five year program of work (POW-III)\. The POW-III has proposed another set of sector-wide
indicators for monitoring and evaluation that are improved, but still not optimally aligned with
the POW's strategic objectives\. There are now three indicators of equity to be measured at the
national level, though none assesses equity at a regional, district, or BMC level, and one will be
measured only once during the POW-III\. The set of indicators chosen are thus unlikely to
improve the ability to identify variations in equity (or other areas of performance) across
management units\. This is a lost opportunity for efforts to improve accountability of health
services at operational levels, as well as to promote a system that would like to align financing
with performance (either to reward high performers, or to provide extra help for low-performing
areas)\.
19
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
(to current country and global priorities, and Bank assistance strategy)
The PAD describes the Project Development Objectives (PDOs) in terms of "supporting the
Ministry of Health in implementing its 2002-2006 Program of Work (POW-II)," and also
translated what is clearly defined in the POW-II as a vision statement into the main PDO of a
project, namely to: "improve the health status of the population while reducing the geographical,
socioeconomic, and gender inequalities in health outcomes\."
This vision and the five strategic objectives defined above remain highly relevant to country and
global priorities in health and development, and also fit in well with the Bank's assistance
strategy, as articulated in the Ghana Poverty Reduction Strategy, the global Millennium
Development Goals, and the Ghana Country Assistance Strategy\.
However, the vision statement is a mis-specification as a PDO, and likely contributed to the way
sectoral dialogue between the MOH and development partners evolved, with the vision statement
being treated more as a project objective rather than a vision statement\. From a management
sciences perspective, a vision statement is an aspirational proclamation about where the
organization (in this case referring to the health sector) would like to be in the future\. A vision
statement is not defined in a way that an objective is monitored (e\.g\. with specific, measurable,
achievable, relevant, and timely attributes), though it is important that strategies and objectives
are consistent with the vision (and mission)\.
The monitoring and evaluation systems of the POW-II were designed to assess the health status
of the population over large time periods, but not in a way that can link changes in the inputs,
activities, and outputs of the POW-II to achievement of the vision as an objective, as might be
planned in a traditional project\. The data for the sector-wide indicators are also unable to detect
anything but the largest changes in population averages of selected health outcomes\. The sector-
wide monitoring system was designed to assess overall health outcomes of the population, but not
the inequities, much less to detect reductions (changes) in inequities\. No country has yet been be
able to demonstrate how sectoral inputs and activities are causally linked to changes in health
status on a national scale, as would be the standard of evidence if the vision statement were
treated as a project objective\. For these reasons, it is inappropriate to only consider the defined
vision statement as the benchmark for achievement of the PDO\.
The POW-II strategic objectives are more appropriate as PDOs\. The PAD also combines the
strategic objectives at the level of a PDO in its logical framework, though it does not treat them as
such in the ISRs\. For purposes of evaluation, this ICR will assess the degree to which progress is
being made towards fulfilling its vision, but will not treat the vision as if it were the sole PDO\. In
keeping with the intent of the POW-II and the PAD, this ICR will also assess the degree to which
the identified strategies and related objectives of the POW-II have been accomplished\.
3\.2 Achievement of Project Development Objectives
(including brief discussion of causal linkages between outputs and outcomes, with details on
outputs in Annex 2)
In considering the achievement of the PDOs, the evaluation will consider both the stated vision of
the POW-II, to "improve the health status of the population while reducing the geographical,
20
socioeconomic, and gender inequalities in health outcomes," and the POW-II's five strategic
pillars, both of which are identified as PDOs in the PAD logical framework\.
Progress Towards Realizing the Vision
The assessments of health status used in the formal review of the POW-II (Table 3\.2\.1) provide
some indication of the concern over the overall lack of improvements in mortality and HIV
seroprevalence\. It also highlights the lack of information needed to assess changes in these
parameters as development objectives\. There is insufficient data to assess changes in maternal
mortality, and interpretation of HIV seroprevalence is fraught with difficulties\. This is because
HIV seroprevalence can increase if those living with HIV are living longer due to treatment, or if
people with HIV infection become more likely to be tested, both of which would be the results of
successful programs (rates can also decrease if people die sooner)\. Prevalence can also increase
if more people are becoming infected, which is not a sign of success\. This evaluation therefore
focuses on further assessing what can be learned from data on changes in infant and under-five
mortality and childhood malnutrition\. To be consistent with an assessment of the statement of
vision, we examine the longer trends over time, and assess changes in inequities\.
Table 3\.2\.1\. Sector-wide indicators of health status
2002 2003 2004 2005 2006 Target
Infant Mortality Rate per 1,000 live births 64 71 50
Under Five Mortality Rate per 1,000 live births 111 111 95
Maternal Mortality Ratio per 100,000 live births 560 150
Children Under Five who are Malnourished (%) 22\.1 17\.8 20
HIV seroprevalence (%) 3\.4 3\.6 3\.1 2\.7 2\.9 2\.6
Source: Health Sector Programme of Work (2002-2006) Independent Review of POW 2006 (2007)\.
Note: 2006 data for infant and under-five mortality actually refer to the average mortality experience over
the previous 10 years; 2004 represents estimates of the previous five years\. Malnourishment is defined as
weight for age\. The reference population is the WHO/CDC/NCHS reference, capturing the percentage of
children scoring more than 2 standard deviations below the mean\.
The best estimates of the multi-agency working group on estimating global mortality rates
provides a picture of mortality trends in Ghana that uses as wide a set of information as possible\.
Their data suggest that nationwide, overall infant and under-five mortality rates have leveled off
since the late 1990s (Figure 3\.2\.1)\.
Since these estimates of mortality rely on point estimates and not their error (variance), it has
limitations when used to assess whether there are significant changes over time\. When
incorporating the level of variance in the estimates from the most recent (2003) DHS data, it is
clear that only very large differences can be detected from one year to the next, such as would be
found with reductions of 30 percent or more in one year (Figure 3\.2\.2\.)\. The results also do not
show statistically significant changes from one five year period to the next since the 1989-1993
period (Figure 3\.2\.3)\.
21
Figure 3\.2\.1 Best Estimates of Infant and Under-Five Mortality Rates in Ghana
GHANA- INFANT MORTALITY
140
)shtrib 120
00 100
10
erp( 80
etar
yti 60
altro 40
mtnafnI 20
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Cen71 GFS79i DHS88d DHS88i
GFS79d DHS93d DHS93i DHS98i
DHS98d WDI DHS03d DHS03i
Sources: Cen71 = Census 1971; GFS = Ghana Fertility Survey; DHS = Demographic & Health Survey; WDI = World
Development Indicators\. Numbers represent year of survey\. "d" represents direct method of estimation; "i" represents
indirect method of estimation\.
GHANA- UNDER-FIVE MORTALITY
250
)shtrib 200
1000
erp( 150
etar
yti
altro 100
m
veif-rednU 50
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Cen71 GFS79i DHS88d DHS88i GFS79d DHS93d
DHS93i DHS98i DHS98d WDI DHS03d DHS03i
Sources: Cen71 = Census 1971; GFS = Ghana Fertility Survey; DHS = Demographic & Health Survey; WDI = World
Development Indicators\. Numbers represent year of survey\. "d" represents direct method of estimation; "i" represents
indirect method of estimation\.
22
Figure 3\.2\.2\. Annual Trends in Ghana's Infant Mortality with Confidence Intervals
180
160
140
s
rth 120
bi
veil 100
000
1,
80
per
60
Deaths
40
20
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
Source: Ghana DHS (2003); Hatt & Peters estimates using bootstrapped confidence intervals
Note: Linear trend-line shown as dotted line\.
Figure 3\.2\.3 Trends in Childhood Mortality in Ghana (1984-2003)
180
Underfive deaths
160 Infant deaths
Neonatal deaths
140
rthsib 120
veil
100
000
1,rep 80
60
eathsD 40
20
0
1984-1988 1989-1993 1994-1998 1999-2003
Period
Source: DHS 1988, 1993, 1998, 2003; Hatt & Peters estimates\.
23
A breakdown of infant mortality rates into its neonatal and post-natal components provides some
useful observations that may explain some of these trends\. Neonatal mortality appeared to
increase during the last survey period, and is the driving force behind the infant and under-five
mortality estimates\. As shown in Figure 3\.2\.4, estimates of post-neonatal mortality (age 1-11
months) and child mortality (age 12-59 months) do not show an upward trend during the last
survey period\. There are well-known errors and biases in estimating neonatal deaths (especially
under-counting and misclassification as still births)\. As discussed below, the increases in neonatal
deaths also occurs largely among the wealthier and urban populations, suggesting a possible
reporting bias that over-estimates neonatal deaths in the latter survey relative to earlier periods\.
Caution should be exercised when attributing causes to the trends in infant and under-five
mortality\.
Figure 3\.2\.4
Trends in neonatal, postneonatal, and child mortality
with 95% confidence intervals
Ghana DHS (1988, 1993, 1998, and 2003)
100
90
80
70
births
veil 60
50
1,000r
pe 40
Deaths 30
20
10
0
1983-1988 1988-1993 1993-1998 1998-2003
Period
Deaths ages 12-59 months Deaths ages 1-11 months Deaths in first month
Are health outcomes becoming more equitable?
We build on these analyses to assess whether there has been progress towards the long-term
vision of improving equity, by defining socioeconomic differences though a standard asset index
(Filmer & Pritchett 2001), and assessing trends over time\. As shown in Figure 3\.2\.6, a steady,
almost linear decline is observed for the poorest 40% of the sample, while under five-mortality
rates among the middle 40% first decline and then level off\. For the richest 20%, declines from
1983 through 1998 are erased by a statistically significant increase in the 1998-2003 survey
period\. Estimates of under-five mortality rates for all wealth groups converged in this most
recent period\. The situation is similar for infant mortality (figure not shown); where the poorest
40% appear to have the most consistent decline in infant mortality rates over the 20-year period\.
The rate of decline appeared to flatten out between the last two surveys\. The middle 40% show a
24
very slight decline overall, while the pattern for the wealthiest 20% is erratic, declining
precipitously in the 1998 survey period and then rising dramatically in the 2003 survey period\.
Figure 3\.2\.5
Trends in underfive mortality, by wealth group
5-year estimates with bootstrapped 95% confidence intervals
Ghana DHS (1988, 1993, 1998, and 2003)
250
200
hst
bir
live
00
1,0 150
per Poorest 40%
s Middle 40%
year Richest 20%
5ts 100
fir
in
s
Death 50
0
1983-1988 1988-1993 1993-1998 1998-2003
Period
Supplementing these analysis with Weibull regression analysis for under-five mortality (Table
3\.2\.5), there was an average of 13% decline per survey period for the poorest 40% of the sample
(p<0\.01), whereas the trends for the middle and richest groups were not statistically significant\.
The results were similar when examining infant mortality\. Incorporating socio-economic
determinants into these models showed that whereas improvements were greater in rural
compared to urban areas, there were otherwise no strong geographic, cultural, or gender
differences in the rates of change in infant or under-five mortality (further details are to be
provided in the forthcoming Country Status Report)\.
Table 3\.2\.5
Weibull regression analysis: Trends in underfive mortality, by poverty group
Pooled Ghana DHS surveys (1988, 1993, 1998, 2003)
Average trend per survey
Wealth group Hazard ratio SE
Poorest 40% 0\.87 0\.04 **
Middle 40% 0\.92 0\.04
Richest 20% 0\.99 0\.10
*p<0\.05 **p<0\.01
25
Weibull regression analysis: Trends in infant mortality, by poverty group
Pooled Ghana DHS surveys (1988, 1993, 1998, 2003)
Average trend per survey
Wealth group Hazard ratio SE
Poorest 40% 0\.90 0\.04 *
Middle 40% 0\.97 0\.05
Richest 20% 1\.06 0\.12
p<0\.05
Source: DHS data, Hatt & Peters calculations
Since neonatal mortality strongly influences the estimates of infant and under-five mortality, it is
worthwhile to examine how it is distributed across different wealth groups\. Although there are
insufficient sample sizes to detect statistically significant trends, it is clear from Figure 3\.2\.6 that
most of recent increase in neonatal mortality estimates is occurring in the richest quintile (also
urban areas data not shown)\. Although it is possible that wealthier families would have higher
mortality rates, this would be highly unusual, and suggests that a reporting bias may be
contributing to the apparent increases in infant mortality (as wealthier families are more likely to
deliver in hospitals and report neonatal deaths)\. Nonetheless, the overall neonatal mortality rates
are sufficiently high to demand more attention in terms of improving maternity and neonatal
health services\.
Figure 3\.2\.6 Trends in neonatal mortality in Ghana according to wealth group
80
hst 70
bir Poorest 40%
veli 60 Middle 40%
0 Richest 20%
1,00 50
per
40
monthtsrfi 30
in 20
hs
at 10
De
0
1984-1988 1989-1993 1994-1998 1999-2003
Period
Note: DHS 1988, 1993, 1998, 2003; Hatt & Peters calculations
Bars indicate 95% confidence intervals\.
26
Childhood Malnutrition
For childhood malnutrition, the trends are very different for the different measures of malnutrition
(Figure 3\.2\.7)\. Stunting (low height-for-age) declined from 1988 to 1998, but increased in the
2003 survey (p<0\.05)\. Wasting (low weight-for-height), showed an opposite pattern, with
substantial improvements between 1998 and 2003 (p<0\.01), whereas underweight (low weight-
for-age) showed a more consistent linear improvement\. All three measures were strongly
associated with poverty\. Time trends in the prevalence of wasting showed that the large poverty
differentials of the early survey rounds were gone by 2003, as the bottom 80% of the population
enjoyed significant improvements from 1998 to 2003\. The reductions were much larger than
those made among the wealthiest quintile, and relative inequalities were eliminated\. Trends in
the prevalence of underweight showed significant reductions in all poverty groups (p< 0\.05), but
with slightly larger declines in the richer quintiles (so that relative inequality increased)\. However,
time trends show that there is no change in rates of stunting across poverty groups\.
Figure 3\.2\.7
Trends in prevalence of malnutrition among children under 3,
with 95% confidence intervals
Ghana DHS
35%
30%
25%
3
under
20%
Underweight
dren
Stunted
chil Wasted
of 15%
centreP
10%
5%
0%
1988 1993 1998 2003
Survey
Conclusions on Progress Towards Realizing the Vision
An overall assessment of Ghana's progress towards realizing its vision would give it a barely
passing grade\. Overall improvements in infant and under-five mortality have slowed down,
though most malnutrition indicators showed substantial improvements\. Yet inequities in mortality
for the poor and rural groups have been significantly reduced\. The majority of malnutrition
indicators show improvements for the poor and a reduction in relative inequality\. Most of the lost
ground in mortality is attributable to recent setbacks in neonatal survival, particularly for wealthy
and urban groups, and while raising questions about the validity of the mortality data and the
27
need for better measurement of results, it also prompts a need for more focused attention to
maternal and neonatal health\.
Achievement of Strategic Objectives
Strategy 1: Increase Access to Services
There are many definitions of access to health services, with most evaluators recognizing that
access is related to the timely use of services according to need (Campbell et al 2000; Peters et al
2007)\. In the POW-II, it is clear that access to health services includes utilization of services and
service coverage, and considers geographic, financial and sociocultural dimensions\. An
assessment of the sector wide indicators of health service coverage (Table 3\.2\.6) shows that there
has been little change in most of the general indicators, and the (arbitrary) targets have not been
met\. The results for the delivery of priority health services, however, showed substantial gains
and/or achievement of appropriate targets in most areas that were measured (see Annex 2 for
further details)\. There are also improvements in structural access to care, as demonstrated by
increased physician and nursing ratios, increased availability of drugs, and increases in functional
Community-based Health Planning and Services (CHPS) zones (though not reaching the
proposed target)\.
Table 3\.2\.6 Sector wide indicators of health service coverage
2001 2002 2003 2004 2005 2006 Target
General Service Coverage Indicators
Outpatient visits per 0\.49 0\.49 0\.5 0\.52 0\.53 0\.52 0\.6
capita
Hospital admission rates 34\.9 35\.3 36 34\.5 36\.5 32\.6 40
per 1,000 population
No\. of specialized 141 158 175 158 164 170 200
outreach services carried
out
Priority Service Coverage Indicators
Penta 3/ DPT3 coverage 76\.3 78\.0 76\.0 75\.0 85\.0 84\.2 80
(%)
Measles coverage (%) 82\.4 83\.7 79\.0 78\.0 83\.0 85\.1 80
Family planning acceptors 24\.9 21 22\.6 24\.3 22\.6 26\.8 40
(%)
Antenatal care coverage 98\.4 93\.7 91\.2 89\.2 88\.7 88\.4 70
(%)
Supervised deliveries (%) 50\.4 32\.0 55\.0 53\.4 54\.1 44\.5 60*
Postnatal care coverage 53\.6 55\.0 53\.3 52\.7 55\.9 65
(%) 52\.5
Structural Access Indicators
Doctor to population ratio 1:20,036 1:18,274 1:16,759 1:17,615 1:10,380 1:10,700 1:16,500
Nurse to population ratio 1:1,728 1:1,675 1:1,649 1:1,510 1:1,508 1:1,587 1:1,500
% Tracer drug availability 70\.0 85\.0 85\.0 87\.5 84\.7 73\.8 80
No\. of functional CHPS 19 39 55 84 186 \. 400
zones
*The target proposed in the PAD was 50%, with a baseline of 44%
28
There was little explicit monitoring of equity improvements in health services during the POW-II,
even though this was a key dimension of the strategy\. Data on immunization coverage and
outpatient visits for the years during POW-II was made available for analysis across Regions\.
This analysis demonstrates that equity in immunization coverage and health service delivery has
improved in disadvantaged regions (defined as Northern, Upper East, and Upper West Regions)\. 1
Immunization coverage for all five tracked vaccines (BCG, Measles, DPT3/Penta 3, OPV3, and
Yellow Fever) showed overall improvement in Ghana by the end of POW-II\. Immunization rates
of all five vaccines follow a very similar pattern of decreases in coverage from 2002 to 2003 and
then continuing to stagnate in 2004, followed by significant increases in coverage in 2005 and
2006 (Figure 3\.2\.8)\. The increase in coverage rates increased most noticeably between 2004 and
2005, but with significant improvements maintained in 2006\. When the data are aggregated by
regional groups, disadvantaged regions (Northern, Upper East, and Upper West Regions)
outperform the rest of the country (Greater Accra and the other regions) by statistically significant
differences every year between 2002 and 2006 (Figure 3\.2\.9)\.
Figure 3\.2\.8 National Immunization Coverage, All Regions, 2002-2006
105\.00
100\.00
Coverage (%) 95\.00
90\.00
BCG
85\.00
Measles
80\.00 DPT3
OPV3
75\.00
Yellow Fever
70\.00
65\.00
60\.00
2002 2003 2004 2005 2006
Year
1Central Region has also been considered a disadvantaged Region in some of the annual POWs\.
29
Figure 3\.2\.9 Measles Coverage by Region, 2002-2006
Coverage (%) 110\.00
100\.00
90\.00
80\.00
70\.00
60\.00
2002 2003 2004 2005 2006
Year
All other regions GAR
Northern, UE, UW Regions All regions (national average)
The patterns are more complicated for outpatient visits per capita\. Health worker strikes in late
2002 and all of 2003 stopped of almost all reporting of outpatient services in these years, making
interpretation of trends more difficult\. After adjusting for periods of missing data, outpatient per
capita appears to be increasing for some regions and is more variable in others (Figure 3\.2\.10)\. A
more rigorous tracking of staff attendance patterns and health service outpatient use in each
region would help to better assess whether there are changes in outpatient use across Regions\.
Figure 3\.2\.10
Outpatient Visits per Capita By Region,
2000-2006
ati 2\.0
caprep 1\.8 2000
1\.5 2001
sts 1\.3 2002
1\.0 2003
vitnei 0\.8 2004
0\.5 2005
atptuO0\.3 2006
0\.0
Western ntral cra foNortheUp
rn per Eastper West TION AL
Ceeater Ac Eastern Ashanti
Up NA
Gr Brong Aha
Region
30
Analyses of trends in disparities of health services by wealth group and Region were also
conducted using the Ghana Demographic and Health Surveys (DHS), which were conducted in
1988, 1993, 1998, and 2003\. The results show a number of improvements in access to services\.
For example, there were improvements in coverage in deprived Regions for skilled birth
attendance and family planning use, reducing the disparity gaps by improving at greater rates than
more advantaged Regions\. Improvements for the poorest groups of Ghanaians were also
achieved for: ORT use, ARI treatment, DPT3 coverage, antenatal care coverage, tetanus toxoid
vaccination, and family planning use, but not for skilled birth attendance\. In looking at time
trends for the poor compared to wealthier groups, the gap between rich and poor for use of ORT
had been eliminated by 2003\. There were also significant improvements in relative rates for
DPT3 coverage, antenatal care coverage, and tetanus toxoid vaccination coverage\. However,
wealth disparities in skilled birth attendance and family planning use actually increased\. More
details of these analyses will be available in the upcoming Country Status Report\.
Conclusions\. Weighing the range of information available on health service access, the overall
assessment is that a positive change has been made in overall access and equity of access during
the POW-II\. There has generally been an increase or maintenance of indicators for the
availability of health services across Ghana during the POW-II\. There is relatively little
information to assess changes in equity of service delivery, though the available data suggest that
there have been reductions in Regional disparities in access to some priority health services (e\.g\.
immunizations, skilled birth attendance and family planning), though in other areas the results are
less clear (e\.g\. outpatient and hospital use)\. When examining the changes in disparities for the
poor, it is also a largely positive, though mixed, picture\. There were improvements for most
services that were measurable (ORT use, DPT3 coverage, antenatal care coverage, and tetanus
toxoid vaccination coverage), but not for two others (skilled birth attendance and family planning
use)\.
Strategy 2: Improvement in Quality of Health Delivery
There are several ways to assess quality of health services\. The health status indicators described
above can be considered measures of quality of health services, though there are many other
factors that influence these outcomes, and so they are not good direct measures of the quality of
care\. Similarly, some of the structural measurements showing increased access to care, such as
increasing the number of doctors and nurses, can also be considered as improvements in quality
of services\. In this section, we consider the two sector-wide indicators that are most attributable
to the quality of clinical or public health service delivery (Table 3\.2\.7)\. The data indicate that
there was a high level of drug availability during the POW-II, with the target being achieved in all
years except 2006, and all showing an improvement over the baseline year\. Tuberculosis cure
rates steadily improved and achieved the stated target (a modest one by international standards) in
all years of the POW-II\. On this basis, the limited information that is available on quality of
health services at a sectoral level leaves a largely positive picture\.
Table 3\.2\.7 Sector wide indicators of quality of service delivery
2001 2002 2003 2004 2005 2006 Target
Tracer drug availability (%) 70\.0 85\.0 85\.0 87\.5 84\.7 73\.8 80
Tuberculosis cure rates (%) 44\.9 53\.8 63\.9 65 67\.6 \. 60
Despite the importance of quality of health services delivery, there is a lack of focus on strategies
for institutionalizing quality improvement\. For example, there was little attention paid to tracking
31
quality improvements at the sectoral level\. Although supervision and quality management
strategies did occur in the GHS, the work is not systematically documented or used as a basis for
changing strategies or re-allocating resources\. Given the central role of equity in the POW-II,
more attention to the Regional and wealth disparities in quality of health services should have
been part of the system for performance review of health services\. Overall, the strategy to
improving quality of health services likely made some positive gains during the POW-II, but it
was largely a lost opportunity that should have led to a more concerted effort and demonstration
of results\.
Strategy 3: Improvement in Efficiency of Health Service Delivery
There is really only one of the sector wide indicators that can be used to directly examine
efficiency of health services delivery, which is one measure of hospital efficiency (bed occupancy
rate)\. On its own, it is a limited indicator of efficiency, which has even less value when not
assessed by level of facility or Region\. As shown in Table 3\.2\.8, the overall levels appear to
decline in 2005 and 2006, and do not reach the 80% target in any year\. Even without data on
other hospital efficiency indicators, the low bed occupancy rates suggest that there are gross
problems with unused bed capacity in the hospital sector\.
Table 3\.2\.8 Sector wide indicator of efficiency of health services
2001 2002 2003 2004 2005 2006 Target
Bed occupancy rates (%) 61\.6 65\.5 64\.1 62\.7 58\.4 50\.9 80
A more rigorous assessment of health workforce productivity based on available data from 116
districts across Ghana and an index constructed from six types of inpatient, outpatient, and
outreach health services demonstrated that productivity decreased slightly between 2004 and
2006 (Vujicic et al 2006)\.
Indirect evidence concerning sectoral spending and health service outputs also suggest that there
have been efficiency losses during the POW-II\. Throughout the POW-II period, the overall
recurrent health budget has increased substantially\. This is largely attributable to significant
increases in the GHS wage bill, which has increased predominantly because of increases in
salaries, not from hiring more people\. However, during this time, there has not been a
concomitant increase in the number or quality of health service delivered the increases in health
services outputs have been very modest, with little evidence about changes in quality\. However,
without substantial increases in wages, it is also likely that "brain drain" and labor unrest would
have been worse than it was during the POW-II, and that there would have been even greater
losses in efficiency had there not been an increase in wages\.
Despite its place as a strategic pillar, there was relatively little attention placed on
institutionalizing assessment and decision-making related to efficiency concerns\. The expansion
of community services and delivery of priority interventions was hampered by lack of funding for
recurrent expenditures, including the reimbursement of exemptions\. Overall, the conclusion is
that there were major shortcomings in the strategy to improving efficiencies in health services
delivery\.
32
Strategy 4: Fostering Partnerships
Progress towards fostering partnerships has been less than planned\. There are no directly relevant
indicators used at the sector level or in the PAD to monitor progress for the activities described in
this area, which include partnerships with the private sector, empowerment of households and
communities, and collaboration across sectors\. The CHPS strategy was intended to empower
communities, though there are little demonstrable changes in empowerment\. A Patients' Charter
of Rights was passed into law and disseminated throughout the country\. This was accompanied
by a provider "Code of Conduct", which was intended to improve staff behavior\. Anecdotal
reports highlight increases in malpractice lawsuits and improvements in staff behavior\. Yet the
dissemination and education efforts of the charter and code of conduct were not sustained\. It is
difficult to assess how much effect they have had on consumer empowerment or on improving
quality, though it is unlikely to have much of an enduring effect without continued attention\.
It is useful to note that the strategic objective concerning partnerships also included partnerships
with development partners, which was not part of the description of the area of focus in the POW-
II (or project "component" see Annex 2)\. In dealing with development partners, there were
some clear successes in working through common management arrangements and continuing the
policy and planning dialogue of the SWAp\. Yet some development partners increasing moved
towards project management support with earmarked funding, including off-budget financing,
undermining the effectiveness of the SWAp partnership\.
A major strategic thrust of POW-II was to improve and establish formal commissioning
arrangements with non-governmental service providers\. Yet during the five-year POW-II, only
one Memorandum of Understanding was signed very late and with one umbrella group for
mission hospitals: the Christian Health Association of Ghana (CHAG)\. Very little progress was
made in engaging the non-governmental sector in health services provision during POW-II\.
Private sector facilities are still not accounted for during health sector planning or budgeting, nor
are they included in monitoring progress in the sector\. Although the GOG has long recognized the
value and importance of including the non-governmental sector into its dialogue, planning, and
monitoring processes, few actions have matched the rhetoric\.
Strategy 5: Improving Financing of the Health Sector
There were considerable accomplishments made in improving health financing during
implementation of the POW-II, with some significant shortcomings in making health financing
more equitable (see Table 3\.2\.9)\. The proportion of the GOG budget allocated to health has
doubled from 2001 to 2006, reaching the Abuja target2 of 15% in 2005 and surpassing it in 2006\.
The proportion of GOG allocations to health of total GOG public expenditure is slightly lower--
at about 13% in 2006\.
The proportion of GOG recurrent funds allocated to health has also increased from 2002-2006\.
This increase, however, is due in large part to increases instituted by the wage bill and dedicated
funding for personal emoluments\. Thus, the increase in the wage budget was not met with a
commensurate increase in the non-wage budget\. The GOG, therefore, has continually overspent
2 In 2001, African Union countries established the Abuja target of attaining a 15% of national budgets for
the health sector\.
33
on its capital and wage budgets, and under spent on its non-wage recurrent budgets-- to the
detriment of needed resources for delivering health services\.
Table 3\.2\.9\. Sector-wide health financing indicators
Indicators 2001 2002 2003 2004 2005 2006 Target
% GOG budget on health 8\.7 9\.3 9\.1 8\.2 15 18 15*
% GOG recurrent budget on 10\.2 11\.5 11\.2 11\.9 14\.5 14 15
health
% GOG recurrent health on 8\.1 5\.9 6\.9 5\.4 6\.6 7
non-salary items (2+3)
% spending on districts and 40\.9 35\.4 37\.9 36 40 43
below, items 2+3
% Earmarked / total DP 62\.3 32\.8 39\.5 26\.3 40 61 40
% IGF from pre-payment 3 10
schemes
% Recurrent funds from 1\.2 3\.1 2
GOG+HF allocated to CSOs
% Recurrent funds\. on 3\.6 8 2\.2 8
exemptions
Per capita expenditure on 6\.3 8\.1 10\.5 13\.5 19 25\.4
health (USD)
Source: Annual sector review, 2006\.
* Abuja target of 15%\.
Although the funding of exemptions for the poor and other priority groups was a priority for the
sector, this funding has been chronically insufficient throughout POW-II\. Exemptions funding
increased in 2005, partly as a result of the maternal exemptions policy which was implemented
nationally that year\. The policy was only partially implemented, however, when funds abruptly
ran out in the middle of the year\. Funding for exemptions has since dropped to 2\.2% in 2006\. The
National Health Insurance Scheme (NHIS) is expected to replace the exemption policy, but full
implementation of this arrangement will take time\. Enrollment for those in the "exempt" category
of the NHIS has surpassed expectations, yet there are delays and inconsistencies in obtaining full
coverage\. This transition may causes gaps in access to services for the poor and, therefore, may
ultimately negatively impact their health status\.
There is some evidence that equity in public financing health is improving slightly\. An analysis of
the Ghana Living Standards Surveys from 1991-92 to 2005-06 suggests that benefit incidence of
public spending at health clinics has improved to a point where it equally distributed across
income groups (Coulombe & Wodon 2007)\. However, the distribution of public spending at
hospitals has changed little, and still favors richer segments of the population\.
The introduction of the NHIS in 2003 was a landmark achievement for Ghana, which abolished
its "cash and carry" system, though it continues to exist in practice to varying degrees across the
country\. This financing modality creates new opportunities to leveraging institutional changes to
improve quality and productivity in health services in addition to improving financial protection
to impact access and equity\.
34
External financing for the health sector has recently changed, presenting several challenges that
the MOH must manage\. The Health Fund, which provided flexible funding to BMCs, has largely
disappeared, as more donors have moved to budget support or earmarked funding\. The loss of the
Health Fund means that BMCs have less flexibility in how they can spend their money, which
was reported to be a valuable tool for BMC managers to improve health service delivery\.
Similarly, donor funds have increased as a proportion of total funding, allowing national priority
health programs to be financed by unpredictable financing\. And finally, several donors have
shifted their support to general budget support, slowing and reducing the accessibility of funds for
the MOH from the MOFEP\. These challenges must be managed carefully in order to maintain
the progress made in health financing during the POW-II\.
3\.3 Efficiency
(Net Present Value/Economic Rate of Return, cost effectiveness, e\.g\., unit rate norms, least cost,
and comparisons; and Financial Rate of Return)
Overall, efficiency in the health sector was not well monitored despite being a strategic pillar of
the POW-II\. All the direct and indirect evidence available point to a deterioration of efficiency
during the POW-II (see Section 3\.2, Strategy 3)\.
Financial analysis in the PAD predicted that GOG financial contributions to the health sector
would increase from 7\.5% of its overall budget in 2001 to 8\.0% in 2006\. This target was below
the Abuja target of 15% of total Government spending on health, but was considered realistic
with budget constraints and health sector spending during project design\. Likewise, the GOG's
recurrent budget spent on health was expected to increase from 11% in 2001 to up to 13% in 2006\.
The Government of Ghana exceeded the financial targets set forth in the beginning of the project\.
In 2005 and 2006, about 15% and 18%, respectively, of the total Government budget (which
includes all expenditures) was spent on health\. Moreover, 14\.5% in 2005 and 14% in 2006 of the
recurrent budget was spent on health\. The Government increased its commitment to funding the
health sector in real financial terms, achieving the Abuja targets\.
3\.4 Justification of Overall Outcome Rating
(combining relevance, achievement of PDOs, and efficiency)
Rating: Moderately unsatisfactory
The Bank's evaluation criteria for the extent to which the operation's major relevant objectives
are achieved (or are expected to be achieved) involves a rating scale that is based on "weighing
possible shortcoming in the achievements of the operation's objectives, in its efficiency, or in its
relevance\." (OPCS 2007) The overall outcome rating is thus defined according to the degree of
shortcomings in these areas\.
Although the PDOs (the vision and strategic objectives of the POW-II) remain highly relevant to
the country's development and the Bank's country assistance strategy and overall corporate goals,
the weight of the evidence suggests that there were significant shortcomings in the operation's
achievement of its objectives, as well as in its efficiency, which is consistent with the Bank's
criteria for a moderately unsatisfactory rating\. The POW-II did, on balance, show greater success
than failure in progress towards its vision, largely because of equity gains in mortality and
malnutrition, as well as the overall improvements in malnutrition\. However, there was a slowing
down of reductions in the measured mortality indicators\. There were also substantial gains in
achieving it strategic objectives, such as in increasing access to priority services, reducing
35
inequalities in service delivery, and introducing a rapidly expanding NHIS\. However, there were
also significant shortcomings in efficiency, institutional reforms, and partnerships with the private
sector\. Other than the introduction of NHIS, where an assessment of results is premature, there
have also been significant shortcomings with the allocation and use of public funds for recurrent
and capital expenditures\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(if any, where not previously covered or to amplify discussion above)
(a) Poverty Impacts, Gender Aspects, and Social Development
Poverty and equity aspects are addressed in more detail in Sections 3\.2 and Annex 2 of this report,
since the POW-II clearly highlights its intention to improve geographic, poverty, and gender
disparities in health\. The available data indicate that there have been substantial improvements in
several measurements of equity in health outcomes, as well as improvements in equity of health
services\. However, management decision-making and the regular review of sector performance
did not incorporate sufficient attention to poverty and equity considerations -- none of the sector-
wide indicators of the POW-II focused on health equity, and incentives were not aligned with
improving health equity\.
(b) Institutional Change/Strengthening
(particularly with reference to impacts on longer-term capacity and institutional development)
The institutional conflict between the MOH and GHS had a major impact on the implementation
of the POW-II\. Both agencies sought to have authority over control of resources and decisions\.
As a result, the performance contracts, which was intended to be the major mechanism for
aligning incentives for improving service quality and productivity was undermined\. The same
approach for developing a more constructive and transparent relationship with non-state providers
also suffered as a result of the conflict between MOH and GHS\. The question of who had the
authority to spend on capital works became a major point of conflict between the MOH and GHS,
resulting in a loss of transparency in the selection of capital works\. In addition, the agencies set
up duplicated structures, which often appeared to be in competition with each other, and tended to
fragment efforts to develop more coherent approaches in human resources, quality assurance, and
partnerships\. Fortunately, as the POW-II ended, there appeared to be diminishment of the
conflict, though it's not clear that there is a long-term resolution\.
During POW-II, substantial achievements were still made in terms of developing mature financial
management systems, procurement systems, and decentralization\. The institutional capacity to
support decentralized BMCs in their planning, budgeting, and implementing their own work
programs remains strong, even if more could have been done if the GHS and MOH had worked
more synchronously\.
Perhaps one of the most important institutional accomplishments of POW-II is the establishment
of the National Health Insurance Scheme (NHIS)\. The NHIS, borne out of a law enacted in 2003,
has increased significantly in terms of size and scope over the past few years\. The NHIS has
demonstrated significant capacity early on, as enrollment has surpassed expectations and the
Scheme has tried to expand quickly to meet demand\. There are challenges to the Scheme's
success, mainly in achieving timely financial payments, ensuring exemption coverage, and
maintaining positive public opinion\. However, the institutional capacity development for the
NHIS is promising and is a significant achievement during POW-II, and promises a new way to
align incentives and performance in health service delivery\.
36
(c) Other Unintended Outcomes and Impacts (positive or negative)
One of the main purposes of the SWAp's "basket" funding (the Health Fund) was that the
Government would be able to set its own priorities by applying predictable, fungible, and
available funds to support the work of its budget and management centers (BMCs)\. However,
contrary to logic, as POW-II progressed, donor funding became more unpredictable and less
accessible to the health sector\. This phenomenon hinged on two occurrences: (a) donors moving
from the Health Fund to budget support; and (b) donors earmarking a greater proportion of their
funds for the health sector\. The shift to budget support, although in line with the principles of the
Paris Declaration, compromised the predictability and accessibility of funds to the health sector\.
In the long-term, the hope is the MOH and MOFEP will be able to work out their internal
processes to allow for predictable financing\. However, in the meantime, the health sector has
faced a huge shock as the Health Fund has been reduced drastically in size and more donors are
funding off-budget, earmarked programs\. Thus, one short-term impact of shifting to budget
support has been a reversion back to project-like funding\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
(optional for Core ICR, required for ILI, details in annexes)
Stakeholder workshops and a beneficiary survey were not carried out in preparation for this ICR\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
Diligent efforts will be required to ensure that the past gains made under the SWAp are not lost\.
The sector currently faces the following challenges that may jeopardize progress: (a) financing of
the health sector has become more complicated, both internally and externally; (b) scale-up of the
NHIS to nation-wide coverage may delay health services, particularly for the poor; (c) continued
failure to properly monitor human resources for health; and (d) decentralization of budgets to
district governments may cause fragmentation and confusion\.
Donor commitments have dropped off following the shift from pooling funds to budget support
and there are signs that the Government's execution rate is retarding as processes become more
complicated\. The shift by some donors to budget support has also been characterized by an
increase in earmarked funding\. As a result, the MOH has funded its national priority health
programs with earmarked funds, since this is one of the only ways to access such funding\. The
result is that Ghana's priority health programs are financed largely by unpredictable financing,
compromising their long-term viability\. BMCs were established and functioned well when using
flexible funds available through the Health Fund\. As the Health Fund has been replaced by funds
provided through the MOFEP, there is a risk that not having flexible funds available will
undermine the capacity of peripheral BMCs to manage resources and deliver services\.
In addition, it is not clear how the poor and the vulnerable will fair as the NHIS is rolled-out
nationwide\. There has already been concern that the scheme will not be financially viable enough
to cover those in exempt categories until about 50% of the country is enrolled\. While this
prediction may be a little pessimistic, there is still little evidence that the NHIS is having a
positive affect on improving access, quality, and equity in health services\. It will be critical to
monitor health service indicators among equity groups to determine the effect of the NHIS on
equitable distribution and access\.
37
The human resources for health crisis continues to plague Ghana\. With so much of the
Government's recurrent budget for health tied up in personal emoluments and salaries, there is
very little room for creating performance incentives for medical staff or further developing its
human resources strategy\. The Government needs to modify its human resources for health
performance indicators\. Staff to population ratios are insufficient indicators for monitoring human
resources as a whole\. The monitoring system needs to focus on new staff training rates, retention
rates, geographic distribution, and performance in terms of coverage, equity, and quality\.
Finally, the potential decentralization of budgets and financial management to district
governments may cause fragmentation in health financing and conflict over resources and
implementation responsibilities\. This could increase the potential conflict and duplication
between the MOH, GHS, local governments, and the NHIS\.
5\. Assessment of Bank and Borrower Performance
(relating to design, implementation and outcome issues)
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
(i\.e\., performance through lending phase)
Rating: Moderately unsatisfactory
The Bank's performance in ensuring quality at entry is rated moderately unsatisfactory\. Although
the Bank ensured that the project was strategically relevant, the Bank failed to conduct the
sufficient analysis and evaluation that could have contributed greatly to the design of the project\.
Nevertheless, the design of another sector-wide approach for this project was appropriate, given
the perceived success of the first SWAp and a strong donor contingency interested in supporting
further nationally-owned strategies and processes\. The financial and economic aspects of project
design were sound, with adequate consideration of the environmental and fiduciary aspects\.
Implementation arrangements were clearly stated in the PAD, with oversight of procurement
retained by the Bank\. In addition, a Memorandum of Understanding (MOU) that was signed by
the MOH and all cooperating partners in December 2002, built on the Common Management
Arrangement endorsed by all development partners in 2001\.
The Bank fell short in its analysis of institutions and their potential roles of contribution or
hindrance to achieving the objectives of POW-II\. More effort should have been spent evaluating
the policy and institutional interactions for implementation of POW-II\. Furthermore, and perhaps
most importantly, preparation for the HSPSP-II failed to adequately analyze and evaluate the
poverty differentials in terms of health status and access to health services\. Although a stated
priority in both the PAD and POW-II (in fact, equity is the centerpiece of POW-II's vision), the
Bank did not, at the time of project design nor thereafter, successfully evaluate or analyze how
differentials in health equity (geographic, financial, and sociocultural) were to be addressed\. This
is unfortunate, not only because improving equity was essential to achieving POW-II's vision, but
also because this is a key area where the Bank is well-positioned to contribute substantively\.
The Bank's inability to ensure that POW-II adequately addressed equity is evidenced in its
monitoring and evaluation system\. Mortality indicators were specified to include regional data to
indicate disparities; however, these data were largely unavailable and insensitive to annual sector-
wide changes or improvements\. Consequently, regional health disparities were mostly unreported
and therefore not available to inform sector dialogue or policy\. Similarly, a public expenditure
tracking survey was not conducted until the very end of the project, even though it was cited as a
38
needed exercise and could have been instrumental in informing resource allocation to improve
equity\.
The monitoring and evaluation system should have included sector-wide indicators that would be
direct measures of equity, and particularly to compare equity performance across functional units
of the sector\. In addition, the sector-wide indicators focused mostly on health outcomes and
service provision data, with insufficient measures of intermediate outcomes in terms of achieving
institutional change\. Thus, although implementation of the POW-II was very successful in
improving sector capacity and institutional change, particularly at district and regional levels,
monitoring and evaluation of the sector failed to capture these improvements\.
(b) Quality of Supervision
(including of fiduciary and safeguards policies)
Rating: Moderately satisfactory
The Bank's quality of supervision is rated as moderately satisfactory, because, on balance, there
were moderate shortcomings in the Bank's identification of opportunities and resolution of threats,
the basis for assessment on the Bank's rating scale\.
The Bank was noted for being a cooperative and supportive partner of the MOH throughout
implementation of POW-II\. Despite that development partners' discussions with the MOH had
become adversarial and contentious at times in the last few years of POW-II, the Bank was cited
time and again as maintaining a professional dialogue with the MOH to foster donor cooperation
and adherence to the principles of the SWAp\. The Bank benefited greatly from a greater presence
in the field when the TTL of the project was moved from Headquarters in Washington, DC to the
Ghana Country Office in order to establish much more fluid and frank discussion with the MOH
and development partners\. The Bank also closely cooperated with the Government in assessing
human resources productivity and the related fiscal constraints imposed by the Government's
policy decisions concerning the wage bill\.
Implementation of POW-II also benefited from the Bank's technical guidance on financial
management and procurement matters\. This technical support was a successful and meaningful
contribution to the MOH's implementation of the project and further developed institutional
capacity\. In addition, the Bank's candor and quality of performance reporting was high, through
the identification and explanation of some difficult and important issues during implementation of
the POW-II\.
The moderate shortcomings noted in the Bank's performance during implementation of POW-II
relate to the: (a) focus on development impact; and (b) adequacy of supervision of inputs and
processes\. The Bank consistently called attention to concerns over health outcomes, but tended to
be complacent about relying on national averages of health outcomes and service delivery rather
than more rigorously investigating concerns about health equity or variation in performance\. This
is problematic given that health disparities and performance monitoring were highlighted at
appraisal as areas where the Bank would focus its attention\. The reporting on the sector-wide
indicators was inadequate in terms of measuring equity (and efficiency), and the Bank was not
able to correct this despite the investigations it initiated into disparities in health towards the end
of the POW-II\. As a result, poverty differentials in health were not accounted for and resource
allocations were not changed accordingly\.
Despite raising issues of the capital investment plan with the Government, the Bank was unable
to successfully influence Government to follow through on its early efforts to prepare and
39
implement a capital investment plan that would reflect the priorities of the GPRS and the POW-II\.
Control over capital investment became a major point of contention between the MOH and GHS,
and donors seemed to use the conflict between agencies to create uncertainty and push their own
agendas\. The Bank had a crucial role to play in ensuring that the capital investment plan was
adequately based on priorities\. Instead, capital works spending between 2002 and 2005 was twice
the forecasted amount and there is little evidence that resources were well allocated to address
underlying poverty and efficiency problems\. Although the Bank was a major contributor to the
Health Fund, it is unclear how much leverage the Bank had over the implementation of the
overall capital investment program, though more might have been done in 2003 to 2005 to
independently investigate expenditures a potentially risky intervention\. A long-promised public
expenditure tracking survey would have helped in assessing both recurrent and capital
expenditures (it was conducted in 2007), though it's not clear that there was sufficient
cooperation to conduct it properly in early years\.
Finally, the Bank also stated its intention at appraisal to focus on improving access to quality
HIV/AIDS services\. It reasonably pursued this largely through the development and financing of
a separate HIV/AIDS project\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately unsatisfactory
The overall rating for the Bank's performance is rated as moderately unsatisfactory, based on the
guidelines used by the Bank\. The Bank's ratings guidelines state that when a rating for one
dimension of Bank performance is in the satisfactory range while the rating for the other
dimension is in the unsatisfactory range, the overall rating depends on the outcome rating\.
Because the outcome rating is in the unsatisfactory range, this overall rating is also on the
unsatisfactory side\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately satisfactory
The Government's performance is rated as moderately satisfactory\. In general, the Government
exemplified a strong commitment to achieving the POW-II's strategic development objectives,
surpassing the financing targets set out in the beginning of POW-II and instituting relevant
policies to improve the health sector (e\.g\., the wage bill and National Health Insurance Scheme)\.
Implementation of POW-II occurred shortly after a new Government came into power\. It was
notable that much of focus of POW-I remained unchanged, and the health sector was able to
proceed with its five-year strategic plan\. The Government also engaged with stakeholders and
development partners in SWAp discussions through annual Health Summits and other relevant
dialogue venues\. The Government could have expanded its consultations by including more civil
society and non-governmental providers into the sector dialogue\.
The Government created systems that facilitated implementation from fiduciary oversight to
transition arrangements\. The Government fell short in properly ensuring that processes were in
place and transitional arrangements were made to transfer funds from MOFEP to MOH when
donors, specifically the Bank, moved from the Health Fund to general budget support in 2006\.
However, this type of shortfall is not necessarily indicative of a long-term Government failure, as
such an experience should serve as an impetus for the MOFEP and MOH to work out their
internal processes to allow for predictable financing\.
40
The Government's performance faced moderate shortcomings in the design, implementation, and
utilization of monitoring and evaluation\. Although the Government set out to improve equity in
health, almost none of the indicators for the evaluation system measured equity\. Moreover, the
indicators failed to measure capacity indicators that could have served as milestones for
improving equity, such as certain measures for improved human resources capacity\. In addition,
the cornerstone of the Government's vision for its health sector was not evaluated appropriately
to inform policy and resource allocation\. The MOH often relied on the annual sector reviews to
aggregate and evaluate data, leaving the critical evaluation role of the Government out of the
equation\.
The Government maintained good relationships and coordination with some of its donors,
partners, and stakeholders, but not all\. Sector-wide dialogue sometimes excluded certain partners,
particularly those who were not contributing to the pooled Health Fund\. Discussions with partners
also became adversarial at times\. Nevertheless, the Government made adequate transition
arrangements to support the operation of activities after the Bank's credit and grant ended, as the
SWAp continues with the POW-III and a new POW for 2007\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately unsatisfactory
The rating is based on the overall assessment of significant shortcomings in implementing
agencies' performance, the standard used for Bank evaluation\.
The performance of the implementing agencies, the Ministry of Health and Ghana Health Service,
suffered due to their failure to be able to work together more coherently, which undermined
policy and implementation of the POW-II\. Following the re-launch of the GHS in 2003, the
MOH and GHS clashed repeatedly over which organization had the authority over many policy
and implementation decisions\. This resulted in a collapse of the intended approach to align
incentives and financing through performance agreements, and the intended approach to better
exploit the potential of the private sector\. Ultimately, this internal conflict diverted time and
resources away from the strategies set to achieve POW-II's objective, particularly at headquarters
and regional levels\.
In many other respects, the performance of the implementing agencies was appropriate for
implementing the POW-II\. The capabilities of the district level BMC's and the Regional offices
was instrumental in achieving modest improvements in service coverage and equity during the
POW-II, aside from periods of labor unrest\. Improvement in some management systems, such as
financial management and procurement of goods also improved over the POW-II\. The successful
introduction of the NHIS is also an important accomplishment from this period\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately unsatisfactory
The overall rating for Borrower performance is moderately unsatisfactory, based on the
guidelines used by the Bank\. The Bank's ratings guidelines state that when a rating for one
dimension of Borrower performance is in the satisfactory range while the rating for the other
dimension is in the unsatisfactory range, the overall rating depends on the outcome rating\.
Because the outcome rating is in the unsatisfactory range, this overall rating is also on the
unsatisfactory side\.
41
6\. Lessons Learned
(both project-specific and of wide general application)
With the completion of HSPSP-II's support to Ghana's health SWAp, reflection on its
achievements as well as weaknesses reveals several lessons\. One lesson is that a stronger analytic
base is needed even when things appear to be going well, as was the case when the HSPSP-II was
approved\. In-depth analysis and debate concerning equity of health services and outcomes,
efficiency of health services, and institutional analyses would have been particularly helpful in
anticipating problems and furthering the agenda set by the POW-II and the GPRS\.
It is also clear that donor behavior is critical to the success or failure of a SWAp\. Donors need to
be disciplined about their funding support to a sector and hold other donors accountable for their
actions\. Donors can easily revert back to earmarked, off-budget funding that compromises the
Government's attention to the SWAp's implementation and success, while tempting other donors
to follow suit and push for their own agendas as well\. Other development partners moved towards
budget support, which can also cause disruptions at the sectoral level\. Safeguards should be
instituted to ensure that shifts to general budget support are upheld by processes to ensure a
smooth transition in financing modalities\. Donor shifts to budget support are in line with the Paris
Declaration, however, countries need to be ready for this transition ahead of time to ensure that
the predictability of funds is not interrupted\.
There were also design flaws that were not well addressed during the POW-II, and the Bank's
conceptualization of investment lending helped to reinforce some of the design flaws\. In
particular, treating the long-term vision as a project development objective helped to change
expectations (that a set of investments and plans would lead to a set of measurable mortality
changes on a national scale during a project period)\. The dialogue between MOH and
development partners spent considerable time dealing with unmet expectations, even though the
results could not have been measured during the POW-II period, much less have been attributable
to the POW-II\. The artificial structure of components imposed by Bank documentation is unlikely
to have affected implementation of the program in a significant way, but it did not help to support
SWAp strategies or contribute to meaningful monitoring and evaluation\.
In Ghana's case, there was inordinate attention on results that were not under control of the health
sector, using a monitoring and evaluation system that was not sufficiently aligned with strategic
priorities, and so was not able to move further towards a performance-based health system\.
These factors can seriously undermine achievement of sector objectives\. Intermediate and long-
term outcomes need to be appropriately identified to properly measure progress towards
achievement of objectives and, if needed, respond and adjust to risks to those objectives\. It is
extremely difficult to improve and redirect policies and programs if they are not appropriately
measured and monitored\. In addition, the lack of valid, measurable progress underscores the need
to link financing with measurable performance targets to ensure timely and appropriate
monitoring and evaluation so that programs and policies may be adapted, as necessary\.
In Ghana, the problems were both technical and institutional\. Institutional competition and
overlap and the failure to resulting capture the contributions of the non-governmental sector are
issues that have both technical and political dimensions, and an area where outside facilitation
and input may be helpful\.
42
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
The Government prepared its own implementation completion report based largely on an analysis
of the independent review of the sector performance and additional interviews with key
stakeholders in government and development partners (see Annex 7 for details of the report)\. The
report describes a mixed picture in terms of achieving the intended objectives of the POW-II, as
identified by the changes in the sector-wide indicators\. Difficulties in managing the transition of
the MOH and its agencies are noted, along with considerable successes in developing common
management arrangements, and in the dialogue and support provided by the Bank\. The overall
conclusion is that Government merits a "pass mark" for the implementation of the POW-II, and
that there remain considerable challenges and optimism for addressing inequity and effectiveness
of the health sector in the future\. These findings and conclusions are consistent with the analysis
of this ICR\.
(b) Cofinanciers
No additional comments\.
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
No additional comments\.
43
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Estimate Actual/Latest
Components Percentage of
(USD millions) Estimate (USD
millions) Appraisal
YEAR 2002 7\.50 0\.00 0%
YEAR 2003 15\.00 0\.00 0%
YEAR 2004 20\.00 29\.97 150%
YEAR 2005 20\.00 59\.62 298%
YEAR 2006 27\.50 10\.62 38%
YEAR 2007 0\.00 0\.51 --
YEAR 2008 0\.00 0\.31 --
Total Baseline Cost 90\.0 101\.03 112%
Physical Contingencies 0\.00 0\.00 0\.00
Price Contingencies 0\.00 0\.00 0\.00
Total Project Costs 0\.00 0\.00
Project Preparation Fund 0\.00 0\.00 \.00
Front-end fee IBRD 0\.00 0\.00 \.00
Total Financing Required 0\.00 0\.00
(b) Financing
Appraisal Actual/Latest
Source of Funds Type of Estimate Estimate Percentage of
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower 638\.00 627\.19 98%
Local Communities 75\.00 70\.00 93%
International Development
Association (IDA) 57\.30 68\.40 119%
IDA GRANT FOR POOREST
COUNTRY 32\.30 38\.50 119%
FOREIGN SOURCES
(UNIDENTIFIED) 310\.40 253\.26 82%
44
Annex 2\. Outputs by Component
The Bank's evaluation structure requires an assessment of the outputs from a set of components,
even though this does not fit well with the design of the POW-II\. Although the overall vision,
goals, and strategic objectives of the program remained the same throughout, there are no
components described in the POW-II\. The PAD and the Development Financing Agreement
highlight ten areas of focus that are consistent with the ten chapters of the POW-II that follow the
strategic vision\. These areas are treated as components in the logical framework of the PAD\.
However, the PAD also identifies each year's program of work as a component when describing
the financing of the program\. Although the ten focus areas were identified as components in the
DFA description of the project, they were not formally revised, and were not treated as
components in the POW-II\. The description of focus areas changed substantially by the 2003
Program of Work, and continued to be modified annually\. To be consistent with the Bank's
evaluation methodology, outcomes and outputs of the program could be assessed according to the
five strategic pillars and the original ten focus areas of the DFA\. Since we have already
considered the strategic pillars in the context of the project development objective (Section 3\.2),
this annex focuses more specifically on the outputs of the ten original focus areas that can serve
as "components":
1\. Strengthening priority health interventions;
2\. Developing human resources for health services;
3\. Enhancing infrastructure and support services;
4\. Fostering partnerships for health;
5\. Improving regulation;
6\. Reforming institutions arrangements;
7\. Improving the health sector financing;
8\. Improving financial management systems;
9\. Further strengthening management; and
10\. Linking with traditional medicine\.
1) Strengthening priority health interventions
Priority health interventions were identified by the GOG as those having a direct impact on health
outcomes and improving health status\. Although the priority interventions change from year to
year, the original priority interventions that are monitored on a sector-wide basis include:
HIV prevention, treatment, and care
TB services
Malaria prevention
Maternity services (antenatal care, delivery, and post-natal care)
Childhood immunization
Family planning
Guinea worm eradication
Polio eradication
This component can be seen as being largely successful in producing targeted outputs\. As shown
in Table 1, targets were achieved in 2006 for five of the eight sector-wide output indicators
related to priority programs\. The results demonstrate that the high rates of immunization and
antenatal care that were achieved during the previous POW were sustained at even higher levels\.
The AFP rate suggests that the surveillance system was succeeding in helping Ghana fulfill
45
commitments for polio eradication\. The three indicators that did not reach their target are related
to pregnancy and delivery\. There was very little change in the family planning and post-natal
care coverage\.
Table 1: Sector wide outputs for priority interventions
2001 2002 2003 2004 2005 2006 Target
(Baseline)
Penta 3 coverage (%)* 76\.3 78\.0 76\.0 75\.0 85\.0 84\.2 80
Measles coverage (%) 82\.4 83\.7 79\.0 78\.0 83\.0 85\.1 80
Family planning acceptors (%) 24\.9 21 22\.6 24\.3 22\.6 26\.8 40
Antenatal care coverage (%) 98\.4 93\.7 91\.2 89\.2 88\.7 88\.4 70
Supervised deliveries (%) 50\.4 32\.0 55\.0 53\.4 54\.1 44\.5 60**
Postnatal care coverage (%) 52\.5 53\.6 55\.0 53\.3 52\.7 55\.9 65
Maternal deaths audited (%) 10\.0 84\.0 85\.0 55\.9 75\.6 52 50
Acute flaccid paralysis (AFP) 2\.8 1\.9 1\.3 1\.5 1\.68 1\.55 >1
non polio rate (%)
* DPT3 was replaced by Penta 3 vaccine in 2004
** The target proposed in the PAD was 50%, with a baseline of 44%
The case of supervised deliveries merits further attention\. As part of an effort to reduce maternal
mortality, much emphasis was placed on increasing supervised deliveries and audit maternal
deaths\. A policy was introduced in 2003 to exempt users from delivery fees in order to encourage
mothers (particularly the poor) to delivery at health facilities\. A review of the exemption policy in
2005 found that the policy proved successful in dramatically increasing the amount of women
delivering in health care facilities until the funds ran out, leading to facility indebtedness\.
Consequently, the 2006 exemption allocation was used to pay this debt, allowing for virtually no
funds to be available for the exemption program for deliveries (Witter & Adjei 2007)\. The results
in Table 1 suggest that higher levels were being achieved from 2003 to 2005 (surpassing the
original target of 50%)\.
Table 2 indicates the health outcome and impact indicators that are specifically related to priority
programs\. The targets for tuberculosis cure rates were met by the second year of the POW-II,
whereas the target to eliminate guinea worm during the POW was not achieved\. There seem to
have been program failures in specific parts of the country during 2003 and 2004, due in part to
local armed conflict and internal migration (the "Dagbon Crisis")\. Although the target was not
met, surveillance and control activities were mobilized to respond to these conditions, leading to
reduced levels in 2005 and 2006\. Interpretation of the other indicators is not as straightforward\.
HIV seroprevalence is not a good indicator of program performance, as the rate can increase if
patients are living longer due to treatment, or if people with HIV are more likely to be tested, both
indicators of successful programs (they can also decrease if people die)\. Prevalence can also
increase if more people are becoming infected, which is not a successful trend\. The under-five
malaria case fatality indicator did not have a target, and requires consistent case definition and
reporting\. Since most deaths do not occur in hospitals or where a definitive diagnosis can be
made, it is hard to tell whether changes in rates are related to reporting or to real differences\.
46
Table 2: Sector-wide health outcomes and impact indicators for priority interventions
2001 2002 2003 2004 2005 2006 Target
Tuberculosis cure rate (%) 44\.9 53\.8 63\.9 65 \. 67\.6 60
Guinea worm cases 4733 5545 8290 7275 3992 2968 0
HIV seroprevalence (%) 2\.9 3\.4 3\.6 3\.6 3\.1 2\.9 2\.6
Under five malaria case 1\.7 3\.7 3\.6 2\.7 2\.4 2\.7 n/a
fatality rate (%)
2) Developing human resources for health
A number of interventions to develop human resources for health (HRH) were implemented
during the POW-II\. However, a coherent human resources strategy was lacking, and the efforts
were not well linked to the strategic objectives to improve quality of services, responsiveness to
client needs, efficiency in service provision, improved financing, or to the vision of reducing
inequities\. The crude indicators used to demonstrate increased success in human resources
through tracking the numbers of doctors and nurses per capita were actually achieved (Table 3)\.
The HRH indicators proposed in the PAD were not used during the POW-II\.
Notwithstanding the achievement of the overall human resource targets in the sector program, it
is difficult to see if the increase in doctors and nurses has had positive effects in the strategic
areas of the POW-II\. The additional duty hour allowance (ADHA) put in place significant
financial incentives to retain staff in the public sector, yet these salary increases were not tied to
increased performance, whether measured as increased productivity or enhancement of service
quality\. They also did not appear to reduce geographic imbalances\. In addition, the deprived
area incentive allowance (DAIA), designed to improve equity in geographic access to health
workers, was only partially implemented, and could not be sustained\. By excluding some
categories of staff (e\.g\. accounts staff), it also seemed to build resentment among those who could
not benefit from the scheme\. Moreover, the ADHA, although successful in improving retention
of doctors and reducing health worker strikes that were particularly problematic in 2003, it has
also crippled the GOG health budget\. In 2005, almost 97% of GOG's health expenditures went to
salaries and ADHA, leaving the Government little flexibility to use the money for other purposes\.
Table 3: Sector-wide indicators on human resources
2001 2002 2003 2004 2005 2006 Target
Doctor to population ratio 1:20,036 1:18,274 1:16,759 1:17,615 1:10,380 1:10,700 1:16,500
Nurse to population ratio 1:1,728 1:1,675 1:1,649 1:1,510 1:1,508 1:1,587 1:1,500
3) Enhancing infrastructure and support services
An early effort was made to prepare a Capital Investment Plan (2002-2006) that would reflect the
priorities of the GPRS and the POW-II\. In addition to listing infrastructure projects, it outlined a
shift allocations in capital works so that 74\.8% of the expenditures would be made at district and
subdistrict levels, 8\.2% to the Regional level (especially to fund Regional training centers), and
17\.0% to the tertiary level\. It also addressed concerns about how to deal with the recurrent cost
implications of capital expenditures, and to improve the transparency in prioritization of sites and
procurement\.
47
Considerable infrastructure investments were made in constructing, rehabilitating and equipping
clinical and administrative facilities\. Other achievements included the enactment of the
Procurement Act to codify procurement procedures, the adoption of a health transport policy, and
application of procedures to the use of standardized designs and equipment lists for small
facilities for CHPS compounds, health centers and district hospitals\.
However, there was relatively little attention to monitoring the capital investment plan during
implementation of the POW-II\. Systematic records on capital investment across the sector are
not maintained\. There are no relevant indicators included in the sector wide indicators, and those
identified in the PAD were not used\. There are multiple sources of funding, increasingly
dependent on donor financing, and multiple authorizations\. It appears that about $204\.6 million
was actually spent on capital works compared to the original forecast of about $100\.8 million for
2002-2005\. About 68% of spending occurred at the district level and below from 2002-2005,
6\.7% at the Regional level, and 25\.2% at the tertiary level\.
The large spending at the district level and below reflect the large number of health centers and
health compounds that were built and rehabilitated\. The Community-based Health Planning and
Services (CHPS) strategy made significant progress in scaling-up from 19 functional CHPS zones
in 2001 to about 270 in 2005\. Much of the strategies achievements were related to completion of
infrastructure components, even as some zones lacked health workers, resources, or the
community involvement necessary to make them functional\.
The increase at the tertiary level represents funding of hospital and central administration of the
GHS\. The question of who had the authority to spend on capital works became a major point of
conflict between the GHS and the MOH, resulting in a loss of transparency in the selection of
capital works\.
In summary, although there was extensive investment in health infrastructure during the POW-II
and some improvements in policies and procedures, there remains no overall planning framework
and an inadequate monitoring system for capital investments\. The health sector is overdeveloping
facilities and equipment in some locations and under-investing in other areas\. Public sector
health facilities appear to have expanded beyond the limits of available operating funds and
staffing\.
4) Fostering partnerships for health
Although fostering partnerships is one of the strategic pillars of the POW-II, progress has been
less than planned\. There are no directly relevant indicators used at the sector level or in the PAD
to monitor progress for the activities described in this area, which include partnerships with the
private sector, empowerment of households and communities, and collaboration across sectors\.
The CHPS strategy was intended to empower communities, though there are little demonstrable
changes in empowerment\. A Patients' Charter of Rights was passed into law and disseminated
throughout the country, including campaigns to reduce "poor staff attitudes"\. This was
accompanied by a provider "Code of Conduct", which was intended to improve staff behavior\.
Anecdotal reports highlight increases in malpractice lawsuits and improvements in staff behavior\.
Yet the dissemination and education efforts of the charter and code of conduct were not sustained\.
It is difficult to assess how much effect they have had on consumer empowerment or on
improving quality, though it is unlikely to have much of an enduring effect without continued
attention\.
48
It is useful to note that the strategic objective concerning partnerships also included partnerships
with development partners, which was not part of the description of the focus area\. In dealing
with development partners, there were some clear successes in working through common
management arrangements and continuing the policy and planning dialogue of the SWAp\. Yet
some development partners increasing moved towards project management support with
earmarked funding, including off-budget financing, undermining the effectiveness of the SWAp
partnership (see section 3\.2 for further details)\.
A major strategic thrust of POW-II was to improve and establish formal commissioning
arrangements with non-governmental service providers\. Yet during the five-year POW-II, only
one Memorandum of Understanding was signed with the Christian Health Association of Ghana
(CHAG), an umbrella organization for mission hospitals\. This was another example of an area of
dispute between the GHS and the MOH, as both organizations felt that they had the authority and
responsibility to oversee such compacts\. Other initiatives, such as a "Strategic Initiatives Fund"
intended to bring together NGOs were labor intensive and small scale operations that did not get
beyond the pilot scale\. As a result, very little progress was made in engaging the non-
governmental sector in health services provision during POW-II\. Private sector facilities are still
not accounted for during health sector planning or budgeting, nor are they included in monitoring
progress in the sector\. Although the GOG has long recognized the value and importance of
including the non-governmental sector into its dialogue, planning, and monitoring processes, few
actions have matched the rhetoric\.
5) Improving regulation
The POW-II intended to increase consumer protection and empower and make statutory bodies
more accountable, and has been partially successful\. As described above, the Patient's Charter
and provider Code of Conduct seemed to have initial positive effects that have not been sustained\.
Wider regulatory reforms that are relevant to the health sector include the establishment of a
Commissioner for Human Rights and Administrative Justice, which hears complaints to protect
consumers, and the passing of a Procurement Act to improve the transparency in procurement
processes in the public sector\.
However, the MOH and the GHS were not very successful in introducing institutions to improve
the quality of health care, an important part of the POW-II strategies\. The National Health
Insurance Council (NHIC) has since established a process for accreditation of health facilities
which is needed to receive funds from the NHIF\. This includes a Council on Accreditation that
collaborates with the GHS and MOH\. This appears to be a promising development, but one that
was not planned as part of the POW-II, and has yet to demonstrate its effectiveness\.
6) Reforming institutional arrangements
This component was intended to complete the reorganization of the MOH and the GHS, and
implement the service agreements at all levels of the health sector\. This is an area that clearly
failed during the POW-II\. None of the proposed indicators in the PAD were used during the
POW-II, but in retrospect, many of the effects of the planned institutional reforms are clear\.
Probably the most successful institutional reform (though still evolving) involves the introduction
and expansion of the National Health Insurance Fund, which was not conceptualized as an
institutional reform in the POW-II\.
The GHS was re-launched in 2003 with renewed efforts to fully implement its legal charter to
manage the delivery of health services\. Yet institutional conflict and confusion between MOH
49
and GHS consumed much of the time and energy of staff at central level till the end of the POW-
II\. This conflict was manifest in poor communications, and conflict over the right to control
training institutions, contracts with service providers, and the procurement of civil works,
commodities, and technical assistance\. There were several attempts to mediate differences
between the GHS and MOH, usually with the ambition of agreeing on common interests and
clarifying roles, but these were not immediately successful\. Only as the POW-II ended did
relationships between the MOH and GHS begin to improve, but the effects of the conflict not
only distracted attention away from implementing the POW-II, but had longer term effects\.
Donors used the confusion between agencies to bypass the accountability of SWAp over
prioritization and financing, in order to push their own agendas\. As a result, more earmarked and
off-budget spending occurred, and many small projects with project units and special
relationships were created\.
Service agreements were not agreed at the central level between the MOH and the GHS, and at
lower levels, the service agreements were not backed up with resources or monitoring and so
were not maintained\. These service agreements became irrelevant to staff at lower levels, and
was reported to be a de-motivating factor\. As discussed above, only recently did service
agreements with NGO providers come into operation, and it is not clear what effect they have had\.
7) Improving the health sector financing
This area comprises the fifth strategic pillar of the POW-II, and is one where there were
considerable accomplishments throughout implementation of POW-II, with some significant
shortcomings in making health financing more equitable\. The POW-II identified four main
objectives for improvement in health financing: (i) to increase GOG health expenditures; (ii) to
enhance prepayment schemes and explore health insurance provisions; (iii) to rationalize and
implement a clear exemption policy; and (iv) to allocate resources according to health needs,
poverty, and gender needs\.
There were considerable accomplishments made in improving health financing during
implementation of the POW-II, with some significant shortcomings in making health financing
more equitable and efficient\. As shown in Table 4, the proportion of the GOG budget allocated to
health has doubled from 2001 to 2006, reaching the Abuja target of 15% in 2005 and 2006\.
However, this indicator requires careful interpretation\. The total allocation of GOG expenditures
on health includes donor, IGF, and statutory funds (the total allocation therefore includes private
contributions [IGF] and non-discretionary expenditures [e\.g\., NHIS])\. The proportion of GOG
allocations to health out of total GOG public expenditure is lower--about 13% in 2006\.
50
Table 4\. Sector-wide health financing indicators
Indicators 2001 2002 2003 2004 2005 2006 Target*
% GOG budget on health 8\.7 9\.3 9\.1 8\.2 15 18 15
% GOG recurrent budget on 10\.2 11\.5 11\.2 11\.9 14\.5 14
health
% GOG recurrent health on 8\.1 5\.9 6\.9 5\.4 6\.6 7
non-salary items (2+3)
% spending on districts and 40\.9 35\.4 37\.9 36 40
below, items 2+3
% Earmarked / total DP 62\.3 32\.8 39\.5 26\.3 40 61
% IGF from pre-payment 3
schemes
% Recurrent funds from 1\.2 3\.1
GOG+HF allocated to CSOs
% Recurrent funds\. on 3\.6 8 2\.2
exemptions
Per capita expenditure on 6\.3 8\.1 10\.5 13\.5 19 25\.4
health (USD)
Source: Annual sector review, 2006\.
* Abuja target of 15%\.
Although the proportion of GOG recurrent funds allocated to health has been increasing, this has
been largely due to the wage bill and dedicated funding for personal emoluments\. The proportion
of GOG recurrent health spending on non-salary items has wavered around 6%, with an increase
to 9% in 2006\. Thus, the observed increase in the wage budget has not been met with a
commensurate increase in the non-wage budget\. As a consequence, the GOG has continually
overspent on its capital and wage budgets, and under spent on its non-wage recurrent budgets,
compromising the delivery of health services\.
The decentralization strategy for health financing has met some challenges\. The proportion of
GOG expenditures at the district level has progressively declined from 2002\. This decline
indicates less financing at the district level to fill funding gaps, which are often a result of project
funding\. In addition, the decentralization of budgets has increased confusion in timely reporting,
auditing, and budget planning\.
There is an increasing trend of donors to move to off-budget and other earmarked (project)
funding, creating funding gaps at the district level and potentially causing inefficiencies and
inconsistencies among national health programs\. Figure 1 depicts this increase in donor
earmarked funding\. However, it is important to note that the percentage of donor funds measured
as a percentage of all donor funds may be falsely inflated as it does not include donor
contributions to multi-donor budget support\.
51
Figure 1\. Ghana Health Sector Funding by Source, 2002-2006
Ghana health sector funding, 2002-6, by source
6,000,000
NHIF
5,000,000 Project funding
) 4,000,000 Financial Credits
mn( HIPC
sid 3,000,000
IGF
Ce2,000,000 Donor earmarked
1,000,000 Donor HF
GOG
-
2002 2003 2004 2005 2006
Source: Annual sector review, 2006\.
IGF from prepayment schemes has not been easy to track in the past\. In 2006, for the first time, it
could have been used to distinguish those paying out of pocket from those benefiting from NHIS
membership\. Exemptions funding increased from 3\.6% in 2001 to 8% in 2005, partly as a result
of the maternal exemptions policy which was implemented nationally that year\. In 2006,
exemptions funding dropped to 2\.2%\.
There is some evidence that equity in public financing health is improving slightly\. An analysis of
the Ghana Living Standards Surveys from 1991-92 to 2005-06 suggests that benefit incidence of
public spending at health clinics has improved to a point where it equally distributed across
income groups (Coulombe & Wodon 2007)\. However, the distribution of public spending at
hospitals has changed little, and still favors richer segments of the population\.
The National Health Insurance Scheme (NHIS) is expected to replace the exemption policy, but
full implementation of this arrangement will take time\. Enrollment for those in the "exempt"
category of the NHIS has surpassed expectations, yet there are delays and inconsistencies in
obtaining full coverage\. This transition may causes gaps in access to services for the poor and,
therefore, may ultimately negatively impact their health status\.
The introduction of the NHIS in 2003 was a landmark achievement for Ghana, which abolished
its "cash and carry" system, though in practice it continues to exist to a varying degree in the
country\. The NHIS enacted substantial financial protection policies, and created a system that
would replace the often problematic exemption policy\. It also creates new opportunities to
leveraging institutional changes to improve quality and productivity in health services, which it
has initiated\. During this introduction phase, there have been significant delays in reimbursement
of claims, leading to cash flow problems to providers, and contributing to ad hoc and undesirable
patient charges, undisciplined expenditure controls, and threats to the trust required for the system
to work effectively\. One effect of the NHIS reimbursement is that funding is skewed toward
clinical services over preventive and public health services, and particularly to specialized
hospital services over peripheral primary care, which is not in line with the relative priorities of
the POW-II\. Another effect of the introduction of NHIS is the current confusion among service
52
providers regarding exemption policies and fee for services, such as fees for maternal deliveries,
which in many places are being determined on an ad hoc basis\.
There are several factors that are crucial to the health financing in the sector\. Government
spending has increased, though it has largely been consumed by increases in salaries rather than
numbers of staff, and it has not been linked to performance\. The Health Fund, which provided
flexible funding to BMCs, has largely disappeared, as more donors have moved to budget support
or earmarked funding\. The loss of the Health Fund means that BMCs have less flexibility in how
they can spend their money, which was reported to be a valuable tool for BMC managers to
improve health service delivery\. Finally, donor funds have increased as a proportion of total
funding, allowing national priority health programs to be financed by more unpredictable
financing\.
8) Improving financial management systems
There was significant progress in improving financing management systems during POW-II in
terms of planning, budgeting, and financial management\. Much of this happened as a result of
using the Health Fund\. The Health Fund was initially established with blessing of MOFEP to
help establish new financial management systems and to enhance accountability\. This may have
developed capacity at BMCs and accountability within the Health Fund, but there was no transfer
to the regular system itself\. As financing of the Health Fund has been cut back, there is a reliance
on the procedures of the MOFEP\. These procedures have proved more cumbersome and less
flexible than the Health Fund, this arrangement poses a significant risk to timely and full
disbursement of funds for the health sector\.
District level financial management was achieved with Budget Management Centers (BMCs) that
operated service planning, non-staff budgeting, and procurement\. Continuing challenges remain,
however, in decentralizing human resources budgets, timely and predictable disbursements, and
moving to resource-based budgeting\. The further decentralization of BMCs from the district to
sub-district level has not really occurred in practice\. Although independent auditors assess each
of the BMCs, there remains a need to assess how all funds are being spent\. The proposed public
expenditure tracking survey was not conducted during the POW-II (it was conducted in 2007),
even though it was frequently cited as a needed exercise\.
9) Further strengthening management
This area of work was intended to improve information systems and performance monitoring,
build capacity for contract management, operational research, and use of information technology\.
There were no indicators in the POW-II or the PAD that are directly related to these activities,
and there is sparse documentation concerning these activities\.
Performance contracts implemented at the Regional and District levels were used in an effort to
strengthen management capacity for several years\. These contracts were largely inconsequential
since the sector lacked the ability to finance the contracts\. There is some evidence of
performance indicator development, and some Regions began creating League tables to evaluate
district performance\. This evaluation tool allowed for resource allocation to respond to need
and/or performance--that is, to provide necessary funds for improvement and/or reward good
performance\.
Although operational research has not played a major role in the dialogue surrounding sector
performance, there has been substantial operational research conducted during the POW-II\. A
53
systematic review all the operational research conducted in the Ghana health sector during the
POW-II is beyond the scope of the ICR, but there are at least three well done studies that are
particularly relevant to the POW-II strategies and merit much greater attention: (1) Nyonator et al
(2006) concerning the successes and limitations of scaling up CHPS; (2) Binka et al (2007)
concerning the effects of a trial of placing nurse and volunteers on reducing child mortality in
Navrongo; and (3) Witter & Ajei (2007) on the unintended effects of inconsistent application of
exemptions for delivery care\.
10) Linking with traditional medicine
It is apparent that this was not a priority area for action during the POW-II\. There were no
substantial resources allocated for traditional medicine, no sector wide indicators to monitor this
area, and the proposed indicators of the PAD were not monitored in the SWAp\. There were,
however, activities to assist in the development of training in traditional medicine and clinical
trials of traditional medicines\.
Conclusions
In considering an overall evaluation of the "component" outputs, it is important to realize that not
all ten areas are equally important\. Indeed, they were never formulated as project components in
the POW-II, and were only treated as such by the Bank to fit the documentation requirements of
the PAD and the ICR\. Some of these areas never received sufficient attention to be given sector-
wide indicators (areas 3, 4, 5, 6, 9, 10)\. Some of the initial focus areas were not carried through
as priorities after the first year, as changes in activities focus was intended to be part of the design
of the POW-II\. In terms of contributing to strategic objectives and vision of the sector, there are
some areas, such as the delivery of priority services (area 1), improving financing of the sector (7),
and fostering partnerships (4), which are directly relevant\. Developing human resources (2) and
reforming organizational arrangements (6) also consume large parts of the funding and effort of
the SWAp, and are important contributors to the strategic objectives and vision\. In examining the
outputs in these five areas, the picture is one of qualified success in health service delivery\. The
introduction of the NHIS is important both to sector financing and reforming organizational
arrangements\. However, this success is mixed with some clear failures in reforming
organizational arrangements of the GHS and MOH, and although there are some successes in
increasing numbers and retaining human resources, little success in demonstrating improvements
in their productivity or effects on equity\.
54
Annex 3\. Economic and Financial Analysis
(including assumptions in the analysis)
There was a limited economic and financial analysis of the program completed at the
time of appraisal\. No NPV, economic or financial rate of return was calculated a priori
for the project, and no analyses are available to assess them as economic or financial
results\. An analysis of the financing, efficiency, and equity effects of the program are
described in Sections 3\.2, 3\.3, and Annex 2\.
55
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Supervision/ICR
Ferdinand Tsri Apronti Procurement Spec\. AFTPC
Sylvester Kofi Awanyo Sr Procurement Spec\. EAPCO
Evelyn Awittor Operations Officer AFTH2
Aissatou Chipkaou Senior Program Assistant AFTH2
Adriana M\. Da Cunha Costa Language Program Assistant AFTH2
Gregoria Dawson-Amoah Program Assistant AFCW1
Manush A\. Hristov Counsel LEGAF
Karen Alexandra Hudes Sr Counsel LEGKM
Bernhard H\. Liese Consultant AFTH2
Johan Mathisen Consultant AFTP4
Mbuba Mbungu Sr Procurement Spec\. AFTPC
Jonathan Nyamukapa Sr Financial Management Specia AFTFM
Alexander S\. Preker Lead Economist, Health AFTH2
Marko Vujicic Economist (Health) HDNHE
Frederick Yankey Sr Financial Management Specia AFTFM
David Peters Sr\. Public Health Specialist HDNHE ICR
Jessica St\. John Junior Professional Associate HDNHE ICR
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY01 6 41\.14
FY02 31 123\.79
FY03 35 176\.46
FY04 0\.00
FY05 0\.00
FY06 0\.00
FY07 0\.00
Total: 72 341\.39
Supervision/ICR
FY01 0\.00
FY02 0\.00
FY03 9 41\.71
FY04 39 123\.51
FY05 44 142\.61
FY06 26 100\.97
FY07 23 60\.63
Total: 141 469\.43
56
Annex 5\. Beneficiary Survey Results
(if any)
No beneficiary survey was conducted\.
57
Annex 6\. Stakeholder Workshop Report and Results
(if any)
Stakeholders were interviewed during the ICR mission and their comments were
incorporated into the main text of the ICR report\. No stakeholder workshop was
conducted\.
58
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
1\.0 Introduction
The report is the Ministry of Health's contribution to the Interim Country Report (ICR) prepared
the World Bank\. ICR is assessed the implementation of the POW II/ HSPSP II which was
implemented from 2002 2006\. The first section looks at the background to the assignment and
this is followed by the performance outcome of the programme\. The next section looks at the
challenges and areas of concern and finally the conclusion\.
1\.1 Background
As part of the Health Sector Program Support Project (HSPSP) II, which closed on June 30, 2007,
the Bank and the Government of Ghana (GOG) are required to jointly evaluate the HSPSP-II, as
is the case for all completed lending operations\.
Since the HSPSP-II project is designed to support the Ministry of Health's 2002-2006 Program of
Work II (POW-II), the evaluation is organized around the POW-II\. The vision of the POW-II;
"to improve the health status of the population while reducing the geographical, socio-economic
and gender inequalities of health outcomes", was used in articulating the HSPSP-II project
development objectives\. The HSPSP-II also incorporated the sector-wide strategies and
performance indicators used in the POW-II, which were reviewed and updated on annual basis
during the implementation of the POW II/HSPSP-II\.
1\.1\.1 Objectives
The main objective of this evaluation assignment will be to assess performance in the
implementation of the recently completed Health Sector Program Support Project II\. In specific
terms, this assignment seeks to find out the following:
The extent to which the major objectives of the HSPSP-II were achieved, along with other
significant outcomes of the POW-II and prospects for sustainability
GOG (Borrower) performance; and
Bank performance and that of other co-financiers of the program\.
The evaluation report will also as much as possible, provide data and analyses to substantiate
assessments made, including the views of GOG and co-financiers of the POW-II on
implementation and results, highlighting lessons learnt\.
1\.1\.2 Scope of work
Areas to include in the evaluation of the HSPSP-II include:
1\. The development impact of the HSPSP-II and the specific questions to be answered in
this evaluation report are;
What is the extent to which the major objectives were achieved (or expected to be
achieved), are they still relevant, and were they achieved efficiently?
What are the risks that the development objectives will not be achieved or maintained,
and what is the potential impact if these risks materialize?
59
What are the important factors that played a role in the achievement of the
development objectives?
2\. The effectiveness of GOG and the MOH in preparing, implementing, monitoring and
evaluating the POW-II\. The specific questions to answer in this regards are;
What is the extent to which GOG ensured quality of preparation, implementation,
monitoring and evaluation of the POW-II?
How well the GOG complied with all the covenants and agreements of the
Development Financing Agreement toward the achievement of development
outcomes?
How effective were the key strategies developed and implemented during the POW-
II? Were the organization and management arrangements effective? Could the
constraints have been recognized and solved earlier?
3\. The appropriateness of Bank assistance
The extent to which services provided by the Bank ensured quality at entry and
supported effective implementation through appropriate supervision toward
achievement of development outcomes
The attention to fiduciary responsibilities and safeguards, including procurement
reviews, disbursements, review of budget and expenditure information and audits,
environmental impact assessments, monitoring of progress of key indicators and
attention to results
1\.1\.3 Methodology
To achieve the objectives of the assignment a literature survey methodology in addition to
interviews with key stakeholders was adopted\. Concerning the literature survey, several
documents specific to the assignment were reviewed (list can be found in the list of
references)\.This was done to find background information as well as the relevant information to
measure performance\. In addition to this, the opinion of 4 key stakeholders were also sought
(health economist at the country office of the World Bank in Ghana, the country lead of health
sector development partners in Ghana and one official each from finance and procurement unit of
MOH respectively)\. Names of specific individuals are attached at the end of the report\.
2\.0 Programme Outcome
This section of the report looks at the implementation outcome of the Health Sector Programme
Support Project (HSPSP) via the POW II\. Specifically the issues looked at include the
development impact of HSPSP, the effectiveness of GOG/MOH in implementing the POW II and
the appropriateness of the Bank's assistance\.
2\.1 Development Impact of HSPSP II
The overall development objective of the POW-II was to improve the health status of the
population while reducing the geographical, socioeconomic and gender inequalities in health
outcomes\. The pursuance of this objective is based on several reasons; lessons learnt from the
implementation of the first five year medium-term health strategy; POW I, the Ghana Poverty
Reduction Strategy (GPRS) and the Millennium Development Goals (MDGs)\.
60
These as well as government's own priority areas concerning health informed the strategic
objectives that were set for the POW II\. The development objectives include;
1) Increase Assess (concern was on increasing geographical, financial as well as socio-
cultural access)\.
2) Improve Quality (improving health worker performance, and improving response to
client needs)\.
3) Improve Efficiency (ensuring cost effectiveness, improving planning, management and
administration)
4) Improve partnership and collaborations (concerned with improving partnership with
households and community, private and public sector providers, ministries, departments
and agencies as well as expanding relations with development partners)
5) Improve financing for the health sector (focus on reducing budgetary burden of
healthcare for the poor and increase public expenditure on the poor and vulnerable)\.
Various strategies were pursued in the course of implementation to achieve programme
targets of the development objectives of the POWW II\. The issues discussed in this section
focuses on the extent of achievement of the development objectives of the POW II, risk that
could other wise have imposed some limitations on the achievement of the development
objectives as well as the factors that engineered the current level of success\.
2\.1\.1 Extent of Achievement of development objectives
Though baseline indicators and targets existed in the Project Assessment Document (PAD), that
was as at 2001 and so in determining the extent of achievement, data from the report of the
independent reviewers as at 2006 was used\. The rational being that, it gives data that coincide
with the programme period (2002 2006)\. Data used for the analysis of the development impact
of HSPSP II is contained in table 1 in annex 1\. The table analyses performance by looking at the
level of change and the extent of achievement of the target set for the five broad objectives of the
HSPSP II; (Health status, Access, Quality, Efficiency, Partnership and Financing)\. It is also
important to state that these are basically the same as the development objectives that were
outlined in the POW II and supported by the World Bank through HSPSP II\.
Health Status
As part of the objectives of the POW II/HSPSP II was the improvement of health status of the
Ghanaian population\. To measure improvements, four development indicators were defined;
infant, under-five and maternal mortality as well as under-five that are malnourished\. From the
data:
Infant and under-five mortality deteriorated below the baseline by 25% and 2\.7% respectively
over the programme period\.
Under-five who are malnourished (U-5MC) however improved by 28% over the baseline and
exceeded the programme target by 40%\.
Unfortunately data is currently not available for maternal mortality to be able to measure
performance\.
Access to Healthcare
Another objective of POW II/HSPSP II was improvements in access to healthcare\. The PAD
contains several indicators for tracking improvement in access to healthcare; population to doctor
ratio (PDR), population to nurse ratio (PNR), out-patient visit per capita (OVC) and number of
specialist outreach carried out (NSC)\.
61
In terms of performance, all the indicators with the exception of hospital admission rate
(deterioration of 6\.6% below baseline) recorded positive changes based on base line data\.
Amongst the five, the most significant was the doctor patient ratio that recorded about 41\.4%
improvement over the baseline with the programme target being exceeded by 327%\. Though the
other indicators recorded improvement, they were all 50% or less of the programme target\.
Quality Improvements
Amongst the development objectives of POW II/HSPSP II was improvement in the quality of
service\. The indicators for measuring quality improvements include; case fatality rate of malaria
for under-five (UCFRM), Availability of tracer drugs (ATD) and maternal audits to maternal
deaths (MAMD)\.
In all, the indicators recorded improvements with the exception of availability of tracer drugs
(13% below the baseline)\. The data suggest that in spite of the improvements in the other two
indicators, MOH could not meet the programme target\. The output constituted 59%, 94%, of the
programme target for UCFRM and MAMD respectively\.
Efficiency Improvements
Another critical area that the POW II sought to address is the issue of efficiency\. To measure
efficiency improvements some indicators were selected; (HIV/AIDS prevalence rate, TB cure rate,
Number of guinea worm cases, ANC coverage, PNC coverage, Supervised deliveries, EPI
coverage; that is DPT3 and measles coverage, Bed occupancy rate, Family planning acceptors
and AFP non polio rate\. TB cure rate exceeded the programme target by 65% with two of the
indicators deteriorating below the baseline (ANC coverage, 5\.6% and Bed occupancy, 22%)\. The
rest all recorded improvement from the base but unable to achieve the programme target\. With
the exception of HIV/AIDS prevalence which achieved 62% of the target the rest were all below
46% of the programme target\.
Partnerships
The POW II also sought to stimulate the level of partnerships especially between the public and
private health sector\. This was expected to be measured by one indicator, which is the percentage
of re-current budget of GOG and health fund used by the private sector, NGOs CSOs and MDAs\.
Unfortunately, data does not exist currently to be able to measure this indicator
Financing
The fifth and final objective of POW II was aimed at improving financing to the sector by
focusing on reducing budgetary burden of healthcare for the poor and increase public expenditure
on the poor and vulnerable\. To measure the performance of MOH in achieving this objective, six
indicators were put forth with three (% of GOG budget spent on health, % of GOG re-current
budget spent on health and % of donor funds earmarked) being discussed in this report because
data is not available for the remaining three\. All the three indicators recorded improvements over
the baseline with the most significant being % of GOG budget spent on health (93\.5% increase
over the baseline and exceeding programme target by 53%)\. The remaining two, though exceeded
the baseline (% of GOG re-current budget spent on health, 21\.7% and % of donor funds
earmarked, 2\.1%), they were still below the programme target by 29% and 94% respectively\.
Overall Programme Outcome
The figures contained in the analysis suggest that MOH/GOG has performed above average in-
terms of the outputs recorded for the POW II/HSPSP II\. Responses from stakeholders during the
62
interview session, also creates the impression that performance is satisfactory\. For instance,
representatives of two DPs scored the performance of MOH/GOG in the implementation of the
POWII/HSPSP II at 3\.5 on a scale of 1 to 5 with one being the lowest and five being the highest\.
Not withstanding the above, it is also important that the current figures are interpreted with
caution\. This is because the Ministry is still confronted with numerous challenges in dealing with
a couple of the development objectives of POW II\. For instances technical presentations at the
just ended annual MOH summit revealed serious issues that border on quality of service at the
institutional level\. Additionally, the issue of productivity and efficiency is another, which the
interview respondent perceived to be very low in the health sector\.
It may be premature to use these perceptions to invalidate the picture painted by the indicators\.
Probably, a higher-level analytical work may be needed to establish very reliable levels of
productivity and efficiency in the sector\. Again, it appears that some of the indicators were
computed from facility level data with it attendant errors and biases and thus could be confusing\.
Perhaps the 2008 demographic and health survey may give a better picture\. Notwithstanding the
caution raised, the general thinking among stakeholders is that MOH/GOG performed creditably
in executing the POW II\.
2\.1\.2 Programme Risk
As part of its programme appraisal practice, the World Bank carried out a pre-implementation
appraisal and identified about 10 risk factors which they believed at the time posed substantial
3
risk to the achievement of the development objectives of the POW II\. With the benefit of
hindsight, one cannot but agree with those who did the appraisal that the issues raised could
easily constrain the achievement of the development objectives of the POW II\.
However, MOH/GOG may have done it work well such that the issues raised could not pose the
kind of risk that was anticipated\. For instance, the first two risks identified included government
commitment and support to the health sector\. In the analysis section, it is realised that
government demonstrated tremendous commitment to the sector by even exceeding the target set
in-terms of GOG spending to health\.
Other areas raised include financial and procurement management, the brain drain and staff
attrition and the sector re-organisation\. Interview responses suggest that in the area of financial
and procurement management programmes were introduced to build the relevant capacity\. The
analysis also shows that MOH/GOG exceeded it target for the population to doctor ratio,
suggesting that significant work was done in this area to reduce the brain drain phenomenon\.
Perhaps the only area some respondent anecdotally believed constituted a risk and possibly
slowed the implementation process was the MOH/GHS split\.
2\.1\.3 Programme Success Factors
Respondents of the interview as well as stakeholders in the health sector in general are unanimous
in their conviction that the singular most crucial success factor to the implementation of the POW
II is the implementation of the National Health Insurance Scheme (NHIS)\. To them evidence
exist that the implementation of NHIS has increased access and that coverage for the poor has
3 In the project appraisal document page 36 and 37
63
improved\. Not withstanding the above, the analysis on the management of the anticipated risk
also seem to suggest that, GOG's commitment in terms of resource allocation to the sector, the
commitment of both MOH and DPs to improve on the financial and procurement management of
the sector\. Also, strategies to address the brain drain and related human resources crisis, might
have all worked together to reduce the impact of risk factors identified and therefore made way
for a greater level of success\. However, it has also increased the wage bill beyond what is
affordable under the budget\.
It is also important to note that the influence of the donor group at the MDBS forum at the
national level could also be responsible for the level of success since at that level they are able to
engage the government on allocation of resources to the health sector\. Finally, there is also the
thinking that the alignment of MOH planning process with the government's budget cycle, as
well as consultation with civil society to guide the policy development process, from a curative to
preventive approach may have also contributed immensely to the current level of success\.
2\.2 Effectiveness of GOG/MOH in POW II Implementation
This section looks at the effectiveness of GOG/MOH in the preparation of the POW II, its
implementation, monitoring and evaluation\. The specific questions answered in this section
includes the quality of work done by GOG/MOH with respect to the preparation implementation,
monitoring and evaluation of the POW II, the level of compliance with covenant agreements and
finally the effectiveness of key strategies pursued as well as the CMA\.
2\.2\.1 Quality of the POW II implementation process
The MOH is responsible for the preparation of the 5YPOW as well as the Annual Programs of
Work (APOW)\. Preparation is done through broad stakeholder consultation to solicit inputs from
agencies of the MOH, DPs CSOs, NGOs etc\. Additionally the annual health summit which has
broad stakeholder representation is also used as a forum to thoroughly discuss the POW before
finalization\. It is also said that in recent times the parliamentary sub-committee on health is also
engaged in the process by meeting MOH to discuss the health budget\.
Implementation of the POW is the responsibility of the different agencies of MOH in addition to
the private sector\. The effectiveness of these bodies in implementing the POW can in general be
viewed from the performance of GOG/MOH as depicted by the indicators\. The results are clear
that good improvements have been made, notwithstanding the fact that the sector still faces some
challenges\.
In the area of monitoring and evaluation MOH carries out it own monitoring as well as joint
monitoring exercises with DPs\. Additionally the performance of MOH is reviewed every year by
the MOH and independent external reviewers, whose reports are made public and also discussed
by MOH and DPs and other stakeholders in different fora especially the health summit\. There is
also the belief among some of the respondents that, the quality of plans, it implementation and
monitoring was initially affected by the MOH/GHS split\. However, the current thinking is that
the situation has improved\.
2\.2\.2 Compliance with agreements
The covenants and agreements relating to development financing provided to GOG/MOH from
the Bank and other Partners include MOH maintaining financial management systems that are
acceptable, preparing budgets and financial reports on a timely basis\. Not much information was
64
found with this issue but at least available information suggests that GOG/MOH has duly
discharged it obligations\.
2\.2\.3 Effectiveness of key strategies and CMA
To achieve it development objectives, the POW II pursued different set of strategies\. As to
whether these strategies have been effective or not, can best be answered by the output indicators
recorded\. The table in annex 1 shows that about 26 indicators were measured\. On rate of
effectiveness of GOG/MOH in executing the POW II, 4 (% of U-5 malnourished, Population to
doctor ratio, TB cure rate and % of GOG budget spent on health) out of the 26 indicators had
their targets exceeded, 17 recorded improvement over the baseline without achieving the set
target with 7 of them deteriorating below the baseline\.
The details of the individual indicators can be checked from the table\. It is important to note that
this can only be a preliminary means of assessing the effectiveness of GOG/MOH\. It will
however be appropriate that a more detailed analytical work is done to ascertain the real level of
effectiveness\.
Another crucial area very relevant to the effectiveness assessment is the implementation of the
management arrangement that accompanied the POW II (Common Management Arrangement,
CMA)\. The performance of GOG/MOH in implementing or adhering to the issues in the CMA
has been reviewed and the findings contained in the CMA review report as well as the report of
the external review team\. In both reports, the common issues that were flagged for attention
include;
1\. Role difficulties between MOH and some of it agencies especially the GHS, which is
believed to be the result of the poor management of the transition process (i\.e\. resulting from
the split between the MOH and GHS)
2\. The capacity of MOH to perform it supervisory duties in respect of it agencies;
a\. Coordinating the work of the various agencies
b\. Performance monitoring and evaluation\. In this regard one of the issues raised in
both reports is the inability of MOH to sign performance agreements with the
agencies as a basis for evaluating their performance
3\. Other areas of challenge in addition to the above raised by the CMA review report boarders
on poor coordination of earmark funds and delays in the preparation and submission of
financial reports at all levels\.
On the whole the review team of the CMA was of the view that not withstanding the above
challenges the management arrangements that accompanied the POW II was implemented by the
MOH\. As to whether the challenges observed above, could have been recognized earlier and
resolved is a fairly difficult question to answer\.
The last two issues are those that MOH has been dealing with for a long time and therefore may
seem normal to expect the Ministry to excel in them\. However the first issue; management of the
transition process (which seem to be mentioned in several reports) is fairly a difficult one\.
Evidence in many of the reports that capture this issue seem to suggest that the issue of role
definition is quite clear on "paper", however the difficulty has been with the way the actors have
interpreted what is written\. Perhaps one may not be wrong to admit that all the challenges have
served as a good learning experience for the Ministry and it agencies, of course this being the first
65
time in Ghana\. That none of the actors in "the drama" regret it because it has opened up new
opportunities to cooperate and in commitment push the agenda of the sector forward\.
2\.3 The Appropriateness of Bank Assistance
The bank has had a long standing relationship with GOG/MOH in-terms of it assistance to the
sector both financial and technical\. In this part of the report, the importance of the assistance
offered GOG/MOH in implementing POW II as well as the commitment of the bank in honoring
it fiduciary responsibility is assessed\.
2\.3\.1 The importance of Bank's assistance
Evidence from the financial statement of MOH indicate that over the five year period of the
implementation of the POW II, the cedi equivalent of about US$ 1\.5 billion was spent by MOH\.
Out of this amount, the cedi equivalent of about US$ 163\.8 million was contributed by the Bank
(i\.e\. through the World Bank and IDA) and represents about 10\.7% of overall spending by MOH
for the period\. The document also indicate that over the same period, the cedi equivalent of about
US$ 419\.8 million was contributed by all the donors out of which the World Bank contributed
about US$ 163\.8 million representing 39% of donor contributions\.
From an initial contribution of about US$ 7\.3 million in 2002, the contributions of the bank rose
to the cedi equivalent of about US$ 73\.9 million in 2005 and dropped to a negligible figure in
2006 (i\.e\. Bank's funds sent through MDBS)\. In terms of actual funds contributed, the figures are
clear that the contributions from the Bank were quite substantial and in no doubt assisted
GOG/MOH in implementing the POW II\.
Aside the funds provided, the evidence gathered also indicate that the bank provided technical
assistance to GOG/MOH in several areas (policy formulation, implementation, monitoring and
evaluation) during the implementation of POW II\.
One area that staff of MOH interviewed believes could be a reference point for the Bank's
assistance to the sector is in the area of procurement\. The Bank's assistance has been very key in
building and continuously strengthening the capacity of the procurement unit to carry out it
functions in the implementation of the POW II\. The evidence gathered suggests that the bank was
very instrumental in making funds available for the procurement of commodities to support the
implementation of the POW II\. Additionally the Bank also assisted the Ministry to establish a
procurement unit, put in place the right structure and systems, trained staff at all levels and
assisted in the development of a procurement manual which became the official document for
procurement in the health sector\. To some of them, the procurement capacity within the MOH
constituted the pilot and the basis for the drafting of the national procurement law which is
currently in force\.
2\.3\.2 Fiduciary responsibility
As part of the HSPSP II/POW II the Bank had a fiduciary responsibility together with other
donors for ensuring that safeguard measures are put in place to reduce risk of poor
implementation outcomes through procurement review, disbursements, review of budgets and
expenditure information, audits, environmental impact assessments, progress monitoring of key
indicators and attention to results\. For the purpose of this report the performance of the bank in
fulfilling it responsibility is structured financial, procurement and programme performance\.
In the area PFM, the bank's work was more in the review of budget out-turns and ensuring that
financial and audit reports are submitted on time\. Due to the on-going financial management
reforms most of the things done by the finance unit to implement the POW II was not necessarily
66
as a result of donor demand but rather a product of improvements in national level financial
management procedures\. This is not however to suggest that the efforts of DPs was irrelevant or
not important in this direction\. The Bank is also said to have assisted in the procurement of
vehicles to support the routine monitoring exercise of the finance unit\.
In the area of procurement, the Bank's responsibility was more in the area of building the
procurement capacity of MOH as well as monitoring procurement outcomes\. The evidence above
indicates that the Bank discharged this responsibility especially in the area of capacity building\.
With programme performance the Bank's responsibility together with other donors in terms of
monitoring performance of GOG/MOH was also fulfilled to a large extent\. This was done
through inputs made by them through participation in meetings, reviews, joint donor monitoring
programmes and direct technical assistance to the Ministry\.
3\.0 Challenges of the Implementation Process
In spite of the relative success of the implementation of POW II/HSPSP II challenges still exist
that are of great concern to some stakeholders\. The thinking is that, addressing these challenges
will go a long way to improve the performance of the sector and perhaps outcomes in general\.
One of the issues that seem to cut across is the issue of productivity in the sector\. There seem to
be the suggestion that current levels of outputs do not match the level of resources injected into
the sector, particularly in the light of recent increases in salaries\. There is therefore the need for
analytical work to establish the current levels of productivity and efficiency in the sector and map
out the right strategies to enhance them\.
There is also the concern that currently; policy planning discussions are more centered on the
budget, reducing discussions more to budget issues than to real planning and development issues\.
There is also the thinking that the current review process lacks analytical rigor and could be taken
a step further by incorporating more rigorous analytical work in the review and preparation of
documents such as the annual plans\.
There is also the concern that inconsistencies have existed between the trend of resource
allocation and policy objectives of the ministry and therefore the need to take a critical look at
this phenomenon\.
It was also suggested that the current dialogue between the Ministry and DPs could be taken
another step forward by ensuring a more open process that is accommodating to the interest of all
stakeholders\. The urge is that both parties must continue to work together to deepen the dialogue
and make it more open as possible\.
4\.0 Conclusion
The implementation of the POW II/HSPSP II has been an insightful experience to the GOG/MOH\.
If the views of the respondents and the output indicators recorded at the end of the programme
period are any thing to go by, then one may not be wrong in concluding that GOG/MOH crossed
the pass mark and therefore needs to be encouraged\.
However, it will be responsible to admit that in spite of the relative success, the Ministry is still
faced with great challenges\. In addition to those enumerated above, gaps still exist (i\.e\. between
the rich and the poor, the south and the north etc) and therefore making the objectives of POW
II/HSPSP II still relevant\. A lot more is expected to be done if the sector is supposed to register
67
the desired quantum leaps\. Additionally it will also be important that more sustainable strategies
are investigated into and used for the implementation of development programmes\. Interestingly,
respondents are unanimous in their optimism that the sector will continue to improve with the
right levels of commitment from all stakeholders and continuous good leadership\.
68
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
No comments were received from cofinanciers or other partners, though the ICR was
circulated and partners were encouraged to submit comments\.
69
Annex 9\. List of Supporting Documents
Aduonum-Darko, L\., A\. Nkrumah, P\. Nomo\. 2006\. Review of the Common Management
Arrangements for the Implementation of the Health Sector Five Year Programme of Work 2002
2006\. Draft\.
Benning, Anang, and Partners\. 2004\. Ghana Health Sector Support Program Final Procurement
Audit Report, September, Accra, Ghana\. Draft\.
Benning, Anang, and Partners\. 2007\. Ghana Health Sector Support Program Final Procurement
Audit Report, September, Accra, Ghana\. Draft\.
Binak F\.N\., A\.A\. Bawah, J\.F\. Phillips, A\. Hodgson, M\. Adjuik, B\. MacLeod\. 2007\. Rapid
achievement of the child survival millennium development goal: evidence from the Navrongo
experiment in Northern Ghana\. Tropical Medicine & International Health 12 (5): 578-583\.
Campbell, S\. M\. et al\. 2000\. Defining quality of care\. Soc\. Sci\. Med\.
11: 1611-1625\.
Christian Health Association of Ghana (CHAG)\. 2006\. Annual Report: Witnessing Christ in the
Healing Ministry II, June 2005 May 2006, Accra, Ghana\.
Coulombe H\., Q\. Wodon\. 2007\. Poverty, Livelihoods, and Access to Basic Services in Ghana: An
Overview\. The World Bank, unpublished document, April 23, Washington, DC\.
DANIDA\. 2006\. Semi-Annual Report\. Health Sector Support Office, June, Accra, Ghana\.
Development Partners\. 2004\. Health Partners Memorandum Joint Response to the 2003 Health
Sector Review, May 27, Accra, Ghana\.
Development Partners\. 2005\. Health Partners Memorandum Joint Response to the 2004 Health
Sector Review, April 21, Accra, Ghana\.
Ernst & Young/The Auditor General\. 2004\. Management Letter and Audited Financial
Statements, December 31, Minister of Health, Accra, Ghana\.
Ernst & Young/The Auditor General\. 2005\. Management Letter and Audited Financial
Statements, December 31, Minister of Health, Accra, Ghana\.
External Review Team\. 2003\. Report of the External Review Team on the Ministry of Health
Programme of Work 2002, May, Accra, Ghana\.
External Review Team\. 2004\. Report of the External Review Team on the Ministry of Health
Programme of Work 2003, May, Accra, Ghana\.
External Review Team\. 2005\. Report of the External Review Team on the Ministry of Health
Programme of Work 2004, April, Accra, Ghana\.
70
External Review Team\. 2006\. Report of the External Review Team on the Ministry of Health
Programme of Work 2005, March, Accra, Ghana\.
External Review Team\. 2006\. Review of the Exemption Policy: A Report of the Annual Health
Sector Review 2005, March, Accra, Ghana\.
External Review Team\. 2007\. Report of the External Review Team on the Ministry of Health
Programme of Work 2006, June, Accra, Ghana\.
Fedelino, A\. G\. Schwartz, and M\. Verhoeven\. 2006\. Aid Scaling Up: Do Wage Bill Ceilings
Stand in the Way? IMF Working Paper, WP/06/106, International Monetary Fund, Washington,
DC\.
Filmer, D\. & L\. Pritchett\. 2001\. Estimating wealth effects without expenditure data--or tears: an
application to educational enrollments in states of India\. Demography, 38, 115-32
Ghana Health Service\. 2007\. Volta Regional Health Directorate 2006 Performance Review
Report, Volta, Ghana\.
Johnson, K\., S\. Rutstein, P\. Govindasamy\. 2005\. The Stall in Mortality Decline in Ghana: Further
Analysis of Demographic and Health Surveys Data\. Calverton, Maryland: ORC Macro\.
Ministry of Health\. 2001\. Partnerships for Health: Bridging the Inequalities Gap\. The Second
Health Sector Five Year Programme of Work: 2002-2006\. SWAp II\. Government of the Republic
of Ghana\.
Ministry of Health, Republic of Ghana\. 2001\. A Bulletin of Health Information: Information for
Action, Vol\. 1(1)\.
Ministry of Health, Republic of Ghana\. 2002\. The Ghana Health Sector Programme of Work\.
Ministry of Health, Republic of Ghana\. 2002\. A Bulletin of Health Information: Information for
Action, Vol\. 1(2&3)\.
Ministry of Health, Republic of Ghana\. 2003\. The Ghana Health Sector Programme of Work\.
Ministry of Health, Republic of Ghana\. 2004\. The Ghana Health Sector Programme of Work\.
Ministry of Health, Republic of Ghana\. 2005\. The Ghana Health Sector Programme of Work\.
Ministry of Health, Republic of Ghana\. 2006\. The Ghana Health Sector Programme of Work\.
Ministry of Health, Republic of Ghana\. 2007\. The Ghana Health Sector Programme of Work\.
Ministry of Health and Development Partners\. 2002-2007\. Aide Memoires\.
Ministry of Health and DESERV JM Associates\. 2006\. Republic of Ghana Health Sector 2002-
2006 Capital Investment Programme Review, Accra, Ghana\.
71
Morrison & Associates\. 2006\. The Republic of Ghana Health Sector 2002-2006 Capital
Investment Pgoramme Review (Financial Analysis)\.
Multiple Indicator Cluster Survey\. 2007\. Monitoring the Situation of Children and Women:
Findings from the Ghana Multiple Cluster Survey 2006, Preliminary Report, February\.
Nyonator F\.K\., J\.K\. Awoonor-Williams, J\.F\. Phillips, T\.C\. Jones\. 2005\. The Ghana Community-
based Health Planning and Services Initiative for scaling up service delivery innovation\. Health
Policy Planning 20(1) 25-34\.
Peters, D\.H\., A\. Garg, G\. Bloom, D\.G\. Walker, W\.R\. Brieger, M\.H\. Rahman\. 2007\. Poverty and
Access to Health Care in Developing Countries\. Annals of the New York Academy of Science (in
press)\.
Republic of Ghana\. 2002\. Financial Report, December 31, Ministry of Health\.
Republic of Ghana\. 2003\. HIV Sentinel Survey 2002 Report\. Accra, Ghana: Ghana Health
Service\.
Republic of Ghana\. 2004\. Financial Report, December 31, Ministry of Health\.
Republic of Ghana\. 2004\. HIV Sentinel Survey 2003 Report\. Accra, Ghana: Ghana Health
Service\.
Republic of Ghana\. 2005\. HIV Sentinel Survey 2004 Report\. Accra, Ghana: Ghana Health
Service\.
Republic of Ghana\. 2006\. Financial Report, December 31, Ministry of Health\.
Republic of Ghana\. 2006\. HIV Sentinel Survey 2005 Report\. Accra, Ghana: Ghana Health
Service\.
Republic of Ghana\. 2007\. Financial Report, December 31, Ministry of Health\.
Republic of Ghana\. 2007\. HIV Sentinel Survey 2006 Report\. Accra, Ghana: Ghana Health
Service\.
Republic of Ghana\. 2007\. Ho Municipal Mutual Health Insurance Scheme, Ho, Ghana\.
UNICEF\. 2004\. Report of the Review of the Accelerated Child Survival and Development
Programme in the Upper East Region of Ghana, November 2004, Accra, Ghana\.
Vujicic M\., E\. Addai, S\. Bosomprah\. 2006\. Methodology for Measuring the Productivity of the
Health Workforce in Ghana\. Draft unpublished document, December 6, 2006\.
Witter S\. & S\. Adjei\. 2007\. Start-stop funding, its causes and consequences: a case study of the
delivery exemptions policy in Ghana\. Int J Health Planning Management\. 22: 133-143\.
World Bank\. Implementation Status Reports, 2002 2007\.
72
World Bank\. 2003\. Project Appraisal Document for a Health Sector Program Support Project II,
P073649\. Washington, DC\.
World Bank\. 2003\. Development Financing Agreement for the Second Health Sector Program
Support Project between Republic of Ghana and International Development Association\.
World Bank\. 2006\. Ghana 2006 External Review of Public Financial Management, Volumes I &
II\. Washington, DC: World Bank\.
World Bank\. 2006\. Implementation Completion and Results Report Guidelines, OPCS,
unpublished document, August, Washington, DC\.
World Bank\. 2007\. Project Appraisal Document for a Nutrition and Malaria Control for Child
Survival Project, P105092, Washington, DC\.
World Bank\. 2007\. Project Appraisal Document for a Health Insurance Project, P101852,
Washington, DC
World Bank\. 2007\. Project Performance Assessment Report for Ghana: Second Health and
Population Project and Health Sector Support Project\.
73
Annex 10\. Sector-wide Indicator Comparison Table
PAD POW-II (2002-2006) POW-2006 Review of POW-2006
Infant mortality rate reduced from IMR per 1,000 reduced to 50 IMR per 1,000 reduced to 50 IMR per 1,000 reduced to 50
57 to 50 per 1000 live births with
significant reduction in disparities
across regions
U5 mortality rate reduced from U5M per 1000 reduced to 95 U5M per 1000 reduced to 95 U5M per 1000 reduced to 95
108 to 95 live births with
significant reduction of disparities
across regions
Maternal mortality is reduced from MMR per 100,000 reduced to 150 MMR per 100,000 reduced to 150 MMR per 100,000 reduced to 150
240 to 150 per 100,000 live births
with significant reduction of
disparities across regions
U5 who are malnourished to 20% U5 who are malnourished to 20%
Life expectancy at birth at least Life expectancy at birth at least
maintained at 58 years maintained at 58 years
Per capital health expenditure on Per capita spending on health
health is increased up to about (US$)
US$12 in 2006 and public
expenditure benefit more to the
poor
HIV prevalence reduced to 2\.6% HIV prevalence reduced to 3% HIV prevalence reduced to 2\.6% HIV prevalence reduced to 2\.6%
TB cure rate increased from 43% TB cure rate TB cure rate increased to 65% TB cure rate increased to 65%
to 60%
TB case detection rate
Use of bednets increased from % use of ITNs for <5 and pregnant
10% to 56% women increased to 55%
Antenatal coverage increased Antenatal coverage increased Antenatal coverage increased to Antenatal coverage increased to
from 47% to 70% from 47% to 70% 99% 99%
Prenatal coverage increased to Prenatal coverage increased to
65% 65%
Supervised deliveries increased Supervised deliveries increased Supervised deliveries increased to Supervised deliveries increased to
from 44% to 50% from 44% to 50% 60% 60%
50% maternal deaths audited 50% maternal deaths audited
Guinea worm disease eradicated Guinea worm disease eradicated Guinea worm disease eradicated Guinea worm disease eradicated
75
PAD POW-II (2002-2006) POW-2006 Review of POW-2006
DPT3 and measles coverage EPI coverage for Penta3 85%; EPI EPI coverage for Penta3 85%; EPI
raised and maintained at 80% or coverage for measles 90% coverage for measles 90%
more
Polio free certification obtained AFP non polio rate less than 1% AFP non polio rate less than 1%
% of FP acceptors raised from % of FP acceptors raised to 40% % of FP acceptors raised to 40%
14% to 40%
U5 malaria case fatality rate U5 malaria case fatality rate U5 malaria case fatality rate U5 malaria case fatality rate
reduced reduced to 1% reduced to 1%
Hospital admission rates Hospital admission rates per Hospital admission rates per
1,000 1,000
Outpatient visits per capita Outpatient visits per capita
Bed occupancy rates are 80% Bed occupancy rates are 80%
No\. of specialized community No\. of specialized community
outreach services carried out outreach services carried out
80% tracer drugs available 80% tracer drugs available 95% tracer drugs available 95% tracer drugs available
80% drugs purchased from CMS
85% transactions meeting agreed
standards
% of clinical, pharmaceutical, and
laboratory practice meeting
international quality standards
raised from 66% to 80%
New incentives and performance
management systems in place;
80% staff appraised
HR budgets and management
decentralized; 100 of BMCs
70% nurses/med assist/doctors doctor to population ratios by doctor to population ratios by
posts filled by category and by regions regions
regions
nurse to population ratios by nurse to population ratios by
regions regions
80% graduating at first sitting
50% increase in intake in medical 50% increase in intake in medical
and nursing schools and nursing schools
80% of staff receive in-service 80% of staff receive in-service
training training
76
PAD POW-II (2002-2006) POW-2006 Review of POW-2006
70% of core staff continuing work 70% of core staff continuing work
in Ghana 3 years after graduation in Ghana 3 years after graduation
interregional and interdistrict 35% of health professionals with
distribution of staff improved short-term placements to the
north/deprived areas
40% change in interregional and
inter-district distribution of key
staff in favor of deprived regions
and districts
40% change in intra-district
rural/urban distribution in favor of
rural areas
Community-based health centers 40% of new facilities developed in
established in deprived areas\. 4 deprived areas
40% of all new facilities developed
in 4 deprived regions\.
Mapping of physical assets 30% of district health facilities
completed and infrastructure rehabilitated
investment-diversification plan
developed to reduce duplication
Value of new investments are
more than 3% of current level
40% of hospital facilities brought
in line with strategy
Average transport fleet age Average transport fleet age
reduced to 5 years reduced to 5 years
70% of vehicles available at lower
levels
80% of vehicles are serviceable
85% of functioning equipment at
value
70% of BMCs using private sector 70% of BMCs using private sector
maintenance maintenance
80% households have improved
health and safety knowledge; 50%
households have improved health
and safety practices
77
PAD POW-II (2002-2006) POW-2006 Review of POW-2006
40% districts in each region are
implementing District Health Plans
(DHPs)
80% households have knowledge
of consumer rights and
responsibilities
80% of CHPS districts are No\. of functional CHPS zones No\. of functional CHPS zones
operational (target 400) (target 400)
4 funded community initiatives
funded in each district
Ombudsman's office established Ombudsman's office established
and 80% of complaints handled and 80% of complaints handled
successfully successfully; 60% patient
satisfaction level
The reorganization of public
agencies (MOH/GHS split)
completed\.
MOU signed with mission sector All mission institutions and 20% of
and converted into service other NGOs have MOUs and
agreements and contracts agreements signed
50% of non-essential services 50% of non-essential services
contracted out contracted out
0\.5% of the health budget 0\.5% of the health budget
allocated to the innovation fund allocated to the innovation fund
% of Program recurrent funds 2% of Program recurrent funds Recurrent budget from GOG and Recurrent budget from GOG and
used by private sector, NGOs, used by private sector, NGOs, health fund allocated to private health fund allocated to private
CSOs, and other MDAs CSOs, and other MDAs sector, CSOs, NGOs, and other sector, CSOs, NGOs, and other
MDAs (target 2%) MDAs (target 2%)
10% of facilities at district level are
private facilities
% of GOG budget spent on health % of GOG budget spent on health % of GOG budget spent on health
(target 15%) (target 15%)
% of GOG recurrent budget spent % of GOG recurrent budget spent % of GOG recurrent budget spent
on health on health (target 15%) on health (target 15%)
% of pooled donor funds to total % donor funds earmarked (target % donor funds earmarked (target
donor funds (per partner) 40%) 40%)
78
PAD POW-II (2002-2006) POW-2006 Review of POW-2006
% of IGF coming from pre- % IGF from pre-payment and % IGF from pre-payment and
payment and community community insurance schemes community insurance schemes
insurance scheme (target 20%) (target 20%)
% of capital and recurrent proportion of non-wage recurrent proportion of non-wage recurrent
expenditure by level, region and budget spent at district level budget spent at district level
by source (target 43%) (target 43%)
total amount spent on exemption % Recurrent budget spent on % Recurrent budget spent on
by exemption category exemptions (target 8%) exemptions (target 8%)
National agenda for herbal and
alternative medicine developed
Guidelines for quality assurance
developed and disseminated
6000 Traditional and alternative
medicine practitioners trained
79
Annex 11\. Sector-wide Indicators 1998 2006
Indicator 1998 1999 2000 2001 2002 2003 2004 2005 2006 Targets
Infant Mortality Rate per 1,000 live births 61 57 64 71 50
Under five mortality Rate per 1,000 live births 110 111 95
Maternal Mortality Ratio per 100,000 live births 214 560 150
Under five who are malnourished4 24\.9 22\.1 17\.8 20
HIV sero-prevalence (%) 2\.9 3\.4 3\.6 3\.1 2\.7 2\.9 2\.6
% EPI coverage (DPT3/Penta3) 76\.3 78\.0 76\.0 75\.0 85\.0 84\.2 80
% EPI coverage (measles) 67\.4 71\.0 81\.5 82\.4 83\.7 79\.0 78\.0 83\.0 85\.1 80
AFP non polio rate (%) 2\.8 1\.9 1\.3 1\.5 1\.68 1\.55 >1
Guinea worm cases 4733 5545 8290 7275 3992 2,968 0
% Family planning acceptors 14\.5 13\.7 11\.6 24\.9 21\.0 22\.6 24\.3 22\.6 26\.8 40
% Antenatal coverage 94\.7 92\.2 96\.5 98\.4 93\.7 91\.2 89\.2 88\.7 88\.4 70
% Prenatal coverage 37\.4 43\.1 46\.3 52\.5 53\.6 55 53\.3 52\.7 55\.9 65
% Supervised deliveries 40\.8 43\.5 50\.2 50\.4 32\.0 55\.0 53\.4 54\.1 44\.5 60*
% Maternal deaths audited 10\.0 84\.0 85\.0 55\.9 75\.6 52 50
Outpatient per capita 0\.38 0\.4 0\.45 0\.49 0\.49 0\.5 0\.52 0\.53 0\.52 0\.6
Hospital admission rates per 1000 population 27\.5 27\.9 32\.1 34\.9 35\.3 36 34\.5 36\.5 32\.6 40
Bed occupancy rates (%) 78\.1 76\.5 58\.9 61\.6 65\.5 64\.1 62\.7 58\.4 50\.9 80
Under five malaria case fatality rate (%) 1\.7 3\.7 3\.6 2\.7 2\.4 2\.7 n/a
Tuberculosis Cure Rates (%) 44\.9 53\.8 63\.9 65\.0 67\.6 \. 60
Number of specialized outreach services 141 158 175 158 164 170 200
% Tracer drug availability 79\.0 75\.0 70\.0 85\.0 85\.0 87\.5 84\.7 73\.8 80
Doctor to population ratio 1:20,036 1:18,274 1:16,759 1:17,615 1:10,380 1:10,700 1:16,500
Nurse to population ratio 1:1,728 1:1,675 1:1,649 1:1,510 1:1,508 1:1,587 1:1,500
No\. of functional CHPS zones 19 39 55 84 186 270 400
% GOG budget spent on health 8\.5 8\.4 8\.7 9\.3 9\.1 8\.2 15\.0 18\.0 15
% GOG recurrent budget spent on health 10\.2 11\.5 11\.2 11\.9 14\.5 14\.0 15
% GOG recurrent health on non-salary (items 2+3) 8\.1 5\.9 6\.9 5\.4 6\.6 7\.0
% GOG spending on districts and below (items 2+3) 50 42 40\.9 35\.4 37\.9 36\.0 40\.0 43
4Malnourishment is defined as weight for age\. The reference population is the WHO/CDC/NCHS reference, representing the percentage of children who score
more than 2 standard deviations below the mean\.
80
Indicator 1998 1999 2000 2001 2002 2003 2004 2005 2006 Targets
% Donor funds earmarked 62\.3 32\.8 39\.5 26\.3 40\.0 61\.0 40
% IGF from pre-payment and insurance schemes 3 10
% recurrent funds from GOG and HF allocated to CSOs 1\.2 3\.1 2
% recurrent budget spent on exemptions 3\.6 8\.0 3\.0 8
Per capita spending on health ($US) 6\.3 8\.1 10\.5 13\.5 19\.0 25\.4
81 | REVIEW |
P126180 | Document of
The World Bank
Report No: ICR00004215
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(SLIDF TF-13246)
ON AN IDA GRANT FROM THE SIERRA LEONE INFRASTRUCTURE
DEVELOPMENT FUND
IN THE AMOUNT OF US$16 MILLION
TO THE
REPUBLIC OF SIERRA LEONE
FOR AN
ENERGY ACCESS PROJECT
January 31, 2018
Energy and Extractives Global Practice
Africa Region
i
CURRENCY EQUIVALENTS
(Exchange Rate Effective October 31, 2017)
Currency Unit = SLL
SLL 1\.00 = US$ 0\.00013
US$1\.00 = SLL 7,539\.54
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
BIS Business Information System
DFID U\.K Department for International Development
EDSA Electricity Distribution and Supply Authority
EGTC Electricity Generation and Transmission Company
EIRR Economic Internal Rate of Return
ESURP Energy Sector Utility Reform Project
EVD Ebola Virus disease
FM Financial Management
ISR Implementation Status and Results Report
IRR Internal Rate of Return
M&E Monitoring and Evaluation
MoE Ministry of Energy
MTR Midterm Review
NPA National Power Authority
NPV Net Present Value
O&M Operation and Maintenance
PAD Project Appraisal Document
PDO Project Development Objective
PMU Project Management Unit
PRSP Poverty Reduction Strategy Paper
RAP Resettlement Action Plan
SLIDF Sierra Leone Infrastructure Development Fund
UPS Uninterruptible Power Supply
ii
Vice President: Makhtar Diop
Country Director: Henry Kerali
Sector Manager: Wendy E\. Hughes
Project Team Leader: Nash Fiifi Eyison
ICR Team Leader: Nash Fiifi Eyison
ICR Primary Author: Nestor Ntungwanayo
iii
REPUBLIC OF SIERRA LEONE
THE ENERGY ACCESS PROJECT
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context and Development Objectives 1
2\. Assessment of Outcomes \. 8
3 Key Factors that Affected Implementation and Outcome \. 18
4\. Bank Performance, Compliance Issues, And Risk to Development Outcome \. 21
5\. Lessons Learned \. 25
6\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 27
Annex 1\. Project Costs and Financing \. 28
Annex 2\. Outputs by Component \. 29
Annex 3\. Economic and Financial Analysis \. 34
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 42
Annex 5\. Beneficiary Survey Results \. 45
Annex 6\. Stakeholder Workshop Report and Results\. 46
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 47
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 48
Annex 9\. List of Supporting Documents \. 50
MAPâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦ 51
iv
A\. Basic Information
Sierra Leone Energy Access
Project - Sierra Leone
Country: Sierra Leone Project Name:
Infrastructure Development
Fund
Project ID: P126180 L/C/TF Number(s): TF-13246
ICR Date: 01/31/2018 ICR Type: Core ICR
REPUBLIC OF SIERRA
Lending Instrument: SIL Grantee:
LEONE
Original Total
US$ 16\.00 Million Disbursed Amount: US$ 15\.67M
Commitment:
Revised Amount: US$ 16\.00 Million
Environmental Category: B
Implementing Agencies:
Ministry of Energy
Cofinanciers and Other External Partners:
DFID
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 03/08/2012 Effectiveness: 09/20/2103 09/18/2013
10/29/2015
Appraisal: 09/11/2012 Restructuring(s):
04/13/2017
Approval: 01/23/2013 Mid-term Review: 06/30/2016 No MTR
Closing: 10/31/2015 07/31/2017
C\. Ratings Summary
C\.1 Performance Rating by ICR
Relevance of objectives High
Outcomes: Moderately Satisfactory
Bank Performance: Moderately Satisfactory
Monitoring and Evaluation: Moderately Satisfactory
v
C\.2 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem
Quality at Entry
Project at any time No None
(QEA):
(Yes/No):
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Major Sector/Sector
Energy and Extractives
Other Energy and Extractives 100 100
Major Theme/Theme/Sub Theme
Private Sector Development
Jobs 33 33
Job Creation 33 33
Urban and Rural Development
Rural Development 33 33
Rural Infrastructure and service delivery 33 33
Urban Development 33 33
Urban Infrastructure and Service Delivery 33 33
E\. Bank Staff
Positions At ICR At Approval
Vice President: Makhtar Diop Makhtar Diop
Country Director: Henry Kerali Yusupha Crookes
Practice Manager: Wendy E\. Hughes Meike van Ginneken
Project Team Leader: Nash Fiifi Eyison Elvira Morella
ICR Team Leader: Nash Fiifi Eyison
ICR Primary Author: Nestor Ntungwanayo
vi
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
Original Project Development Objectives (PDOs) and Key Indicators (as approved)
The PDOs are to: (i) reduce losses in electricity supply in Freetown Capital Western Area;
(ii) improve commercial performance of the National Power Authority (NPA)1; and (iii)
increase access to electricity in selected rural areas\. Project statement in the Project
Appraisal Document (PAD) and in the Grant Agreement is identical\.
Revised Project Development Objectives
The revised PDO is to reduce losses in electricity supply in Freetown Capital Western
Area and to improve commercial performance of the Electricity Distribution and Supply
Authority (EDSA)\.2
(a) PDO Indicator(s)
Performance against the Results Framework at Approval in January 2013\.
PROJECT RESULTS FRAMEWORK AT APPROVAL
PDO Results Original Actual Value
Measurement Unit
Indicators Target Achieved at the
Values (from project closure (July
approval 31, 2017)
Base Line
documents)
PDO Core Results
Indicators
(1) Electricity losses per year in the project area
Value (quantitative or % 38% 33% 34\.5 %
Qualitative)
Date achieved 2/2/2009 1/23/2013 7/31/2017
Comments (incl\. % Partially achieved: While the information is preliminary, actual
achievement) percentage losses fell from 38% down to 34\.5%, an achieved level
of 70% of the target\. Upgrade of the distribution network was key
to this trend\. The probability of achieving the target in a 12-month
1
NPA was unbundled and replaced by (a) EDSA and (b) the Electricity Generation and Transmission
Company (EGTC) in January 2015\.
2
The PDO was revised during the October 2015 level one restructuring, following the cancellation of the
component covering rural electrification activities\.
vii
period is high with the full deployment of the new substations and
electrical lines\.
(2) Collection rate by EDSA
Value (Quantitative or % 76% 86% 86%
Qualitative)
Date achieved 2/2/2009 1/23/2013 7/31/2017
Comments (including Fully Achieved: The collection rate increased from 76% to
% achievement) 86%, a 10 percent increase\. The surge is consecutive to (i) )
increase in ratio of consumers pre-paid metered consumers to post-
paid consumers , and (ii) the launching of a strong revenue
protection and arrears recovery program\.
(3) Public buildings in rural villages provided with access to electricity under the Project
through photovoltaic systems
Value (Quantitative or Number 0 28 0
Qualitative)
Date achieved 6/30/2012 1/23/2013 7/31/2017
Comments (incl\. % The component supporting this activity was cancelled during the
achievement) restructuring approved in October 2015, and the indicator was
dropped at the same time\.
4\. Direct project beneficiaries in (number), of which are female (%)
Value (Quantitative or Number 0 205,400 720,000
Qualitative) % 51% of female 367,200
Date achieved 6/30/2012 1/23/2013 8/31/2017
Comments (including Target exceeded, as the target was more than tripled\. Upgrade in
% achievement) the distribution network and improvement in the planning and
commercial functions of EDSA are at the core of this performance\.
The number is derived from 120,000 households connected during
the period of project implementation with an average of 6 persons
per household\.
Intermediate Results
Indicators
(1) Substations rehabilitated under the project
Value (Quantitative or Number 0 4 5
Qualitative)
Date achieved 2/2/2009 1/23/2013 7/31/2017
Comments (including Target exceeded: Five substations were rehabilitated at the
% achievement) Wilberforce, Kingtom, Blackhall Road, Ropoti, and Wellington
locations\. Ropoti substation was a brand-new substation, while new
equipment for Blackhall Road substation, is scheduled to be
installed in the context of an ongoing World Bank project
(P120304)\.
(2) Distributions lines rehabilitated under the project
Value (Quantitative or Km 0 7\.5 7\.8
Qualitative)
Date achieved 2/2/2009 1/23/2013 7/31/2017
viii
Comments (including Fully achieved: The 7\.8 km power line from Blackhall Road
% achievement) substation to Wellington station via Ropoti substation,
operating at 11kV was replaced and upgraded to 33kV and
constructed on double circuit towers\.
(3) Pre-paid meters installed under the project
Value (Quantitative or Number 8,000 20,000 20,000
Qualitative)
Date achieved 6/30/2008 1/23/2013 7/31/2017
Comments (including Fully achieved: 20,000 pre-paid meters, including 17,800
% achievement) single phase and 2,200 three phases were installed in 20
neighborhoods of Freetown, with the target achieved at 100%\.
(4) Statistical meters installed under the project
Value (Quantitative or Number 80 200 100
Qualitative)
Date achieved 6/30/2008 1/23/2013 7/31/2017
Comments (including Partially achieved: 100 bulk meters were installed at 8
% achievement) switching stations and substations, with the target achieved at
50%\.
(5) Photovoltaic systems installed under the project
Value (Quantitative or Number 0 28 0
Qualitative)
Date achieved 12/31/2008 1/23/2013 7/31/2017
Comments (including Component 2 devoted to funding this activity was canceled during
% achievement) the October 2015 restructuring and the indicator was also dropped
(6) Staff recruited at the Project Management Unit (PMU) under the Project
Value (Quantitative or Number 0 7 6
Qualitative)
Date achieved 12/31/2008 1/23/2013 7/31/2017
Comments (including Partially achieved: The PMU hired 6 staff, or 85 percent of the
% achievement) project target\. However, the staff technical capacity needed
improvement
ix
Performance against the Results Framework at Restructuring in October 2015
PROJECT RESULTS FRAMEWORK AT THE OCTOBER 2015 RESTRUCTURING
PDO Results Indicators Original Revised Actual Value
Measurement Unit
Target Target Achieved on
Base Line
Values Values on July 31, 2017
(from October the Closing
approval 28, 2015 Date of the
documents) Project Except
Otherwise
Specified\.
PDO Core Results Indicators
(1) Collection rate by EDSA
Value (Quantitative or Percentage 76 86 86 86%
Qualitative)
Date achieved 02/02/09 01/23/2013 10/28/2015 7/31/2017
Comments (including % Fully achieved: The surge is consecutive to (a)) increase in ratio of
achievement) consumers pre-paid metered consumers to post-paid consumers , and (b)
the launching of a strong revenue protection and arrears recovery
program\.
(2) Direct project beneficiaries
Value (Quantitative or Number 0 205,400 624,000 720,000
Qualitative)
Date achieved 06/30/12 01/23/2013 10/28/2015 7/31/2017
Comments (including % Target exceeded, as the target was more than tripled\. Upgrade in the
achievement) distribution network and improvement in the planning and commercial
functions of EDSA are at the core of this performance\.
(3) Female beneficiaries
Value (Quantitative or Number 0 51% 51% 51%
Qualitative)
Date achieved 01/23/2013 10/28/2015 7/31/2017
Comments (including % Fully achieved: Assuming that the female population represent 51
achievement) percent of the beneficiary households\.
(4) Electricity losses per year in the project area
Value (Quantitative or Percentage 38 33% 33% 34\.5 %
Qualitative)
Date achieved 01/23/2013 10/28/2015 09/16/2106
Comments (including % Partially achieved: While the information is preliminary, actual
achievement) percentage losses fell from 38% down to 34\.5%, an achieved level of
70% of the target\. Upgrade of the distribution network was key to this
trend\. The probability of achieving the target in a 12-month period is
high with the full deployment of the new substations and electrical lines\.
Intermediate Results Indicators
(1) Substations rehabilitated under the project
x
Value (Quantitative or Number 0 4 4 5
Qualitative)
Date achieved 02/02/09 01/23/2013 10/28/2015 7/31/2017
Comments (including % Target exceeded: Five substations were rehabilitated at the Wilberforce,
achievement) Kingtom, Blackhall Road, Ropoti, and Wellington locations\. Ropoti
substation was a brand-new substation, how Blackhall Road substation
was only rehabilitated while waiting for the new equipment to be
installed in the context of an ongoing World Bank project (P120304)\.
(2) Pre-paid meters installed under the project
Value (Quantitative or Number 0\.00 20,000 20,000 20,000
Qualitative)
Date achieved 02/02/09 01/23/2013 10/28/2015 7/31/2017
Comments (including % Fully achieved: 20,000 pre-paid meters, including 17,800 single
achievement) phase and 2,200 three phases were installed in 20 neighborhoods
of Freetown, with the target achieved at 100%\.
(3) Staff recruited at the Project Management Unit (PMU) under the Project
Value (Quantitative or Number 0 7 4 6
Qualitative)
Date achieved 06/30/08 01/23/2013 10/28/2015 7/31/2017
Comments (including % Exceeded: The PMU hired 6 staff, exceeding the project target\.
achievement) However, the staff quality needed technical improvement\.
(4) Statistical meters installed under the project
Value (Quantitative or Number 0 200 200 100\.00
Qualitative)
Date achieved 06/30/08 01/23/2013 10/28/2015 09/16/2106
Comments (including % Partially achieved: 100 Statistical meters were installed at 8
achievement) Switching stations and Substations, with the target achieved at
50%\.
(5) Distribution lines constructed or rehabilitated under the project
Value (Quantitative or km 0\.00 7\.5 7\.5 7\.8
Qualitative)
Date achieved 12/31/08 01/23/2013 10/28/2015 07/31/2017
Comments (including % Fully achieved: The 7\.8 km power line from Blackhall Road
achievement) substation to Wellington station via Ropoti substation, operating at
11kV was replaced and upgraded to 33kV and constructed on
double circuit towers\.
(6) Distribution lines rehabilitated under the project
Value (Quantitative or km 0\.00 7\.5 7\.5 7\.8
Qualitative)
Date achieved 12/31/08 01/23/2013 10/28/2015 07/31/2017
Comments (including % Fully achieved: The 7\.8 km power line from Blackhall Road
achievement) substation to Wellington station via Ropoti substation, operating at
11kV was replaced and upgraded to 33 kV and constructed on
double circuit towers\.
Note: Because the existing 11 kV line was replaced by a 33 kV
line, the 7\.8 km count both as lines constructed and rehabilitated
Source: Implementation Status and Results Reports (ISRs) and other World Bank documents\.
xi
G\. Ratings of Project Performance in ISRs
Date ISR Actual Disbursements
No\. DO IP
Archived (US$ millions)
1 09/30/2013 Satisfactory Satisfactory 0\.00
2 07/07/2014 Satisfactory Moderately Satisfactory 2\.60
3 01/28/2015 Satisfactory Moderately Unsatisfactory 3\.37
4 10/01/2015 Satisfactory Moderately Satisfactory 6\.26
5 04/15/2016 Satisfactory Moderately Satisfactory 8\.17
6 11/14/2016 Satisfactory Moderately Satisfactory 10\.52
7 07/07/2017 Satisfactory Moderately Satisfactory 14\.60
xii
H\. Restructuring (if any)
Restructuring Board ISR Ratings at Amount Reason for Restructuring and
Dates Approved Restructuring Disbursed at Key Changes Made
PDO Restructuring
change PDO IP (US$ million)3
(i) 10/28/2015 N S MS 6\.26 To extend the closing date of the
project from October 31, 2015
until April, 30 2017, and revise
the PDO and the Results
Framework\. The above changes
were triggered by the cancellation
of the Component 2 activities,
impossible to implement due to
the Ebola Virus Disease outbreak\.
(ii) 04/13/2017 N S MS 12\.50 To extend the closing date until
July 31, 2017 to allow the
completion of the unfinished
activities, and to reallocate
resources among categories\.
3
The disbursement levels are estimates
xiii
I\. Disbursement Profile
xiv
1\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A\. Context at Appraisal
(i) Country Context\.
1\. The recent history of Sierra Leone is that of a successful transition from a decade-
long civil war to a peaceful and stable country, with a democratic change of power:
The country went through a devastating civil war during 1996-2007, but a peace and
reconciliation process brought a closure to the conflict period, and allowed two
democratic elections in 2007 and in 2012\. However, the recent internal situation
remained fragile, due to a complicated political economy marked by the alluvial
diamond industry, youth unemployment, and regional instability\.
2\. While the economy grew and poverty fell in the aftermath of the civil war, the
country continued to rank among the least advantaged countries\. At project
appraisal, Sierra Leone was ranked 180th out of 187 countries in the 2009â2010 United
Nations Development Programme Human Development Index rankings, despite seven
consecutive years of sustained economic growth\. There were still high levels of
unemployment; child and maternal death rates; as well as elevated gender disparities
and vulnerability of women\. There were also weaknesses in infrastructure (energy,
water, ports, and roads) and in access to quality finance (notably rural finance), as well
as vulnerabilities to external shocks\.
(ii) Sector Context:
3\. The countryâs electricity access and consumption were among the lowest in Africa\.
Electricity access in the country was below 6 percent of the households in 2013\. A large
majority of the countryâs population relied on inefficient and polluting fuels such as
kerosene for lighting and fuel-wood and charcoal for cooking, with their adverse impact
on health and the environment\. Public electricity services were limited to selected areas
in the urban centers, and in rural areas, where the bulk of the population leaves,
electricity access was practically non-existent (Project Appraisal Document [PAD]
p\.10)\.
4\. Reduced power supply and degrading infrastructure were the key obstacles to
expanding energy consumption\. Power generation capacity remained
disproportionate to the countryâs overall power demand\. Hydropower volume from the
newly-commissioned Bumbuna power plant was seasonal, and high costs of imported
fuel for the thermal power plants, coupled with the transmission and distribution
bottlenecks diminished the available power capacity\. Moreover, fast growth in the
mining sector implied an exponential increase in energy demand, and called for a major
scale-up in generation capacity\. There was a need for a thought-through sector strategy
for exploiting synergies in electricity supply by facilitating joint public and private
venture investments in the energy sector\.
1
5\. Outside the power supply deficit, transmission and distribution bottlenecks were
the major impediments to expanding electricity supply\. Both transmission and
distribution capacity were severely constrained due to high losses, which reached over
38 percent\. The low voltage levels in certain areas and the high level of fault occurrence
contributed to poor quality of supply\. Black outs and load shedding were common
place\. If not addressed, transmission and distribution bottlenecks were to block the
expansion of generation capacity and to suppress electricity demand, which was
expected to increase considerably in line with continued economic growth\.
6\. The structural and operational weaknesses of the then National Power Authority
(NPA) was at the heart of countryâs power sector challenges\. Shortcomings
included (a) the lack of adequate technical, operational and financial management (FM)
capacity, (b) inaccurate customer data base, and (c) dysfunctional metering, billing and
revenue collection systems and poor accounting, which led to low levels of commercial
and operational performance\. The NPAâs financial situation has been fragile as
illustrated by its inability to fully honor payments for the purchase of Bumbuna's
electricity, and its financial situation was heavily dependent on Government support\.
7\. Institutional and regulatory frameworks needed to be redesigned for a forward-
looking perspective for the energy sector: The sector was under the aegis of the
Ministry of Energy and Water Resources (now the Ministry of Energy-[MoE]), which
supervised a vertically integrated national utility, without a regulatory authority\. Both
the MoE and NPA were understaffed and lacked the skills and resources needed to
efficiently run the sector\.
(iii) Rationale for World Bank Involvement
8\. The World Bankâs intent was to support the Governmentâs broad power sector
reform aimed at unbundling the sector\. The Government approved a National
Energy Policy and Strategic Plan in 2010 outlining sector priorities and objectives, and
approved the objectives and principles for setting electricity tariffs\. Unbundling the
energy sector was at the core of the reform agenda, and aimed to separate the
responsibilities for operating and maintaining existing government-owned assets into
new entities, and associate the private sector much more\. However, there were
challenges in implementing the envisaged reforms, the key ones being (a) how to
quantify the financial and economic impact of the unbundling exercise, (b) what will
be the new organizational structure and the role of the regulator, and finally (c) how to
integrate the institutional, regulatory and financing frameworks for rural electrification
in the sector reform\.
9\. The project was a coordinated effort of the International Development
Association (IDA) and the UK Department for International Development (DFID)
to support an integrated energy sector reform program\. The Governmentâs reform
agenda was a large program covering the increase of transfer capacity of the
transmission and distribution system; the revamping of the NPA, and the scaling up of
electricity access in rural areas\. The scale of the challenges and the resources needed
2
called for an integrated program, well beyond the capacity of any one institution\. The
proposed project aimed to: (a) focus on the areas where results can be achieved in the
short- to medium- term; and (b) help remove some of the critical barriers to sector
development\. The project was entirely funded by the Sierra Leone Infrastructure
Development Fund (SLIDF), which was a multi-donor trust fund established by the
World Bank in 2010 with the DFID as the anchor donor\. The fund was a vehicle for
pooling donor support to Sierra Leone aimed at: (a) facilitating expanded access to
basic infrastructure services; (b) raising the efficiency and effectiveness of
infrastructure development by improving sector governance and accountability; and (c)
building Governmentâs capacity to plan and manage development projects\.
10\. The World Bank had plans to complement the project by follow-on IDA
operations in the context of a larger Energy Access Program supported by the
donor community\. The long-term World Bank agenda in Sierra Leone was to support
the recovery of the electricity sector by increasing availability and quality of electricity
supply, improving finances and operational capacity of the energy utilities and raising
sector performance and financial viability\. The World Bank had planned a follow-on
operation to continue: (a) investments to upgrade the Freetown distribution network
focusing on other critical segments of the network; and (b) the support to the
implementation of a loss reduction program\. During the period of project
implementation, the World Bank was also implementing the Energy Sector Utility
Reform Project (ESURP) and prepared the Western Area Power Generation Project
(WAPGP)\. Other donors and institutions supporting the energy sector development
included the ECOWAS, the Japan International Cooperation Agency (JICA), the
African Development Bank, the Millennium Challenge Corporation and the Islamic
Development bank\.
(iv) Project Theory of Change and Results Chain
11\. The results chain set out in table 1 presents the theory of change linking the project
activities, the expected outputs and outcomes, and the Project Development Objectives
(PDOs) as identified at appraisal\.
Table 1: Project Results Chain for the Sierra Leone-Energy Access Project
Activities Outputs PDOs/Outcomes Long term
Outcomes
Objective 1: To reduce losses in electricity supply in Freetown Capital Western Area
3
(i) Rehabilitation of (i) Primary (i) Reduction of losses in (i) Improved
primary distribution substations electricity supply in Freetown efficiency in
network, and loss rehabilitated under Capital Western Area energy distribution
reduction the project
(ii) Improved reliability of the (ii) Extension of
(ii) Restoration of the (ii) Existing line network and safety concerns of energy access in
distribution of power operating at 11kV operators at the substations the Freetown
at 33kV, to increase replaced by the addressed Western Area\.
the evacuation construction of a
capacity of the 7\.8 km 33kV line
network and reduce (iii) Statistical
associated technical meters installed
losses under the project
Critical assumptions ⢠Financial and technical support from DFID
⢠The Government has technical capacity to warrant effective management
per World Bank procedures and to oversee implementation\.
Objective 2: To increase access to electricity in selected rural areas
Installation of photo- (i) Public buildings (i) Increased access to electricity Extension of
voltaic systems in in rural villages through public lighting\. energy access in
public buildings in 14 provided with the rural areas
villages access to electricity (ii) Increased access to electricity
under the project by households
(ii) Photovoltaic
systems installed
under the project\.
Critical assumptions ⢠Financial and technical support from DFID
⢠The Government has technical capacity to warrant effective management
per World Bank procedures and to oversee implementation
Objective 3: To improve commercial performance of the National Power Authority
(i) To install pre-paid(i) Pre-paid meters (i) Improved operational and (i) Improvement of
meters network and bulk meters commercial efficacy and efficiency EDSA commercial
meters, and a revenue installed under the of the National Power Authority performance
management system project (EDSA)
(ii) To provide (ii) Revenue (ii) Improvement
technical assistance management (ii) Increased collection rate by of EDSA financial
and conduct studies system set up and EDSA health
(iii) To hire staff andoperational
acquire equipment (iii) Staff hired,
studies completed,
and equipment
delivered\.
Critical assumptions ⢠Financial and technical support from DFID
⢠The Government has technical capacity to warrant effective management
per World Bank procedures and to oversee implementation
Source: PAD and Project Management Unit (PMU)
Note: EDSA = Electricity Distribution and Supply Authority\.
4
Project Development Objectives (PDO)
12\. The original PDOs are to: (i) reduce losses in electricity supply in Freetown Capital
Western Area; (ii) improve commercial performance of the National Power
Authority; and (iii) increase access to electricity in selected rural areas\.
(v) Key Expected Outcomes and outcome Indicators
13\. The key indicators for the PDO level results were the following:
a\. Electricity losses per year in the project area (percentage): the target was set at 33
percent from a baseline of 38 percent\.
b\. Collection rate by EDSA: the target was set at 86 percent from a 2012 baseline of
76 percent
c\. Public buildings in rural villages provided with access to electricity under the
project through photovoltaic systems (number); the target was set at 28 buildings
from a baseline of 0\.
d\. Direct project beneficiaries (number), of which female (percent): the project
target was set at 205,400, of which 51 percent female, against a baseline of 0\.
(vi) Project Components
14\. The original project had three components as delineated below:
Component 1\. Rehabilitation of Primary Distribution Network, Loss Reduction and
Improvement of NPAâs Operational and Commercial Performance (US$12\.2
million)
⢠This component aimed to rehabilitate the primary distribution network (33/11kV) in
Freetown area, including overhead lines and substations, the supply and installation
of about 20,000 pre-paid meters, an appropriate vending and control system, and a
statistical metering and data management system\.
⢠The component also was to fund (a) the setup of an appropriate business information
system (BIS) to improve the utility management, particularly in the financial,
commercial and logistics areas, and (b) the provision of extensive technical assistance
to ensure optimal application of the investment support, and on strengthening energy
utility expertise in two key areas of operations regulation, and commercial
management\.
⢠Finally, the component intended to provide limited resources for compensation for
new encroachments and temporary disturbances to households and businesses\.
5
Component 2\. Rural Electrification: (US$1\.46 million)
⢠This component was devoted to support a pilot program for the installation of
photovoltaic systems in public buildings in 14 rural villages to demonstrate
applicability of the solar technology for larger deployment\.
Component 3\. Project Implementation Management: (US$1\.225 million)
⢠This component was specifically designed to strengthen project implementation and
management capacity, and to finance external expertise needed to support key project
management functions\.
B\. Significant Changes During Implementation
15\. The Ebola outbreak in 2014 made the rural area inaccessible, prompting (i)
the cancelation of the component with rural electrification activities, (ii) the change
of the PDO and the result framework, and (iii) the reconfiguration of the project
components\. The revised PDO is to: (i) reduce losses in electricity supply in Freetown
Capital Western Area and (ii) improve commercial performance of the Electricity
Distribution and Supply Authority (EDSA)\.
16\. The key indicators for the revised PDO-level results are the following:
(a) Collection rate by EDSA: from a baseline of 76 percent, the target of rate of collection
at closure was maintained at 86 percent\.
(b) Direct project beneficiaries: from a baseline of 0, the target was set at 624,000\.
(c) Female beneficiaries: from a baseline of 0, the target a closure was set at 51 percent of
the total beneficiaries\.
(d) Electricity losses per year in the project area: from a baseline of 38 percent, the target
at closure was maintained at 33 percent\.
17\. There were two key changes in the Results Framework of the revised PDO, as
follows: (a) the cancellation of the indicator related to rural electrification, and (b) the
tripling of the target for the direct beneficiaries of the project\.
18\. Following the level a restructuring approved on October 28, 2015, the projectâs
components were revised as described below, and the total project amount was reallocated
toward the two remaining components (Components 1 and 3)\.
Component 1: Rehabilitation of Primary Distribution Network, Loss Reduction and
Improvement of EDSA's Operational and Commercial Performance (Revised
amount: US$13\.88 million)
19\. While the rehabilitation of the distribution network remained the key task under
this component, including the installation of 20,000 pre-paid meters, an appropriate
6
vending and control system and statistical meters, additional activities included (a)
financial advisory services to the Government and EDSA for a proposed private sector
thermal generation project and (b) increases in resettlement costs associated with the
rehabilitation of a transmission line and substations along Blackhall Road\. On the contrary,
the BIS was eliminated from this component, as it did not attract bidders due to limited
scope\. Team decided to implement this as part of a larger utility management system under
the Bank financed Energy Sector Utility Reforms Project\.
Component 2: Rural Electrification (Cancelled)
20\. This component was dropped from the project scope as DFID preferred to exclude
rural electrification activities and to pursue a more comprehensive approach to rural
electrification under a separate new engagement\. The funds initially earmarked for rural
electrification were therefore reallocated to cover increased costs under Components 1 and
3\.
Component 3: Project Implementation Management (Revised amount: US$2\.12
million)
21\. There was a cost increase in Component 3 resulting from the implementation delays
and the consequent closing date extension of the project for a total of 21 months until July
31, 2017\. Other additional costs incurred to the operation cost was the provision of
temporal accommodation for Project Management Unit (PMU) because of a fire accident
that gutted their offices at the MoE-Electricity House\. Reallocated resources were also
used to acquire office equipment and vehicles, and software for the PMU\.
C\. Rationale for Changes and their Implication for the Theory of Change
22\. The Ebola Virus Disease (EVD) outbreak in 2014 triggered the October 2015
project restructuring\. The Ebola crisis halted project implementation in 2014, especially
because it made the rural area inaccessible\. Consequently, the Government and DFID
agreed to postpone the implementation of the second component (Rural Electrification)\.
Project implementation was continued only after the approval of a level 1 restructuring in
October 2015, which made the following changes to the project: (a) a revision of the PDO,
(b) a reconfiguration of project activities and (c) few changes in the Results Framework\.
These changes are described in detail under sub-section B above\.
23\. The financial resources freed by the cancellation of Component 2 were
reallocated to finance additional activities under Components 1 and 3\. More
specifically, the budget amount of US$1\.5 million initially allocated for rural electrification
was reallocated to the two remaining components to top up the funding for resettlement
cost under Component 1 and cost increase under Component 3 as detailed under paragraph
21\.
24\. The impact of the October 2015 restructuring on the projectâs theory of
change was clearly a dropping in outcomes expected from the objective of increasing
7
rural electrification, with a potential improvement of results in the two other
objectives\. With the cancellation of Component 2, outputs and outcomes expected from
rural electrification activities could not occur, with some possibility of increase in the scope
of the results expected from the two remaining objectives\. Project achievements after
restructuring were not expected to fundamentally differ from those accomplished before
the restructuring\. The key difference is that, while the absence of results in rural
electrification downsized project efficacy before restructuring, performance of the revised
project had to be assessed based on two objectives\. While key indicators for the rural
electrification objective were canceled, all other indicators were maintained with their
targets, except that with the upgrade of the distribution infrastructure and the planning and
commercial functions of EDSA, the energy access target indicator was tripled\.
II\. ASSESSMENT OF OUTCOME
A\. Relevance of Project Development Objectives (PDO)
25\. Original project\. The PDO prior to restructuring was to (i) reduce losses in
electricity supply in Freetown Capital Western Area; (ii) improve commercial performance
of the National Power Authority; and (iii) increase access to electricity in selected rural
areas\. The project is consistent with the Second Poverty Reduction Strategy Paper (PSRP
II) for Sierra Leone covering 2008-2012\. Expanding and improving electricity supply is
one of the strategic priorities of the Government's National Development Program outlined
in PRSP-II and continues to be a critical priority under the new Poverty Reduction Strategy
for 2013-2017\. The 2013 letter of Government Policy in Utility Reforms in the Electricity
Sector confirms the Governmentâs commitment to complete the unbundling of the sector
and mandated the MoE to lead the full implementation of the Electricity Act, including the
resourcing of the EGTC and the EDSA\.
26\. The project is also consistent with Sierra Leoneâs Joint Country Assistance
Strategy covering 2010-2013, which was adopted by the World Bank, the International
Finance Corporation and the AfDB to support PRSP II with its two pillars: Human
Development; and Inclusive Growth\. A new Country Partnership Strategy in preparation
reiterates the focus on energy to support growth in the extractive sector\. Activities under
the project are well aligned with previous World Bank operations and are supported by
other development partners\.
27\. Revised project: The revised PDO is to: (i) reduce losses in electricity supply in
Freetown Capital Western Area, and (ii) improve commercial performance of the
Electricity Distribution and Supply Authority (EDSA)\. The relevance of the revised
objectives remained high after the project restructuring, because the Governmentâs
programs and policies in the energy sector did not change, and the World Bankâs strategies
in Sierra Leone in the energy sector were not revised during the period of project
implementation\. What changed was only the scope of the project activities to be
implemented during the project life, and not the relevance of project objectives\.
8
B\. Achievement of Project Development Objectives4
Original project: January 2013-October 2015 - 40 percent of disbursed resources
Rating: Substantial
(a) Objective 1: To reduce losses in electricity supply in Freetown Capital Western
Area:
28\. Achievements exceeded project targets in the areas of upgrading primary
substations, and distribution line\. Key outputs generated under this objective were (a)
the rehabilitation and upgrade of the energy distribution of the Kingtom, Wilberforce, and
Wellington substations, (b) the creation of a new Ropoti substation, (c) the installation of
original equipment for Blackhall Road substation and the supply of additional equipment
(transformers, switchgears, and related materials and accessories), (d) the replacement of
the 7\.8 km power line from Blackhall Road substation to Wellington substation via the
Ropoti substation, (e) the installation of 100 network statistical meters at 8 substations and
locations, and (f) the compensation of 107 project affected persons\.
29\. Most outputs indicators were either achieved or exceeded as follows: (a) the
number of substations created or rehabilitated under the project reached 5, exceeding the 4
substations targeted, and (b) the length of distributions lines rehabilitated under the project,
was slightly exceeded, reaching 7\.8 km, against a target of 7\.5 km\. On the contrary, the
number of statistical meters installed under the project reached 100 units, or 50 percent of
the target\.
30\. Key outcome achieved includes the reduction of electricity total losses per
year, and improved reliability of the network, but precise assessment and validation
of total and technical losses is still work in progress\. EDSA reported that generation
capacity utilization increased from 76 percent in December 2016 to reach 90 percent in
March 2017\. The reduction of total losses on its distribution network improved, reaching
on average 34\.5 percent (see figure 1) during January 2001-July 2017, against a baseline
of 38 percent in 2009, and a target of 33 percent at project closure\. However, a good
measure of electricity losses requires better coordination between EDSA and EGTC which
is being put in place\.
4
A split assessment of the project outcome will be conducted for this project, due to the
October 2015 restructuring, and the ensuing revision of the project objectives and the
results framework\.
9
Figure 1: Loss Reduction in Freetown 2016-2017
Source: EDSA Monthly Progress Report â August 2017
(b) Objective 2: To improve commercial performance of the electricity distribution
Authority\.
31\. Key outputs consisted primarily in the installation of prep-paid meters, the
setting up of a revenue management system, and the completion of studies that set the
stage for better management of the commercial function in the energy sector\. In
summary, (a) 20,000 meters were installed in 20 neighborhoods of Freetown; (b) two
EDSA appointed staff were trained, (c) a revenue management system with its backup,
software management application, power banks (uninterruptible power supply [UPS]) for
main and backup power, and Human Machine Interface (HMI) was delivered, (d) a
transaction advisory and tariff study was completed, (e) a business plan for the electricity
distribution utility was completed, including resources management, commercial
enhancement, and technical and operations modules, as well as an electricity network
investment plan setting out priorities for the Greater Freetown area and the rest of the
country were completed, and finally (f) the bidding document for a Management
Contractor was prepared\.
32\. Achievements toward performance indicators were as follows: (a) the target of
20,000 pre-paid meters was fully achieved, and (b) the target for staff recruited at the PMU
was exceeded, reaching 6 against a target of 4 following 2015 restructuring\.
33\. Key outcome indicators achieved were the following: (a) the collection rate target
by EDSA of 86 percent was achieved and, (b) the target of 620,000 direct project
beneficiaries, of which 51 percent are female, was exceeded\. These results were obtained
because of (a) a decisive decision to increase consumers connected via pre-paid meters,
and (b) the launch of a strong revenue protection and arrears recovery program, as well as
sustained commercial audit\. Figure 2 shows a net change in trend of the ratio between the
volume of MWh consumed and the volume of MWh billed since October 2016\.
10
Figure 2: Comparison of Levels of Electricity Consumption and Billing
Source: EDSA Monthly Progress Report â August 2017
34\. It is worthy to mention that key studies funded by the project and detailed in para 31
have had a strong impact on the operational and commercial performance of EDSA\.
(c) Objective 3: To increase access to electricity in selected rural areas:
35\. Due to the Ebola outbreak, the pursuit of this objective was cut short, and during
the 2015 level 1 restructuring, a consensual decision was reached by the Government and
DFID to postpone the implementation of the identified activities, and to fund them later in
the context of a new financial instrument\. Expected outputs and outcomes under this
objective could not be pursued\.
(d) Assessment of performance of the original project:
36\. Efficacy of the initial project is assessed as substantial, owing to good
performance toward the two objectives and a situation of force majeure that
annihilated all efforts to pursue the third objective\. Based on what was developed under
the first objective, performance toward the electricity reduction loss was positive\. While
precise quantification of performance in reducing losses in electricity is work in progress,
figure 1 shows that the losses were on average lower during December 2016 - June 2017,
in comparison to the previous period of January 2016-November 2016\. The performance
is set to increase further when most of the projectâs effects (from new electrical lines and
upgrading of substations) are used over a longer period\. Toward the second objective, the
unbundling of the energy sector is still recent, but the commercial outcome of EDSA has
shown strong signals of performance\. A higher level of revenue collection was spurred by
increase in shift from post-paid to pre-paid billing and the launch of a strong revenue
protection program and arrears recovery, as well as sustained commercial audit\. The
pursuit of the third objective was curtailed, owing to a situation of force majeure\., and not
to shortcomings related to project design, monitoring and evaluation (M&E) or
11
supervision\. On balance, the projectâs efficacy toward stated objectives of the initial project
is rated Substantial based on good progress toward the two first objectives, and an
unfortunate event that cut short the pursuit of the third objective\.
Revised project (November 2015-July 2017-60 percent of disbursed resources):
Rating: High
37\. The substantive change brought in by the 2015 level 1 restructuring was the
cancellation of the rural electrification component and the objective that was pursued, with
light reallocation of resources and adjustments in target indicators\. Project achievements
after restructuring do not fundamentally differ from those accomplished before the
restructuring\. The key difference is that, while the absence of results in rural electrification
downsized efficacy before restructuring, performance of the revised project is assessed
based on two objectives\.
(a) Objective 1: To reduce losses in electricity supply in Freetown Capital Western
Area:
38\. New activities prompted by the restructuring and orientated toward this objective
were limited, and consisted of technical assistance and advisory work towards the
preparation of the Western Area Power Generation Project and overall improved sector
performance, and increases in resettlement costs associated with the rehabilitation of the
distribution network\. Overall, key outputs and outcomes achieved under this objective are
like those described under the same objective during the initial project\. This was further
illustrated by the maintaining key indicators with their targets for this objective before and
after restructuring, with the exception of the energy access target\.
(b) Objective 2: To improve commercial performance of the National Power
Authority:
39\. New activities implemented toward this objective after the restructuring were also
limited\. Reallocated resources principally funded technical assistance work that
strengthened the management, planning and commercial functions of EDSA, and the
recruitment of the private Management Contractor\. Overall, key outcomes achieved under
this objective are comparable to those described under the same objective during the initial
project\. Key indicators were also maintained were maintained, except that with the upgrade
of the distribution infrastructure and the planning and commercial functions of EDSA, the
energy access target indicator was tripled and was exceeded at project closure\.
(c) Assessment of the performance of the revised project:
40\. The achievements of the revised project under the two objectives were strong\.
Project efficacy is shown through the theory of change presented in table 2\. The theory of
change of the restructured project omits from this results chain the activities (Component
12
2) that were canceled during the level 1 restructuring in 2015, while those consequent to
project resources reallocation were added, including their implicit outputs and outcomes\.
41\. The two-key notable additional outcomes reinforced under the revised project were
(a) the increased level of energy access and (b) institutional strengthening of EDSA owing
to technical assistance to boost its management, planning and commercial functions\. This
additional performance in these two areas is attributable to the reallocation of resources
freed by the cancellation of the rural electrification component\.
Table 2: Results and Theory of Change of the Revised Project
INPUTS/ OUTPUTS OUTCOMES
ACTIVITIES
(A) Objective 1: Reduce losses in electricity supply in Freetown Capital
Western Area
(i) Rehabilitation of (i) The Freetown 161kV Kingtom (i) Restoration of power at 33kV,
critical components substation was rehabilitated and upgraded\. thus increasing the evacuation
of Freetown capacity of the network and
distribution (ii) The Wilberforce, Blackhall Road and reducing associated technical
network, Wellington substations were rehabilitated losses;
and upgraded\.
(ii) Supply and (ii) Existing line operating at
installation of a bulk (iii) A new Ropoti substation was created 11kV replaced by the
metering and upgraded; construction of a 7\.8km 33kV
line;
(iii) Installation of (v) Transformers, switchgears, and related (iii) Improved reliability of the
power lines materials and accessories for Blackhall network and reduction of
Road substation were supplied; technical losses\.
(v) Replacement of the 7\.8km power line
from Blackhall Road substation to
Wellington substation via Ropoti
substation;
(vi) 100 bulk meters installed at 8 locations
in Freetown\.
(B) Objective 2: Improve commercial performance of the National Power Utility
(i) Supply and (i) 20,000 meters were installed in 20 (i) Higher number of beneficiaries
installation of pre- neighborhoods of Freetown\. connected to the electricity grid,
paid meters including females\.
(ii) A Factory Acceptance Test was
(ii) Supply and conducted by a consultant firm, and two (ii) Improved revenue collection
installation of the EDSA appointed staff were trained\. rates and debt repayment, but the
revenue scope of the achieved results was
management (iii) A revenue management system with its affected by modest funding\.
system backup, software management application,
power banks (UPS) for main and backup (iii) Electricity utility unbundling
(iii) Preparation of power, and HMI was set up and is completed; and
the business plan for operational\.
the electricity (iv) Institutional strengthening of
distribution utility (iv) A business plan for the national EDSA\.
electricity distribution utility was
completed, including resources \.
13
(iv) Preparation of management, commercial enhancement, and
the Electricity technical and operations modules\.
Network Investment (v) Completion of the Electricity Network
Plan Investment Plan drawing priorities for the
Greater Freetown area and the rest of the
(v) Preparation of country\.
the transaction
advisory and tariff (vi) Completion of a transaction advisory
study and tariff study\.
(vi) Preparation of (vii) Completion of bidding document for
the bidding the selection of an EDSA Management
document for the Contractor\.
Management
Contractor for (viii) Supply of office equipment, vehicles,
EDSA and software to the PMU, which was moved
to work under EDSA after project
completion\.
Performance On balance, project achievements toward high level objectives was high\.
toward high level
objectives
Source: Information collected from the Implementation Status and Results Reports ISRs and the PMU
C\. Efficiency
Rating: Modest
42\. Economic and financial efficiency\. An ex-post economic and financial analysis
of the project was carried out to update the projectâs financial flows in comparison to the
scenario presented in the PAD\. The economic analysis looked at the costs and benefits
accruing to the urban households benefiting from connections to rehabilitated electricity
infrastructure, and the additional equipment funded by the project to improve efficiency in
the use of electricity\. The high economic returns of the projectâs investments in
rehabilitated electricity plants, and the savings arising from the pre-paid meters and the
loss reduction mechanisms brought in by the project allowed the generation of a net present
value NPV of about US$ 2\.46 million and an economic internal rate of return (EIRR) of
14 percent over the 20-year period during which the main acquired infrastructure will last\.
43\. Benefits\. The quantifiable benefits obtained from the different investments include
the following: (a) the benefits from improved distribution (P*Q) and pre-paid meters, and
(b) savings from the technical and non-technical losses reduction consecutive to the project
investments\.
44\. Costs\. The main costs of the different infrastructures include the investment costs
and the costs for operation and maintenance (O&M)\. Additional costs specific to the sub-
projects were included under the specific analyses of the sub-components\. A detailed
account of the calculations of costs and benefits of the diverse categories of infrastructures
are provided in annex 3\.
14
45\. Results\. Table 3 summarizes the results of the ex-post economic analysis of the
project\. The NPV of economic benefits during a 20-year life of the project is US$2\.46
million\. The EIRR is 14 percent\. The economic returns are moderate, since the investment
return from the loss reduction programs is relatively small\. The financial analysis of the
project reveals that the project is financially viable with an internal rate of return (IRR) of
33 percent in the base case and an NPV of US$23\.43 million\. There are additional direct
and indirect benefits from connections to electricity which are difficult to estimate, such as
improvements in education, health, communication and productivity\.
Table 3: Summary of Economic and Financial Analysis
ICR Results Appraisal Results
NPV (US$, EIRR NPV (US$ ERR
millions) millions)
Economic Analysis 2\.46 14% 26\.7 39%
Financial Analysis 23\.43 33% 11\.3 36%
Source: World Bank staff calculations\.
Note: ICR = Implementation Completions and Results Report\.
46\. Operational and administrative efficiency\. Because of the fragile environment
context, the project delivery suffered from the Ebola outbreak when its implementation
was at its climax\. Project implementation before the Ebola outbreak was delayed, because
the PMU had limited capacity in completing procurement and safeguards requirements to
disburse and acquire goods and services\. Activities related to pre-paid meters, and energy
loss reduction were launched, and some of them were swiftly completed\. The project came
almost to a halt when the Ebola crisis hit to the extent that supervision missions were at
times relocated to Abidjan, making it impossible for the World Bankâs team to have a
realistic assessment of the shortcomings on the ground\.
47\. There were implementation delays stemming from the lack of project
implementation readiness\. Deterioration of health conditions brought the project almost to
a halt, affecting more specifically Component 1 related to rehabilitation of substations,
because the procurement related to Component 1 were delayed\. The operational efficiency
of the project is rated Modest, mainly because of the delays in launching the project, due
to weaknesses in the PMU and the consequences of the health deterioration on the ground\.
Overall efficiency is also rated Modest\.
D\. Outcome Attribution
48\. The achieved projectâs outcome embodies a major contribution from other key
stakeholders in the countryâs energy sector\. The above-described project outcomes were
achieved because of the activities funded by this project, but also because of parallel
support and funding provided by ongoing Bank projects and other donors, including inputs
by the unbundled energy utilities, especially EDSA\. In all, table 4 shows that ongoing
support from other stakeholders who have contributed to the level of achieved outcome\.
The performance reflected by the key indicators of loss reduction and collection rates could
15
not be achieved without the role of the unbundling reform that led to the creation of EDSA,
or the support provided by JICA, and other external donors\.
Table 4: Stakeholders Active in The Sierra Leone Energy Sector
Partner Purpose Amount
World Bank /EAP Supply of pre-paid meters US$16
Upgrade and construction of 33 kV primary substations million
Delivery of distribution lines
Delivery of revenue management system and network meters
World Bank/ ESURP Energy Sector Utility Reform Project - Network expansion and US$40
rehabilitation million
Japanese Construction of a new 33 kV primary substation at Goderich US$14
International and 33kV distribution line between Wilberforce and Goderich million
Corporation Agency
ECOWAS/WAPP The distribution component includes upgrading of network and US$21\.8
extension of electricity to unserved communities, and the supply million
of pre-paid meters (approximately 8,000 meters)
Islamic Development Rehabilitation and strengthening of medium and low voltage US$10\.4
Bank network million
MCC Electricity Sector Reform Project (ESRP) with two components: NA
(a) Roadmap and coordination activity and (b) the institutional
strengthening activity
AfDB Support to the energy transmission and distribution network NA
EDSA Provision of 500 AMR meters for an Advance Metering NA
Infrastructure pilot, being implemented by PEC SL (South
Africa)
Source: NRECA International Ltd, July 2016
E\. Justification of the overall outcome rating
Original project:
49\. The relevance of objectives is high for the original objective\. Efficacy of the initial
project is rated Substantial, while efficiency is Modest\. The overall outcome rating for the
original project is Moderately Satisfactory\.
Revised Project:
50\. The relevance of objectives for the revised project is also high\. Efficacy of the
revised project is rated High, while efficiency is modest\. The overall outcome rating for
the revised project is Moderately Satisfactory\.
Assessment of Overall Performance
51\. Applying the World Bank formula for restructured projects, (4 X 0\.40) + (4 x\.0\.60)
= 4\.00, the overall outcome rating for the Energy Access Project is Moderately
Satisfactory as shown in table 5\. This rating summarizes the weighted performance of the
project before and after restructuring, and goes beyond the achievement of expected of
outputs and outcome indicators\. It takes into account the contribution of this project to the
16
stated objectives, including also the contribution of EDSA, other World Bank projects, and
other donors to the same objectives through their respective interventions\. While project
results contributed to the achieved outcome and objectives, other World Bank projects and
other donors supported the energy sector and similar activities (see paragraph 48, table 4),
and contributed to the achievement of the same objectives
Table 5: Weighted Project Performance
Against Against Overall Comments
original Revised
PDOs PDOs
Rating for MS 4 4
Weight (% 40% of 60% of
disbursed US$16\.0 US$16\.00
before/% million million
disbursed after
Weighted value 1\.60 2\.40 4\.00
Final Rating - - Moderately Cancellation of the rural
Satisfactory electrification component affected
the performance of the initial
project, while reallocated resources
enhanced the performance of the
revised project that remained with
two objectives\.
F\. Other Outcomes and Impacts
52\. Gender: The immediate gender impact of the project is that 51 percent of the new
beneficiaries of energy are female, and an estimated 360,000 females have access to
energy\. Other gender impacts attributable to the project have not been assessed yet\.
53\. Institutional strengthening\. The project has had positive institutional effects on
the implementing agencies, namely the MoE and EDSA\. The project was instrumental in
supporting EDSA, by funding the advisory work and the technical assistance leading to the
hiring of a Management Contractor under the Energy Sector Utility Reforms Project
(ESURP) to oversee improvement of EDSAâs operational and finance performance\. The
Network Investment Plan financed by the project has laid the foundation for reinforcing
the network and further expansion which will also be implemented under the ESURP\.
Contribution to the institutional strengthening in the Government was minimum, because
the PMU hired independent consultants to support project implementation, who are not
bound to remain with the public sector after the project closure\.
54\. Other positive and unintended impacts\. Following the completion of the project,
there are expected direct or indirect effects involving the private sector business that will
be spurred by the availability of electricity in the new neighborhoods, thus contributing to
poverty reduction and shared prosperity\. However, there have been, so far, no surveys to
assess the scope of that impact\.
17
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
3\.1 Key Factors during Preparation
55\. The project design reflected the challenges in the countryâs energy sector, and
the willingness of two donors (the World Bank and DFID) to support the
Governmentâs sector reform program\. The sustainability of the countryâs entities
involved in the generation and transmission of electricity was central to economic growth
and diversification, and a condition for the Government to improve public services to
people in the future\. The Government did not have the resources and the expertise
necessary to undertake the appropriate diagnostic of the energy sector, and to chart out a
reform program that could improve its efficacy and efficiency\. This is the context that
underpinned the dialogue between the Government on one side, and the World Bank and
DFID on the other side, and which resulted in the design of this project\. This project was
a consensual undertaking between the Government and the two donors, and it was a first
phase of a long-term program to reimagine the development of the countryâs energy sector\.
56\. The project design incorporated the lessons learned from the World Bankâs
previous projects implemented in the countryâs power and water sectors, and the
dialogue that surrounded their design and delivery\. The project had well-perceived
goals of improving the efficiency of the energy utility through the reduction of losses, and
the launching of rural electrification\. However, the second objective was postponed
following the Ebola outbreak in 2015 and DFIDâs option to support identified activities
through another financial instrument\. Overall, the key goal of the project was concentrated
around stepping up the technical and commercial performance of the energy utility\. The
project objectives were not ambitious and the envisioned outcomes were realistic, and drew
from the dialogue that brought together key stakeholders supporting the energy sector,
including the Government, its public entities, and the external donors\. Identified activities
were the Governmentâs priorities in the sector, and their costing was sound, including
earmarked contingencies to cater to variations in the quantities and prices of goods and
services\.
57\. The design of implementation and M&E arrangements drew from the World
Bankâs interventions in the countryâs water and energy sectors\. The project design
drew from the World Bankâs experience in implementing the Power and Water Project
(P087203) and the Bumbuna Project (P086801), and the field experience accumulated
during the implementation of these two closed projects\. The choice of the implementing
agency, and the selection of M&E indicators drew from the experience of implementing of
the above projects\. An already existing PMU in the MoE was maintained to take up the
supervision of the project, and attention was stressed to make sure that procurement, FM,
and safeguards functions are dealt with carefully, as they underperformed during
implementation of previous projects\.
58\. Risks were assessed as high at appraisal, because of high country risks and
the crippling weaknesses in the project implementing agency\. The fragile country
context, the weak sector regulatory institutions, and the systemic sector governance
18
challenges were all factors that could potentially jeopardize the project implementation\.
Because of weak capacity in the electricity utility and the MoE, project implementation
was entrusted to the existing PMU established at the ministerial level, based on prior
experience from power sector projects that showed that low implementation capacity had
increased the risk of hiring unqualified firms for carrying out fiduciary management tasks\.
To mitigate implementation risks, the option adopted consisted of hiring a group of
individual consultants for key PMU functions and to ensure that most of procurement will
be conducted through international competitive means, and to enhanced supervision
through site visits to allow for immediate mitigation of issues that might be identified
during implementation\. Table 6 summarizes developments related to identified and non-
identified risks and the extent to which they were mitigated\.
Table 6: Developments Related to Identified and Unforeseen Project Risks
Identified Risks Mitigation Actions Adopted or Consequences of
Absence of Remedy
Country-level risks: Given the fragile Both the Government and the electricity utility
context, emergencies might occur, shifting (NPA/EDSA) remained committed to the project
the Governmentâs focus to other objectives and helped to address implementation
development priorities\. obstacles throughout the project life\.
Fiduciary and governance risks: The risks materialized and there were implementation
Implementing agencies had weak FM and delays due to procurement weaknesses and red tape in
procurement capacity, including weak processing the procurement and delivery of goods and
internal controls and audit systems that may in hiring required expertise\. Procurement of goods was
affect implementation and oversight on the slow, because procurement was not staffed properly in
project and long-term outcomes\. numbers and quality\.
Implementation capacity risks: Both the The risks materialized, and were mitigated by through
electricity utility and the MoE had weak the fielding of experienced international expertise to
institutional and project management support the PMU ( including the supervising Engineer)\.
capacity to effectively implement the project\.
Unforeseen risks: The Ebola outbreak in The Ebola outbreak brought the project implementation
2015 triggered the revision of project to a halt, triggered the cancellation of the rural
objectives, components and implementation\. electrification component, and shifted the project focus
to upgrading the substations, and strengthening the
PMU\.
3\.2 Key Factors during Implementation
59\. The reform to unbundle the energy utility and the sector support by external
donors were positive factors for the project implementation\. Among other changes in
the sector, the unbundling reform led to the setup of EDSA and to putting it under private
management\. The reform has created a conducive environment for changes in consumer
behavior, including the move from post-paid toward pre-paid billing\. Moreover, the
presence of other donors supporting the reforms in the energy sector has created a
momentum of change in the energy sector, thus helping in the launching of measures and
actions supported by the project, notably revenue protection programs to increase revenue
collection\.
19
60\. There was a slow start to the project implementation, owing to weak capacity in
the implementing agency with regard to key skills required to effectively run the
project\. More than a year after project approval, the key PMU positions of FM and
procurement specialists were not filled yet, leading to difficulties and delays in the
launching of project activities, including the procuring of pre-paid meters and the
associated revenue management system\. Despite some progress over time, the World Bank
team remained concerned until late in the project implementation regarding protracted lags
in procurement, weak knowledge of and compliance with World Bank fiduciary
requirements and the lack of coordination and communication among the key project
stakeholders\. The PMU was demonstrating weak planning and oversight of deliverables
and insufficient command of the requirements related to procurement and safeguards as
well as stronger coordination with and support by the staff of the distribution utility\. The
observed weaknesses posed at the time a risk to timely achievement of the projectâs
expected results\.
61\. The outbreak of the EVD in 2014 annihilated the thrust of implementation of
the key project activities\. The implementation of the network rehabilitation component
that had started in the meantime, including the implementation of the Environmental and
Social Management Plan and the relocation of Project Affected Persons suffered significant
delay, because of the outbreak of EVD\. Following the inability of the supervision mission
to travel to the country because of the EVD outbreak, meetings among the World Bankâs
team and the PMU representatives involved in project implementation took place in
Abidjan during 2014-2015 to assess progress on the ground, and to agree on which steps
could be taken despite the ground difficulties\.
62\. A change in the priorities and the support nature of a key donor (DFID) led to
a level 1 restructuring that affected the project configuration and the expected
outputs and outcomes\. Following the delays and implementation disruptions that arose
from the EVD, some activities under Component 1, and Component 2 had fallen behind
their implementation schedule or were facing execution obstacles\. While the contract for
the rural electrification for prioritized rural villages had already been prepared, the bidding
process was put on hold due to EVD as no disbursements for Component 2 had taken place\.
Similarly, the BIS activity under Component 1 failed to attract bidders\. In the instance,
DFID had indicated that it wished to exclude the pilot program for photovoltaic systems in
rural villages under the project and pursue a more comprehensive approach to rural
electrification under a separate engagement\. All these developments put together led to a
level 1 restructuring in October 2015 that comprised the following: (a) a change in the
PDO, (b) the cancelation of the second component related to rural electrification, (c) the
elimination of the BIS activity under Component 1, so that it can be part of a larger
procurement package under a new project, (d) the reallocation of resources, and (e) the
extension of the closing date of the project until April 30, 2017\.
63\. PMU weaknesses in addressing procurement and environment safeguards
issues and delays provoked by the EVD led to the extension of the project closing date\.
When the country was declared Ebola free in October 2015, the implementation of key
components resumed, although the general weak capacity of the PMU combined with the
20
lack of incentives to process contracts was the key obstacle to project progress toward
completion\. By the end of 2016, only the civil works of the Freetown Upgrade contract,
and its associated compensation and relocation of project affected people was still under
way, while all other activities not cancelled during restructuring were completed in the
meantime\. To finalize the works related to the Freetown Upgrade network rehabilitation
and the associated Resettlement Action Plan (RAP), stakeholders agreed to extend the
project execution until July 31, 2017\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT
OUTCOME
A\. Quality of Monitoring and Evaluation
Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Rating: Moderately Satisfactory
64\. M&E Design\. A Results and Monitoring Framework was negotiated and agreed
upon among the PMU, the electricity utility (NPA) at the time, and the Ministry of Energy
and Water Resources (annex 1 of the PAD)\. The framework identified result indicators for
the project and for each of its components\. The framework had annual target values for the
results indicators and baseline data against which results were to be measured\. Most data
were to be provided by the NPA from the utility database and accounts, or collected through
direct observation, or from technical reports\. The PMU was responsible for collecting and
verifying the data, and submitting progress reports to the World Bank, annually for PDO
indicators and semi-annually for the intermediate indicators\.
65\. M&E Implementation: There were 7 filed ISRs, and all of them provided the
progress achieved toward the results indicators\. Following the level 1 restructuring of the
project in October 2013, the Result Framework was revised to reflect the change in the
project objective and components\. The midterm review (MTR) exercise could not take
place, because it coincided with the outbreak of the Ebola crisis\. When the Ebola crisis
subsided, the project team concentrated on resolving operational issues of the project to
ensure that the retained components are completed\.
66\. M&E Utilization: The data and information provided by the ISRs were used to
monitor progress in the project implementation, but the Ebola outbreak and the cancelation
of the MTR were factors that reduced the possibility of collecting M&E information, and
using it to spearhead the project implementation\.
67\. Overall, M&E was mostly rated Satisfactory in the ISRs from the outset until April
2016 when it was downgraded to Moderately Satisfactory to reflect delays in reporting
from the PMU and incomplete progress reports\. This review concurs with the Moderately
Satisfactory rating in the last ISR\.
21
B\. Environmental, Social and Fiduciary Compliance
Social and Safeguard Compliance:
68\. The project was classified under the safeguards category B, and two safeguards
policies were triggered by the project: (a) Environment Assessment OP/BP 4\.01, and (b)
Involuntary Resettlement OP/BP 4\.12\. An environmental and Social Impact Assessment
and an Environment and Social Management Plan were prepared to ensure that adequate
mitigation measures are implemented\. Safeguards preparation and compensation payment
started of satisfactorily but deteriorated to Moderately Unsatisfactory in the last months to
project closure\. The project at start impacted several project-affected persons\. The RAP
was implemented satisfactorily with only two outstanding cash compensation (totaling
about 1000 USD) largely attributed to procedural bottlenecks\. One project-affected person
was not available during asset enumeration and negotiation for compensation; the other
involved court litigation among multiple claimants\. The mechanism involved a four-tier
system of resolving conflicts at the community level under the ward councilors (first-tier)
through the two management committees, the RAP Implementation Committee and the
Intermenstrual Sub-Committee (second and third-tier respectively), and the final stage
where the complainant has the option to seek redress in a court of law (fourth-tier)\. The
PMU at implementation further paid additional compensation to PAPs due to omission or
requiring additional land as well as from inconveniencies to a project affected person (PAP)
following prolonged implementation of the project\. About 65 to-70 PAP participated in a
Livelihood Restoration Program\. Seedlings were provided to all participants for vegetable
gardening\. Training on health and sanitation was concluded and 68 hand washing basins,
hand sanitizers and soaps were distributed to PAPs in the wake of Ebola crisis\.
69\. During implementation, the project suffered from safeguards challenges\.
Dismantling and stringing of towers resulted in additional damage to properties\. The
project by design in a heavily congested area was a factor\. It is worth noting however that,
the design followed the existing right of way from the plans under the previous Sierra
Leone Power and Water Project\. There was minimal buffer for work space and
environmental and social safeguards staffing had weakened\. The clientâs safeguards
specialist resigned and it took a while to replace her\. The Ebola crisis also affected
supervision\. Above all, there was lack of speedy responsiveness by British Engineering
Services, the contractor on the ground, in adhering to very basic safety precautions to
minimize the impacts\. There was minimal progress by the contractor following several
safeguards missions and recommendations to fix the issues\. Upon escalation to the Sierra
Leone Country Management Unit, Energy Minister and Minister of Finance, disbursement
was subsequently suspended for a while to force compliance\.
70\. Compensation has been paid to PAP who was absent during enumeration\.
Regarding the other outstanding payment, the Ministry in charge of energy will, and
expects to use interest earnings on project funds to, offset the compensation when the court
case is resolved\. Contractor has resolved all compensations to cover damages during
construction\. Any outstanding issues that is not contractual obligation to the contractor will
be addressed under the ESURP\.
22
71\. Overall rating of Moderately Satisfactory is conferred as the project is in
compliance with social and environment safeguards at the time of finalizing ICR due to
efforts made by the Bankâs team, PMU and Government to resolve issues during
implementation and after project closure\. The projectâs safeguards rating was always
satisfactory except for 3 months in the later stages of the project when it deteriorated\. A
positive note is that any issues that may arise will be dealt with in the context of ESURP
which is building on projectâs achieved outcome\.
Fiduciary Compliance:
72\. FM\. The risk assessment of the PMU FM was moderate at approval, as existing
FM arrangements of the PMU satisfied the World Bankâs minimum requirements\. A set of
measures and an action plan were identified to reduce the FM risk and ensure that FM
systems provide accurate and timely information on the status of the project\. FM was rated
Satisfactory throughout the project implementation period, and no irregularities were
reported\. However, an external audit will be conducted after the project closure to conclude
on the FM performance of the project, and this is due at end of January 2018\.
73\. Procurement: The PMU had weak procurement capacity and benefitted from the
contribution of an internationally hired procurement specialist, and some strengthening
occurred with the recruitment of a procurement assistant\. However, the contract of the
international procurement specialist was not extended leading once again to a decrease in
the overall procurement capacity of the PMU\. Additional support was provided by the
World Bank through the energy specialist deployed to Sierra Leone, but there was no
international hiring as the Government was not favorable to replacing the procurement
specialist\. There was a near mis-procurement on one of the contracts, because of
incomplete bid documents, and major procurement activities were put on hold until the
situation was later resolved\. Therefore, the procurement performance was rated Moderately
Satisfactory in the ISRs throughout the period of project implementation to reflect the
procurement shortcomings described above\. This review concurs with the Moderately
Satisfactory rating\.
C\. Bank Performance
Rating: Moderately Satisfactory
(a) Bank Performance in Ensuring Quality at Entry
74\. The World Bank tapped the findings from its previous interventions in fragile
environments and designed a simple project, but the project had weak M&E and
implementing arrangements\. Some of the World Bankâs findings and lessons with
regards to emergency operations were factored in the projectâs design as follows : (a) the
scale and complexity of emergency projects have to ensure that the borrower has the
capacity to manage the projects and absorb the lessons arising from them and (b) World
Bank supervision teams needed to have the necessary range of expertise to deal effectively
23
with the key project components\. As such, the projectâs proposed scope was realistic and
simple, but implementation arrangements involved entities that had weak experience in the
type of activities that were proposed\.
75\. The World Bank used its convening and management power to implement a
project funded by an external partner (DFID): The resources used to fund the project
were provided by DFID, and showed the extent to which the World Bank enabled a synergy
between its convening and management capabilities and that of other donors to support the
energy sector\.
76\. While the overall risk was assessed as high, mitigating measures were correctly
identified, but the Ebola outbreak annihilated all mitigating mechanisms at the
country level\. Some mitigating measures at operation level worked and rescued the
project\. At the country level, the main risks that could jeopardize the project as identified
in the PAD, included the implementing agency risk and the delivery monitoring and
sustainability\. Unfortunately, all mitigating measures were blown away by the
overwhelming nature of the Ebola crisis that hit the country during 2014-5, leading to a
slow-down and then a halt in the project implementation\.
(b) Quality of Supervision
77\. There were delays in launching the project, because of low implementation
readiness, and weak technical capacity of the PMU\. The procurement of equipment to
upgrade the substations was problematic in the beginning, because the PMU was not
staffed to handle the operation, and the Ebola crisis worsened the context making the close
of the operation even more difficult\. Throughout the project implementation until the
project closure, there were weaknesses in procurement, FM reporting, and supervision of
social and safeguards aspects of the project\. Implementation was accelerated only when a
resident World Bank task team leader was brought in after the Ebola crisis subsided\.
78\. While the overall risk was assessed as high, mitigating measures were correctly
identified, but the Ebola outbreak annihilated all mitigating mechanisms at the
country level\. At the country level, the main risks that could jeopardize the project as
identified in the PAD, included the deterioration of the macro-economic, security and
political environment\. While the above risks were under control, unfortunately, all
mitigating measures were blown away by the overwhelming nature of the Ebola crisis that
brought the project implementation to a halt\.
79\. While the Ebola crisis brought the project implementation to a halt, World
Bank supervision remained resilient\. The Ebola pandemics that hit the country during
the period 2013-14 brought the project implementation to a halt, and made supervision
meetings bringing together the World Bank staff and the representatives of implementing
agencies difficult\. During the above period, project activities were either stopped or slowed
down, because of dire health conditions on the ground\. When the country was declared
Ebola free in 2015, the World Bank, DFID, and the Government agreed for the 2015 project
restructuring, to continue the project implementation with a less ambitious agenda and
24
update the Result Framework\. The new operational adjustments supported the continuation
of project implementation with improved efficacy\.
(c) Justification of Rating for Overall World Bank Performance
80\. Implementation arrangements could have been improved\. Supervision was affected
by weak capacity in the PMU and the Ebola crisis, but the World Bankâs mitigation
measures through a project restructuring and fielding of country-based staff with the
relevant experience came in with a delay\. Overall, World Bank performance is rated
Moderately Satisfactory\.
D\. Risk to development outcome
81\. The borrower committed to follow up on pending issues identified during the
ICR mission\. Three weak spots were identified during the ICR mission in September 2017
as follows: (a) there were concerns that installation of the equipment delivered at the
Blackhall Road substation could be delayed or forgotten, (b) there were social and
safeguards issues related to the electrical line linking Blackhall Road substation, and
Wellington substation, which were not settled at project closure, and (c) capacity building
in the borrowerâs institutions was not dealt with correctly during project implementation\.
The borrower committed to follow up and act on those issues satisfactorily in the context
of government initiatives and cooperation with external donors\.
82\. The World Bankâs ongoing and future interventions will build on the achieved
results in the energy sector\. The World Bank is active on the ground through the ESURP
and the Western Area Power Generation Project\. The ESURP will take care of urgent
pending activities, particularly the installation of the transformers and switchgears at the
Blackhall Road substation, while both projects will continue to build on achieved results
to make the countryâs energy sector more efficient\.
83\. The hiring of a private Management Contractor to provide technical
assistance in the oversight of EDSAâs performance might contribute to improved
outcomes in the countryâs energy sector\. Bringing private management ethics in the
management of energy distribution might improve commercial performance, and the
energy sector as a whole\. Similar approaches have worked under different circumstances\.
If the World Bank and other donors maintain the momentum of reforms and support to the
energy sector, the outcome achieved under this project could be sustained\.
V\. LESSONS LEARNED
84\. Implementation readiness at project approval and adequate M&E are central
to prompt project launching and effective supervision\. There were delays in the
launching of the project, because there was inadequate preparation of key documents such
as bidding documents and the PMU was not properly staffed, staff rotation in key functions
(coordination and procurement) was observed throughout the project life\. Furthermore,
25
weaknesses in the PMU hampered the collection and dissemination of the information
related to project implementation progress\. Mitigation measures would include making
sure that at project approval there is adequate technical capacity in the PMU to perform
key functions of project management and M&E\. In fragile environments, the World Bank
team should assess more rigorously, existing technical capacity at the implementation
agency during project preparation to facilitate efficient planning and provision of adequate
technical assistance\.
85\. When strengthening technical capacity in the borrowerâs institutions becomes
a challenge, one effective option is to bring in external expertise to move forward with
project implementation\. Two years after project effectiveness, the project was
accumulating delays, because implementing agencies lacked the technical know-how to
process procurement and disbursements\. Fielding of a resident task team leader made a
difference in the project implementation\. At the project closure, weaknesses in the PMU
and the borrowerâs institutions were still observable\. Besides outsourcing expertise, it is
important to devise better strategies such as foreign exchange program to enable staff from
fragile countries train on similar Bank projects in other countries as part of ongoing reforms
and that technical capacity is built in local institutions using the World Bankâs resources
before the project closes\.
86\. Progress in reforming the energy sector relies on balancing the necessary
investments toward upgrading the energy infrastructure that can deliver good service
to the client, and the scope of changes in the policies governing the energy sector\.
Some of the policy measures that drove the ongoing energy sector reform in Sierra Leone
were the tariff increases, and the prepayment system in revenue collections\. These difficult
reforms were launched and conducted successfully and seem to generate good results and
are generally supported by the public, because currently the unbundled electricity utilities
(EDSA and EGTC) strive to make the service available in a sustained manner, owing to
recent investments partly supported by the World Bank\.
87\. World Bank specialists need to get involved more in project design and
implementation to improve compliance with social and environmental safeguards\.
Both the World Bank and the borrower put insufficient attention in ensuring that skilled
staff oversee compliance with social and environmental safeguards from the outset of
project preparation and during implementation such as interacting timely with contractors\.
Efforts to catch up the lost time yielded reduced results, with the poor bearing most of the
burden of low-level compliance with social and environmental safeguards, which is
contrary to the World Bankâs motto of eradicating poverty\. Involvement of safeguards
experts in the preparation of the project would have provided advise on an alternative
routing of transmission line and led to a simpler and practical design of infrastructure\.
88\. The World Bank management should consider increased support for country-
based staff if necessary: In fragile countries, the World Bank team is quick to secure
financial resources, but has difficulties to disburse because of weaknesses in the PMU,
particularly in handling procurement and disbursement\. The World Bankâs team can
26
achieve success if hands-on support from the World Bank management is provided, more
so, if this is done in the early stages of the project\. It is a fine line and can be very confusing
for country based staff, who need encouragement and most importantly guidance from
management to take on this calculated risk of intervening in a fragile environment\.
VI\. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING
AGENCIES/PARTNERS
(a) Borrower/implementing agencies
Annex 7
(b) Cofinanciers
Annex 8
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
Not Applicable
27
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (US$ Millions Equivalent)
P126180-Sierra Leone Energy Access Project - Sierra Leone Infrastructure Development
Fund- TF-13246/ TF-071502
Components Appraisal Revised Actual/Latest Percentage
Estimate Estimate at Estimate of
(US$ Restructuring (US$ Appraisal
millions) millions)
Component 1: Rehabilitation 12\.20 13\.88 13\.29 96%
of Primary Distribution
Network, Loss Reduction and
Improvement of NPAâs
Operational and Commercial
Performance
Component 2: Rural 1\.46 0\.00 0\.00 0%
Electrification
Component 3: Project 1\.225 2\.12 2\.38 112%
Implementation Management
Total Baseline Cost 14\.885 16\.00 15\.67 98%
Physical Contingencies 1\.038
Price Contingencies
Total Project Costs 16\.00 16\.00 15\.67 98%
Total Financing Required 16\.00 16\.00 15\.67 98%
(b) Financing
P126180-Sierra Leone Energy Access Project - Sierra Leone Infrastructure Development
Fund- TF-13246/ TF-071502
Appraisal Actual/Latest
Type of
Estimate Estimate Percentage of
Source of Funds Financin
(US$ (US$ Appraisal
g
millions) millions)
Borrower 0\.00 \.00
SLIDF 16\.00 0\.00 98%
SLIDF 0\.75
Total Financing 16\.75 15\.67 98%
28
Annex 2\. Outputs by Component
⢠Component 1: Rehabilitation of Primary Distribution Network, Loss Reduction
and Improvement of EDSA's Operational and Commercial Performance:
US$12\.2 million at appraisal, actual cost of US$13\.29 million
(A) Investments
(a) Rehabilitation of critical components of Freetown distribution network:
⢠Extension of the Freetown 161kV substation by inserting a new 40MVA 161/33kV
transformer and creation of a four-ways outdoor 33kV switchgear including the control
and protection system and substation data management system\.
⢠Complete rehabilitation of the Wilberforce substation by providing a new 33 kV and
11 kV switchgear, a new 20MVA 33/11 kV transformer, and a station transformer and
control and protection system; provision of AC/DC system and connection to the
existing 33 kV and 11 kV panels\.
⢠Complete Rehabilitation of Wellington Substation by providing a new 33 kV and 11
kV switchgear, a new 20 MVA 33/11 kV transformer, a new AC/DC system, and a
station transformer and control and protection system;
⢠Creation of a new Ropoti substation with 33kV and 11kV switchgear, a new 20 MVA
33/11 kV transformer, a new AC/DC system, and a station transformer and control and
protection system;
⢠Supply of a 20 MVA transformer, 33 kV and 11kV switchgear, station transformer,
and all related materials and accessories for the Blackhall Road substation;
⢠Complete replacement of the 7\.8km power line from Blackhall Road to Wellington via
the Ropoti substation\. The line was operated at 11kV and is now upgraded to 33 kV
and constructed on double circuit towers\.
(b) Supply and Installation of network statistical meters
⢠Supply and installation of 100 number of bulk meters\. These meters were installed at
switching stations and Substations\. The stations considered in this project are Freetown
161, Kingtom, Falcon Bridge, Brookfields, Congo Cross, Wilberforce, Regent,
Blackhall Road and Wellington\. The meters were also supplied with Data Management
Software and training was carried out for EDSA engineers\.
(c) Supply and installation of pre-paid meters:
⢠Supply and installation of 17,800 single phase prepaid meters and 2,200 three phase
meters\. These meters were installed in the following neighborhoods of Freetown and
29
replaced the old meters: Kortright, Maeba Town, PWD, Ferry Junction, Cline Town,
Foulah Town, Kissy Area in the East; Mountain Cut, New England, Freetown Central
in Central; and Tengbeh Town, Congo Town, Signal Hill, Wilberforce, Hill Station,
Spour Road, Babadorie, Lumley, Juba Hill and Goderich\.
⢠To ensure the adequacy of operation of meters and compatibility of meters with the
existing meter management system, the PMU hired the services of Factory Acceptance
Test consultancy services to carry out all tests required, train two EDSA appointed staff
and prepare a complete factory tests report\.
(d) Supply and Installation of the revenue management system:
⢠Supply and Installation of complete revenue management system to back up the
existing one which was old and unable to host an additional number of customers\. The
new system consists of a Data Management System with its backup, software
management application, power banks (UPS) for main and backup power, and HMI\.
The vending system consists of 20 vending machines equipped with their software and
data management system\. The system was installed at Electricity House and the backup
system was installed at Blackhall Road\. The contract also covered the training of EDSA
staff to use and get familiar with the system\.
(e) Compensation under the RAP
⢠107 affected persons identified during project preparation and pre-construction stages
of the construction the electric line were compensated
(B) Technical Assistance\.
(a) Preparation of the business plan for the national electricity distribution utility\.
The prepared plan has three segments as described below:
(i) The Management of Corporate Resources Module\. This portion of the plan
describes the operational procedures for management of corporate resources, and
provides for a new organizational structure and identification of procedures to
achieve high efficiency in management of corporate resources\. An action plan
ensures a smooth transition within a three-year period from the existing practices
to full implementation of the new structure and procedures\.
(ii) The Management of Commercial Functions Module\. The plan describes an
organizational structure and related operational procedures for the development of
commercial functions, including the management of the commercial cycle, and
service orders, focusing on sales to large customers, attention to customers at
customer service centers or by phone, on-line management of the customersâ
database, energy balance and other commercial processes and activities\. It also
describes the development of commercial functions, with the support of the state-
30
of-art Commercial Management System and revenue protection programs to be
incorporated by the utility\.
(iii) The Management of Network Planning and Operations Module\. This
component of the plan describes the organizational structure and related
operational procedures for network planning and O&M of the energy utility, with
focus on procedures for management of incidents in electricity supply (customersâ
complaints, failures in networks), in particular in restoring normal electricity supply
after incidents and customersâ claims\. It provides also for specification of
information systems and other tools to support network planning and operations
related to response to and resolution of customersâ claims\.
(b) Preparation of the Electricity Network Investment Plan:
This Five-Year Plan defines (i) the emergency investments to be carried out in the
immediate term to address critical network rehabilitation needs; (ii) prioritized
investments aimed at improving network performance in the medium term; and (iii)
a logical direction for undertaking future grid development activities for Sierra
Leone during 2015-2029\.
⢠System Investment Plan for the Greater Freetown area: A consulting firm
conducted extensive inspection of the electricity supply system of the Greater
Freetown area, studied information, and proposed a network rehabilitation and
expansion projects, and developed the Five-year System Investment Plan for the
Greater Freetown area\. The plan prepared (i) priced schedules of requirements for
implementing the distribution-level works identified under activities above as well
as the grid-level works, (ii) Single Line Diagrams and geographic layout drawings,
in electronic format, and procurement packages under which the System
Investment Plan for the Greater Freetown area would be implemented, and (iii) the
whole set of bidding documents for the procurement of goods\.
⪠Electricity Network Investment Plan for the country\. The consulting firm
prepared (i) a base case electricity demand forecast based on the expected evolution
of consumption by existing and prospective users, and (ii) a model to analyze
historic energy demand by major subsectors and tariff classes and to produce a range
of load forecasts using an appropriate set of variables\. The model developed (i) a
forecast of base-load, peak and intermediate power demand, with associated load
shapes, for 2011-2021, and (ii) a country-wide grid design considering, among other
things, the proposed interconnection project under the West African Power Pool
225kV project and existing 161kV and 33kV infrastructure\. Finally, the firm carried
out technical feasibility analysis of the grid design, made lump-sum estimates by
geographical area for the distribution-level investments required to meet predicted
levels of demand, customer population, prepared a priced schedule of investment
requirements, and prepared Single Line Diagram and geographic layout drawings
for the design developed\.
31
(c) Transaction advisory and tariff study\. The study developed a Revenue
Enhancement Program, as well as a Power Sector Cash Flow Analysis\. The study
set out a sector cash flow model and analyzed the impact of a series of variables on
the cash flows\. The main themes covered under this study included: (i) a Revenue
Protection Program, (ii) Reducing Commercial Losses and Electricity Theft, (iii)
Automated/Advanced Metering Infrastructure, (iv) Improving Collection Rates, (v)
Metering and Energy Audit, (vi) Billing Record Enhancement, (vii) Improving
Customer Services and Customer Satisfaction, and (viii) Reducing Technical
Losses, Loss Reduction Forecast, and EDSA Cash Flow Analysis\.
(d) Preparation of the bidding document of Management Contractor\. A private
firm was hired to draft the bidding document to select the EDSA Management
Contractor\. The exercise led to the selection of the Lebanese firm Khatib & Alami
as the EDSA Management Contractor\.
(e) Environment and social management
i\. Safeguards policies triggered by the project were Environment Assessment
OP/BP 4\.01, and Involuntary Assessment OP/BP 4\.12\.
ii\. Implementation of the RAP under the Energy Access Project included the
implementation of an Abbreviated Resettlement Action Plan to mitigate the
impacts of the project on project affected persons\. The PMU involved all
stakeholders and used door-to-door sensitizations, meetings with individuals,
groups, communities, relevant line ministries and departments, and the civil
society\.
iii\. The PMU addressed compensation issues that were directly within its
mandate such as additional compensation due to omission or requiring additional
land as well as from inconveniencies to project-affected persons due to
prolonged implementation of the project\. The mechanism involved a four-tier
system of resolving conflicts at the community level under the ward councilors
(first-tier) through the two management committees, that is, the RAP-
Implementation Committee and the Intermenstrual Sub-Committee (second and
third-tier respectively), and the final stage, where the complainant has the option
to seek redress in a court of law (fourth-tier)\.
iv\. There were issues that were still unresolved at project closure: late signature
of negotiations with project-affected person who was outside the country which
was submitted to the project after 31st July, 2017 and ongoing court dispute
among claimants of a property\. In addition, 15 new complains have been
received after the contractor had compensated 92 properties affected during
installation of conductors\.
32
Component 2: Rural Electrification: US$1\.46 million at appraisal, nil actual cost
Due to the Ebola epidemic outbreak, DFID and the Government of Sierra Leone
agreed to cancel this component and reallocate the funds to Components 1 and 3\.
Resources added to Component 1 helped improve EDSA operations by adding
several 11 kV and 33 kV panels at the Blackhall Road substation, and to undertake
additional sector studies as detailed under Component 1\. Resources added to the
component 3 helped fund external expertise to support the PMU, and acquire office
equipment, vehicles, and software packages for the PMU, which had to be moved
to EDSA and continue to support the implementation of the World Bankâs ESURP\.
Component 3: Project Implementation Management: US$2\.12 million at appraisal,
actual cost of US$2\.4 million\.
⢠The PMU closely coordinated with EDSA and the MoE, as the two
implementing agencies for the project\. The PMU Director ensured general
oversight of the project and effective coordination between the PMU and the
project agencies\. The PMU Director delegated day-to-day oversight to the
General Project Coordinator\.
⢠The PMU hired external expertise, including (i) a supervising engineer, (ii)
a project coordinator for rural electrification, (iii) a procurement specialist
and procurement assistant; (iv) FM specialist and FM assistants; (v) an
environmental and social development specialist; (vi) a public
relations/communications specialist, and (vii) a project secretary
⢠The PMU Director/Permanent Secretary of the MoE held regular monthly
meetings with the members of the Project Oversight Committee to review
project progress and discuss any strategic issues that might need the support
of the Oversight Committee\. The PMU Director also participated in the
meetings of the Steering Committee overseeing the SLIDF work program,
to provide briefings on project progress\.
⢠Project task team leader reported a deficit of performance in some of the
experts (procurement and safeguards), explaining staff rotation and delays
in project implementation\. Moreover, capacity building targeting staff in the
PMU and in the implementing agencies did not occur\.
33
Annex 3\. Economic and Financial Analysis
(A) Project Economic Analysis at Appraisal:
At appraisal, the economic analysis focused on assessing the benefits deriving from loss
reduction because of the rehabilitation of the distribution system and collection
improvements\. Net economic benefits were measured by estimating the changes in
consumer surplus\. The NPV of economic benefits to a 20-year life was estimated at
US$26\.7 million, with an ERR of 39 percent\. The economic returns were robust as the
hurdle rate was reached already in year 5 of operational benefits, and in year 10 reaches
36\.8 percent\. An economic analysis of the rural electrification component was not carried
out due to the lack of survey information from which to derive credible and reliable
quantitative estimates of economic benefits\.
In the perspective of the energy utility, the financial analysis of the project indicated that
the project was financially viable with an IRR of 31 percent in the base case and a NPV of
US$10\.1 million\. Component I had an IRR of 36 percent and a NPV of US$11\.3 million\.
Conversely, the rural electrification component had a negative IRR and a NPV of minus
US$1\.2 million, as customers will only pay for the O&M costs of the solar panels\.
(B) Project Economic and Financial Analysis at Project Completion
At project completion, economic analysis refers to investments supported by the project
aimed at technical and commercial loss reduction, and those aimed at better demand side
management\. There were no investments related to rural electrification, because the Ebola
outbreak led to the cancellation of the component devoted to its financing\.
Key investments supported by the project
(i) Investments toward technical loss reduction: The following investments
targeting technical loss reduction were completed at the project closure:
⢠Extension of the Freetown 161kV substation and creation of a four-ways
outdoor 33kV switchgear including the control and protection system and
substation data management system;
⢠Rehabilitation of the Wilberforce substation by providing new 33 kV and 11
kV switchgear, a new 20MVA 33/11kV transformer, and a station transformer
and control and protection system; and provision of AC/DC system and
connection to the existing 33 kV and 11 kV panels;
⢠Rehabilitation of the Wellington substation by providing new 33 kV and 11 kV
switchgear, a new 20 MVA 33/11 kV transformer, a new AC/DC system, and
a station transformer and control and protection system;
⢠Creation of a new Ropoti substation with 33kV and 11kV switchgear, a new 20
MVA 33/11 kV transformer, an AC/DC system, and a station transformer and
control and protection system;
34
⢠Supply of a 20 MVA transformer, 33 kV and 11 kV switchgear, station
transformer, and all related materials and accessories for the Blackhall Road
substation;
⢠Replacement of the 7\.8 km power line from Blackhall Road to Wellington via
the Ropoti substation\. The line was operated at 11 kV and is now upgraded to
33 kV and constructed on double circuit towers
⢠Supply and installation of 100 bulk meters installed at 9 switching stations and
substations\.
(ii) Investments toward commercial loss reduction: The following investments
targeting improvement of commercial performance were completed:
⢠Supply and installation of 17,800 single-phase prepaid meters and 2,200 three-
phase meters\. These meters were installed in 20 neighborhoods of Freetown
and replaced the old meters\.
(iii) Investments toward demand side management\. The main investment consisted
in supplying and installing a complete revenue management system to back up the
existing one which was old and unable to host an additional number of customers\.
The new system consists of a data management system with its backup power,
software management application, power banks (UPS) for main and backup, and
HMI\. The vending system consists of 20 vending machines equipped with their
software and data management system\. The system was installed at Electricity
House and the backup system was installed at Blackhall Road\.
Economic and Financial Analysis
(i) Methodology and assumptions: The economic analysis has focused on Component 1
of the project and assessed the benefits deriving from loss reduction as a result of
distribution system rehabilitation and collection improvements\. Net economic and
financial benefits are measured by contrasting the benefits and savings gained from
upgraded distribution and collection infrastructure, and the costs of investment and O&M\.
Assumptions\.
The following assumptions have been made for the calculation of economic and financial
returns:
(i) The loss reduction targets are assumed to be phased in with a three-year lag of benefits
over investment outlays\. Non-technical transmission and distribution losses are assumed
to decline from 30 percent to 15 percent, and the collection ratio to improve from the 2011
rate of 76 percent to 86 percent\. System-wide technical losses are assumed unchanged at
18\.5 percent\.
(ii) The investment in the 11/33 kV primary distribution network is expected to improve
reliability of supply, and will enable more power to be distributed\. An additional 8MW is
expected to be evacuated once these works are completed, about 31 GWh at the
estimated load factor\.
(iii) Tariffs are expected to increase by 10 percent every 5 years\.
35
(iv) Life of assets and of newly installed equipment is assumed as follows: 20-years for the
11/33kV distribution system; 7 years for the BIS; and 10 years for pre-paid meters\.
(v) The discount rate is set at 10 percent\. No taxes and duties are included in the investment
costs, which are taken at constant 2016 prices\.
(ii) Results of economic analysis
The NPV of economic benefits over a 20-year life of the project is US$2\.46 million\. The
ERR is 14 percent\. The economic returns are moderate, because the loss reduction program
achieved so far under the project was small\. The economic returns are robust with respect
to lifetime assumptions\.
(iii) Results of project financial analysis
The financial analysis of the project reveals that the project is financially viable with an
IRR of 33 percent in the base case and an NPV of US$23\.43 million\.
36
Table1 3\.1: Energy Access Project- Project Investments Costs
Project Investments Costs
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total
TECHNICAL LOSS REDUCTION
Energy distribution infrastructure 0\.7 0\.7 2\.2 3\.7 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 7\.4
Statistical meters 0\.0 0\.0 0\.1 0\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.3
Engineering and supervision 0\.2 0\.2 0\.5 0\.8 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 1\.6
Total distribution equipment 0\.8 0\.8 2\.3 3\.9 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 7\.7
Total engineering & supervision 0\.2 0\.2 0\.5 0\.8 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 1\.6
Total technical loss reduction 0\.9 0\.9 2\.8 4\.7 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 9\.3
US$ millions 0\.9 0\.9 2\.8 4\.7 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 9\.3
Cumulative 0\.9 1\.9 4\.7 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3 9\.3
COMMERCIAL LOSS
REDUCTION
Meters and installation 0\.2 0\.2 0\.7 1\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 2\.4
Other 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
Software 0\.0 0\.0 0\.0 0\.1 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.1
Total commercial loss reduction 0\.3 0\.3 0\.8 1\.3 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 2\.6
US$millions 0\.3 0\.3 0\.8 1\.3 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 2\.6
Cumulative 0\.3 0\.5 1\.3 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6 2\.6
DEMAND SIDE MANAGEMENT
Equipment/revenue management
system 0\.0 0\.0 0\.1 0\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.3
Total Demand-side Management 0\.0 0\.0 0\.1 0\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.3
US$millions 0\.0 0\.0 0\.1 0\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.3
Cumulative 0\.0 0\.1 0\.2 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3 0\.3
Total 1\.2 1\.2 3\.7 6\.1 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 12\.3
Cumulative 1\.2 2\.5 6\.1 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3 12\.3
37
Table 3\.2: Energy Access Project- Economic and Financial Analysis
Economic Evaluation 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total
Benefits
Technical loss reduction 0\.0 0\.0 0\.0 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 10\.1
Commercial loss reduction 0\.0 0\.0 0\.0 0\.1 0\.1 1\.8 1\.8 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 1\.9 28\.2
Gross benefits 0\.0 0\.0 0\.0 0\.7 0\.7 2\.4 2\.4 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 38\.3
Costs
Investment cost 1\.2 1\.2 3\.6 6\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 11\.9
Cumulative 1\.2 2\.4 6\.0 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9 11\.9
O&M 0\.0 0\.0 0\.1 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 3\.2
Total costs 1\.2 1\.2 3\.7 6\.1 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 15\.2
Net cash flow -1\.2 -1\.2 -3\.7 -5\.5 0\.5 2\.2 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 2\.3 23\.2
EIRR/NPV 14% 2\.46
NPV costs (million) $10\.1
NPV Benefits (million) $12\.5
Financial evaluation
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total
Benefits
Technical loss reduction 0\.0 0\.0 0\.0 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 0\.6 10\.1
Commercial loss reduction 0\.0 0\.0 0\.0 0\.4 0\.4 6\.1 6\.2 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 6\.3 94\.4
Gross benefits 0\.0 0\.0 0\.0 0\.9 1\.0 6\.7 6\.8 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 104\.5
Costs
Investment cost 1\.2 1\.2 3\.6 6\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 11\.9
O&M 0\.0 0\.0 0\.1 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 3\.2
Total Costs 1\.2 1\.2 3\.7 6\.1 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 15\.2
Net cash flow -1\.2 -1\.2 -3\.7 -5\.2 0\.8 6\.5 6\.6 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 6\.7 89\.4
EIRR/NPV 33% 23\.43
NPV costs (US$ million) $10\.1
NPV Benefits (US$ million) $33\.5
Discount rate 10%
38
39
40
41
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team Members
Responsibility/
Names Title Unit
Specialty
Lending
Elvira Morella Energy Specialist AFTEG Team Leader
Mudassar Imran Sr\. Energy Economist SEGEN Team Leader
Nikolay Nikolov Sr\. Energy Specialist AFTEG Technical
Analysis/Policy
Dialogue
Brent G\. Hampton Sr\. Energy Specialist AFTEG Technical Analysis
Sameh Mobarek Sr\. Counsel LEGPS Legal
Christine Makori Counsel LEGAM Legal
Arnaud Braud Financial Analyst AFTEG Financial Analysis
Manuel Berlengiero Energy Specialist AFTEG Technical/Economic
Analysis
Maria Concepcion J\.Cruz Lead Social Development Specialist AFTCS Social Safeguard
Moses Y\. Duphey Environmental Safeguard Specialist AFTEN Environmental
Safeguard
Joyce Olubukola Agunbiade Financial Management Specialist AFTME Financial Management
Frederick Yankey Sr\. Financial Management Specialist AFTME Financial Management
Viorel Velea Procurement Specialist AFTPE Procurement
Adu-Gyamfi Abunyewa Sr\. Procurement Specialist AFTPE Procurement
Raima Naomi Oyeneyin Language Program Assistant AFTEG Project Team Support â
HQs
Fatu Karim-Turay Team Assistant AFMSL Project Team Support â
Sierra Leone
Peter Meier Lead Consultant (Economic Analysis)
Supervision/ICR
Chita Azuanuka Obinwa Senior Program Assistant GEE01 ACS Support
Collins S\. Umunnah Program Assistant GEE01 ACS Support
Joseph Quayson Energy Specialist GEE08 Engineer
Elvira Morella Energy Specialist AFTEG Team Leader
Mudassar Imran Sr\. Energy Economist SEGEN Team Leader
Nikolay Nikolov Sr\. Energy Specialist AFTEG Technical
Analysis/Policy
Dialogue
Brent G\. Hampton Sr\. Energy Specialist AFTEG Technical Analysis
Sameh Mobarek Sr\. Counsel LEGPS Legal
Christine Makori Counsel LEGAM Legal
Arnaud Braud Financial Analyst AFTEG Financial Analysis
Manuel Berlengiero Energy Specialist AFTEG Technical/Economic
Analysis
Maria Concepcion J\.Cruz Lead Social Development Specialist AFTCS Social Safeguard
Moses Y\. Duphey Environmental Safeguard Specialist AFTN3 Environmental
Safeguard
Joyce Olubukola Agunbiade Financial Management Specialist AFTME Financial Management
Frederick Yankey Sr\. Financial Management Specialist AFTME Financial Management
Viorel Velea Procurement Specialist AFTPE Procurement
42
Adu-Gyamfi Abunyewa Sr\. Procurement Specialist AFTPE Procurement
Raima Naomi Oyeneyin Language Program Assistant AFTEG Project Team Support â
HQs
Fatu Karim-Turay Team Assistant AFMSL Project Team Support â
Sierra Leone
Carol Litwin Senior Energy Specialist Task Team Leader
Cephas Gakpo Senior Consultant N/A Engineer
Jianping Zhao Senior Energy Specialist GEE08 Task Team Leader
Richard Olowo Lead Procurement Specialist GCFKE Procurement
Specialist
Gloria Malia Mahama Social Protection Specialist GSU01 Safeguards
Specialist
Pedro Antmann Lead Energy Specialist GEE08 Sector Lead
Rahmoune Essalhi Procurement Specialist GGO01 Procurement
Specialist
Robert Robelius Consultant GEN05 Environmental
Specialist
Innocent Kamugisha Procurement Specialist GGO01 Procurement
Specialist
Sydney Augustus Olorunfe Financial Management Specialist GGO31 Financial
Godwin Management
Specialist
Felix Nii Tettey Oku Environmental Specialist GENDR Environmental
Specialist
Anita Bimunka Takura Environmental Specialist GEN01 Environmental
Tingbani Specialist
Nash Fiifi Eyison Senior Energy Specialist GEE07 Task Team Leader
and ICR contributor
Nestor Ntungwanayo Consultant IEGSD ICR Primary
Author
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle US$ thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY11 10\.00 30,065\.80
FY12 59\.08 50,709\.46
FY13 53\.68 12,278\.67
Total: 122\.76 93,053\.93
Supervision/ICR
FY13 4\.40 35,850\.68
FY14 41\.62 8,046\.47
FY15 21\.69 23,409\.48
FY16 19\.43 20,355\.68
FY17 48\.41 112,048\.77
43
FY18 11\.82 68,828\.53
Total: 147\.37 268,539\.61
44
Annex 5\. Beneficiary Survey Results (if any)
Not Applicable
45
Annex 6\. Stakeholder Workshop Report and Results (if any)
Not Applicable
46
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
47
Annex 8\. Comments from Sierra Leone DFIF Office
Dear Parminder,
Thank you for sending Mary the Implementation Completion Results and Report for
Energy Access Project (P126180)\.
On her behalf (with thanks to Simon Kenny and Tim Hatton), here are DFID Sierra
Leoneâs comments to enable the team to finalise and submit for Board approval\. Please
also note the request at the end, which is not for inclusion in comments section of the
report of for publication\.
Overall the report provides a fair assessment of the project at completion\.
The project outcome was rated Substantial against the original development objective: (i)
to reduce losses in electricity supply in the Freetown Western Area; (ii) improve
commercial performance of the National Power Authority, and (iii) increase access to
electricity in selected rural areas\. The project was restructured in October 2015, when the
third component (rural electrification) was dropped\. The restructured project outcome
has consequently been rated as High\. Almost all the project outputs were either achieved
or surpassed expectations\. Notably the project rehabilitated 5 sub-stations (against a
target of 4); installed 20,000 pre-paid meters; installed 100 statistical meters; and
constructed 7\.8 km of distribution line\. The project also prepared a number of important
sector related policy documents related to network planning and investment\.
The projectâs efficiency rating has been scored Modest\. This was based on the ex-post
economic and financial analysis being positive but marginally less than expected at the
time of appraisal; and a recognition that the Project Management Unit had limited
capacity in completing procurement and safeguards requirements\. The Ebola outbreak is
(rightly) cited as a justification for the operational efficiency being rated as
Modest\. Other reasons given include delays in launching the project and limitations in
the Bankâs supervision function\. The Bankâs overall performance was rated as
Moderately Satisfactory\. Quality at entry was relatively good; supervision was affected
by weak capacity in the PMU and the Ebola crisis\.
The project was rated as High Risk at the time of appraisal\. Government commitment to
the project remained high\. However, fiduciary and governance risks (mainly
procurement procedures and safeguards), implementation capacity risks, and unforeseen
(i\.e\. Ebola) risks all materialised\. Procurement performance was rated Moderately
Satisfactory, after mitigation measures were put in place through the deployment of an
energy specialist\.
Financial management was rated Satisfactory\. Financial Performance shows 98%, with
a latest estimated utilisation of $15\.67 million against an appraisal estimate of $16\.75
48
million\. It is noted in paragraph 64, however, that an external audit of the project is due
in January 2018\. We are expecting a reimbursement of unspent funds from the Bank in
due course\.
DFID took part in the ICR review mission and confirmed the reviewâs findings\. The
draft mission report was used as the basis for our own Project Completion Report, and
this is consistent with the results reported in this draft ICR report\. Overall the DFID
project scored an A: Outputs met expectations\. The project outcome was also deemed to
have met expectations and provided value for money\. It should noted that the 3rd
component of the original project (rural electrification), which was dropped from the
EAP, is now being implemented under a much larger DFID funded £34\.8 million Rural
Electrification in Sierra Leone (RESL) project, managed by UNOPS\.
We are in full agreement with the ICR reportâs assessment of future risk to the
development outcome of the project, as highlighted on page 23 of the report\. The
transformer and switchgear provided at Blackhall Road substation had not been installed
at the time of project completion\. This issue was raised at the completion review mission
wrap up meeting with the Minister of Energy in Freetown in October 2017\. It was agreed
that these works would be completed under the World Bankâs current Energy Sector
Utility Reforms Project\. It is critical that the World bank follow through on this
agreement\. The Bank should also ensure that the Government of Sierra Leone (GoSL)
makes full use of the two studies on Tariffs and on Integrated Resource Planning that
were financed from the Energy Access Project\.
Bobby Stansfield |Economic Growth Team Leader
DFID Sierra Leone
49
Annex 9\. List of Supporting Documents
1\. Project Appraisal Document,
2\. Restructuring paper of the project, October 2015
3\. Aide-memoires of supervision missions, 2013-2017
4\. Implementation status and results reports, 2013-2017
5\. Borrowerâs implementation completion report, November 2017
6\. EDSA Monthly Progress Report, August 2017
7\. EDSA Business Plan and Management Contractor Strategic Plan-
Comparative analysis and Progress\.
50
MAP
51
52 | REVIEW |
P073572 |  ICRR 11708
Report Number : ICRR11708
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 03/11/2004
PROJ ID : P073572 Appraisal Actual
Project Name : Structural Fiscal Project Costs 400 400
Adjustment Loan US$M )
(US$M)
Country : Colombia Loan/
Loan US$M ) 400
/Credit (US$M) 400
Sector (s): Board: EP - Sub-national Cofinancing
government administration US$M )
(US$M)
(32%), Central government
administration (26%),
Compulsory pension and
unemployment insurance
(16%), Health (16%),
Health insurance (10%)
L/C Number : L7092
Board Approval 2
FY )
(FY)
Partners involved : Closing Date 12/31/2002 03/31/2003
Prepared by : Reviewed by : Group Manager : Group :
Elliott Hurwitz Jorge Garcia-Garcia Kyle Peters OEDCR
2\. Project Objectives and Components
a\. Objectives
The main objective was to provide support to the government's demonstrated commitment to reaching an inflection
point in its fiscal accounts path, an essential first step toward achieving full fiscal sustainability, economic growth, and
poverty reduction\. The program to be supported by the SFAL focused on a core set of policies that could strengthen
the country's fiscal outlook \. This policy package involved (a) rationalizing the system of transfers to local
governments, and imposing more market - driven and more binding budget constraints on their finances; (b)
establishing mechanisms to arrest the exploding cost of inefficiency in the provision of public health services; (c)
halting the accumulation of pension -related contingent liabilities; (d) advancing the reorganization of public
agencies and their current expenditures; and (e) setting up a better system for managing public debt \.
b\. Components
Macroeconomic Framework
Maintain macroeconomic framework consistent with the objectives of the program \.
Intergovernmental Fiscal Relations
1\. Passed the constitutional amendment dated July 30, 2001, regarding transfers of resources from the Central
Government to Territorial Entities\.
2\. The government submitted to Congress a draft law reforming the tax system of Territorial Entities to increase
subnational tax revenues by more than 20 percent in real terms in the first year of its application term compared to
realized tax revenues in 1999\. The final law passed by Congress is to be substantially in accord with this draft \.
3\. Implement the constitutional amendment to limit the rate of growth of : (a) total transfers of resources to Territorial
Entities to a rate equivalent to 2001 inflation plus two percentage points; and (b) the operational expenditures of the
entities of the Central Government set forth in the law to a rate equivalent to 2001 inflation plus 1\.5 percentage
points\.
4\. Promulgate and implement Presidential Decree governing debt and borrowing of Territorial Entities, which (a)
limits unsustainable borrowing and constrains the freedom of Territorial Entities in issuing debt; and (b) prohibits
Territorial Entities from receiving any bailouts or guarantees of their debt \.
5\. Draft law No\. 086, which rationalizes and reforms the tax system of Territorial Entities, submitted to Congress on
September 6, 2001, has become law substantially in accordance with the submitted draft law \.
Health Reform
1\. The Ministry of Health, Department of National Planning, and Ministry of Finance have defined and approved a
national public hospital restructuring policy and implementation program for the next five years, and have begun the
implementation, including selection of at least 10 departments\. For 2002, implementation has covered more than 15
percent of the total public hospital budget included in the FYOI budget \.
2\. The Central Government was to sign and start to implement contracts with at least three Territorial Entities to
finance restructuring of their hospitals, to include specific annual targets for (a) productivity increases in inpatient and
outpatient services and (b) labor cost reductions with a view to achieving fiscal savings equivalent to at least five
percent per month on average, in real terms, in relation to the same period in 2001\.
3\. At least 60 percent of health-related funds of budgetary transfers (after deducting mandatory legal contributions )
set forth in the 2001 budget are to be transformed to demand subsidies for health services \.
ISS (Social Security Institute ) Reform
1\. The government has initiated a restructuring plan for ISS Health, including negotiating with unions about labor
costs and benefits, and has implemented the first phase, including completion of renegotiating 50 percent or more of
ISS's total outstanding debt to health service providers and the reduction in at least 30 percent in the waiting list for
elective surgeries (as of June 30, 2001)\.
2\. The Central Government and the ISS have reached an agreement to generate annual savings in ISS's total costs
over a ten-year period which would, in the opinion of the Bank, make ISS financially and economically viable \.
Pension Reform
1\. The government created a new social security department in the Ministry of Finance for improving social security
system control\. Improved control of public pension regimes has generated fiscal savings equivalent to more than
US$100 million in 2001\.
2\. Better central Government controls of pension payments, including inter alia, reduced payments of ineligible
pension claims, generate fiscal savings, on average, of at least $ 10,000,000 equivalent per month\.
3\. (a) Congress to approve a law to reform the general pension system governed by Law No \. 100/1993 in order to put
this system on a sustainable path, in a manner satisfactory to the Bank; or (b) Congress to approve a law to reform at
least one of the pension regimes which are exempted from the rules applicable to the general pension system in a
manner that brings the reformed regime or regimes, in the opinion of the Bank, in line with the Borrower's general
pension system\.
Public Sector Reform
1\. The government's approved budget for FY 02 includes a reduction in total central government current expenditure
(net of interest payments and transfers to subnational entities and to social security ) of more than 4% in real terms in
relation to the same expenditures in the approved budget for FYOI \.
2\. The government's approved budget for FY 02 has included a reduction in central government's general
expenditures of more than 15% in real terms in relation to the same expenditures in the FY 00 executed budget\.
3\. The Central Government's total actual current expenditures (net of interest payments and transfers to Territorial
Entities and to social security ) incurred in 2002 are to generate average savings of more than 4% in real terms in
relation to the same expenditures incurred during the same period in 2001\.
4\. The budget approved for 2002 is to include general expenditures that in real terms are not higher than those
effectively incurred under the executed budget for 2001\.
Education
(a) Law No\. 60 (1993) to be amended to provide for certification of municipalities that, together with districts,
represent at least 40 percent of the country's school enrollment enabling such municipalities to autonomously
manage provision of education services (including teacher payroll) and establish education performance monitoring
mechanisms; or (b) the Central Government to certify municipalities that, together with districts, represent at least 14
percent of the country's school enrollment enabling such municipalities to autonomously manage provision of
education services (including teacher payroll), and satisfactory performance agreements have been entered into
between the Central Government and such certified districts and municipalities \. In either case, no extra budgetary
transfers for education to such certified districts or municipalities shall have taken place \.
c\. Comments on Project Cost, Financing and Dates
The second tranche was released 7 months later than planned, due to an overly -optimistic schedule and delays that
occurred during an election year \.
3\. Achievement of Relevant Objectives:
Macroeconomic performance --Macroeconomic performance was satisfactory \. GDP grew during 2002-2003 and
inflation generally declined\. The fiscal deficit grew in 2002, contrary to the program's objectives, but then fell in 2003\.
Intergovernmental Fiscal Relations --Achievement was satisfactory \.
(1) Intergovernmental transfers complied with the limits specified in the constitutional amendment (see section 2)\.
(2) Issuance of debt by Territorial Entities was restricted (see section 4)\.
(3) Law 788-2002 was passed, which contained most of the intended reforms (see section 5)\.
Health Reform --Achievement was satisfactory \.
(1) The government implemented a National Hospital Restructuring Policy, and the pilot phase (2002) covered more
than 10 departments and 15% of the total hospital budget\.
(2) The government signed contracts with six Territorial Entities for restructuring hospitals \.
(3) More than 60% of the budgetary transfers were transformed into demand subsidies \.
ISS (Social Security Institute ) Reform--Achievement
Reform was unsatisfactory \.
While the government began implementation of a restructuring plan, it was not assessed by the Bank as adequate
(see section 5)\.
Pension Reform --Achievement was satisfactory \.
(1) The Government brought public pension schemes under the operational control of a single entity, DRESS \.
(2) Tighter administration and stricter management of eligibility generated fiscal savings of over US$ 100 million per
year\.
(3) Congress passed a law in December, 2002, which brought an exempted pension scheme under the control of the
general pension system\.
Public Sector Reform --Achievement in this area was unsatisfactory \.
(1) The approved 2002 budget for total central government current expenditures complied with the requirement to be
4% below the previous year in real terms \.
(2) However, for 2002, actual real government expenditures rose by 4%, 8 percentage points above what was
intended\.
Education --Achievement in this area was satisfactory\.
Law 715 was passed in 2001 which provided for certification of municipalities (comprising more than 40% of the
country's school enrollment) to autonomously manage their school systems, and also established performance
monitoring systems\.
4\. Significant Outcomes/Impacts:
Decree No\. 2540 was adopted specifying that banks holding the debt of sub -national entities are subject to
risk-weighting based on the ratings of this debt by an internationally reputable credit rating agency \. New banking
regulations also specify that financial firms may only hold the debt of subnational entities which have received
investment-grade ratings from 2 reputable rating agencies\.
Passage of a constitutional amendment and new law on intergovernmental fiscal relations has substantial
promise to achieve fiscal benefits
5\. Significant Shortcomings (including non-compliance with safeguard policies):
While the government complied with loan commitments to reduce central government and general expenditure
budgetary commitments (2002 over 2001) by 4%, actual expenditures rose by 4%, or 8 percentage points above
what was intended
Government actions to restructure the ISS were not sufficient to put the agency on a financially viable course
Law 788-2002, which governs the subnational tax scheme, did not contain all of the elements specified in the
conditionality, and a waiver was required for release of the floating tranche
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Satisfactory The country's structural improvements
across a number of SFAL areas acted to
reduce the fiscal deficit\. However, the
country's failure to achieve the goal of
reducing the actual 2002 fiscal deficit, and
in achieving ISS reform detracted from the
benefits achieved in other areas \.
Institutional Dev \.: Modest Modest
Sustainability : Likely Non-evaluable Government commitment to fiscal reform
was inconsistent, strong in some respects
but weak in others (e\.g\., by exceeding
project spending limits in budget
execution while at the same time
implementing additional tax measures )\.
Bank Performance : Satisfactory Satisfactory While Bank performance was overall
satisfactory, the use of a quick disbursing
adjustment loan was unwise in this
instance (see section 7)\.
Borrower Perf \.: Satisfactory Satisfactory While Borrower performance was overall
satisfactory, actual 2002 expenditures
exceeded project provisions \.
Quality of ICR : Unsatisfactory
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
NOTE:
7\. Lessons of Broad Applicability:
In a project designed to reduce the fiscal deficit, conditions should be set in terms of actual expenditures
rather than budgetary allocations --In the SFAL, after tranche release actual expenditures accelerated, violating
the intent of the conditionality \.
A series of one -tranche programmatic loans utilizing executed budget data would have been more effective
--A series of programmatic loans (which are in actuality following the SFAL ) would have been more effective
than a short quick-disbursing loan in achieving structural reform and reductions in actual budgetary spending \.
8\. Assessment Recommended? Yes No
9\. Comments on Quality of ICR:
The ICR is unsatisfactory:
The ICR presents insufficient data to substantiate its rating of macroeconomic performance, and some of the
data presented are incomplete or misleading \. A competent presentation of data on macroeconomic
performance is particularly important in an evaluation of a fiscal structural adjustment project \. The ICR should
have presented, at a minimum, actual data from 1999 through 2002 on real GDP growth, inflation, the fiscal
balance, and public debt as a % of GDP\.
The ICR statement of the project objectives does not correspond to the RRP or other key project documents \.
The ICR rates achievement of Component 6, Public Sector Reform, as marginally satisfactory \. The analysis
presented to substantiate the ratings of this aspect of the loan is deficient \.
While in many cases the ICR provides information on the achievement of structural reforms, often the
information is not sufficiently specific to make evaluative judgments, e \.g\., "specific measures implemented
included renegotiating special -benefit agreements with labor unions, restructuring the ISS debt, improving its
financial management, eliminating 8,000 vacant positions, and closing ambulatory health facilities \." Also, the
ICR presents little data on outcomes, showing the effects of the reforms \.
The ICR description of progress in the area of pension reform is unsatisfactory \. For example, the ICR also does
not state whether a unified registry of contributors has been established \.
Annexes 2 and 4b (on project costs and financing ) were not completed\. | REVIEW |
P075379 |  \.Document of
The World Bank
Report No: ICR1992
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-54999)
ON A
GRANT FROM THE
GLOBAL ENVIRONMENT FACILITY
IN THE AMOUNT OF US$ 6\.75 MILLION EQUIVALENT
TO THE
STATE OF RIO DE JANEIRO
FOR A
RIO DE JANEIRO SUSTAINABLE INTEGRATED ECOSYSTEM MANAGEMENT
IN PRODUCTION LANDSCAPES OF THE NORTH-NORTHWESTERN
FLUMINENSE (GEF) PROJECT
May 15, 2012
Sustainable Development Department
Brazil country Management Unit
Latin America and the Caribbean Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective November 30, 2011)
Currency Unit = Real (R$)
R$ 1\.00 = US$ 0\.551
US$ 1\.00 = R$ 1\.814
FISCAL YEAR
January 1 to December 31
ABBREVIATIONS AND ACRONYMS
GEF Global Environment Facility
CAS Country Assistance Strategy
CEDRUS State Council for Sustainable Rural Development
CMDR Municipal Rural Development Council
CNPq National Council for Scientific and Technological Development
COPPETEC Foundation for Project Coordination, Technological Studies and
Research
COGEM Micro-catchment Management Council
CONAB National Supply Company
COREM Regional Micro-catchment Council
DPGE State Public Defenderâs Office
DRM State Mineral Resources Department
EA Environmental Assessment
ECC Statutes of Community Conduct
EMATER State Rural Extension Agency
EMBRAPA Brazilian Agricultural Research Enterprise
FAO Food and Agriculture Organization
FAPERJ Amparo Foundation for Research, State of Rio de Janeiro
FEALQ Luiz de Queiroz Foundation for Agrarian Studies
FEEMA State Environmental Management Foundation
FMR Financial Management Report
FUNBIO Brazilian Biodiversity Fund
FUNBOAS Fund for Best Practice in Water Catchments
FUNDES State Social and Economic Development Fund
GOB Government of Brazil
GoRJ State Government of Rio de Janeiro
IBAMA National Environmental Institute
ICS Information and Communication System
IEM Integrated Ecosystem Management
M&E Monitoring and Evaluation
MIS Management Information System
Moeda Verde State Credit Program for Agric\. Production and Diversification
PEM Sustainable Micro-catchment Land Management Plans
PES Payment for Environmental Services
PESAGRO State Agricultural research Enterprise
PID Individual Farm-level Development Plans
POA Annual Operating Plan
PRONAF National Family Agriculture Program
RIC Regional Information Center
Rio Rural Micro-catchment State Program of Sustainable Rural Development
RPPN Nature Protection Reserve
SEAAPI State Secretariat of Agriculture, Fisheries and Rural Development
SEAPEC State Secretariat of Agriculture and Livestock
SEINPE State Secretariat of Energy, Naval Industry and Petroleum
SEMADUR State Secretariat for Environment and Urban Development
SEP Project Management Unit
SoRJ State of Rio de Janeiro
USLE Universal Soil Loss Equation
Vice President: Hasan Tuluy
Country Director: Makhtar Diop
Sector Manager: Ethel Sennhauser
Project Team Leader: Marianne Grosclaude
ICR Team Leader: Marianne Grosclaude
BRAZIL
Rio de Janeiro Sustainable Integrated Ecosystem Management in
Production Landscapes of the North-Northwestern Fluminense (GEF) Project
CONTENTS
Data Sheet
A\. Basic Information\. i
B\. Key Dates \. i
C\. Ratings Summary \. i
D\. Sector and Theme Codes \. ii
E\. Bank Staff \. ii
F\. Results Framework Analysis \. iii
G\. Ratings of Project Performance in ISRs \. ix
H\. Restructuring (if any) \. x
I\. Disbursement Profile \. x
1\. Project Context, Global Environment Objectives and Design \. 1
2\. Key Factors Affecting Implementation and Outcomes \. 4
3\. Assessment of Outcomes \. 12
4\. Assessment of Risk to Development Outcome\. 22
5\. Assessment of Bank and Borrower Performance \. 22
6\. Lessons Learned \. 24
Annex 1\. Project Costs and Financing \. 27
Annex 2\. Outputs by Component \. 28
Annex 3\. Economic and Financial Analysis \. 42
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 53
Annex 5\. Beneficiary Survey Results \. 55
Annex 6\. Stakeholder Workshop Report and Results\. 59
Annex 7: Summary of Borrower's ICR and/or Comments on Draft ICR \. 60
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 71
Annex 9\. List of Supporting Documents \. 72
MAP IBRD: BRA39119 \. 74
A\. Basic Information
Rio de Janeiro
Sustainable Integrated
Ecosystem Management
Country: Brazil Project Name: in Productive
Landscapes of the North-
Northwestern
Fluminense (GEF)
Project ID: P075379 L/C/TF Number(s): TF-54999
ICR Date: 06/26/2012 ICR Type: Core ICR
STATE
Lending Instrument: SIL Borrower: GOVERNMENT OF
RIO DE JANEIRO
Original Total
USD 6\.75M Disbursed Amount: USD 6\.50M
Commitment:
Revised Amount: USD 6\.50M
Environmental Category: B Global Focal Area: B
Implementing Agencies:
State Secretariat of Agriculture and Livestock (SEAPEC)
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 07/24/2003 Effectiveness: 12/30/2005
Appraisal: 03/01/2005 Restructuring(s): 11/09/2010
Approval: 05/31/2005 Mid-term Review: 06/16/2008 09/21/2009
Closing: 11/30/2010 11/30/2011
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Global Environment Outcome Moderate
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Moderately Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Moderately Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments (if
Indicators Rating
Performance any)
Potential Problem Project Quality at Entry
Yes Satisfactory
at any time (Yes/No): (QEA):
Problem Project at any Quality of Supervision
Yes None
time (Yes/No): (QSA):
GEO rating before
Satisfactory
Closing/Inactive status
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General agriculture, fishing and forestry sector 80 80
Other social services 10 5
Sub-national government administration 10 15
Theme Code (as % of total Bank financing)
Biodiversity 20 20
Climate change 20 5
Land administration and management 20 30
Other environment and natural resources management 20 30
Participation and civic engagement 20 15
E\. Bank Staff
Positions At ICR At Approval
Vice President: Hasan A\. Tuluy Pamela Cox
Country Director: Deborah L\. Wetzel Vinod Thomas
Sector Manager: Ethel Sennhauser John Redwood
Project Team Leader: Marianne Grosclaude Alvaro J\. Soler
ICR Team Leader: Marianne Grosclaude
ICR Primary Author: Anna F\. Roumani
ii
F\. Results Framework Analysis
Global Environment Objectives (GEO) and Key Indicators(as approved)
The development objective of the proposed project is to promote an integrated ecosystem
management (IEM) approach to guide the development and implementation of sustainable
land management (SLM) practices in the North and Northwest (NNWF) regions of Rio de
Janeiro State\. The desired principal outcomes for the primary target group (smallholder
families and communities) are: (i) improved capacity and organization for NRM, and (ii)
increased adoption of IEM and SLM concepts and practices\.
The global environmental objectives are to: (i) address threats to biodiversity of global
importance, (ii) reverse land degradation in agricultural landscapes, (iii) enhance carbon
sequestration, and (iv) increase awareness at all levels of the value of adopting an IEM
approach in the management of natural resources\. The desired principal outcomes for the
global environment are: (i) conservation and sustainable use of biological diversity, and (ii)
increased carbon storage in terrestrial ecosystems\.
Revised Global Environment Objectives (as approved by original approving authority) and
Key Indicators and reasons/justifications
N/A
(a) GEO Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Change in total land area characterized by biodiversity-friendly agricultural
Indicator 1 :
practices that enhance soil structure stability in micro-catchments
31,650 ha
Value
implemented with
(quantitative or Zero 32,000 ha by PY 5 na
biodiversity-friendly
Qualitative)
practices by PY5
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Achieved: 99% of target\. Biodiversity-friendly agricultural practices were
(incl\. % implemented with GEF and co-financing (mostly PRONAF) on 31,650 ha, enhancing
achievement) soil structure stability in micro-catchments\.
Total area of riparian and other native forests rehabilitated for biodiversity
Indicator 2 :
conservation and hydrology stabilization objectives\.
Value 1,440 ha of riparian
1\.332 ha
(quantitative or Zero and other native na
implemented
Qualitative) forest rehabilitated
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
Substantially achieved: 93% of target\. 1,332 ha of riparian and other native forests
(incl\. %
rehabilitated for biodiversity conservation and hydrology stabilization\.
achievement)
Area of biodiversity conservation-friendly land use mosaics established on
Indicator 3 :
private lands supporting corridor connectivity in project watersheds
Value
792 ha of land use
(quantitative or Zero 1,240 ha by PY 5 na
mosaics established
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
iii
Comments
Partially achieved: 64% of target\. Establishing land use mosaics on private land
(incl\. %
proved a slow and complex process\.
achievement)
Reduction in erosion and downstream sedimentation in at least 3 micro-
Indicator 4 :
catchments, and amount of CO2 sequestered\.
(i) Erosion reduced (i) Downstream
50% in 3 micro- sedimentation values
catchments; (ii) improved in 2
downstream micro-catchments;
Value
sedimentation (ii) no erosion data
(quantitative or Zero na
reduced 50% in 3 available; (iii)
Qualitative)
micro-catchments; substantial carbon
(iii) CO2 storage - 80 tons/ha
sequestered (1\.5 (air) and 5 tons/ha
tons/ha by PY5) (soil) by PU5
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Substantial achievement: (a) Carbon storage exceeded targets - 19,649 tons/ha/year
(incl\. % (b) Erosion/sedimentation targets too ambitious but EMBRAPA/Soils study (2011)
achievement) shows erosion controls were effective in 2 project micro-catchments\. See Annex 2\.
By PY4, 40 rural community organizations created that have adopted and
Indicator 5 :
implemented IEM/SLM strategies in 40 micro-catchments\.
Value 40 rural community 48 rural community
(quantitative or Zero organizations; 40 na orgs\. created in 48
Qualitative) micro-catchments micro-catchments\.
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Achieved/exceeded: 120% of target\. Project-sponsored COGEMs provided
(incl\. % organizational cohesion, supporting successful adoption/implementation of
achievement) conservation-friendly agric\. practices in 48 micro-catchments\.
Education, training and awareness-building of beneficiary stakeholders, project
Indicator 6 :
executors and schools\.
3,000 beneficiaries;
5,730 beneficiaries;
Value 150 project
370 technical
(quantitative or Zero executors na
executors; 20
Qualitative) (technicians); 25
schools
schools
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved/exceeded: 191%, 247% and 80% respectively
achievement)
Best practices and lessons learned disseminated through workshops, events and
Indicator 7 :
media campaigns in the NNWF region\.
30
30 State
workshops/events;
Value workshops/events; 3
4 national
(quantitative or Zero na national workshops;
workshops; 3 media
Qualitative) 3 media campaigns;
campaigns; 1
1 Homepage\.
Homepage\.
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved: 100% of all targets
achievement)
Indicator 8 : PDO Indicator 1: Integrated Eco-system Management (IEM) and Sustainable
iv
Land Management (SLM) practices adopted by at least 1900 farmers in 40
communities in min\. 40 micro-catchments by PY5, reversing land degradation
and improving livelihoods\.
1900 farmers, 40
Value 2,254 farmers, 48
communities\. min\.
(quantitative or Zero na communities, 48
40 micro-
Qualitative) micro-catchments
catchments
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Achieved/exceeded: IEM/SLM practices adopted by 2,254 farmers (119% of
Comments
original and 155% of reduced targets) in 48 communities (120%), in 48 micro-
(incl\. %
catchments (120%)\. 1292 GEF-financed, 962 co-financed (mainly PRONAF)\. See
achievement)
3\.2 and Annex 2\.
PDO Indicator 2: Coordinating bodies with significant stakeholder
representation from micro-catchment and municipal levels, active at regional
Indicator 9 :
and local levels to integrate project concepts and activities into ongoing rural
development efforts\.
Value
1 COREM; 40 1 COREM; 48
(quantitative or Zero na
COGEMs\. COGEMs
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Achieved/exceeded: Project established one COREM (100%) representing micro-
Comments
catchment and municipal stakeholders; and 48 COGEMs (120%), fundamental to
(incl\. %
improving local organization and participatory dissemination/debate of project
achievement)
objectives\.
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Component 1: Five Watershed Management Strategies developed (and updated
Indicator 1 :
by PY3)
Value
WMS in 5 micro- WMS in 5 micro-
(quantitative or Zero na
catchments catchments
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved: 100% of target
achievement)
Actions to support implementation of the Serra do Mar Biodiversity Corridor in
Indicator 2 :
project watersheds identified by PY2
Value
(quantitative or Zero One study na One study conducted
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved: 100% of target
achievement)
Indicator 3 : Support system of sustainable agriculture, and an environmental services fund
v
designed by PY3
Payment for
PES system
Environmental
Value established by
Services (PES)
(quantitative or Zero na Decree; SLM
system established;
Qualitative) support system
and support system
under completion
for SLM designed
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Largely achieved: Support system is 2-part: (i) PES: (studies, policy dialogue,
(incl\. % testing) was established by State Decree with pre-testing by farmers, with EMATER
achievement) TA; (ii) SLM system nearing completion at closing\.
Indicator 4 : Land suitability analysis study at the micro-catchment level carried out
Value
(quantitative or Zero One study na Study not conducted
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
Not achieved: Study was not conducted due to its technical complexity, contracting
(incl\. %
and timing issues\.
achievement)
Micro-catchment Development Plans (PEM) and related individual farm-level
Indicator 5 :
plans (PID) developed in at least 40 micro-catchments
Number of
PIDs reduced
Value 40 PEMs; 1900 to 1,450 due to 48 PEMs; 1,292
(quantitative or Zero PIDs; 40 micro- cost PIDs; 48 micro-
Qualitative) catchments (appreciation of catchments
Real to USD)
and time issues
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Largely achieved: 120%, 88% and 120% respectively\. Time and resources
(incl\. % available made original target unachievable\. This also limited the number of direct
achievement) beneficiaries (GEF) to 1450 since access to project incentives required a PID\.
Indicator 6 : ECCs developed in at least 10 micro-catchments
Value
(quantitative or Zero 10 ECCs na 10 ECCs developed
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
Achieved: 100% of target\. 10 Statutes of Community Conduct (ECC) developed,
(incl\. %
signed, obligating communities to utilize conservationist practices\.
achievement)
Component 2: Technical assistance and financial support for on-the-ground
investments (through FUNDES) received by rural producer/stakeholder groups
Indicator 7 :
leading to adoption of improved production and environmental management
practices (and certified products)
(i) 2,728 investments
(i) 4400 proposals in 48 micro-
in 40 micro- catchments repres\.
Value
catchments for min\. 4,092 individual,
(quantitative or Zero na
1,000 farmers (an production and
Qualitative)
error in PAD) and environmental
150 groups practices; 9ii) TA in
48 micro-catchments
vi
benefiting 1292
farmers and 87
groups\.
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Substantial achievement: 2,728 subprojects financed, representing 4,092 individual
Comments
practices\. Note: PAD target of 4,400 proposals was indicative, and representing
(incl\. %
proposals from PIDs, not actual subprojects; (ii) 48 micro-catchments; 2,254 farmers;
achievement)
87 groups (58%)\.
At least 10 improved agro-system management practices tested and validated
Indicator 8 : (aver\. 10 producers per test), including those addressing human settlements in
fragile and vulnerable areas\.
Value
10 adaptive 13 practices tested
(quantitative or Zero na
research practices and validated\.
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Achieved/exceeded: 130%\. Sustainable agro-ecosystem management technologies
(incl\. % were tested/validated\. (Did not include practices addressing human settlements in
achievement) fragile/vulnerable areas)\.
Component 3: By PY4, 40 rural community organizations created that have
Indicator 9 :
adopted and implemented IEM/SLM strategies in 40 micro-catchments
Value
40 rural community 48 organizations
(quantitative or Zero na
organizations created
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
Achieved: 48 organizations created (120%), adopting and implementing IEM/SLM
(incl\. %
strategies in 48 micro-catchments (120%)\.
achievement)
Two regional information centers (RIC) and a project Portal (webpage)
Indicator 10 :
established
Value 2 RICs 1 Telecentro (RIC)
(quantitative or Zero (Telecenters); one na established; 1 project
Qualitative) Project Portal Portal established\.
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
Mixed achievement: 50% and 100% respectively\. technical and contracting issues
(incl\. %
hampered establishment of second RIC\.
achievement)
Information and Communication System (ICS) implemented in at least 5 micro-
Indicator 11 :
catchments before end-PY3
Value
ICSs in 5 micro- ICS implemented in
(quantitative or Zero na
catchments 13 micro-catchments
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved/exceeded: 260% of target\. 13 ICs established by PY6\.
achievement)
Indicator 12 : At least 200 project executors trained throughout life of the project
Value 370 project
Min\. 200 project
(quantitative or Zero na executors and
executors trained
Qualitative) technicians trained
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Achieved/exceeded: 185% of target
vii
(incl\. %
achievement)
At least 3,000 participants in environmental education events, including
Indicator 13 :
stakeholders from 5 project micro-catchments (24 municipalities)\.
2,600 participants
inenvironmental
3,000 participants;
Value events, incl\.
min\. 5 micro-
(quantitative or Zero na stakeholders from 5
catchments; 24
Qualitative) micro-catchments
municipalities
representing 28
municipalities\.
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved: 87%, 100% and 117% respectively, of targets
achievement)
At least 3,000 stakeholders trained, including farmers, municipal community
Indicator 14 :
leaders, technicians\.
Value
3,000 stakeholders 5,730 stakeholders
(quantitative or Zero na
trained trained
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved/exceeded: 191% of target
achievement)
Minimum of 25 environmental projects prepared in local schools before end-
Indicator 15 :
PY3
Value 25 environmental
20 projects prepared
(quantitative or Zero projects in local na
in local schools
Qualitative) schools
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Largely achieved: 80% of target\. 20 projects prepared in local schools by closing
achievement)
Component 4: Project Implementation Unit (PIU) established in SEAAPI/SMH
Indicator 16 : (Directorate of Micro-catchment Development), effectively facilitating project
implementation by PY1\.
Value
PIU established by PIU established by
(quantitative or Zero na
end-PY1 end-PY1
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved: 100% of target
achievement)
Coordinating bodies with significant stakeholder representation from micro-
Indicator 17 :
catchment and municipal levels active at the regional and local levels
Value
1 COREM; 40 1 COREM; 48
(quantitative or Zero na
COGEMs COGEMs
Qualitative)
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Achieved/exceeded: project established one COREM (100%) and 48 COGEMs
(incl\. % (120%), active at regional and local levels\.
viii
achievement)
Project reports prepared and submitted on a timely basis over life of the
Indicator 18 :
project\.
Value 12 management
10 management
(quantitative or Zero na reports prepared and
reports prepared
Qualitative) submitted
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
(incl\. % Achieved/exceeded: 120% due to extension of the closing date\.
achievement)
Indicator 19 : Establish and operate an effective M&E system
Value M&E system M&E system
(quantitative or Zero established and na established and
Qualitative) operational operational
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments Achieved: Effective M&E system was established incorporating an MIS; an ICS for
(incl\. % comprehensive monitoring of all micro-catchments; and very successful participatory
achievement) monitoring in three selected micro-catchments\.
Best practices and lessons learned disseminated through state and national
Indicator 20 :
workshops/events and a Homepage (Website)\.
31 regional (State)
30 State
dissemination
dissemination
Value events; 4 national
events and 4
(quantitative or Zero na events; 5 workshops;
national; 5
Qualitative) Project Portal
workshops; 1
(Webpage)
Homepage
established
Date achieved 04/12/2005 11/30/2010 11/30/2011 11/30/2011
Comments
Achieved: 100% in all cases\. Homepage/Project Portal:
(incl\. %
<microbacias@agricultura\.rj\.gov\.br>
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. GEO IP Disbursements
Archived
(USD millions)
1 06/19/2006 Satisfactory Satisfactory 0\.68
2 12/27/2006 Moderately Satisfactory Satisfactory 0\.68
3 06/24/2007 Moderately Satisfactory Moderately Satisfactory 0\.82
4 12/27/2007 Moderately Satisfactory Moderately Satisfactory 1\.03
5 06/13/2008 Moderately Satisfactory Moderately Satisfactory 1\.58
6 06/23/2008 Moderately Unsatisfactory Moderately Unsatisfactory 1\.70
7 11/30/2008 Moderately Satisfactory Moderately Satisfactory 1\.94
8 06/02/2009 Moderately Satisfactory Moderately Satisfactory 2\.44
9 12/29/2009 Moderately Satisfactory Moderately Satisfactory 3\.53
10 05/28/2010 Moderately Satisfactory Moderately Satisfactory 4\.19
11 12/14/2010 Satisfactory Satisfactory 5\.15
12 06/28/2011 Satisfactory Satisfactory 5\.69
13 02/01/2012 Satisfactory Satisfactory 6\.46
ix
H\. Restructuring (if any)
ISR Ratings at Amount
Board
Restructuring Restructuring Disbursed at Reason for Restructuring &
Approved
Date(s) Restructuring Key Changes Made
GEO Change GEO IP
in USD millions
(i) To take advantage of project's
accelerating momentum after
delayed start of field activities,
and permit completion of key
studies, closing date was
extended 12 months to
11/09/2010 MS MS 4\.70
11/30/2011; (ii) On same date, to
permit completion of key
activities, US$715,000 was
reallocated to Category 1 Goods,
Category 2 Consultants' Services,
and Category 3 Training
I\. Disbursement Profile
x
1\. Project Context, Global Environment Objectives and Design
1\.1 Context at Appraisal
1\.1\.1 State and sector background: Long isolated from other major rainforest blocks in South
America, the Atlantic Forest has a diverse and unique mix of vegetation and forest types\. The State of
Rio de Janeiro has the highest percentage of the Atlantic Forest biome in relation to total area, in
Brazil\. At project appraisal in 2005, less than 10% of that forest â an area of global importance and
home to an estimated 20,000 plant species â was still standing\. Centuries of sugarcane and coffee
plantation had dramatically depleted forest habitats\. Many unique and in some cases critically
endangered vertebrate and bird species were clinging to survival\.
1\.1\.2 The project area, the North and Northwestern Fluminense (NNWF) administrative regions,
encompassing 22 municipalities covering an area of 15,000 km2 and with about 30,000 family farms,
had the largest stands of remaining Atlantic Forest in the State\. While some of these tracts were
already under conservation in protected areas, most were dispersed, on private lands and not protected\.
The principal threats facing the Atlantic Forest in the NNWF region at the time of appraisal were
deforestation stemming from land conversion and charcoal production, and soil erosion caused by
deforestation, over-grazing, and inappropriate agricultural practices\. From 1990-2000, the State of
Rio de Janeiro had the highest rate of deforestation of all Brazilian states with tracts of Atlantic Forest,
with most occurring in the NNWF region\.
1\.1\.3 Agriculture and Socio-economic conditions: A significant portion of the NNWF population
was (and remains) dependent on agriculture, characterized by extensive cattle-raising of low technical
input and productivity\. Pasture degradation, soil erosion and decreasing water availability had
reduced productivity, while increased competition from other regions/countries along with declining
prices had impacted most heavily on small family farms, reducing incomes, deepening rural poverty
and prompting out-migration\. Such farms depended on manual labor, lacked corrective measures to
address soil fertility, made little use of technical assistance and rural extension, and showed only
modest organizational capacity\. Urgent interventions were warranted to introduce integrated
ecosystem management (IEM) and sustainable land management (SLM) practices, given the potential
for improved land use, the need to increase carbon storage in NNWF agro-ecosystems, the
significance of the Atlantic Forest biome and associated agro-ecosystems for the conservation and
sustainable use of biodiversity of global importance, and growing threats to remaining habitats\.
1\.1\.4 While the NNWF region was the largest agricultural producer state-wide and had benefited
from State Government efforts to boost the availability of agricultural credit and technical assistance, a
positive foundation for conducting project activities (see 1\.1\.5), greater effort was needed on two
fronts: a comprehensive, cross-sector approach to ecosystem management to ensure ecosystem
integrity, justifying the use of IEM methodologies to plan and implement SLM activities; and, greater
public awareness of SLM techniques to conserve natural resources and strengthen demand for them, as
well as to adapt SLM techniques to the project area\. Constraints affecting the adoption of IEM and
SLM were: (i) insufficient human and institutional capacity and weak community organizations at the
local and state levels; (ii) producersâ lack of capital to undertake the fairly heavy, up-front investments
needed to adopt SLM techniques; (iii) limited number of SLM practices adapted to specific agro-
ecological conditions of the NNWF region; and (iv) insufficient organized data and information
available to decision-makers to incorporate eco-system level considerations into productive activities\.
The project sought to address these deficits\.
1\.1\.5 Rationale for Bank assistance: The project was seen as a key complement to the Bank-
supported set of projects to improve natural resource management (NRM), environmental
conservation and development in the States of Sao Paulo, Santa Catarina, Parana and Rio Grande do
1
Sul and in other parts of Latin America\. It was also consistent with a range of government programs
and external donor efforts, including in the area of payment for environmental services (PES)\. The
project was consistent with the then-current Country Assistance Strategy (CAS), strengthening a key
development pillar (Environment and Natural Resources Management) by fostering environmental
protection and management, natural resources management, and global environmental externalities
including carbon sequestration and biodiversity\.
1\.1\.6 The project was also consistent with the GEF Operational Strategy and its Operational
program on Integrated Ecosystem Management (OP 12); and with the Sustainable Land Management
Operational Strategy (OP 15)\. 1 It also fit GEF Strategic Priorities for: (i) biodiversity (BD-SP2),
facilitating the mainstreaming of biodiversity objectives within production systems and development
of market incentive measures; and (ii) sustainable land management (SLM-SP1), by including a heavy
focus on SLM capacity building\.
1\.2 Original Project Development Objectives and Global Environment Objectives, and Key
Indicators
1\.2\.1 Project Development Objective (PDO): As stated in the PAD and Credit Agreement, the
project sought âto promote an integrated ecosystem management approach to guide the development
and implementation of sustainable land management practices, while providing environmentally and
socially sustainable economic opportunities for rural communities living in the North and Northwest
Fluminense administrative regions of the State of Rio de Janeiroâ?\. The main expected outcomes were
improved capacity and organization for natural resources management, and increased adoption of IEM
and SLM concepts and practices\.2 Progress would be measured by the following Key Performance
Indicators (KPI - see also Data Sheet), shown aligned with their sub-objectives:
Improved capacity and organization for natural resources management:
ï Coordinating bodies with significant stakeholder representation from MC and municipal levels
active at the regional and local levels (1 regional committee (COREM) by PY 1), at least 40
local committees (Micro-catchment Management Councils (COGEM) by PY 2) to integrate
project concepts and activities into ongoing rural development efforts\.
Increased adoption of IEM and SLM concepts and practices:
ï IEM/SLM practices adopted by at least 1,900 farmers in 40 communities in at least as many
MCs by Project Year (PY) 5 (80% of the project target), thereby reversing land degradation
and improving local livelihoods\.
1\.2\.2 Global Environmental Objectives (GEO): The GEO sought to: (i) address threats to
biodiversity of global importance; (ii) reverse land degradation in agricultural landscapes; (iii) enhance
carbon sequestration; and, (iv) increase awareness at all levels of the value of adopting an IEM
approach to the management of natural resources\. The main, desired outcomes for the global
environment were: conservation and sustainable use of biological diversity; and, increased carbon
storage in terrestrial ecosystems\. The following indicators, also aligned with their sub-objectives,
would measure progress:
Address threats to biodiversity of global importance:
ï Change in total land area characterized by biodiversity-friendly agricultural practices that
enhance soil structure stability in micro-catchments (32,000 ha by PY 5);
1
OP 12: promote adoption of comprehensive land and ecosystem management interventions that integrate ecological, economic and social
goals to achieve long-term protection and sustainable use of biodiversity, reduction of net emissions and increased storage of carbon in
terrestrial ecosystems, and the conservation and sustainable use of watersheds, providing benefits at the local, national and global levels\. OP
15: address land degradation issues and support adoption of SLM practices\.
2
This statement of the PDO incorporates the fuller presentation included in the PAD Logframe\.
2
ï Total area of riparian and other native forests rehabilitated for biodiversity conservation and
hydrology stabilization objectives (1,440 ha by PY 5); and,
ï Area of biodiversity conservation-friendly land use mosaics established on private lands
supporting corridor connectivity in project watersheds (1,240 ha by PY 5)\.
Reverse land degradation in agricultural landscapes:
ï Reduced erosion (50 percent by PY 5) and downstream sedimentation (50 percent by PY 5) in
at least 3 micro-catchments\.
Enhance carbon sequestration:
ï Amount of CO2 sequestered (1\.5 tons of CO2/ha by PY 5)\.3
Increase awareness at all levels of the value of adopting an IEM approach to the management of
natural resources:
ï 40 rural community organizations created that have adopted and implemented IEM strategies
in 40 micro-catchments (by PY 4);
ï Education and training of beneficiary stakeholders (1,900 by PY5), project executors (150 by
PY5), and schools (25 by PY5); and,
ï Best practices and lessons learned disseminated through workshops, events and media
campaigns in the NNWF region\.4
1\.3 Revised PDO/GEO (as approved by original approving authority) and Key Indicators, and
reasons/justification
1\.3\.1 Neither the PDO nor GEO was revised\. Key Performance Indicators were not changed\.5
1\.4 Main Beneficiaries
1\.4\.1 The primary, potential target group included about 4,000 small- and medium-sized farmers,
rural youth, school teachers and community leaders in 50 pilot micro-catchments covering some
100,000 ha (about 15% of the aggregate micro-catchment area)\. In addition, a significant percentage
of the total regional rural population (estimated at about 1\.0 million) would be targeted with
awareness-building media tools\.6 The stakeholder pool was broad, including relevant State, Federal
and municipal institutions, NGOs, private sector bodies and academia\.
1\.5 Original Components (as approved)
1\.5\.1 Four components comprising 10 sub-components supported project objectives (see Annex 2):
Component 1: Planning for Integrated Ecosystem Management Actions (6% of total project cost)
financed studies, based on lessons learned from land management investment activities, to influence
policy-making and strengthen state and local frameworks to facilitate adoption of IEM principles and
SLM practices\. Sub-components: (i) Strengthening of IEM Incentive Structure and Ecosystem
Management Systems; and (ii) Local Land Management Planning\.
3
Stated in the PAD Arrangements for Results Monitoring table as equivalent to 34,000 tons of CO2 by PY5\.
4
Included as an indicator in the PAD Log Frame but not the Main Text\.
5
The targeted number of beneficiaries (1900, a Key Performance Indicator) was synonymous with the number of Individual Farm Plans
(PID), a target of 1900 mentioned only in the PAD Arrangements for Results Monitoring table\. A project beneficiaryâs access to GEF
incentive financing required a PID\. Reduction of the PID target (to 1,450) automatically implied reducing the targeted beneficiaries, but the
latter was a KPI and any formal change needed approval of the Country Director\. Only the PID adjustment was mentioned in Aide Memoires\.
6
The incidence of poverty among rural households in the State of Rio de Janeiro was, at the time of appraisal, about 27% (440,000 people),
or about 2\.5 times the poverty levels of urban areas\. This percentage increased to 35-39% in some municipalities in the NNWF region,
levels similar to the poorest regions of Brazil, e\.g\., the Northeast\.
3
Component 2: Support Systems for the Adoption of IEM/SLM Practices (57\.4% of total project
cost) financed technical and financial support for investment subprojects 7 benefiting 1,900 small
farmers/others (individuals or groups) to shift from non-sustainable farming practices to sustainable
livelihood activities to improve biodiversity, reduce/reverse land degradation, and increase carbon
sequestration\. Sub-components: (i) Financial Support for Sustainable Natural Resources Management;
and (ii) Support to Adaptive Management Practices\.8 Investments would be grouped under five lines
of activity: (i) recuperation of degraded areas; (ii) use and sustainable management of biodiversity;
(iii) management of water resources; (iv) re-orientation of productive systems to sustainable systems;
and (v) commercialization of socio-environmentally sustainable projects\.
Component 3: Organization and Capacity-Building for Integrated Ecosystem Management
(16\.0% of total project cost) financed improved farm- and community-level capacity to manage
natural resources by strengthening rural organizations, and by sharing project implementation
experiences and lessons with stakeholders at all levels, to broaden project impact\. Sub-components:
(i) Community Organization; (ii) Training of Project Executors; and (iii) Training and Environmental
Education of Beneficiaries\.
Component 4: Project Management, Monitoring and Evaluation (17\.5% of total project cost)
financed participatory management and monitoring activities to leverage project impact, effective
project implementation and coordination, and results dissemination\. Sub-components: (i) Participatory
Management of the Project; (ii) Monitoring and Evaluation; (iii) Project Dissemination\.
1\.6 Revised Components
1\.6\.1 Components were not revised\.
1\.7 Other significant changes
1\.7\.1 There were two Level 2 restructurings, both dated November 9, 2010: (i) Project closing date
was extended 12 months to November 30, 2011 to permit full disbursement of the GEF Grant and
achievement of project objectives; and (ii) US$715,000 was reallocated from Category 6 Unallocated
and US$40,000 from Category 5 Incremental Operating Costs to Category 1 Goods (US$55,000),
Category 2 Consultantsâ Services (US$350,000), and Category 3 Training (US$310,000)\. No
significant changes were made to project design, scope or scale, or implementation arrangements\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
Background analysis:
2\.1\.1 The Project took its lead â conceptually and technically - from several decades of Bank
support for and evaluation of successful projects in Southern Brazil which had increased agricultural
productivity and reduced soil loss through innovative approaches to sustainable land management and
7
The PAD mentions a target of 4,400 âproposalsâ?, which was an indicative target within a demand-driven project framework - the first of its
kind in this State\. Farmer demand IEM/SLM investments, could not be projected with any accuracy\. It should also be noted that a single PID
could generate several proposals from an individual farmer for investments in different but complementary âpracticesâ? intended to maximize
on-farm impact\. A single subproject might constitute several âpracticesâ?\.
8
Access to project benefits - maximum amount of project support - was to be differentiated based on type of farmer, size of land-holding,
whether market-oriented/not, and depending on the category of subproject chosen\. This was to ensure support to the neediest while also
garnering the participation of farmers with capacity to develop and implement successful, replicable subprojects\. Even so, all residents of
micro-catchments were to benefit from improved management of the natural resource base and future scaling up of the project strategy\.
4
biodiversity conservation\. 9 The lessons from those operations stressed: the micro-catchment as the
optimal unit for conservation planning and management; technical changes delivering direct and early
productivity benefits to farmers; greater impact and sustainability via integration with related,
complementary programs and political support; extensive training using group and participatory
approaches; and, socio-economic and environmental monitoring to quantify/demonstrate the national
and global externalities from improved land management\. These projects also promoted changes in
agricultural research models and the provision of rural technical assistance services to more
participatory, environmentally-friendly approaches\. Project design reflected these lessons through: a
defined set of micro-catchments; financial incentives to promote adoption of SLM practices directly
on farmersâ land; strengthening state and local policymaking and political support for IEM principles
and SLM practices; and, strengthening rural organizational capacity and participatory monitoring
systems\.
2\.1\.2 The project drew on Socio-economic and Environmental Diagnostic Studies and a Social
Assessment conducted during preparation to identify relevant issues, their consequences and the
constraints needing solution\. Relationships between smallholder agriculture, the environment and
rural poverty were explored and defined\. The strategy focused on developing mechanisms to
complement specific elements of federal, state and local programs already underway\. Many of the
investment activities had potential to produce both global and local benefits, so GEF funding was
limited to developing the enabling conditions (information, experimentation, collective action, access
to technical assistance and inputs, monitoring and evaluation), to allow farmers to make informed
decisions on management systems capable of reducing biodiversity loss and land degradation\.
Assessment of project design:
2\.1\.3 Objectives and Indicators: Despite the characteristic breadth of the GEO, the project did not
seek to finance the actual large-scale implementation of IEM\. It was a pilot/demonstration operation,
emphasizing on-the-ground actions which could be replicated and provide the foundation for scaling
up\. The PDO was more âlocalâ?, with specific goals for the target population: improved capacity and
organization for NRM, and increased adoption of IEM and SLM concepts and practices leading to
better incomes\. The PDO and GEO were clearly-stated (language added to the Logframe version (see
footnote 2) focused even more tightly on the welfare of rural communities) and their Key Performance
Indicators (KPI) were linked rationally to the main themes\. The inclusion of a PDO and GEO with
separate sets of indicators was typical of similar projects approved at that time; the GEF had begun to
require that projects demonstrate real impact on peopleâs welfare and include appropriate indicators,
resulting in the PDO/KPIâs language regarding improved production practices and rural livelihoods\.
2\.1\.4 Even so, there was confusion and overlap in the wording, meaning and targets of key PDO,
GEO and Intermediate Outcome Indicators, too many of the latter and some of questionable relevance\.
Social impact indicators were also included - separate from the Logframe â many unlikely to be
measurable within the project period (PAD, Annex 3)\. The implied monitoring and evaluation burden
was heavy\. Certain targets should have been allowed to evolve in consonance with institutional
capacity, pace of implementation on the ground, and emerging constraints\.10 Indicator targets for the
challenging IEM/SLM activities were tough given the pilot nature of the project and time likely to be
available for on-the-ground activities once the initial â and characteristically time-consuming â
learning period had positioned project institutions to launch them\.11 Targets such as a 50% reduction
9
These included: Parana Land Management I Project; Santa Catarina Land Management II Project; Sao Paulo Land Management III
Project; and Ecosystem Restoration of Riparian Forests in Sao Paulo Project\.
10
The Logframe targeted 1,900 farmers adopting IEM/SLM practices, assumed to combine 1,450 individual farmers and 150 groups
averaging three members\. The target of 1900 PIDs is mentioned in the âArrangements for Results Monitoringâ? table of the PAD, not in the
Logframe\. However, âtechnical assistance and financial support for on-the-ground investmentsâ? under sub-component 2\.1 targets âat least
1,000 producers and 150 groupsâ?, not the expected 1450/150 combination (1900) for farmers and PIDs, and is an error\.
11
As with similar projects where experience shows that it is not only technical/field activities which are being tested/piloted, but also
institutional capacity and local organization, targets could have been lower\. However, the original project team believed targets were
5
in erosion and sedimentation at the micro-catchment level required longer-term and more massive
interventions focused on changes in land use and management, difficult to achieve/measure from
small-scale, dispersed demonstration efforts\. The targeted 32,000 ha of on-land NRM improvements
was also challenging\.
2\.1\.5 Components, technical design and organization: The projectâs four components (and 10
subcomponents) were a logical projection of the key obstacles hindering improved NRM defined at
appraisal (see 1\.1\.3)\. The inter-institutional and inter-sector integration and coordination â both
vertical and horizontal â were as complex as the projectâs technical design, needing to align targets,
objectives, timetables, modus operandi and commitment from numerous participating bodies\.
Technical design was drawn from successful, micro-catchment-focused Bank-supported operations
within and beyond Brazil, and sought to integrate with existing federal and state programs combining
rural and environmental support\. However, the projectâs technical strategy and institutional
framework/structure were new to Rio de Janeiro State and the difficult learning process was
inescapable\. Aide Memoires reveal the complex training, organizational measures and sequencing -
the latter especially vulnerable to disruptive factors with few immediate solutions â required at all
levels to position the project for take-off in the field\.
2\.1\.6 As background to the design and targets, the State of Rio de Janeiro had been âoutsideâ?
observers throughout the Bank-supported NRM projects in the southern states and wanted their chance\.
Given the delays and poor prospects for processing a full-scale Bank loan, that opportunity came via a
GEF operation but a somewhat top-heavy one which evolved to incorporate key elements of the larger
vision\. The State was highly-motivated to pursue innovative approaches and had already brought new
ideas to the wider micro-catchment discourse\. The GEF operation was over-loaded and had not
benefited from the long dialogue-building of the other states but despite this the Bank team maintains
that specific targets were carefully-considered at the time and believed reasonable\. In fact, the team
aimed to exceed those targets, which in several key cases occurred, with the benefit of an extended
closing date and the accumulated experience of key institutions\.
2\.1\.7 Project management, implementation arrangements: The implementation framework was
rational in principle, but demanding in practice for a small demonstration project testing unfamiliar
technologies and relying on the collaborative capacity of multiple entities/programs with varying
levels of commitment, understanding and/or experience\. 12 Such entities were to sign agreements
(convenios) with SEAAPI, the goal being to leverage their operational capacity while mainstreaming
the project approach within them\. Experience shows that their roles and responsibilities needed better
definition up-front to avoid technical and operational disfunctionalities\. Surprisingly for a project
seeking to mainstream a technological approach within an existing State program, key project
mechanisms did not apply to the co-financing agencies/programs\. The primacy of their own rules and
standards meant they were not obliged to use the PEMs and PIDs to guide subproject
planning/investments, participate in the micro-catchment councils (COGEM), or share basic data on
their project operations and results\. The GEF-financed and co-financed activities, with some
exceptions, moved largely in parallel\. The regional offices of EMATER-Rio were to be the projectâs
decentralized executive units interacting directly with micro-catchment stakeholders but EMATER-
Rio was weak, technically outdated and lacked firm commitment to the project concept, requiring
major effort over time to meet project demands\. However, the seemingly complex and bureaucratic
reasonable and that the State could have handled even higher targets in some cases\. Another factor driving targets was the then-bleak
prospect of processing the planned larger loan and the resulting temptation to load up the GEF\.
12
State Rural Extension Agency (EMATER) and State Agricultural Research Enterprise (PESAGRO) (SEAAPI agencies) supported
extension and research; Brazilian Agricultural Research Enterprise/Soils Division (EMBRAPA-Soils, State Environmental Management
Foundation (FEEMA, an agency of the State Secretariat for Environment and Urban Deveopment (SEMADUR) and the State Mineral
Resources Department (DRM, an agency of State Secretariat of Energy, Naval Industry and Petroleum (SEINPE)) supported monitoring
activities; also involved were the Public Defenderâs Office (DPGE), the NGOs SOS-Mata Atlantica and Conservation International Brasil
(CI/Brasil), and a private Foundation for Project Coordination, Technological Studies and Research (COPPETEC)\.
6
hierarchy of steering committees designed to guide the project at the State, regional, municipal and
local levels actually worked well in practice\. 13
2\.1\.8 Financing: The Rio Rural/GEF was originally conceived as a blended operation to
complement a proposed Bank loan but the Stateâs uncertain creditworthiness delayed Federal
Government consideration of the Carta Consulta for the latter\. The GEF thus covered a smaller
project area than that envisioned under the blended operation but given the Stateâs improving
macroeconomic situation and the GoRJâs interest in a loan, the GEF emphasized foundational
activities for scaling-up and replication, e\.g\., sustainable production models and state-wide
dissemination of experiences and lessons\. The project was to complement activities from ongoing
programs in the sector and region, and leverage their co-financing estimated at appraisal at around
US$8\.20 million equivalent, about 55% of total project cost\.
2\.1\.9 Participatory processes: An intensive and broad-based consultation with national, state and
local beneficiaries and stakeholders accompanied project preparation and under-pinned the
Socioeconomic and Environmental Diagnostic Studies and the Social Assessment\. Civil society
stakeholders also shaped the initial project concept and selection of project areas\. Two NGOs â SOS
Mata Atlantica and CI-Brasil â were included as project executors\. The missing element however, was
gender; women were not part of this process, an omission highlighted by the 2005 Quality at Entry
Assessment (see 3\.5\.2)\. This consultative framework was expected to consolidate during the
implementation period via Project Steering Committees (see 2\.1\.5) and other project elements such as
participatory monitoring, and collective implementation of the PEMs\.
2\.1\.10 STAP Roster Review (SRR): The SRR agreed with the general thrust of the project but not
with its assumed capacity to reverse deforestation or reduce poverty due to its pilot scope/scale and the
likely limited impact of incentives and education\. The SRR called for a shift from low value
subsistence cropping to higher value-added products\. The Bank/Project team responded that the
projectâs main thrust was to strengthen the organizational and conceptual structure for self-
management of natural resources by rural communities using a methodology developed by the Federal
University of Rio de Janeiro\. Post-harvest, value-added activities were already incorporated in project
design but this was further strengthened and clarified, and specific examples provided by the reviewer
were included as eligible for incentives under the five main lines of activity (see 1\.5\.1)\.
Adequacy of Government commitment:
2\.1\.11 The State and Federal Governments had established a policy agenda incorporating the
following: (i) the State Credit Program for Agricultural Production and Diversification (Moeda
Verde); (ii) State Micro-catchment (MC) Program for Rural Sustainable Development (Rio Rural)
providing rural extension and infrastructure to rehabilitate micro-catchment resources (e\.g\., erosion
control on rural roads); (iii) National Family Agriculture Program (PRONAF), providing credit and
assistance for smallholders to improve productive capacity; and (iv) other, non-governmental
initiatives to support State Protected Areas, e\.g\., KfWâs Pro-Atlantic Forest Program in the NNWF,
and the GEF-supported Critical Ecosystem Partnership Fund to help establish private protected areas
in the Serra do Mar Corridor and conservation research\. The projectâs focus on SLM, IEM and
biodiversity conservation was consistent with governmentâs established framework and sector
development plans, was expected to contribute to implementation of Governmentâs National
Biodiversity Policy, and met eligibility for GEF funding according to guidelines of the National
Commission on Biodiversity (CONABIO)\.
Risk Assessment:
13
CEDRUS, COREM, COGEM, CMDR: respectively, State Council for Sustainable Rural Development; Regional Micro-catchment
Council; Micro-catchment Management Council; and, Municipal Rural Development Council\.
7
2\.1\.12 Critical risks identified at appraisal were comprehensive and candid but ratings were uneven
and mitigation measures varied in relevance and efficacy\. The risk rating of modest for SEPâs ability
to function in a complex multi-institutional setting was under-stated, as was the likelihood that the
many partner institutions would interact seamlessly and effectively\. Greater clarity was needed at
appraisal in defining the roles and responsibilities of participating agencies and programs and in
mainstreaming the entire framework to promote durable forms of collaboration and intersection\.
Project complexity was not mentioned as a risk, but was substantial given the small size of the project,
its technical innovations and its predictably difficult, initial learning trajectory in a State with little/no
experience working with the Bank\. And, the lack of local and institutional capacity was rated
substantial but was expected to be addressed by ongoing programs of SEAAPI, PRONAF and state
environmental agencies, an oddly hands-off approach but understandable given the small scale of the
project and its integration goals\. The project could not do everything\.
2\.2 Implementation
Factors affecting project implementation and outcomes:
2\.2\.1 The SoRJâs difficult fiscal situation created budget and counterpart funding issues for the
project\. Delayed release of State counterpart resources in the first two years disrupted Annual
Operating Plans and sequencing, reverberating across the framework of activities designed to position
the project for its next stages\. Further, State budget resources were drawn away from the project (and
other state activities/programs) to finance completion of the new Metropolitan Urban Transit system in
Rio de Janeiro, in financial straits due to the appreciating value of the Real to the US Dollar\. The
Stateâs permitted level of indebtedness under the Federal Fiscal Responsibility Law was also an issue,
with the State seeking to negotiate an increase in its debt ceiling to create fiscal space for the many
pending programs/projects\. The GEF had to wait in line for funds, delaying key activities for several
years\. The erratic release of counterpart resources also affected farmersâ land management decisions
and agricultural activities, dependent on financing synchronized with seasonal production cycles\.
Apart from continuous pressure from the Bank team on the executing and related agencies, and their
appeals for resources from the State, this situation was beyond the projectâs control\.
2\.2\.2 Project launching activities were caught between two mandates - the end of one
administration and the start of another\. In Brazil, this period is typically characterized by a lack of
resources in the final year of the outgoing government, and the desire of the incoming administration
to acquaint itself with and âadoptâ? a project in its policy agenda before it commits budget resources\.
While the PIU/SEP team did not change, the leadership in virtually all other project-associated
institutions did\. The Bank teamâs experience and the strategy of project management by negotiation
mitigated the risks associated with State institutionsâ initial lack of political will\. Once convinced, the
State came on board with important support, sustained throughout the implementation period, e\.g\.,
kept/supported the central-regional project structure; worked hard to improve the counterpart funding
situation; authorized a public bidding process to contract new technical executors for EMATER/Rio;
and, supported preparation of the new Rio Rural/IBRD project (and proposed Additional Financing)\.
2\.2\.3 Institutional capacity and innovative project design delayed execution\. The multi-
institutional nature of the project further complicated project launching/execution\.14 Training activities
were protracted, duplicative and linear\. A more agile system which bunched training in shorter periods
interspersed with practical experience was needed, and was subsequently introduced\. Project
14
The Project team noted in hindsight that activities could have been included to mainstream multi-institutional collaboration\. Rio de Janeiro
State both under the GEF and the Rio Rural/IBRD has tended to depend on strong project leaders/individuals within a weak â albeit evolving
- institutional setting, entailing risks if that leadership is disbanded\. While the core project objective was not entirely dependent on the multi-
institutional arrangements/linkages, their comparatively informal nature suggests a potential future risk\. As in other southern states, Rio de
Janeiro needs to develop a culture of inter-institutional collaboration on its flagship rural programs\.
8
innovations, including the focus on micro-catchments, required an unexpectedly long period for
municipalities, executing agencies/partners and targeted farmers to internalize and understand the
project rationale/logic and gain sufficient confidence to engage\. Previous, failed State and local
initiatives had left farmers disenchanted and reluctant to get involved\. The fact that project design
reflected the Bankâs extensive experience with similar operations in several southern states, and that
the State was broadly familiar with those projects, had actively sought a similar project and already
had a âdomesticâ? variant (Rio Rural) ongoing, could not mitigate the need for Rio de Janeiro State to
go through the learning cycle itself\. Experience showed that this cycle - albeit unusually long in this
case - typically resulted (and did result) in a sharp take-off and rapid progress\.
2\.2\.4 EMATER/Rio, responsible for technical assistance and rural extension (ATER) services,
was challenged by the projectâs concept and methodology\. Its presence and effectiveness in the
micro-catchments were uneven, with managers and technicians variously unwilling to innovate or be
accountable for performance\. Concerns arose about EMATERâs capacity to respond to the
accelerating demand for subprojects including under the new Rio Rural/IBRD operation for which
EMATER-Rio also took the technical lead in the field\. With the Stateâs adoption of the Rio Rural
program as a flagship development priority, EMATER-Rio was boosted by the contracting/training of
150 new field technicians; special spreadsheets were developed to monitor techniciansâ performance
and achievement of ATER targets, and to hold managers accountable; and, consistent efforts were
made to build institutional commitment to the project approach\.15 EMATER/Rioâs performance had
improved significantly by end- project (see also 2\.2\.2)\.
2\.2\.5 Gradual strengthening of the Real to the US Dollar in the initial years reduced resources
available to the project\. By 2009, when field activities were ready to launch, the Bank team noted
that project targets would be difficult to achieve due to the 40% decline in the Real/US$ exchange rate\.
However, only minor changes were made to targets: the number of PIDs was reduced from 1,900 to
1,450; the targeted number of SLM-adopting âbeneficiaryâ? farmers was informally reduced in 2010
from 1,900 to 1,450 (due to its implicit linkage to the number of PIDs)\. The target of 32,000 ha
expected to reflect changed, biodiversity-friendly practices, was not adjusted since it was an aggregate
of GEF-financed and other-financed activities/subprojects and project authorities (correctly as it
turned out) believed it was still achievable\. 16 Project indicators, targets and/or their composition
needed realistic analysis which would typically have occurred under the Mid-term Review (see below)\.
2\.2\.6 The Mid-term Review (MTR) contributed to improving the projectâs pace and quality but
a more formal, better-reported process was needed\. The MTR represented an analytical and
practical process conducted from 2008 to 2010\. The Bank team and State project counterparts were
aware that more intensive management of project activities and institutions was required, given the
protracted and difficult launching experience, but above all a more disciplined and realistic approach
to improving the performance of EMATER/Rio and other extension agents crucial to the field
activities was essential\. The Bank/Client consensus emphasized greater attention to inter-institutional
integration, communication and project monitoring, and the need for an extension of the closing date
and a reallocation of funds\. Monitoring and organized feedback on various issues were already
underway while an MTR evaluation study was being prepared by independent consultants\. However,
the concluded study was not accepted by the PIU, it did not become the analytical guide for a
systematic revitalization of the project, and the project archive lacks any discussion of its findings and
recommendations (although some of the latter were consistent with project teamsâ independent
15
A related issue affecting the quality and timeliness of field operations was the delayed (procurement-related) contracting of the Foundation
for Project Coordination, Technological Studies and Research (COPPETEC), responsible for training the technical executors in the various
phases of local planning, an activity of fundamental importance to other project activities\.
16
There were no formal arrangements for systematic data collection/sharing between the PIU and the projectâs co-financing partner
programs (e\.g\., PRONAF)\. End-project data aggregation in key cases was a protracted and difficult exercise\.
9
assessments of the way ahead)\. 17 The informality of the MTR represented a missed opportunity inter
alia, for a more timely and participatory analysis of project design including indicators, data collection
arrangements, and institutional collaboration\.
2\.2\.7 Project at Risk: The project was never declared at risk\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
2\.3\.1 Design: The vision and framework for M&E was comparatively sophisticated especially for
first-time implementers, covering the monitoring of project impacts (including social) and tracking of
physical and financial execution through an MIS, with expected regular feedback\. The approach was
two-pronged, combining âcompleteâ? or full monitoring in three micro-catchments and participatory
monitoring in all beneficiary micro-catchments\. The framework also included a project portal to
channel project-related information to policymakers and steering committees, and a coordination unit
within SEP including EMATER-Rio, State University of North Fluminense (UENF), the Brazilian
Agricultural Research Company (EMBRAPA) to monitor environmental activities/outcomes and
socio-economic aspects\. An M&E design issue which complicated the measurement of project
achievements was the lack of agreed procedures for data collection/aggregation of GEF-financed and
co-financed activities\. Targets were aggregates but the PIU had little/no access to the databases of co-
financiers, creating difficulties ex-post in constructing/reporting a complete picture of performance\.
2\.3\.2 M&E implementation: Taken as a whole, M&E met its quantitative targets and the project
was a successful example of participatory monitoring\. The project financed baseline and MTR studies,
and a well-organized and thoughtful final report, but was unable to monitor/collect social impact data
to the extent foreseen at appraisal\. The project also conducted all required local, state and regional
dissemination seminars/events and established the planned project portal (www\.microbacias\.rj\.gov\.br)
which by closing had registered some 42,000 visits\. Bulletins were distributed, disseminating the
project, its practices and results; brochures were prepared in classroom-accessible language;
technical/operational and conceptual manuals for SLM practitioners and extensionists were produced
and disseminated; and, folders encapsulating the demands of Micro-catchment Development Plans
(PEM) were distributed, providing communities with a tool to leverage resources beyond the project\.
As standard practice, all project dissemination materials utilized data generated by project M&E
(Annex 2)\. A summary of the two main monitoring mechanisms is as follows:
(a) Complete monitoring: 18 The complete or intensive monitoring of three micro-catchments
generated important results including data/analysis on the impact of pollinizing species on economic
crops; the importance of forest remnants to pollinizing species; and the identification and study of
forest remnants in the micro-catchments and their importance to biodiversity conservation\. Challenges
included: the projectâs multi-institutional structure and difficulties in coordinating and operationalizing
monitoring activities; the high cost of data collection and production of technical materials; a time-
consuming baseline study of mixed relevance to the project; delayed and/or deficient feedback of data
to micro-catchment communities and technicians; and, information collection campaigns not
synchronized with the subprojects themselves to benefit from results and feedback; and,
17
See âRelatorio de Avaliacao de Meio Termoâ?, Fundacao de Estudos Agrarios âLuiz de Queirozâ? (FEALQ), January 2010\. The PIU
asserts that the report did not follow a âclassicâ? evaluation methodology, and put undue emphasis on recommendations concerning activities
not directly related to the project\. The report commended: (i) the projectâs partnership with the Public Defenderâs Office to institute the
Community Conduct Statutes re environmental conservation; (ii) beneficiary empowerment through participatory management; and, (iii) the
âincubationâ? methodology for building farmersâ organizational commitment to the environment; but was critical of (iv) weak integration of
involved institutions despite project efforts; and (v) the projectâs modest investment in educating beneficiaries to improve incomes and
quality of life\. Recommendations included sharing successful experiences more widely with internal and external audiences and putting a
higher value on promoting inter-institutional collaboration\. Such findings were incorporated into the already evolving and renovated
managerial approach which included greater accountability from EMATER-Rio for the performance of annual rural extension
activities/targets\.
18
The project also launched a digital inclusion initiative enabling local farmers in 13 micro-catchments to use computer centers (installed in
schools and community centers) for access to project information from the regional and state levels including from the project MIS\.
10
(b) Participatory monitoring: This methodology evolved into a highly useful instrument, generating
information from which important subproject results were detected\. The product of this monitoring
approach proved fundamental for the projectâs cost-effectiveness and economic/other evaluations and
studies\. The main weakness was lack of consistent dissemination/use of information generated to
motivate and mobilize the participation of additional groups of micro-catchment residents\.
2\.4 Safeguard and Fiduciary Compliance
2\.4\.1 Safeguards compliance: Safeguards performance/compliance was rated uniformly
Satisfactory by supervision missions\. The project was classified Category B (Partial Assessment), with
an Environmental Assessment (EA) and Environmental Management Plan (EMP) to ensure
conformity with OP 4\.01\. The project also triggered Natural Habitats (OP 4\.04) and Forests (OP 4\.36)\.
The projectâs basic thrust was to establish the organizational and practical foundation for long-term
integrated SLM with local and global environmental implications\. The project team included senior
environmental specialists/economists, and supervision of compliance with triggered Safeguards was
thorough and consistent, aiming to avoid and/or minimize any potential negative impacts and enhance
planned outcomes\. Supervision found that the identification, preparation and implementation of
activities on the ground followed recommended practices consistent with the projectâs EMP\. In
addition to ensuring that project-financed investment activities built environmental commitment while
doing no harm to natural habitats and forests, project achievements included the Decree authorizing a
system of Payment for Environmental Services (PES), the Action Plan to implement the Serra do Mar
Biodiversity Corridor, the Statutes of Community Conduct mandating community compliance with
environmental laws, and creation of Nature Protection Reserves in several micro-catchments, paving
the way for sustainable compliance longer-term (see section 3\.2)\.
2\.4\.2 Fiduciary compliance:
(a) Financial Management (FM) performance varied over the course of the project\. FM supervision
was intensive in the initial years\. Problems were diagnosed and evaluated, training was provided, and
time-bound action plans and close follow-up sought to correct multiple deficiencies\. The root cause
was lack of experience with Bank FM procedures/systems and human resource issues\. FM staffing,
organization, information, archiving and reporting were improved to varying degrees over time but
internal controls remained problematic\. With some exceptions, FM was rated Moderately
Unsatisfactory up to mid-2010 due to overall inherent and control risks being rated as substantial and,
at the project and implementation levels, high\. An Action Plan with specific risk mitigation measures
was designed to integrate all major FM functions\. The rating was restored to MS when controls were
examined by the Bank and found acceptable, and sustained at MS because project closure precluded a
final FM supervision mission (which was expected to restore the rating to Satisfactory)\.
(b) Audit reports were delayed, quality was uneven and auditorsâ opinions swung between unqualified
and qualified, the latter reflecting the same internal control risks/deficiencies detected by Bank FM
missions\. The Client worked hard with the Bank FM team to resolve the issues defined, since inter alia,
they represented a risk to the preparation and approval of the Rio Rural/IBRD operation which was/is
coordinated by the same Secretariat and PIU as the Rio/GEF\. The 2010 and 2011 audits will be
conducted jointly, with results due by June 30, 2012\.
(c) Procurement performance was mixed due to: inexperience with Bank procurement and the
resulting slow pace of acquisitions and consulting contracts; conflict between Bank and State
procurement norms; and, weak organization of procurement (and FM) functions along with human
resource issues\. Bank procurement specialists delivered effective training and guidance to the PIU,
which learned how to resolve bottlenecks and accelerate procurement processing\. Procurement
capacity had evolved by closing to a standard the Bank rated Satisfactory\.
11
2\.5 Post-completion Operation/Next Phase
2\.5\.1 Post-completion operation: The post-completion transition looks promising with some
caveats\. First, positive feedback from the end-project survey and the demonstrated productivity and
income benefits of the shift to improved land management bode well\. Farmers were convinced about
the relationship between the new, environmentally appropriate practices they adopted and their
improved productive situation and quality of life\. Second, the importance of operation and
maintenance (O&M) was inculcated in beneficiary farmers through tailored training from the projectâs
technical executors to implement and maintain their investments\. Farmers were not required to sign an
up-front commitment, but O&M was a standard element of TA and training for the operational phase
of specific SLM practices, and PIU management supervision and participatory monitoring reports
routinely discussed O&M progress and performance\. Third, institutional capacity has continued to
grow as a direct result of the larger, even more demanding follow-on operation (see below), which has
the same institutions in key roles\. But whether participating institutions developed the synergies likely
to sustain their collaboration beyond the GEF - under the Rio Rural/IBRD or within the Stateâs wider
Rio Rural efforts - is not known\. Evidence suggests that a more formalized framework which maps the
intersection, responsibilities, policy linkages and incentives driving multi-institutional arrangements
needs closer attention in the design of projects which adopt such approaches\.
2\.5\.2 Related operation: As mentioned earlier, the Rio de Janeiro Sustainable Rural Development
Project (known as Rio Rural/IBRD, total cost US$79\.0 million, Bank loan US$39\.5 million) seeks to
increase the adoption of integrated and sustainable farming systems in specific areas of the State,
thereby increasing small-farm productivity and competitiveness\. Its incentives scheme is intended to
address market failures through one-time matching grants, while improving the policy environment
and investment climate, and helping economic agents manage up-front transaction costs associated
with technology adoption and organizational innovation\. Key elements of the Rio/GEFâs operational
and institutional structure were adopted by the Rio/IBRD: the Borrower is the State Secretariat of
Agriculture and Livestock (now SEAPEC); the project is coordinated by the same PIU with the two
NNWF regional offices supplemented by another three in different regions; EMATER-Rio plays a
crucial technical and operational role; and the established GEF FM, Procurement, M&E units/systems
were expanded and enhanced\. About 65% of the Rio/IBRD overlaps geographically with the Rio/GEF\.
The Rio/IBRD is intended to complement and build on the Rio/GEF by focusing on farmersâ
productivity and income generation within a conservative environmental framework\. The Rio/IBRD
operation is implicitly but not overtly micro-catchment-based, and utilizes the participatory COGEMs
and COREM organizational structure, as well as the PEMs and PIDs for investment targeting, good
indicators of longer-term sustainability at more decentralized levels\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
3\.1\.1\. Project objectives remain highly relevant to country and global priorities and to the Bankâs
assistance strategy for Brazil\. The Country Partnership Strategy (CPS) for FY2012-2015 emphasizes
among its four strategic objectives, the further improvement of sustainable natural resource
management and enhanced climatic resilience while contributing to local economic development\. The
Bank group would expand support for sustainable development in the Amazon, the Cerrado and
fragile eco-systems - the latter particularly relevant to Rio de Janeiro State\. Project design â especially
the micro-catchment organizational and productive focus â remains highly relevant to local conditions\.
3\.2 Achievement of Project Development and Global Environmental Objectives
12
3\.2\.1 Project Development Objective (PDO): The following results were achieved â citing key
indicators followed by supporting evidence - cross-referenced to the GEO where indicators overlap
(see also Data Sheet and Annex 2):
Substantially achieved: Improved capacity and organization for natural resource management
leading to integration of project activities with on-going rural development efforts\.
ï The project established one Regional Micro-catchment Council (COREM â 100%) with
significant stakeholder representation from the micro-catchment and municipal levels; and 48
local Micro-catchment Management Councils (120%) providing active forums for integrating
project concepts and activities into ongoing rural development efforts\.
Other important outcomes:
ï 1,292 (GEF-financed) farmers, individually or in groups, acquired Individual Farm-level
Development Plans (PIDs â 89% of a reduced target of 1,450); and, 48 Micro-catchment
Executive Plans (PEMs â 120%) were developed using participatory rural diagnoses,
improving farmersâ capacity for organized natural resources management activities;
ï Local land management/NRM planning improved\. Farmers and public programs targeting
rural populations acquired - through the PEMs and PIDs - a âroadmapâ? for better-organized
local development financing of SLM technologies/practices and other development needs;
ï The PID/PEM planning process fulfilled a key project strategy â using GEF resources to
increase and improve existing investments in sustainable agriculture through organized,
participatory mechanisms (see Annex 2 regarding PIDs, PEMs, COGEMs and COREM);
ï The multi-disciplinary Incubator of Sustainable Rural Enterprises (IRS) methodology was
adapted successfully to the rural environment, boosting community organizationsâ capacity for
collective action and self-management of natural resources\. 588 farmers in 87 groups
implemented small-scale agro-industrial ventures producing environmentally sustainable
goods and services;
ï Farmers/stakeholders idescribed the benefits of their strengthened organization: greater access
to technical assistance, knowledge, local and state authorities, and new practices which
conserved their green assets while increasing their productivity (see Annex 5);
ï The Rio GEF integrated its activities via relationships with/links to a wide range of State and
Federal public programs, most directly to the PRONAF, Moeda Verde and State Rio Rural
programs, but including many others; and,
ï Diverse awareness-building and educational events reached several thousand stakeholders
who reported that project capacity-building initiatives were useful and rewarding, improving
their understanding of the project approach integrating economic, environmental and social
concerns (see GEO Sub-objective 4 below); and
ï This was demonstrated by farmers undertaking similar subprojects at their own expense and
by the State Governmentâs sustaining this approach under the follow-on operation\.
Substantially achieved: Increased adoption of IEM and SLM concepts and practices\.
ï 2,254 farmers (155% of reduced target), members of 48 organized communities in 48 micro-
catchments, adopted some 4,092 IEM/SLM practices on about 31,650 ha (106%), their
investments aligned with the five categories defined at appraisal: recuperation of degraded
areas, use and sustainable management of biodiversity, water resources management,
13
reorientation of productive systems and the commercialization of âgreenâ? products (Data
Sheet and Annex 2); 19
ï Land degradation was reversed by the introduction/adoption of these practices (see GEO sub-
objectives below);
ï Livelihoods were improved: ex-post economic and cost-effectiveness analyses of investments
in pasture rotation, rustic poultry production, beekeeping/honey production and protection of
water sources/springs, show average IRRs (for the first three) of 59%, 26\.2% and 32\.7%
respectively, indicating strong potential for beneficiary income generation and increasing the
likelihood that adoption rates of IEM/SLM will continue to increase (see section 3\.3); and,
ï The cost-effectiveness of environmental impacts in all four cases was very positive (see table,
section 3\.3), a further incentive promoting increased adoption\.
Other important outcomes:
ï Some 2,728 investments in IEM/SLM practices were financed: 1,292 GEF-financed and 1,154
co-financed (mainly PRONAF) investments representing 1,292 and 962 families respectively;
ï Adaptive research units (13) established on farmersâ land, the participatory evaluation of
results, and proactive dissemination activities, expanded technology adoption by farmers;
ï Farmers were already independently adopting the technologies introduced on their land,
expanding from experimental to larger areas at their own expense/risk (Annex 2, Box 2\.1\.19);
ï A wide range of environmental education/awareness-building events, facilities and media
tools promoted/expanded stakeholdersâ understanding of the projectâs concept and objectives,
increasing their acceptance/adoption of new practices (see GEO Sub-objective 4 below); and,
ï Stemming directly from the Rio GEF experience and demonstrating the projectâs multiplier
effects, seven long-term research units were established (now being maintained under the Rio
Rural/IBRD) to increase the scope of adaptive technologies available for farmer adoption\.
3\.2\.2 Global Environmental Objectives (GEO): The following results were achieved, cross-
referenced to the PDO where indicators overlap (see also Data Sheet and Annex 2):
Substantially achieved: Address threats to biodiversity of global importance
ï IEM/SLM practices were introduced on 31,650 ha (99%) to promote the conservation and
sustainable use of biological diversity, reverse land degradation and promote green production
techniques;
ï Biodiversity conservation was fostered by establishing 792 ha of land use mosaics (64%) on
private lands supporting corridor connectivity in micro-catchments\. This activity was more
complex and time-consuming than anticipated; and,
ï 1,332 ha of riparian and other native forest were restored for biodiversity conservation and
hydrology stabilization objectives (93%)\.
Other important outcomes:
19
Many farm families - the 1,292 with PIDs providing a detailed guide to on-farm needs - got support for several âpracticesâ? under a single
subproject (and some families got two or more subprojects), adopted to support a sustainable intensification of smallholder crop production\.
In many cases, two or more practices are needed to generate a âconceptâ? or an âapproachâ? such as Conservation Agriculture, i\.e\., zero tillage
equipment, crop rotation, soil conservation (contour farming, terraces), soil mulching, which the project sought to promote\. Final analysis
also shows that, for some of the practices incentivated, beneficiaries financed, with their own resources (or even without the need for
additional resources), additional sustainable practices such as water source protection, organic fertilization, and regeneration of vegetation in
water recharge areas\.
14
ï A Payment for Environmental Services (PES) mechanism was enacted by Decree and
established, the direct outcome of project-supported studies and policy dialogue under a joint
initiative of the Secretariats of Environment (SEA) and Agriculture (SEAPEC)\. The Decree â
one of the most important project achievements - obligates the State to financially support
such system within the Stateâs Water Resources Management Policy\. The PES was piloted -
with EMATER and SEAPEC participation - in the São João River Basin\. Signature of the
Decree followed a transparent, negotiated process involving State environmental institutions,
NGOs and civil society which, acting jointly through the PES Forum, are now defining
priority areas for biodiversity/environmental conservation, valuation criteria, monitoring
methodologies and institutional arrangements\. The São João River Basin Committee,
influenced by the project, adopted the PIDs and PEMs as planning tools and is now paying
upstream farmers to provide environmental services;
ï A study developed recommendations and an Action Plan to support implementation of the
Serra do Mar Biodiversity Corridor in project watersheds; and,
ï The project adopted a multi-institutional approach designed to build a longer-term framework
supporting agro-ecological conservation in vulnerable areas, and to integrate,
methodologically and financially, the projectâs IEM/SLM elements into existing programs\.
Substantially achieved: Reverse land degradation in agricultural landscapes\.
ï The targeted 50% reduction in erosion and sedimentation was not achieved\. Telemetric
monitoring stations and hydro-sedimentology points were installed near the outfall area of
three micro-catchments to identify possible changes in hydrologic variables resulting from
SLM practices implemented on-farm\. The effects on sediment reduction could not be detected
because, to monitor such changes in small areas, this monitoring equipment needed to be
installed immediately adjacent to treatment areas, i\.e\., where new practices were implemented,
which is now occurring under Rio Rural/IBRD;
ï Recent studies by Embrapa/Soils (2011) however, in two of the project micro-catchments
showed reduced concentrations of sediments attributed to the projectâs effective control of
erosive processes\. 20 These results are taken to be representative of what is likely to have
occurred in other project micro-catchments (see Annex 2)\.
Other important outcomes:
ï Soil structural stability was enhanced in micro-catchments through investments including
crop/pasture rotation, soil conservation equipment, agro-forestry systems, minimum tillage
and riparian/other forest restoration (see Annex 2);
ï Case studies on soil quality improvement, evaluated based on organic material and nutrients in
the surface layer of soil in six subprojects monitored over three years showed: (i) increased
organic material in four subprojects (67%) averaging 5\.04 g/dm3 or 0\.5%; and, (ii) increased
potassium and phosphorus in five subprojects (83%) averaging 10\.14 mg/dm3 for phosphorus
and 2\.14 mmolc/dm3 for potassium;21
ï Watershed management strategies were developed in five micro-catchments, and 13
sustainable agro-ecosystem management methodologies were adapted to local conditions,
tested/validated on-farm, and with independent replication by farmers underway by closing\.
Substantially achieved: Enhance carbon sequestration
20
Reductions of 26% in average values of sediment concentrations and 31% in maximum values of sedimentation in the Breja de Cobica
micro-catchment; and 7% in average values for sediment concentrations in suspension, and 8% in maximum concentrations of suspended
sediments in Santa Maria/Cambioco micro-catchment\.20
21
These results cannot be extrapolated to other subprojects since each area has its own soil characteristics and each subproject its own
management system\.
15
ï Evaluations conducted through participatory research, and associated closely with pasture
rotation investments, indicate the storage/sequestration in the soil of 80 tons/ha and in the air,
about 5 tons/ha (compared to a project target of 1\.5 tons/ha);
ï Taking into account that some 224 pasture rotation subprojects were implemented with an
average area of 1 ha/subproject, carbon sequestration totaled 19,040 tons (19 tons per R$1,000
applied given the average subproject value of R$4,506\.23);
ï Based on 1\.5 ha/subproject released for biodiversity conservation (336 ha in total), carbon
sequestered in this area was a total 9,475 tons (or 28\.2 tons/ha for each R$1,000 applied,
resulting in a carbon âpriceâ? paid by the project of about R$35\.00/ton)\.
Substantially achieved: Increase awareness at all levels of the value of adopting an IEM approach to
the management of natural resources
ï The project established 48 rural community organizations (COGEMs) whose members
adopted, individually and collectively, IEM/SLM strategies in 48 micro-catchments,
exceeding targets in both cases;
ï Environmental education and awareness-building â in various formats and forums, and
stressing IEM approaches - reached 2,600 members of micro-catchment communities, 5,730
members of the wider regional population, and 20 local schools; and,
ï Best practices and lessons learned were disseminated through 31 State events, four national
events, five workshops and establishment of a Project Portal (webpage)
<microbacias@agricultura\.gov\.rj\.br>\.
Other important outcomes:
ï Beneficiaries and COGEM members described their improved understanding of the
significance of the IEM approach integrating economic, environmental and social concerns;
ï Surveys showed the project increased environmental awareness in 84% of municipalities
surveyed; 36% noted better water quality, attributed to source protection activities; 68%
favorably evaluated activities in re-forestation, soil conservation, use of organic fertilizer,
reduced use of agro-chemicals, and activities to inculcate safe disposal of chemical containers;
ï Municipalities noted the positive, motivating role of the COGEM Councils in these outcomes;
ï Consistent and intensive efforts were made to explain and disseminate the project and its
emerging results and lessons widely through numerous events, forums and media materials;
ï Collaborative, participatory preparation of PIDs and PEMs built awareness of the holistic
nature and value of IEM;
ï Economic and environmental outcomes (see 3\.3 and Annex 3) were convincing evidence of
IEMâs value to beneficiary farmers;
ï The project successfully piloted innovative organizational and technical mechanisms focused
on the micro-catchment and on farmer participation and self-management of natural resources;
ï The Rio GEF was integrated - to varying degrees - with a large cohort of related programs, 22
gradually building awareness of and buy-in to the value of the IEM approach to NRM;
22
Programs: Programa de Desenvolvimento de Territorios Rurais Sustentaveis; Territorios de Cidadania; Pacto para Restauracao da Mata
Atlantica; Pacto pelo Saneamento; Plano Estadual de Mudanca Climatica; Mecanismo de Pagamento por Servicos Ambientais; Estrategia
Saude da Familia; Pontos da Cultura; Programa de Apoio a RPPNs; Corredor Central de Mata Atlantica de Conservacao da Biodiversidade;
Programa Observadores de Agua, Agenda 21 Escolar; programa Nacional de Alimentacao Escolar; Programa de Aquisicao de Alimentos;
Programas Setoriais da Secretaria de Estado de Agricultura e Pecuaria (Cultivar Organica, Multiplicar Frutificar, Prosperar, Florescer, Rio
Leite, Rio Genetica, Moeda Verde); and Programa Nacional de Fortalecimento da Agricultura Familiar (PRONAF)\.
16
ï Evidence suggests that the projectâs IEM message has reached the highest levels of the State,
reflected in the State Governorâs strong financial backing for the Rio Rural/IBRD operation,
support for the PES Decree, and expansion of the Stateâs Rio Rural program\.
3\.2\.3 Project costs and financing: As shown in Annex 1, total project cost was US$18\.31 million,
122\.47% of the appraisal estimate\. Cost sharing differed significantly from appraisal\. The GEF Grant
financed 36\.3% of project cost compared to the appraisal estimate of 45%\. The Recipient (State
Government) contribution was barely 57% of appraisal, while the Federal Governmentâs contribution
was four times the original estimate at US$4\.80 million, chiefly due to the declining US Dollar/Real
exchange rate, as well as very high demand for PRONAF financing (which made up most of the
Federal contribution) and the abundant flow of these funds nationwide\. Contributions from
beneficiaries and NGOs were about 28% and 3\.2% respectively, of their original estimates\. The
expected contribution of beneficiaries was estimated at about 20% of GEF financing for subprojects
(sub-component 2\.1) but reached only 8% mainly because financing for environmental practices
subprojects was exempt from the beneficiary counterpart requirement\.
3\.2\.4 Co-financing: The project successfully leveraged an additional US$3\.04 million in
contributions from diverse sources (see Table 2\.31\.2, Annex 2)\. The methodology involved bidding
events - based on Micro-catchment Development Plans (PEMs) - which disseminated financing
opportunities to public and private entities involving environmental, social and cultural projects to be
executed in the Rio Rural/GEF area (the NNWF)\. Lists of potential, interested co-financing entities
were compiled and distributed to local EMATER technicians, regional offices, farmer associations and
individual producers who then prepared and transmitted specific proposals to these interested bodies\.
The process was monitored/supported by specialist consultants within the Sustainable Development
Superintendency (SDS) of the State Agriculture Sectretariat\. Communities received technical
assistance to prepare projects whose financing was submitted to public bid or presented directly to
âlistedâ? agencies such as the Amparo Research Foundation of Rio de Janeiro (FAPERJ), the National
Council for Science and Technology Development (CNPq) and various foundations for financing\.
The longer-term goals of this effort were: (i) sustainability of project activities beyond closing; (ii) to
bring other sector institutions and programs to the rural development and SLM âtableâ?; and, (iii) to
create mechanisms for the integration and consolidation of public policies/planning and co-investment
programs with a rural focus\. This co-investment strategy enabled development institutions to reach
down to the local level, overcoming the time and distance challenges of micro-catchment residents,
while fostering their autonomous, self-managed development\.23
3\.3 Efficiency
3\.3\.1 Due to the demonstration/pilot nature of the activities and relatively modest GEF investment,
project design included cost effectiveness considerations to promote maximum implementation
effectiveness and multiplier effects beyond the project, but did not conduct an economic analysis\. An
ex-post analysis utilized an internal rate of return approach to derive economic results, and cost-
effectiveness factors for environmental impacts, the latter based on GEF guidelines\.24 The outcomes
for four types of subprojects are summarized below (see full analysis, Annex 3)\.
Table 3\.3: Summary of Economic and Cost-effectiveness Outcomes for Subprojects
Subproject Economic Results Cost effectiveness of Environmental Impacts
(a) 80% increase in milk (a) Increase of 66\.6% in organic material for the subprojects
Pasture production in 90% of subprojects monitored via participatory methods, with an average increase of
Rotation monitored under participatory 5\.04 g/dm3 or 0\.5%\.
monitoring activities\. (b) Capture/storage of a total 19,040 tons, that is, 19 tons for each
23
Relatorio Final de consultoria com recomendacoes sobre acompanhamento da aprovacao dos projetos junto a entidades financiadoras e
novas possibilidades de captacao de recursos, D\. Versari/SEAPEC/SDS, 2011
24
Cost Effectiveness Analysis in GEF Projects: Global Environmental Facility 2005\.
17
R$ 1,000 applied given the average value of subprojects was
(b) Average IRR of 59% for 6 R$ 4,506\.23\.
subprojects evaluated\. (c) Average release of 1\.5 ha per subproject for biodiversity
conservation, making a total of 336 ha within the project area, or,
(c) Profitability ranging from 0\.366 ha for each R$1,000 applied to pasture rotation\.
R$ 0\.11 to R$ 0\.48 per Real
expended\. (d) Carbon sequestration in this area was 28\.2 tons for each R$1,000
applied, while the âcarbon priceâ? paid by the project would be around
R$35\.00 per ton\.
(a) Annual production of 2,475 tons of organic fertilizer/manure with
(a) Average IRR of 26\.2% for 4
a market value of around R$ 222,750\.
subprojects evaluated\.
(b) Return of R$ 0\.40 per Real applied, just on the production of
(b) Sale of eggs at local fairs and
Rustic Poultry manure, resulting in a reduced need to purchase synthetic fertilizers
to institutional markets (school
Kit (Kit galinha (opportunity cost) and reduced potential pollution through the use of
lunch program)\.
caipira) wastes for fertilizer\.
(c) Profitability ranging from
(c) The environmental practice most used in association with the Kit
R$ 0\.52 to R$ 0\.84 for each Real
Galinha was organic fertilization, highlighting the environmental
expended\.
sustainability of this type of subproject\.
(a) Recuperation of native vegetation and local biodiversity\.
(b) Increased availability of water\.
(c) Utilization of water available in critical periods:
(i) Case study 1: Irrigated pineapple cultivation: With increased
availability of water, farmers were able to increase the irrigation
period on one hectare, leading to an increase of about 12% in
production representing 2,666 kg/ha, which at a value of R$0\.85/kg
The economic results of water represented a gain of R$2,261\.10/ha or, R$0\.77 per Real applied by
Protection of source protection are indirect and the Project;
water are presented in terms of the cost- (ii) Case study 2: Use in future pasture to be irrigated\. The
sources/springs effectiveness of their expectation with pasture irrigation is for an increase of 5,300 liters of
environmental impact\. milk/year, compared to actual production without irrigation\.
Considering a value of R$ 0\.75/Liter, the gain in Reais/year will be
R$ 3,975\.00\. Further, in this area farmers are also producing meat
and the expected increase in arrobas25/year with irrigation will be
1\.5\. Considering the value of arroba of R$ 93\.00, the annual value
will be R$ 139\.50\. Taking into account the application of
R$ 2,930\.00 for water source protection, results indicate a return of
R$ 1\.40 per Real applied (without considering the cost of
implementing the irrigation system)\.
(a) Average IRR of four
Honey subprojects evaluated was 32\.7%\. (a) Release of an average 2 ha per subproject for biodiversity
Production (b) Profitability ranged from conservation associated with beekeeping and honey production
(Apicultura) R$ 0\.50 to R$ 0\.90 per Real activities\.
expended/invested\.
3\.3\.2 The PAD referred to the relatively high cost to farmers of introducing SLM practices on-farm
as a disincentive to making such investments\. Undoubtedly, certain SLM practices do imply
significant costs at the initial implementation stage, especially when they require construction or
renovation of structures and a higher labor input\. Project incentives enabled farmers to surmount this
obstacle, tiding them through to the results phase where they saw initial costs diluted and understood
better the cost-benefit of SLM adoption\. Among diverse possibilities within the Stateâs technological
stocks, the project selected the most economical and always those adapted to local eco-climatic
conditions\. Criteria considered included: (i) degree to which on-farm structures needed to be changed;
(ii) low labor requirements; (iii) low requirement for the acquisition of external inputs; (iv) little need
25
Measure of weight equivalent to about 15 kg
18
for sophisticated equipment, and the use of predominantly low-cost, and easily learned and applied
technologies; and (v) potential for replication and continuity/sustainability (as a practice per se)\.
3\.3\.3 To summarize, in regard to economic results, project-financed subprojects contributed directly
to sustainable income improvements - due to increased productivity with low costs - and indirectly by
the opportunity cost and cost effectiveness of environmental impacts\. In relation to environmental
impacts, the project made an important contribution to biodiversity preservation directly from the
regeneration of native forest associated with environmental subprojects (e\.g\., protection of springs),
and indirectly, through the release of areas for preservation of biodiversity associated with productive
investments (e\.g\., pasture rotation)\. Other important results observed included improved soil quality,
carbon storage, and increased water quantity and quality\.
3\.4 Justification of Overall Outcome Rating
Rating: Satisfactory
3\.4\.1 This rating is based on the following: (i) The development priority and project objectives were
and remain, relevant to the environmental conditions affecting thousands of small and medium-scale
farms in the State of Rio de Janeiro, and to the increasingly fragile eco-systems of Atlantic Forest
areas of Brazil, and globally; (ii) The projectâs GEO and PDO were substantially achieved when
viewed - as intended at appraisal - as the technical, operational and institutional framework for more
extensive efforts state-wide (and already under expansion through the Rio Rural/IBRD operation); (iii)
Project sustainability is boosted by strong evidence of its methodological institutionalization within
state public policy including importantly, the Stateâs Climate Change Plan, multiplier effects observed
in independent local replication of the project methodology beyond the project regions, and capacity to
attract/leverage public and private resources; (iv) Analysis indicates project efficiency judged by its
positive direct and indirect economic and environmental benefits; and (v) The project disbursed just
under 100 percent of the Grant with a one-year extension of the closing date\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
3\.5\.1 Poverty impacts and social development: The projectâs technical design was based on the
confluence between smallholder agriculture, environmental degradation and rural poverty\. The NNWF
region showed the worst socio-economic indicators in the State stemming, in rural areas, from a
moribund agriculture sector, precarious living conditions, lack of organization and poor natural
resources management\. An ambitious set of social impact monitoring indicators was developed, not
all of which were measured or even measurable within the timeframe and resources available\.26 The
following is relevant to the indicators developed:
ï 2,254 farm families (GEF and co-financed) saw the socio-economic and environmental
benefits of adopting the IEM/SLM approach, and of participatory mobilization and
organization of micro-catchment communities;
ï Most beneficiaries were poor, small-scale farmers whose agricultural profitability/prospects
increased as a direct result of their shift to more sustainable farming methods (Table 3\.3 and
Annex 3);
ï Some subprojects from adaptive research started to use certification of origin labeling;
ï Successful demonstration activities on-farm resulted in replication by farmers using in many
cases, their own resources, but the overall extent/intensity ot replication was not studied;
ï Beneficiary surveys suggest that organizational capacity and social capital improved
substantially but formal validation is needed;
26
The depth and complexity of the social impact indicators (PAD, Annex 3) were beyond the projectâs capacity, time or resources to
monitor and evaluate\.
19
ï Better-organized farmers with PEMs and PIDs, and organized in their COGEM councils, now
have - and confirmed having - greater access to public programs, and Governmentâs targeting
of such programs is likely to be more effective based on these guides; and,
ï Beneficiaries also reported a reverse migration effect in their immediate areas indicating that
their localities had become more promising, economically and socially, to live and work\.
3\.5\.2 Gender: The project made strong efforts to include women including investments in 245
subprojects valued at some R$607,000 under the direct leadership/responsibility of women\.
Subprojects included diverse SLM investments, small-scale agro-industries, crafts, clothes-making and
group equipment acquisitions\. This was a QAE/supervision-driven development since project design
made no technical or operational distinction in regard to gender, and the participation of women was
not mentioned in the PAD\. The QAE noted this omission, stating that the role of women in sustainable
agriculture and the need for a gender-sensitive approach were standard practice by the time of
appraisal and women should have been part of the consultation process at preparation\. The Bank team
asserted that the operational strategy relied on ongoing programs with lines of support geared to
women and that several specific activities supported by sub-components were typically those
embraced by women and had been selected as a direct result\.
(b) Institutional Change/Strengthening
3\.5\.3 The institutional âplatformâ? for SLM and rural poverty reduction â both for the immediate
benefit of the Rio Rural/GEF and by definition, the Rio Rural/IBRD project, and longer-term, the
Stateâs agro-ecological support programs - was strengthened through institutional partnership
formation horizontally and vertically, and the intense and often difficult learning process involved in
positioning the project for, and implementing, field operations\. Innovative partnerships with
international environmental NGOs improved conservation strategies and led to the more efficient use
of resources and scientific knowledge to promote and implement/mainstream conservationist activities
in private areas/property\.27 However, this broad institutional foundation, involving inter alia, five state
secretariats and many dependent agencies, proved ambitious for a pilot, demonstration project\.
Participating institutions/leaders showed uneven engagement with the project over time, sought to
impose their own modus operandi and objectives, and/or resisted critical input designed to improve
their/project operations, generating some conflict within the project, and demonstrating that multi-
institutional collaboration remained a pilot effort\.28
3\.5\.4 On the other hand, partnerships such as that with the Public Defenderâs Office generated
important results, establishing participatory norms and procedures for NRM via the legally-binding
Statutes of Community Conduct (ECC)\. Further, a new culture of co-responsibility and local
empowerment emerged from the COGEMsâ partnership with micro-catchment residents to implement
the project vision locally, as evidenced from interviews conducted with COGEM members (see Annex
5)\. Even within this dense institutional environment, limited/no experience with the project
methodology, and the pilot nature of the intervention in the NNWF, the PIU/SEP management team
27
Participating NGOs had a crucial role in mainstreaming the design and implementation of activities compatible with the objectives of the
Serra do Mar Biodiversity Corridor\. They prepared TORs for studies, provided satellite images, analysed eco-system fragmentation and
landscape connectivity\. These activities created greater knowledge/awareness of biodiversity richness and threats in the Corridor area, and
prompted farmers to implement conservation measures such as restoration of riparian zones\.
28
The Client Completion Report cites the example of the projectâs collaboration with the State Secretariat of Education (SEDUC) to
implement the planned Telecenters where participatory, decentralized management and farmersâ access did not conform to the project vision\.
Protracted technical and operational problems also affected the performance of EMATER-Rio, responsible for the field investments\. The
Mid-term Review study attributes institutions/agenciesâ resistance to constructive critiques to: their belief that the larger, Rio Rural/IBRD
had resolved/minimized most problems; an inability to come to terms with/consolidate new technologies and multi-disciplinary approaches;
and, the inability to determine why some micro-catchments and some inter-institutional collaborations did better than others\. This study also
notes, as further explanation for uneven institutional collaboration and engagement with the project, the fact that all state secretaries
associated with the project were changed during the project execution period, with the exception of the projectâs Secretariat of Agriculture,
Livestock and Supply, and the same was true for the mayors of most NNWF municipalities\.
20
was able to improve institutional integration which has in turn been beneficial to the Rio Rural/IBRD
project and to the Stateâs own broader Rio Rural program\.
3\.5\.5 EMATER-Rio and PESAGRO were pivotal project institutions importantly due to their
capillarity and reach in the countryside\. Projects covering extensive territory require support from the
public institutional âapparatusâ? but their adaptation to farmer demands and new methodological
approaches, and attempts to overcome old ways can be slow and difficult\. Both institutions evolved
markedly over the course of project execution but important needs remain - specifically in the case of
EMATER: greater technical presence in the field; stronger, more consistent commitment and
engagement in project decision-making and willingness, as a principal executing agency, to put project
priorities first; stronger technical preparation and renovation of field teams; and, a more proactive and
strategic vision to make structural adjustments and keep abreast of project demands\.
3\.5\.6 The planned coordination forums/arrangements (COGEMs, CMDRs, COREM and CEDRUS)
generally functioned well\. The original premise was to strengthen existing entities (CMDRs and
CEDRUS) and establish new forums at the micro-catchment and regional levels to promote farmer
participation and integrate activities, programs and institutions\. The 48 COGEMs, albeit of varying
capacity and organizational levels, generally performed their assigned functions â supporting
beneficiary selection, coordinating activities at the micro-catchment level and supervising the
submission of statements of expenditure\. Many members of the COGEMs also participated in the
CMDRs, facilitating a two-way flow of information about progress in the micro-catchments and the
municipal discourse\. The COREM considered and approved subproject proposals, communicating
with the COGEMs and ATER technical executors in the micro-catchments about all related activities\.
In the final phase of the project, joint evaluations were conducted between the COGEMs, CMDRs and
the COREM resulting in proposals for regionalized as well as micro-regional activities designed to
facilitate the Stateâs wider Rio Rural program and to integrate other public policies\. The CEDRUS
forum pre-existed the project and was kept regularly informed about project performance and results
from involved municipalities to support its primary function of integrating initiatives and institutions
in environment, health, education and culture\.
(c) Other Unintended Outcomes and Impacts
3\.5\.7 The project was the catalyst for important, unanticipated outcomes:
ï Organizational and social elements of the project approach are being used by the State
Government in the âunidades de pacificaçãoâ? to restore social coherence and empowerment in
areas being âre-takenâ? from the drug cartels;
ï Government increasingly acknowledged the methodologyâs productive benefits, supporting
expansion of the Rio Rural/IBRD, not only to reimburse the project for disaster emergency
measures implemented in 2011, but new funds to consolidate, expand and pilot new activities;
ï Case studies/interviews revealed that the principles of transparency, participation and social
control which guided project activities on the ground, restored a measure of confidence in the
public sector, easing the path for the Rio Rural/IBRD and new State initiatives;
ï Several municipalities adopted Special Nature Protection Reserves (RPPN) based on the
projectâs conservation principles and organization; and
ï The Fund for Socio-environmental Best Practice (FUNBOAS) was created to remunerate
farmers who contribute to conservation of the regional environment\. Resources are derived
from water usage charges and at closing, some R$60,000 had been transferred to small-scale
collective and individual projects using Rio/GEF planning, mapping and selection criteria\.29
29
The FUNBOAS projects are included in the PIDs and PEMs and activities supported so far include sanitation, water source protection,
riparian forest restoration, pasture rotation, coffee processing and the fencing of Permanent Preservation Areas (APP)\.
21
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
3\.6\.1 The project evaluation team surveyed project beneficiaries, municipal authorities and
COGEMs with the following results: (i) Social organization: Beneficiaries/others believed, despite
weaknesses, that project-sponsored organization in a region where most pre-existing forms of
organization were moribund was empowering, enabling a solid front in their representations to
authorities and specifically, to accessing programs, projects and public policy\. The overall conclusion
was that while COGEMs varied significantly in capacity and organization they had demonstrated
potential to organize and energize local groups; (ii) Technical assistance and rural extension
(ATER): Beneficiaries observed that interaction between the Rio Rural/GEF and other programs and
projects was common, and that the project provided three major benefits in relation to ATER services:
their improvement; the incorporation of environmental concerns; and farmersâ improved access to
ATER per se\. The presence and involvement of the ATER technician was viewed as fundamental to
the credibility of the new practices proposed; and, (iii) Subprojects: The projectâs innovative interface
with environmental concerns was repeatedly noted by beneficiaries in all micro-catchments surveyed\.
Farmers reported increased productivity and income generation from the Rustic Poultry Kits and
Pasture Rotation investments and understood the relationship between the new practices adopted under
Rio/GEF and their improved productive situation\. They saw the project/subprojects as improving local
conditions and as a key factor in their decisions not to out-migrate\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
4\.1\.1 The following factors impact on the sustainability of project outcomes:
ï Beneficiary farmers and their representative bodies clearly âboughtâ? the project methodology,
seeing positive direct and indirect benefits on their incomes, wellbeing and physical
environment from the IEM/SLM approach, and the established organizational framework;
ï Evidence, as noted earlier, of the projectâs methodological incorporation within State public
policy including the Stateâs Climate Change Plan, multiplier effects observed in independent
local replication of the methodology beyond the project regions, and capacity to
attract/leverage public and private resources;
ï Building the PID, PEM and COGEM framework into the Rio Rural/IBRD is sustaining
farmersâ organizational links to the overall package of approaches constituting IEM/SLM;
ï Cross-sector institutional growth from the collaboration needed for projects of this type, even
though this aspect of project planning and execution was far more difficult and less successful
than expected, remaining largely a pilot\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
5\.1\.1 A Quality at Entry Assessment in FY2005 rated the project Satisfactory overall\. Strong
features were cited as: impressive ownership of the project by Brazilian counterparts who took the
lead on the initiative and financed it even before GEF funds became available; clear strategic
relevance, and high priority for the need to address biodiversity and sustainable land management
22
issues in Rio de Janeiro State; and, the good track record of other, similar projects addressing land
management issues in other Brazilian states, and thus good prospects for the Rio GEF\. Areas needing
improvement included: more attention to future scaling up, given the high rates of loss of remaining
forest in this region; design was not based on a strategic analysis of state aims, including large farmers,
other policy interventions, actions of other agencies such as electricity and transport, and hence the
plausibility of the projectâs expected impacts on small farmers was uncertain; lack of clarity in the
projectâs articulation and presentation, possibly caused by an intense focus on meeting internal
operational deadlines; and, need for a stronger analysis of the basis for expecting that small farmers
would change their behaviour\.
5\.1\.2 The ICR broadly agrees with this assessment but not with the rating, taking into account that
the QAE was conducted soon after effectiveness before the implications of design issues had become
evident\. While the Stateâs initial difficulties were familiar to the Bank team from experiences in other
southern states, the framework of objectives, activities and multi-institutional arrangements exceeded
the Stateâs capacity in the initial years and in some cases throughout â even bearing in mind other
obstacles such as fiscal\. The lessons from those states did not ease the burden on Rio State of having
to undergo the same learning process, in this case unusually long\. The QAEâs reference to unclear
articulation and presentation is assumed to include over-designed and confusing indicators and
inconsistencies in the PAD, creating difficulties for project monitoring and the desired optimal focus
on biodiversity results\. On balance, the ICR rates quality at entry as Moderately Satisfactory\.
(b) Quality of Supervision
Rating: Moderately Satisfactory
5\.1\.3 Supervision missions were regularly spaced and comprised experienced specialists\. The
project benefited from stable Bank task management from appraisal to its final year, and the Rio GEF
task team had extensive experience with similar projects upon which the Rio State GEF was modeled\.
The Bank team was proactive in cultivating strong relationships with the client and related institutions
and in helping them work through the many complex organizational, institutional and technical issues
arising from project design\. While the record shows 10 supervision missions in six years, below the
Bank standard and the needs of a project with implementation challenges requiring more intensive
coverage, this was mainly a function of inadequate reporting/recording of the informal but substantive
supervision of the GEF conducted during preparation and implementation of the Rio/IBRD operation,
which involved the same State (lead) institution and PIU, and saw substantial leveraging of the GEF
experience to enhance the larger project\. Ratings for the GEO and Implementation Progress in the
first three years were unduly optimistic given the low level of disbursement but reflected the teamâs
expectation that this was the normal precursor to a second phase of accelerated implementation and
successful conclusion, as seen in other states\. Safeguards policies were well-supervised and missions
included senior Bank and FAO environmental expertise\. The Mid-term Review however, was
problematic, as described in 2\.2\.6\. On balance, the ICR rates supervision as Moderately Satisfactory\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
5\.1\.4 This rating acknowledges that while the project addressed clearly-defined issues affecting
natural resources management and rural poverty in a highly degraded and vulnerable area of global
importance, using methodologies tested successfully in other states and regions, it was over-designed
for ambient conditions, especially institutional, and the description, design and number of indicators
and some aspects of the PAD created monitoring challenges and confusion at the project evaluation
stage\. Taking into account supervision performance, where an otherwise skilled oversight of a difficult
project by an experienced Bank team is compromised by several concerns relating to supervision
reporting, the MTR and realism of ratings, overall Bank performance is rated Moderately Satisfactory\.
5\.2 Borrower
23
(a) Government Performance
Rating: Moderately Satisfactory
5\.2\.1 The State Government was committed to the project concept from the earliest days and
supported preparation of both the Rio Rural/GEF and its successor, Rio Rural/IBRD\. Even with a
change of government in 2006, the project management team was left intact, of fundamental
importance for overall stability in the early years, especially of a project facing many challenges\.
Government supported the PES Decree including the incorporation of project results and lessons, and
the projectâs efforts to attract/leverage additional, complementary sources of financing\. However, as
noted elsewhere, deficits in governmentâs performance constrained project implementation: delayed
disbursements and erratic counterpart funding in the first three years due to acute fiscal difficulties
saw the project struggle to gain traction; delayed internalization of Bank project norms and
administrative procedures by the State institutions sharing project execution, distorted the institutional
reformulation process underway during the projectâs launch years; and, government could have
provided greater political guidance and proactivity by fostering the engagement of State secretariats
and municipal administrations in project activities\.30
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
5\.2\.2 The regionalized structure of the PIU/SEP with an Executive Secretary at the center and two
regional Executive Secretaries worked well, steering the project through its initial difficulties and
accelerating an almost-moribund project to meet or exceed most of its key targets with a one-year
extension\. Obviously, the projectâs improving budget and counterpart funding situation over time,
along with agreed internal restructuring of the PIU breathed new life into project operations after an
unusually slow start\. Notably, the same PIU/SEP team was also coordinating the much larger Rio
Rural/IBRD operation from 2009 onwards, a major task indicating (and further stimulating) significant
institutional growth\. SEPâs creation of thematic management units was also effective in injecting
rigor into the supervision of project executing teams\. Finally, as noted in 3\.5\.4, the PIU/SEP, even
with limited/no experience with the project methodology, improved institutional coordination and
supported the strengthening of EMATER-Rioâs field operations, benefiting the larger Rio Rural/IBRD
operation and the Stateâs own wider rural program\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
5\.2\.3 This rating balances the difficult but ultimately significant maturation of key project
coordinating and executing bodies, reflected in the many project achievements/successes, against a
series of obstacles impeding the progress of this project especially in its first half\. Some of these
impediments were beyond the control of project executors, and others resulted from fundamental
institutional weaknesses, all set against a backdrop of competing State priorities with greater political
weight\.
6\. Lessons Learned
6\.1\.1 The following lessons are among the more important:
30
As background, it is worth noting that agriculture and the rural sector generally, still have little political currency in Rio de Janeiro State,
aggravated by the Stateâs massive investment in petroleum, plus the Olympics and World Cup\. As the project consolidates over time, and
beneficiaries assert their demands, rural development may gain more traction in the interior of the State but its ability to become a powerful
player in the Stateâs future policy dialogue will be difficult\.
24
Projects seeking methodological change and requiring a strong, committed field presence need
careful upstream analysis of the institutional profile and capacity of proposed partners and co-
executors\. Mechanisms must be designed up-front for formalizing partnerships and integrating cross-
sector efforts for IEM projects which experience demonstrates, require shared implementation\. Such
frameworks also require joint agreement on roles, relationships, responsibilities and budgets bearing in
mind institutionsâ inherent, differentiated characteristics\. Clear, measurable targets, inter-institutional
commitments not dependent on individual relationships, channels of communication between
institutions and with the coordination unit, and oversight mechanisms which measure performance of
individual partners, are all essential\.
Collaborative monitoring, data-collection and storage need to be negotiated between the executors
and partners to ensure that a Bank-supported project co-financed by other programs can access
project-related data reflecting the performance/achievements of all players\. Monitoring, evaluation
and dissemination can have a material impact on a projectâs ability to detect and resolve critical issues
affecting immediate execution and to support related, larger-scale and longer-term efforts\. Joint
project databases and agreed data formats are needed to support whole-project evaluation, especially
where co-financing partners have their ownmanagement structures, field operations and procedures\.
To secure genuine collaboration on IEM longer-term, mechanisms are needed to create intersection
and communication between the Recipient/Borrower and the other co-financing programs or
institutions\. The trajectory of the two major financing groups under the Rio Rural/GEF essentially ran
in parallel with co-financiers not obligated to use the organizational or financial instruments developed
to empower farmers and facilitate the application of IEM principles to their development\. Nor, as
mentioned above, were co-financiers obliged to share their project data with the project/PIU\. While
the mechanics of a more collaborative, co-financing effort may have exceeded the GEFâs capacity, the
principle is valid for larger operations\.
GEF projects can tend to have sweeping objectives which envision global impacts from localized,
demonstration/pilot-scale activitie while the âcompanionâ? Project Development Objectives tend to
be more grounded and local\. A clear distinction is needed between demonstration/foundational goals
and those requiring a full measure of development\. Expecting both can be difficult to deliver as in the
case of the projectâs ambitious erosion and sedimentation goals more likely to be detectable in larger,
more concentrated areas, and the projectâs complex social goals - not even overtly evident from the
PDO - which were clearly beyond its capacity to deliver or measure\.
The qualifications of the technical teams and their adequate presence on the ground, as well as
their close and regular contact with beneficiaries, promote farmer confidence and the credibility of
the project and its institutions\. Techniciansâ motivational role - even more than technical - the use of
participatory methodologies, the strength of the technical strategy and its consistency with project
objectives are indispensable elements\. Further, the training process is not linear\. Experience shows
that training is best conducted as project activities evolve, at critical points and for short, intensive
periods targeting specific capacity gaps\. This approach requires a strategy, planning and flexibility\.
The project demonstrated that a conjunction of mechanisms and events is needed to mobilize and
motivate small farmers to engage with/in biodiversity conservation through their agricultural
practices and indeed as activities in their own right, on their properties\. The project effectively
combined decentralized, participatory governance mechanisms, stakeholder education including the
dissemination of results, financial incentives and the direct demonstration of technologies on-farm\.
The critical element was undoubtedly the GEF-financed grant mechanism to trigger/incentivate
adoption of initially unacceptable technologies, which would likely not have happened as rapidly
without the financial incentive\.
25
Related to the above, financial sequencing is critical: using the GEF instrument for demonstration
effects through non-lending technical assistance and grants produced results which became
incentives in their own right to spur farmers to further, independent adoption/utilization\. In
addition, government recognized that biodiversity conservation through technological innovation on-
farm has a legitimate longer-term place at the table in the public policy dialogue on rural development\.
Demonstration effects also undoubtedly prompted governmentâs acceptance of the PES concept and
approval of the Decree â the new Law was approved after Rio/GEF results began to appear â and
promoted/consolidated its support for the larger Rio Rural/IBRD operation\.
Establishing a PES system and actually launching its physical and financial component on-farm,
demonstrated the value of inter-institutional and multi-disciplinary collaboration at each stage:
analytical, political, technical, financial and physical\. The participation of farmers in the evolving
policy dialogue and the value of their PIDs and PEMs to providing a disciplined, decentralized
organizational and sequencing framework supporting successful PES activities, were also critical\.
6\.1\.2 Other Lessons: Other important lessons are highlighted in the Client Completion Report, the
Executive Summary of which, with lessons, is presented in Annex 7\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
7\.1 The Implementing Agency, SEAPEC, on behalf of the Borrower, confirmed its overall
concurrence with the findings of this ICR (see Annex 7)\. The main divergence in the Implementing
Agencyâs evaluation of the project relates to the overall performance of the Bank and that of the
Borrower, which they consider to both be satisfactory, given the results which have been achieved and
despite the initial difficulties encountered by the Project\. The Bank considered the Borrower's
implementation trajectory and the consensus was that an MS rating was appropriate, reflecting a
balanced assessment of positive and negative factors throughout project implementation\.
(b) Cofinanciers
N/A
(c) Other partners and stakeholders
N/A
26
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Planning for IEM Actions 0\.936 1\.332 142\.3
- Strengthening of IEM incentive 0\.151 0\.164 108\.3
structure and eco-system planning
systems
- Local land management planning 0\.784 1\.168 148\.9
Support Systems for Adoption of
8\.805 8\.939 101\.5
IEM/SLM Actions
- Financial support for sustainable
8\.429 8\.532 101\.2
NRM
- Support to adaptive management
0\.375 0\.406 108\.2
practices
Organization and Capacity-
2\.468 1\.531 62\.0
building for IEM
- Community organization 0\.426 0\.618 145\.1
- Training of project executors 0\.410 0\.562 137\.0
- Training and environmental 1\.631 0\.350 21\.5
education of beneficiaries
Project Management, M&E 2\.740 3\.280 119\.7
- Participatory management of the 1\.805 2\.412 133\.7
project
- Monitoring and Evaluation 0\.720 0\.744 103\.2
- Project dissemination 0\.215 0\.123 57\.3
Total Baseline Cost 14\.949 15\.080 100\.9
Physical Contingencies 0\.00
Price Contingencies 0\.00
Total Project Costs 14\.949 15\.080 100\.9
Project Preparation Facility (PPF) 0\.00
Front-end fee IBRD 0\.00
Total Financing Required 14\.949 15\.080 100\.9
(b) Financing
Appraisal Actual/Latest
Type of Estimate Estimate Percentage of
Source of Funds
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower/Recipient 6\.31 3\.60 57\.07
Global Environment Facility (GEF) 6\.75 6\.65 98\.52
Federal Government of Brazil 1\.11 4\.80 432\.43
Other Co-financiers --- 3\.04 ---
NGOs, Beneficiaries 0\.95 0\.22 23\.15
Total: 14\.95 18\.31 122\.47
27
Annex 2\. Outputs by Component
2\.1 Drawing on the project archive including the Clientâs Final Report (SEAPEC/SEP 2012), the
following summarizes the main achievements/outputs under individual components/sub-components
and end-project results\.
2\.2 Component 1: Planning for Integrated Eco-system Management Actions (US$0\.94
million, 6\.0% of total project cost) intended to provide national and beneficiary stakeholders with a
strengthened framework at the state and local levels to support IEM approaches to sustainable rural
development and protection of critical eco-systems\. The main components and activities were to drive
a stronger support framework and planning for IEM, the former as studies and the latter as action
planning of IEM/SLM activities to be conducted under Component 2\. Component 1 activities would
intregrate with the State Rural Extension Service (EMATER) regular program, and with other existing
programs addressing biodiversity conservation, protected areas, environmental legislation enforcement
and environmental monitoring\.
2\.3 Subcomponent 1\.1: Strengthening of IEM Incentive Structure and Ecosystem Planning
Systems\. Implemented by SEP, the subcomponent financed studies and workshops to strengthen the
foundation of existing incentive and planning structures for sustainable eco-system and land
management in the NNWF\. The sub-component achieved most of its targets\.
Achievements:
ï Decree (2011) obligating the State Government to financially support a Payment for
Environmental Services (PES) system within the Stateâs Program to Revitalize and Conserve
Water Resources, itself instituted within the Stateâs Water Resources Management Policy;
ï Seminars to divulge the results of the Study of a Strategy for Biodiversity Conservation
Integrated with the Serra do Mar Corridor Initiative, in partnership with Conservation
International-Brasil and the State University of North Fluminense; 180 technicians trained by
Conservation International in biodiversity conservation strategies;
ï Study to improve institutional integration intended to improve governance and access to rural
development public policies;
ï Study to design an incentives program to support the economic sustainability of rural
communitiesâ productive and NRM practices;
ï Integration of the Rio Rural/GEF with State and Federal public institutions/programs, and
NGOs to improve project activities;31
ï Five Watershed Management Strategies updated and fine-tuned on basis of the first 20 PEMs;
ï The land suitability analysis was not conducted due to time, expertise and financing factors\.
2\.4 Payment for Environmental Services: Up to 2011, when the project-promoted Decree was
signed, there had been only isolated experiences of PES in Rio de Janeiro State financed by the Stateâs
31
Programa de Desenvolvimento de Territorios Rurais Sustentaveis; Territorios de Cidadania; Pacto para Restauracao da Mata Atlantica;
Pacto pelo Saneamento; Plano Estadual de Mudanca Climatica; Mecanismo de Pagamento por Servicos Ambientais; Estrategia Saude da
Familia; Pontos da Cultura; Programa de Apoio a RPPNs; Corredor Central de Mata Atlantica de Conservacao da Biodiversidade; Programa
Observadores de Agua, Agenda 21 Escolar; programa Nacional de Alimentacao Escolar; Programa de Aquisicao de Alimentos; Programas
Setoriais da Secretaria de Estado de Agricultura e Pecuaria (Cultivar Organica, Multiplicar Frutificar, Prosperar, Florescer, Rio Leite, Rio
Genetica, Moeda Verde); and Programa Nacional de Fortalecimento da Agricultura Familiar (PRONAF)\. As examples of specific
collaborations: (i) Territorios de Cidadania (coordinated by the Federal Minstry of Agrarian Development): The project financed
improvement of two territorial plans to eliminate their âshopping listâ? design and to bring community demands into the plans; and (ii) Food
Acquisition Program (PAA) and National School Feeding Program (PNAE): The project organized groups of farmers to provide
food/agricultural products to both programs\.
28
Rio Rural program and some water catchment committees using resources from water use charges\.
The involvement of FUNBOAS (Fund for Good Practices in Water Micro-catchments) pioneered in
the area of financing SLM, adopting the Rio Rural methodology even though it was not located in the
same area\. Today it channels 50% of resources collected in the Lagos Sao Joao catchment to foster
SLM designed to improve water quality and maintain hydrological function\. The project also
supported PES piloting with small farmers in the São João River Basin - via its Basin Committee - led
by SEA with strong support from EMATER and SEAPEC, prior to approval of the PES Decree\. The
Decree was transparently negotiated between the Government and civil society, using seminars and
joint coordination between the Secretariats of Environment and Agriculture as well as NGOs from the
PES Forum which is now defining priority areas, valuation criteria, monitoring methodologies and
institutional arrangements, while linking PES development to other sources of funding to expand its
coverage\. The São João River Basin Committee is now paying farmers to provide environmental
services\. In this case, the project also had an impact on State water resources management policy as
the Basin Committee adopted the PIDs and PEMs as one of their planning tools and the committee is
now paying upstream farmers for their provision of environmental services\.
2\.5 Subcomponent 1\.2: Local Land Management Planning to be implemented by EMATER
and the Public Defenderâs Office, would cover a planned 50 micro-catchments (subsequently
understood by the Bank and Client to be 40) and include: (i) formulation of PEMs; (ii) preparation of
PIDs from which would be selected certain proposals for financing as subprojects; and (iii)
participatory preparation of ECCs\. PEMs would be collectively implemented by micro-catchment
beneficiaries, monitored by SER (the two regional offices of SEP)\.
Achievements:
ï Participatory Rural Diagnoses (PRD) prepared;
ï 48 Micro-catchment Development Plans (PEM) prepared (120%);
ï 1,292 Individual Development Plans (PID) prepared (for GEF-financed farmers), based on a
reduction of the 1900 PIDs targeted to 1,450 (of which 89% achieved);
ï 10 Statutes of Community Conduct (ECC) established (100%), supported by the State Public
Defenders Office (DPGE)\.
2\.6 Component 2: Support Systems for the Adoption of IEM/SLM Practices (US$8\.80
million, 57\.4% of total project cost) financed technical support to small farmers and other relevant
ecosystem managers at the micro-catchment, municipal and watershed levels to move from
conventional, unsustainable smallholder agriculture to sustainable livelihood activities which would
enhance biodiversity and carbon sequestration in the agricultural landscape\. It financed technical
assistance, investments, and targeted research demands identified in the Watershed Management
Strategies (WMS), PEMs, PIDs and PID-derived subproject proposals\. GEF would finance
incremental resources to support the transition but once this transition was achieved, outputs from
those activities were intended to help ensure ongoing financial support to sustainable activities
designed to create environmental benefits at the local, regional and global level without further GEF
involvement, i\.e\., GEF would jump-start a process of boosting existing financial support programs and
establish a foundation for other self-sustaining financial mechanisms, e\.g\., Payment for Environmental
Services (PES)\. Notably, 70% of the cost of Component 1 would be financed by ongoing State and
Federal programs (Rio Rural, Moeda Verde and PRONAF)\.
2\.7 Challenges during implementation: This component supported the adoption of IEM/SLM
practices\. It faced a number of challenges including: (i) exceptionally weak institutions with little/no
prior experience with the project strategy or World Bank projects, inadequate technical and
operational resources, budget constraints and lack of priority within GoRJâs tight fiscal space; (ii)
challenges inherent in the projectâs multi-institutional and multi-sector integration strategy, combined
with a complex coordination, monitoring and decision-making structure, both vertical and horizontal;
29
and (iii) the need to integrate GEF resources with other official sources of co-financing (PRONAF,
Moeda Verde, State Rio Rural) and other co-financiers\.
2\.8 Subcomponent 2\.1: Financial Support for Sustainable Natural Resources Management
provided technical and financial support to promote the shift to sustainable farming activities
mentioned above, financing subproject proposals for support services and environmentally appropriate
investments derived from the PEMs and PIDs\. The sub-component comprised two activity streams:
(i) Activity 1 (not GEF-financed): small infrastructure (erosion control on rural roads and small
sustainable irrigation schemes) and productive systems in farms in project-supported micro-
catchments; (ii) Activity 2 (GEF-financed): transition to sustainable livelihood activities within the
IEM framework\.
2\.9 Incentives system: The grant-based incentives were demand-driven, based on the PEMs and
PIDs with the participation of municipal and regional decision-making bodies\. Technical assistance
was delivered by EMATER and/or contracted technicians\. EMATER financed staff salaries,
infrastructure, vehicles and other, while the GEF financed operational costs\. Grants were up to
R$6,000 per beneficiary smallholder family and up to R$4,000 for other types of beneficiaries, later
increased to R$7,500 per family and R$5,000 for other types due to evidence of inflation-based
escalating costs for equipment, materials and labor\. Applications were initially evaluated by the
COGEMs, endorsed, consolidated by municipality (local EMATER) and submitted to SEP for final
approval\. Disbursement occurred against receipts/statements of expenditure (SOE) submitted by
beneficiary groups/individuals\. Beneficiaries received/spent the approved subproject resources and
submitted statements of expenditure/accounts\. They were expected to contribute about 20% of the
GEF financing for subprojects but in practice, their contribution was around 8% mainly because the
financing of subprojects supporting environmental practices was exempt from the beneficiary cost-
share requirement\.
2\.10 Integration of co-financiers: The GEF and other co-financiers followed essentially parallel
tracks except on the primary objectives which were the same in both cases\. The main difference
between the GEF and other financing was the formerâs more holistic approach, integrating the social,
economic and environmental sectors and vision, and supporting sustainability goals\. The portfolio of
subprojects eligible for GEF incentives was larger while the focus of the other financing sources was
narrower, supporting mostly economic, environmental or cultural initiatives\. However, to attract
financiers, besides the project resources, the entire methodological strategy was utilized and shared as
the guarantee of a set of socio-environmental best practices to be adopted by beneficiaries\. While the
other co-financiers were not obligated to use these same tools, the fact that beneficiaries were
organized in COGEMs and/or possessed an instrument prepared in a participatory manner for planned
activities which were socially and environmentally balanced (the PIDs and PEMs), qualified
beneficiaries to access these other financing sources\.
Achievements:
ï Financed â with GEF and other co-financiers (mainly the Stateâs Rio Rural and Moeda Verde
programs, and Federally-financed PRONAF) â implementation of an aggregate 2,728
IEM/SLM subprojects (there was no subproject target per se, only an indicative estimate of
4,400 proposals, from which a minimum 1900 subprojects â equal to the projected number of
PIDs â would be financed);
ï Of this total, 1,292 investments were GEF-financed, and 1,154 were solely co-financed
(mainly PRONAF) under the Incentives Scheme, attending a total 2,254 families; and,
ï These 2,254 families implemented IEM/SLM practices on about 31,650 ha of land\.
ï Provided technical assistance to support the implementation and maintenance of those
subprojects in 48 micro-catchments; and,
ï Leveraged some US$3\.04 million of co-financing from public and private programs to
support/complement these investment activities\.
30
2\.11 The project strategy of utilizing GEF resources incrementally to increase and improve existing
investments in sustainable agriculture was successful\. This result was possible via the methodology for
preparing Individual Development Plans (PIDs) and Micro-catchment Executive Plans (PEMs)
whereby project technicians and beneficiaries, in a participatory manner, sought to integrate different
sources of counterpart funding to maximize and put into effect the PIDs/PEMs, attending in the
process at least one of the Lines of Support\.
2\.12 That said, the Rio/GEF was a pilot project which sought to demonstrate that investments
premised on equal weight between environmental, economic and social concerns are possible\. It was
not assumed that the investments financed by other sources would necessarily adhere to the five
categories of investment, or be based on the PIDs/PEMs, since they already had their own objectives,
methodologies and instruments\. Importantly, the project did not require them to conform\. The
Rio/GEF with its participatory methodology of activities in micro-catchments (Participatory Rural
Diagnoses, PIDs and PEMs) initiated a process of integration of investments within micro-catchments,
whether derived from the Stateâs Rio Rural program, beneficiary resources or rural financing/credit\.
The expectation is that project results will build awareness in beneficiaries and managers of financial
institutions to promote the educative benefits of rural financing, improving the overall quality of rural
investments and their greater sustainability\.
2\.13 Evidence suggests this process is underway: new lines of credit for sustainable agricultural
activities were recently established under federal policies, e\.g\., Low Carbon Agriculture (Agricultura
de Baixo Carbono â ABC) and PRONAF Sustentavel\. Out of a total R$123 billion for Governmentâs
2011/2012 Agriculture and Livestock Plan, the ABC program has already logged demand of R$400
million from July 2011 to Januaary 2012\. In the same period, R$65 billion were applied to agriculture\.
(nation wide)
2\.14 Subproject categories/types: Subprojects eligible for grants - so-called incentives - fell into
five categories and all activities were intended to have demonstration effects and be representative of
one or more of the four major eco-systems in the project area\. See table 2\.15\.1, which covers only
GEF-financed investments\. Similar data was unavailable for co-financed subprojects\.
Table 2\.14\.1: Rio Rural-GEF â Lines of Support and GEF-financed Investments
Summary Table
Lines of Support Nº of Subprojects Value (R$)
1\. Recuperation of Degraded Areas 238 311,922\.00
2\. Use and Conservation of Biodiversity 120 250,058\.75
3\. Water Resources Management 329 684,708\.15
4\. Re-orientation of Productive Systems to
Sustainable Systems 730 2,082,324\.90
5\. Support for Commercialization of Socio-
environmental Products 157 1,274,209\.50
Total: 1,574 4,603,223\.30
Erosion and sedimentation control results:
2\.15 Based on the project monitoring plan, telemetric monitoring stations were installed near the
outfall area of the three micro-catchments targeted for âcompleteâ? monitoring to identify possible
changes in hydrologic variables resulting from sustainable natural resource management practices
31
implemented by farmers with project support\. Bearing in mind the pilot nature of erosion control
activities, adopted by a limited number of farmers, the effects on reduction of sediments could not be
detected due to the decision to instal hydro-sedimentology points on the micro-catchment outfall areas
intended for monitoring\. To detect such changes in small areas, the installation of monitoring
equipment would have needed to be installed immediately adjacent to where the practices were
implemented (treatment areas)\. As a direct outcome, the Rio Rural/IBRD project has been installing
the equipment and structures associated with soil conservation subprojects in areas of the micro-
catchment where such subprojects/practices are concentrating\.
2\.16 Further, EMBRAPA/Soils recently reported some data on the concentration of sediments in
two of the project micro-catchments indicating a tendency to reduction throughout the project
execution period in these two micro-catchments\. This tendency suggests that the practices introduced
to control erosive processes were effective\. However, taking into account the projectâs demonstration
character and the implementation of practices in localized areas, there was not the 50% impact
foreseen on the reduction of erosive processes and sedimentation\. The following information is
derived from micro-catchments which showed some reductions\.
Micro-catchment Brejo da Cobiça â Municipality of São Francisco de Itabapoana
2\.17 In this micro-catchment, sustainable natural resources management practices were
implemented as follows: (i) 14 riparian forest recovery and conservation subprojects; (ii) 10 spring
protection subprojects; (iii) 4 pasture rotation subprojects; (iv) 3 crop rotation subprojects; and (v) 2
green/organic fertilizer subprojects\. Data show a reduction of 26% in average values of sediment
concentrations and of 31% in the maximum values of sedimentation in this micro-catchment in the
period from 2009 to 2011 (Graphic 1)\.
Concentraçao de sedimentos em suspensaoÂ
(mg/L)
2008 2009 2009 2009 2010 2010 2010 2010 2011 2011
Monitoring period
Source: EMBRAPA/Soils 2011
Micro-catchment of Santa Maria/Cambiocó â Municipality of São José de Ubá
2\.18 Data show a reduction of 7% in average values for sediment concentrations in suspension, and
of 8% in maximum concentrations of suspended sediments in the micro-catchment of Santa
Maria/Cambiocó, in the period from 2009 to 2010 (Graphic 2)\.
32
Concentraçao de sedimentos em suspensao (mg/L)
2008 2009 2009 2009 2010 2010 2010 2010
Monitoring period
Source: EMBRAPA/Soils 2011
2\.19 Sub-component 2\.2: Support to Adaptive Management Practices financed the adaptation of
existing soil management practices and adequate technological solutions for unsustainable land usage
identified by the farming community at the micro-catchment level\. Activities included: improvement
and validation of practices for the integrated management of natural resources; adaptation and
validation of cropping, agro-forestry and pasture management systems to increase carbon stocks and
biodiversity; implementation of pilot units to improve the use of rural space and in buffer zones of
ConservationUnits\.
Achievements:
ï Implemented and validated 13 adaptive research units on farmersâ land, in partnership with
and monitored/overseen by PESAGRO-Rio, designed to adapt existing technologies to varied
agro-ecological conditions in micro-catchments;
ï Principal themes studied were: pasture rotation, agro-ecological cultivation of tomato, organic
coffee cultivation, and subterranean dams;
ï Dissemination of results occurred using special field days (dias do campo), technical visits to
farmers and exchange of information among farmers at the research sites, publication of
expanded summaries through the Project Portal, and the presentation of results at seminars and
congresses;
ï Stemming directly from the Rio GEF experiences, seven long-term research units are being
maintained under the Rio Rural/IBRD project: Pasture Rotation (Itaocara, Miracema,
Quissama); the PAIS System or Integrated, Sustainable, Agro-ecological Production (Sao
Jose de Uba); Agro-forestry Systems (Cambuci); Alternative Controls of Fruit Pests and
Diseases (Cambuci); and Sustainable Fruit Culture (Itaocara)\.
2\.20 The participatory research methodology included an evaluation of results with the
experimenting farmers\. In this way, the adoption/otherwise by farmers was observable by the
33
responsible technician\. The technologies introduced and evaluated following the advent of the
Research Units were adopted by farmers who then expanded from experimental areas to larger areas â
with some adaptations â at their own expense and risk\. These included: (i) use of green fertilizer in
fruit cultivation; (ii) use of vermicompostagem on vegetables; (iii) semi-intensive systems of rustic
poultry production; (iv) the PAIS System (Integrated Sustainable Agriculture Project); (v) use of bio-
fertilizer in coffee and in vegetables; (vi) use of green fertilizer in manioc production; (vii) access to
the National School Food Program; (viii) use of the water from subterranean dams; (ix) agro-
ecological technologies for tomatoes; and (x) establishment of a corn seed bank\.
Box 2\.20\.1: Adaptive Technologies Developed by the Project
1\. Introduction of green fertilizer: The introduction of Arachis Pinto sought to control the incidence of
infestedplants and reduce the use of herbicides, and improve the protection and quality of the soil\. The
planting of Arachis Pinto was done using seedlings spaced at 0\.35 meters by 0\.35 meters\. This plant was the
cultivar selected to be introduced in caqui sub-systems because it presented certain favorable characteristics
such as: easy management; capacity to promote soil surface coverage; promote the recycling of soil nutrients,
making orchards self-sufficient in some nutrients; promotes excellent production of biomass; controls invasive
species, avoids soil loss, and can be propagated by seedlings and seeds\.
2\. Semi-intensive production system for Galinha Caipira: Some 60 birds aged 60 days, of the Label Rouge
brand, were introduced on the property of each partner farmer\. As part of the food restriction process
associated with the semi-intensive system, it was stipulated that part of the conventional diet would be
substituted by alternative rations obtained from farmersâ properties (left-over vegetables, banana leaves and
stems, medicinal herbs and grasses, and freely available in parks\. These parks were planned tomeasure 30 by
20 meters, divided into four parts\. These were adapted, forming just one park, without any division and with
existing vegetation\. The required food was established, according to production phases and the potential of
the partner farmers\.
3\. Establishment of varietal corn Seed Bank: The Seed Bank was carried out with the corn variety BE 106
which is rustic and fully adaptable to diverse edafo-climatic conditions\. As a rustic variety it is stable and
adaptable\. The first seeds produced were distributed during a field day with 29 interested producers â about
600 kg were distributed between the farmers to form the second generation planted in the community\.
Farmers received guidance on how to preserve the seeds and the genetics of the variety in order to multiply
production on their own properties\.
4\. Introduction of vermicompostagem (worm composting) in the production of leaf kale: The use of
humus as the main source of fertilizer for the leaf-kale subsystem was introduced\. Worm compost is an
organic fertilizer (humus) capable of improving the attributes of soil chemically (better retention and cycling
of nutrients), physically (improved structure and formation of aggregates), and biologically (increased
biological organisms)\. A suspended earthworm container formed from two rings of concrete with a volume
of about 0\.8 m3 aquired through the local construction industry\. Each ring received 200 to 300 kg of manure
and 25 liters of California red earthworms (Eisenia foetidae) acquired from a specialist source, which
produced, each 45 to 60 days, 100 liters of worm-compost ready to be used in the field\.
5\. Agro-ecological practices for tomato: In the tomato sub-system, alternative forms of controls of pests and
diseases were introduced, carried out through the use of Bordeaux mixture (calda bordaleza), vegetable
extracts,32 wrapping the stalks with glassine paper, and using home-made traps attached to the tomato plant
with tape\.
6\. Green fertilizer for manioc cultivation: Green fertilizers (Guandu and Crotalaria) were introduced into
manioc sub-systems in consortia arrangements\. The green fertilizers were seeded simultaneously with the
manioc\. The producerâs preferred system is a consortia in alternating lines, with Guandu\.
7\. Alternative controls of pests and diseases in coffee: An alternative control for pests and diseases was
introduced for coffee sub-systems\. This occurred through the utilization of alternative mixtures among which
were Agrobio, Bordeaux mixture, BMBio and Metabio\. The bio-fertilizer Agrobio isproduced from fresh
bovine manure, water, molasses and mineral salts in open containers\. The Bordeaux mixture is a colloidal
suspension, light blue, obtained by mixing a solution of copper sulphate with a suspension of natural or
hydrated lime, also with nutritional effects and disease control\. BMBio is a by-product which contains, in its
formulation, spores of fungus Beauveria bassiana applied in powder form to the plant\. It contains control
agents such as fungi and bacteria which colonize the pathogens attacking the fields\. Metabio is also a by-
32
Fungicide made of copper sulphate, lime and water
34
product which contains in its formulation fungus spores of Beauveria bassiana and Metarhizium anisopliae,
applied directly to the soil, thereby biologically controlling pests\.
8\. Green fertilizer interspersed with manioc: The use of green fertilizer was introduced interspersed with
beans in manioc production sub-systems cropped in simple rows â 1\.0 m by 0\.8 m and in double rows â 2\.0 m
by 0\.8 m by 0\.8 m with and without the fertilizer interspersed with the beans\.
9\. Use of alternative protection in pimentos: Biofertilizers were introduced in pimento sub-systems
reducing the use of agro-chemicals\. The biofertilizer Agrobio is produced from fresh bovine manure, water,
molasses and mineral salts in open containers\. The same is the case with organo-mineral fertilization which is
a mixture of organic composts complemented by mineral sources\. With the greater supply of fertilizer in the
soil, the organo-mineral is such that the farmer can reduce by 35-40% the source of nutrients, a significant
reduction in production costs\.
10\. Sustainable, integrated agricultural production (PAIS): An adapted PAIS system was introduced and
evaluated based on the exploration/analysis of 17 cultivars including onion, cilantro, kale, carrots, lettuce,
capsicum, peppers and arugula\.
11\. Marketing of health foods from family agriculture to institutional markets: Family farmers were
trained to participate in the Federal Governmentâs Food Acquisition Program (FAP)\. Data were collected
concerning production and delivery for institutional markets\.
12\. Subterranean dams: The subterranean dam is a technology for capturing rainwater from surface run-off
as well as infiltrated water, to improve soil humidity/moisture content\. The damming of water occurs in the
soil profile, creating a reservoir or elevating the water table, preventing losses through evaporation\. Use of the
subterranean dam has positive environmental impacts such as the reduction of surface run-off and erosion, a
strategic mechanism in areas suffering frequent dry period, which can reach 10 months in duration annually,
affecting agro-livestock production as well as the supply of water for human consumption\. The subterranean
dam is an alternative for water capture and for increasing agricultural productivity of small and medium rural
enterprises, mainly those which lack water for irrigation use\.
13\. Silvi-pastoral systems: Despite the research project being initiated, the results were not evaluated or
disseminated due to the sale of the property\.
2\.21 Long-term research units: The Rio/GEF also financed seven long-term research units, now
being maintained and concluded by the Rio Rural/IBRD project\. These research units are testing:
sustainable management of dairy pasture; sustainable production of limes; agro-forestry systems; use
of alternative pest control in fruits; and adaptation of seasonal crops to the integrated agro-ecological,
sustainable production (PAIS) system\.
2\.22 Component 3: Organization and Capacity-building for Integrated Ecosystem
Management (IEM) (US$2\.47 m, 16\.0% of total project cost) financed training, education and
community engagement efforts to facilitate the formation and strengthening of rural organizations for
the self-management of natural resources\. These activities were to complement productive and
marketing group activities fostered by the ongoing State Rio Rural and Federal PRONAF programs\.
Direct beneficiaries were to be about 6,000 technicians, smallholders, rural youth and micro-
catchment residents, trained in natural resources management, and to participate in rural collective
undertakings to promote beneficiariesâ socio-economic development\.
2\.23 Sub-component 3\.1: Community Organization entailed diagnostic studies of existing
community organizations and facilitating the development and implementation of pilot community
self-management activities focusing on the production and delivery of environmentally sustainable
goods and services\. An innovative, multi-disciplinary methodology - known as Incubation of
Sustainable Rural Enterprises (IRS) â was applied for strengthening local organizations through
collective action and self-management\. Two rural incubator centers were planned within
Information/Communication Centers\. 33 An interactive project Communication Plan was also
supported\.
33
The methodology is based on a World Bank award-winning program developed by the Technology Incubator for Popular Cooperatives
(ITCP) at the Federal University of Rio de Janeiro to establish viable and sustainable collective enterprises and networks\.
35
Achievements:
ï The EMATER-Rio team was trained to act as an incubator of collective/group enterprises
within the micro-catchments, improving their delivery of ATER services to support
community groups organizationally and in their capacity to conduct collective business
activities/ventures;
ï Community organizations were strengthened via the projectâs adaptation of the incubator
methodology for popular cooperatives of ITCP/COPPE/UFRJ to the rural environment
(known as the IRS â Incubator of Sustainable Rural Enterprises);
ï 40 community organizations were created, adopting and implementing IEM/SLM strategies
via the incubator mechanism;
ï Incubator groups were strengthened through the implementation of a communication system
between technicians and beneficiaries;
ï The IRS resulted in the financing of some 588 small-scale agro-industrial ventures/subprojects
in 24 municipalities, including: milk chilling tanks; beekeeping/honey production; crafts,
seedling nurseries, manioc mills, fruit orchards, processed fruit products, dairy livestock, and
confectionary production;
ï Implemented one Telecenter to promote communication and market/organizational
networking\.
2\.24 Sub-component 3\.2: Training of Project Executors supported training and environmental
awareness efforts for project-related inter-sector and rural extension staff including management and
technical capacity building programs for some 420 staff\.
Achievements:
ï The project trained 370 technicians including local NGOs (185%) to improve their managerial
and technical capacity to manage natural resources adequately and communicate such
messages to micro-catchments residents;
2\.25 Sub-component 3\.3: Training and Environmental Education for beneficiaries to enhance local
capacity and increase support for sustainable NRM, complementing existing training by the base
programs in agro-processing, improved cropping, animal health and aquaculture; training for teachers
and support for environmental projects in schools; and, demand-driven technical training in the five
broad subproject investment categories\.
Achievements:
ï Trained 2,600 members of micro-catchment communities (87%) through environmental
education;
ï Provided training/environmental awareness-building to 5,730 members of the wider regional
community (191%); and
ï Conducted 20 environmental education programs (80%) through local schools\.
2\.26 Component 4: Project Management, Monitoring and Evaluation (US$2\.74 million, 17\.5%
of total project cost)
2\.27 Sub-component 4\.1: Participatory Management of the Project supported technical assistance,
office equipment, administrative and operational aspects to ensure effective project implementation
and resources management; the Project management Unit (SEP); and, establishing the participatory,
consultative external project coordination structure (Coordination Forums) at State, municipal and
micro-catchments levels\.
36
Achievements:
ï The Project Executive Secretariat (SEP) was established as planned, supported by two
decentralized Regional Executive Secretariats (SER)\.
ï The coordination structure of COGEMs, COREM and CMDRs was successfully established
and while quite complex, functioned well/as intended;
ï The high level Project Steering Committee (the pre-existing State Council for Sustainable
Rural Development â CEDRUS) was also kept regularly informed about project progress,
results and performance in different municipalities\. CEDRUS activities focused on integrating
government/non-government institutions and initiatives in the health, education, culture and
environment sectors\.
2\.28 Micro-catchment Management Councils (COGEM) and Regional Micro-catchment
Councils (COREM): To constitute the COGEMs, EMATER extension staff worked as âanimatorsâ?
of a participatory process to identify the scope of stakeholders within a micro-catchment and to
promote the sense of common purpose and identity\. Various groups congregated (women, youth,
cultural, dairy farmers etc) to form a pre-COGEM\. Following a diagnostic process, each group
nominated their representative to form the COGEM\. At least 80% of these groups had to be part of
the COGEM but there was no required minimum percentage of small farmers\. The experience in
applying the methodology showed that generally, at least 70% of COGEM members were
beneficiaries (commonly men, women and young small farmers)\. In the case of the COREM, the PIU
identified and invited doe a public meeting the major actors in the NNWF region including public
institutionms (municipal, state and federal), trade unions, NGOs, universities and River Basin
Committees\. Subsequently, participants divided into groups and elected representatives from the
various sectors and levels (one focal point and one alternate)\. COREM has 14 members/focal points
and 14 alternates\. Overall, the COREM is 50% public sector and 50% private\.
2\.29 PEM and PID: The PEM consolidated community demands/needs across sectors (including
agriculture, infrastructure, environment, education, health and leisure) to facilitate the delivery of
solutions in each case\. The project methodology included elements to strengthen community self-
management can now approach relevant programs to address key deficits using the PEM as a
community âbusiness planâ?, incrasing their access to public policies and resources\. The project also
had a simplified version of the PEM (without physical targets and more qualitative) called the âPEM
vendavelâ? (saleable PEM) used by communities to approach potential donors in the public and private
sectors\. SEP also has a role in assisting this integration with on-going programs and policies, e\.g\., in
some micro-catchments, the demands stemming from the PEM for the health sector were taken to the
State Secretariat of Health resulting in the training of health agents for rural districts to improve
services and increase their relevance in rural areas\. Demands for sanitation services are also being
responded to by relevant state programs\. In regard to the link between the PEM and the PID, project
managers provided (and still provide under the Rio Rural/IBRD) guidance to project technical staff
that the PID must reflect the demands of the PEM in those themes eligible for project financing\. The
subproject screening and analysis criteria include a detailed analysis of a PIDâs coherence/consistency
with the PEM\. If they are not consistent, the PID can be (on occasion) returned to the farmer for
adjustment, but in general, the PID reflects a wide range of needs/proposed activities\.
2\.30 Sub-component 4\.2: Monitoring and Evaluation financed the physical and financial
monitoring of the project, socio-economic and environmental monitoring in pilot micro-catchments
and overall project evaluation\. GEF activities complemented the Stateâs Rio Rural monitoring
program in pilot micro-catchments and were to support: (i) continuous monitoring of the results of
project actions through established indicators; (ii) with CI-Brasil and SOS Atlantica, evaluate the
positive impacts of IEM on the increase inregional biodiversity and carbon stocks in agriculture and
livestock; (iii) support project planning and adjustments; (iv) provide essential data for the MTR and
37
final evaluations; (v) establish a database showing project evolution\. Two full evaluations were
planned in addition to a baseline study\.
Achievements:
ï Baseline (2006) and Mid-term Review (FEALQ 2010) studies were conducted, as well as a
final report by independent consultants which became the Client Competion Report
(SEAPEC/SDS 2012);
ï Within SEP, units were created linked to different themes/components to facilitate project
decentralization and the assignment/allocation of responsibilities and activities\. Each unit ad
its own set of performance monitoring indicators to oversee the evolution of activities and
correct and deviations\. This arrangement permitted a greater project presence in the micro-
catchments and strengthened the dialogue with local and regional co-management bodies
(COREM, COGEMs and Municipalk Rural Development Councils (CMDRs), as well as
with the mayors, partner institutions and direct executors/technicians;
ï Comprehensive monitoring was conducted in three micro-catchments and participatory
monitoring â very successfully - in the entire 48 micro-catchments (see Main Text, Section
2\.3);
ï Comprehensive monitoring of soil use in micro-catchments indicated a decline in area of
degraded pasture (especially in the Santa Maria/Cambioca â Sao Jose de Uba micro-
catchment) and regeneration of vegetation especially in areas near springs and water-courses
in the Brejo da Cobica â Sao Francisco de Itabapoana micro-catchment (see paras\. 2\.15 and
2\.16 above); and,
ï The micro-catchment simulator methodology using the Universal Soil Loss Equation
(USLE) was almost completed by project closing, designed to support the sustainable
management of natural resources through the adoption by farmers of practices adapted to
local realities â soil, climate, vegetation\. An important function of this methodology is to
simulate soil loss through erosion stemming from inadequate management, much of the time
imperceptible to farmers\. Using the USLE, cited frequently in specialist studies, published
data was adapted to the areas where the project was active\.
2\.31 Sub-component 4\.3: Project Dissemination financed the project information dissemination
strategy to share information both within and outside the project\.
Achievements:
ï Dissemination was local, regional and global through seminars, field days, the production and
distributionof materials and distribution of press releases\. Global dissemination occurred via
the project-supported Project Portal (website) www\.microbacias\.rj\.gov\.br \.
Results of dissemination activities included:
ï 114,000 copies of Rio Rural News were distributed to farmers and project stakeholders
reporting events, activities, SLM items, best practices and resource mobilization opportunities
for SLM; this bulletin attended to the very broad demand for information from people lacking
access to the internet;
ï Project Portal (see above) had some 43,000 visits and 137,000 page viewings\. The number of
site visits grew by 105% in the second year of the Portalâs availability;
ï Brochures in accessible language for school distribution/other audiences were produced, and
distributed through EMATER-Rioâs local offices, dealing with socio-environmental issues,
sustainable development, and the flora/fauna of specific micro-catchments\. The Portal was
also uploaded with a virtual library of such material;
ï Practical manual of operational procedures was produced to support technicians and field
extension workers from the subproject initiation through results dissemination stages;
38
ï A Visual Identification Manual was developed to establish a standardized usage of the âbrandâ?
Rio Rural/GEF and contribute to its rapid identification/recognition by strategic project
stakeholders/public and dissemination of its key concepts\. The Manual is available on the
Project Portal;
ï 29 Technical Support Manuals were produced in three series, prepared in partnership with
PESAGRO/Rio\. The purpose of the manuals is to support technicians and stakeholders to
prepare projects designed to incentivate sustainable natural resources management practices in
micro-catchments, with suggested projects adhering to the five main categories of
investments; and,
ï As an incentive to mobilize communities to capture/leverage resources to execute activities
defined in their Micro-catchment Development Plans (PEM), folders containing a resume of
communitiesâ principal demands in three micro-catchments (so-called âSaleable PEMsâ?),
folders were prepared containing a resume of principal demands/needs and basic information
about each micro-catchment; their preparation was participatory, with micro-catchment
residents contributing ideas and perspectives, and formulating local strategies; and;
ï The project supported â through scholarships - research conducted by EMBRAPA/Soils with
results presented at the 22nd Brasilia Soil Sciences Congress in Fortaleza\. Studies were
authored by research groups from EMBRAPA/Soils and graduate students from the Federal
University of Rio de Janeiro (UFRJ) and Santa Ursula University, contributing to appropriate
soil management and identification of local priorities for soil recuperation and conservation\.
2\.32 Project costs and financing: As shown in Annex 1 tables, total project cost was US$18\.31
million, 122\.47% of the appraisal estimate\. The GEF Grant financed 36\.3% of the project cost
compared to the appraisal estimate of 45%\. Cost sharing differed significantly from appraisal: The
Recipient contribution was barely 57% of appraisal, while the Federal Governmentâs contribution
(mostly PRONAF) was over 400% the original estimate at US$4\.80 million, chiefly due to the
declining US Dollar/exchange rate, but also because of high demand for PRONAF financing and
liberal flow of these funds nationwide\. Contributions from beneficiaries and NGOs were about 28%
and 3\.2% respectively, of their original estimates\. The expected contribution of beneficiaries was
about 20% of GEF financing for subprojects (sub-component 2\.1) but reached only 8% due mainly to
the exemption of the counterpart requirement in the case of financing for environmental practices\.
The project was able to leverage about US$3\.04 million in contributions from other sources\. The
tables below show co-financing outcomes by principal source and component, and a breakdown of the
US$3\.04 million from diverse contributors\.
Table 2\.32\.1: Co-financing by Component â End-project
Co-financing Rio Rural GEF (R$ ´000)
Other Sources
State
Federal (NGOs, FAO, Total
Co-financing Government Beneficiaries
Government Private Sector, Financing
Rio de Janeiro
Municipality)
Subcomponent 1\.1 160,400\.00 189,281\.40 349,681\.40
Subcomponent 1\.2
Subcomponent 2\.1 718,395\.00 1,882,512\.45 2,850\.00 1,283,476\.00 3,887,233\.45
Subcomponent 2\.2 142,000\.00 142,000\.00
Subcomponent 3\.1 1,374,647\.00 1\.374,647\.00
Subcomponent 3\.2
Total R$ 1,020,795\.00 3,446,440\.85 2,850\.00 1,283,476\.00 5,753,561\.85
Total US$
540,103\.17 1,823,513\.68 1,507\.94 679,087\.83 3,044,212\.62
Loan 5,725\.29 1,823\.51 1\.51 679\.10 8,229\.40
Source: SEAPEC/SEP, 20
39
Table 2\.32\.2: Co-financing Rio Rural GEF (R$)
Total Co-
Source financing (R$)
Cultural projects - Pontos Cultura 1,260,000\.00
Projects supporting creation of conservation units (RPPN) 14,850\.00
Food Security Projects
National Food Aquisition Program â PAA/CONAB 122,606\.45
PAA (Brejo da Cobiça)/2009 37,000\.00
PAA (Brejo da Cobiça)/2010 78,000\.00
More Food Program 45,000\.00
Participatory research project including incubator methodology financed by CNPq
114,647\.39
Productive project supporting rice cultivation - FAPERJ 75,000\.00
Think about Rio Research Project - FAPERJ 12,000\.00
Project to Regulate Organic Agriculture - FAPERJ 130,000\.00
Project for Eco-certification - FAPERJ 179,000\.00
Pear Project (Porciuncula) 2,881,327\.00
Iniciatives in Varre Sai
Partnership to obtain seedlings of native species 0
Equipment and infrastructure for rural producers 250,000\.00
Plastic/other container collection campaigns 4,500\.00
Courses and workshops for rural producers 7,500\.00
Marcelo Trindade Projects
Development of biotechnologies applied to the propagation of native tree species of Atlantic
Forest as a strategy for the conservation and recovery of impacted eco-systems and areas â 64,400\.00
FAPERJ
The use of functional attributes as an auxiliary tool in the evaluation of the structure of
96,000\.00
communities in fragmented forest areas, envisaging ecological restoration - FAPERJ
Biodiversity, bio-geographic standards, and conservation of arbustive-tree flora in standing 19,500\.00
forests of the North-Northwest â CNPq
Maria Cristina Projects
Conservation and management of pollinizers of tomato in different conditions of landscape
and agricultural management in the principal planting areas of the States of Sao Paulo,
93,000\.00
Minas Gerais, Rio de Janeiro and Goiás-MCT/CNPq/CT-Agro 24/2009 -Pollinizersâ
Network
Communities of bees: genetic diversity, pollinization services, conservation management -
76,781\.40
PROCAD/CAPES 158/2007
Counterpart â Municipal Mayors of the North (2010) 192,450\.00
TOTAL R$ (equiv\. US$ 3,044,212\.83) 5,753,562\.24
40
2\.33 Adjustments to allowable subproject support: The ceilings on allowable subproject
support to beneficiaries were adjusted due to price inflation for inputs (materials, labor and equipment)
and exchange rate fluctuations\. When the project was approved in December 2005, the ceiling per
farm family was R$6,000 and R$4,000 for other participating farmers\. Of this value, family farmers
would receive 80% and other farmers would receive 40%\. By 2008-9 when the project started to
release incentives financing to beneficiaries, evidence showed that the ceiling was no longer adequate
to implement the practices envisaged and an increase was needed\. The ceiling was adjusted to
R$7,000 and R$5,000 respectively\. Family farmers would receive a maximum R$5,600 (80%) while
the others would receive R$2,000 (40%)\. In 2010, a new adjustment was agreed with the Bank, with
the maximum for a family farmer increasing to R$8,750 of which they would effectively receive
R$7,000 (80%) while the others would get a maximum R$5,000 (corresponding to 40% of R$12,500)\.
2\.34 Group investments were established in quotas with the value of a quota calculated by dividing
the total value of the enterprise/investment by the number of participants in the group\. The quota for
project support to each group participant/member could not exceed the limit per beneficiary cited
above\. The project support quota varied based on the composition of the group, with 80% for groups
of family farmers and 60% for groups comprising other types of farmers\.
41
Annex 3\. Economic and Financial Analysis
Introduction:
3\.1 Given the projectâs demonstration/pilot nature, the PAD did not include an economic and
financial analysis but project design did include cost-effectiveness considerations to promote
maximum implementation effectiveness, replication and impact both within and outside the project
area\. Thus, project activities would be fully integrated with complementary, ongoing, public and
private efforts including those to financially support improved production systems and supply of
technical assistance\. Cost effectiveness considerations also drove the distribution of target micro-
catchments for development of environmentally and financially sound demonstrative models with
maximum representation of the diverse situations within the five targeted micro-catchments\.
3\.2 For this evaluation, direct economic impacts and positive environmental impacts were
considered in the case of productive subprojects and, positive, direct environmental impacts and
indirect economic impacts for environmental subprojects\. According to GEF (GEF 2005) 34 , the
evaluation of environmental impacts is not simple due to the difficulty of quantifying such impacts
and relating them in a direct manner with the resources applied (especially those related to
biodiversity) suggesting the need to adopt a qualitative approach which would include cost-
effectiveness\.
3\.3 The subprojects examined by the evaluation, especially Rustic Poultry Production Kit (Kit
Galinha Caipira â 339 investments), water source protection (226 investments), and pasture rotation
(224 investments) were the most commonly demanded by beneficiaries\. Another aspect to take into
consideration is the economic importance, in the case of pasture rotation, the social significance in the
case of kit galinha caipira and the environmental importance associated with the notorious scarcity of
water in drought periods in the two project regions, for the case of source protection subprojects\. Table
1 below shows the 10 most-demanded subprojects\.
Table 1: Most-demanded subprojects
Resources Released % of total resources
Subprojects Nº of Subprojects
(R$) released
Rustic Poultry Production Kit 339 579,388\.00 12\.51
Water Source/Spring Protection 226 402,356\.25 8\.69
Pasture Rotation 224 1,009,396\.40 21\.79
Organic Fertilizer 168 174,092\.00 3\.76
Cane Fodder equipment 144 421,620\.50 9\.10
Beekeeping/Honey Kit 99 183,378\.00 3\.96
Native Riparian Forest Recuperation 78 210,836\.80 4\.55
Coffee Washing and De-shelling 19 556\.629,50 12\.02
Implem\. of Small Processing Units 19 270,938\.00 5\.85
Coffee Drying Equipment 7 196,000\.00 4\.23
Source: SEP 2012
Methodological approach:
3\.4 The approaches taken into account were: (i) use of Internal Rate of Return (IRR) to evaluate
economic returns; (ii) use of the cost-effectiveness approach (GEF, 2005), to evaluate environmental
impacts\. Each subproject was considered as a case study and certain results of environmental impacts
were extrapolated to the total number of such subprojects and resources applied/invested\.
34
GEF (2005)\. Cost Effectiveness Analysis in GEF Projects\. GEF/C\.25/11\.
42
Criteria for selection of subprojects:
3\.5 For the selection of subprojects, the following criteria were adopted: (i) number of
beneficiaries who demanded those subprojects and resources applied\. The Rustic Poultry Kits (336
beneficiaries), Water Source Protection (226 beneficiaries) and Pasture Rotation (224 beneficiaries)
were the most frequently demanded and totaled the sum of R$ 1,991,140\.65; (ii) subprojects
monitored and availability of information, especially for pasture rotation subprojects and water source
protection, for which the following elements were monitored: soil quality; degree of vegetative
covering; carbon sequestration, and productivity (pasture rotation); (iii) reconomic versus
environmental impacts, especially for rustic poultry kits and pasture rotation; (iv) potential positive
environmental impacts (for all subprojects selected) and negative (for rustic poultry kits)\. Honey
production subprojects, while not demanded in large quantity, but still within the 10 subprojects
receiving most of the resources, was selected both for its importance in relation to biodiversity
conservation and for the pollinization process for native vegetation species, and for its economic
interest\.
Selection of farmers:
3\.6 For the selection of farmers, within each subproject, the following criteria were used: (i)
farmers with pasture rotation and water source protection subprojects: availability of information from
participatory monitoring; use of available areas for biodiversity conservation (in the case of pasture
rotation) and utilization (or planning for the use) of water available in periods critical for irrigation;
(ii) in the case of kit de galinha caipira, the main criteria were the availability of information necessary
to conduct evaluations â economic and cost-effectiveness â of environmental impacts, as well as the
existence of results provided from the sale of eggs and use of waste; (iii) in the case of honey farmers,
the main criterion was the availability of information for an economic-financial analysis\.
Table 2: Types of subprojects considered by the evaluation
Type of Subproject No\. of Subprojects
Selected
Pasture Rotation 6
Rustic Poultry Production Kit 4
Honey/Beekeeping 4
Protection of Water Source 2
Source: SEP 2012
Table 3: Characteristics of properties selected for the evaluation of environmental impacts
Average Area of
Principal
Project Principal Activities
Area of Activities of
MunicÃpality Micro-catchment Subproject Beneficiaries in within the Micro-
Property (ha) Properties
the Micro- catchment
Selected
catchment (ha)
Bovinocultura de leite
Pastoreio Bovinocultura de
Campos Rio Preto 4\.4 11\.0 Cana de Açucar ,
Rotacionado leite
Olericultura
Córrego do
Pastoreio Bovinocultura de
Itaperuna Marambaia 16\.9 Bovinocultura de leite
Rotacionado leite
(Campinho)
Bovinocultura de
Bela Pastoreio Bovinocultura de
Natividade 9\.6 leite, fruticultura
Vista/Conceição Rotacionado leite
(laranja)
Porciúncula Bonsucesso Kit Apicultura 9\.1 Cafeicultura
Cafeicultura e
Cafeicultura e
Pastoreio bovinocultura de leite
Porciúncula Bonsucesso 6\.3 bovinocultura de
Rotacionado
leite
43
Pastoreio Bovinocultura de
Quissamã Brejo da Piedade 5\.0
Rotacionado leite
Grãos , Bovinocultura de leite
8\.0
Kit Galinha olericultura e Cana de Açucar
Quissamã Brejo da Piedade 2\.4
Caipira avicultura de
postura
Bovinocultura de leite
São Francisco do Proteção de
Brejo da Cobiça 19\.4 12\.0 Abacaxi Olericultura ,Cana de
Itabapoana nascente
Açucar
Bovinocultura de leite
São Francisco do Kit Galinha Bovinocultura de
Fazenda Tipity 7\.7 15\.0 Olericultura ,Cana de
Itabapoana Caipira leite e olericultura
Açucar
Santa Maria Bovinocultura de
Médio Imbé Kit Apicultura 5\.0 Bovinocultura Leite
Madalena corte e apicultura
6,0 Bovinocultura Corte,
Santa Maria Apicultura
Médio Imbé Kit Apicultura 4\.9 Apicultura
Madalena
Olericultura, grãos
Kit Galinha
São José de Ubá Córrego Ubá 2\.3 e avicultura de
Caipira
postura
Cafeicultura e
Pastoreio
Varre-Sai Ribeirão Varre-Sai 38\.7 bovinocultura de
Rotacionado
leite
Kit Galinha Bovinocultura de
Varre-Sai Ribeirão Varre-Sai 2\.3 Cafeicultura
Caipira leite, cafeicultura e
bovinocultura de corte
Cafeicultura,
bovinocultura de
Varre-Sai Ribeirão Varre-Sai Kit Apicultura 29\.3
leite e de corte e
apicultura
Source: SEP 2012
Methodology for calculation of Internal Rate of Return (IRR) and profitability:
3\.7 Internal rate of Return: This involved the following calculations: (i) variable costs are
those whose values change as a function of a firmâs volume of production\. For example: raw
materials and inputs used in the productive process\. Variable costs increase as production increases;
(ii) fixed costs are those whose values remain the same whatever the firmâs volume of production\.
This is so in the case for example, of rental of the factory, taxes, salaries, depreciation\. This will be
charged at the same value whatever the level of production, including in the case of a factory which
produces nothing; (iii) cash flow has as its main objective a projection of incoming and outgoing
financial resources of the company in a determined period of time\. In this case the flow will be the
result between costs and receipts which will serve to calculate the internal rate of return of the
investment; (iv) useful life of the project, to verify the maximum time in which it is possible to obtain
information\. Year Zero means the moment when the investment is made and from the start of Year 1
one is going to obtain receipts and expenses for production; (v) Internal Rate of Return (IRR) of a
flow of cash is a mathematical goal which provides the real rate of interest in a financial operation,
understanding the values in their real time (present value) Cane fodder(see Table 4, for a pasture
rotation subproject, considered for this evaluation)\. The subprojects evaluated are on average three
years old and the times considered (k) vary as a function of the type of subproject, the average being
(a) pasture rotation subproject: average 8 years; (b) rustic poultry kit: average 5 years; and (c) honey
production: average 6 years\.
3\.8 Profitability: To calculate profitability, the gross income/return on the activity (cash flow)
and operational 44xpenditures were considered\. The profitability was obtained by dividing the gross
44
margin (cash flow) by the total operational expenditures, and given as a percentage, and the net return
for each R$ invested35 (see Table 4(a))\.
Table 4: Example of IRR Worksheet
Operacional Expenses (R$) (a) Receipts (b)
Years Initial Quantity Unit Cash Flow
Fixed Variable IRR
(k) Invest\. Deprec\. Total (R$) produced Price Total (R$) (R$) (b-a)
Costs Costs
(litres) (R$)
0 8\.955,00 (8\.955,00)
1 67,00 4\.930,00 895,50 5\.545,50 10\.800,00 0,75 8\.100,00 2\.554,50
2 67,00 7\.360,00 895,50 8\.042,50 16\.200,00 0,75 12\.150,00 4\.107,50
3 67,00 10\.870,00 895,50 11\.552,50 21\.600,00 0,75 16\.200,00 4\.647,50
4 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50
5 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50 39%
6 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50
7 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50
8 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50
9 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50
10 67,00 10\.870,00 895,50 11\.485,50 21\.600,00 0,75 16\.200,00 4\.714,50
Table 4(a): Example of Calculation of Activity Profitability
Operational Bross Margin Profitability Net Return for
Year Receipts
Expenses (cash flow) (%) each R4 spent
1 5\.545,50 8\.100,00 2\.554,50 39 0,39
2 8\.042,50 12\.150,00 4\.107,50 46 0,46
3 11\.552,50 16\.200,00 4\.647,50 37 0,37
4 11\.485,50 16\.200,00 4\.714,50 38 0,38
5 11\.485,50 16\.200,00 4\.714,50 38 0,38
6 11\.485,50 16\.200,00 4\.714,50 38 0,38
7 11\.485,50 16\.200,00 4\.714,50 38 0,38
8 11\.485,50 16\.200,00 4\.714,50 38 0,38
9 11\.485,50 16\.200,00 4\.714,50 38 0,38
10 11\.485,50 16\.200,00 4\.714,50 38 0,38
Methodology for Carbon Sequestration:
3\.9 The amount of carbon sequestered was calculated in a Participatory Research Unit (pasture
rotation subproject), in partnership with family farmers, beneficiaries of the Rio Rural/GEF project\.
The methodology compares two pasture management rotation systems, that which uses fixed terms of
occupation and repose, and one which uses variable terms â Voisin Rational Pasture â and aims to
propose an agro-ecological solution for family farmers\.
3\.10 The sample collection period was weekly for the variable term system, and every 28 days for
the fixed-term system\. Comparisons are based on averages obtained for each of the treatments, in the
respective periods\. Average productivity in kg of Dry Material was obtained for the drying of green
material collected in random samples of 1\.0 m2, in a force-ventilated stove, maintained at 58o C up to
constant weight\. Soil organic material was calculated deducing the mineral fraction of Dry material
and its equivalent in Carbon was calculated based on an equation proposed by Oliveira & Millioli
(2005)\.
3\.11 A hypothesis considered by the study is that well-managed pasture eco-systems contribute in
diverse ways to a sustainable environment, noting inter alia, an increase in the accumulated organic
matter in the soil\.
35
EMBRAPA, 2006\. Technical instruction for milk producer â to calculate proitability of milk production activities\. Juiz
de Fora, State of Minas Gerais\.
45
Actual situation and possible results for the subprojects considered:
3\.12 Presented below is a consideration of the situation before the project and the hypotheses of
results expected by the project, as well as a conceptual model for pasture rotation, rustic poultry kits
and water source protection subprojects, which were the most heavily demanded of those included in
this evaluation\.
Pasture Rotation Subproject
(a) Previous situation (without the subproject): In the case of livestock the conventional system has
brought a cycle of soil degradation and consequently of water resources, and of reduced production as
a consequence of inadequate soil, water and pasture management\. The cycle starts with land clearing
of vegetative cover in sloping areas with soils susceptible to erosion\. From the over-grazing and
pisoteio of livestock occurs superficial âglazingâ? (soil compaction) which, associated with rain impact
and reduced filtration leads to erosion, impact on water resources and loss of production\. To balance
such losses, the farmer increases the area of pasture, extending the degraded area within the micro-
catchment, thus closing the cycle\.
(b) Actual Situation (with project): With the pasture rotation subproject, even though the cattle are
concentrated in smaller areas, a cycle of environmental recovery and milk production is initiated,
caused by: (i) increased vegetative cover from the resting of areas for pasture recuperation, and (ii) by
the concentrated waste load, associated with improvements in the pasture itself with the introduction
of species with greater potential to produce green mass\. These aspects lead to a virtuous cycle with
increased productivity, improved soil quality, less erosion, less impact on water resources, less
extension of pasture for the same levels of production, releasing in this way areas for environmental
restoration, like for example, biodiversity conservation\.
The project hypothesis, in relation to pasture rotation, was a sustained increase in production n: greater
production, with recuperation of soil and less area utilized\. The major challenge was to convince
farmers to change their system of management and implement measures to preserve biodiversity in
areas released/set aside due to the implementation of subprojects (especially on river margins,
recharge areas and springs)\.
Rustic Poultry Production Kit (kit galinha caipira)
(a) Previous situation (without project): It needs to be considered that for the selection of regions for
project interventions, one of the criteria was the rural poverty index\. The profile of families in these
conditions demanded practices with the possibility of utilization of small areas and in a short time to
get a return which ensured their subsistence, increased their food security and provided the possibility
of selling surpluses\.
(b) Actual situation (with project): The benefits of the project practice were most notably: (i) use of
manure for crops (horticulture, fruticulture, coffee etc\.), leading to a reduction of environmental risk
and sustainably increasing production; (ii) subsistence production and the possibility of selling
surpluses; (iii) the use of wastes implies a reduced dependence on synthetic fertilizers which present,
in addition to high cost, possible environmental impacts in specific situations\. Due to the lack of both
economic and subsistence options of these families, there was very strong demand for the rustic
poultry production kit, leading to the project adopting it as an incentivating practice and, negotiating
so that beneficiaries would use the waste for fertilization of subsistence and economic crops,
minimizing the potential environmental risks associated with this activity\.
It can be seen in Table 5 that the hypothesis initially suggested by the project â that beneficiaries
would utilize the waste as a source of fertilizer â was confirmed, since the environmental practice
most commonly used in conjunction with the poultry kit was organic fertilization\. In visits to the field
to collect information for the projectâs final evaluation, it was noted that beneficiary farmers are
still/already using the waste generated as a source of organic fertilizer\.
46
Table 5: Environmental and Productive Subprojects associated with Kit Galinha Caipira
Environmental Subprojects Nº Productive Subprojects Nº
Adubação Orgânica 60 Cana Forrageira 25
Proteção de Nascente 50 Kit Apicultura 14
Mata Ciliar Nativa â Recuperação 18 Pastoreio Rotacionado 14
Ã?rea de Recarga â Isolamento 15 Lavador e Descascador de Café 13
Adubação Verde 11 Secador de Café 7
Canais de Contenção 8 Implant\. De Peq\. Unid\. Proc\./Benef\. 5
Ã?rea de Recarga â Recuperação 6 Máq\. E Equip\. â Conservação do Solo 5
Caldas Fitossanitárias â Grupal 5 Adensamento de Cafezal 3
Manejo Florestal 2 Cambona 3
Sistema Agroflorestal 2 Esterqueira/Composteira 2
Source: SEP 2012
The potential environmental risks are mainly: (i) soil erosion in the pens where the birds are kept, from
the removal of vegetative cover and consequent impact of rain drops/fall and surface run-off\. This
risk, however, could be considered irrelevant due to the very small areas assigned to poultry pens; and,
(ii) transport of waste into water courses (in the case of inadequate management)\.
The project hypothesis for the rustic poultry kit was: attend the demand of micro-catchment residents,
offering a source of income with the possibility of using organic fertilizer, avoiding impact on the
environment\. The major challenge was convincing beneficiaries of the importance of using waste as a
soil fertilizer, avoiding in this way the impact on the environemt (and especially on water resources),
besides the utilization of other associated environmental practices, to be implemented with project or
their own resources\.
Water Source Protection Subproject
(a) Previous situation (without project): The vast majority of springs in the project area can be found
in pasture areas, unprotected, and permitting the direct access of animals\. They have low vegetative
cover with consequent pollution of water from animal waste and gradual reduction in water quality,
especially in periods of drought\.
The reduction in water quantity is effected by the pressure exerted on the area around the source re-
charge area by cattle stamping on the ground, causing modifications in soil attributes, especially soil
density, reducing infiltration and water flow and compromising the re-charging (recarga) of the
aquifer\. This fact favors direct surface run-off, promoting gradual silting up of the spring\.
In addition to this, the type of cover influences the process of interception and collection of
precipitation\. In this case, cover in the form of forest, besides intercepting and retaining a large parcel
giving more time for infiltration, and as a consequence, re-loading humidity in the soil profile and
consequently the subterranean water table\. It is worth remembering however, that the size of the
recharge area, the use of the soil and the state of preservation of spring recharge areas influence the
value and performance over time of the specific yields of same\.
In the case of domestic consumption and animal watering, this situation leads to families depending on
neighbors to guarantee water and/or water capture in distant locations with consequent higher costs\. In
the case of irrigation, the low availability in dry periods implies non-viability or diminution of
irrigation time and consequent reduced production\.
(b) Actual situation (with project): With the protection of springs, the project hoped to achieve the
following results: (i) increase in the index of vegetative cover and in the diversity of species around
the protected springs; (ii) improvement in the quality and increase in availability of water, for the
different uses for which it was intended; (iii) increased awareness of beneficiaries and other residents
in the micro-catchments (through demonstration effects), about the need for protection of water
resources and biodiversity\.
47
The project hypothesis was: recuperate springs and biodiversity through protective practices, with
positive impacts on the quantity and quality of water\. The greater challenge was to convince potential
beneficiaries to open up/set aside one hectare to be dedicated to biodiversity and water resources
conservation\.
Honey Production (Apicultura)
Honey production/beekeeping is an activity related directly to biodiversity and agri-biodiversity in the
micro-catchments, due to the role of bees in the generalized pollinization of vegetative species\. They
also represent an important economic potential in two respects: (i) through the direct sale of their
products and by-products; and (ii) through the indirect gains from the action of bees in pollinization of
productive species\.
The project faced the challenge of attending to the demand from the micro-catchments while at the
same time, stimulating new residents to adhere to this activity, because in addition to the issues noted
earlier, beekeeping represents a path for building awareness in producers regarding the non-
application of agro-chemicals because these can stop beekeeping/honey activities\. In addition,
beekeeping represents an important potential activity for organizing producers around honey
processing centers, stimulating the formation of small associations which could become future
cooperatives\.
The Honey Kits are composed of an average 5 hives with an annual expected production of 125 kg of
honey\.
Results observed:
Pasture Rotation
Economic results: In relation to milk production, it can be seen in Figure 4 that of the 10 subprojects
monitored via participatory monitoring there was an increase in 9 (90%), with an average increase of
80% in productivity\. Only one subproject showed a slight reduction in productivity\. The average
Internal Rate of Return (IRR) of projects evaluated by the case study was 59% and profitability ranged
from R$0\.11 to R$0\.48 for each Real expended/invested (see Table 6)\.
Figure 4 â Baseline (marco zero) Milk Production vs December 2011, for subprojects monitored
via Participatory Methods (Source: Database Rio Rural/GEF, 2012)
18
Produtividade de leite (L/vaca/dia)
16
Marco
14 zero
12
10
08
06
04
02
00
MunicÃpios com subprojeto monitorado (1ª microbacia)
48
Table 6: Internal Rate of Return (IRR) and Profitability for Pasture Rotation Subprojects
Profitability of the activity
IRR (annual average)
Municipality Micro-catchment
(%) Net Return
%
(R$/R$ invested)
Natividade Bela Vista/Conceição 49\.0 11 0\.11
Itaperuna Córrego do Marambaia 86\.0 39 0\.39
Porciúncula Ouro 71\.0 48 0\.48
Varre-Sai Ribeirão Varre-Sai 65\.0 12 0\.12
Campos dos Goytacazes Rio Preto 39\.0 38 0\.38
Quissamã Brejo Piedade 44\.0 37 0\.37
Environmental impacts (cost-effectiveness)
3\.13 Specifically in the case of improved soil quality, evaluated based on organic material (g/dm3
e % M\.O\.) and nutrients in the surface layer (0 â 20 cm) of soil in six subprojects accompanied by
participatory monitoring over a three-year period, the following results were noted, when comparing
the third year with the baseline â when the practice was initially implemented: (i) increased organic
material in 66\.6% of subprojects, with an average increase of 5\.04 g/dm3 or 0\.5%; reduced organic
material in 33\.4%, with an average reduction of 2\.07 g/dm3 or 0\.2%; (ii) in the case of phosphorus and
potassium, 87\.5% of subprojects had an increase, showing an average increase of 10\.14 mg/dm3 for
phosphorus and 2\.14 mmolc/dm3 for potassium\.
There is no way to extrapolate these results for all subprojects since each area has its own specific soil
characteristics and each subproject had its own management system\.
In regard to the liberation of areas for conservation, the case studies conducted indicate the release of
an average 1\.5 ha per subproject, amounting to a total 336 ha within the project area, taking into
account that some 224 pasture rotation subprojects were approved in total\. These areas have been
utilized primarily for the restoration of riparian forest (mata ciliar), protection of water springs and
protection of water resource re-charge (recarga) areas\. Bearing in mind that about R$1\.0 million were
invested in pasture rotation subprojects, there was a release of 0\.336 ha for each R$1,000 applied\.
In relation to carbon sequestration, evaluations conducted through participatory research, associated
with pasture rotation indicate the storage/sequestration in the soil of 80 t/ha and in the air about 5 t/ha\.
Bearing in mind that some 224 subprojects were approved with an average area of 1 ha/subproject,
there was a storage totaling 19,040 tons, that is, 19 tons per R$1,000 applied, since the average value
of subprojects was R$ 4,506\.23\.
As 1\.5 ha/subproject was released for biodiversity conservation (336 ha in total), carbon sequestration
in this area was 28\.2 tons for each R$1,000 applied, so that the âcarbon priceâ? paid by the project
would be approximately R$ 35\.00 per ton\.
Rustic Poultry Production Kit (Kit galinha caipira)
3\.14 Economic results: In regard to the socio-economic result, it was noted during field
interviews that a percentage of beneficiaries with the Rustic Poultry Production Kit are selling surplus
production of eggs in local markets/fairs and institutional markets such as the school lunch program\.
The average Internal Rate of Return of subprojects evaluated by the case studies was 26\.2% and the
profitability varied between R$0\.52 and R$0\.84 for each Real invested/expended (Table 7)\.
49
Table 7: Internal rate of Return (IRR) and Profitability for Kit Galinha Caipira
Profitability of the activity
(annual average)
Municipality Micro-catchment IRR (%)
Net Return
%
(R$/R$ expended)
Varre-Sai Ribeirão Varre-Sai 47\.7 72 0\.72
São José de Ubá Córrego Ubá 27\.1 52 0\.52
Quissamã Brejo Piedade 15\.0 84 0\.84
São Francisco de Itabapoana Tipiti 15\.0 76 0\.76
Environmental impacts (cost-effectiveness):
3\.15 The case studies showed that the introduction of the rustic poultry kits provided an annual
production of 2,475 tons of organic fertilizer36 with a market value of around R$90\.00/ton, resulting in
a total R$ 222,750\.00\. Bearing in mind that the project applied/invested approximately R$580,000\.00
in this practice, the result indicates a return of R$0\.40 per R$1\.00 invested, just for the production of
manure (opportunity cost)\. Considering that the percentage of N, P2O5 e K2O in poultry manure is
respectively: 3\.04; 4\.70 e 1\.89 (KIEHL, 1985)37, the 2,475 tons of manure are equivalent to: 75\.2 tons
of Nitrogen; 116\.3 tons of Pentoxide of Di-phopherus - P2O5 and 46\.7 tons of Potassium Oxide - K2O,
it is possible to fertilize 247 ha of coffee, or 165 ha of fruits, or 82\.5 ha of oil plants (based on average
data on dosage in the project regions)\.
As a positive externality, the reduced use of synthetic fertilizers contributed to a reduction in
environmental impacts in areas where raw materials are obtained for those same products\.
Protection of water springs
3\.16 With the protection of springs, important results were noted both by participatory monitoring
and by case studies conducted for this evaluation\.
(a) Recuperation of native vegetation and of local biodiversity was noted in subprojects monitored by
participatory monitoring, where 9 subprojects were monitored and in all cases the recuperation of
native vegetation and species diversity were observed\. Also, beneficiaries interviewed for the case
studies on the adoption of SLM practices: âThe forest is growing and there are many new seedlingsâ?\.
(b) Increased availability of water: Increased water availability was noted in three subprojects of the
four monitored by participatory monitoring\. Beneficiaries interviewed during preparation of the case
study also noted incrresed water availability: âThe water is flowing moreâ?; âWhen you protect the
spring, nature shows the difference rapidlyâ?\. âThe water is extending more over the course of the
drought periodâ?; âThe water is increasing and it is cleanerâ?\. âItâs normal even with the droughtâ?\.
(c) Utilization of water from protected springs: Two case studies were conducted on the utilization of
water from protected springs and the results showed:
(i) In the case study conducted in São Francisco de Itabapoana, the farmer utilizes the water for
irrigation of pineapple\. According to the farmer, with increased availability of water from the
protected spring, it is possible to increase the irrigation period on one hectare leading to a production
increase of approximately 12% as a function of the extension of the irrigation period\. This increase
represented 2,666 kg/ha with a value of R$0\.85/kg representing a gain of R$2,261\.10 or R$0\.77 per
Real invested/applied by the project (considering that the farmer applied, in order to protect the spring
a value of R$2,330\.00 of project funds and R$600\.00 of counterpart financing\.
36
According to information from project technicians, 1 kit with 60 adult birds produces 20 kg of manure per day\. Since some 339 kits were
financed, the daily production of manure is 6\.78 tons or, 2,474\.7 tons/year\.
37
KIEHL, E\. J\. 1985\. Organic Fertlizers\. São Paulo: Agronômica Ceres\. 492 pp\.
50
(ii) In the case study conducted in Campos dos Goytacazes, from the increase in water available from
the protected spring, the beneficiary farmers is planning to plant irrigated pasture\. The farmerâs
expectation with irrigation of pasture is an increase of 5,300 liters of milk/year, compared with actual
production, without irrigation\. Considering the value of R$ 0\.75/Liter, the gain in Reais per year will
be R$ 3,975\.00\. In addition, in this area the farmer produces meat and the increase expected in
arrobas38/ano with irrigation will be 1\.5\. Considering the value of one arroba (15 kg) of $ 93\.00, the
value per year will be R$139\.50\. Taling into account that some R$ 2,930\.00 was invested in protecting
the spring, the results indicate a return of R$1\.40 per Real invested (without considering the cost to
implement the irrigation system)\.
The project applied R$402,356\.25, that is, an average value of R$1,780\.34/subproject\. With project
support some 226 springs were protected\. Considering that each protected spring encompasses 0\.75 ha
(according to the current Federal Forest Code, the protection area must cover a radius of 50 meters
around the spring), 169\.5 ha were protected, that is to say 0\.42 ha for each R$1,000\.00 applied by the
project\.
Even though carbon sequestration in the area of the project protected springs was not directly
measured, studies indicate the air storage of an average 1\.5 tons/ha/year in forests in process of natural
regeneration\.39\. This average would give a sequestration of carbon in the order of 294\.75 tons/year
associated with spring protection subprojects, that is, 0\.73 tons for each R$ 1,000\.00 applied by the
project\.
In regard to water quality, while participatory monitoring has not adopted quantitative parameters
which could prove improvements in water quality associated with springs protection, results from
other projects indicate the improvements associated with the physical protection of springs and to their
isolation: Reduction of up to 89% in the presence of heat-tolerant coliforme bacteria in springs
protected by the Rio Grande do Sul Project (RS Rural)\.40
Honey Production (Apicultura)
3\.17 Economic Results: Honey production kits comprise an average 5 hives and an expected
annual production of 125 kg of honey\. The average Internal Rate of Return for subprojects considered
by this evaluation was 21\.8% and profitability ranged from R$0\.50 to R$0\.90 for each Real
invested/applied (Table 8)\.
Table 8: Internal Rate of Return (IRR) and Profitability for Honey Production Subprojects
Profitability of the Activity
IRR (annual average)
Municipality Micro-catchment
(%) Net Return
%
(R$/R$ expended)
Porciúncula Bonsucesso 23\.0 50 0\.50
Varre-Sai Ribeirão Varre-Sai 40\.3
Santa Maria Madalena Médio Imbé 11\.0 90 0\.90
Santa Maria Madalena Médio Imbé 13\.0 89 0\.89
38
Arroba: a measure of weight equivalent to about 15 kg
39
TANIZAKI, K\.F\.; Impacto do uso da terra no estoque e fluxo de carbono na área de domÃnio da mata atlântica: estudo de caso estado do
Rio de Janeiro\. Tese (Doutorado em Geociências)\. Instituto de Geociências\. Universidade Federal Fluminense, 2000\. 197 pp\.
40
Program to Manage and Conserve Natural Resources and Fight Rural Poverty (RS RURAL), Loan Nº 4148 â BR, from the World Bank
(IBRD)\. Final Report (2005)\.
51
Environmental Impacts (cost-effectiveness):
3\.18 A study conducted in Minas Gerais on the effect of pollinization by Apis mellifera and other
genus of bees in the productivity of coffee41 indicated that: âopen pathways for the visit of pollinizers
produced a greater number of fruits per flower compared to pathways without contact with pollinizers,
demonstrating that pollinization is an important process in coffee productivity, increasing production
by 5% on averageâ?\. The study noted that the presence of Apis mellifera was 56% of total pollinizers\.
3\.19 The study also noted: âIf we consider that on a property of one hectare, 4,000 coffee plants
can be planted, spaced at 2\.5 m by 1 m and that a 5-year old coffee plantation produces on average
4,680 beans per plant (collection data), we would have a production of 18,720,000 beans
corresponding to 176\.56 sacks of coffee\. Thus, an average increase of 5% associated with pollinization
services in these areas means 8\.8 sacks or more of coffee per farmer, per ha, when the forest is
maintained\. If the market value of a sack of coffee is today, [2008] around R$245\.00
(http://www\.abic\.com\.br), a farmer has an asset of R$ 45,413\.20 per year from coffee production\.
Under these terms, the value of pollinization as an eco-system service for crops near native forests
would be about R$ 2,156\.00 per hectare, per yearâ?\.
Conclusions:
3\.20 From this evaluation it can be concluded that, from the subprojects analyzed by these case
studies, the economic results and positive environmental impacts are consistent with the initial project
hypothesis\.
ï In regard to economic results, the contribution of subprojects to the sustainable improvement
of income in a direct manner (due to the increased productivity with low costs) and indirectly,
by the opportunitry cost and cost-effectiveness of environmental impacts\.
ï In regard to positive environmental impacts, the important contribution to biodiversity
preservation is notable, from the regeneration of native forest associated with environmental
subprojects (such as protection of springs) and indirectly through the release of areas for
preservation of biodiversity associated with productive subprojects, as in the case of pasture
rotation\. There are also important results observable in improved soil quality, from increase in
organic material and nutrients such as phosphorus and potassium, carbon storage and
increased water quantity and quality\.
ï Specifically in regard to the kit galinha caipira, the fact that organic fertilizer has been the
most demanded subproject in association with the former indicates that beneficiaries are aware
of the importance of the use of waste as a source of soil fertilization, providing environmental
sustainability to this activity\. The results of the case studies indicate that the introduction of
this practice into beneficiariesâ routine was an important strategy for negotiating the project as
a means of attending to demand from micro-catchment residents, gaining their commitment to
environmental preservation\.
41
FERREIRA, C\. M\. F\. 2008\. Pollinization as an ecosystem service: an economic strategy for conservation\. University of Minas Gerais,
Belo Horizonte\.
52
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Task Team Leader
Alvaro Soler Agricultural Economist LCSER
(from 07/2003)
Task Team Leader (to
Graciela Lituma Consultant LCSER
07/2003)
Maria Isabel Braga Environmental Specialist LCSEN Environment
Judith Lisansky Sr\. Anthropologist LCSEO Social Assessment
Claudio Mittelstaedt Financial management Specialist LCOAA Fin\. Management
Emilio Rodriguez Procurement Specialist LCOPR Procurement
Keiko Ashida Operations Analyst LCSES Operations
Financial Management and
Susana Amaral LOAG3 FM/Disbursement
Disbursement
Katia Medeiros Sr\. Environmental Specialist FAO Environment
Nestor Bragagnolo Micro-catchment Spec\. (Cons) FAO/CP
Francisco Guimaraes Rural Economist (Cons) FAO/CP
Waldir Pan Agronomist (Cons) FAO/CP
Marta Irving Env\. Education Specialist (Cons) FAO/CP
Arthur Sofiatti Historian/Ecologist (Cons) FAO/CP
Dana Frye Junior Professional Associate LCSER Operations
Supervision/ICR
Maria Isabel Junqueira Braga Sr Environmental Specialist AFTEN
Nestor Bragagnolo Consultant LCSAR
Joao Vicente Novaes Campos Financial Management Specialist LCSFM
Matthew Cummins Junior Professional Associate LCSAR
Nicolas Drossos Consultant LCSFM
Judith M\. Lisansky Sr Anthropologist LCSSO
Graciela Lituma Consultant LCSAR
Katia Lucia Medeiros Environmental Management Specialist FAO/CP
Claudio Mittelstaedt Consultant LCSFM
Paula Silva Pedreira de Freitas Operations Analyst LCSEN
Anemarie Guth Proite Procurement Specialist LCSPT
Emilio H\. Rodriguez Consultant LCSPT
Luciano Wuerzius Procurement Specialist LCSPT
Anna Roumani Consultant LCSES ICR
53
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY02 2\.44 12\.56
FY03 6\.47 34\.37
FY04 15\.43 69\.30
FY05 18\.66 104\.50
Total: 43\.00 220\.73
Supervision/ICR
FY06 10\.62 55\.37
FY07 15\.03 70\.00
FY08 14\.39 59\.25
FY09 8\.42 48\.91
FY10 9\.59 66\.82
FY11 3\.41 32\.13
FY12 5\.20 19\.21
Total: 66\.66 351\.69
54
Annex 5\. Beneficiary Survey Results
5\.1 The evaluation team surveyed project beneficiaries, municipal authorities and Micro-
catchment Management Councils (COGEMs) in eight municipalities and micro-catchments in the
project area\. In the case of beneficiaries, the process was organized but not structured, i\.e\.,
seeking to measure relative responses for data collection purposes; responses of COGEM
members were quantified\. The scope of enquiry covered: (i) social organization; (ii) technical
assistance and rural extension (ATER); (iii) the productive and environmental aspects of
subprojects; and (iv) an assessment of the COGEMs\.
Meetings with Beneficiaries
5\.2 Social organization:
ï Forms of local organization pre-existed the project - productive, religious and social - but
in many cases were described as in difficulty or moribund\. Opinion remained strong
however, that organization was empowering and enabled, among other things, a solid
front for representations to authorities and specifically, for accessing public/other
resources and training, and more generally programs, projects and public policies\.
ï Beneficiaries viewed the COGEMs as a project-sponsored framework for achieving these
same goals, with the added element of its environmental responsibilities\. The COGEM,
even with its specific project responsibilities, was seen as fundamentally a mediator
between local groups and external agents and an instrument for variously, rescuing or
reviving diverse local forms of organization/collective action\.
ï Limitations on the evolution of beneficiary/farmer associations and COGEMs tended to
align around the logistical difficulties encountered by farmers in attending physically, and
time aspects, considered more a reflection of their underlying lack of interest\.
ï COGEMs initially encountered skepticism due to farmersâ inability to understand the
project methodology and the manner in which resources were transferred, reinforced by
past experiences with rural credit and public programs\. This disbelief, along with the
protracted period before resources actually reached farmers (2009), plus COGEM
membersâ difficulties in physically monitoring/overseeing beneficiaries, were factors
which weakened farmersâ adherence to their Council\.
ï Even so, farmers viewed the COGEM as a training instrument, a conduit to information,
to accessing technical assistance and to learning new environmental and
agricultural/livestock practices\.
ï Farmersâ believed that the future of COGEMs depended on efforts to stimulate farmer
participation, more regular meetings, and reorganization of some COGEMs, interpreted
as farmersâ demand that the project continue\. (Such demand was formally presented at
two regional forums of COGEMs in late 2011)\.
ï The overall conclusion from farmersâ opinions was that the COGEMs remained at an
early stage of development, with potential to organize and catalyze local groups but
lacking detail as to their future form and function\.
5\.3 Technical assistance and rural extension (ATER):
ï In half the micro-catchments surveyed, EMATER-Rio was one among several technical
assistance providers which included the Brazilian Service for Support to Small Business
(SEBRAE) and the Ministry of Integration; municipal mayors; commercial agricultural
55
input and other private providers\. Interaction between Rio-GEF and other programs,
projects and public policies was common\.
ï Farmers were aware of the benefits of partnerships, in part to allay their concerns about
their micro-catchments, their future and the likelihood of another project;
ï Farmers observed that the Rio/GEF provided three major benefits in relation to technical
assistance services: their improvement; their incorporation of environmental concerns;
and, farmersâ greater access to these services per se;
ï The project was an opportunity for farmers to have closer relations with EMATER/Rio
technicians, while at the same time demanding better quality and more intensive services\.
Losses (e\.g\., in Kit Galinha and seedlings subprojects) were seen as indicative of fragile
services needing improvement, and also needing greater engagement of farmers in such
processes\. In other cases, the presence/involvement of the ATER technician was
fundamental to the credibility of the new practices being promoted;
ï In many cases, farmers had had little if any contact with ATER services and the Rio/GEF
was their first experience; this initial contact was critical for their sense of future access
to training, and new projects/initiatives and to their growing concerns about and ability to
judge ATER quantity and quality and demand better\.
5\.4 Subprojects: Productive and Environmental
ï The projectâs âinterfaceâ? with environmental concerns was a constant in all micro-
catchments surveyed; riparian forest restoration, protection of water sources and access
to information on the Forest Code were specifically mentioned as innovations;
ï The COGEM was described as an instrument for environmental action and as stimulating
environmental awareness and innovation;
ï Future demands of farmers interviewed stressed sanitation, water quality and quantity,
and garbage management\. The project was seen as having notable impact in the latter via
the separation of organic waste for composting and its subsequent use for fertilization\.
Septic tanks and sanitation systems were stressed for future programs/projects;
ï Farmers in many micro-catchments had grasped the importance and urgency of the
projectâs environmental goals more broadly, while in others, farmersâ still-fragile
engagement was evident;
ï Farmers especially noted the increases in productivity and income generation stemming
from Kits Galinha Caipira and the crop rotation investments; farmers were well aware of
the relationship between the new practices adopted under Rio/GEF and their improved
productive situation, e\.g\., drying equipment associated with coffee cultivation; pasture
rotation and forage equipment associated with better milk production;
ï Farmers saw the project as improving local conditions and promoting farmersâ decisions
to remain in rural areas and not migrate; this was cited as needing more intensive
action/additional projects to reverse the broader tendency to migrate\.
Meetings with the COGEMs:
5\.5 Social organization:
ï Among the 25 municipalities where meetings were conducted with COGEMs, 64%
related difficulties in organizing social groups including the total absence of local
organizations such as associations and cooperatives\. Only six municipalities had prior
experience with such organizations and only four reported good farmer participation;
56
ï Nine municipalities 36%), among those reporting previous failings, said there were now
both associations and coops\. Local social organization had increased with farmers
participating and the COGEM was described as a motivating element; and,
ï Some 14 municipalities (56%) stressed the need for strengthening of COGEMs and other
forms of social organization, seen as intermediaries in securing new resources for the
micro-catchments\.
5\.6 Technical assistance and rural extension (ATER):
ï In 12 of the 25 municipalities (48%), ATER services had not existed prior to the project;
at the time of the consultations with the COGEMs, such services were freely available in
10 municipalities and still being established in the remainder\.
ï Some 36% of COGEMs reported no partnership arrangements prior to the Rio/GEF\.
ï Eight municipalities expressed lack of confidence in the grant-based nature of a
Rio/GEF-type project, (presumably its sustainability in terms of ongoing resources or
lack of understanding that it was a demonstration/pilot operation);
ï There was a general sense that the quality and quantity of ATER had improved, and that
more intensive services were needed, along with training;
ï The project was seen as a mechanism for greater access to and intensification of ATER,
directly linked to and the avenue to satisfying demand for continuation of environmental
activities, greater organization of beneficiaries, their training, improved local productive
activities and access to other projects and programs\.
5\.7 Subprojects: environmental and productive:
ï About 40% of COGEMs stated that environmerntal awareness did not exist priot to the
project\. Many problems were cited: indiscriminate use of agro-chemicals and random
disposal of containers; lack of garbage collection; poor or no sanitation and poor water
quality/quantity;
ï The project had increased environmental awareness in 84% of municipalities surveyed;
36% noted better water quality, attributed to source protection activities; 68% favorably
evaluated activities in re-forestation, soil conservation, use of organic fertilizer, reduced
use of agro-chemicals, and activities to inculcate safe disposal of chemical containers\.
Municipalities noted the positive, motivating role of the COGEMs in these outcomes;
ï 88% of municipalities surveyed called for the continuation of environmental awareness-
raising and SLM activities and for carrying through on the Community Conduct Statutes
(ECC);
ï Municipalities recalled past practices prejudicial to soil conservation, to sustaining small
farmers on the land, to adequately feeding livestock and to dairy production;
ï Some 56% of surveyed municipalities reported that diversification of production (Kit
Galinha, Honey Kit, fish farming, seedling production, and fruit cultivation) as well as
new techniques for fertilization, esterqueira and pasture rotation were associated with
increased farmer incomes;
ï The projectâs role in introducing and intensifying the subject of the environment was
acknowledged; via actual on-the-ground practices and through the promotion of
environmental conservation; demand appeared strong for a continuation of such
activities;
57
Conclusions
ï Social organization, successful productive and environmental outcomes and access to
technical assistance were the most noted achievements acknowledged by both
beneficiaries and the COGEMs;
ï The potential for scaling up these successful activity streams was widely confirmed\.
58
Annex 6\. Stakeholder Workshop Report and Results
(if any)
N/A
59
Annex 7: Summary of Borrower's ICR and/or Comments on Draft ICR
A\. Executive Summary of Borrower Completion Report (Informal Translation)
Project Description
7\.1 The project âIntegrated Management of Agro-ecosystems in the North-Northeast
Fluminense (Rio Rural/GEF)â? was a demonstration effort and considered the water micro-
catchment as a the unit for planning, interventions and monitoring, stimulating the adoption n of
approaches to the Sustainable Management of Natural Resources (MSRN) and Integrated
Management of Eco-systems (MIE)42 in productive processes, with a view to integrating global
efforts to conserve critical eco-systems\.
7\.2 The project was developed by the State Secretariat for Agriculture and Livestock of Rio
de Janeiro (SEAPEC), through its Superintendency for Sustainable Development (SDS)\. The
World Bank was the implementing agency through Credit Agreement nº TF 054999 signed
between the World Bank and the Government of the State of Rio de Janeiro\. According to the
PAD, the total projected investment was US$14\.95 million, of which US$6\.75 million financed
by the Global Environmental Facility (GEF), US$6\.31 million from the State Government, and
US$1\.89 million from co-financiers\. The project had four components and 10 subcomponents\. It
became effective in late 2005 and closed at end-November 2011\.
7\.3 The central problems requiring solution, to which the project sought to contribute were:
land degradation, reduced availability and quality of water resources, and loss of biodiversity, the
consequence of deforestation of primary forest for charcoal production, expansion of family
agriculture and planting of extensive pastures\. Associated with the degradation of eco-systems
was the impoverishment of the populations in the micro-catchments and consequent rural exodus\.
7\.4 The Project Development Objective (PDO) was âpromote an integrated eco-system
management (IEM) approach to orientate the development and implementation of sustainable
natural resources management practices (MSRN) in the North and Northeast regions of the State
of Rio de Janeiro\. The Global Environmental Objectives (GEO) were: (i) confront threats to
biodiversity of global importance; (ii) reverse soil degradation in agricultural landscapes; (iii)
increase carbon sequestration; and (iv) increase awareness at all levels regarding the adoption of
an IEM approach to natural resources management\.
Methodology
7\.5 The methodology is based on evidence from the concept and design of the project, its
implementation and effects, results and impacts, as set out in the Log Frame, and conducted in a
participatory manner, seeking to build a consensus concerning what was achieved and the lessons
learned\. Specifically from the point of view of beneficiaries, the methodology was divided into
two parts: the first is developed based on field work conducted in January 2012 when interviews
were done with beneficiaries in eight selected micro-catchments; the second part is based on
material produced by the representatives of the COGEMs during municipal meetings of those
Councils in December 2011\.
42
Equivalent to Sustainable Land Management (SLM) and Integrated Eco-system Management (IEM) respectively\.
60
7\.6 The economic-financial and cost-effectiveness evaluation of the projectâs environmental
impacts took the following methodological elements into account: (i) use of the Internal Rate of
Return (IRR) to evaluate economic results; (ii) use of the cost-effectiveness approach (GEF,
2005), to evaluate environmental impacts\. Each subproject was considered as a case study and
some environmental impact results were extrapolated for all subprojects and the resources applied\.
The evaluation considered the following types of subprojects: (i) Pasture Rotation, 6 subprojects;
(ii) Kit Galinha Caipira, 4 subprojects; (iii) Water Source Protection, 2 subprojects; and, (iv)
Honey Production, 4 subprojects, a total of 16 subprojects\.
Project Implementation
7\.7 Project implementation was influenced by various factors which affected the flow of
planned activities, some of which were under the control of the management team, of which the
following were notable: (i) initial difficulties provoked by delays in the release of counterpart
resources motivated in part by the fact that the project was initiated between one State
administration and another\. The final and initial periods of governments are characterized by
scant budget resources, both on the part of the outgoing administration in its final year, and the
new administration which needs time to internalize the project and âadopt itâ? in its policy agenda
and financial priorities\. Associated with this delay, the Bankâs release of GEF resources only
occurred one year after project effectiveness; (ii) the US$/Real relationship was unfavorable by
around 40% during project execution, prejudicing the achievement of targets initially proposed;
(iii) some targets were very ambitious and the absence of procedures to revise them during
implementation influenced what was actually achieved; (iv) other factors such as methodological
innovation, complexity of the institutional structure/framework and delayed internalization of the
project both at the local and institutional levels and even the time needed to prepare project
execution teams also influenced to varying levels the implementation of distinct components of
the project\. Even when these initial difficulties had been overcome and the project was launched,
the period remaining, including the extension phase, was too short to consolidate all the expected
results both from the perspective of innovative mechanisms as well as results and impacts at the
micro-catchment level (MIE/MSRN)\.
Monitoring and Evaluation System
7\.8 Complete monitoring: The monitoring and evaluation system was implemented in a
complete form (including technical, environmental and socio-economic indicators) in three
micro-catchments representative of the project regions, and in a participatory form in all micro-
catchments benefited\. It generated important results, noting in particular, the monitoring of
biodiversity where the best results occurred such as: (i) monitoring of pollinizing species
(especially bees and wasps); (ii) importance of the presence of forest remnants associated with
pollinizing species (bees and wasps); (iii) identification and study of forest re-birth in the
monitored micro-catchments and their importance for biodiversity preservation; (iv) production
of brochures on flora and biodiversity in monitored micro-catchments, for public dissemination;
and (v) publication of documents and studies and participation in events to divulge project results
and biodiversity monitoring\. However, some deficiencies needed to be overcome, especially in
cost-benefit information, greater participation of beneficiaries and greater and more rapid
feedback of information to the micro-catchments\. These aspects led to an evaluation of complete
M&E as Moderately Satisfactory, according to GEF criteria\.
7\.9 Participatory monitoring: Parallel to complete monitoring a system of participatory
monitoring was designed to be implemented in all project micro-catchments\. This was designed
so that the actors directly involved in the project at the local level (beneficiaries, COGEM and
technical executors) could supervise/accompany project results of subprojects through quasi-
61
quantitative environmental and socio-economic indicators, and simple data collection tools\. In
contrast to complete monitoring, which proved to be high cost and low return of information
especially for soil and water, participatory monitoring demonstrated itself as a highly useful tool\.
The information generated permitted the detection of important subproject results which were
fundamental to give sustainability to cost-effectiveness evaluation of environmental impacts of
the project and economic results, such as: (i) soil quality; (ii) availability of areas for biodiversity
conservation associated with pasture rotation; (iii) availability of water associated with water
source protection subprojects; and, (iv) milk/dairy production\. Aspects to be improved in
participatory monitoring relate to the need for greater dissemination and use of information
generated to motivate and mobilize residents of micro-catchments\.
Project Results
7\.10 In many aspects, the project was unique in the regions where it was operational, most
notably in the following: (i) the process of planning and intervention in water micro-catchments;
(ii) establishment of a local management structure (COGEM), providing empowerment and
introducing transparency; (iii) establishing innovative mechanisms such as incubators, telecentros
and other; (iv) integrated actions with environmental entities, NGOs and partners of SDS which
contributed to the creation of the PSA decree\.
7\.11 Apart from the creation of the law in question, there was continuity in the discussion
which resulted in contributions to the State Climate Change Plan\. This initiative is a lead in to
the Rio + 20 which will occur in June 2012\. In addition, there is an effort to make sure that good
agricultural practices can be linked by the Project Executive Secretary to the mitigation of the
effects of climatic change\.
7\.12 In this vein, a partnership was signed in 2009 between the Committee for Sao Joao Lagos
Committee and the Rio-Rural Program, resulting in the implementation of the Fund for Socio-
environmental Best Practice (FUNBOAS)\. FUNBOAS, created by Committee in 2007, is a
mechanism for remunerating farmers who contribute to the conservation of the regional
environment\. A large part of the funds resources are derived from charges for water usage in the
municipalities of the Lagos Region and the objective is to gain the commitment of rural producers,
managers and other social actors with conservation and sustainability policies\. Since its creation,
the Good Practices Fund has ransferred R$60,000 to 25 collective projects and six individual,
using the methodology of planning, mapping and selection criteria of the Rio Rural Program\. The
projects are included in the PIDs (Individual Development Plans) and the PEMs (Micro-
catchment Development Plans)\. Activities incentivated by the Fund include rural sanitation, local
road repairs, agro-forestry systems, protection of water sources and riparian forests, pasture
rotation, coffee processing and the fencing of Permanent Preservation Areas (APPs)\. For the
implementation of individual projects, farmers receive R$5,000 and technical assistance\.
7\.13 Throughout the projectâs development, as results were emerging, important local
initiatives were being developed/coming on stream within the institutional/government sphere,
derived from project results and demands, of which the following are noted: (i) establishment of
Special Nature Protection Reserves (RPPN) in the Municipality of Varre-Sai; (ii) adoption of
GEF criteria in Catchment Committees\. At least one committee is supporting activities in a
micro-catchment in its area, replicating the project methodology; (iii) more dynamic municipal
councils with new roles; (iv) creation of the PSA Decree incorporating project experiences; (v)
training of COGEMs enabled improvements in formal micro-catchment associations (leadership
renewal), and administrative overhaul; and (vi) through the incubator methodology, structured
business groups were established\.
62
7\.14 Within the institutional sphere, EMATER held a public bidding to assign new technicians
to the project\. It was found, during interviews with technicians when the case studies were being
prepared, that there had been change in the perception in relation to planning and the manner for
conducting rural extension activities in communities\. There was more proactive activity using the
project methodology\. Still in the institutional area, the project promoted the incorporation of
participatory research into PESAGROâs routines, improving EMATERâs technical assistance
strategy for community organizations through the creation of IRS\. The activities of public and
private institutions, government and non-government, in promoting sustainable development of
rural areas were improved (DPGE, INEA, CI, SOS Mata Atlântica, Secretariat for Health,
Secretariat of Education, etc\.)\.
7\.15 Among the main impacts and positive aspects of the project, the following are noted: (i)
improved governance from the integration of multi-sector institutions (health, education,
environment, DPGE) and by strengthening local organizations (municipal councils, associations,
COGEMs, etc\.); (ii) self-management of natural resources â increase in the perception of farmers,
women and young people for local, regional and global environmental problems, and of the
adoption of integrated management practices (IEM and SLM) in productive systems; (iii)
technological innovation â micro-catchment simulation â supporting decision-making for
sustainability; (iv) financial sustainability â leveraging of public and private resources and design
of a system for financial sustainability; (v) inclusion of biodiversity conservation in the agenda of
services provided by farmers/productive units and integration of project activities in the State
PSA Program; (vi) contribution to reducing threats to biodiversity of global importance through
the generation and dissemination of knowledge about the Atlantic Forest of the North-Northwest
Fluminense and environmental services provided by the project to productive systems; (vii)
participatory construction of commitments assumed collectively by rural communities adopting
the micro-catchment and not rural properties as the best and most balanced mechanism for
environmental conservation/management (ECC); (viii) potential for integration of conservation
activities in carbon markets; and, (ix) insertion in/integration with public policies\.
Achievement of Global Environmental Objectives (GEO)
7\.16 The achievement of the Global Environmental Objectives (GEO) and project
Development Objectives (PDO) was satisfactory, even though some targets associated with these
were not fully achieved, due to the factors noted earlier which influenced project implementation\.
In regard to the Key Indicators associated with the project objectives, there was an achievement
level averaging 104%; in 47% of the indicators, the achievement exceeded 100%\. The erosion
reduction indicator (besides being over-dimensioned) was not monitored in subprojects associated
specifically with soil conservation practices, where there was assuredly a reduction in erosion
especially associated with the construction of rainwater capture facilities and surrounding canals,
based on reports by farmers visited (and especially in coffee fields)\. The target related to
implementation of sustainable, biodiversity-friendly agricultural practices which improved the
stability of the soil structure were partially reached, in part because they were over-dimensioned
in relation to the resources available to support such activities, and due to the demonstration
nature of the project\.
7\.17 The following results related directly with project objectives, should be noted: (i)
biodiversity conservation generating knowledge which was disseminated and supported the
implementation of concrete activitiespromoting the IEM approach through the adoption of
sustainable practices in rural areas, generating environmental services, conservation of small
forest fragments, among others; (ii) recuperation of water resource recharge and riparian forest
areas, and water source protection, with positive impacts on water resources; (iii) adoption of a
management system which led to improved soil quality â physically, chemically and biologically
63
and to carbon storage; and, (iv) improved income and quality of life of micro-catchment residents
beneficiting from the project\.
Results by Component
7\.18 Considering the resources programmed by the PAD, Component 1 applied 142\.31% of
the resources projected and reached on average 80% of programmed targets\. Component 2
applied 101\.52% of programmed resources and reached an average 86% of its expected physical
targets\. Component 3 applied 62\.02% of expected resources and reached an average 131% of
targets, while Component 4 applied 119\.69% of resources and reached an average 125% of
targets\. Execution between components was heterogeneous, however, reallocation of resources
and adjustments to activities permitted optimal use of resources and balanced expenditures\.
7\.19 Results of the components were reached in a differentiated manner, having been
influenced at different levels by the factors affecting implementation; thus, components
dependent on external resources (credit) had greater difficulty in achieveing their targets due to
the unfavorable US$/Real relationship\. The failure to review targets also affected results to
different extents\.
Partnership Strategy
7\.20 To strengthen the projectâs institutional platform/base, partnerships were established at
the municipal, state, federal and international levels, with governmental and non-governmental,
multi-sector agencies such as: EMATER, PESAGRO, State Secretariats of Health, Environment,
Education and Economic Development, Public Defenderâs Office, the State Center for Data
Processing, municipal Secretariats of Agriculture and Environment, EMBRAPA, INEA, Water
Catchment Committees, producer associations, cooperatives and NGOs\. Worth noting is the
innovative partnership with international environmental NGOs\. This initiative promoted
improvement in conservation strategies and the more efficient application of resources and
scientific knowledge to effect conservationist activities in private areas\.
7\.21 Even within a complex institutional environment, with limited experience of the project
methodology and bearing in mind the pilot character of this initiative in the regions of
intervention, the management team adequately led the process, conducting an ever-improving
institutional integration and with other initiatives and programs to be continued under the Rio
Rural/BIRD\. Even so, the lessons learned from this and other projects indicate the need to
establish agreements and responsibilities of each partner institution as early as the design stage
and preparation stage of the project, including specific targets and resources\.
Beneficiariesâ Evaluation of the Project
7\.22 From visits and direct interviews with beneficiaries: (i) in the total micro-catchments
studied, references were made to three dimensions within which the project would be acting:
social organization, environmental and productive; (ii) from all interviews conducted, it can be
said that the Rio Rural/GEF is considered by interviewees as an instrument for intervention in the
environment; (iii) apart from the panorama encountered, the activities of Rio Rural/GEF can be
considered as, similar to social organization, promoters of the urgency of the environmental
theme in the micro-catchments, due mainly to the association between the project and the micro-
catchments; (iv) the Rio Rural/GEF project was noted as an instrument of intervention capable of
promoting improvement in local consitions, considering its environmental and productive
activities, which would stimulate the permanence of the farmer in his rural setting\.
7\.23 In regard to the results of municipal evaluations of COGEM members: (i) the Rio
Rural/GEF project can be considered as a mechanism for accessing and intensifying technical
64
assistance, this directly linked and one of the possible pathways to carry out the demands
presented, such as: continuity and intensification of environmental activities, increased
organization of farmers, their training, improved local productive activities and access to other
projects, programs and public policies, as well as the continuity of Rio Rural/BIRD; (ii) in regard
to the present situation with the Rio Rural/GEF, the increased environmental awareneness was
evident in 21 municipalities (84% of the total surveyed); (iii) for the future, 22 municipalities
(88% of the total surveyed) expect/hope for continuity of environmental awareness-building and
sound use of natural resources, and asked for more activities of an environmental character; (iv)
references to the results of productive activities were made in meetings with the COGEMs,
through their association with increased income of beneficiary farmers\.
Economic-Financial Evaluation and Cost-effectiveness of Environmental Impacts
7\.24 From this evaluation it was concluded that, based on the subprojects analyzed by the four
case studies, the economic results and positive environmental I mpacts are consistent with the
initial project hypothesis\.
7\.25 In regard to the economic results, one notes the contribution made by the subprojects to
the direct, sustainable improvement in income (from increased productivity with low costs), and
indirectly from the opportunity cost and cost-effectiveness of environmental impacts\. In regard to
the positive environmental impacts, one notes the important contribution to preservation of
biodiversity, from the regeneration of native forest associated with the environmentaql projects
(as in the case of protection of springs) and indirectly through the release of area for biodiversity
preservation associated with productive subprojects, as in the case of pasture rotation\. One can
also observe other important environmental results such as improved soil quality from increased
organic matter and nutrients such as phosphorus and potassium, storage of carbon and increased
availability and quality of water\.
Performance of the World Bank and Counterpart
7\.26 The performance of the World Bank during preparation and appraisal of the project was
Satisfactory, despite changes in project management\. The supervision process of the Bank was
satisfactory\. Ten supervision missions were conducted over the five years of project execution
and in the period of project extension\. Interventions by the supervision team at times and on
themes crucial to project execution were opportune\.
7\.27 The performance of the State Government was considered satisfactory, because there was
political will to support the preparation and implementation of the project\. Even with the election-
derived changes of government, the project management team (SEP and SER) was maintained,
which was fundamental to the projectâs not suffering any loss of continuity and changes to its
basic path\.
7\.28 Project management, through its structure was satisfactory and achieved its goals within
its established responsibilities, leading to timely actions and driving the project to its completion\.
Maintenance of the same team throughout the project was a positive factor which contributed to a
permanent flow of activities\. Another notable factor in the activity of SEP was the establishment
of management centers (nucleos) responsible for the large project themes, facilitating supervision
and guiding the execution teams\.
7\.29 The performance of executing institutions was also satisfactory with the actions of
EMATER and PESAGRO fundamental to the results obtained by the project due to their
evolution throughout project execution and their ability to overcome institutional difficulties in
terms of the availability of technical personnel and institutional structure\.
65
Financial Execution
7\.30 Based on PAD data (2005), for its execution the Rio Rural/GEF project had US$6\.75
million of GEF resources and US$6\.31 million in State Government counterpart\. These resources
were distributed among the components and subcomponents and categories of expenditure\. Some
98% of total available resources were applied to the project, demonstrating the projectâs ability to
overcome problems encountered in the initial phase of the project, since up to 2008 only 25% of
project resources had been used\. The qualification of mechanisms of supervision and control
over project activities and adjustments to technical and administrative procedures, aligned with
political will, permitted the project to overcome difficulties in aligning and making compatible
State structures and procedures with those of the Bank\. Extension of the project for one year,
besides contributing to achieving most project targets and project objectives, permitted the
projectâs financial performance to improve\.
7\.31 The State Government counterpart resources projected by the PAD at appraisal were
around US$6\.31 million\. During project execution some US$8\.43 million, reflecting the
importance of the project to the State Government\.
7\.32 In regard to execution by component, considering the resources programmed in the PAD,
Component 1 applied 142\.31%; Component 2 101\.52%; Component 3 62\.02%; and Component 4
119\.69%\. Execution among components was heterogeneous but, as noted above, reallocation of
resources and adjustments to activities permitted optimal use of project resources and balanced
expenditures\.
7\.33 The value of co-financing foreseen by the PAD was US$ 1\.89 million, provided from
diverse sources\. In practice, co-financing resources amounted to approximately US$3\.0 million\.
It should be noted that at the time of preparation of this report, a portion of these resources was
still being applied to project activities\. Exceeding by 59% the co-financing initially programmed,
demonstrates the great capacity of the project to leverage resources, its replicability and
efficiency in integrating with other initiatives and state and federal public policies, contributing to
greater financial sustainability\.
Lessons Learned
7\.34 From the lessons learned, the following should be noted:
(i) The fundamental need to plan for the guaranteed provision of counterpart resources and their
release in a continuous/smooth and timely manner to permit the implementation of diverse
activities;
(ii) The need to seek greater synchronization between the time expended in State administrative
routines with that of the agricultural calendar, because delayed relaease of resources, which may
be tolerable for non-agricultural activities, can in the case of agricultural activities mean the loss
of a whole year due to the seasonality of production cycles;
(iii) The use of methodologies which favor participation, such as the DRP, is of fundamental
importance for the identification, discussion and prioritization of problems and demands
guaranteeing in this way greater permanence in the adoption of the practices implemented;
(iv) During the planning and design stage of the project, there needs to be adequate time to define
in a realistic manner, the targets, schedules and periods, providing greater implementation
efficiency and avoiding exhaustion and loss of interest;
(v) The system of monitoring and evaluation is an integral part of the projectâs day to day
operations and as such should generate, in a participatory manner, the information for timely
decision-making to facilitate management and to support local planning, cost-effectively\. Neste
66
sentido o monitoramento participativo foi um importante aprendizado do projeto a ser
incorporado no Rio Rural/BIRD;
(vi) The motivational role, more than executive, the use of methodologies which favor
participation, the pre-eminence of the projectâs technical strategy and consistency with project
objectives are indispensable attributes for greater success of technical assistance and rural
extension\.
B\. Letter from Client commenting on the Bankâs ICR:
67
68
69
70
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
N/A
71
Annex 9\. List of Supporting Documents
Project Appraisal Document
Credit Agreement
Operational Manual
Social Assessment
Environmental Assessment
Environmental Management Plan
Supervision Aide Memoires
Implementation Supervision Reports (ISR)
Procurement Post-reviews
Financial Management Supervision Reports
Audit Reports
Quality at Entry Assessment (QEA7)
Baseline diagnosis of the main socio-economic, environmental and legal issues affecting the
NNWF (2006)
Mid-term Review Study (FEALQ 2010)
Clientâs Final Project Evaluation/Completion Report (SEAPEC/SDS 2012)
Final Consultantâs Report with Recommendations on the Monitoring of Approvals for Projects
with Joint Financing, and New Possibilities for Capturing Resources, D\. Versari/SEAPEC/SDS
(2011)
72
73
R\.B\. DE GUYANA French Guiana (Fr\.)
COLOMBIA
VENEZUELA SURI-
NAME BRAZIL NORTHEAST REGION / REGIÃO NOROESTE
AT LANTIC MUNICIPALITY MICROCATCHMENTS hectares
OCEAN
RIO DE JANEIRO INTEGRATED PORCIÃNCULA 1\. OURO
2\. BONSUCESSO
6178
6334
ECOSYSTEM MANAGEMENT IN VARRE-SAI 3\. VARRE-SAI
4\. INVERNO
6281
1594
PERU
BRAZIL PRODUCTION LANDSCAPES OF NATIVIDADE 5\. CONCEIÃÃO
6\. BELA VISTA E SÃO SEBASTIÃO
13066
7783
BOLIVIA
BRASÃ?LIA
THE NORTH-NORTHWESTERN BOM JESUS DO ITABAPOANA 7\. CÃRREGO DO LAMBARI
8\. LIBERDADE
2879
9195
CHILE PARAGUAY Area of Map FLUMINENSE ITAPERUNA 9\. CÃRREGO DO MARAMBAIA (CAMPINHO) 12060
10\. CUBATÃO 4227
PACIFIC 0 25 50 LAJE DO MURIAÃ 11\. JARARACA 9436
OCEAN AT LANTIC
A RG ENTINA 12\. RIBEIRÃO DO CAMPO II 5054
OCEAN KILOMETERS
URUGUAY MIRACEMA 13\. MÃDIO RIBEIRÃO DO BONITO 5191
14\. MÃDIO RIBEIRÃO SANTO ANTÃNIO 5682
SÃO JOSÃ DE UBÃ? 15\. SANTA MARIA 2873
This map was produced by the Map Design 42°00â To Governador 41°30â 16\. CÃRREGO UBÃ? 8498
Unit of The World Bank\. The boundaries, Valadares To Vitória
colors, denominations and any other SANTO ANTÃNIO DE PÃ?DUA 17\. RIBEIRÃO OURIVEIS A 5985
information shown on this map do not imply, To Governador
Valadares 18\. RIBEIRÃO BOM JARDIM 6847
on the part of The World Bank Group, any
judgment on the legal status of any territory,
1
CAMBUCI 19\. VALÃO GRANDE II 4165
or any endorsement or acceptance of such
boundaries\.
2 3 ESPÃ?RITO ITALVA
20\. VALÃO GRANDE I
21\. CÃRREGO MARIMBONDO
7231
7756
Varre-Sai To Vitória
Porciúncula 4
SANTO APERIBÃ
22\. VALÃO CARQUEJA
23\. PITO ACESO
2924
1827
21°00â 24\. BARRA DO POMBA 1963
6 ITAOCARA 25\. VALÃO DO PAPAGAIO 2191
7
To Governador 26\. CÃRREGO DAS AREIAS 9788
Valadares
Natividade
5 41°00â
To Vitória
9
Bom Jesus do
Itabapoana
MI N AS Laje do
Muriaé
Itaperuna
8 Ri o It abapoana
11
GE RAI S 12
10
28
No rthea st
16
São José de Ubá
14 15 27
13 19
To Belo Miracema Italva
Horizonte 20 21 São Francisco
20°30â
Santo Antônio
17 R eg i o n 22 29
Cardoso Moreira
de Itabapoana
20°30â
de Pádua Rio M
uri
Cambuci 30
18
aé
aÃba do Sul
io Par
23 Aperibé R
São João
24 25 da Barra
Itaocara São Fidélis
31 34 35
26 32
Campos dos
Goytacazes
AT L A N T I C
North 33
OCEAN
36
38
Cantagalo São Sebastião
Santa Maria Madalena 37
Region
20°00â Macuco do Alto 20°00â
Cordeiro
Trajano de Morais
41 40
Conceição Quissamã
42 de Macabu 44
43 39
Bom Jardim 46
Carapebus
48 45 HIGHWAYS
NATIONAL ROADS
PROJECT MUNICIPALITIES RAILROADS
PLANNED RAILROADS
PROJECT MICROCATCHMENTS:
MUNICIPAL CAPITALS*
47 PRIORITY 1 STATE BOUNDARIES
é REGION BOUNDARIES
aca Macaé PRIORITY 2
Ri oM MUNICIPAL BOUNDARIES
*Municipalities are named
42°00â 41°30â 41°00â after their respective capitals\.
Casimiro de Abreu Rio das Ostras
NORTH REGION / REGIÃO NORTE
STATE OF RIO DE JANEIRO ESPÃ?RIT O MUNICIPALITY MICROCATCHMENTS hectares
SANT O SÃO FRANCISCO DO 27\. BREJO DA COBIÃA 15031
PROJECT MUNICIPALITIES ITABAPOANA 28\. FAZENDA TIPITI 7176
STATE CAPITAL CARDOSO MOREIRA 29\. VALÃO DOS PIRES 5222
30\. VALÃO SÃO LUIS 4909
MUNICIPAL BOUNDARIES
SÃO FIDELIS 31\. CÃRREGO VALÃO DOS MILAGRES 11360
STATE BOUNDARIES 32\. CÃRREGO RIO DO COLÃGIO 20403
CAMPOS DOS GOYTACAZES 33\. RIO URURAÃ? 28172
MINAS GERAIS 34\. RIO PRETO 26064
SÃO JOÃO DA BARRA 35\. CANAL DEGREDO 8125
36\. RIO DOCE 7008
SANTA MARIA MADALENA 37\. MÃDIO IMBÃ 26596
38\. SEDE 17463
RI O D E J A NEIRO Area of main map QUISSAMÃ 39\. BREJO PIEDADE
40\. MORRO ALTO
4247
15482
TRAJANO DE MORAIS 41\. CAIXA DâÃ?GUA 944
SÃ O 42\. BAIXO MACABÃ 13526
CONCEIÃÃO DE MACABÃ 43\. CÃRREGO SÃO DOMINGOS 1251
PA U L O Rio de Janeiro 44\. RIO DO MEIO 8054
AT L A N T I C CARAPEBUS 45\. LAGOA DE CARAPEBUS 6442
IBRD 39119
OCEAN 46\. CÃRREGO GRANDE 5084
APRIL 2012
MACAÃ 47\. RIO DâANTAS 7319
48\. RIO DO LÃ?RIO 7947 | REVIEW |
P114119 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
PH-GEF-Chiller Energy Efficiency Project (P114119)
Report Number : ICRR0020870
1\. Project Data
Project ID Project Name
P114119 PH-GEF-Chiller Energy Efficiency Project
Country Practice Area(Lead)
Philippines Environment & Natural Resources
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
TF-95991,TF-96093 01-Jan-2017 18,375,000\.00
Bank Approval Date Closing Date (Actual)
03-Jun-2010 01-Jan-2017
IBRD/IDA (USD) Grants (USD)
Original Commitment 3,600,000\.00 3,600,000\.00
Revised Commitment 3,600,000\.00 2,688,320\.81
Actual 2,694,970\.19 2,688,320\.81
Prepared by Reviewed by ICR Review Coordinator Group
Ranga Rajan John R\. Eriksson Christopher David Nelson IEGSD (Unit 4)
Krishnamani
2\. Project Objectives and Components
a\. Objectives
The Project Development Objective (PDO) as stated in the Global Environment Facility (GEF) Trust Fund
Agreement (Schedule I, page 5) and in the Project Appraisal Document (PAD, page 8) was:
"To reduce Green House Gas (CHG) emissions by replacing inefficient chillers, including both old
Chlorofluorocarbon (CFC) chillers and non-CFC based chillers\."
Note: A chiller is the primary component in a refrigeration or air-conditioning system\.
Page 1 of 13
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
PH-GEF-Chiller Energy Efficiency Project (P114119)
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
PHEVALUNDERTAKENLBL
c\. Will a split evaluation be undertaken?
No
d\. Components
There were four components\.
One\. Investment in Chiller Replacement (Appraisal estimate US$43\.85 million\. Actual cost at closure
US$19\.28 million)\. This component aimed at accelerate the replacement of inefficient chillers with energy
efficient ones by providing financial incentives\. Chiller owners could opt for either: (i) accepting an up-front
grant subsidy of 15% of the cost of new, non-Chlorofluorocarbon (CFC) based energy efficient chillers to
replace their stock of aging, inefficient chillers: or, (ii) carbon finance reflows option, that is owners could
receive an annual subsidy of 80% of Clean Development Mechanism (CDM) under the Kyoto
protocol\. These revenues to be generated from actual energy savings by the new chillers and in this case
payments to the chiller owners were to be made one year after installation and commissioning of new
chillers and every year thereafter until 2019, upon successful issuance of certification by the Executive
Board of the CDM\.
Two\. Measurement, Monitoring and Verification (Appraisal estimate US$1\.82 million\. Actual cost at
closure US$0\.04 million)\. Activities in this component were: (i) measuring energy consumption of baseline
and new equipment, monitoring performance of new chillers on an online basis and analyzing the data
collected during the lifetime of the project: and, (ii) establishing a database for monitoring individual
chiller replacement activities for certification of emission reduction claims\.
Three\. Performance Standards and Technical Assistance\. (Appraisal estimate US$0\.20 million\. Actual
cost at closure US$0\.18 million)\. This component aimed at capacity building of project participants
(government regulators, chiller owners/suppliers/ and manufacturers)\. Activities included: (i)
training, organizing workshops and distributing educational materials, exploring opportunities for expanding
coverage to other energy conservation options in large buildings and industries and inform participants
about measuring and verifying power consumption, energy savings and accounting for emission
reductions: (ii) providing certification awards to chiller owners: (iii) operation of marketing tools, including
computer software to raise awareness of chiller owners of energy saving opportunities from chiller
replacements: and, (iv) developing performance standards for non- Chlorofluorocarbon (CFC) energy
efficient chillers and developing a policy framework and incentive mechanism for promoting good practice
in operating energy efficient non CFC chillers\.
Four\. Project Management\. (Appraisal estimate US$1\.82 million\. Actual cost at closure US$0\.52 million)\.
This component aimed at providing project management support\. Activities included: (i) support for
coordination and supervision: and, (ii) managing a grievance handling mechanism to allow for feedback
from chiller owners and potential stakeholders\. Neither the PAD nor the ICR mention M&E as an activity
under component four\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project cost\. Appraisal estimate (including baseline cost and costs associated with contingencies) was
Page 2 of 13
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
PH-GEF-Chiller Energy Efficiency Project (P114119)
US$47\.90 million\. Actual cost at closure US$20\.02 million\. Actual cost was lower than estimated due to
the reduced scope of activities (discussed below under dates)\.
Project financing\. The project was financed by a Global Environment Facility (GEF) grant of US$2\.60
million\. Amount disbursed at closure US$1\.93 million\. There was co-financing from:
(i) Germany\. Kreditanstalt fur Wiederaufbau (KfW)\. Appraisal estimate US$7\.31 million\. Actual
contribution at closure US$0\.00 million\. Activities pertaining to Clean Development
Mechanism (CDM) (see Section 3a below for further discussion of the CDM and related international
agreements and mechanisms) were to be financed by KfW, as KfW was the carbon buyer\. As indicated
below (under âDatesâ) all activities pertaining to carbon finance reflows were cancelled:
(ii) Montreal Protocol Investment Fund\. Appraisal estimate US$1\.00 million\. Actual contribution US$0\.78
million:
(iii) U\.S\. Environmental Protection Agency\. Appraisal estimate US$0\.05 million\. Actual contribution
US$0\.00 million: and,
(iv) Private Commercial financing (the financing provided by chiller owners to finance their share of the
conversion cost (any amount not covered by the 15% incentive payments) US$36\.62 million\. Actual
contribution at closure US$10\.11 million\.
Borrower contribution\. Appraisal estimate US$0\.32 million\. Their actual contribution at closure was
US$0\.04 million\.
Dates\. There were two level 2 restructurings\. The following main changes were made through the first
restructuring on June 2013:
(i) The original target values pertaining to the installation of new energy efficient chillers were revised
downwards, in view of the reduced available financing for chiller replacement activities associated with
Clean Development Fund (CDM)\. This was mainly due to the delays and eventual termination of
the Emission Reduction Purchase Agreement (ERPA) between KfW and the Department of Environment
and Natural Resources (DENR)\. Under this agreement, KfW was expected to buy any carbon credits at
an agreed price, which at that time was the current global market price for carbon\. The Task Team Leader
clarified that during project implementation, the global market price for carbon dropped drastically (from
US$16 to around US$2 per ton equivalent of CO2)\. Due to the drastic price drop, KfW would be incurring
a loss\. The delay in project implementation provided a window for KfW to negotiate an exit from the
ERPA\. All parties agreed to cancel the ERPA and with this, the option pertaining to carbon finance reflows
was removed from the project scope\. This reduced the project's expected scope to Energy
Efficiency activities financed by the GEF grant:
(Ii) A new indicator was added to monitor the number of sub-grant agreements signed with beneficiaries
as a legal binding means by which to document chiller owners' commitment to the proper maintenance of
the new chillers subsidized by the project and,
(Iii) Reallocation of project funds from the Multilateral Fund for the Implementation of the Montreal
Protocol (MP) to activities pertaining to strengthening performance standards and technical
assistance\. The second restructuring on December 2014 extended the project closing date by two years
from January 1, 2015 to January 1, 2017 for completion of ongoing activities\.
3\. Relevance of Objectives & Design
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a\. Relevance of Objectives
The Philippines was a signatory to the Montreal Protocol on Substances that Deplete the Ozone
layer (MP) since 1999\. As per the MP mandate, Philippines as a developing country, was required to
completely phase out production and consumption of new Ozone Depleting substances (ODS) by January
1, 2010 and develop measures for effectively using the ODS recovered from the chillers to meet the servicing
needs of the Refrigeration and Air-conditioning (RAC) sector\. Philippines had also ratified the Kyoto Protocol
(KP) in 2003 which required developing countries to reduce emissions by an average of 5\.2% between 2008
and 2012, compared to the 1990 baseline\. The KP also had a flexibility mechanism, such as the Clean
Development Mechanism (CDM), which enabled developed countries to reduce the costs of compliance
through purchasing emissions reductions from developing countries, provided they were real and
measurable\. Before appraisal In 2007, the Philippines had phased out 2,847 Metric Tons (MT) of
Chlorofluorocarbon (CFC) or 94% of its baseline consumption and also intended to meet the MP deadline
of total CFC phase out by 2010\.
The Project Development Objective (PDO) continues to be government strategy\. At appraisal, the PDO was
consistent with the Philippine Medium Term Development Plan's goal for the 2004-2010 period of achieving
higher energy self-sufficiency and incorporating ozone friendly technologies, products and equipment for
protecting the environment and thereby improve the quality of life of citizens\. The PDOs were also consistent
with the government's Energy Plan for the 2007-2014 period prepared by the Department of Energy, which
was being regularly updated\. The two objectives of the energy plan were: attaining 60% energy efficiency
beyond 2010 and promoting a globally competitive energy sector\. The PDOs were also closely aligned with
the Philippines' existing ODS phase out program in support of the MP and addressed the government's
KP objective of encouraging energy savings to support reduction in Green House Gas (CGS) emissions\. The
PDOs were relevant to the Energy Efficiency (EE) Action Plan for 2016-2020, which set targets for EE
improvements in buildings and to the National Climate Change Action Plan (NCCAP) that targeted
implementation of actions over the short, medium and long terms with respect to environmental stability,
climate smart industries and services, sustainable energy and knowledge and capacity development\.
The PDO was consistent with the goals of the Bank's Country Assistance Strategy (CAS) for 2010-2012
which highlighted the need for achieving growth that was inclusive to reduce vulnerabilities\. The PDO was
well aligned with the Bank's Country Partnership Strategy (CPS) for the 2015-2018 across its Rapid,
Inclusive and Sustained Economic Growth and Resilience to Climate Change, Environment and Disaster
Risk Management areas of engagement\. The PDO also was consistent with the GEF focus areas on climate
change and ozone layer depletion and its strategic program on energy efficiency (energy efficiency in the
commercial buildings and promoting energy efficiency in the industrial sector)\.
Rating
High
b\. Relevance of Design
The statement of the PDO was clear\. The causal links between outputs and outcomes were logical among the
project activities, which sought to address the financial, technological and information barriers to increasing
cooling efficiency\. The intended outcomes were measurable in principle\. While component one and
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two activities entailing replacement of inefficient chillers and financial incentives for chiller owners were
intended for addressing the financial and technological barriers to cooling efficiency, component three
activities were intended for addressing the informational barriers to increasing cooling efficiency\. The
combination of these activities can be expected to contribute to the PDO of reducing Green House Gas
emissions\. The project activities could also be expected to contribute to the higher-level objective of meeting
the government's commitments pertaining to the MP requirements of complete phase out of ODS and to
the KP requirements\. The design which entailed replacing older chillers in commercial buildings and in the
industrial sector with newer energy efficient ones that utilized refrigerants with lower global warming
potential could also be expected to contribute to the GEF focal areas on climate change and its strategic
program on energy efficiency\.
Rating
Substantial
4\. Achievement of Objectives (Efficacy)
PHEFFICACYTBL
Objective 1
Objective
To reduce Green House Gas (CHG) emissions by replacing inefficient chillers, including both old
Chlorofluorocarbon (CFC) chillers and non-CFC based chillers\.
Rationale
Outputs\.
⢠71 new energy efficient chillers for reducing greenhouse gas emissions were installed at project closure
with subsidy grants\. This exceeded the revised target of 53\. The original target value was redefined based
on the reduction of available financing due to the loss of potential carbon finance reflows\. This restricted
the projectâs design to payment of a fixed level subsidy tied to the available grant financing which
determined the number of chiller conversions possible based on the going market price at the time\. The
revised target was surpassed due to the drop in the price of chillers during implementation and the
savings allowed for replacement of additional chillers\. (ICR, Datasheet, Intermediate Indicator Number
One)\.
⢠The online Chiller Management Information System (CMIS) to track chiller replacement was installed
and operational at project closure\. This system automatically generated chiller performance notifications\.
The MIS was housed on the project's webpage so that chiller owners could supply and submit chiller
replacement documents on line as well as to monitor the status of their application\.
⢠41 of the 71 new chillers installed were connected to the CMIS at project closure\. This exceeded the
revised target of 35\. The remainder were set to come online upon completion of installation (ICR,
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Datasheet Intermediate Indicator Number Two)\.
⢠Tool kits were developed as targeted to assess the eligibility of baseline chiller units\. This included
a Power-Output Function (POF) Regression Analysis tool to assess the efficiency of the baseline chiller
units and Investment Analysis worksheets to assess the financial viability of each chiller replacement
proposed\. Access to the toolkits was given to prospective beneficiaries for enabling them to make
decisions with regard to replacing old and inefficient chillers (ICR, page 44)\.
⢠29 project recipients participated in the recognition program\. This exceeded the original target of 15\.
(ICR, Datasheet, Intermediate Indicator Number Three)\.
⢠26 training sessions and workshops for technical representatives from beneficiary facilities (including
government staff) were conducted\. This exceeded the original and revised targets of 15 and 12
respectively (ICR, Datasheet, Intermediate Indicator Number Four)\.
⢠40 sub-grant agreements were signed as compared to the target of 20\. This indicator added at the time
of the 2013 restructuring introduced a legally binding document in order document chiller ownersâ
commitment to the proper and sustainable operation and maintenance of the new chillers subsidized by
the project (ICR, Datasheet, Intermediate Indicator Number Five)\.
Outcomes\.
⢠According to the data collected by the CMIS, 45,687 Tons of Refrigeration (TR) of cooling capacity were
transformed to energy efficient cooling\. This exceeded the original target capacity of 30,649 (ICR,
Datasheet, Key Outcome Indicator Number One)\.
⢠6\.9 Ozone Depleting Potential (ODP) were phased out at project closure, which represented a 48%
increase relative to the target\. The direct phase out of ozone depleting refrigerants which have Global
Warming Potential and the energy savings generated by chillers with more efficient cooling capacity
contributed to reduction in carbon emission\. The cumulative carbon emission reduced to 151\.4 kilo tons of
CO2 equivalent (kTCO2) This exceeded both the original and revised targets of 560 kTCO2 and 62\.4
kTCO2, respectively (ICR, Datasheet, Key Outcome Indicator Number Three)\.
⢠Energy consumption was reduced to 35 Gigawatt Hour (GW) a year at project closure\. This was as
originally targeted and exceeded the revised target of 124\.7 GW a year (ICR, Datasheet, key Outcome
Indicator Number Four)\.
Rating
Substantial
PHREVDELTBL
PHREVISEDTBL
5\. Efficiency
Economic Analysis\. A Cost-Benefit analysis was conducted for the chiller replacement component of the
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project which accounted for 92% and 96% respectively, of the total project costs at appraisal and at closure\.
The methodology entailed a comparison of "with" and "without" the project over a thirty-year timeframe (2011-
2040)\. The potential benefits associated with early replacement of chillers were assumed to come from, the
avoidance of power generation capacity requirements that result from reduced electricity use from early
replacement of chillers; lower greenhouse gas emissions from energy savings; Ozone Depleting Substance
(ODS) recovery; and reduced leakage of ODS from new chillers\. The Net Present Value at closure with a
12% discount rate at project closure was estimated to be US$19\.8 million and the ex post Economic Internal
Rate of Return (EIRR) was 136% as compared to the ex-ante EIRR of 59%\. The significantly higher EIRR at
closure was due to a combination of factors including: (1) the low efficiency of the original chillers: (2) the
significantly advanced timeframe for replacement of chillers in the "with project" scenario: and, (iii) the extent
of greenhouse gas reductions from the chillers\.
Cost Effectiveness\. The cost effectiveness of this project was US$26 per Tons of Carbon-dioxide
equivalent (tCO2e) captured was in line with the base case for the social value of carbon for this time period\.
Administrative and Operational Issues\. There were several start-up problems including, frequent changes
of personnel within the Project Management Coordinator (PMC), identifying candidate chillers for replacement
due to the stringent requirements associated with the Clean Development Mechanism (CDM) of the Kyoto
Protocol\. These problems in conjunction with the significant downturn in the carbon market, led to the
termination of the Emission Reduction Purchase Agreement (ERPA) and thereby to the restriction of the
project activities\. However, the project at closure was carried out at an estimated total cost (from grant and
government financing) of US$2\.93 million instead of the planned US$3\.6 million (after restructuring)\. The
project utilized this amount to subsidize installation of an additional 71 chillers as compared to the revised
target of 53)\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
92\.00
Appraisal ï¼ 59\.00
ï¨Not Applicable
96\.00
ICR Estimate ï¼ 136\.00
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Relevance of the PDO to the government and Bank strategy for Philippines was rated as High\. Relevance of
design was rated as Substantial in view of the logical links between the project activities, their outputs and
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outcomes\. Efficacy of the single objective - to reduce greenhouse gas emissions by replacing inefficient chillers
- was rated as Substantial, given that the both the project and GEF outcomes were realized in all
cases\. Efficiency was rated as Substantial\. The project activities were economically justifiable\.
a\. Outcome Rating
Satisfactory
7\. Rationale for Risk to Development Outcome Rating
Government Commitment\. Negligible\. Government commitment to the PDO remained high as demonstrated
by the Governmentâs specific policy actions on ozone through the governmentâs Montreal Protocol
Commitments and the 2016-2020 Energy Efficiency (EE) Action plan\. The Government's MP commitments
were given operational significance through the Department of Environment and Natural Resources (DENR)
Administrative order (DAO) 2013-25, the revised regulation on chemical control of Ozone Depleting Substance
(ODS) and its regulations on energy conservation in buildings\.
Institutional Support\. Under the aegis of this project, targeted financial and technical assistance was provided
to strengthen the management and operational capacities of the Department of Environment and Natural
Resources (DENR)âs participating and other relevant government agencies\. Given that DENR now has an
effective management framework with well institutionalized functions, the institutional risk is rated as negligible\.
a\. Risk to Development Outcome Rating
Negligible
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The project was prepared based on the lessons learned from the chiller conversion demonstration projects
undertaken with the support of the Bank in Mexico (CFC -Based Chillers Replacement Project), Thailand
(Building Chiller Replacement Program and Turkey (Chillers Replacement Program) and the methodology of
a chiller sector study prepared for a similar chiller replacement project that was under preparation at that time
and that is now being implemented (Chiller Energy Efficiency Project)\. The design incorporated familiar
financing mechanisms such as subsidy to cooler users\. Several risks were identified at appraisal, including
Substantial risks associated with financial management and appropriate risk mitigation measures were
incorporated at design\. Appropriate arrangements were made at appraisal for M&E and safeguards and
fiduciary compliance (discussed in section 11)\.
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Quality-at-Entry Rating
Satisfactory
b\. Quality of supervision
Supervision was conducted through bi-annual missions in conjunction with site-specific technical visits that
provided understanding of on-ground implementation experiences\. This aided in addressing the challenges
during implementation\. The continuity of leadership was maintained given that a core Bank team of technical
specialists were maintained throughout the life of the project\. Following the termination of the activities
associated with replacement of chillers under the Emissions Reduction Purchase Agreement (ERPA), the
supervision team adapted a management approach for using the remaining available funds that allowed for
course correction without compromising the project's objective or its overall structure\. The expenditure and
post procurement reviews conducted by the Bank's procurement and financial management specialists
and several site visits conducted by the Bank's Environmental Specialist during implementation aided in
compliance with fiduciary and safeguards during implementation (discussed in section 11)\.
Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
The government commitment to promoting energy efficiency at preparation was demonstrated by the
policies and legislation before appraisal\. These included: The Philippine Energy Plan (2007-2014): the
Presidential Administrative Order Number 110 of 2004: the institutionalization of a Government Energy
Management Program: and, the Department of Energy Act of 1992\. The Department of Energy collaborated
with the project beneficiaries on best practices\.
There were minor shortcomings\. Strategic inter-ministerial collaboration was weak and although a Project
Steering Committee was established to provide operational guidance and oversight to the project, the body
was not convened during the implementation period\.
Government Performance Rating
Satisfactory
b\. Implementing Agency Performance
The Foreign-Assisted and Special Projects Office (FASPO) in the Department of Environment and Natural
Resources (DENR) was in charge of coordination and implementation, with the support of a Project
Management Coordinator (PMC)\. The PMU had a financial management specialist and this aided in
determining chiller owner's eligibility and the level of subsidy to be offered\. The PMC had qualified carbon,
Management and Information Systems (MIS) and Financial Management (FM) specialists to manage the
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day-to day project management\. The PMU conducted a diligence audit of refrigerants at closure to address
the Government's compliance requirements under the Montreal Protocol on Substances that Delete the
Ozone layer (MP) (discussed in section 11)\.
There were minor shortcomings associated with DENRâs internal processes\. This contributed to delay in
the engagement of a FM specialist to conduct the financial analysis pertaining to realization of return on
investment\.
Implementing Agency Performance Rating
Satisfactory
Overall Borrower Performance Rating
Satisfactory
10\. M&E Design, Implementation, & Utilization
a\. M&E Design
The four key outcome indicators - the number of inefficient chillers replaced by the project, phase out amount of
new Chlorofluorocarbon (CFCs) in the Refrigeration and Air Conditioning (RAC) servicing sector, certification of
quantified emissions reductions and savings in Mega Watt Hour (MWh) through replacement of chillers - were
realistic and appropriate for monitoring project performance\.
The M&E at design envisaged the installation of a Management Information System (MIS) to measure and
analyze data at the project level\. At the sub-project level, each data logger and transmitter who installed a
chiller was expected to measure energy consumption of baseline and new chillers and monitor their
performance parameters (such as flow rates, temperature and electricity) and their on-line energy savings\. This
data was to be used for determining aggregate energy savings and emission reductions\.
b\. M&E Implementation
The MIS introduced a monitoring and management tool to track and report on individual chiller and aggregate
energy savings and emission reductions\. To facilitate access, the MIS was housed on the project's webpage
so that chiller owners could supply and submit chiller replacement documents on line as well as to monitor the
status of their application\. An interface in the system also allowed the owner to automatically upload data
through the website once a new chiller was included in the system\.
c\. M&E Utilization
The M&E data was used to monitor project performance\. At project closure, the Department of Environment
and Natural Resources, Statistics and Information System Management Section (SISMS) assumed the on-
going management of the MIS\. The SISMS is to date tasked with the overall responsibility of ensuring that all
project beneficiaries come online following installation and commissioning of their chiller and that they
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PH-GEF-Chiller Energy Efficiency Project (P114119)
continue to report energy savings and emission reduction practices\.
M&E Quality Rating
Modest
11\. Other Issues
a\. Safeguards
The project was classified as a Category B project\. One safeguard policy was triggered: Environmental
Assessment (OP/BP 4\.01)\. The potential environmental risks associated with installing new chillers (such as
risks related to building renovations or retrofitting, disposal of old Chlorofluorocarbon (CFC)- based chillers,
health and safety issues from handling non-Ozone Depleting Substances (ODS) used in new chillers and
worker and building occupant safety risks), were identified at appraisal\. The PAD (page 28) reports that an
Environmental Management Framework (EMF) and Environmental Management Plans (EMPs) were
prepared at appraisal\.
The ICR (page 27) notes that safeguards compliance was satisfactory\. Several site visits were conducted
by the Bank's Environmental Specialist during implementation\. In cases where chiller replacement required
replacing hydrocarbon refrigerant (HC), occupational safety procedures were followed\. A due diligence audit
of refrigerants conducted by the Project Management Unit (PMU) showed compliance with the
government's requirements under the Montreal Protocol on Substances that Delete the Ozone Layer (ICR,
page 27)\.
b\. Fiduciary Compliance
Financial Management\. A financial management review was conducted at appraisal to assess
the implementing agency's ability to address financial management issues (PAD, page 75)\. The assessment
concluded that the financial management system of the implementing agency was satisfactory (PAD, page 75)\.
The financial management risk was rated as Substantial and several mitigating measures were incorporated at
appraisal to address financial management issues\.
The ICR (page 28) notes that there was compliance with financial management during implementation\.
Although there were moderate shortcomings (such as delays in submission of interim financial audits and
audited financial statements), these were rectified by the last year of project implementation\. The ICR however
provides no details on the quality of audits\. The task team leader clarified that with the exception of the most
recent one, all audit reports were unqualified\. The most recent audit had a qualified opinion which has now
been corrected to date\.
Procurement\. The PAD (page 88) notes that an assessment was conducted at appraisal to assess the
procurement capacity of the implementing agency\. The assessment concluded that while the procurement unit
of the implementing agency had qualified staff who could handle procurement issues following Bank
procedures, the implementing agency had limited capacity for addressing the increasing number of projects
under its responsibility\. A procurement plan was prepared at appraisal and this was updated at least annually
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or as required to reflect project implementation (PAD, page 87)\.
The ICR (page 29) notes that although there were procurement delays during implementation in view of the
time it took for the project to reach out to prospective beneficiaries, these were resolved and procurement was
done in accordance with the Bank's procurement policies\.
c\. Unintended impacts (Positive or Negative)
---
d\. Other
---
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory ---
Risk to Development
Negligible Negligible ---
Outcome
Bank Performance Satisfactory Satisfactory ---
Borrower Performance Satisfactory Satisfactory ---
Quality of ICR Substantial ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the
relevant ratings as warranted beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as
appropriate\.
13\. Lessons
The ICR draws the following main lesson from the experience of implementing this project\.
(1) Under certain conditions, the use of small-scale financial subsides can be a sound investment
option to catalyze interest and support broader national energy efficiency goals\. This project used two
types of funding - grant and market-based measures for addressing the financial and technical barriers to
adopting commercially-available energy efficient alternatives at design\. Given that market-based measures
were not used, the project had another measure through grants and this enabled utilization of the remaining
available funding without compromising the project's objective or its overall structure\.
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14\. Assessment Recommended?
No
15\. Comments on Quality of ICR
The ICR is concise and for the most part well written\. It reports both outputs and outcomes of the project and
its assessment of the project is comprehensive\. It is candid about the implementation problems that were
encountered (termination of agreement with KfW) and how they were resolved during project execution\.
Although the ICR discusses the financial management issues during implementation and how they were
resolved, it provides few details on the quality of financial audits\.
a\. Quality of ICR Rating
Substantial
Page 13 of 13 | REVIEW |
P050706 |  ICRR 13603
Report Number : ICRR13603
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 05/11/2011
PROJ ID : P050706 Appraisal Actual
Project Name : Ry-civil Service US$M ):
Project Costs (US$M): 33\.0 32\.2
Modern
Country : Yemen Loan/ US$M ):
Loan /Credit (US$M): 30\.0 30\.0
Sector Board : US$M):
Cofinancing (US$M ):
Sector (s): Central government
administration (100%)
Theme (s): Administrative and civil
service reform (100% -
P)
L/C Number : C3335; C4391
Board Approval Date : 04/20/2000
Partners involved : Closing Date : 12/31/2005 06/30/2010
Evaluator : Panel Reviewer : Group Manager : Group :
Michael R\. Lav Chad Leechor IEG ICR Review 2 IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
To create capacity, institutions and systems for improved and sustained utilization of human and financial
resources of the Yemen civil service \. See PAD, page 2\.
Schedule 2 of the Development Credit Agreement says the objectives are "to assist the borrower in creating
capacity, and putting in place institutions and systems, for sustained and improved utilization of human and
financial resources", with no specific reference made to the civil service \.
This review uses the objectives as stated in the PAD as the basis for evaluation \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
There were six components\.
Component 1\. Core Systems Improvement (appraisal, US$14\.6 million, actual US$23\.4 million)\. This is the
largest component and supports improvements in the human resources management framework, personnel
information management (including creation of an Employee Data Base, EDB, and a Biometric Information
System (BIS)) , payroll, and the accounting and financial management information system (AFMIS)\. For each of
these sub-components, the project supports development of clear processes, procedures, and policies,
involving training and, in some cases, computerization \.
Component 2\. Civil Service Fund (appraisal, US$1\.54 million, actual US$ 0\.28 million)\. This component
provides resources to assist in the design, development, implementation, and monitoring of a Civil Service Fund
(CSF) charges with the responsibility of dealing with surplus staff within the public administration \.
Component 3\. Streamline and Rationalize Government (appraisal, US$ 4\.99 million, actual, US$US$4\.95
million)\. This will aim to streamline organizational structures, simplify business processes, and put in place
basic information systems on a pilot basis for selected ministries /organizations, candidates for which were
identified as the Ministries of Civil Service and Administrative Reform, Social Affairs, Labor, and Health, and the
Tax Authority, Central Office for Control and Audit, Civil Aviation Authority, and the Prime Minister's Office \. This
component would also provide resources for an Innovation Fund and technical assistance to define the mandate
of government, motivated by the large number of departments (well over 80) and the large number of public
enterprises\.
Component 4\. Capacity Building and Change Management (appraisal, US$ 4\.02 million, actual, US $0\.62)\.
This component supports mid and high level management training , technical training for users of core systems
(component 1), and a program of training in project management teams within ministries \.
Component 5\. Program Management and Administration (appraisal, US$ 2\.76 million, actual, US$2 million)\.
This project is a complex reform program which requires a fully functioning management structure as well as
ongoing technical assistance for procurement , auditing, and project management \.
Component 6\. Project Preparation Facility refinancing (appraisal, US$2 million, actual, US$0\.92 million)
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The project cost US$32\.2 million financed by an IDA credit for US$ 30 million, and Government financing for the
remainder\. A Supplemental Financing Credit for US$14 million was approved by the Board in March, 2008, but
was never declared effective \. The project was appraised in June, 1999, approved by the Board on April 20,
2000, and declared effective on November 29, 2000\. It was restructured without Board Approval in 2005 and
2007, and, restructured again, as part of the Board Approved Supplemental Financing Credit, in 2008\. It closed
on June 30, 2010, four and a half years after the original closing date of December 31, 2005\. IDA financing was
complemented by two Danish Trust Funds, for a total of US$ 22 million, approved in August, 2001, and February,
2005, but with disbursements totalling only US$ 3\.9 million\.
3\. Relevance of Objectives & Design:
Relevance of Objectives - Rated Substantial \.
The objectives were substantially relevant at project appraisal and closing \. Government maintained a large,
overstaffed, civil service with low productivity, poor management, few incentives to produce, lacking
administration, core financial and human resource management functions and structures, and little management
capacity\. The objectives of the project appropriately sought to address these deficiencies \. It was consistent
with the Government Civil Service Modernization Strategy, and consistent with Bank assistance strategy \. The
Accounting and Financial Management (AFMIS) component should have more clearly identified an improved
payroll system as a key objective \.
Relevance of Design - Rated Modest at Appraisal and Negligible at Closing \.
The project's design was over ambitious and too complex, and therefore only modestly relevant at project
initiation\. There were 5 components, 15 sub-components directly involving 12 agencies\. While the Bank tried to
build in strong linkages among these sub -components, it turned out that this detracted from the ability of the
Bank and the Government to implement the reforms as institutional resistance grew \. Limited government
capacity was strained\. The complex and politically sensitive reforms supported by the project paid insufficient
attention to a parallel system of informal management and reporting chains in the civil service \. Implementation
suffered\. Relevance was negligible at project closing \.
4\. Achievement of Objectives (Efficacy):
At the outcome level\. The objective was to create capacity, institutions and systems for improved and
sustained utilization of human and financial resources \. Rated modest\. The project had two outcome indicators,
both of which were not well related to the objectives and components of the project \.
1\. Consolidated financial statements for budget execution produced in a timely manner -- The target was a fully
functional HR and Financial system \. A Public Expenditures and Financial Accountability (PEFA) Report in June,
2008, confirmed that Government prepares consolidated financial statements about 10 months after budget
closure, but that the statements do not include payment or tax arrears, and is not based on international
COFOG/GFS standards\. There was much less progress in achieving a fully functional HR system \. The
achievement is rated modest \.
2\. Employment based on positions and transparent application of civil service law \. The target was for the Civil
Service Fund (CSF) to be operational with a goal of removing 34000 redundant employees, as well as all double
dippers and ghost workers\. While CFS was fully operational, only 17,753 workers were processed mainly from
defunct state enterprises \. 3792 double dippers were removed, but no ghost workers were removed \. This
indicator fails to address the sustainable utilization of human and financial resources, which was the main
rationale for the project\. The integrated and standard system of employment description and evaluation is not
yet fully in place, the core human resource information systems needed to correlate staff and positions and
ensure a consistent and transparent implementation of the civil service law are not yet operational \. While the
civil service legal and regulatory framework have been revised, implementation, albeit demanding, is only
partial\. Specific technical units need to be set up in all agencies and governorates to ensure the correct transfer
of staff to the new wage structure, integrated standard systems of job profiles and evaluation need to be
prepared, as well as head counts for each of the 1400 spending units, etc\. Compliance and data accuracy are
very uneven as many units are not yet set up \. Compliance with removing double-dipping and ghost workers is
very uneven\. The biometrics system to eliminate fraud is not yet operational \. The envisaged linkage between
salary reform and restructuring has not been adhered to in practice and wage increases were not conditioned by
savings related to restructuring, with the result that the wage bill, large to begin with, has nearly doubled \. The
achievement is rated modest \.
At the output level\.
1\. Core systems -- Rated modest \.
(a) The AFMIS sub-component suffered from a late start but since 2004 made significant progress\. Operating
manuals have been adopted, and a computerized system with core modules budget execution, accounts
payable, fixed assets, revenue, and final accounts ) was developed, tested, and rolled out to four pilot ministries
(Finance, Health, Education, and General Operations and Works )\. Roll-out has started for five additional
institutions: Customs Authority, Tax Authority, Ministry of Water and Environment, Ministry of Oil and Minerals,
and Ministry of Electricity\. While usage is still only partial, the roll -outs appear to have been successful \. This
PDO indicator was substantially achieved \.
(b) The civil service core information systems sub -component was less successful \. Manuals have been
developed, but the computerized systems are not yet operational \. The EDB was developed during project
preparation, but its maintenance has not been supported by the project, and it is not operational with an
incomplete database, incomplete and missing personnel records, and a much higher number than the BIS and
payroll databases\. The BIS system itself is not yet fully operational \. Captured data for the BIS has been
achieved for only 80 percent of military and security forces, and only 50 percent of captured data has been
uploaded to the BIS system\. Linkage between the EDS and BIS systems is faulty \. The payroll system is still
fragmented among 100 entities and not harmonized\. Achievement against this PDO indicator is rated modest at
best\.
2\. Civil Service Fund -- Rated negligible \.
Against the objective of reducing the number of civil servants on the payroll and retaining high quality workers,
the number of civil servants increased by 24 percent\. The new wage bill did not improve pay prospects for high
quality workers, nor address the problems of patronage, lack of transparency, and other issues \. The wage bill,
which was not sustainable, was further increased with the National Wage and Salary Strategy adopted in 2005\.
There has been some improved enforcement of retirement rules, but the problems of double dippers and ghost
workers have achieved modest results at best -- no ghost workers have been identified and removed from the
payroll, while 3767 employees voluntarily came forward and relinquished one of their jobs \. The EDB identified
only 25 double dippers\.
3\. Government Agency re -engineering -- Rated negligible \.
While many studies have been completed, there is little evidence of outcome in terms of restructured agencies
or improved workflows/service delivery, which were the targets \. The innovation fund has achieved very limited
results, with only six projects supported with varying outcomes, all of which did little to achieve reforms as
management rested with an external consulting firm with little interaction with reform teams \.
4\. Capacity Building -- Rated modest \.
The target indicator was for effective mid and higher level training to be conducted on an ongoing basis, for
training on core computer systems to be completed, and for a training strategy to be developed for the whole
civil service\. While 27 training programs were delivered to about 1,500 civil servants, there is no evidence of
comprehensive quality assessment or impact evaluation \. There was no overall training plan \.
5\. Efficiency (not applicable to DPLs):
N\.A\. -- Institutional Capacity Building Project
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
While the relevance of the project's objectives is rated substantial, the relevance of its design is rated only
modest at appraisal and negligible at closing \. The relevance of design is considered more important than the
relevance of objective\. Thus, overall, the relevance of the project is modest \.
On efficacy, an overall rating of modest is appropriate given that the modest rating for the core systems
component, which is the largest component of the project, despite a rating of negligible for some of the other
components\.
With ratings of modest for both relevance and efficacy, an outcome rating of "unsatisfactory" is required\.
a\. Outcome Rating : Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
A number of serious risks exist, including the political and security risks, which have only heightened since the
project closed and, indeed, since the ICRR was drafted \. The Governance risk is high, with high levels of
corruption and patronage\. The risk of reduced government ownership and commitment is high, given current
political conditions\. Other risk factors such as social risk, financial risk, and lack of institutional support are
considered significant to high, again, given recent developments \.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
While project preparation was thorough, the project was too complex given the low capacity and fragile state
status of Yemen, with its weak governance and severe security issues \. A key quality at entry issue was the
failure to take adequate account of the cross -currents in Yemeni society, especially its tribal structure \. At a
more technical level, the project's outcome indicators only partly reflect the project's development objectives,
since they didn't address the objective to create operational HR and financial management systems \.
Supervision provided early warnings, but these were not reflected in project implementation \. An external
review in July, 2003 recommended substantial modifications to and simplifications in the project, which was
not acted upon\. While supervision missions' skill mix was generally appropriate, the candor and quality of
ISRs varied greatly\. There were 7 Task Team Leaders during implementation, raising serious issues of
continuity, greatly reducing the Bank's capacity to follow through on issues identified during supervision
missions, and limited the confidence of Government in Bank assistance in project implementation, and the
Bank's capacity to dialogue with the government \.
at -Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Unsatisfactory
c\. Overall Bank Performance :Unsatisfactory
9\. Assessment of Borrower Performance:
While Government commitment to civil service reform appeared strong in the steps leading up to the project,
this commitment was not maintained during project implementation \. The AFMIS component was poorly
managed during the first four years of the project, although a change in project management (requested by
the Bank) led to somewhat improved performance afterwards \. Coordination was severely lacking until 2009,
when it was too late to greatly affect project implementation \. The AFMIS PIU staff was recruited at some
variance with Bank procedures \. There were significant delays in implementation and disbursement \.
a\. Government Performance :Moderately Unsatisfactory
b\. Implementing Agency Performance :Moderately Unsatisfactory
c\. Overall Borrower Performance :Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
M&E design was flawed at the project level \. There was no automated system nor were there independent
performance audits built into the project \. This made M&E cumbersome and difficult to implement, with the result
that M&E relied on Bank Supervision missions to a large extent \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
There are no safeguards issues reported in the ICRR \.
A positive unintended impact was the support the project extended to local consulting companies, which were
awarded most of the contracts under the project \.
The Civil Service wage bill has greatly increased, the opposite of what was intended under the project \.
Champions of the project, given its emphasis on eliminating double dipping and ghost workers, were faced with
intense resistance and opposition, and, for example, the Minister of Civil Service was removed at the beginning
of the project\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Unsatisfactory With ratings of modest for both
Unsatisfactory relevance and efficacy, an outcome
rating of "unsatisfactory" is required\.
Risk to Development Significant High Given recent developments, the risk to
Outcome : development outcome is now rated as
high by IEG\.
Bank Performance : Unsatisfactory Unsatisfactory
Borrower Performance : Moderately Moderately
Unsatisfactory Unsatisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
1\. Civil service reform projects need to be highly focussed and in line with the country's administrative
capacity and its social and political context \. Such projects need to be focussed on responding to country
demand for reform, and in the absence of such demand, ESW and other work should focus on showing way
reform is needed, along with appropriate outreach campaigns \.
2\. In addressing the problems of a bloated civil service, due attention must be paid to credible alternatives,
including social safety nets, creation of productive jobs, or social transfers \.
3\. A candid and detailed risk analysis should underpin projects, especially difficult projects such as civil
service reform projects
4\. Frequent rotation of TTLs is costly and should be avoided \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICRR presents a thoughtful, well -reasoned, and detailed analysis of this project and the issues which should
have been addressed in project formulation and which emerged during project implementation \. It goes well
beyond normal requirements and presents a well rounded picture, with a well reasoned set of lessons for the
future\. The ICRR is clearly written and user friendly \. While it is a bit long, this is understandable given the
complexity of the project and the completeness of the analysis \. The annexes provide important additional
information\. The Government's numerous comments indicate concern with the quality of Bank assistance, and
appear to have been adequately taken into account in the final version of the ICRR \. The ICRR would have
been rated "exemplary" but for its rating of outcome\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P036417 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 22232-MN
IMPLEMENTATION COMPLETION REPORT
(IDA-27600; TF-25283)
ON A
CREDIT
IN THE AMOUNT OF SDR 6\.5 MILLION (US$ 10 MILLION EQUIVALENT)
TO
MONGOLIA
FOR A
POVERTY ALLEVIATION FOR VULNERABLE GROUPS PROJECT
June 22, 2001
Rural Development and Natural Resources Sector Unit
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 2001)
Currency Unit = "Mongolian Togrogs
1,000 Mongolian "Togrog" = US$ 0\.92
US$ 1 = 1,080 Mongolian Togrogs (MNT)
FISCAL YEAR
Government January 1 - December 31
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank
AIDS Acquired Auto-immune Disease Syndrome
Aimag Province
APAC Aimag Poverty Alleviation Council
BA Beneficiary Assessment
Bag the smallest unit of Mongolian public administration (rural sub-district)
CAS (World Bank) Country Assistance Strategy
CLT Core Learning Team
COMECON Council for Mutual Economic Assistance
DPAC Duureg Poverty Alleviation Council
Duureg Urban district (in Ulaanbaatar)
Dzud the generic Mongolian term for a range of late autumn, winter, and early spring weather
conditions that prevent livestock from obtaining sufficient feed from open grazing due to
deep snow or ice covering pastures = "winter emergency"
est\. estimated
FAO/CP UN Food & Agriculture Organization/Cooperating Program (with World Bank)
FER Final Evaluation Report (PAPO, December 2000)
Ger Felt tent (traditional dwelling)
GoM Government of Mongolia
GDP Gross Domestic Product
ICR Implementation Completion Report
IDA International Development Association
IGF Income Generation Fund (VGO modification from late-1998)
ILI Intensive Leaming ICR
IMR Infant Mortality Rate
IPRSP Interim Poverty Reduction Strategy Paper
Khoroo Ulaanbaatar sub-district
KPAC Khoroo Poverty Alleviation Council
LDF Local Development Fund (of NPAP)
LG Local Government
LSMS Living Standards Measurement Survey
m\. million
M&E Monitoring and evaluation
Vice President: Jemal-ud-din Kassum
Country Director: Ian C\. Porter
Sector Director: Mark D\. Wilson
Task Team Leader/Task Manager: Robin Meams
FOR OFFICIAL USE ONLY
MIS Management Information System
MMR Maternal Mortality Rate
MNT Mongolian Togrog
MoECS Ministry of Education, Culture and Science
MoFE Ministry of Finance and Economy
MoH Ministry of Health
MoPPL Ministry of Population Policy and Labor (now MoSWL)
MoSWL Ministry of Social Welfare and Labor
NGO Non-Government Organization
NPAC National Poverty Alleviation Committee
NPAP National Poverty Alleviation Programme
NSO National Statistical Office
O&M Operation and maintenance
PA Poverty Assessment
PAC Poverty Alleviation Council
PAPMU (former) Poverty Alleviation Programme Management Unit (under MoPPL)
PAPO Poverty Alleviation Programme Office (PMU for PAVGP and the broader NPAP)
PAVGP Poverty Alleviation for Vulnerable Groups Project
PHRD Policy and Human Resources Development
PIM Project Implementation Manual
PIP Project Implementation Plan
PLSA Participatory Living Standards Assessment
PMU Project/Programme Management Unit
PRA Participatory Rural Appraisal
PW Public Works
QAE Quality at Entry
QAG Quality Assurance Group (World Bank)
RLF Revolving Loan Fund (from credit reflows)
SAR Staff Appraisal Report
SDR Special Drawing Right
SIDA Swedish International Development Agency
SL Sustainable Livelihoods
SPAC Sum Poverty Alleviation Council
STDs Sexually transmitted diseases
Sum Rural district
SWOT Strengths, weaknesses, opportunities and threats
TBC Tuberculosis
TTL Task Team Leader (formerly referred to as Task Manager)
UB Ulaanbaatar
UNDP United Nations Development Programme
UNV United Nations Volunteer
VGO Vulnerable Group Organization
WB World Bank
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not be otherwise disclosed without
World Bank authorization\.

MONGOLIA
POVERTY ALLEVIATION FOR VULNERABLE GROUPS
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 12
6\. Sustainability 14
7\. Bank and Borrower Performance 15
8\. Lessons Learned 17
9\. Partner Comments 19
10\. Additional Information 19
Annex 1\. Key Performance Indicators/Log Frame Matrix 20
Annex 2\. Project Costs and Financing 21
Annex 3\. Economic Costs and Benefits 23
Annex 4\. Bank Inputs 24
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 26
Annex 6\. Ratings of Bank and Borrower Performance 27
Annex 7\. List of Supporting Documents 28
Annex 8\. Beneficiary Survey Results 29
Annex 9\. Stakeholder Workshop Results 37
Annex 8\. Beneficiary Survey Results 29
Annex 9\. Stakeholder Workshop Results 37
Annex 10\. Process Documentation: PAVGP Intensive Learning ICR Process Flow Chart 48
Annex 11\. Borrower records of project achievements by component, from MIS 57
Annex 12\. Selected Social Indicators for Mongolia 72
Map: IBRD 31531

Project ID: P036417 Project Name: POVERTY ALLEVIATION FOR
VULNERABLE GROUPS
Team Leader: Robin Mearns TL Unit: EASRD
ICR Type: Intensive Learning Model (ILM) of ICR Report Date: June 22, 2001
1\. Project Data
Name: POVERTY ALLEVIATION FOR VULNERABLE L/C/TFNumber: IDA-27600; TF-25283
GROUPS
CountrylDepartment: MONGOLIA Region: East Asia and Pacific
Region
Sector/subsector: AL - Livestock; BD - Decentralization; EP - Primary
Education; HB - Basic Health; SA - Social
Assistance
KEY DATES
Original Revised/Actual
PCD: 08/19/1994 Effective: 01/11/1996 01/11/1996
Appraisal: 03/17/1995 MTR: 09/20/1997 09/20/1997
Approval: 07/06/1995 Closing: 06/30/1999 12/31/2000
Borrower/Implementing Agency: GOM/PAPO
Other Partners: UNDP, Local NGOs
STAFF Current At Appraisal
Vice President: Jemal-ud-din Kassum Russell Cheetham
Country Manager: Ian C\. Porter Nicholas Hope
Sector Manager: Mark D\. Wilson Vinay K\. Bhargava
Team Leader at ICR: Robin Mearns Petros Akliku
ICR Primary Author: Alice Carloni (FAO/CP)
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
Context\. The objectives and design of the Poverty Alleviation for Vulnerable Groups Project (PAVGP)
need to be assessed in the context of (a) the exceptional economic, political and institutional conditions
prevailing in Mongolia and (b) the process of programme development of which PAVGP formed part\.
When Government initiated its National Poverty Alleviation Programme (NPAP) in 1994, the economy was
in deep crisis\. Following the break-up of the Soviet Union and the collapse of COMECON, the loss of
subsidies from the Soviet Union equivalent to one third of GDP was a profound shock to the whole
economy, resulting in rapid plant closures and major job losses in urban state sector employment, 300%
inflation and massive population shift from cities back to the country's traditional livestock sector in spite
of the concomitant collapse of rural co-operatives and public services\. The main economic outcome of
transition was therefore a rapid rise in urban and rural unemployment and poverty\. The maternal mortality
rate (MMR) doubled between 1991 and 1993 from 13 to 26 per 10,000 births (see Annex 12)\. School
enrolment declined and dropouts increased, in large part due to increased demand for family labour,
particularly boys, in herding\. In a country where poverty had been rare until 1990, the first Living
Standards Measurement Survey (LSMS) in 1995 found that 36\.3% of the population fell below the poverty
line\. In response to the crisis situation, PAVGP was processed quickly, with pilot activities largely
substituting for traditional project preparation and appraisal\.
Pilot Phase (Oct 1994-Dec\. 1995): 65 pilot schemes were implemented under a $330,000 Japanese PHRD
grant, as a basis for the design of an IDA project\. The pilot phase was implemented, with Bank
supervision, by a project management unit (PAPMU) under what was then the Ministry of Population
Policy and Labour (MoPPL)\.
NPAP Phase I (Jan 1996-June 1999): In response to deteriorating social and economic conditions, in 1994,
with support from UNDP, GoM approved a "National Poverty Alleviation Programme" (NPAP), with the
ambitious objective of reducing poverty from 26\.5% in 1994 to 10% by 2000\. The NPAP Programme
Document identified a broad menu of 22 poverty alleviation actions, ranging from emergency public works
and small-scale enterprise development to health, education and social welfare\. The umbrella programme
attracted US$15\.7 million in finance from 15 donors including IDA, UNDP, ADB, The Netherlands,
Japan, SIDA and UK\. UNDP provided over USS 1\.4 million mainly for institutional capacity building\. The
1994 NPAP Programme Document stated that the PMU for the programme would be "\.based at the
Ministry ofPopulation Policy and Labour\." (MoPPL, now MoSWL)\.
PA VGP (March 1996-Dec\. 2000): although the IDA project was implemented as an integral part of NPAP,
its objective (below) was more modest than that of NPAP and in the SAR, the PMU was described as\.
an autonomous entity under the supervision ofNPAC, reporting directly to the Minister ofMoPPL in his
capacity as Deputy Chairman ofNPAC\."
The original objective of PAVGP, as stated in the SAR, was to mitigate the adverse effects of Mongolia's
economic transition on vulnerable groups, particularly those falling below the poverty line\. Specifically, the
project aimed to: (i) create gainful employment and income for poor people in urban and rural
communities; (ii) raise enrolment in basic education; (iii) reduce maternal and infant mortality; and (iv)
promote income-generating opportunities for the handicapped\. PAVGP was implemented by the Poverty
Alleviation Programme Office (PAPO) under the guidance of the National Poverty Alleviation Committee
(NPAC) as an integral part of Government's National Poverty Alleviation Programme (NPAP), through
provincial (aimag) or urban district (duureg) level poverty alleviation councils (APACs/DPACs) and rural
district (sum) or urban sub-district (khoroo) poverty alleviation councils (SPACs/KPACs)\.
-2-
Project objectives reflected essential priorities of poverty reduction strategies in Mongolia at the time, as
expressed in the Government's NPAP and the Bank's Country Assistance Strategy (CAS)\. The SAR
remarked that "\.while the [Government's] adopted strategy is appropriate, reducing poverty to 10% by
the year 2000 appears ambitious" and identified the risk that "achievement of GoM objective of reduction
of poverty incidence from 26% in 1994 to 10% in 2000 rests on assumption of GDP growth rate of 5%
per year\. " In this context, PAVGP's modest objective was to ensure that poverty did not remain
unchecked, school dropouts and non-enrolment did not increase, matemal mortality did not continue to rise
and that those unable to participate in the labour market would be provided their basic needs\. This low-key
and pragmatic approach to poverty reduction was realistic under the circumstances\.
3\.2 Revised Objective:
No formal revision of objectives was required during project implementation because the original objectives
were stated in quite general terms\. Nevertheless, some shift in emphasis was apparent in the implementation
of the public works sub-component - from employment generation to sustainable rural infrastructure - and
in the productive activities credit sub-component, from maximisation of poverty outreach to creation of
self-sustaining enterprises\.
3\.3 Original Components:
(a) Income generation (US$6 million = 60%; IDA credit 5\.6 million):
* public works - employment generation for the unemployed poor through rehabilitation of district
level infrastructure such as roads, schools, hospitals and water supply;
* credit for productive activities - loans to Vulnerable Group Organizations (VGOs) for income
generating activities\.
(b) Basic education (US$2 million = 20%)
(c) Rural health (US$2 million = 20%)
(d) Support for the Disabled (US$0\.2 million = 2%)
(e) Institutional Support (US$0\.1 million = 1%)
3\.4 Revised Components:
Although there was no major revision, components were regrouped in 1998 when an Income Generation
Fund (IGF) was established as distinct from the Local Development Fund (LDF)\. At this time, public
works (US$2\.28m), basic education (US$1\.56m), rural health (US$1\.92M) and support for the disabled
(US$0\.18m) were grouped under LDF, whereas credit was placed under IGF (VGO scheme: US$0\.79m;
IGF: US$0\.69m)\. In 1999, the Credit Agreement was amended to enable the rural health component to
procure ambulances for 212 remote rural sums, and in 2000, in response to high levels of livestock deaths
during the 1999/2000 dzuJ the loan agreement was further amended to enable the project to devote the
remaining unspent US$1\.3 million under IGF to restocking of poor herders\.
3\.5 Quality at Entry:
Although overall quality at entry was satisfactory , project design was uneven\. The design of the
components dealing with education and health and support for the disabled was sound, and that of public
works was adequate, but the Vulnerable Group Organization credit scheme design was unsatisfactory\.
However, since VGO credit absorbed only 9% of the project budget (17% with IGF), this weakness -
although serious - was not enough to warrant an unsatisfactory rating\. The principal strengths of project
design were conformity with national policy and the World Bank Mongolia Country Assistance Strategy,
heavy country involvement in project preparation, use of pilot projects for design and correct identification
of several implementation risks\. The principal weaknesses included a poorly designed credit scheme, thin
documentation (lack of sectoral working papers and detailed costing) and poor or inappropriate
-3-
specification of targets and impact indicators'\.
The SAR did not disaggregate costs between public works and credit\.
Dzud is the generic Mongolian term for a range of late autumn, winter, and early spring weather conditions that
prevent livestock from obtaining sufficient feed from open grazing\. They include deep snow (tsagaan dzud) or
ice (tumur dzud) covering pastures, but also the absence of snow (khar dzud) where this would normally be the
primary source of water for animals on otherwise unusable winter pastures\. Dzud conditions tend to be
exacerbated by drought during the preceding summer, which reduces the amount of green forage in summer,
and standing litter available for grazing during winter/spring\. Extreme winter conditions occurred in both
1999/2000 and 2000/2001 (two successive 1-in-50-year dzud events)
World Bank's Quality Assurance Group (QAG) - during a rapid assessment of quality of project supervision in
FY99 - rated quality at entry as satisfactory\.
4
No targets were specified for credit, health or education - neither regarding numbers of sub-projects to be
financed nor numbers of beneficiaries\. The target for employment generation (700,000 person-months) was
excessively ambitious for an investment of US$6 million ($8 per p/m)\. Impact indicators for education and
health on the other hand (national primary school enrolment, maternal and infant mortality rates), are
influenced by many factors other than the project\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Although the overall goal of NPAP was to reduce poverty from 26% in 1994 to 10% by 2000, overall
poverty at national level does not appear to have been reduced\. In 1995, the LSMS undertaken by NSO
with Bank support found that 36% of the population fell below the poverty line\. In 1998, a similar - but
not fully comparable - LSMS survey undertaken by NSO with UNDP support, found that 35% of the
population was below the poverty line and that the depth and severity of poverty had slightly worsened\. The
findings of the Participatory Living Standards Assessment (PLSA) conducted by NSO in 2000 with World
Bank support are consistent with these trends and confirm that polarisation between rich and poor
intensified between 1995 and 2000\. While a minority of households managed to lift themselves out of
poverty, many were left behind and those already below the poverty line experienced a worsening of living
conditions\. However, PAVGP's objective of mitigating the adverse effects of Mongolia's economic
transition on vulnerable groups such as poor herders, female-headed households, children and disabled
people was largely achieved, albeit on a smaller scale than originally anticipated\. In particular, the project
contributed to halting the deterioration of basic education and rural health facilities and community
infrastructure during a difficult period of the economic transition\.
The project's success in achieving its objective of creating gainful employment and income for poor people
in urban and rural communities was mixed\. The public works component was successful in creating
temporary employment and in halting the deterioration of economic and social infrastructure, and, although
the duration of employment was too short to have an impact on the livelihoods of the poor, the
infrastructure works themselves contributed to poverty reduction\. While the public works component was
largely successful, the achievements of the productive activities sub-component were modest, due mainly
to flaws in the original VGO credit scheme design\. The recently added restocking sub-component holds
promise for poverty reduction but it is too soon to assess its impact\.
The project was well targeted, with the exception of the VGO credit scheme, which allowed non-poor group
leaders to borrow sums up to US$2,000 on behalf of their groups\. The independently-conducted
-4-
Participatory Living Standards Assessment in mid-2000 reported perceptions that VGO loans tended to go
to people well-connected with the local administration\. The impact of the VGO scheme on overall targeting
was minor because it absorbed only 9% of total project finance\. The IGF credit scheme had fewer targeting
problems\. The IGF credit scheme targeted the bankable poor whereas the public works employment
schemes targeted the extreme poor who did not benefit from credit due to fear that they might not be able to
repay\.
Distribution of benefits by gender was satisfactory: 54% of credit beneficiaries and 28% of persons
employed as construction workers on public works schemes were female\. Women were the main
beneficiaries of the rural health component, which focused on lowering maternal mortality rates, whereas
the main beneficiaries of the basic education component were boys, who are under high pressure to drop
out of school to assist families with herding\. Rural/urban balance was appropriate: aimag and sum centres
benefited mainly from credit and public works schemes whereas the rural population also benefited from
basic education, rural health and restocking\. Although urban areas were not eligible under the education
and health components, each of the 9 urban districts of Ulaanbaatar benefited from an average of 13-14
public works schemes\.
Although the resources utilised by the Income Generation component were modest, an estimated 20% of
total poor households benefited from temporary employment in public works and 4\.5% benefited from
income-generating credit under VGO and IGF schemes\. In addition, 4% of total dzud-affected households
in 5 severely-affected aimags were restocked, amounting to around a third of all households meeting the
eligibility criteria (such as poverty status)\. Moreover, with a total of 1,821 health, education and public
works schemes implemented, each of the country's 342 sums benefited on average from 4-5 different
schemes\. Hence coverage of the poor was satisfactory in spite of relatively low coverage of the
income-generating credit scheme\.
4\.2 Outputs by components:
A\. Income Generation
Outputs:
Under the Income Generation component, through the Local Development Fund, some 634 public works
projects have been completed (total cost $2\.28 million) and 781 group loans extended (total lent $0\.79
million)\. Under IGF, a further 2,002 household loans were extended (totalling $0\.686 million) plus 1,728
loans for restocking of herders who lost most of their animals in the dzud\. In addition, credit reflows from
PAVGP were channelled into district level revolving loan funds (RLFs), managed by local government,
from which some 1,370 additional loans have been made to date\. Onlending from RLFs is expected to
continue well beyond project closing\.
Impact:
Under the income generation component, 39,100 individuals (28% women) benefited directly from
temporary employment (27,430 in labour intensive public works and the rest in rehabilitation of basic
education or rural health facilities) for an average of 1\.5 months each, an estimated 8,690 households
benefited from micro-credit for income-generating activities (54% women) and 1,728 poor herder
households that lost most of their animals in the 1999/00 dzud benefited from restocking\. The lack of
baseline data at time of appraisal, however, precludes an accurate quantitative assessment of the overall
impact on household incomes\.
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A\.1 Public Works
Under the Public Works (PW) sub-component, the project spent US$2\.3 million on 634 small-scale,
labour-intensive infrastructure schemes - road and bridge repair, drinking water supplies, public
bath-houses, building renovation - covering every sum and khoroo in the country, at an average cost per
scheme of US$3,600\. A total of 27,430 unemployed people (28% female) received short-term work for an
average of 6-weeks per person, resulting in about 41,500 person-months of paid employment at an average
cost of about $55 per person-month of labour\. Although employment creation was far less than anticipated
at appraisal (SAR target was 700,000 person-months of temporary employment), this is largely attributable
to unrealistic expectations on the part of project designers, as the target was inappropriate for the VGO
credit (see below) and unrealistic at 1995 US$8 per person/month\.
Although the SAR specified that wages would be set "slightly below the market rate " (para\.3\.16e) to
promote self-targeting, wages were actually set at the minimum rate or paid on a piece-rate basis, which
resulted in payments substantially above market rates\. Beneficiaries were selected either by bag/sum
officials or by the MoSWL labour office from the list of registered unemployed\. Informants agree that
beneficiaries were poor or very-poor and typically received about twice the prevailing poverty-line income\.
The payment of wages above the minimum reduced the number of persons able to benefit, but had positive
impacts in both increasing the total income to labourers from the short-term work opportunities created,
and giving them a sense ofjob-satisfaction\.
The main benefits of public works as perceived by communities were the infrastructure works themselves,
rather than of the temporary jobs created\. Interviewees recognised that palliative short-term job creation
offers no solution to underlying economic problems\. The PW schemes implemented vary considerably from
those with near 100% labour content and little long-term impact (e\.g\. garbage collection) to ones with
significant sustainable benefits (e\.g\. irrigation schemes for vegetable farmers or insulation of heating pipes
or road/bridge rehabilitation)\. Although the overall quality of works was satisfactory, the beneficiary
survey noted that the quality of some of the works was questionable, and this was confirmed during ICR
field visits\. In terms of sustainability, many of the public baths and some of the water points created are
being run on a cost-recovery basis and some bridges have toll arrangements\. The longer-term impact of
both the small economic infrastructure and the public health schemes is likely to be at least as beneficial as
the short-term income supplements through job creation\.
The design of the Public Works sub-component was appropriate for providing short-term employment
opportunities, if less so for addressing underlying development challenges\. The number of temporary jobs
created (est\. 41,500 person-months) and the average unit cost (est\. $55 per person-month) were reasonable
in view of the longer-term benefits of most schemes\.
A\.2 The VGO and IGF Credit Schemes
Context\. The design of the Vulnerable Group Organisation (VGO) credit scheme outlined in the SAR
(Annex 4A) called for the formation of VGOs comprising 20 to 25 very poor people in every bag (target
1,700 VGOs), each of which was required to have a management committee (although the leader could be
from outside the group) and to be a registered co-operative with its own bank account, controlled by the
VGO leader and accountant\. Interest-free and collateral-free loans of up to $2,000 repayable over four
years would be made to each group to enable them to undertake agricultural, natural resource, community
service, handicraft or food production activities\. The VGOs were expected to pay salaries to all their
members, with the total wage bill capped at 50% of the "cost" of each VGO project\. The VGO concept
was thus for the project to finance new businesses which were expected, from the outset, to earn sufficient
-6-
income to pay wages for up to 25 poor people, with wages linked, apparently, to capital rather than
earnings, whilst making provision for the project loan to be re-paid starting from the second year\.
From the outset, PAPO staff were concerned about the high transaction costs of VGO legal registration
(often requiring trips to UB) and opening of group bank accounts (considering that most bank branches
outside the major cities closed in 1998-99)\. Large loans were being made to group leaders - commonly
influential local elites - with insufficient feedback on benefit-sharing between leaders and group members\.
The inclusion of 'cost-per-job' ratios in the application process encouraged substantial over-reporting of
beneficiary numbers\. In other cases, the VGO loan was simply sub-divided amongst group members,
making monitoring and enforcement of repayment problematic\. In many such cases, the beneficiaries "ate"
their share of the money, leaving the group leader with a heavy burden of loan repayment\.
In mid-1998, in response to the recommendations of a December 1996 Mid-Term Evaluation of NPAP
commissioned by UNDP, the LDF VGO credit scheme was replaced by the Income Generation Fund
(IGF)\. The main improvements introduced were: devolving loan approval to sum/khoroo level; reducing the
minimum size of loan 'groups' to 3 people; dropping reference to "salaries" and "cost-per-job"; reducing
the maximum loan size to $100 per group member (US$ 1,000 per group) and the term to 1 year; making
the loan payable at term with a 1% per month interest rate; and liberalising the loan purpose\. Although
these changes were in the right direction, they stopped short of creating the basis for an effective and
self-sustaining micro-credit scheme\. Incentives for timely loan payment remain low in the absence of peer
pressure mechanisms and possibility of second loans and the 1% p\.m\. interest rate is too small for
operational sustainability, or even to allow incentive payments to the local government staff responsible for
loan management, and the PAPO MIS is unsuitable for effective credit monitoring\. Moreover, IGF
continues to lend to "groups" (many of which are members of the same household), making interpretation
of the loan portfolio, beneficiary impact and repayment responsibility difficult\.
Outputs
Under the LDF VGO loan scheme, 781 group loans were extended for a total of US$0\.79 million and under
IGF, a further 2,002 household or small group loans were extended totalling US$0\.686 million (total 2,783
loans for US$1\.477 million)\. Although the PAPO MIS (Annex 11 Tables) reports 6,222 beneficiaries for
VGO loans and 6,298 for IGF loans, when double counting was eliminated, the following estimate of actual
numbers of beneficiary households was obtained and has been endorsed by PAPO\.
VGO/IGF Credit: Estimated Number of Direct Beneficiary Households
Scheme No\. of Total Loan Avg\. Loan Estimated avg\. no\. of Total Poor HHs
First-Round Amount ($) Size (US$) Poor HHs Benefiting' Benefiting (2 *
Loans per Loan 5)
VGO 781 790,428 1,012 6 4,700
IGF 2,002 686,312 343 2 4,000
VGO + IGF 2,783 1,476,740 _ 8,700 2
Not including secondary beneficiaries such as workers employed by loan recipients
These totals were fully discussed and agreed between the mission and PAPO\.
In addition, funds recovered from all first-round loans (including those financed by other donors such as
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SIDA) are channelled into district-level Revolving Loan Funds (RLFs) managed by the sum and khoroo
authorities\. Apparently, at least 5,000 second-round loans have been made to date, about half of which
could be attributed to reflows from PAVGP\. If these funds are well managed, the remaining capital could
benefit a large number of additional households in the years to come\.
Loan repayment rates of 48% (VGO) and 44% (IGF) are unsatisfactory\. They are much lower than those
achieved by private micro-finance organizations such as XAC-Microstart (99%), whose clients, however,
tend to be less poor than PAVGP's\. In the crisis-ridden commercial banking sector, only an estimated
30-40% of loans are bad or late\.' Because there is no system for ageing overdues, it is impossible to assess
what proportion of the initial loan fund is likely to be irrecoverable\. Considering local governments'
commendable efforts to recover overdues (even resorting to the courts), a plausible estimate is that 60% of
the initial capital may eventually be recovered\. However, it is a matter of considerable concern that the
VGO/IGF design has left local government and many poor households facing acute difficulties in deciding
how to treat the large number of bad loans outstanding at project closing\.
Recent modifications of the sum-level Revolving Loan Schemes in aimags such as Dornogobi are an
improvement over existing income-generating credit schemes \. Loan administration and recovery is handled
by full-time loan officers who are either paid by local government or receive a share of the interest on the
loans they recover\. Interest rates have been raised to 3% per month, of which 1% is devolved to loan
officers as an incentive for loan recovery and 1% is paid into a risk fund to cover bad debts\. Although
modifications of this type should be encouraged, even this falls short of micro-finance good practices\. The
future options for revolving loan funds (RLFs) could include the integration of the RLFs into the current
financial system and/or granting them legal status\.
Impact:
The beneficiary survey and ICR field visits confirm that most borrowers have made successful use of their
loans and that poor households succeeded in setting-up relatively successful vegetable production, boot and
furniture-making, catering and food-processing enterprises\. On the estimate that 60% of project borrowers
succeed in establishing new enterprises, the number of sustainable new household businesses created from
the first-round loans is about 5,200 (8,700 * 60%)\. With the estimated total number of poor households in
Mongolia at 190,000 , the proportion of poor households "lifted out of poverty" by the VGO/IGF
sub-component is therefore about 2\.7%\. The ICR beneficiary assessment confirmed that training of
beneficiaries in simple business management skills could have increased the credit impact\. The performance
of IGF beneficiaries who received such training through a parallel SIDA project was better than that of
IDA project beneficiaries who did not receive such training\.
Conclusion:
The credit schemes under the 'productive activities' sub-component of Income Generation were the most
problematic and disappointing element of the project, due to poor design, compounded by the failure of
IDA and other NPAP donors to provide professional micro-finance advice to PAPO, despite the clearly
identified need for such support\. Although beneficial modifications to the original VGO design were made
in mid-1998 with the creation of IGF, these changes came too late and were too minor to redress the
fundamental weaknesses of the original design or to increase benefits and impact significantly\. The
outcome was that, by project closing, achievements in terns ofjob creation, business development, the
introduction of sound micro-credit principles, and poverty alleviation, were well below what they could and
should have been\.
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A\.3 Restocking
Outputs:
Under the Restocking sub-component, over 95,000 animals were delivered to 1,728 poor herder
households severely affected by the 1999/2000 dzud in 5 aimags\. Livestock were mostly sheep and goats,
because: (a) small ruminants are cheaper to buy, thereby enabling more herders to be assisted; (b) they
require relatively less feed and upkeep compared to cattle; and (c) owing to faster reproduction, they are
quicker to generate a cashflow\. The average beneficiary received 40 sheep and 15 goats (99% smallstock)
at an average cost of US$390 per household\. Field visits confirmed Bank supervision assessments that the
selection process through an open bag (or sub-district) assembly meeting was highly transparent and fair,
targeting was satisfactory and that the animals procured were of good quality\. Beneficiaries were pleased
that the project had insured their animals and that veterinary services were being provided\. In contrast to
the highly problematic flow of funds through Agriculture Bank over 1998-99, owing to its insolvency and
the wider crisis in the banking sector, the transfer of funds to sums through the Postbank was rapid and
efficient\. The main complaint came from officials who reported that the prices demanded by local livestock
sellers were unnecessarily highs because payment was not in cash on the spot, but deferred until the animals
had been inspected and accepted by the beneficiaries\. In spite of the notable achievements, only 20-40% of
total applicants meeting some or all project selection criteria could be covered (or 4% of total dzud-affected
households in the 5 severely-affected aimags)\.
Impact:
Although it is too soon to assess impact (loan repayments only start in 2003), local governments are
concerned that the 2001 dzud could have a negative impact on loan recovery\. This is only a limited problem
in Ovorkhangai, where, as of 10 April 2001, only 3% of animals given for restocking under PAVGP were
reported lost\. Although comparable figures are not yet available for losses among restocking beneficiaries
the other aimags, much higher rates of animal losses have been recorded this year in project sums in
Zavkhan (12\.5%) and Uvs (4\.2%)\. The implication is that that pastoral risk needs to be addressed to
improve sustainability of restocking efforts\.
B\. Basic Education
Outputs:
A total of 453 sub-projects have been financed in Basic Education (total cost $1\.56 million) and each of
the country's rural districts has benefited at least once\.
Impact:
The Basic Education component aimed to increase school enrolment from 70 to 85% nation-wide, by
reducing the non-enrolment and dropout rate, especially among children of poor herders in remote rural
areas\. During the course of the project, the enrolment rate increased from 77\.5% in 1995 to 93\.8% in 1999
(see Annex 12) and there is broad consensus that PAVGP's contribution was substantial\. The return of
school enrolment to pre-transition levels was largely due to improvement brought about by basic education
schemes in the quality, comfort and safety of school buildings and dormitories, which persuaded many
herders to keep their children in school\. The mission's field visits confirmed that works were generally of
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good quality, facilities are greatly appreciated by teachers, parents and students, and that dormitory
capacity provided by the project is fully utilised\. An added bonus of heating system renovation has been a
30-35% reduction in heating costs\.
C\. Rural Health
Outputs:
Under the Rural Health component, 522 sub-projects were financed for rehabilitation of services (total
cost $0\.895 million) and 212 ambulances distributed to remote rural sums (total cost $1\.02 million)\. Apart
from ambulances, which absorbed over half of total funds, the bulk of IDA support was allocated to
hospital building and heating system renovation and rehabilitation of maternal rest homes, with each of the
country's rural districts benefiting from an average of 2-3 sub-projects\.
Impact:
The Rural Health component aimed to reduce maternal and infant mortality rates (MMR/IMR) to
pre-transition levels\. These activities were appropriate for achieving the project objective but the choice of
impact indicator was less appropriate because it is influenced by factors beyond project control\. Between
1994 and 2000, IMR decreased from 46\.8 to 31\.2 per 1,000 but MMR only decreased from 21\.2 deaths
per 10,000 live births in 1994 to 17\.5 in 1999"\. Although the appraisal target for MMR (12/10,000) was
only partially achieved, there is broad consensus that the project made a major contribution, especially in
12
rural areas
D\. Support for the Disabled
Outputs
The project provided $180,000 to procure training, exercise and audio-visual equipment and stocks of
vitamins for 19 Centres for the Disabled serving a total of about 3,800 people\. This far exceeded the SAR
target of assisting 600 people in 4 institutions\.
Impact:
As a result of project-financed training equipment, an estimated 1,300 disabled adults acquired
professional skills and around 290 to date have found employment\. Most of the remaining beneficiaries
were disabled children\. As a result of project-financed hearing aids, wheelchairs and artificial limbs, many
of these children are now attending public schools\.
E\. Institutional Support
Outputs:
To build PAPO's and APACs' management, implementation and monitoring capacities, UNDP and GoM,
using the proceeds from the IDA credit, provided funding for TA coordinated by UNDP\. Under the IDA
credit, international consultancies for design of the MIS and financial accounting systems were undertaken\.
However, capacity constraints were only partly addressed (professional advice on micro-finance was
requested but not provided)\. According to PAPO, some of the IDA-funded consultant advice was too
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sophisticated for local conditions\.
Impact:
Although the IDA credit only covered a fraction of NPAP's total capacity-building and operating costs, the
objective of developing umbrella organisations capable of managing local and external assistance for the
NPAP was successfully achieved, especially at national and at aimag/duureg level\. Capacity building at
district level was incomplete, because the responsibility for identifying, contracting and monitoring
sub-projects and managing RLFs originally rested with aimags and its decentralisation to sum and khoroo
level was not foreseen at design\. Capacity building at sum, khoroo and beneficiary level therefore needs
further attention\.
4\.3 Net Present Value/Economic rate of return:
As sub-projects to be financed could not be identified in advance and most of the project costs were
incurred for public works, rural health, basic education and support for disabled people, the SAR stated
that cost/benefit analysis was not applicable\. Accordingly, no attempt was made to calculate ERR/NPV at
ICR either\. In terms of the cost effectiveness of project interventions, the procedures for the public works
under the project were the same as for other comparable public works, and unit costs were within the cost
range for comparable projects implemented by the government or other agencies\. On the other hand, under
the "productive activities" sub-component, credit repayment rates were unsatisfactory (44-48%)\. The
interest rates paid by borrowers were negative (interest-free loans) until the scheme was redesigned in
mid-1998\. Currently, the IGF and RLF interest rates (12%-36% per annum) are positive in real terms
compared with an (official) inflation rate of 10% per annum\. Given the quality and gaps in available data,
it was not possible to assess portfolio quality, efficiency and profitability of the credit fund\.
4\.4 Financial rate of return:
See above
4\.5 Institutional development impact:
Although the project did not have explicit policy or institutional development objectives, it succeeded in
putting poverty reduction on the national agenda and in building a strong institutional network in support of
project implementation, articulated on three levels - national, aimag/duureg and sumlkhoroo\. In addition, it
enhanced the capacity of local government staff to identify, prioritise, implement and monitor small
projects and to handle contracting and procurement\. The project's bottom-up approach to sub-project
identification and prioritisation is reported to have influenced normal government practice\. It has also
created a favourable environment for growth of small-scale, local-level private contractors and for
consulting firms specialised in poverty-related monitoring and survey work\. In spite of initial weaknesses in
the VGO credit scheme, capacity of APACs and SPACs to manage micro-credit and revolving loan funds
has gradually been built up\.
5-
The fact that the IGF scheme repayment rate is even lower than that of the VGO scheme may be due to the fact
that the IGF portfolio was only 50% due at December 2000, and a larger share of IGF non-repayment, compared
to VGO loans which are 77% due, is therefore likely to be late rather than bad\.
For the sum/khoroo "Revolving Loan Funds" the reported repayment rate (20%) refers the proportion of
recoveries against disbursements, not against dues, and is therefore effectively meaningless\.
7\.
LSMS 1998 (NSO 1999)
- 11 -
8
Especially in Dundgobi and Ovorkhangai aimags\.
Source: Aimag fact sheets downloaded from UN website on the 1999/2000 dzud disaster\.
10
Source: FAO Emergency Assessment Mission and State Emergency Commission, 26 March 2001\.
Source: Ministry of Health (note: IMR for 2000 had been announced at time of ICR preparation but not yet
MMR)\.
12
MMR is currently higher in Ulaanbaatar and urban centres not covered by the project than it is in most rural
areas\.
13
A survey covering 10 institutes for the disabled reported that an average of 70 adults per institute completed
vocational training, 15 of whom found employment\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control ofgovernment or implementing agency:
Continuing Economic Crisis\. Much of the current political debate on poverty in Mongolia concerns the
perceived failure of NPAP to reduce poverty (as measured by LSMS surveys)\. PAPO, on the other hand,
argues that NPAP has not failed but that its multiplier effect is greatly reduced in the absence of
broad-based, inclusive and labour-intensive economic growth\. Achievement of NPAP's ambitious goal of
reducing the poverty headcount ratio to 10% by 2000 was based on the assumption that after the transition
GDP growth would quickly resume\. Although GDP growth has partially resumed, economic recovery was
slower and less broad-based than anticipated\. Insofar as gains in social sectors may be offset by growing
unemployment and economic deterioration in other sectors, the impact of PAVGP on poverty is difficult to
quantify\. Crisis in the financial sector more broadly throughout the period of project implementation
severely impeded sound financial management in ways that lay beyond the capacity of the implementing
agencies to control\.
Natural Calamities\. Two severe dzuds in 1999/00 and 2000/01 increased poverty among rural herders
throughout large areas of the country\.
5\.2 Factors generally subject to government control:
Rigidity of the VGO Credit Scheme\. At GoM's insistence, Schedule 4 of the IDA Development Credit
Agreement specified that sub-projects for productive activities would have "a repayment period not
exceeding 4 years, a grace period of 1 year and no interest " and that any change in the sub-project types,
eligibility or appraisal criteria, lending terms, allocation of credit funds between aimags and sums and
procurement or disbursement would be subject to prior approval by GoM and IDA\. This contributed to an
18-month delay in revising the VGO credit scheme\.
Counterpart Funds\. Shortages of counterpart finance caused serious disbursement delays until 1999 and
led Ministry of Finance and Economy (MoFE) to engage in unauthorised "borrowing" from the project
special account on two occasions to pay public sector salaries\. Shortage of local government finance for
O&M of public works continues to be a problem\. Since the project did not foresee the need to cover
incremental operating costs at aimag and sum level, access of APAC secretaries to transport is highly
variable, depending on personal relations with the Governor and the level of importance given to the project
by local authorities\.
Institutional Conflicts\. The statement in the SAR that the PMU would be "\. an autonomous entity under
the supervision ofNPAC, reporting directly to the Minister ofMoPPL in his capacity as Deputy
Chairman ofNPAC' was interpreted differently by different stakeholders\. MoPPL considered PAPO to be
under its own authority, whereas the donors considered PAPO to be an autonomous entity under NPAC,
reporting directly to the Prime Minister as NPAC's Chairman\. MoPPL/MoSWL's repeated efforts to block
- 12-
decisions taken by PAPO through NPAC were disruptive to implementation\. In an effort to resolve the
issue, in early 1996, under pressure from the WB, UNDP, ADB and the PMU staff, GoM issued a
statement that PAPO would thereafter report directly to the Prime Minister, in his capacity as Chairman of
NPAC, thus making PAPO operationally independent of the MoSWL\.
Staff Turnover\. Mongolia's tradition of changing government staff after every election posed a challenge
for project continuity\. Although nearly all members of NPAC changed after last year's election, it is to
PAPO's credit that the new government agreed - in the interest of continuity - not to change the APAC
secretaries\. However, high turnover and low incentive of PAC members continues to be a problem at sum
and khoroo level\.
Auditing\. No provision was made in the Credit Agreement to finance audits from the proceeds of the
credit\. Until 1999, audits were conducted by the State Audit Board, which the Bank by 1999 judged not to
be qualified to conduct audits to the required standard\. Following a 1999 Country Portfolio Performance
Review (CPPR) meeting, this issue began to be addressed at country level with separate IDA financing\.
Project audits were adversely affected by these circumstances\. While all audits were ultimately found to be
acceptable, they were delivered late in 1998 and 1999\. The highly decentralized nature of PAVGP required
a higher capacity in auditing than was available in Mongolia during the life of the project, and errors on the
part of auditors - later corrected - suggested a lower standard of project financial management than was in
fact the case\.
5\.3 Factors generally subject to implementing agency control:
Implementing Agency Culture\. PAPO staffs strong commitment and dedication to poverty alleviation
and their initiative, determination and extremely hard work, as well as their flexibility and ability to learn
from experience, were critical for steering the project through external shocks and crises\.
Information Management\. Deficiencies in information management make it difficult for PAPO to
demonstrate the project's impact on poverty\. The existing MIS is unsuitable for monitoring a credit
programme\. Considerable resources were spent on developing a system of participatory M&E, which
generates useful impact information - for instance, on numbers of households lifted out of poverty\.
However, due to the absence of linkage between participatory M&E and the MIS, this important
information is not used to inform management decisions\.
Financial Management\. In light of the prevailing economic crisis in Mongolia and its adverse impact on
the banking sector, the unauthorized 'borrowing' from the special account by MOFE, and weaknesses in
country auditing capacity, project-level financial management was reasonably sound\.
5\.4 Costs and financing:
Costs\. Project costs at appraisal did not correspond to pre-identified investments, but rather to programmes
that could be expanded or contracted according to demand and implementation capacity\. Actual total costs
of the project are very close to those estimated at appraisal\. The IDA credit fund agreement in terms of
disbursement accounts and categories was amended several times in the course of project implementation to
respond to the emergent need\. of restocking in the aftermath of 1999/2000 dzud and other developments\.
Disbursement was slow in the first three years of project implementation due to frequent changes of
government, controversy over the PAPO's status, and the cycle-based sub-project implementation and
special account replenishment arrangement\. Although the project was intended to be quick disbursing, the
requirement of complete expenditure documentation from all aimags as a condition for release of each new
tranche of funds forced it to move at the speed of the slowest-reporting aimag\. As a result of slow
- 13 -
disbursement, the project was extended twice to the current closing date of Dec\. 31, 2000\.
Funding\. Due to changes in the exchange rate between the SDR and the US dollar, IDA Credit funds
available to the project amounted to US$8\.85 million, or 88% of the appraisal estimate\. At appraisal, the
total project cost was estimated at US$10\.53 million without physical and price contingencies (as specific
sub-projects could not be identified a priori)\. IDA credit amounted to US$ 8\.85 million, which is - after
adjusting for US dollar/SDR exchange rate - very close to SDR 6\.5 million (US$ 10 million equivalent) as
estimated at appraisal\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
Overall, sustainability is judged to be likely\. The staffing and resourcing of clinics, schools and other
services renovated by the project is currently good, and is likely to be maintained\. Sustainability of health,
education and public works sub-projects was to be ensured by involving local stakeholders in their
identification, selection and construction and by requiring that local government ensure sufficient recurrent
budget allocation for operation and maintenance of proposed works as a condition for their approval by
SPACs and APACs\. Although this principle is sound and has largely been adhered to, local governments
continue to experience shortages of funds for recurrent costs\.
The sustainability of the VGO enterprises established under the original credit scheme is doubtful\. Most
VGOs were formed to satisfy the requirements of the poorly designed group credit scheme and
subsequently fell apart because of unequal capacities and divergent interests of group members, lack of
transparency and domination by group leaders\. The enterprises established through household loans under
the Income Generating Fund (IGF) are more solid and roughly two-thirds are estimated to be sufficiently
profitable to make them sustainable\. In spite of strong local government commitment to ensuring the
sustainability of the Revolving Loan Funds established at sum level from micro-credit repayments, in most
cases, the capital is gradually eroding due to incomplete loan recovery\. It is too soon to assess the financial
viability and sustainability of herder restocking because loan repayment will only begin in 2003\.
6\.2 Transition arrangement to regular operations:
The project has laid a solid foundation for a follow-up programme that can build on the successes and
improve on the weak areas of the first\. As a follow-on to PAVGP, a second phase is planned, with a new
title - Sustainable Livelihoods - to enhance emphasis on local initiative and self-reliant development at
community and district levels\.14 The proposed project - which incorporates lessons from PAVGP's
experience - would have three main components in addition to institutional support: (a) pastoral risk
management; (b) community investment fund (CIF); and (c) rural micro-finance\. For the management of
the CIF, the SL project would build upon the implementation capacity created within PAPO and within
local PACs, whereas micro-finance would be the responsibility of appropriate specialised financial
institutions and pastoral risk would be the responsibility of the Ministry of Food and Agriculture (MoFA)\.
Sustainability of the project investments might be enhanced by: (a) reviewing local government methods for
planning, budgeting and financing building and equipment maintenance and other non-staff recurrent cost
items; (b) fielding a micro-finance specialist to review the current status and operation of the 342 local
government Revolving Loan Funds and to advise on simple systems, procedures and formats to extend their
expected life and impact; and (c) by reducing pastoral risk\.
-14-
14
It was felt that the approach reflected by the old project title - Poverty Alleviation for Vulnerable Groups -
tends to perpetuate vulnerability and encourage dependency on Government to solve problems\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Bank support for project preparation and appraisal was satisfactory, even though the VGO credit scheme
design was unsatisfactory\. Although the origin of the faulty credit design is unclear , in hindsight, a
number of aspects of the design were contrary to Bank policy and established good practice at the time
(interest-free loans, credit administration by a PMU)\. The use of pilot projects as a basis for design was
commendable\.
7\.2 Supervision:
The Bank Quality Assurance Group (QAG) rated quality of supervision for FY1999 as marginally
satisfactory in spite of high turnover among task managers \. However, had the QAG/Rapid Supervision
Assessment been done during the previous two years, it might have been judged unsatisfactory, since there
was only one site visit between late 1996 and spring 1998, in spite of serious problems with disbursement,
unsatisfactory ratings on implementation progress for income generation and support for the disabled,
shortage of local counterpart funds, unauthorised "borrowing" of project funds by MoFE and escalation of
conflict with MoSWL over PAPO's autonomy\. Satisfactory supervision resumed in mid-1999 with the
appointment of a full-time task manager\. The Borrower rates Bank supervision as satisfactory and cites the
action plan drawn up in July 1998 as particularly helpful\. Hence the overall rating on Bank supervision is
satisfactory in spite of weakness in 1997-1998\.
7\.3 Overall Bank performance:
Overall performance of the Bank in project lending and supervision was satisfactory, in spite of the
unsatisfactory design of the credit scheme and failure to provide micro-finance expertise to the
implementing agency\.
Borrower
7\.4 Preparation:
Borrower performance in drafting the PIP and PIMs was satisfactory, in spite of the weakness of the credit
scheme design\.
7\.5 Government implementation performance:
Overall Government implementation performance was satisfactory\. However, had GoM been more
proactive and vigorous in defending PAPO's autonomy as a multi-sectoral institution serving as a
Secretariat to NPAC and reporting directly to the Prime Minister, disruption to project implementation
would have been greatly reduced\.
7\.6 Implementing Agency:
Considering the poor initial design and lack of professional micro-finance advice, PAPO and local
government implementers did a satisfactory job of adapting and implementing the scheme\. The
- 15 -
implementing agencies' commitment to poverty reduction and their ability to learn from experience has
been highly satisfactory\.
7\.7 Overall Borrower performance:
Overall, Borrower performance was satisfactory\. Although central-level commitment to the project was
undermined at times by institutional rivalries, this was offset by the highly satisfactory performance of the
implementing agencies\.
15
No credit scheme was foreseen at Identification or Preparation\. It was added at appraisal, as a consequence of
April 1994 negotiations between GoM and the Bank on the draft PIP\. Apparently GoM made project approval
conditional on the introduction of a productive component\. The detailed design of the VGO credit scheme was
agreed at these negotiations\. It is not clear whether the design came from GoM or the Bank\.
6 PAVGP was supervised by three different task managers in calendar year 1999\.
-16-
8\. Lessons Learned
The Poverty Alleviation for Vulnerable Groups Project was a timely and rapid response to the economic
and social problems of the vulnerable poor during Mongolia's transition to a market economy\. Its success
under difficult conditions during a period of economic transition can be attributed to:
* a highly committed and dedicated implementing agency at national level;
* PAPO's and local government's capacity to learn from experience;
* the use of an existing network of local government institutions at aimag and sum level as a
delivery mechanism - which allowed the project to work efficiently in spite of severe constraints
such as low population density, scattered settlement, seasonal population movements, harsh
winter conditions and poorly-developed transportation and communication networks;
* the introduction of a bottom-up approach to project identification and implementation
(previously unknown in the former command economy);
* the trust placed in local government's capacity to identify, contract, supervise and report on
public works schemes and basic education and rural health projects;
* the cross-sectoral approach that allowed districts a choice between health, education, public
works and income generating credit; and
* the emphasis on making certain that funding was in place for O&M of whatever structures and
services were rehabilitated by the project\.
In the context of the project's achievements, the shortcomings identified in this report are relatively
minor and are attributable more to weaknesses in project design than to deficiencies in local
implementation\. Some important lessons from implementation experience are listed below\.
Successful implementation of a bottom-up, demand-driven approach is facilitated by open public
meetings at grassroots level\. The restocking component achieved broad-based and inclusive community
participation in beneficiary selection because it worked through the lowest unit of local government - the
bag assembly\. Decision making for other components was less broad-based, since project selection was
heavily influenced by Government department heads and NGOs in their capacity as SPAC members\.
- 17 -
The establishment of a cross-sectoral implementing agency (such as PAPO) facilitates poverty project
implementation but creates conflicts and uncertainty\.
* Lack of clarity about PAPO's autonomy from MoPPL/MoSWL was a source of continual
organisational conflict throughout the life of the project\. PAPO was certainly an effective
implementation unit as an autonomous entity under the Prime Minister's office\. Whether project
performance would have been better or worse if PAPO had remained a PMU within a line
ministry is unknown\. The lesson is that donors need to be exceptionally careful before requiring
governments to adopt specially-created institutional arrangements for project implementation\.
* Decentralisation of project management responsibility can be an effective way of overcoming
institutional blockages at national level\. Although controversy over PAPO's autonomy hindered
implementation at central level, it was not a serious problem at aimag level and below\.
* Although PAPO's autonomy may have reduced its leverage over line ministry policy and
expenditure allocation at central level, because of its bottom-up approach, the project's influence
over Government procedures and expenditure allocation at local level was greater than it might
have been if project funding had been channelled through the line ministries\.
* Since poverty reduction is an issue that transcends sectoral boundaries, the proper location for a
poverty programme PMU is either under the Prime Minister or in a cross-sectoral ministry such
as Finance, Planning or Local Government\. A social sector ministry was a poor initial choice\. If
a sectoral ministry is given responsibility for a pilot programme, it is likely to resist efforts to
shift the programme elsewhere for the investment phase\.
The creation or rehabilitation of local infrastructure can have a quick and direct impact on income
earning opportunities and standards of living\. However, the temporary employment created by
public works programmes is too short to have significant impact on livelihoods of the poor\.
Nonetheless, labour intensive public works can be an effective way of reaching the extreme poor who are
unable to benefit from income-generating credit\.
Sustainable access to credit for the poor requires the creation of a rural finance system\. Local
government bodies can help channel funds to the target group but constitute an inappropriate
institutional base for micro-banking\.
* Credit and micro-finance interventions require professional design\. When an operational bank
with a branch structure, or a specialist micro-finance company, is not available (as in Mongolia
in 1995), and another institution has to be developed to implement credit (such as local
government in the case of PAVGP), specialist design assistance is even more essential\.
* Although sums and khoroos have shown a keen interest in management of the revolving funds
created from credit reflows, there is no prospect of these arrangements making more than a
temporary and minor contribution to the overall demand from the poor for credit\. There are no
known international examples of sustainable credit activities implemented through local
government\.
A diversified menu of activities is needed for reaching different socio-economic categories among the
poor: micro-credit is appropriate for the bankable poor in the urban slums and peri-urban centres,
restocking for bankable herder households, labour-intensive public works for the able-bodied unemployed
poor, rehabilitation and vocational training for the disabled, and targeted social assistance for the aged and
mentally unfirm\.
-18-
9\. Partner Comments
(a) Borrower/implementing agency:
Prior to the mission's arrival, the implementing agency completed its own ICR (see supporting list of
documentation), which was an extremely valuable input to the mission's work\. There is substantial
consensus between the present ICR report and the PAPO ICR\. All data presented in the ICR have been
thoroughly discussed and agreed with PAPO\. The team's conclusions were presented and lessons learnt
discussed at three interlocking national stakeholder workshops, one with Core Learning Team members,
another with key informants that played important roles in NPAP implementation, and finally at an NPAC
meeting chaired by the Prime Minister (see Annex 9)\. The draft ICR was sent to the borrower for comment
on 8 May and the comments received on 11 May are fully reflected in the present text\.
(b) Cofinanciers:
In the absence of cofinanciers, UNDP's opinion was sought because of its lead role in NPAP formulation
and because it provided parallel financing for capacity building in support of PAVGP\.
(c) Other partners (NGOs/private sector):
NGOs were consulted on all levels through interlocking stakeholder workshops at sum/khoroo,
aimag/duureg and national level\. The private sector was represented at the national stakeholder workshops\.
10\. Additional Information
Tables summarizing project achievements from the PAPO MIS database are attached - see Annex 11\.
- 19-
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome I Impact Indicators:
Indicator/Matrix Projcted in last PER Actual/Latest Ratimate
Income per job; maternal mortality, and Output indicators were broadly defined but
school enrolment\. not quantified
- Income Generation
- Income per job Not quantified 10,000-15,000 Tg/person/month
Job created 0\.7 million person-months 15,000 long-term jobs and 39,000 short-term
jobs
- Basic Education
- School Enrolment From 70% to 85% Increased to 93\.8% from 77\.5%
Rural Health
- Maternal Mortality Rate Reduce MMR from 24 to 12 per 1000 births MMR reduced to 15\.7 per 1000 births
Support for the Disabled
- No\. of disabled trained 600 directly benefited 698 persons received vocational training, 758
benefited from physical rehabilitation\.
Income of disabled trained Not qualified N\.A\.
Output Indicators:
Indicator/Matrix Projected In last PSR ActuallLatest Estimate
Income Generation
Public works
Road repairs 91
Bridge repairs 61
Construction renovation/dam cleaning 46
Renovation of buildings 92
Drinking water system 85
Public heating system repairs 25
Public shower and bath 62
Environmental sanitation and forestry 52
Fuel collection 25
Garbage collection 59
Ground preparation 20
Exploration natural resources 3
Others 13
Micro-credit 2783
No\. of loans Not quantified
Job created Not quantified 15,000 long-term jobs and 39,000 short-term
jobs
No\. of VGOs established Not quantified
Basic Education
Heating system/renovation 257
Strengthening sum school subsidiaries 13
Open Bag school 5
Sum school/dorm\. Electricity supply 17
Dormitory renovation/heating 120
Rural Health
Hospital transport (No\. of ambulances) 219
No\. of Feldshers 43
Heating system/renovation 183
Maternity Homes 187
Support for the Disables
Training equipment 4 institutions to benefit 19 institutions received special training
equipment
Training 698 persons received vocational training\.
758 benefited from physical rehabilitation\.
End of project
- 20 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal ActuallLatest Percentage of
Estimate Estimate Appraisal
Project Cost By Component USS million US$ million
Income Generation 5\.94 5\.22 88
Education 2\.00 1\.56 78
Health 2\.00 1\.92 96
Support for Disabled 0\.20 0\.18 90
Insitutional Support 0\.39 0\.44 113
Total Baseline Cost 10\.53 9\.32
Total Project Costs 10\.53 9\.32
Total Financing Required 10\.53 9\.32
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
1 Procurement Method
Expenditure Category ICB cB thd N\.B\.F\. Total Cost
I NCB Other
1\. Works 0\.00 0\.00 9\.34 0\.00 9\.34
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 0\.00 0\.00 0\.80 0\.00 0\.80
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
3\. Services 0\.00 0\.00 0\.10 0\.00 0\.10
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. Operating Costs 0\.00 0\.00 0\.29 0\.00 0\.29
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00)\. (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.00 0\.00 10\.53 0\.00 10\.53
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
- 21 -
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
Procurement Method
Expenditure Category IC th 2 N\.B\.F\. Total Cost
NCB Other
1\. Works 0\.00 0\.00 8\.18 0\.00 8\.18
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 0\.00 0\.00 0\.70 0\.00 0\.70
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
3\. Services 0\.00 0\.00 0\.10 0\.00 0\.10
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. Operating Costs 0\.00 0\.00 0\.34 0\.00 0\.34
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00
Total 0\.00 0\.00 9\.32 0\.00 9\.32
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
21 Includes civil works and goods to be procured through national and international shopping, consulting services,
services of contracted staff of the project management office, training, technical assistance services, and incremental
operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
fPercentage of Appraisal
Component Appraisal Estimate ActualfLatest Estimate PercentAge of Appraisal
Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\.
Income Generation 5\.70 0\.24 5\.09 0\.13 89\.3 54\.2
Education 2\.00 1\.56 78\.0
Health 2\.00 1\.92 96\.0
Support for Disabled 0\.20 0\.18 90\.0
Institutional Support 0\.10 0\.29 0\.10 0\.34 100\.0 117\.2
- 22 -
Annex 3: Economic Costs and Benefits
Not Applicable
- 23 -
Annex 4\. Bank Inputs
(a) Missions: Performance_Rating
Stage of Project Cycle No\. of Persons and Specialty Performan a
(e g 2 Econonists\. I FINIS\. etc Implementation De%elopment
MonihYear Count SpecialrN Progress I Objectile
Identification/Preparation
5/94 4 E, Ed, B, M
Appraisal/Negotiation
10/94 1 Ed
11/94 6 B, C, E, 21, M
Supervision
5/96 3 2E, K S S
12/96 1 E U S
09/97 2 A, E S S
03/98 1 E S S
6/98 2 E, D S S
1/99 3 E, G, N S S
9/99 3 H, N/F, E S S
12/99 2 E, N/F S S
4/00 4 H, I, K, N/F S S
8/00 2 G, N/F S S
ICR
3/01 4 A, 2E, N/F S S
A - Anthropologist
B - Operations Analyst
C - Engineer
D - MIS Specialist
E - Economist
Ed - Education Specialist
F - Social Scientist
G - Livestock Specialist
H - Rural Poverty Specialist
I - Financial Management Specialist
K - Project Management Specialist
L - Lawyer
M - Health Specialist
N - Natural Resource Management Specialist
- 24 -
(b) Staff
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 124 212
Appraisal/Negotiation 56 85
Supervision 139 330
ICR 19 81
Total 338 708
- 25 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
0 Macro policies OH OSUOMON * NA
0 Sector Policies OH OSUOM ON * NA
E Physical OH OSUOM ON ONA
O Financial OH OSU M ON CNA
E Institutional Development O H 0 SU 0 M 0 N S NA
0 Environmental OH OSUOM ON * NA
Social
Ll Poverty Reduction OH * SU M ON ONA
D Gender OH OSUOM ON ONA
0 Other (Please speci) OH OSUOM ON ONA
l Private sector development 0 H SU OM 0 N 0 NA
0 Public sector management 0 H O SUOM 0 N 0 NA
D Other (Please specify) 0 H 0SU M 0 N 0 NA
- 26 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
l Lending OHSOS OU OHU
l Supervision OHS OS OU OHU
O Overall OHS IS OU OHU
6\.2 Borrower performance Rating
O Preparation OHS OS OU 0HU
L Government implementation performance O HS OS 0 U 0 HU
O Implementation agency performance O HS OS 0 U 0 HU
L Overall OHS OS 0U OHU
- 27 -
Annex 7\. List of Supporting Documents
Borrower Implementation Completion Report - Poverty Alleviation for Vulnerable Groups Project - IDA
Credit No\. 2760-MOG\. 13 April 2001\.
Independent Evaluation of NPAP and Options Post-2000\. UNDP/World Bank, Oct\. 1999\.
National Poverty Alleviation Programme - Evaluation Mission Team Report\. UNDP/OPS, December
1996\.
Survey on the Vulnerable Groups Income Generation Project, by Women's Information and Research
Centre, 1998\.
Report on the Survey and Evaluation of Newly Created Jobs within NPAP Income Generating Projects, by
Centre for Social Development Consulting Unit, by Institute of Philosophy, Sociology and Rights of
Mongolia, 1998\.
Primary Education in Rural Areas (Research Report), by the Institute of Philosophy, Sociology and Rights
of Mongolia, 1998\.
Assessment Research on Activities under PAP for Improving Rural Health Services in Mongolia, by
National University of Mongolia, Population Teaching and Research Centre, 1999\.
National Poverty Alleviation Programme - Mid-term Report: Oct 1997-June 1998, NPAP/PAPO\.
National Poverty Alleviation Programme - Annual report 1998, NPAP/PAPO (Dec\. 1998)\.
National Poverty Alleviation Programme - Annual report 1999, NPAP/PAPO (Dec\. 1999)\.
NSO (1999)\. National Living Standards Measurement Survey (LSMS) 1998\.
NSO/World Bank, Participatory Living Standards Assessment - [Draft] Sept\. 2000\.
Hunt, Simon - Mongolia: Participatory Living Standards Assessment - Complementary Analysis of the
Living Standards Measurement Surveys, March 2000\.
World Bank, Mongolia - Sustainable Livelihoods Project, PID, No\. PID9725, 11/28/00
World Bank, Mongolia - Sustainable Livelihoods Project, PCD\.
World Bank, Mongolia - Mongolia: Country Assistance Evaluation - Informal Discussion Draft, OED,
March 5th, 2001\.
World Bank (1996)\. Poverty Assessment in a Transition Economy\. June 1996\.
World Bank, Mongolia - Poverty Alleviation for Vulnerable Groups Project - FY99 Rapid Supervision
Assessment\. World Bank Quality Assurance Group, July 8, 1999\.
- 28 -
Annex 8\. Beneficiary Survey Results
1\. In preparation for the original project closing date in mid-1999, four beneficiary surveys (on
income generating credit, job creation, basic education and rural health were undertaken by local institutes
under contract from PAPO with funding from other NPAP donors, as an input for the Independent
Evaluation of the NPAP umbrella programme'\. Given that four beneficiary surveys had already been done
on the main project components, the FAO/CP ILI team leader decided not to commission yet another
questionnaire survey, but, in lieu of a survey, to organise a participatory evaluation of PAVGP through a
stakeholder workshop-based approach (see Annex 10 for methodology and process)\.
2\. In preparation for the ICR mission, a comprehensive series of stakeholder workshops,
commissioned by FAO/CP through PAPO, were carried out by local PACs in 17 provinces (aimags), 9
urban districts (duuregs), 51 rural districts (sums) and 20 urban sub-districts (khoroos) with a total of
2,340 participants\. The workshops used participatory techniques to assess the perceived impact of PAVGP
on the livelihoods of beneficiaries and to identify strengths and weaknesses of each project component\.
3\. The stakeholder workshops were preceded by training of APAC secretaries in participatory
evaluation methods\. The training was organised and carried out by B\. Enkhbat, Director, Consulting Unit,
and R\. Gantumur, Director, Centre for Social Development and took place in Ulaanbaatar\. Most APAC
secretaries had already been trained in PRA and participatory M&E, but their initial levels of competence
varied\. At the end of the training, the APAC secretaries returned to the aimags, where they trained the
SPAC secretaries to carry out PRAs and participatory evaluation\.
4\. Each stakeholder workshop lasted for one full day\. The participants in the sum-level stakeholder
workshops included representatives of direct beneficiaries (>50%), SPAC members and local authorities
representing a wide range of rural bags\. Half of workshop participants were women\. Women beneficiaries,
men beneficiaries and officials worked in separate groups and their replies were disaggregated throughout
the exercise\.
5\. The key questions addressed at sum-level stakeholder workshops are listed below\. SWOT analysis
was done separately for each component, culminating in a sum-level synthesis across components (for
details see Annex 10)\.
* Positive impacts on beneficiaries (household level, local government level);
* Negative impacts (household or community level, local government level);
* Unexpected impacts (if any - environmental, social, economic, institutional);
* Strengths (of PAVGP);
* Weaknesses (of PAVGP);
* Opportunities (for future poverty alleviation efforts);
* Threats (which could undermine impact or sustainability of benefits);
* Lessons leart\.
6\. The sum-level stakeholder workshops fed into aimag-level stakeholder workshops, attended by
representatives of direct beneficiaries, sum officials, aimag-level officials, the aimag-level PAPO officer,
the national UNV and any participating NGOs\. The questions discussed were the same as for the sum but
with a strong emphasis on building consensus among different sums in order to have a common point of
view for the aimag as a whole\.
- 29 -
7\. Findings from the 17 aimags and 9 urban districts were analysed jointly by PAPO staff,
Consulting Unit and Centre for Social Development in a two-day participatory analysis session, with
participation of the ICR mission\. The section on "findings" below and the SWOT analysis table below
draws on a synthesis of key findings - in English - prepared by B\. Enkhbat, Consulting Unit and R\.
Gantumur, Centre for Social Development\.
Findings
Positive impacts of PAVGP
Local government level (as reported by officials):
* Improvement of districts
* Impact on holding unemployment
* Officials learnt to make priority setting in terms of projects selection and implementation
* Improvement of infrastructure and water supply
* Decreased maternal and infant mortality, decrease in school drop out
Community level (as reported by beneficiaries):
* borrowers learned basic business skills
* skills on project design and implementation
* new sources of income developed
* working capital
* some households got indebted and cannot repay
Negative impacts of PAVGP
Local government level:
* low loan repayment due to poor design of the VGO scheme
* some got indebted
Unexpected outcomes
* cost escalation eroded the size of sub-projects more than local government expected
* natural disasters ( dzud) have been a setback (not only did herders lose most of their
animals but the overall decrease in purchasing power of the poor is affecting the viability of
many small non-farm enterprises)
* the dzud accelerated migration from the countryside to urban outskirts, leading to increased
poverty in slums
Perceived Impact at Beneficiary Level
8\. Impact on Income\. According to beneficiaries, income increased between the without and with
project situation, and a significant part of the increase was attributable to income-generating activities
launched by PAVGP\. Women beneficiaries reported that they learned to adjust to the market economy; the
project increased financial resources at their disposal and that they got valuable training in micro-credit and
basic business management skills\. The latter was financed by other donors (SIDA, UNDP) but was
perceived as being connected with PAVGP\. Male beneficiaries reported that provision of small credits
increased income\. Officials reported that the project contributed to poverty reduction\.
9\. Income Stability\. Income stability also increased as a result of the project\. Women beneficiaries
- 30 -
report that their income is more stable than before, because they learned how to earn an income of their
own, and they learned how to budget their expenditure and to live within their economic means\. According
to male beneficiaries, the project contributed to income stability by helping dzud-affected herders to restock
and by providing credit that allowed them to widen the range of economic activities and income sources\.
They also learned, partly through the project, to mobilise their own resources\. The officials noted that
PAVGP helped to increase trading, which can provide a regular income\.
10\. Household Food Security\. According to male beneficiaries, PAVGP contributed to household
food security by increasing small-scale vegetable production and food processing activities, whereas women
beneficiaries reported that food security increased because women had more money to buy food\. Officials
said that the project contributed to increased food production through the MoFA-sponsored "green" and"
white" revolution (home gardening, irrigation); it contributed to better diet through social development
training (financed by other donors); and it contributed indirectly to food security by increasing the
purchasing power of the poor\.
11\. Ownership of Assets\. Although much of the IGF lending has been for working capital, there is
consensus that the project's credit schemes significantly contributed to increased ownership of assets such
as bakery, carpentry, boot making, sewing and beverage bottling equipment among the poor\. Men
emphasised that careful use of credit had increased ownership of productive assets, whereas women
emphasised how increased incomes had enabled them to purchase important consumer assets\. Officials
noted that PAVGP had an even greater impact on community-owned social and economic assets such as
schools, hospitals, ambulances and roads\.
12\. Livestock Ownership\. Everywhere, livestock ownership was reported to have increased as a result
of higher income\. Men reported that earnings from small enterprises were invested in animals\. Restocking
after the dzud made a major contribution to livestock ownership of poor households\. Officials stated that
livestock numbers increased both as a source of income and as a means of accumulating wealth\.
13\. School Enrolment\. Girls' school enrolment is increasing steadily and PAVGP contributed directly
by rehabilitating schools, refurbishing and heating school dormitories, by increasing poor parents' ability to
pay for their children's schooling (including school supplies, clothing and board for herder children staying
at the dormitories)\. The overall trend of boys' school enrolment, on the other hand, was declining in the
absence of the project, especially in remote areas because parents need their sons' labour for herding\. It was
acknowledged that school and dormitory renovation and heating under PAVGP did a lot to arrest the decline
in boys' school enrolment\. There was much more interest from rural areas in improved boarding facilities
for herder children at sum schools having grades 1-8 than in ger schools offering only grades 1-3\.
14\. Health\. PAVGP is acknowledged to have increased access of poor households in remote areas to
health care, especially by repairing hospitals and providing ambulances and re-equipping and re-opening the
rest homes for mothers about to give birth\. Men emphasised improved health facilities and services as well
as maternal rest homes\. Women greatly appreciated the supply of ambulances\. Officials felt that PAVGP's
training of (volunteer) community health workers was especially beneficial to health\.
15\. Problem-solving Ability\. There was consensus that the capacity of the poor to solve their own
problems has increased and that PAVGP contributed\. Men feel better able to solve problems because they
now have more money, whereas women feel better-able to solve their problems because of newly acquired
livelihood skills, increased access to information and access to micro-credit\. Officials felt that
project-related training increased their ability to solve problems of their constituencies\.
- 31 -
Without and With Project Wealth Ranking
16\. This exercise built on wealth-ranking skills acquired by Mongolians during the fieldwork for the
Bank-supported Participatory Living Standards Assessment (PLSA)\.
Wealth Without With Reason for changes as perceived by Did PAVGP
category project Project Officials Male beneficiaries Female beneficiaries cause the
change?
Very 17% 20% Feed me mentality Learning life Yes
poor Credit available skills (according to
Increased jobs Accumulation officials and
Restocking Equipment men but not
Working capital women)
Poor 20% 18% Projects implemented New income Learning livelihood yes
sources skills
HHs with 53% 44% no
means
Wealthy 10% 18% Increased living Unfair Wealth gets more no
standards privatisation wealth
Got wealth
17\. Very poor\. Consensus from the 117 stakeholder workshops was that the proportion of very poor
in the total population has increased due to factors unrelated to the project (such as loss of employment,
loss of livestock in the dzud, poor money management, absence of self-employment skills, and a sense of
helplessness and passivity)\. The perception of some officials is that that this category - the poorest - have
not been able to benefit much from PAVGP\. Others say that although some very poor households did
benefit from restocking, employment and credit, PAVGP coverage was not wide enough to reverse the
increase in numbers of very poor\. Initially, under the VGO-credit scheme, some very poor households were
given credit but most of them spent the money on family consumption and now are unable to repay\. Since
then, the poorest households have mainly benefited from temporary employment in public works\. The
perception of male beneficiaries, on the other hand, is that some very poor households did benefit from
loans for equipment and livelihood skills, and that numbers of very poor would have been greater without
the project\. Women agree that the share of very poor has increased but do not attribute it to the project\.
18\. Poor\. Findings from the 117 stakeholder workshops suggest that the share of the poor is perceived
to have slightly reduced and that PAVGP contributed to the reduction\. This was the category of poor most
able to make wise use of income-generating credit\. Officials attributed the reduction in share of poor to
successful projects implemented, male beneficiaries to new income sources such as trading and women
beneficiaries to learning new livelihood skills\.
19\. Households with Means\. The comparison of before/after wealth rankings suggest that the share of
households with means has declined as many of them joined the ranks of the wealthy\. This happened as a
result of their own efforts and asset accumulation, independently of PAVGP\. The overall perception is that
PAVGP was well-targeted in that it benefited the poor - not those with means\. However, some households
with means were impoverished (for instance as a result of the dzud) and went to join the ranks of the poor
and very poor\. A substantial number of poor households that lifted themselves out of poverty joined the
ranks of the households with means\.
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20\. Wealthy\. The perception of beneficiaries and officials is that there was a substantial increase in
the proportion of wealthy households between 1994 and 2000, due to factors unrelated to the project\. The
perception of officials was that these households were better-able than others to take advantage of economic
growth, whereas the perception of women is that people who are already wealthy find it easier to
accumulate additional wealth\. Male beneficiaries identify today's wealthy as those people who - through
unfair use of their wealth or influence - were able to gain control of important income-earning assets when
collective goods were privatised\.
SWOT Analysis by Project Component
21\. A summary of findings from SWOT analysis of project components is given below\. The most
interesting information regards perceived weaknesses and threats\. The term "opportunities" seems to have
been misunderstood (most points listed are "outcomes" - not future opportunities)\.
22\. Income-generating Credit\. The main strengths of the component as identified by beneficiaries
were: higher income, expansion of productive activities and development of new enterprises; obtained some
assets in the form of equipment and working capital; favourable lending terms (low interest rate, no
collateral requirement; and acceptable repayment terms\. NPAP (under the SIDA component) also helped
borrowers to learn new business skills\. From officials' point of view, the main strength was the creation of
a rural credit structure\. The main weaknesses according to beneficiaries were: small size of loan, low
coverage (not all households who wanted credit could get access); late fund transfer and that restocking was
not eligible for credit under VGO and IGF\. According to officials, eligibility criteria were inadequate; lack
of collateral negatively affected repayment, lending to very poor households created a high risk for
repayment; and poor economic conditions affected loan repayment\. They also complained about lack of
provision for loan administration costs and lack of a full-time loan officer\. The main "opportunities" were
seen to be: permanent self employment; working capital accumulation; understanding of market principles;
and possibility to work hard\. Threats included: low profitability due to cost escalation (imported raw
materials) and high transportation costs (especially trips to urban areas for purchase of raw materials and
marketing of products), weak financial skills and legal knowledge of borrowers; and slow turnover of goods
and cash, due to low purchasing power of the poor and acute cash shortage due to barter trading in rural
markets (services are usually paid in kind, not cash)\.
23\. Public Works\. The main strengths identified by beneficiaries are: improved local infrastructure;
temporary jobs created for ultra poor and poor; increased public services like water supply; garbage
collection increased land available for housing; many people covered; some permanent jobs created to
collect user fees\. The main weaknesses identified by beneficiaries were "very low" wages and too short
term of employment (not permanent jobs)\. For local officials, the main weaknesses were lack of
professional involvement in scheme design and construction; low budget and low quality works; lack of
budget for maintenance; lack of attention to labour safety and social insurance\. Positive outcomes listed
were: cleaner environment; reduced flood damage; increased drinking water supply and people motivated\.
Threats identified by local officials included erosion of funds due to price escalation and lack of cost
contingency planning; weak control over implementation; poor working conditions for employees on public
works; late fund transfer; and insufficient funds to finish the entire scheme\.
24\. Basic Education\. The main strengths of the PAVGP basic education component were that it
concentrated benefits on remote sums; renovation of remote schools and dormitories was good for herders'
children; it reduced school drop-outs and increased the community interest to send their children to school\.
- 33 -
It also created temporary jobs for poor people and improved the work environment for teachers\. It also
relieved local budgets to an extent, because renovation and insulation of school heating systems cut running
costs for heating by about one third\. Weaknesses cited by officials included poor quality of renovation
works because very poor were engaged as construction workers; weak control during implementation;
insufficient budget to complete entire job; and shortage of materials (which had to be bought in
Ulaanbaatar)\. Positive outcomes included: reduction of school dropouts; increased enrolment; increase
number of students boarding at dormitories and improvement of local education infrastructure\. Threats
included prices and cost escalation; limited budget; lack of professional body to advise on standards; and
equipment purchased was low quality (due to limited budget)\.
25\. Rural Health\. The main strengths of the component were: health care facilities improved,
ambulances supplied, decrease in maternal and infant mortality and increased ability of the bag doctors to
visit patients in remote areas\. Weaknesses identified include: lack of "incentives" for project-trained
community health volunteers; failure to consider contingency costs in design and some quality issues for
renovation projects\. Positive outcomes include increased access to services; better emergency services;
trained community health volunteers; renovated maternal houses used by women about to give birth;
officials and community leaders acquired new skills for project planning, implementation and monitoring\.
Threats included: poor quality of works due to lack of professional advice and skilled labour for repair
jobs; price escalation for construction materials; impossibility to cover some remote areas that should have
been covered and shortage of budget for recurrent costs\.
26\. Restocking\. The main strengths were that the component is one of the few activities that
increased living standards of herders by assisting poor herders - especially younger ones - to overcome the
negative impact of dzud\. It also contributes to employment generation\. According to beneficiaries, lending
conditions were favourable because the loan repayment term is long with staggered repayment; restocked
animals are insured; quality animals were delivered\. Weaknesses identified by beneficiaries were that not
all sums affected by dzud could be covered and eligibility criteria were [too] strict\. According to some local
leaders, by targeting poor households who lost their animals, the component encouraged dependency on
government ("feed me" mentality) rather than discouraging it\. Other weaknesses mentioned by officials
included insufficient budget for administrative costs; shortage of veterinary services and that prices paid by
the project for procured animals were higher than necessary because sellers were not paid in cash on point
of sale (payments to sellers were deferred to permit the recipients to verify the condition of the procured
animals)\.
(a) Survey on the Vulnerable Groups Income Generation Project, by Women's Information and Research Centre,
1998; (b) Report on the Survey and Evaluation of Newly Created Jobs within NPAP Income Generating Projects,
by Centre for Social Development Consulting Unit, 1999; (c) Primary Education in Rural Areas (Research
Report), by the Institute of Philosophy, Sociology and Rights of Mongolia, 1998; (d) Assessment Research on
Activities under PAP for Improving Rural Health Services in Mongolia, by National University of Mongolia,
Population Teaching and Research Centre, 1999\.
Three of the country's 21 rural provinces had to be omitted from the survey due to the foot and mouth disease
epidemic\. In each aimag, stakeholder workshops were carried out in the aimag center sum plus two rural sums;
in each UB district, stakeholder workshops were held in 30% of khoroos\.
Sample size is comparable with that of the World Bank-supported Participatory Living Standards Assessment
(PLSA) and of the two LSMS surveys\.
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SWOT Analysis - Summary Table
(Synthesis of 117 Stakeholder Workshops)
Prepared by B\. Enkhbat, Director - Consulting Unit, and R\. Gantumur, Director - Centre for Social Development
Credit for Inome Generation
Strengths: Weaknesses:
* Increased income of borrowers * small amount of loan
* Productive activities expand * low coverage
* Obtained some assets in the form of equipment * fund transfer is late
and working capital * restocking is not eligible for credit
* Low interest rate * no collateral affected repayment
* No collateral is good for poor * very poor created risk for repayment
* Repayment terms are acceptable * no provision for loan administration costs
r Learned business skills i no loan officer
* Creation of rural credit structure * economic conditions affected loans
* criteria were inadequate
"Opportunities"/outcomes': Threats:
* Permanent self-employment * Transportation costs high
* Working capital accumulation * Costs increased
* Understanding of market principles * Lack of financial skills
* Possibility to work hard * Barter trading (services paid in kind, not cash)
* Low purchasing power at local market
* Lack of legal knowledge
* Slow turnover of goods and cash
Public Works Component
Strengths: Weaknesses:
* Improved local infrastructure * Need for professionals [design, construction)
* Temporary jobs created for ultra poor and poor * No labour safety or social insurance
* Increased public services like water supply, * Very low wage
increased land available for housing * Term of employment is short
* Many people covered * Not permanent jobs
* Some permanent jobs created on fee charges * Low budget leads to low quality works
* Lack of budget for maintenance
"Opportunities"/outputs/outcomes: Threats:
* Clean environment * Price increase
* Flood prevention * No cost contingency planning
* Increased water supply * Weak control over implementation
* People motivated * Labour conditions bad
* Fund transfer is always late
* Insufficient funds to finish work
Rural ealth Component
Strengths: Weaknesses:
* Health care facilities improved * Community health volunteers have no incentives
* Ambulances supplied * Contingency costs were not considered in design
* Decrease in maternal and infant mortality * Some quality issues for renovation projects
* Transportation for bag doctor
Opportunities (outputs/outcomes): Threats:
* Increased access to services * Lack of professional advice & skilled labour for
* Trained community health volunteers repair jobs
* Maternal houses * Price increase
The term "opportunity" appears to have been misunderstood in the Mongolian translation: Responses
refer to perceived project "outcomes" as opposed to future opportunities\.
- 35 -
SWOT Analysis (continued) - Synthesis of 117 Stakeholder Workshops
Basic Education component
Strengths: Weaknesses:
* Good for herders' children * Quality of renovation was low because very
* Temporary jobs for poor people poor were engaged as construction workers
* Improved work environment for teachers * Weak control during implementation
* Reduced drop-outs * Insufficient budget to complete entire job
* Budget relief * Shortage of materials (bought in UB)
* Increased interest of community to send their
children to school
* Remote sums were mostly benefited
"Opportunities" (impact): Threats:
* Drop out stopped 0 Prices and costs increased
* Increased of students' number in dormitories 0 Limited budget
* Tendency in increase of enrolment a No professional body
* Improvement of local infrastructure * Equipment purchased was low quality (due to
I limited budget)
Restocking component
Strengths: Weaknesses:
* good financial source * Not all sums affected by dzud covered
* helps overcome negative impact of dzud * encourages "feed me" mentality
* loan repayment term is long * criteria are [too] strict
* staggered repayment schedule is good * insufficient budget for administration costs
* good for young herders * shortage of veterinary services
* restocked animals insured * no spot prices for animals were used
* quality animals delivered
* employment generation
* increased living standards of herders
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Annex 9\. Stakeholder Workshop Results
1\. Due to unusually high turnover of project stakeholders at national level, three national stakeholder
workshops were held: (a) the first with members of an 18 person Core Learning Team comprising mission
members and representatives of the Borrower (MoFE), implementing agencies (PAPO, Consulting Unit and
relevant sectoral ministries); (b) the second with key informants who played important roles in NPAP
design and implementation between 1995 and 2000 (most of whom left their former government positions
after last year's elections); and (c) a third with members of the National Poverty Alleviation Committee
(most of whom were newly-appointed after the elections and have only limited familiarity with PAVGP)\.
National Stakeholder Workshop #1 - Core Learning Team
2\. The first national stakeholder workshop was an all-day (10-hour) brainstorming session upon the
return of the Core Learning Team from field visits in 3 aimags\. Its purpose was to analyse findings from
the 3 aimags and to build consensus on ICR conclusions and lessons learnt\. It was attended by 25 people
including ICR mission members, Bank staff (TTL and a team member), PAPO staff, Consulting Unit
facilitators and senior staff of the Ministry of Finance and Economy; Ministry of Social Welfare and
Labour, Ministry of Health; Ministry of Education, Culture and Science; Ministry of Food and
Agriculture; and the Ministry of Infrastructure (see attached participant list)\.
3\. Background\. Before going to the field, Core Learning Team members agreed on a set of key issues
to clarify\. These were entered into a checklist (reproduced in Annex 10: Process Documentation - Questions
by Component)\. Then three multi-sectoral sub-teams were formed (5-7 members each) - each of which
visited and reported on a different aimag\. Issues were clarified through PAC meetings, site visits, key
informant interviews and focus group meetings with beneficiaries plus some individual interviews with poor
households unable to benefit\.
4\. Workshop Procedure\. Team presentations were organised by component First Orkhon would
present its findings (10 minutes - entered on a flip chart); then Domogobi; then Ovorkhangai\. Then the
group would try to reach consensus on the main findings and lessons learnt\. After completing all the
components, the debate centred on the project's institutional development impact and on overall lessons
learnt\.
Basic Education
5\. After comparing findings from the three aimags, the component was judged to be satisfactory\.
Sustainability is likely because running costs of schools and dormitories are covered by local government\.
The positive impact of the project on primary school enrolment is confirmed, dropout rates have been
reduced and school dormitory utilisation has greatly increased\. Renovation and insulation of school and
dormitory heating systems has reduced fuel costs\. There is evidence that herding families prefer to send
their children to boarding school in the sum centre rather than setting up mobile ger schools\.
Rural Health
6\. The component was unanimously judged as satisfactory\. Works are of good quality and very much
appreciated by the local population; ambulances are well maintained and are used for health-related
purposes\. Sustainability is likely as local government is covering operation and maintenance costs\.
Maternal deaths have decreased\. The decrease is attributed to reduction in % of home births and to use of
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maternal rest homes for two weeks prior to childbirth\. Infant mortality has decreased except in Orkhon and
the decrease is attributed to the project\. Although provision of horses for bag doctors helped them to
provide primary medical care to herders in remote areas, sustainability is doubtful, since in Ovorkhangai -
where this year's dzud was not severe - half of the bag doctors' horses still died in the dzud\.
Public Works
7\. The implementation of this sub-component was rated satisfactory although there is room for
improvement\. Sustainability is an issue because local government can only afford to pay for routine
operation and maintenance - not substantial repairs\. Although in Ovorkhangai local communities
demonstrated their willingness to provide unpaid self-help labour for road repairs, reports from Orkhon are
less encouraging\. Targeting was done administratively - from lists of registered unemployed people - but
on the whole was satisfactory\. None of the wages were paid at below the market wage - as specified in the
SAR - so an opportunity was missed to experiment with self-targeting\. Remuneration of workers was
usually based on piece rates and was well above the market wage\. The benefit to the community from the
infrastructure rehabilitated was greater than the benefit from temporary employment\. Procedures under
PAVGP were rated as "better" than normal government procedures because: (a) project selection was more
bottom-up; (b) availability of funds for O&M was a prerequisite and (c) works were cheaper than
comparable government schemes\. But the selection of works needs improvement and the quality of works
tends to be less good than those of Government schemes due to heavy reliance on unskilled labour; high
labour content/insufficient provision for use of machinery; and insufficient use of professionals for design
and supervision\.
Income-generating Credit
8\. This sub-component was rated unsatisfactory in spite of improvements\. The VGO loan scheme
was (almost) unanimously recognised to be flawed and it has saddled local government with a burden of
bad loans\. Although the IGF credit scheme is an improvement, repayment rates are still quite low, although
highly variable between Domogobi (the best), Ovorkhangai (among the top 5 aimags) and Orkhon (not the
worst - but about average for the programme as a whole)\. Whereas interest for VGO and IGF credit waned
at project closing, local governments showed a keen interest in managing the RLFs created from credit
reflows\. There was unanimous recognition that credit should be handled by a full-time loan officer, suitably
trained, and that interest rates should be raised to allow for incentive payments to reward loan officers for
good loan recovery\. Targeting was adequate\. Emphasis rightly shifted from lending to the poorest to lending
to persons perceived as bankable poor\. However, it is reported that some LGs show a preference for lending
RLF funds to the bankable non-poor\.
Restocking
9\. This sub-component could only be assessed in Ovorkhangai (not implemented in Orkhon or
Dornogobi)\. Its implementation has been satisfactory but as loan repayments only start in 2003, it is still
too soon to assess repayment rates, impact and sustainability\. Beneficiary selection was assessed to have
been fair; animals of good quality; veterinary follow-up has improved and this year's dzud has underlined
the importance of insuring the animals\. Animals losses to date in Ovorkhangai have been modest (3%) but
are reported to be much higher in Zavkhan aimag\.
Environmental Impact
10\. School and clinic heating renovation and insulation has reduced fuel requirements, thereby
- 38 -
indirectly reducing tree cutting and environmental pollution\. Public works such as garbage collection and
tree planting have been positive (although tree survival was low)\. Restocking seems to have been neutral
because the dzud-related animal deaths greatly reduced grazing pressure and the relatively small proportion
of households that could be restocked acquired animals that were locally procured, thereby redistributing
animals amoung households rather that adding to total numbers\.
Institutional Development Impact
11\. There was unanimous agreement that institutional development within PAPO, APACs and SPACs
was satisfactory, although SPACs require further strengthening\. There was also broad consensus that the
project had a positive impact on regular government planning, implementation and monitoring procedures,
especially at aimag level, and especially in Ovorkhangai and Dornogobi\. Aimag officials reported that the
project's bottom-up and demand-driven approach has influenced the local government planning process\.
They recognise the importance of involving the sums and bags in project identification and implementation\.
They learned from the project to make support for infrastructure conditional on availability of funds to
ensure proper operation and maintenance\. In Ovorkhangai, in particular, community ownership of
sub-projects and willingness to contribute to their maintenance has been built\. Institutional development in
the private sector was modest (although local government gained experience with using private contractors
for sub-project implementation)\. Although NGOs are involved in the APACs and SPACs, other civil society
institutional development has been limited\. In the future, grassroots institutional development - among
restocked herders, school PTAs, water source users and credit borrowers - should receive more attention\.
Core Learning Team - Cross-cutting Analysis of Findings from 3 Aimags
Component/issue Orkhon Dornogobi Ovorkhangai Group Consensus
Basic Education Good Good Good Good impact
Running cost LG pays LG pays LG pays sustainable
Primary school enrolment Increased 3% enrolment increase enrolment increased Enrolment increased due
decreased 3-2 shifts from 71% to 86\.2% to project
Primary school dropouts Decreased -17% dropouts decreased Dropouts decreased due
from 135 to 4 to project
School dormitory 190% increase in increased from 18 Large increase - benefits
boarders kids to 172 kids poor herders
Ger (mobile) schools Urban: no need Not needed Not needed Not a high priority
Rural Health Good Good Good Good
Maternal mortality Decreased: 2 to I/yr Decr\. 3-2 deaths Decr\. 7 to 4 deaths Decreased due to project
Infant mortality No change: 51/yr\. Decreased from 54 to Decreased from 43 to Decreased due to project
30 due to PAVGP 28\.6 due to proj\. (except Orkhon)
Ambulance - non-emergency use? No, but used for Used for vaccination in Used for preventive Only for health uses
Non-health use? vaccination campaign remote areas medical advice
Ambulance condition Good Good Good Good
% of births in hospital Increased Incr\. 95% to 98% Increased
Bagfeldsher transport (horses) 50% offeldsher Horses vulnerable to
horses died in dzud dzud
Sustainability Heating cost= LG pays running cost Sustainable
68% decrease
Public Works Satisfactory Satisfactory Satisfactory Satisfactory
Maintenance An issue due to LG OK but 1 case of Good: roads by LG + Sustainability = likely
budget shortage budget shortage self-help labour O&M budget needs attn\.
Impact on unemployment? Temporary Temporary Temporary Palliative only
Targeting Satisfactory Satisfactory Poor but not poorest Satisfactory
Wage Piece rate: above market Above market Above market No self-targeting wage
wage
Benefits The works themselves; Increased workers' Better infrastructure Main benefits are
incr, land for housing self-esteem infrastructure, not jobs
Procedures Unprofessional design Better than Govt's More participatory Room for improvement
-39 -
Income Generating Credit Unsatisfactory The best aimag Still unsatisfactory Improved but still
unsatisfactory
Repayment rate LDF acc\. to APAC 22% 95% 71% PAPO MIS = errors
Repayment rate IGF (APAC) 25% 95\.6% 64\.7%
Repayment rate RLF (APAC) "'7% "(understated) 94% 70% PAPO MIS= big errors
Future plans for RLF Keep revolving Keep revolving Keep revolving Capital is shrinking
Preferred credit scheme Sum level RLF schemes HH loans from RLF @ RLF scheme LGs prefers HH loans @
3a/mo interest 1-3%/month interest
Support for Disabled Satisfactory No component No component Satisfactory overall
Coverage of total disabled 11% of disabled pop\.
Beneficiary selection process Fair - doctors selected Good way to select
Reason for complaints Not all disabled were
able to benefit
Restocking None in Orkhon None in Dornogobi Good Good impression
Was beneficiary selection fair? Yes: fair, transparent Yes, fair
Veterinary follow-up Big improvement Project improved access
Next year's insurance of animals Ready to pay for it Monitor closely
Impact of 2001 dzud 3% of animals died Monitor closely
Environmental impact
School & clinic heating Fuel use decreased Fuel use decreased Fuel use decreased Positive impact
Garbage collection, tree planting Healthy environment Healthy environment Low tree survival Positive impact
Roads and bridges No adverse impact Neutral impact
Restocking (overgrazing) No adverse impact Only 4% of dead animals
replaced
Institutional development
Implementing agencies Satisfactory Highly satisfactory Highly satisfactory Satisfactory or better
Private sector Restricted impact Contractors Modest: Contractors Needs more attention
Civil society Negligible impact Modest Modest: NGOs Needs more attention
Government - national level Limited impact outside Poverty heads new Project supported Positive
PAPO government's agenda decentralisation
Government - aimag level Major individual skill Changed Govt's Bottom-up planning, Strongly positive
development method of planning O&M, monitoring
Government - sum level No hard evidence of Had useful impacts Major: Bottom-up Positive
Government_-_sum_level _ impact planning, self-help
-40 -
List of Participants - National Stakeholder Workshop #1 (Core Learning Team)
6 April, 2001 - Ministry ofSocial Welfare and Labour meeting room
Name of Participant Title
1\. D\. Tsedenbal Director, MoFE
2\. D\. Munkhor Senior Officer, MoECS
3\. Ts\. Chinbat Officer, MoSWL
4\. D\. Otgonbaatar Officer, MoH
5\. B\. Manduul Officer, Mol
6\. Enghtsogt Officer, MoECS
7\. Suvd Officer, MOFA
8\. B\. Dodi Senior Officer, Mol
9\. Unenbat Officer, MoFA
10\. Batbileg Officer, MoSWL
11\. B\. Enkhbat Executive Director, Consulting Unit
12\. R\. Gantumur Director, Centre for Social Development
13\. S\. Onon Director, PAPO
14\. G\. Pagma Senior Officer, PAPO
15\. P\. Byambadorj Officer, PAPO
16\. D\. Gobisairkhan Finance Officer, PAPO
17\. O\. Ariuntyia Officer, PAPO
18\. Ganbold Restocking Officer, PAPO
19\. A\. Carloni Sr\. Rural Sociologist, Team Leader, FAO/CP
20\. X\. Liu Economist, FAO/CP
21\. A\. Batkin Financial services specialist, FAO/CP consultant
22\. R\. Mearns Task Team Leader, World Bank
23\. M\. N\. Benali World Bank, Lead Agriculturist
National Stakeholder Workshop #2 - Key Informants
12\. The purpose of the second workshop was to discuss project achievements and to solicit the reaction
of participants to ICR mission findings and to refine conclusions prior to final debriefing with the National
Poverty Alleviation Committee\. The workshop was attended by persons selected because of their important
role in project implementation\. They included former ministers (now retired), Members of Parliament from
both sides (ruling party and opposition); representatives of NGOs and civil society organizations; private
sector and journalists\. The workshop was held at the Ulaanbaatar Hotel and lasted 1/2 day (4 hours)\. For
the list of participants see below\.
Workshop Agenda
9:00-9:10 Opening remarks
9:10-9:25 Briefing on PAVGP Ms\. S\. Onon, PAPO Director
9:25-9:45 Evaluation team introduction Ms\. A\. Carloni, FAO/CP
9:45-10:45 Discussion session Participants
* Achievement of project development objectives
* Role of WB and borrower in project design and
implementation
* Institutional development impact of PAVGP
10:45:11:00 Break
11:00-12:45 Discussion of lessons learnt Participants
12:45-13:00 Closing remarks
- 41 -
Stakeholder assessment of overall project performance and impact on poverty
1\. Although Government's target of reducing poverty to 10% by 2000 does not appear to have been
achieved, there was consensus between all participants (ruling party and opposition) that PAVGP's
performance was satisfactory and its contribution to poverty reduction has been significant\.
2\. The project reached all of Government's officially-designated vulnerable groups and was useful to
those who benefited\.
3\. The project's most important accomplishment is that it changed people's mentality and behaviour\.
People no longer have a "feed me" mentality or sit and wait for Government handouts\. They accept
that they need to work and to take initiative\. This was unanimously seen as a positive change\.
4\. The second most important achievement was the introduction of a bottom-up, decentralised
participatory project identification, implementation and monitoring process\.
5\. One of the key factors in success was the capacity and willingness of local government and PAPO to
learn from exprience and to solve problems together\. The project was an important learning
experience for all participants\.
6\. There was unanimous agreement that NPAP cannot solve the entire problem of poverty\.
- Poverty reduction is not just PAPO's work\. If poverty reduction projects are to be successful, they
need to be supported by an enabling policy environment\.
- The 4\.5% coverage of micro-credit implies that credit alone cannot get rid of poverty\. However,
the project helped to ensure that household living standards did not deteriorate\.
- In assessing coverage and impact one should bear in mind that the PAVGP was small in
comparison with total Government resources for social assistance\. Government spends US$10
million per year in social assistance\.
7\. More attention should be given to documenting and disseminating information about project
achievements\. Few of the current MPs have been exposed to NPAP\.
Lessons learnt - Institutional and management issues
1\. When NPAP was designed, poverty reduction was new to Mongolia, hence the creation of a specific
organizational structure to deal with poverty was justified\. Institutional capacity was built within
PAPO and at local PACs\. However, the structure of PACs is still fragile and it is critical to ensure
that this experience and knowledge is not lost\.
2\. The independent structure of NPAP (PAPO/PACs) helped to maintain continuity\. PAC secretaries
should not be changed every time there is an election\.
3\. UNDP's own analysis of world-wide experience with poverty alleviation programmes is that because
poverty is a cross-sectoral issue, poverty reduction should not be the responsibility of a single
ministry\.
4\. Future poverty reduction programmes should be even more decentralised with fewer layers of decision
making\.
5\. Decentralisation of implementation calls for parallel efforts to strengthen audit and financial
monitoring at local government level\. Misuse of funds must be controlled\. PAPO needs to have its own
capacity to review the audits it receives\. There is also a need to strengthen monitoring and audit
capacity at aimag and sum level\.
6\. The previous project did not consider joint matching-grant funds (with contribution of project, central
government and local government) but the possibility exists to create such a fund\.
7\. M&E systems need to be designed as a tool for management decision-making\. The current PAPO MIS
is ill-suited for monitoring credit disbursement and recovery\.
8\. Now that implementation capacity has been created it is important to retain and build on that capacity\.
PAPO staff need financial incentives to prevent a brain drain\. PAC secretaries need incentives for loan
recovery and a transport budget\.
- 42 -
9\. NPAP was implemented in close collaboration with NGOs\. Initially, the focus was mainly on
income-generating credit through large-scale national NGOs, many of which later withdrew because
they found it too difficult to work with the poor\. Experience with local NGOs has been more positive\.
Lessons learnt - Employment generation through public works
1\. Public works provided only temporary employment and cannot solve long-term employment problems\.
2\. According to MoSWL, the supply of registered unemployed people far exceeds the number of jobs;
80% of the registered unemployed are unskilled whereas the job market demands skilled workers\.
Hence, the principal need in the future is vocational training for youths\.
3\. Future programmes need to involve private sector stakeholders\. According to the National Employers'
Association, employers might be willing to set up a joint fund with donors to finance vocational
training\.
Lessons learnt - Income-generating credit
1\. Proper selection of beneficiaries is important - Government learned that the important thing is not to
maximise the absolute number of people covered by the project but to maximise the number of people
able to use the assistance effectively\. The important thing is to recover the money so that it can
continue to revolve in the sum-level revolving loan funds\.
2\. The VGO credit scheme was poorly designed: interest free loans were too soft; 4 years to pay was too
long; household loans are preferable to group loans\.
3\. Avoid specifying the details of the PIM manual in the legal credit agreement because it takes too long
to change them\.
4\. The target group wants to acquire market economy skills - this underlines the importance of business
training\. Training of beneficiaries in business management and financial record keeping skills is
important as a complement to the credit (this was financed by SIDA but not IDA)\.
5\. Repayment is unacceptably low - incentives are needed for loan recovery and full time loan officers
are required\.
6\. Lack of mobility of PAC secretaries was an obstacle to performance: the new programme must
provide a budget to ensure their mobility\.
7\. Because of low population density and limited markets, there is a serious risk of market saturation in
some localities: when too many loan beneficiaries go into the same line of business, profits are low and
repayments are poor\. The project should pay more attention to the issue of market saturation\.
8\. Systematic information campaigns are needed at sum/khoroo level to improve transparency and to
ensure that all eligible poor know how to apply for project assistance\. This would help to guard
against the tendency for local leaders to hold back information from the general public in favour of
their friends and relatives\.
Lessons Learnt - Restocking
1\. Procedures under PAVGP differed from those developed by other donors with the assistance of NGOs
(such as Save the Children/UK) since they incorporated lessons from experience; however, this was
perceived to have created unnecessary confusion for the implementing agencies\.
2\. Restocking should not be done in isolation from efforts to reduce pastoral risk\.
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Lessons Learnt - Health
I\. The project was very useful\. The most tangible benefits were: the ambulances; the renovation of
heating systems in the sum hospitals; and renovation of the maternal rest homes\.
2\. The project's contribution to health infrastructure was good but health insurance for the very poor was
overlooked\.
Lessons Learnt - Education
1\. NPAP had a significant impact on children's school attendance but there is still more to be done\. There
are still children who cannot attend school because they have no clothing\.
2\. Future poverty programmes should integrate protection of children's rights and set out to reduce the
number of street children\.
Lessons Learnt - Implications for design of future programmes
I\. In the future, GoM would continue to have an important role in poverty reduction but project efforts
should be integrated with the long-term economic and fiscal policy to make the results more
sustainable\.
2\. Future efforts should emphasise reduction of livelihood risks and pro-poor social and economic
policies\.
3\. Because the mention of "vulnerable groups" in the project's title encouraged the non-poor to pose as
vulnerable to get handouts from the State, future projects should emphasise household livelihood
capacity building\. A focus on household livelihoods would encourage self-reliance rather than
dependency on the Government\.
4\. There is a need to enlarge the target group by paying more attention to the people close to the poverty
line who are vulnerable to impoverishment\.
5\. Given the cross-sectoral nature of poverty, PAPO should continue to be an autonomous entity under
NPAC reporting directly to the Prime Minister\. The autonomous structure of NPAP is important as a
means of influencing government structures from outside; if NPAP were to lose its autonomy [by
being absorbed into a line ministry], efficiency would diminish\.
6\. It is important to maintain continuity within NPAC to ensure consistency in policy\.
7\. Social services have improved owing to the project's contribution\. Now Government must pay more
attention to productive activities, credit and financial intermediaries\.
- 44 -
List of Participants - National Stakeholder Workshop #2 (Key Informants)
11 April, 2001 - Ulaan Baatar Hotel
1\. Ms\. T\. Gandi Member of Parliament- Chairwoman of the Parliamentary Standing
Committee on Social Policy
2\. Ms\. S\. Oyun Member of Parliament
3\. Ms\. N\. Gerelsuren Member of Parliament
4\. Mr\. R\. Amarsaikhan Member of Parliament
5\. Mr\. P\. Byambatseren Member of Parliament
6\. Ms\. Ch\. Davaasuren Deputy Chairman, Secretariat of Ikh Khural (National Assembly)
7\. Mr\. P\. Ganbaatar Chairman, People's Khural, Songinokhairkhan district
8\. Ms\. Ts\. Bumkhorol Adviser to Minister of Finance and Economy
9\. Mr\. D\. Tsedenbal Senior Officer, MoFE
10\. Mr\. B\. Zorigt Officer, MoSWL
11\. Mr\. L\. Lodoi Officer, MoH
12\. Mr\. S\. Lambaa Secretary, Mongolian Democratic Party
13\. Mr\. Oyunchimeg Officer, Mongolian Employers' Association
14\. Ms\. D\. Batjinnyam Coordinator, National Network of Women's NGOs
15\. Ms\. Ch\. Tedenbazar President, Erdmiin Undraa NGO
16\. Mr\. Ch\. Ganbold Team Leader, Development Debate, World Bank
17\. Ms\. B\. Ariunaa Governor, 3rd Khoroo, Bayanzurkh district, Chairwoman, PAC
18\. Ms\. M\. Santuya Programme Associate, UNDP
19\. Ms\.Uranbileg National Children's Committee
20\. Ms\. R\. Oyunbileg Programme Coordinator, SCF(UK)
21\. R, Gantumur Director, Centre for Social Development
22\. Mr\. B\. Enkhbat Director, Consulting Unit
23\. Ms\. S\. Onon Director, PAPO
24\. Ms\. G\. Pagma Senior Officer, PAPO
25\. Mr\. A\. Menamkat Programme Management Advisor, PAPO
26\. Mr\. S\. Chimid-Oidov Local Advisor, PAPO
27\. Mr\. Sh\. Enkhur Head, Operations Division, PAPO
28\. Mr\. D\. Gobisaikhan Finance Officer, Operations Division, PAPO
29\. Ms\. A\. Carloni Sr\. Rural Sociologist, Team Leader, FAO/CP
30\. Mr\. A\. Batkin Financial Services Specialist, FAO/CP (consultant)
31\. Mr\. X\. Liu Economist, FAO/CP
Stakeholder Workshop #3 - National Poverty Alleviation Council meeting
13\. The final stakeholder meeting was held on 12 April in Government House\. It was chaired by
the Prime Minister, and was attended by high ranking officials of the Ministries of Finance and Economy;
Foreign Affairs; Justice and Internal Affairs; Infrastructure; Social Welfare and Labour; Health; Education,
Culture and Science; Food and Agriculture; Nature and Environment; National Statistical Office and NGOs
such as the Mongolian Women's Federation and the Mongolian Trade Union Confederation (see list)\. The
session began with a rapid summary in Mongolian of PAVGP's achievements and the mission's main
conclusions\. After a lively debate, the following consensus emerged\.
Achievement of the project development objective
I\. The new Government challenged the old Government because it failed to produce any quantitative
evidence that it had reduced poverty as promised by NPAP\. The issue raised from the floor was "How
can achievement of objectives be satisfactory when poverty (as measured by LSMSs) has not reduced?
How was achievement of objectives measured?"
- 45 -
2\. NSO clarified that estimates of poverty incidence in the early 1990s (26% of the population below the
poverty line) were based on a different method (based on income rather than consumption) are not
comparable with estimates of 36-35% poor by the LSMS\. Because the second LSMS survey
introduced some slight but significant modifications from the first, it is not legitimate to attempt to
extrapolate poverty trends from comparison of the results\.
3\. The mission clarified that PAVGP did not set itself a quantifiable numerical objective for reduction of
poverty by a certain date\. It was the Government's NPAP's objective to reduce the incidence of
poverty to 10% by 2000\.
4\. The final consensus, as expressed by the Prime Minister in closing the workshop was that "Overall,
the project was a good investment\. It created capacity which helped to slow down the adverse impact
of the economic transition on vulnerable groups\."
Institutional support
1\. Capacity building at the next stage should focus on sum/khoroo level\.
Income generating credit
1\. There was consensus that repayment rates are unacceptably low\.
2\. GoM recognises the need to strengthen the legal and institutional framework for micro-credit\.
3\. In the past, GoM sought to minimise Bank support for capacity building under NPAP on the
assumption that this was better handled through grant assistance from donors such as UNDP and
bilaterals\. GoM now recognises that if IDA assistance in the micro-finance sector is to be effective, it
should no longer limit the Bank contribution to "hardware" (the loan funds) but also consider
borrowing for "software" (such as improvement of the micro-finance policy and regulatory framework
or capacity building and business skills training for beneficiaries)\.
4\. It was agreed by MoFE and the Prime Minister that in the future programme, income generating credit
should be handled by specialised financial institutions', whereas training of credit beneficiaries can be
provided by NGOs\. The Independent Evaluation found the record of Ulaanbaatar-based NGOs in
credit delivery to be no better (and often poorer) than that of local government\.
Restocking
1\. Risk reduction and insurance for restocked animals is critical for success\.
Health
1\. The project assisted in improving rural health but it did not cover UB slums or aimag centres\. Since
IMR and MMR indicators are currently worse in urban slums than rural areas, the new project should
cover both\.
2\. The next project should focus on STDs, AIDS and TBC\.
3\. The previous health component targeted women; there is also a need to target males because
alcoholism among unemployed men is a major cause of social and behavioural problems\.
Education
1\. NPAP renovated over 200 schools and 100 dormitories and the main beneficiaries were poor people in
remote areas\. However additional finance is needed for further dormitories, informal vocational
training, distance education and greater attention to local government capacity to cover O&M costs\.
Conclusions and implications
1\. Future projects should focus on risk reduction through preventive actions - not just the existing poor
but also the future poor who are near the poverty line and vulnerable to impoverishment\.
- 46 -
2\. In the future, micro-credit should be handled by professional banking institutions\.
3\. Institutional capacity created in PAPO and local PACs should continue to be harnessed in support of
decentralised community-level initiatives\.
List of Participants - Stakeholder Workshop #3 - National Poverty Alleviation Committee
12 April 2001 - 13:30 - Cabinet room - Parliament building
Name of Participant Title
1\. Mr\. N\.Enkhbayar Prime-Minister, NPAC Chairman
2\. Mr\. P\.Nyamdavaa Minister of Health
3\. Mr\. A\. Tsanjid Minister of Education, Culture and Science
4\. Mr\. S\. Chinzorig Deputy Minister of Social Welfare and Labour
5\. Mr\. N\.Tumendemberel State Secretary, Ministry of Finance and Economy
6\. Mr\.Ganbold State Secretary, Ministry of Foreign Affairs
7\. Mr\.G\.Bayasgalan State Secretary, Ministry of Justice & Internal Affairs
8\. Mr\.S\.Banzragch State Secretary, Ministry of Nature &Environment
9\. Mr\.Ts\.Tsengel State Secretary, Ministry of Infrastructure
10\. Mr\.P\.Damdindorj State Secretary, Ministry of Food and Agriculture
11\. Mr\.Ch\.Davaasuren Chairperson, NSO
12\. Ms N\. Ayush Head of Department, Ministry of Social Welfare and Labour
13\. Ms\.J\.Erdenchimeg President, Mongolian Women's Federation
14\. Mr\. G\.Adiya President, Mongolian Trade Unions Confederation
15\. Mr\.N\.Chuluunbat Vice President, Mongolian Veterans Union
16\. R, Gantumur Director, Centre for Social Development
17\. Mr\. B\. Enkhbat Director, Consulting Unit
18\. Ms\. S\. Onon Director, PAPO
19\. Ms\. G\. Pagma Senior Officer, PAPO
20\. Mr\. A\. Menamkat Programme Management Advisor, PAPO
21\. Mr\. D\. Gobisaikhan Finance Officer, Operations Division, PAPO
22\. Ms\. A\. Carloni Sr\. Rural Sociologist, Team Leader, FAO/CP
23\. Mr\. A\. Batkin Financial Services Specialist, FAO/CP (consultant)
24\. Mr\. X\. Liu Economist, FAO/CP
- 47 -
Additional Annex 10\. Process Documentation: PAVGP Intensive Learning ICR Process -
Flow Chart
BENEFICIARY SUR VEY (117 workshops, 2,340 participants)
Trainin2 of APAC/DPAC secretaries in varticivatory evaluation methods (UB)
r ----------- ------------ -------------------- --------------------
APAC secretaries train sum PAC members DPAK secretaries train khoroo PAC members
--------- --------------------S ----------- -----~---------
Stakeholder workshops in 2 rural sums + Stakeholder workshops in 30% of urban
I aimag sum per aimag = 17 * 3 = 51 khoroos = 40 khoroo level stakeholder
sum level stakeholder workshops workshops
Secondary level stakeholder workshops Secondary level stakeholder workshops
in 17 aimags in 9 urban districts
SCross-cutting analysis of participatory evaluation findings
by ICR mission, PAPO staff and CU (Ulaan Baatar):
Core Learning Team
18 National level stakeholders (FAO/CP, PAPO, CU, MoFE, MoSWL,
MoH, MoECS, MoFA, Mol): team building, logistics and brainstorming
on key issues for field visits
Orkhon team Dornogobi team Ovorkhangal team
Day 1: aimag level Day 1: aimag level Day 1: aimag level,
Day 2: rural sum Day 2: rural sum Day 2: rural sum
Day 3: aimae sum Day 3: aimai sum Day 3: aimag sum
National Stakeholder Workshop #1 - Core Learning Team
Cross-cutting analysis of findings from field visits in 3 different aimags;
Consensus building across teams on ICR findings and lessons learnt from project
National Stakeholder Workshop #2 - Key Informants
Debate on project with Parliamentary Social Development Adviser, MPs, retired civil servants,
opposition party, NGOs, donors, Civil Society, journalists, private sector
National Stakeholder Workshop #3 - National Poverty Alleviation Committee
Presentation of mission findings and lessons learnt
SDebate on mission findings and lessons learnt
Consensus building on lessons and their implications
- 48 -
BENEFICIARY SURVEY - STAKEHOLDER WORKSHOP PARTICIPANTS
SUM WORKSHOPS
* SPAC = 10% of participants
* Sectoral agencies (front line services) = 20%
* NGOs= 10%
* Beneficiary representatives = 60% of participants, 50% female
(by component: labour-intensive works, credit/enterprise,
restocking, education, health, handicapped)
AIMAG WORKSHOPS
* APAC + 2 PAPO representatives = 5%
* Sectoral agencies = 20%
* NGOs= 5%
* Sum representatives = 30%
* Representatives of beneficiaries (male/female) = 40%
3 NATIONAL STAKEHOLDER WORKSHOPS
1\. Core Learning Team
2\. Outsiders: political opposition, private sector, NGOs, civil society
3\. National Poverty Alleviation Committee
- 49 -
STAKEHOLDER WORKSHOP ACTIVITIES -SUB-DISTRICT LEVEL
1\. "Without Project/with project" Before/After Impact Comparisons: done separately by women
beneficiaries, male beneficiaries and sum officials
PRA Technique: proportional piling
Item Without project With project Reason for change Did PAVGP cause
the change?
(yes/no)
Income level (Tg/mo)
Income stability
Food security
Livestock
Other assets
Schooling (girls)
Schooling (boys)
Health facility used
Capacity to solve own
problems
2\. Perceived Impact on Poverty - Without/with project wealth rankings
Without With PAVGP Reason for change Was change due to
PAVGP PAVGP? (yes/no)
Very poor (% of HHs)
Poor (% of HHs)
Non-poor (% of HHs)
Rich (% of HHs)
SWOT Analysis
Split sum participants into small groups: male beneficiaries, female beneficiaries, local authorities
Each prepares its own responses (and reports back at plenary)
1\. Strengths of PAVGP 2\. Weaknesses of NPAP
* List strengths (brainstorming) a List weaknesses (brainstorming)
* Public works sub-component 0 By component or activity
* Income generating credit sub-component 0 Public works
* Basic education component 0 Income generating credit
* Rural health component 0 Basic education
* Support for the disabled (if applicable in * Rural health
the aimag/district) 0 Support for the disabled
Rank (pair-wise ranking) 0 Rank weaknesses (pair-wise ranking)
3\. Opportunities 4\. Threats
Make a list (brainstorming) * Make a list (brainstorming)
* Rank (in order of importance) * Rank in order of importance
- 50 -
5\. Lessons learnt from PAVGP implementation
* Public works
* Income generating credit
* Education
* Health
* Support for the disabled (if applicable)
Plenary session:
* Women beneficiaries present their analysis; male beneficiaries present their analysis; local
authorities present their analysis (after the others have finished)
* Consensus building: what feedback does the sum want to give to the aimag?
STAKEHOLDER WORKSHOPS - AIMA GIURBAN DISTRICT LEVEL
Same procedure but split into at least 4 small groups for separate working group sessions: women
beneficiaries, men beneficiaries, sum officials, aimag officials\.
- 51 -
Core Learning Team fieldwork process
CORE LEARNING PARTNERSHIP
B ank (including the ILI mission)
orrower (MoFE)
* oImplementing Agencies (PAPO, line ministries)
*Local government (see below)
INSIDERS OUTSIDERS
Tertiary * NPAC * Political opposition
Stakeholders
(National) * PAPO group
* Implementing agencies * Multilaterals
* Sectoral ministries * Bilaterals
* Other NPAP donors * NGOs
INSIDERS OUTSIDERS
aimag/ * APACs * Other donor
duureg * Aimag-level PAPO programmes
Level * Sectoral departments * Local government
Sum/Khoroo INSIDERS OUTSIDERS
Level * SPACs * Local leaders
* Sectoral departments * Private sector
T~ I --------------
Bag INSIDERS OUTSIDERS
Level * Bag assembly * Teachers
* Local leaders * Health workers
* Front line services
Household PAVGP beneficiaries Non-beneficiaries,
Level (direct benefit) indirect beneficiaries
FOCUS GROUP MEETINGS
* Women beneficiaries
* Men beneficiaries
* Local authorities, officials
- 52 -
Core Learning Team - Plan for Field Visits
Purpose
1\. For WB Team Members
* Learn about project and local conditions
* Check information from other sources
* project outputs
* implementation procedures
* project impact
* sustainability
* institutional development
* Clarify key issues
*\. Learn from other team members
2\. For Mongolian Team Members
* Learn about PAVGP and how PAVGP relates to own sector
* Listen to aimag's and sum's perspective
* Listen to beneficiaries' perspective
* Internalisation of lessons learnt (as a basis for future)
3\. Build consensus (between WB, PAPO, GOM) on lessons learnt and the way forward
Itinerary
Day 1 - Sunday, 1 April - Travel to aimag
Day 2 - Monday, 2 April - Meet with aimag authorities
* Morning: until 12:30 - courtesy call to Governor + APAC meeting (question & answer session)
* Lunch: 12:30-14:00
* Afternoon: individual meetings with counterparts (APAC secretary and department heads) in
aimag
* Individuals make selected site visits within aimag centre with counterpart (if time permits)
* Share experiences and preliminary impressions in evening
Day 3 - Tuesday, 3 April - Visit to a rural sum
* SPAC meeting
* Site visits
* Focus group meetings with beneficiaries
* Back to aimag
* Share experiences in evening
Day 4 - Wednesday, 4 April - aimag centre sum + wrap-up with APAC
* meet SPAC
* site visits
* focus group meetings with beneficiaries
* late afternoon: wrap-up with APAC - feed back findings, discuss
Evening: Orkhon and Dornogobi teams return by train back to Ulaanbaatar
Day 5 - Thursday 5 April - Ovorkhangai team drives back to UB
Day 6 - Friday, 6 April - Three groups meet for brainstorming and cross-cutting analysis
* Discuss findings, component by component - agree on lessons learnt
* Overall lessons learnt
- 53 -
Core Learning Team - Division of Responsibilities
TORs for Core Learning Team members
* Learn together about the project (GOM reps are not here to evaluate the project but to learn)
* Share expertise in own sectoral area of competence
* Cover one's own sector plus assist with other sectors as necessary (no team has a full complement
of people for all components - some are not covered and will need to be covered by others)
* Don't lecture or tell aimag or sum officials or community members what to do - LISTEN!
* Be respectful and courteous to others (team members, officials and beneficiaries)
* In focus group meetings with APAC, SPACs and beneficiaries, do not dominate the discussion
* Work hard and contribute (don't just come along for the ride)
* Share the burden with other team members
* Take careful notes on what is said
* Fill the forms
* Participate in evening sharing sessions with other team members
Role of World Bank team members
* Overall facilitation of core learning team exercise
* each has own agenda and questions to answer - must deliver an evaluation report to WB
* Learn together with PAPO, GOM and local government officials
* Help build consensus
* Assisted by PAPO or CU staff
Role of Mongolian team leader: selected by team members
* Organizes work of Mongolian members of Core Learning Team
* Makes the programme of meetings and site visits (in collaboration with APAC, APAC secretary
and officials)
* Makes sure that all sectors and questions are fully covered
* Collects the forms filled out by team members
* Combines them into one report for the aimag (all sectors)
* Organizes the team reporting back in plenary on Friday 6 April
PAPO or CU with APAC secretary - in charge of organizing logistics
Logistics and allowances
* DSA allowances for nights out
* Train to Orkhon and Dornogobi - departure times (7:30 am for Orkhon; 10:00 for Dornogobi) and
planned return on Wednesday evening
* Drive to Ovorkhangai - departing 8 am Sunday 1 April and returning Thursday 6 April
* Risks - foot and mouth disease - must make sure that we do not get stuck outside UB - must drop
everything and come back to UB in a hurry if necessary
-54-
Questions for Core Learning Team Field Visits
Questions by Component Who to ask?
aimag/ Sum/ Community
duureg khoroo
Basic Education
1\. What was the running cost of school or dormitory before the project? After? Who X X
will pay the running cost when the project ends?
2\. What was the primary school enrolment rate before PAVGP? After? Reason\. X X
3\. What was the primary school dropout rate before PAVGP? After? Reason\. X X
4\. Is school dormitory capacity fully utilised? If not, why not? Why do parents prefer to X X
send their children to stay with relatives when there are places available in the
dormitory?
5\. Who identified the project? Were the local people consulted? X X
6\. Is there demand for ger schools? If yes, did the SPAC/APAC support it or not? If not, X X X
why not? If there is no demand for ger schools, what is the reason?
Rural Health
1\. Maternal mortality rate before and after PAVGP and reason for change X
2\. Infant mortality rate before and after PAVGP and reason for change X
3\. Is the ambulance sometimes used for non-health purposes? If yes, explain\. X X X
4\. What was the % of home births before PAVGP? What is it now? Reason for change X X
5\. Utilisation of bag feldsher transportation (are the horses still alive?) X X
Public Works
I\. Maintenance: did any of the works built by the project get broken down? If yes, what X X X
got broken? Did it get fixed? If yes, who fixed it and who paid?
2\. Are public work projects a good way to solve the unemployment problem X X X
3\. What benefit did you get from the works project? X X X
4\. Are PAVGP procedures the same as for other public works? If not, what are the X
differences? Which procedures are better and why?
Income Generation
1\. What is the repayment rate on loans from the LDF and the IGF? What is the reason X
for high or low repayment? Does this refer to the rate at which the loan beneficiaries
pay back to the sum or the rate at which the sum repays the money to the aimag? Did
the sum retain any of the money it recovered? If so, did it lend some of the recovered
money out to other households? How is this reflected in the repayment rate?
2\. What is the repayment rate on the revolving loan fund? What will be done with these X
funds when the project ends?
3\. Which credit scheme was better - the group loans for Vulnerable Group X X X
Organizations or the household loans under the IGF and why?
Support for the Disabled (Orkhon aimag only)
1\. How many disabled are there in the aimag? How many benefited? X
2\. How were the beneficiaries selected? Was the selection process fair and transparent? X X X
3\. Why are the non-beneficiaries disappointed? X X X
Restocking (Ovorkhangai only)
I\. Are you satisfied that beneficiary selection was done fairly and transparently? Did the X X X
loans go to the right people?
2\. Are veterinary services available? How far? At what cost? X X
3\. Are you ready to insure the animals again next year? If so, who will pay? X X
4\. What happened to the animals during this year's dzud? What % of animals given as X X X
part of restocking died? If few animals died, what was the reason? What action was
taken to make sure the animals did not die?
Environmental Impact
I\. School and clinic heating (wood and coal consumption, tree cutting, air pollution) X X X
2\. Roads and bridges X X X
3\. Restocking (overgrazing) - Ovorkhangai only X X X
- 55 -
Questions for Core Learning Team field visits (page 2) - Institutional Development
Aimag/ Sum! Community
Duureg khoroo
Aimax/daureg level
1\. Planning: has PAVGP methodology for selecting and prioritising infrastructure X X
schemes influenced normal practice? If so, how?
2\. Sector strategy: does aimag/duureg have sector plans (esp\. education, health, X
roads)? How does PAVGP methodology fit? Comments\.
3\. Capital financing: How significant has PAVGP financing been for infrastructure X
schemes compared to government financing level? Comments\.
4\. Capital sharing - How does PAVGP aimag/sum sharing compare with normal X
practice? Comments
5\. Demand -What proportion of total school/donnitory, health facilities or public X
works was completed by PAVGP?
6\. Recurrent financing - have special provisions been made for the incremental X X
recurrent financing of PAVGP infrastructure schemes?
7\. Financial flows - How does PAVGP transfer mechanism compare with normal X
government financing? Compare strengths and weaknesses\.
8\. Accountability - Differences between PAVGP reporting procedures and normal X X
government procedures? comments
9\. Transparency - Does local government regularly publicise schemes proposed, X X
finance received, scheme completions, etc? Comments
10\. Audit - Does the aimag have an audit programme for sums? X
11\. Scheme design (e\.g\. heating, water supply) - Any differences between PAVGP and X
normal government procedures? comment
12\. Scheme contracting - any differences between PAVGP infrastructure contracting X
and normal government procedures? Comment
13\. Scheme costs - any difference in the cost of infrastructure schemes from normal X
government schemes? comments
14\. Congruence - Overall, how close are PAVGP infrastructure selection, financing, X
procurement, contracting, etc\. procedures to normal government rules? Comment
15\. Summary - what changes to normal infrastructure selection, financing, X
procurement, contracting, etc\. procedures have been made as a result of PAVGP?
16\. Do APACs/DPACs or SPACS/KPACs add value? Future after project closure? X X
SumlKhoroo level
I\. Planning - is PAVGP methodology for selecting and prioritising schemes different X X X
from normal practice? If so, how? Comments?
2\. Participation - Is there a formal procedure for canvassing infrastructure priorities X X X
from the community? Comments?
3\. Social capital - Did PAVGP strengthen local community or civil society X X
organization and voice? If so, give examples
4\. Budget sharing - Is there a policy on sharing between bags and sum centre? X
5\. Scheme design and implementation - How is it done? Support from aimag? X
- 56 -
Additional Annex 11\. Borrower records of project achievements by component, from MIS
Table 11a
Local Development Fund - IDA Credit
Disbursements by Aimags and activity areas from 1/1/96 to 3/12100
Cumulative Total % of Pubic Works income Generalion Basic Educafior Rural HealMb Services
Disbursement Projs total Proisl Amount Proisl Amount Prois Amount I Prois Amount Ambulance
Aknag USD # # USD # U # SD I# USD # USD
1 Ardkangi 363,830 123 5% 29 117,558 46 82,294 16 70,637 21 44,721 11 48,620
2 BayarUgi 452,293 233 7% 36 112,029 112 59,633 24 116,199 47 99,718 13 59,270
3 Bayankhwngor 328,019 121 5% 21 94,901 37 28,551 29 81,200 24 72,307 10 51,060
4 BDgan 303,221 91 5% 34 134,833 10 12,513 19 80,583 19 28,812 9 46,480
5 Gobi-Aai 280,916 95 4% 16 80,681 31 47,097 18 52,927 19 44,341 11 55,870
6 Gobsrnter 59,268 30 1% 10 16,052 9 4,845 4 11,720 4 10,921 3 15,730
7 Darkhan-UJt 175,763 35 3% 10 66,565 9 18,643 7 59,681 3 8,369 3 10,450
8 Domod 303,875 142 5% 36 122,262 34 31,276 13 43,135 47 40,980 11 55,120
9 Domogobi 210,202 62 3% 22 90,393 13 14,681 7 42,605 11 17,603 9 44,920
10 DunCobi 226,414 77 3% 18 49,562 18 19,510 17 79,737 12 16,790 11 55,120
11 Zavihan 330,467 204 5% 31 65,909 40 38,395 46 91,958 75 78,885 12 55,320
12 Orkhon 124,388 63 2% 9 21,459 30 26,462 8 9,136 13 36,980 2 6,450
13 Ovd-engai 416,189 194 6% 36 58,788 50 44,171 66 206,110 33 62,650 9 44,470
14 Omrgobi 196,753 82 3% 20 30,151 9 13,538 23 70,771 21 33,319 8 43,530
15 Sutaatar 273,169 100 4% 12 45,928 31 31,628 16 77,658 31 70,035 10 47,920
16 Selenge 215,768 74 3% 14 48,795 22 23,795 8 52,481 17 35,623 12 49,630
17 Tov 297,860 83 4% 31 126,814 17 31,021 16 61,035 5 1Z275 13 61,020
18 Uvs 311,176 131 5% 31 111,999 50 45,527 18 64,138 19 25,248 12 58,820
19 Khenti 247,591 101 4% 35 89,545 15 14,368 16 56,706 20 15,307 14 65,970
20 Khosgtd 537,487 200 8% 49 177,657 48 53,369 48 155,981 39 69,610 16 80,870
21 Khovd 264,593 133 4% 11 35,687 36 30,078 34 77,511 42 71,207 10 50,110
22 Nalaikh 79,940 37 1% 11 60,462 15,028 1 4,450
23 Bagarw 57,129 21 1% 13 47,448 7 5,231 1 4,450
24 Bagkhangai 28,132 7 0% 7 28,132 0 0 0
25 Sukhbaalar 55,684 22 1% 6 38,981 16 16,703 0
26 CingelWai 138,938 32 2% 20 81,619 11 15,346 0
27 Bayangol 64,825 25 1% 9 49,250 16 15,575 0
28 Baynzmskh 133,867 34 2% 17 77,828 13 15,804 0
29 Khan-W 92,087 29 1% 14 60,242 13 18,397 0
30 Songiddnairkatr 160,801 40 2% 26 140,152 13 16,949 1 3,700
ToW 6,730,645 Z621 100% 634 2,281,682 781 790,428 453 1,561,909 522 895,701 212 1,019,350
- 57 -
Table 11a continued
Disabled Support Beneficiaries - LDF IGPs Investment Avg IG $
Projs Amount Total HH VGO Members per caput per VGO
Aimag # USD Population Total Female FHH Disabled USD Member
1 Arkhangai 0 0 69,355 1,892 432 127 13 5\.25 43\.50
2 Bayan-Ulgii 1 5,444 259,274 2,085 404 20 1 1\.74 28\.60
3 Bayankhongor 0 0 177,603 3,039 156 48 28 1\.85 9\.39
4 Bulgan 0 0 91,572 3,542 514 152 30 3\.31 3\.53
5 Gobi-Altai 0 0 200,606 2,503 251 21 29 1\.40 18\.82
6 Gobisumber 0 0 23,050 1,145 210 33 0 2\.57 4\.23
7 Darkhan-Uul 3 12,055 24,090 934 1,775 37 12 7\.30 19\.96
8 Dornod 1 11,102 29,207 2,320 758 52 19 10\.40 13\.48
9 Dornogobi 0 0 54,122 1,498 629 45 0 3\.88 9\.80
10 Dundgobi 1 5,695 34,398 2,307 836 170 18 6\.58 8\.46
11 Zavkhan 0 0 385,118 4,587 980 191 9 0\.86 8\.37
12 Orkhon 1 23,901 35,847 845 252 178 26 3\.47 31\.32
13 Ovorkhangai 0 0 159,424 2,253 699 176 1 2\.61 19\.61
14 Omnogobi 1 5,444 23,942 3,545 985 126 0 8\.22 3\.82
15 Sukhbaatar 0 0 118,167 1,541 642 281 8 2\.31 20\.52
16 Selenge 1 5,444 70,520 1,313 453 176 79 3\.06 18\.12
17 Tov 1 5,695 16,050 2,045 775 303 31 18\.56 15\.17
18 Uvs 1 5,444 140,778 3,578 1,250 294 19 2\.21 12\.72
19 Khentii 1 5,695 35,345 2,016 532 149 14 7\.00 7\.13
20 Khovsgul 0 0 138,621 5,835 657 81 18 3\.88 9\.15
21 Khovd 0 0 115,433 1,264 624 186 2 2\.29 23\.80
22 Nalaikh 0 0 2,134 547 236 143 14 37\.46 27\.47
23 Baganuur 0 0 4,088 419 131 50 5 13\.97 12\.48
24 Bagakhangai 0 0 728 1,255 41 25 1 38\.64 0\.00
25 Sukhbaatar 0 0 4,998 1,489 342 142 25 11\.14 11\.22
26 Chingeltei 1 41,973 5,930 1,036 314 86 4 23\.43 14\.81
27 Bayangol 0 0 16,162 1,035 379 67 23 4\.01 15\.05
28 Bayanzurkh 4 40,235 109,441 1,178 570 126 10 1\.22 13\.42
29 Khan-Uul 2 13,448 15,156 1,020 204 59 3 6\.08 18\.04
30 Songinokhairkhan 0 0 7,695 1,533 189 10 0 20\.90 11\.06
Total 19 181,575 2,368,854 59,599 16,220 3,554 442 2\.84 13\.26
- 58 -
Table l1b
Income Generating Fund Date 111198-31112/00
*!@td Bank leeiire
Proj Amfffft Ofwa i %g\. kln 'l1a bf whIch
Almag : USD ;GFfundel proj dp n~fi~ Total FemalesT Fm Dabld
Arxhangai 94 26\.278 4% 280 875 300 162 24 6
Bayan-Ulgii 320 78,128 11% 244 2,015 1,024 325 65 21
Bayankhongor 49 21,955 3% 448 3,548 156 62 26 0
Bulgan 51 26,998 4% 529 624 163 94 21 3
Gobi-Altai 72 31,139 5% 432 625 230 130 28 14
Gobisumber 65 14,967 2% 230 352 208 103 19 9
Darkhan-Uul 190 117,493 17% 618 2,198 608 315 76 23
Dornod 6 4,854 1% 809 956 20 9 6 0
Domogobi 116 34,891 5% 301 752 371 232 51 16
Dundgobi 16 5,540 1% 346 581 51 28 18 3
Zavkhan 38 15,696 2% 413 625 121 71 22 9
Orkhon 14 5,764 1% 412 372 46 26 15 1
Ovorkhangai 5 2,806 0% 561 864 18 10 4 0
Omnogobi 99 30,476 4% 308 489 318 175 35 6
Sukhbaatar 20 5,844 1% 292 965 72 42 8 3
Selenge 117 20,374 3% 174 322 281 178 46 8
Tov 1 93 0% 93 795 4 2 0 0
Uvs 56 23,148 3% 413 2,965 185 105 15 16
Khentii 3 280 0% 93 684 13 8 5 0
Khovsgul 45 10,737 2% 239 180 90 42 28 2
Khovd 86 23,045 3% 268 486 281 169 48 22
Nalaikh 113 46,889 7% 415 659 360 225 63 17
Baganuur 37 9,229 1% 249 565 124 79 19 3
Bagakhangai 35 12,716 2% 363 356 135 64 8 2
Sukhbaatar 6 3,455 1% 576 458 24 13 3 0
Chingeltei 41 13,925 2% 340 395 142 142 14 5
Bayangol 0 0 0% 0 0 0 0 0
Bayanzurkh 76 29,969 4% 394 402 245 245 34 11
Khan-Uul 208 50,480 7% 243 897 632 632 87 9
Songinokhairkhan 23 19,143 3% 832 1,375 76 76 15 6
Total 2002 686,312 100% 343 26,380 6,298 3,764 803 215
-59-
Table 11b continued
Benficiaries
[it - of which
Almag LpänfferillUWEMM I TbMl iF mais FHHs Disabled
Arkhangai 30,032 87,593 2\.9 54% 8% 2%
Bayan-Ulgii 38,773 76,297 2\.0 32% 6% 2%
Bayankhongor 6,188 140,737 22\.7 40% 17% 0%
Bulgan 43,266 165,632 3\.8 58% 13% 2%
Gobi-Altai 49,822 135,387 2\.7 57% 12% 6%
Gobisumber 42,520 71,957 1\.7 50% 9% 4%
Darkhan-Uul 53,455 193,245 3\.6 52% 13% 4%
Dornod 5,077 242,700 47\.8 45% 30% 0%
Dornogobi 46,398 94,046 2\.0 63% 14% 4%
Dundgobi 9,535 108,627 11\.4 55% 35% 6%
Zavkhan 25,114 129,719 5\.2 59% 18% 7%
Orkhon 15,495 125,304 8\.1 57% 33% 2%
Ovorkhangai 3,248 155,889 48\.0 56% 22% 0%
Omnogobi 62,323 95,836 1\.5 55% 11% 2%
Sukhbaatar 6,056 81,167 13\.4 58% 11% 4%
Selenge 63,273 72,505 1\.1 63% 16% 3%
Tov 117 23,250 198\.8 50% 0% 0%
Uvs 7,807 125,124 16\.0 57% 8% 9%
Khentii 409 21,538 52\.6 62% 38% 0%
Khovsgul 59,650 119,300 2\.0 47% 31% 2%
Khovd 47,418 82,011 1\.7 60% 17% 8%
Nalaikh 71,152 130,247 1\.8 63% 18% 5%
Baganuur 16,335 74,427 4\.6 64% 15% 2%
Bagakhangai 35,719 94,193 2\.6 47% 6% 1%
Sukhbaatar 7,544 143,958 19\.1 54% 13% 0%
Chingeltei 35,253 98,063 2\.8 100% 10% 4%
Bayangol 0 0\.0 0% 0% 0%
Bayanzurkh 74,550 122,322 1\.6 100% 14% 4%
Khan-Uul 56,276 79,873 1\.4 100% 14% 1%
Songinokhairkhan 13,922 251,882 18\.1 100% 20% 8%
Total 26,016 108,973 4\.2 60% 13% 3%
-60-
Table 11c
VGO Borrowers from LDF
Aimag Schemes US$ Benef Total Female FHH Disabled
Arkhangai 46 82,294 1,232 277 106 28 4
Bayan-Ulgii 112 59,633 13 742 293 18 1
Bayankhongor 37 28,551 1,070 314 170 40 2
Bulgan 10 12,513 65 65 33 12
Gobi-Altai 31 47,097 1,189 403 213 52
Gobisumber 9 4,845 77 28 18 7
Darkhan-Uul 9 18,643 78 74 7 2
Domod 34 31,276 26 343 196 43 2
Domogobi 13 14,681 16 73 39 6
Dundgobi 18 19,510 0 152 95 28
Zavkhan 40 38,395 1,205 224 104 38 9
Orkhon 30 26,462 21 170 100 29
Ovorkhangai 50 44,171 10 324 166 16
Omnogobi 9 13,538 0 73 32 7
Sukhbaatar 31 31,628 238 138 43 1
Selenge 22 23,795 124 73 30
Tov 17 31,021 230 190 73 34
Uvs 50 45,527 1,449 397 191 37 3
Khentii 15 14,368 383 81 54 28 2
Khovsgul 48 53,369 916 646 310 72 15
Khovd 36 30,078 722 264 131 27 2
Nalaikh 25 15,028 351 173 109 42 14
Baganuur 7 5,231 111 37 21 9 5
Bagakhangai 0 0 0 0 0 0 0
Sukhbaatar 16 16,703 0 101 22 6 0
Chingeltei 11 15,346 158 73 37 13 1
Bayangol 16 15,575 286 114 35 12 19
Bayanzurkh 13 15,804 509 170 76 35 23
Khan-Uul 13 18,397 813 199 88 5 4
Songinokhairkhan 13 16,949 0 153 19 0 0
Total 781 790,428 10,930 6,222 2,949 719 107
-61-
Table I1d
Income Generating Credit
No\.of Schemes % of Total Expenditure Expenditure MTN
Schemes (MNT m\.) Share
Sewing 1,317 19% 530\.271 18%
Bakery 553 8% 226\.115 8%
Vegetable growing 867 12% 332\.103 11%
Boot making and repair 609 9% 247\.125 9%
Trade 1206 17% 376\.842 13%
Services 251 4% 117\.730 4%
Other 2302 32% 1070\.135 37%
1__ 7,105 100% 2900\.322 100%
- 62 -
Table 11e
Basic Information on PAPO-Implemented Restocking Project - IDA Credit
Ulaanbaatar As of 25\.12\.2000
Almag Soum No\.of animals distributed thousand Households Beneficiaries Costs In mln\.Tg
Total Camel Horse Cow Sheep Goat
1Delgertsot 1,121 3 5 694 419 35 157 21\.4
2 Deren 704 7 19 454 224 20 100 12\.8
3 Gurvansaikhan 2,321 1 46 7 1,378 889 50 225 42\.8
4 Ulziit 1,709 884 825 33 148 34\.2
5 , Kuld 2,023 6 884 1,133 79 355 36\.4
6 Luus 1,331 10 1 787 533 32 144 25\.6
7 Delgerkhanaaj 2,602 12 1,414 1,176 49 225 49\.2
8 Saikhan-Ovoo 2,372 6 1,267 1,099 55 247 42\.8
9 Erdenedalai 5,287 84 56 3,280 1,867 99 445 102\.7
10 Saintsagaan 3,741 19 13 2,395 1,314 85 382 70\.6
Sub- total _ 23,211 1 193 101 13,437 9,479 537 2,428 438\.5
11 Bayan-Undur 2,639 36 25 2,283 295 50 225 47\.5
12 Burd 1,818 1,760 58 60 270 46\.5
13 3 Bayangol 3,054 1 3 2,382 668 57 256 49\.7
14 a Esonzuil 2,631 1 35 10 2,451 135 35 157 34\.5
15 Sant 2,595 17 1,918 660 62 279 53\.2
S Togro 1,737 6 946 785 29 130 27\.2
17 Zuunbayanulaan 1,160 3 21 1,029 107 32 144 21\.7
18 Kharkhorin 2,911 1 1 2,420 491 52 234 51\.2
Sub- total 18,545 1 97 59 15,189 3,199 377 1,695 331\.5
19 Gurvanbulag 3,312 2\.952 360 48 216 35\.1
20A Jargalant 1,195 1,195 12 54 12\.1
21 , o Bayanbulag 2,569 2,368 201 54 243 27\.2
22 m Mo Zaq 3,772 3,421 351 58 261 39\.9
Sub- total 10,848 9,936 912 172 774 114\.3
23 Aldarkhaan 2,669 1 13 16 1,211 1,429 34 153 31
24 Santmargats 3,668 6 2,410 1,252 70 315 42\.2
25 r Songino 2,777 2 1 2,634 140 34 153 32\.7
26 M' Uliastai 2,229 17 24 1,810 378 57 256 31\.6
27 Shiluustei 1,563 1 3 1,539 20 26 117 17\.7
28 Tsetsen-Uul 3,569 2,688 881 41 193 40\.8
29 Erdenekhairkhan 6,246 11 15 4,877 1,343 67 301 68
30 Yaruu 4,402 24 30 3,903 445 50 225 49\.8
Sub- total 27,123 74 89 21,072 5,888 379 1,713 313\.8
31 Ulgii 2,950 1,727 1,223 36 162 36
32 Undurkhangal 3,412 2,594 818 62 279 41\.1
33 UvS Zuunkhangai 3,007 26 15 2,772 194 61 274 40\.7
34 Umnugobi 2,747 16 9 1,735 987 41 220 35\.9
35 Naranbulag 3,628 1 -1 2,486 1,142 63 284 43\.7
Sub- total 15,744 42 24 11,314 4,364 263 1,219 197\.4
Total 95,471 2 406 273 70,948 23,842 1,728 7,829 1395\.5
- 63 -
Table lf
PAVGP Restocking Component
Average Restacking Loan Per Household
AJmag Saum Average Restocking aan per HH (No\. of Heas) CostHH Coastbd
\.Animal\. C-\.ne\. Harsc Cow Shecp Goat Bod equlv Sg\. is (tg)_
1 Delgertsogt 32 0 0 0 20 12 4\.77 611,429 128,144
2 Deren 35 0 0 1 23 11 6\.14 640,000 104,186
3 Gurvansaikhan 46 0 1 0 28 18 7\.56 856,000 113,196
4 - UIziit 52 0 0 0 27 25 7\.40 1,036,364 140\.082
5 Kuld 26 0 0 0 11 14 3\.72 460,759 123,750
6 c Luus 42 0 0 0 25 17 6\.24 800,000 128,275
7 Delgerkhangai 53 0 0 0 29 24 7\.80 1,004,082 128,796
8 Sakhan-Ovoo 43 0 0 0 23 20 6\.25 778,182 124,419
9 Erdenedalai 53 0 1 1 33 19 8\.84 1,037,374 117,333
10 Saintsagaan 44 0 0 0 28 15 6\.61 830\.588 125,655
Sub- total Dundgobl 43 0 0 0 25 18 6\.65 816,574 122,865
11 Bayan-Undur 53 0 1 1 46 6 8\.59 950\.000 110,649
12 Burd 30 0 0 0 29 1 4\.33 775,000 179,043
13 Bayangol 54 0 0 0 42 12 7\.72 871,930 112,964
14 Esonzuil 75 0 1 0 70 4 11\.84 985,714 83,247
15 Sant 42 0 0 0 31 11 6\.21 858,065 138,079
16 :$ Togr"g 60 0 0 0 33 27 8\.73 937,931 107,389
17 Zuunbayanulaan 36 0 0 1 32 3 5\.82 678,125 116,488
18 Kharkhorin 56 0 0 0 47 9 8\.00 984,615 123,119
Sub- total Ovokhangal 49 0 0 0 40 8 7\.38 879,310 119,069
19 Gurvanbulag 69 0 0 0 62 8 9\.86 731,250 74,185
20 A Jargalant 100 0 0 0 100 0 14\.23 1\.008,333 70,879
21 , Bayanbulag 48 0 0 0 44 4 6\.80 503,704 74,115
22 Zag 65 -0 0 0 59 6 9\.29 687,931 74,046
Sub-total Bayankhongor 63 0 0 0 58 5 9\.01 664,535 73,756
23 Aldarkhaan 79 0 0 0 36 42 11\.95 911,765 76,328
24 Santmargats 52 0 0 0 34 18 7\.56 602,857 79,752
25 c Songino 82 0 0 0 77 4 11\.74 961,765 81,896
26 1 Uliastai 39 0 0 0 32 7 6\.20 554,386 89,374
27 Shiluustei 60 0 0 0 59 1 8\.72 680\.769 78,072
28 Tsetsen-Uul 87 0 0 0 66 21 12\.44 995,122 80,022
29 Erdenekhairkhan 93 0 0 0 73 20 13\.65 1,014,925 74,352
30 Yaruu 88 0 0 1 78 9 13\.50 996,000 73,762
Sub- total Zavkhan 72 0 0 0 56 16 10\.59 827,968 78,168
31 Ulgi 82 0 0 0 48 34 11\.71 1,000,000 85,424
32 Undurkhangai 55 0 0 0 42 13 7\.86 662,903 84,320
33 Uvs Zuunkhangai 49 0 0 0 45 3 7\.62 667,213 87,581
34 Umnugobi 67 0 0 0 42 24 10\.09 875,610 86,745
35 Naranbulag 58 0 0 0 39 18 8\.23 693\.651 84,317
Sub- total Uvs 60 0 0 0 43 17 8\.77 750,570 85,613
Tatal 55\.2 0,0 0\.2 0\.2 41 14 8\.23 807,581 98,116
-64-
Tabe lig
PAVGP Retocking - Coverage of Total 199912000 Dzud Affected Households (5 project almags)
1999-2000 Dzd
Total L[vestock % Replaced HHs lost HH Avg logs PAVOP PAVGP
Almag Sourn Uveatock Distributed through locing all affected per HH beneficiarks B'8s%
Loass 99\.00 by PAVGP PAVOP imales (animas) fa~ctd
Del rs 23,204 1,121 5% 29 388 60 35 9%
2 Deren 31,766 704 2% 14 439 72 20 5%
3 Gura han 44,693 2,321 5% 46 540 83 50 9%
4 Uizlft 42,547 1,709 4% 5 627 68 33 5%
5 Kuld 48,415 2,023 4% 5 510 95 79 15%
6 Luus 36,351 1,331 4% 22 389 93 32 8%
7 a~ ~ 44\.587 2,602 6% 22 534 83 49 9%
8 Salkhan~ 42,375 2,372 6% 5 540 78 55 10%
9 Erdaa 110,560 5,287 5% 29 1507 73 99 7%
10 Saintlagean 86,286 3,741 4% 56 909 95 85 9%
SuD- tos"l Dun obl 561,000 23,211 4% 160 8,074 72 537 7%
B~Undur 52789 2,639 5% 39 1046 50 50 5%
12 Burd 48,998 1,818 4% 88 984 50 60 6%
13 Bayango 53,298 3,054 6% 37 1\.021 52 57 6%
Esonzu 35,937 2,631 7% 14 989 38 35 4%
15 Sent 56\.090 2,595 5% 1,010 56 62 6%
16 Togrog 30,511 1,737 6% 19 681 45 29 4%
17 Zuunbaysnulaan 22,907 1,160 5% 15 824 28 32 4%
18 Kharkhorin 57\.191 2,911 5% 1,431 40 52 4%
Sub, total Ovokhangai 434,400 18,545 4% 256\. 6,555 66 377 6%
19 Gu~ag 29,069 3,312 11% 127 652 45 48 7%
20 Bayankho Jargalat 36,911 1,195 3% 120 512 72 12 2%
21 ngør B~lag 16,586 2,569 15% 30 460 36 54 12%
22 Zag 25,535 3,772 15% 56 819 31 58 7%
Sut> total Bayankhong 126,200 10,848 8% 276 2,443 52 172 7%
23 Aiaar 26,070 2,669 10% 30 1065 24 34 3%
24 Sem ts 32,048 3,668 11% 50 590 54 70 12%
25 Songbo 23,420 2,777 12% 12 547 43 34 6%
26 UH~ 17\.582 2,229 13% 18 884 20 57 6%
27 ShluusW 13,630 1,563 11% 2 636 21 26 4%
28 Tsø~Uul 20\.610 3,569 17% 21 633 33 41 6%
29 Erdae~airkhan 38\.345 6,246 16% 36 932 41 67 7%
30 Ymuu 36,946 4\.402 12% 46 925 40 50 5%
Su-total 2avkhan 321,400 27,123 8% 268 17,400 18 379 2%
31 Utgil 23\.217 2\.950 13% 40 545 43 36 7%
32 Undurkha 25,594 3,412 13% 0 585 44 62 11%
33 Uvs Zuurkangai 248,450 3,007 1% 13 690 360 61 9%
34 Umnugobi 21,419 2,747 13% 0 570 38 41 7%
35 Naranbulag 28\.444 3,629 13% 24 560 51 83 11%
Sul lotal Uvs 214,200 15,744 7% 180 9,319 23 263 3%
Total 1,179,200 95,71 8% 1,138 43,791 38 1,728 4%
-65-
Table 11h
Ovorkhangai Aimag - Livestock Losses in 2001 Dzud among PAVGP Restocking Beneficiaries
PAVGP Restocking Area Livestock Losses by Species in 2001 Dzud
Aimag Sum Among PAVGP Restocking Beneficiaries
Total Horses Cattle Sheep Goats Bod Equiv
1 Bayan-Undur 82 0 2 78 2 15
2 Burd 51 0 0 50 1 8
3 m Bayangol 9 0 0 9 0 2
4 p Esonzuil 49 3 2 42 2 12
5 Sant 0 0 0 0 0 0
6 > Togrog 5 0 0 3 2 1
7 0 Zuunbayanulaan 35 0 27 5 3 28
8 Kharkhorin 337 0 0 302 35 55
Sub- total Ovorkhangai 568 3 31 489 45 121
PAVGP Restocking Area % Losses by Species in 2001 Dzud
Amag SPAVGP Restocking Beneficiaries
Sum Total Horses Cattle Sheep Goats Bod Equiv
1 Bayan-Undur 3% 0% 8% 3% 1% 3%
2 - Burd 3% 3% 2% 3%
3 Bayangol 0% 0% 0% 0% 0%
4 Esonzuil 2% 9% 20% 2% 1% 3%
5 Sant 0% 0% 0% 0% 0%
0
6 > Togrog 0% 0% 0% 0% 0%
7 0 Zuunbayanulaan 3% 0% 129% 0% 3% 14%
8 Kharkhorin 12% 1 1 12% 7% 12%
Sub- total Ovorkhangai 3% 3% 53% 3% 1% 4%
Table 11i
Public Works
No\.of PW Share of Total Expenditure % of total
Schemes PW Schemes Million Mtg Expenditure
Road Repair 91 14\.40% 349\.6 16\.90%
Drinking water supply 85 13\.40% 289\.9 14\.00%
Building renovation 92 14\.50% 258\.6 12\.50%
Bridge Construction & Repair 61 9\.60% 240\.2 11\.60%
Dam construction & repair 46 7\.30% 192\.6 9\.30%
Garbage clearing 59 9\.30% 190\.3 9\.20%
Environment & Forestry 52 8\.20% 179\.8 8\.70%
Public showers & bath-houses 62 9\.80% 120 5\.80%
Public heating system repairs 25 3\.90% 98\.4 4\.70%
Others 13 2\.10% 59\.5 2\.90%
Ground preparation 20 3\.20% 56\.4 2\.70%
Fuel Collection 25 3\.90% 34\.5 1\.70%
Natural Resources 3 0\.50% 4\.8 0\.20%
All Public Works 634 100\.00% 2,074\.60 100\.00%
- 66 -
Table 11j
RURAL HEALTH
No\.of Share of total Expenditure % of Total
Schemes PW schemes Million Mtg Expenditure
Hospital transport and equipment 89 17% 995\.63 57%
Heating system/renovation 183 35% 564\.28 33%
Maternity Homes 187 36% 111\.05 6%
Health volunteer training 43 8% 32\.91 2%
Health training 2 0% 2\.36 0%
Ambulancce services 4 1% 4\.48 0%
Others 8 2% 23\.13 1%
Total 516 100% 1,733\.85 100%
Table I1k
BASIC EDUCATION
No\. of Share of total Expenditure % of Total
Schemes Schemes million Mtg Expenditure
Heating system/renovation 257 56% 1,018\.53 67%
Strengthening sum school subsidiaries 13 3% 18\.93 1%
Open Bag school 5 1% 8\.22 1%
Sum school/dorm\. Eletrictricy supply 17 4% 34\.01 2%
Dormitory renovation/heating 120 26% 372\.42 24%
Moving teachers 1 0% 1\.09 0%
Open Pre-school Class 1 0% 2\.25 0%
Training for Shool Dropouts 24 5% 30\.31 2%
Training for disabled children 2 0% 0\.70 0%
Bag school renovation and heating 6 1% 17\.01 1%
Ger school 12 3% 12\.93 1%
Others 4 1% 14\.99 1%
Total 462 100% 1,531\.39 100%
- 67 -
Table I1
LDF IG PROJECT REPAYMENT STATUS
# AIMAG I cycle due it cycle due III cycle due IV cycle due V cycle due Total due Total amount Total
repaid repayment
rate/%/
100% by 100% by 50% by 50% by 100% by 03\.01\.2000
03\.01\.2000 2000\.VII\.1 02\.10\.2000 2000\.V\.1 1998\.XII\.1
1 Arkhangai 6,750,000 12,340,000 15,605,000 34,695,000 15,691,200 45%
2 Bayan-UIgii 5,302,990 12,500,000 9,150,000 26,952,990 7,954,998 30%
3 Bayankhongor 6,695,000 4,000,000 1,500,000 1,182,000 13,377,000 8,291,800 62%
4 Bulgan 3,860,000 1,650,400 5,510,400 2,666,160 48%
s Gobi-Altai 8,523,000 4,352,000 4,672,700 1,999,250 19,546,950 7,989,100 41%
6 Gobisumber 2,340,000 2,340,000 1,569,000 67%
7 Darkhan-Uul 4,700,000 2,000,000 1,875,400 8,575,400 3,324,000 39%
a Domod 4,700,000 4,230,000 4,700,000 13,630,000 6,482,000 48%
9 Domogobi 4,338,810 600,000 1,150,000 560,650 6,649,460 7,531,810 113%
1o Dundgobi 4,300,000 4,600,000 750,000 9,650,000 6,750,000 70%
11 Zavkhan 7,531,600 4,710,000 4,900,000 17,141,600 6,120,990 36%
12 Orkhon 4,000,000 1,300,000 5,485,000 10,785,000 2,266,200 21%
13 Ovorkhangai 7,700,000 2,284,960 8,730,000 18,714,960 18,587,100 99%
14 Omnogobi 3,380,000 2,741,000 500,000 6,621,000 5,103,000 77%
1s Sukhbaatar 4,204,000 5,895,000 4,089,150 14,188,150 8,887,100 63%
16 Selenge 3,800,000 5,000,000 2\.250,000 11,050,000 3,710,000 34%
17 Tov 4,753,680 3,815,280 5,102,688 13,671,648 9,650,698 71%
18 UVs 4,710,000 10,140,000 6,075,000 20,925,000 8,848,650 42%
19 Khentii 3,720,000 810,000 1,700,000 225,000 6,455,000 7,590,000 118%
2o Khuvsgul 9,080,000 9,900,000 5\.800,000 24,780,000 5,672,700 23%
21 Khovd 5\.000,000 7,000,000 2,500,000 14,500,000 2,230,000 15%
AIMAG TOTAL: 109,389,080 98,218,240 87,435,338 4,716,900 299,759,558 146,916,506 49%
UB Nalaikh 4,000,000 1,700,000 1,300,000 7,000,000 3,511,000 50%
UB Baganuur 1,500,000 960,000 2,460,000 1,692,800 69%
UB Bagakhangai
US Sukhbaatar 2,945,096 2,561,000 2,231,200 7,737,296 3,046,470 39%
UB Chingeltei 3,812,884 2,395,732 1,093,155 7,301,771 3,974,122 54%
US Bayangol 4,000,000 2,500,000 1,075,000 7,575,000 2,868,000 38%
UB Bayanzurkh 3,749,400 2,178,700 1,516,056 7,444,156 4,166,500 56%
UB Khan-Uul 4,496,400 2,375,100 1,692,750 8,564,250 2,333,300 27%
UB Songinokhairhan 2,505,008 3,500,000 2,005,175 8,010,183 2,930,120 37%
22 Ulaanbeatar 25,508,788 18,710,532 11,873,336 56,092,656 24,522,312 44%
GRAND TOTAL: 134,897,868 116,928,772 99,308,674 4,716,900 355,852,214 171,438,818 48%
- 68 -
Table 11m
IGF PROJECT REPAYMENT STATUS
Income Generation Fund
# AIMAG Disbursed by Due 12/31100 Repaid Repayment
12131100 12131100 rate %
1 Arkhangai 59,800,000 44,450,000 5,780,700 13%
2 Bayan-Ulgii 123,000,000 39,000,000 2,842,600 7%
3 Bayankhongor 59,200,000 39,000,000 18,900,000 48%
4 Bulgan 55,611,018 30,000,000 5,310,000 18%
5 Gobi-Altai 57,154,000 30,154000 21,604,000 72%
6 Gobisumber 24,941,300 8,851,300 12,139,833 137%
7 Darkhan-Uul 152,594,000 26,994,000 17,580,000 65%
a Dornod 96,000,000 69,000,000 18,919,500 27%
9 Dornogobi 48,130,000 31,980,000 31,538,987 99%
i0 Dundgobi 40,050,000 30,000,000 19,743,001 66%
11 Zavkhan 48,900,000 30,900,000 13,334,950 43%
12 Orkhon 21,020,000 21,020,000 5,190,500 25%
13 Ovorkhangai 63,000,000 27,000,000 9,623\.200 36%
14 Omnogobi 41,300\.000 27,200,000 25\.000,000 92%
15 Sukhbaatar 48,300,000 48,300,000 16,518,468 34%
16 Selenge 30,000,000 27,000,000 2,700\.000 10%
17 Tov 32,250,000 32,250,000 20\.274,559 63%
18 UVS 69,000,000 45,000,000 5,671,500 13%
19 Khentii 27,000,000 12,000,000 9,542,000 80%
2o Khuvsgul 55,816\.000 55,816,000 20,200,000 36%
21 Khovd 51,000,000 27,000,000 12,231,400 45%
Total of almags: 1,204,066,318 702,915,300 294,645,198 42%
UB Nalaikh 64,000,000 23,000,000 3,838,262 17%
US Baganuur 26,250,000 16,200,000 15,594,150 96%
US Bagakhangai 19,600\.000 7,600,000 6,792,800 89%
US Sukhbaatar D 37,000,000 34,000,000 9,161,500 27%
UB Chingeltei 32,898,557 17,998,557 13,999,818 78%
US Bayangol 64,900,000 18,000,000 9,470,000 53%
UB Bayanzurkh 50,400,000 29,900,000 31,552,150 106%
US Khan-Uul 75,050,000 20,885,000 3,853,000 18%
UB Songinokhairkhan 134,900,000 50,900,000 16,956,000 33%
22 Total US: 504,998,557 216,483,557 111,217,680 51%
ITUAL: 1,1UU,U4,51 VZ1,3sU,50t 405,52,878 447\.
- 69 -
Table 11n
Revolving Funds
Amount Disbursed Disburs\. Amount Repaym Projects
in RLF from RLF Rate Repaid Rate
Aimag Tg 1000 Tg '000 Tg 1'000 %
Arkhangai 26182 6000 23% 0 0% 21
Bayan-Ulgii 13298 5400 41% 0 0% 29
Bayankhongor 34876 5700 16% 3513 62% 13
Bulgan 13381 0 0% 0 0% 0
Gobi-Altai 30625 3000 10% 2022 67% 6
Gobisumber 15089 6750 45% 34 1% 20
Darkhan-Uul 41855 9680 23% 444 5% 10
Dornod 47175 13049 28% 1000 8% 63
Dornogobi 57732 69522 120% 16123 23% 259
Dundgobi 30035 3000 10% 0 0% 7
Zavkhan 29811 10900 37% 1498 14% 18
Orkhon 18092 1000 6% 70 7% 1
Ovorkhangai 38850 34850 90% 17827 51% 152
Omnogobi 46288 27734 60% 7158 26% 105
Sukhbaatar 29685 3000 10% 795 27% 9
Selenge 7570 9400 124% 1506 16% 71
Tov 39491 9000 23% 0 0% 90
Uvs 18205 6700 37% 0 0% 11
Khentii 23257 7100 31% 0 0% 18
Khovsgul 24989 0 0% 0 0% 0
Khovd 20664 1750 8% 450 26% 5
Nalaikh 8929 1300 15% 0 0% 3
Baganuur 19396 18675 96% 13762 74% 79
Bagakhangai 7568 1400 18% 0 0% 5
Sukhbaatar 21369 13300 62% 0 0% 14
Chingeltei 27012 22000 81% 0 0% 30
Bayangol 22643 3900 17% 200 5% 5
Bayanzurkh 44015 21900 50% 606 3% 83
Khan-Uul 11336 12500 110% 300 2% 32
Songinokhairkhan 34728 4500 13% 0 0% 6
Total 804146 333010 12\.034104 67308 20%/ 1165
Reported totals 1370
IDA share 685
59Vo
50%
-70 -
Revolving Funds cont'd
RLF beneficiaries
total pop Total Female FHH Disabled
Aimag
Arkhangai 254 56 27 0 0
Bayan-Ulgii 180 113 28 8 0
Bayankhongor 26 13 13 1 0
Bulgan 0 0 0 0 0
Gobi-Altai 30 30 7 0 0
Gobisumber 112 42 21 6 2
Darkhan-Uul 65 41 9 6 2
Dornod 273 162 121 22 3
Dornogobi 1992 746 340 67 18
Dundgobi 72 59 26 3 2
Zavkhan 309 100 59 15 1
Orkhon 5 10 4 1 0
Ovorkhangai 1357 540 328 46 0
Onnogobi 480 244 139 52 9
Sukhbaatar 109 29 16 2 0
Selenge 386 94 76 28 0
Tov 425 185 116 12 5
Uvs 220 53 47 8 0
Khentii 66 66 26 3 0
Khovsgul 0 0 0 0 0
Khovd 26 18 13 3 0
Nalaikh 30 15 8 1 3
Baganuur 549 218 140 16 6
Bagakhangai 30 14 7 1 0
Sukhbaatar 242 116 58 21 0
Chingeltei 346 148 103 19 3
Bayangol 133 42 35 10 4
Bayanzurkh 826 336 244 56 13
Khan-Uul 376 127 65 8 2
Songinokhairkhan 123 33 33 3 1
Total 9042 3650 2109 418 74
Reported totals 12567 5069 2768 418 74
IDA share 2535 1385
69% 66%
50% 50%
-71-
Additional Annex 12\. Selected Social Indicators for Mongolia
1990 1991 1992 1993 1994 1995
1\. Population (source NSO) 2,187,251 2,214,946 2,250,000 2,280,000 2,317,500
Population growth rate (% per annum) 1\.8% 1\.3% 1\.6% 1\.3% 1\.6%
2\. Health (source MoH)
Maternal deaths 89 93 129 124 116 101
Number of woman giving birth 72,790 69,776 63,037 47,726 52,723 54,052
Number of live births 54,293
Maternal mortality rate/1000 women giving birth 12\.2 13\.3 20\.5 26\.0 21\.2 18\.8
MMR per 1000 live births 18\.6
Infant mortality rate (per 1000 live births) 62\.6 59\.5 61\.2 48\.0 46\.79 44\.57
Number of infectious disease cases 25,228 26,843 42,694 32,713
Change in MMR (%) 9% 54% 27% -18% -11%
Change in IR (%) -5% 3% -22% -3% -5%
Change in No\. of infectious diseases (%) 6% 59% -23%
3\. Basic Education (source MoECS)
Number of schools 681 663 659 664
Primary school enrolment MoECS 98\.6 n\.a\. 82\.2 n\.a\. 84\.6 88\.0
Female primary school enrolment rate n\.a\. n\.a\. 83\.3 n\.a\. 85\.4 88\.7
Male primary school enrolment rate n\.a\. n\.a\. 81\.1 n\.a\. 83\.8 87\.2
Gender balance (girls as % of boys) 103% 102% 102%
Pupils reaching grade 5 (% of cohort) 90\.6 85\.2 86\.1 84\.1 76\.1 72\.2
Literacy rate 69\.8 70\.8 71\.9 73\.0 74\.0 75\.0
Female literacy rate 78\.5 79\.2 79\.9 80\.6 81\.3 81\.9
Male literacy rate 60\.9 62\.3 63\.7 65\.1 66\.5 67\.9
Gender balance (females as % of males) 129% 127% 125% 124% 122% 121%
- 72 -
1996 1997 1998 1999 2000 2001
1\. Population (source NSO) 2,353,338 2,387,006 2,420,505
Population growth rate (% per annum) 1\.5% 1\.4% 1\.4%
2\. Health (source MoH)
Maternal deaths 90 7I 80 90
Number of woman giving birth 51,618 49,317 49,062 49,229
Number of live births 51,806 49,448 49,256 49,461
Maternal mortality rate/l000 women giving birth 17\.6 14\.5 15\.8 17\.5
MMR per 1000 live births 17\.4 14\.4 16\.2 18\.2
Infant mortality rate (per 1000 live births) 40\.52 40\.18 35\.38 36\.07 31\.2
Number of infectious disease cases 28,113 25,293 28,290
Change in MMR (%) -6% -18% 9% 11%
Change in IMR (%) -9% -1% -12% 2% -14%
Change in No\. of infectious diseases (%) -14% -10% 12%
3\. Basic Education (source MoECS)
Number of schools 658 645 630
Primary school enrolment MoECS 90\.3 95\.9 96\.5 97\.3 89\.9
Female primary school enrolment rate 91\.5 97\.2 97\.3 98\.3 91\.2
Male primary school enrolment rate 89\.1 94\.5 95\.7 96\.3 88\.6
Gender balance (girls as% of boys) 103% 103% 102% 102% 103%
Pupils reaching grade 5 (% of cohort) 77\.1 77\.3 81\.3 80\.9 83\.6
Literacy rate 75\.9 76\.8
Female literacy rate 82\.5 83\.1
Male literacy rate 69\.2 70\.5
Gender balance (females as % of males) 119% 118%
- 73 -
-74-
z

ä¸ä¸ | REVIEW |
P076908 |  ICRR 12040
Report Number : ICRR12040
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 03/29/2005
PROJ ID : P076908 Appraisal Actual
Project Name : Poverty Reduction Support Project Costs 50\.0 50\.0
Credit III US$M )
(US$M)
Country : Burkina Faso Loan/
Loan US$M ) 50\.0
/Credit (US$M) 50\.0
Sector (s): Board: PO - General public Cofinancing
administration sector US$M )
(US$M)
(40%), Primary education
(20%), Health (20%),
General agriculture fishing
and forestry sector (15%),
Sub-national government
administration (5%)
L/C Number : CH058
Board Approval 04
FY )
(FY)
Partners involved : None Closing Date 06/30/2004 06/30/2004
Prepared by : Reviewed by : Group Manager : Group :
Martha Ainsworth Jorge Garcia-Garcia Alain A\. Barbu OEDSG
2\. Project Objectives and Components
a\. Objectives
The overall objective of the PRSC series is to contribute to the implementation of the PRSP public expenditure
program, which supports achievement of the government's core objectives for 2005 of: (i) raising GDP/capita by at
least 3% annually; (ii) reducing the headcount poverty index from 45\.3% to <35%; (iii) raising the literacy rate from
19% to 40%; and (iv) increasing life expectancy to 57 years\. (President's Report, PR, p\. 4)
The specific objectives of PRSC III are not provided in the Program Document (PD), so are presumed to be the same
as prior PRSCs--to help the government achieve better outcomes in the management of public resources by :
(i) strengthening program budgets linking allocations to specific sector objectives, strategies and action plans;
(ii) improving service delivery in education, health, and rural development;
(iii) strengthening the fiduciary framework to promote accountability and transparency in the use of public funds,
including external assistance; and
(iv) strengthening the Government's capacity to track and manage public expenditure efficiently \.
An additional, implicit objective is to provide resources "to safeguard macroeconomic stability " by ensuring that "the
government budget, including the poverty reduction action plans, be financed in a sustainable, non -inflationary
manner" and "to insulate the poor against the impact of shocks to the economy \." (PR, p\. 24)
b\. Components
The objectives are to be achieved through activities grouped into two components :
(i) Public sector reform and governance
(ii) Pro-poor sectoral policies and institutional changes in basic education, health, and rural development \.
c\. Comments on Project Cost, Financing and Dates
PRSC III was financed by an IDA grant for debt -vulnerable countries\. It is the last of a 3-tranche PRSC series; it was
originally to be $40 million, but was increased by $10 million to accommodate financing needs following the Ivorian
crisis\. This is a regular, full ICR for the last in the series; simplified ICRs were submitted for PRSCs I & II \.
3\. Achievement of Relevant Objectives:
*This section deals only with the objectives of PRSC -III, as the two previous PRSCs were covered by earlier ICRs \.
(i) Strengthening program budgets linking allocations to specific sector objectives, strategies and action plans :
Satisfactory
The MTEF for 2003-5 was adopted; it and program budgets derived from its expenditure ceilings are aligned
with PRSP priorities and recommendations of the basic education, health, and infrastructure PERs were
reflected in the 2003 budget law\.
An action plan for the elaboration and implementation of the 2004-06 MTEF was prepared; remaining
weaknesses of program budgets have been identified and will inform analytical work \.
(ii) Improving service delivery in education, health, and rural development : Satisfactory
Education:
The government is satisfactorily implementing the 10-year education development plan \. Primary education's
share of total education expenditure has been maintained at 60% and the share of education in total government
spending has risen from 21\.6% to 23%\.
School supplies are being subsidized in the 20 provinces with the lowest schooling levels
Access to education in the 20 provinces with the lowest schooling is being increased by : building more schools;
introducing multigrade teaching where population density is low; and expanding double -shift teaching in urban
areas where there is excess demand \. (The ICR does not provide statistics, however \.)
The medium term budget and program were updated in preparation for the Education for All Fast Track, however
the government still needs to prepare a full sectoral MTEF for the education sector \.
Health:
Administrative instructions for deconcentration and decentralization of health personnel were issued, although
the planning and recruitment plan remain to be developed \.
Special vaccination days were held throughout the country to raise the DPTC 3 rate to at least 70 percent in rural
areas\.
The Ministry of Health (MOH) issued a nationally standardized list of prices for generic drugs and for medical
services in February 2003\. Prenatal care and vaccination services are provided for free and prices for 3
pediatric drugs, pediatric consultations, and delivery are subsidized \.
Regies d'avance were set up in all 66 health regions and districts, managers for the accounts were appointed
and trained, and resources were transferred in March -April 2003\. Further follow-up is needed to ensure that the
resource flow to districts is sufficient, however \.
A pilot project of local third party payment was designed, to finance the essential health services of indigents \.
Two-thirds of health centers have at least one staff member who has been trained in planning, budgeting, and
monitoring\.
Rural development:
In terms of liberalization of the cotton sector, the trigger was partially fulfilled in terms of various preparations to
implement an 18-month program that will open two new cotton zones to private investors \.
A review of progress in implementing the pilot for demand -driven agricultural service delivery was completed \.
Action plans for cereals and oilseeds were finalized; a firm has been contracted to prepare an action plan for
fruits and vegetables\.
A fruit terminal with cooling facilities was opened at the Ouagadougou airport \.
A firm was chosen to undertake the institutional reform analysis of the Ministry of Agriculture; planned analyses
for the Ministries of Animal Resources and Environment have not been launched \.
A workshop was held to disseminate national environmental assessment (EA) procedures and Bank
environmental and social safeguards to facilitate ministries' compliance; specific technical guidelines for sector
or activity-specific EAs remain to be prepared \.
(iii) Strengthening the fiduciary framework to promote accountability and transparency in the use of public funds,
including external assistance : Moderately satisfactory
A new procurement decree consistent with international best practice was adopted in May 2003; a high-level
working group was created to define and oversee execution of procurement reforms; a draft procurement
manual and draft capacity building plan were finalized in June 2003; however, the audit of public procurement
(to verify that 50% of public procurement was subject to competitive procurement practices ) was delayed\.
The 2001 budget execution reports were submitted to the Supreme Audit Court in April 2003 and the draft
organic budget law was approved by parliament in January 2003\.
Health budgets continue to be posted at health facilities, increasing transparency \. The Participatory Poverty
Assessment was completed in March 2003\.
(iv) Strengthening the Government's capacity to track and manage public expenditure efficiently : Satisfactory
A feasibility study of a computerized revenue management system was completed and the government made
further progress in integrating foreign -financed investment into the Computerized Expenditure Circuit (CID) of
the integrated financial management system \.
The experience of the regie d'avance was evaluated for the health sector; the government opted for
consolidating and fully operationalizing the experience in the health sector and expanding budget
deconcentration (rather than extending the system to other ministries )\.
The Government issued instructions guiding budget deconcentration procedures in Sept 2002; Budget
administration at the regional level, linked to the CID, was created as a pilot in Bobo Dioulasso for FY 2003\.
Budget and treasury offices in Bobo can now issue commitments, verifications, and payment orders directly,
without intervention from Ouagadougou \.
A government plan for deconcentrating personnel management, under the principle of making civil servants
available to regions and provinces according to their needs, was adopted \. Instructions were reissued in Sept
2002 to apply performance-based personnel evaluation system as of January 2003; the Ministry of Civil Service
received additional funding to unify the personnel databases in 2003\.
A household survey was completed in 2003; the government adopted the RMSM-X macro model enhanced with
a cotton module and a poverty analysis macro simulator (PAMS), with technical assistance from the Bank \.
(v) Maintaining macroeconomic stability : Satisfactory
Except for 2000 (when real GDP growth was only 1\.6%, due to drought), the target of 4-6% real GDP growth
rates appears to have been met \. Real GDP growth rates exceeded 4% in 2001 and 2002\. According to the IMF,
estimated GDP growth rates for 2003 and 2004 were 8% and 4\.8%, respectively (IMF Country Report 05/95,
March 2005)\.
Per capita GDP growth rose from -0\.9% in 2000 to 2\.1% in 2001-2, but is estimated to decline to only 0\.2% in
2003 and 1\.6% in 2004(PD, p\. 5); the target was 2%\.
The target was to keep inflation below 3%\. This was not met\. According to the PD, estimated inflation in 2001
exceeded 4%; according to the IMF, estimated (end of period) inflation was 3\.9% in 2002 and 3\.2% in 2003 and
projected to be 0% in 2004 (IMF Country Report 05/95, March 2005)\.
4\. Significant Outcomes/Impacts:
Most of the anticipated outcomes for the three -operation series were achieved or partly achieved (see below)\.
However, the extent to which they can be attributed to specific actions linked to the PRSC -- as opposed to
implementation of other IDA investment projects, the actions of other donors, or exogenous events (like better
weather, changes in international prices, better incomes )-- is not clear\. In addition, based on these trends through
2003, it is unlikely that the Government's core objectives for 2005 will be met\.
Poverty reduction:
The share of the population below the poverty line declined (by the headcount index) from 54\.6% in 1998 to
46\.4% in 2003\.
Public sector and governance :
The share of material and services budget allocated to deconcentrated units in education increased from 65% to
76% from 2000-2001 and increased further in 2002\. However, in the health sector it declined from 40% to 36%\.
(PD, p\. 15)
The prices paid for publicly procured goods got closer to market prices, but further reductions are needed \.
Transparency has been enhanced by making administrative data and the results of surveys on service delivery
quality and expenditure tracking regularly available, and by making budget documents public \.
Pro-poor sectoral policies:
Education: (a) Gross primary enrollment rates (GPER) rose from 41\.7% (1999-2000) to 52\.3% (2003-4); in the
20 most disadvantaged provinces, it rose from 27\.8% to 36\.2%\. (No targets were set in the PRSC\.) (b) The
GPER for girls rose from 36\.2% to 46\.0%, nearly reaching the target of 50% in 2003\. (c) Literacy rates rose from
18\.4% in 1998 to 21\.8% in 2003, substantially short of the target of 25%\.
Health: (a) The cost of many medical interventions (appendectomy, casesarian, etc ) declined in 2002 by
15-30%\. (b) Target increases in vaccination rates for 1999-2002 were met for BCG and DTCP3 (rising from
60% to 90\.4% and from 42 to 69\.1%, respectively), but fell short for measles (rising from 53% to 64\.1%) and
yellow fever (from 50% to 61%); the target for both of the latter was 70%\. (c) Infant mortality declined from
105/1000 live births in 1999 to 83/1000 in 2003, nearly reaching the target of under 80/1000\. This is a large
decrease -- about 20% -- over a period during which the economy performed modestly \. It is doubtful that the
modest improvements in immunization, health care access and quality during this period can account for such a
large decline; one is left wondering how the rate could decline so dramatically and wondering how reliable the
statistics are\. (d) The number of new contacts/person/year in first-level health facilities rose from 0\.21 to 0\.27\.
However, the interpretation of these statistics is ambiguous without more information : an increase could signal
a failure in prevention programs, an epidemic, or famine (bad outcomes) or a reduction in service cost, an
increase in quality or availability (good outcomes)\.
Rural Development: (a) 800 km of feeder roads were constructed out of HIPC resources during 2002-02\. (b)
Cereal production increased by more than 15% in 2003 after an already abundant harvest in 2002; the extent to
which this can be attributed to actions implemented by the PRSC or to better weather is not discussed \.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Education: (a) Execution of deconcentrated budgets by the education ministry has been poor and needs
improvement\. Public expenditure reviews have still not been completed (as planned) for the higher education
and justics ministries\. (b) Reducing the cost per child in primary school was among the target outputs, but it
increased by 5\.5% in 2002, though it remains below its 2000 level\. (c) Female literacy rates remained
unchanged\.
Health: (a) The ownership of the PRSC-supported reform program by the MOH was weak, and there is currently
no specific sectoral investment operation in the health sector \. The transition from project to programmatic
support required changes in instruments and a new focus on the budget \. The Bank waived a trigger in PRSC-3
on reform of personnel management and incentives that could have helped to entice health personnel to work in
rural and poor areas\. (b) There was initially a drop in resources allocated to the health districts (through 2001)
following the closing of the Bank health project that was transferring resources directly to the districts; however,
health district financing doubled between 2001 and 2003\.
Rural Development: (a) Farm mechanization rates remain low (an increase was in the matrix but no data are
provided on trends)\. (b) Diversification of farm incomes remains very limited and reliance on cotton possibly is
growing (no data provided)\.
Public finance: Due to onerous approval procedures by the Government, none of the three PRSCs were
disbursed until October-November, toward the end of the budget year \. Thus, Bank resources have not been
able to alleviate the beginning -of-year cash shortages that constrain investment spending \.
Monitoring and evaluation: According to staff, the project did not collect data on several of the key performance
indicators set out in the PD: (i) reduction in the cost of medical interventions in 'first level' health centers
(evidence presented was on surgical procedures ); (ii) decrease in maternal mortality from 484/100,000 to
<400/100,000 from 1999-2003 and reduction in mortality rates in poor families; and (iii) increase in loans granted
to farmers\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory The timely update of the poverty profile to
correspond with the end of the PRSC was
fortunate\. However, the project did not
collect a number of key performance
indicators set out in the PD\.
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
NOTE:
7\. Lessons of Broad Applicability:
The preparation and implementation of program budgets can only advance to the extent that the capacity exists
in the civil service; in the case of Burkina Faso, that capacity remains weak and needs to be improved \. Capacity
is also a constraint with respect to evaluation of policy outcomes and making more effective use of available
poverty statistics and result indicators \.
In the case of the education sector, a PRSC can complement an existing sectoral investment program,
promoting a selective set of reforms to reduce education costs and increase enrollment \.
The dialogue surrounding preparation of PRSCs is an important opportunity to help Government to prioritize
PRSP-related activities and improve the monitoring of PRSP implementation \.
PRSCs have lowered transactions costs compared to project financing, but harmonization also risks resulting in
an "all or nothing" financing scenario, with more volatility of budget resources \.
Household surveys must maintain the comparability of measures of household consumption and other key
poverty indicators over time, in order to accurately monitor the outcomes of policies and programs implemented
as part of the PRSP\.
8\. Assessment Recommended? Yes No
Why? The PRSC focuses on raising human development indicators quickly, from a low level, in a very
low income country\. The results of reforms and the complementarity with investment project lending in these sectors
is likely to yield important lessons \.
9\. Comments on Quality of ICR:
The ICR is satisfactory\. The use of household data to demonstrate outcomes is commendable \. There were a few
shortcomings, however\. The ICR does not report whether the following outcomes were achieved, in table 1, although
OED believes that the data were collected :
Growth in real GDP/capita of 2% per year
Outages of essential drugs kept below 8%
The existence of household consumption surveys covering the period of implementation is a real benefit that could
be exploited to greater extent in future ICRs \. While evidence is presented demonstrating that outcomes in the
aggregate were largely achieved, the ICR would have been more compelling if it had presented data showing that
access or outcomes among the poor improved disproportionately -- for example, that enrollment or immunization
increased mostly among the lowest quintiles \. In addition, multivariate analysis of the determinants of outcomes in
the two periods, including links to policy variables measured at the household level, and changes in the
determinants, might yield more insights on the extent to which these outcomes are due to specific policies or
programs that were supported\. | REVIEW |
P129600 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
03 -Global Partnership for Educ Program (P129600)
Report Number : ICRR0021564
1\. Project Data
Project ID Project Name
P129600 03 -Global Partnership for Educ Program
Country Practice Area(Lead)
Benin Education
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
TF-16842,TF-16846 30-Jun-2016 42,030,538\.16
Bank Approval Date Closing Date (Actual)
21-Mar-2014 30-Apr-2018
IBRD/IDA (USD) Grants (USD)
Original Commitment 42,300,000\.00 42,300,000\.00
Revised Commitment 42,300,000\.00 42,300,000\.00
Actual 42,030,538\.16 42,030,538\.16
Prepared by Reviewed by ICR Review Coordinator Group
Katharina Ferl Judyth L\. Twigg Eduardo Fernandez IEGHC (Unit 2)
Maldonado
2\. Project Objectives and Components
a\. Objectives
According to the Project Appraisal Document (PAD, p\. vii) and the Financing Agreement of March 21, 2014
(p\. 5), the objective of the project was âto improve (i) access and equity, and (ii) quality of classroom
instruction at the basic education level, with particular emphasis on deprived districts in the Recipient's
territory\.â
The basic education level is defined as primary level and lower secondary level\.
Page 1 of 17
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
03 -Global Partnership for Educ Program (P129600)
Some key outcome targets were revised at a 2015 restructuring, As neither the original nor revised targets
were achieved for any of these indicators, a split rating is not performed\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
Yes
Did the Board approve the revised objectives/key associated outcome targets?
No
PHEVALUNDERTAKENLBL
c\. Will a split evaluation be undertaken?
No
d\. Components
The project included three components, most of which were to be administered in 31 of Beninâs 77 districts\.
The districts were selected based on the following criteria: at the primary level, districts with a General
Enrollment Rate (GER) lower than 95 percent and/or a completion rate of less than 50 percent\. 25 districts
representing 22\.7 percent of students and 25\.3 percent of schools qualified\. At the secondary level,
districts with a GER for girls lower than 30 percent, accounting for 15\.1 percent of students and 20\.6
percent of schools\. 17 districts overlapped at the primary and lower secondary levels\. Two sub-
components from Component 1 (pre-service training of lower secondary teachers) and Component 3
(strengthening school inspection and improving pedagogical management through the use of student
learning assessments) were implemented in all of Beninâs 77 districts\.
Component 1: Improving the quality of basic education (appraisal estimate US$8\.2 million, actual
US$12\.9 million): This component was to finance the improvement of teaching practices and the quality of
the learning environment in Beninâs most deprived districts\. The teaching practices of primary school
teachers were to be improved through in service-training and pre-service training\. Also, this component
was to finance school grants for the acquisition of learning materials, not including textbooks, to support
primary schools in the targeted districts\. Each school was to receive US$ 1,000 to purchase teaching
materials only in the school year 2014-2015\.
Component 2: Improving access and equity (appraisal estimate US$25\.3 million, actual US$23\.1
million): This component was to finance the construction and equipment of classrooms in primary and
lower secondary schools, as well as activities necessary to improve retention and equity, including school
feeding programs and actions aimed at promoting girlsâ enrollment, in the targeted districts\. In order to
reduce the shortage of classrooms in the targeted districts, this component was to finance the construction
and equipment of classrooms in selected schools based on the needs of each district and student-
classroom ratios\. The number of classrooms to be built was as follows:
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⢠For primary schools: (i) 255 classrooms or 85 standard modules of three classrooms (which were to
include an office and a storage room), 6,375 student desks, and 255 teacher desks; and (ii) 170 blocks
of 4 latrines;
⢠For lower secondary schools: (i) 192 classrooms or 48 standard modules of four classrooms, 4,800
student desks, and 192 teacher desks; and (ii) 96 blocks of 4 latrines\.
The project was also to finance, in its last two years, 396 existing school canteens run by communities in
the targeted districts by offering at least one meal per day to an average of 128,000 students annually\.
Furthermore, in order to promote girlsâ access, the component was to finance primary school package for
all girls in grades 1 and 2 in targeted districts, approximately 91,000 students per year, consisting of: (i)
school supplies, including notebooks, other didactic materials (excluding textbooks), and a school bag; and
(ii) school uniforms\.
Component 3: Improving sector management and governance (appraisal estimate US$8\.8 million,
actual US$5\.9 million): This component was to finance the installation of a network data center in the
central ministry of primary education, the six regional primary education directorates, and six selected
district education offices; the development of specific programs (school statistics, computerized staff
management, and consolidated results of school exams); and the building of capacities for the
management and use of an Education Management Information System (EMIS)\. It was also to finance the
strengthening of school inspections and improvement of pedagogical management through the use of
student learning assessments\. Furthermore, this component was to finance carrying out training for key
staff, strengthening capacity in data collection and analysis and improving monitoring and evaluation
functions\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost: The project was estimated to cost US$42\.3 million\. Actual cost was US$42\.03 million\.
According to the ICR (p\. 23), during the second restructuring the budget for each component was revised,
resulting in a budget execution rate of 123 percent for component 1, and 93\.5 percent and 83\.7 percent
for components 2 and 3, respectively\. According to the ICR (p\. 23), the government decided to invest
relatively more in the first component after initial weak results in teacher training, and less on the second
and third components based on cost savings accruing from a policy that waived taxes on construction\.
Financing: The project was to be financed by a US$42\.3 million Global Partnership for Education (GPE)
grant\. The project used a pooled funding mechanism building on the previous Education for All - Fast
Track Initiative (EFA-FTI) arrangement (ICR, p\. 34), intended to ensure alignment by working through
existing systems\.
Borrower Contribution: It was not planned for the Borrower to make any contribution\.
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Dates: The project was restructured twice:
September 17, 2015: The project was restructured to: (i) make modifications to the Results Framework:
The target for the PDO indicator âGER in lower secondary education in targeted districts (total and girls)â
was decreased, given a decrease in GER observed during the initial 16-month implementation period\. The
target for the PDO indicator âPrimary Education Completion Rate (PECR) in targeted districts (total and
girls)" was increased to take into account progress made on this indicator as of the 2013-14 school year\.
Some intermediate indicators and targets were also revised; (ii) extend the projectâs closing date by
eleven months from June 30, 2016 to May 31, 2017 to allow for the completion of activities that had
been delayed due to a nine-month delay in project effectiveness; (iii) provide and distribute grammar
books to teachers under component 1; (iv) reallocate US$1\.8 million of grant proceeds from category 2 to
category 1 of eligible expenditures; and (v) make changes to the Grant Agreement in terms of
disbursement percentages under each trust fund and inclusion of specific guidelines related to the
disbursement of the trust funds\.
May 21, 2017: The project was restructured to: (i) extend the closing date by eleven months from May 31,
2017 to April 30, 2018 to allow for the completion of some project activities such as the construction of
additional schools (which was financed from cost savings resulting from exchange rate gains),
establishment of a learning assessment system, implementation of school feeding activities, and
establishment of the EMIS; and (ii) reallocate costs across components and categories of expenditure\.
3\. Relevance of Objectives
Rationale
The project's objectives were highly relevant to country context, government strategy, and Bank strategy\. In
2010, per capita income in Benin was US$680, putting it in the lower income group of countries with
moderate economic performance\. The government was implementing a Growth Strategy for Poverty
Reduction to remove constraints on raising economic competitiveness, reach the Millennium Development
Goals, and promote good governance\. However, Benin ranked 166th out of 186 countries on the United
Nations 2012 Human Development Index\. Also, the country was experiencing a relatively high rate of
population growth (3\.2 percent per year between 1992 and 2012) and struggled to meet increasing demand
for social services\. In 2006/2007, the government had abolished pre-primary and primary school fees and
established a school grants mechanism managed by school directors and School Management
Committees\. Also, in 2006, the government had adopted a ten-year Education Sector Development Plan
that focused on improving service delivery to increase access, equity, retention, and learning outcomes in
basic education, promoting girlsâ education, training qualified teachers, and strengthening governance and
efficiency through school-based management\. However, the education sector continued to face challenges
such as a rapid increase in school-age population, an increase in repetition rates, a continuously high
dropout rate, shortage of teachers, and overall conditions not adequately supporting teaching and learning\.
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The project's objectives were aligned with the countryâs new Education Sector Development Plan (2018-
2030) that focuses on promoting equitable access, improving teaching practices, and increasing equitable
access of girls to schools\. The objectives were highly relevant to the Bankâs Country Partnership Strategy
(FY 13-17) at appraisal, which identified under its second pillar âimproving service delivery and social
inclusionâ the need to improve the quality of education especially in deprived districts, as well the need to
ensure that gender issues were mainstreamed within the framework\. The objectives were also in line with
the Bankâs most recent Country Partnership Framework (FY19-23), which focuses under its second priority
âequitable access to opportunities and inclusion of the poor in the growth processâ on three areas: (i)
developing human capital by improving equitable access to quality education and other basic services; (ii)
improving educational outcomes and increasing educational attainment to further reduce poverty, increase
labor productivity, and create better jobs; and (iii) addressing gender imbalances and regional disparities in
well-being, to improve equality of opportunity and equity overall\.
Rating
High
4\. Achievement of Objectives (Efficacy)
PHEFFICACYTBL
Objective 1
Objective
To improve access, with particular emphasis on deprived districts in the Recipient's territory
Rationale
The projectâs theory of change linked reducing the shortage of classrooms by constructing new classrooms
and providing at least one meal per day with improving access to primary and lower secondary level school\.
According to the ICR (p\. 11), at the primary level, districts with a GER lower than 95 percent and/or a
completion rate less than 50 percent were selected as "deprived" districts, representing 22\.7 percent of
students and 25\.3 percent of schools\. At the lower secondary level, districts with a GER for girls lower than
30 percent were selected, which represented approximately 15\.1 percent of students and 20\.6 percent of
schools\. According to these selection criteria, 17 districts overlapped at the primary and secondary
levels\. The ICR (p\. 8) stated that since the selection criteria for the most deprived districts were based on
access indicators, interventions that aimed at access were implemented only in the most deprived districts\.
The objectives of equity and access were combined in the objectives statement, as the projectâs focus on
implementing access interventions only in the most deprived districts was seen as equity-enhancing\. For
purposes of this assessment, however, equity and access are assessed separately, in order to capture fully
the results chains for each element\.
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Outputs
⢠318 equipped classrooms at the primary level and 212 equipped classrooms at the lower secondary
level in deprived districts were constructed, surpassing the target of 255 classrooms at the primary level
and 192 classrooms at the lower secondary level\.
⢠318,245 primary students received at least one meal per day in the deprived districts, surpassing the
original target of 128,000 students and the revised target of 270,000 primary students\.
The project also produced outputs to improve capacity development that should have contributed to the
achievement of all three objectives\.
⢠460 officers of ministries in deprived districts were trained in areas such as Excel, leadership and team
management, archives and electronic records management, budgeting etc\., surpassing the original target
of 300 officers and the revised target of 350 officers\.
⢠A data center was established within the Ministry of Basic Education, and software for personnel
management and the management of statistical data was installed\. Due to procurement issues, a full
EMIS could not be implemented in the entire country; only personnel training and implementation of a first
phase of EMIS development were implemented\. As a result, the target -- EMIS being in place at the
central ministry and regional directorates, generating data for preschools and primary education -- was not
achieved\.
Outcomes
⢠According of an end-of project beneficiary survey, 95 percent of parents sampled were satisfied or very
satisfied with the school canteen intervention\.
⢠The GER in the deprived districts decreased from 107 percent in 2015 to 104\.3 percent in 2018, not
achieving the target of an increase to 117 percent\.
⢠The PECR in targeted districts increased from 40\.4 percent in 2014 to 42\.10 percent, not achieving the
original target of 50 percent or the revised target of 56\.5 percent\.
⢠The GER in lower secondary education in target districts decreased from 45 percent in 2014 to 35\.6
percent, not achieving the original target of 52 percent or the revised target of 48\.5 percent\.
Rating
Modest
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PHREVDELTBL
PHEFFICACYTBL
Objective 2
Objective
To improve equity, with particular emphasis on deprived districts in the Recipient's territory
Rationale
The projectâs theory of change linked the provision of school kits to girls with improving equity for girls, and
the provision of equipped classrooms with reducing the gap in access between deprived districts and the rest
of the country\.
Outputs
â¢323,455 school kits were provided to girls in grades 1 and 2 in deprived districts, surpassing the target of
265,000 school kits\. The school kits consisted of notebooks, didactic materials such as textbooks, school
backpacks, and school uniforms\.
Outcomes
⢠According to an end-of project beneficiary survey, 89 percent of parents sampled reported being
satisfied or very satisfied with the school kits\.
⢠The Gross Primary Intake Rate (GPIR) of girls in the deprived districts increased from 100\.5 percent in
2015 to 104\.4 percent in 2018, not achieving the target of 114 percent\.
⢠The GER in lower secondary education of girls increased from 23 percent in 2014 to 29\.4 percent in 201,
not achieving the original target of 30 percent or the revised target of 37\.5 percent\.
⢠The gap in GPIR for boys and girls between the deprived districts and the average national level
increased from 27\.50 percent in 2014 to 33\.40 percent in 2018, not achieving the original target of a
reduction to 20 percent or the revised target of a reduction to 26 percent\.
⢠The gap in GPIR for girls between the deprived districts and the average national level increased from
29\.5 percent in 2014 to 33 percent in 2018, not achieving the original target of a reduction to 23 percent or
the revised target of a reduction to 28 percent\.
Rating
Modest
PHREVDELTBL
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PHEFFICACYTBL
Objective 3
Objective
To improve the quality of classroom instruction at the basic education level, with particular emphasis on
deprived districts in the Recipient's territory
Rationale
The projectâs theory of change linked the training of teachers and providing teaching materials through
grants with improving the quality of classroom instruction at the basic education level in deprived districts\.
Outputs
⢠10,699 primary level teachers received in-service teacher training in the deprived districts, surpassing
the original target of 9,000 teachers and the revised target of 10,500 teachers\.
⢠9,735 teachers received pre-service training at the lower secondary level\. Modules were developed by
subject experts and delivered to contract teachers\. 387 educational advisors, 73 inspectors, and 1,320
management teams of lower secondary schools (directors, censors, and superintendents) were trained
(these outputs did not have targets)\. At project closing, 63\.3 percent of the teachers who were trained had
graduated and were qualified to teach secondary school\.
⢠1,744 lower secondary teachers were newly recruited (there was no target)\.
⢠In 2017, 26,000 grammar books were purchased, surpassing the target of 21,000 grammar books,
and teachers received a study schedule with guidance on use of the books\.
⢠A system for learning assessment at the primary level has been implemented, achieving the target\. The
assessment has been implemented three times, also achieving the target\.
Outcomes
⢠In 2018, 59 percent of teachers were rated satisfactory by the Institute for Teacher Training and
Research and an external agency survey of classroom observations in the deprived districts, surpassing
the target of 55 percent\.
⢠In addition, 75\.8 percent of public teachers performed at or above accepted standards, based on
inspection and classroom visits each year at the primary level using the OSEP (outil de supervision et
dâencadrement pédagogique) tool, a pedagogical supervision and guidance instrument designed to collect
and analyze teaching and learning data\. This achievement surpassed the target of 70 percent\.
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⢠In 2014, Benin participated in the Programme for the Analysis of Education Systems (PASEC), a
regional assessment (covering ten countries) to assess student abilities in mathematics and reading in
French\. The results from this assessment showed that Benin's student scores at the beginning of primary
school were the second last in language and mathematics, but that by the end of primary school, Benin's
students ranked third in language scores and fourth in mathematics scores\. Within Benin, performance in
urban areas was substantially better than performance in rural areas\.
Rating
Substantial
PHREVDELTBL
PHOVRLEFFRATTBL
Rationale
Overall efficacy was modest\. Although outputs related to access and equity were successfully implemented,
these activities did not translate into anticipated outcomes\. According to the ICR (p\. 22), while the project
experienced progress on each of the PDO-level indicators linked to improving access over the first few years of
implementation, during the last two years these positive trends did not continue (in the deprived districts or at the
national level)\. The inability of the project to achieve its targets specifically on GER in project districts at the lower
secondary level could be explained through a new government policy in 2016 that implemented more rigorous
enforcement of secondary school admission standards\. Overall, however, the ICR stated that, despite the joint
efforts of the ICR team, project team, and government, the factors underlying the decline of PCR and GPIR in
targeted districts and at the national level could not be identified\.
Overall Efficacy Rating Primary reason
Modest Low achievement
5\. Efficiency
The PAD did not include a traditional economic analysis\. It stated (p\. 19) that investments in education,
particularly primary education, generally produce very high economic returns\. The ICR also did not conduct a
traditional economic analysis, stating that sufficient data was not available\. Instead, the ICR assessed the
operational efficiency of the project\.
According to the ICR (p\. 23), the project benefited from substantial cost savings due to exchange rate
fluctuations that increased project funding by 16 percent\. Also, the project benefited from the governmentâs
decision to waive taxes on construction activities, resulting in lower unit costs for new classrooms at the
primary and lower secondary levels (unit costs were 85 percent of budgeted costs) and latrines (unit costs
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were between 87 percent and 92 percent of budgeted costs)\. The ICR (p\. 24) stated that unit costs at the
primary level were lower than cost comparators, while at the lower secondary level, unit costs were higher; no
specific data was provided\. The per student cost of school kits was US$8\.0, lower than the estimated cost of
US$11\.63\. Furthermore, the per-child unit cost of school feeding was US$28, below the average cost of
US$41 in low income countries\.
The project benefited from strong coordination among the 16 different donors within the sector\. The pooled
funding mechanism contributed to alignment of donor interests (ICR, p\. 29)\. However, the project
experienced significant implementation delays related to financial management, procurement, and misuse of
project funds (see Section 10b), all indicative of implementation inefficiencies\. According to the ICR (p\. 29),
financial management staff were highly risk-averse when processing payments, causing implementation
delays related to construction activities, as frequently the payment of one tranche was necessary to move
forward to the next phase of implementation\. These delays also caused service providers (including mothers
providing school feedings) to have to finance activities with their own funds to ensure service continuation\.
Furthermore, the project experienced administrative and procurement bottlenecks, such as the need to re-
launch several procurement procedures to ensure the integrity of procurement processes, delays in drafting
terms of reference or finalizing technical aspects of activities, and long waits for government staff participation
in bidding evaluations and related processes\. In addition, the project was impacted by delays in signing
contracts by ministries such as the Ministry of Finance\. Cumulatively, these delays resulted in the need to
extend the project by 26 months\.
Taking everything together, the projectâs efficiency rating is Modest\.
Efficiency Rating
Modest
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate
Point value (%) *Coverage/Scope (%)
Available?
0
Appraisal 0
ï¨Not Applicable
0
ICR Estimate 0
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
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The project's objectives were highly relevant to country context, government strategy, and Bank
strategy\. Efficacy was modest\. Although there is evidence of substantial achievement related to improved
quality of classroom education based on in-class assessments of teacher performance and relative
improvement in demonstrated primary-level learning outcomes, there was (at best) modest progress in
outcomes related to equity and access\. The ICR reported that the collaborative efforts of the ICR team, project
team, and government were unable to determine the factors underlying the disconnect between well-achieved
outputs and disappointing outcomes\. Efficiency is rated modest due to significant shortcomings in
implementation efficiency\. These ratings indicate significant shortcomings in the project's overall preparation
and implementation, producing an Outcome rating of Moderately Unsatisfactory
a\. Outcome Rating
Moderately Unsatisfactory
7\. Risk to Development Outcome
According to the ICR (p\. 37), the government continues to be committed to the projectâs objectives and
highlighted the importance of infrastructure, teacher training, school canteens, and school kits for 42 newly-
categorized deprived districts in the Education Sector Plan (ESP) 2018-2030\. The ICR (p\. 38) highlighted that
the ESP's objectives are closely linked to this project's PDOs: (i) increasing access and retention of children
aged three to 15 in basic education; (ii) providing children aged three to 15 with fair and inclusive basic
education; and (iii) providing children aged three to 15 with quality basic education\. The ESP contained strong
statements about closing the financing gap for the plan's implementation\. The government is also planning to
continue the national learning assessments and has already made its 2019 contribution to the PASEC\. The
Bank continues to cooperate with the government through a new US$19\.4 million project (Global Partnership
for Education, GPE-3) that will build on many of this project's interventions, including pre- and in-service training
to basic education teachers, school packages for girls in regions with PECRs below 50 percent, strengthening
of the monitoring and evaluation system to fully use the EMIS and extend the EMIS to cover the secondary
level, and implementation of a national assessment in 2022\. According to the ICR (p\. 37), continued support for
project-financed activities from development partners such as United Nations Childrenâs Fund, Deutsche
Gesellschaft für Internationale Zusammenarbeit, and Plan International is likely, as the GPE-3 project's
objectives and design were endorsed by these partners through the Local Education Group\.
It is important to note, however, that continuing to implement more of the same (or similar) outputs as this
project, without fully acknowledging and understanding the factors underlying this project's disconnect between
outputs and intended outcomes, is unlikely to produce desired results\.
8\. Assessment of Bank Performance
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a\. Quality-at-Entry
The ICR (p\. 27) stated that project design built on activities that were successful during the previous EFA-
FTI project, such as strengthening district inspectorates and school management/information systems to
increase accountability to achieve results, providing direct support to schools for the acquisition of learning
materials, and supporting community-run school canteens\. Also, according to the ICR (p\. 29), the project
was built on strong donor coordination based on the EFA-FTI, and the project coordinated with local
development partners to ensure that activities were complementary\. Furthermore, the Bank team worked
with delegated contract management agencies that had been successful in the past to manage
construction activities\.
At appraisal, the Bank team identified the main risk factors that could impede project advancement: weak
capacity at central and local levels, and political reorganization in relevant ministries\. Mitigation activities
included providing technical expertise, capacity building for higher-level and technical staff at the central-
level ministries and decentralized offices in key areas, and training sessions for school headmasters and
heads of parentsâ association in the targeted school districts in order to improve their skills related to
objective-based school contracts\. However, mitigation efforts were not adequate, and the project
experienced several delays due to financial management and procurement issues\.
The projectâs M&E design was generally sound\. However, the ICR (p\. 35) stated that aligning the projectâs
data collection timelines with the government's would have been useful for timely updating of the results
framework\.
Quality-at-Entry Rating
Moderately Satisfactory
b\. Quality of supervision
According to the ICR (p\. 36), the Bank team had an adequate skill mix for project implementation\. The
project benefited from the task team leader being in-country, which ensured continuity in the projectâs
supervision\. The ICR stated that implementation bottlenecks were reported in a timely manner, and that
supervision missions were conducted regularly\. Furthermore, the Bank team ensured strong cooperation
with other development partners and harmonization of activities in the countryâs education sector\. The Bank
team restructured the project twice to modify the results framework to reflect changes in implementation
circumstances and allow for better monitoring of project outcomes\. According to the ICR (p\. 30), two cases
of fraudulent activity in regards to school feeding were addressed adequately (see Section 10b)\.
However, the project experienced several implementation delays\. Implementation started nine months late
due to a lengthy project preparation period that involved delay in completing the recruitment of Program
Monitoring Unit staff (which was a pre-condition for the project)\. Results monitoring encountered several
challenges, including indicators being based on EMIS data that took months to update, and unreliable
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survey data underpinning the indicator on the percentage of schools in deprived districts communicating
student results and budgets to the community\. According to the Bank team (April 25, 2019), the project
would have benefited from closer supervision, include supervision of school feeding during the first two
years of the project, which experienced some financial leakage\. However, the misuse of funds was
significantly reduced after the Bank began to require third-party verification and regular audits on activities
carried out at the school level\. Despite some early challenges, significant efforts were put forth by the Bank
team to ensure that funds were used for their intended purposes\.
Quality of Supervision Rating
Moderately Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. M&E Design, Implementation, & Utilization
a\. M&E Design
The projectâs objectives were clearly specified, and the PDO and intermediate outcome indicators
encompassed all outcomes of the PDO statement\. The selected indicators were adequate in capturing the full
results chain\. All indicators were specific, measurable, and relevant\.
The project invested in an EMIS to build a sustainable information system\. According to the ICR (p\. 31), the
project's M&E design would have benefited from being more aligned with the government's timelines for
reporting education data, as EMIS data was only available several months after the beginning of each academic
year, meaning that it was not available for timely planning purposes for any given school year\.
b\. M&E Implementation
According to the ICR (p\. 32), the projectâs M&E system used existing ministry data collection instruments and
systems at all implementation levels\. Data collection was complex and included the reporting of several
entities such as schools and school districts, non-governmental service providers, follow-up committees at the
commune and regional levels, central-level ministry directorates, and the project's Program and Monitoring
Unit\. In addition, the project collected data from annual work plans in various project implementation units,
periodic implementation reports from executing agencies/service providers, and performance reports from the
ministries\. The ICR (p\. 32) stated that the structure of the M&E process, data collection, analysis, and
reporting was clearly defined, but it required high levels of collaboration between different departments\.
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Project M&E experienced challenges, such as the closing of the statistical division within regional education
offices when the government changed\. Also, the project lacked sufficient resources for data cleaning and
verification during the last year of project implementation, resulting in delays in data processing and reporting
of key indicators\. The ICR (p\. 32) stated that these shortcomings affected data trends, including EMIS data
showing substantial declines in enrollment compared to previous years\. Even though the project supported
the EMIS, there were implementation delays, and project indicators could not be updated with 2017/2018
EMIS data when the project closed in April 2018\. According to the ICR (p\. 33), another shortcoming of the
projectâs M&E was that the indicator tracking the percentage of schools communicating studentsâ results and
budgets to the community could not be fully measured throughout project implementation, as the survey that
was to provide data for this indicator was not reliable\.
The projectâs M&E was rated Moderately Unsatisfactory during the last year and a half of implementation\.
c\. M&E Utilization
According to the ICR (p\. 33), the project used M&E data to inform decision making\. For example, the project
conducted internal and external classroom observations and used the results together with the outcomes of
education system performance (PASEC 2014) to tailor teacher training content and refine the trainingâs
targeting (what teachers would receive training, in what topic, and for how long, during in-service
training)\. Also, M&E activities identified low teacher content as an obstacle to achieving the projectâs quality
outcomes, resulting in the project adding the activity of distributing two grammar books to all primary
teachers in the targeted districts at restructuring in September 2015\.
M&E Quality Rating
Modest
10\. Other Issues
a\. Safeguards
The project was classified as category B and triggered the Bankâs safeguard policies OP/BP 4\.01
(Environmental Assessment) and OP/BP 4\.12 (Involuntary Resettlement)\. The ICR (p\. 35) stated
that safeguards assessments were conducted in June 2016 and compliance with the Resettlement Policy
Framework (RPF) was found to be insufficient\. According to the Bank team (April 25, 2019),
the shortcomings related to a lack of dissemination of the RPF and insufficient site evaluation to establish
convincingly the non-existence of situations of non-compliance\. These shortcomings were addressed by
disseminating the RFP and collecting necessary documentation in each of the construction sites to ensure
their compliance\.
The ICR (p\. 35) stated that the projectâs safeguard compliance was rated Moderately Satisfactory overall\.
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b\. Fiduciary Compliance
Financial Management
According to the ICR (p\. 27), the projectâs financial management was designed to follow the governmentâs
existing public financial management systems for budgeting, accounting, disbursement, and flow of funds\. The
ICR (p\. 34) stated that the project conducted seven audits, of which all had unqualified opinions\. Reporting
standards and protocols were appropriate, and interim unaudited financial reports were submitted on time and
complied with the Bankâs procedures\. A final audit will be conducted once the pooled financing facility closes in
2019\.
According to the ICR (p\. 29) the project experienced implementation delays due to disbursement and payment
arrangements and a high work load of the governmentâs financial management staff\. The ICR mission found
that delays were also due to the financial management staff's hesitancy in making payments directly from the
designated account at the Central Bank and using a procedure with fewer administrative controls\.
The project experienced two fraudulent activities\. In 2014/2015, it was found that the Head of the Inspectorate
and the District Tax Officer in Malanville, one of the projectâs districts, conducted fraudulent activities regarding
the projectâs school feeding interventions\. This resulted in the government having to reimburse the Bank in the
amount of US$51,800\. The ICR (p\. 35) stated that this issue was addressed quickly by letting the involved
authorities go, reimbursing the Bank in the amount of US$51,800, and conducting an audit on a representative
sample of schools in the target districts to oversee the use of funds transferred to all activities\. Also, the
fiduciary risk rating was increased to High\. The issue was reported by the task team to the Bankâs Integrity
Vice Presidency (INT), which found that it was dealt with appropriately\. Another fraudulent activity was
identified in 2016/2017 with US$87,080 being misused for school canteens\. The government reimbursed the
Bank\. The issue was reported to INT, which found that it was handled appropriately\.
According to the ICR (p\. 34) the projectâs financial management was rated Moderately Satisfactory during most
of project implementation\.
Procurement
The ICR (p\. 35) stated that the project followed the Bankâs procurement procedures, and no major issues were
found during project supervision\. However, even though the project used two Delegated Contract Managers
who were experienced in administering classroom construction, the project faced delays in several activities
such as school feeding, school kits, construction, processing of contracts, etc\., resulting in implementation
bottlenecks\. Also, the ICR stated that the project experienced an issue of conflict of interest with procurement
procedures for the EMIS; this issue was addressed quickly\. The project experienced a high turnover of its
procurement specialist, who changed three times during implementation\. At the beginning of the project,
Page 15 of 17
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
03 -Global Partnership for Educ Program (P129600)
procurement was rated Satisfactory, and the procurement rating was Moderately Satisfactory for the remainder
of the project period\.
c\. Unintended impacts (Positive or Negative)
None reported\.
d\. Other
---
11\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Moderately Moderately
Outcome ---
Unsatisfactory Unsatisfactory
Moderately Moderately
Bank Performance ---
Satisfactory Satisfactory
Quality of M&E Modest Modest ---
Quality of ICR Substantial ---
12\. Lessons
The ICR (p\. 38-39) provided lessons learned, summarized here by IEG:
⢠Equipping a project implementation unit with adequate staff can ensure stability and continuity of
project implementation during political changes\. In this project, the governmentâs administration
changed in 2016, resulting in the restructuring of the education ministries and re-organization of lead
directorates responsible for project implementation\. Even though it took some time for the new staff in the
education ministries to get up to speed, the presence of the project implementation unit was critical for
ensuring knowledge transfer and keeping implementation delays to a minimum\.
⢠Having complementary data sources available in case of delays in national data collection is critical
when a projectâs M&E relies on national data for measuring progress towards the PDO\. In this project,
three out of seven PDO indicators were dependent on data collection from the EMIS\. However, EMIS data
collection was often delayed by several months, complicating assessment of these indicators when the
project closed\.
Page 16 of 17
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
03 -Global Partnership for Educ Program (P129600)
⢠Establishing feedback mechanisms to allow for continuous and regular assessment of project
activities is critical for making adaptations when necessary\. In this project, the assessment of teacher
competencies and subject specialization allowed for modifications in teacher training by grouping teachers
according to their capacity and subject specification\.
13\. Assessment Recommended?
Yes
Please explain
To understand better the disconnect between outputs (which were largely achieved) and outcomes (which
were not achieved for the access and equity indicators)\.
14\. Comments on Quality of ICR
The ICR provided a solid overview of project preparation and implementation\. It was candid and outcome-
driven\. Its lessons were insightful and drawn from project experience\. However, the ICR did not conduct a
traditional economic analysis, was lengthy, and did not state how the lack of safeguard compliance was
addressed\. Overall, the ICRâs quality is rated Substantial\.
a\. Quality of ICR Rating
Substantial
Page 17 of 17 | REVIEW |
P077752 | IEG
Report Number: ICRR14669
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 04/28/2015
Country: China
Project ID: P077752 Appraisal Actual
Project Name: Second Shandong Project Costs (US$M): 286\.11 248\.04
Environment Project
L/C Number: L4852 Loan/Credit (US$M): 152\.00 143\.18
Sector Board: Water Cofinancing (US$M): 0 0
Cofinanciers: Board Approval Date : 02/27/2007
Closing Date: 12/31/2013 12/31/2013
Sector(s): Sanitation (77%); Water supply (13%); Solid waste management (9%); Sub-national
government administration (1%)
Theme(s): Pollution management and environmental health (67% - P); Water resource management
(33% - S)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Santhadevi Meenakshy J\. W\. Van Holst Christopher David IEGPS1
Pellekaan Nelson
2\. Project Objectives and Components:
a\. Objectives:
The project development objective stated in the Project Appraisal Document (PAD, page 4) for the Second
Shandong Environment Project (SEP II) was to âimprove the environmental conditions in participating
municipalities/counties through a package of priority interventions, including upgrading and development of waste
water collection and treatment facilities, river embankment rehabilitation, solid waste management, water supply
improvements, industrial pollution monitoring, and enhancement of the financial performance and efficiency of key
urban environmental service agenciesâ
The project development objective stated in the Loan Agreement for SEP II (page 4) is to âassist Shandong Province
in improving, in a sustainable manner, the quality of its environment through selected waste water, solid waste and
water supply investments and technical assistance in the Project Municipalities and Project Counties and through
enhancement of the financial performance and efficiency of key urban environment servicesâ
As per the IEG guidelines, the project development objective in the Legal Agreement is used in this Review to assess
the project's achievements\.
The Global Environment Objective of the (Global Environment Facility) stated in the PAD and in the Grant Agreement
was identical\. The objective was to âreduce land-based pollution along the Yantai coast and the Bohai Sea through
development of a pilot septic-tank management system in Yantai and dissemination of the Yantai model in Shandong
Province and in other parts of China"
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
Component 1: Waste Water Management and River Embankment Rehabilitation (Appraisal cost: US$182\.38 M and
Actual cost: US$187\.33 M) This component included: (i) construction of waste water collection systems, treatment
plants and treated effluent re-use facilities; (ii) pilot septic tanks management; and (iii) associated river embankment
rehabilitation\. Project locations include Gaomi, Huantai, Qixia, Weifang, Weihai, Yantai and Zaozhuang counties, with
associated river embankment rehabilitation in Qixia, Weifang and Zaozhuang counties\.
The component also included the GEF pilot that: (i) established a septic tank unit to implement the project; (ii)
designed and approved septic tank management system in Yantai; (iii) procured equipment and auxiliary facilities; (iv)
collected septage and treated it in Xinanhe Waste-water Treatment Plant (WWTP); (v) undertook monitoring and
evaluation of results; and (vi) disseminated outcomes through workshops, seminars, study tours and visits, training
and pamphlets etc\. to publicize GEF intervention\.
Component 2: Solid Waste Management - (Appraisal cost US$21\.26 M; Actual cost: US$29\.25 M)
This component was implemented in Heze and Rizhao counties\. It included construction of: (a) integrated solid waste
processing, recycling, composting and sanitary landfill facility in Heze county; and (b) sanitary landfill extension,
transfer stations, and collection facilities in Rizhao county\.
Component 3: Water Supply Management â (Appraisal cost US$30\.39 M; and Actual cost: US$20\.40 M)
This component was to be implemented in Gaomi and Huantai counties\. It included construction and rehabilitation of
waste water (WW) transmission mains, distribution network, and central control systems\.
Component 4: Institutional Development and Capacity Building â (Appraisal cost: US$4\.52 M; Actual cost: US$2\.57
M)
This Component included four sub-components\. They were: (a) Construction, management and business
development; (b) Sector studies; (c) Capacity building of provincial EPB and (d) Capacity enhancement of provincial
and local government decision makers and project owners\.
Restructuring during Implementation
1\. The project was restructured in January 2010 leading to an amendment to the Loan Agreement by: (i) deleting
Huantai county and substituting it with Zhoucun county; and (ii) correct a drafting error in the legal agreement, to
increase the civil works disbursement percentage for Zaozhuang county from 70% to 100%\.
2\. The Yantai county Septic Tank Management Office added 520 septic tanks from outside the pilot area\. According
to the baseline survey, the number of septic tanks was 1,700, but, during implementation, it was found to be only
3 3
1,056 and the average volume of a septic tank was found to be about 24 m , instead of 44 m as per the base line
records\. The reports from the baseline survey regarding the number of septic tanks and its average volume were
corrected during implementation\.
3\. The pre-treatment of waste water intercepted from Weifang county in downstream wetlands along the Bailang River
was deleted to accord with a Government mandate that required new municipal WWTPs to be upgraded to Class 1A
discharge standards by 2015\. This resulted in a total Loan saving of about US$11 M, which was canceled at Loan
closure as the Weifeng Municipal Government and the Shandong Provincial Government (SPG) were
not able to formulate alternative proposals to utilize Loan savings\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Costs: The estimated cost at appraisal (including the GEF Grant) was US$286\.11 M\. The actual cost at completion
(including the GEF Grant) was US$248\.04 M (ICR, Annex)\.
Financing: The project was financed by: (a) IBRD Loan - appraisal cost US$147\.00 M, actual cost $134\.69 M; and (b)
GEF Grant - appraisal cost US$5\.00 M, actual cost US$8\.49 M\.
Borrower Contribution : Government funding commitment at appraisal was US$134\.11 M The actual funding from the
Government was US$105\.55 M
Dates:
Restructuring of the Second Shandong Environment Project (SEP II) was agreed on February 5, 2010\. The SEP II
Loan and the GEF Grant for SEP II both closed on schedule on December 31,/2013\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Substantial
The project development objective (PDO) was consistent with the Bankâs Country Partnership Strategy
(CPS) of FY 2006-F Y2010 (Report No\. 46896-CN) and remained well aligned with the new CPS (Report No\.
67566-CN) of FY2013-FY2016 at closure\. With regard to its relevance to national priorities, the PDO was fully
consistent with the national government and Shandong Province policies (reducing domestic and industrial pollution
discharges, improving water quality in the major rivers, protecting large marine ecosystems, improving environmental
management, reducing waste-water treatment rates, increasing water supply coverage and enhancing re-use of
water)\. The PDO also continued to remain relevant to the priorities for Shandong Province at closure\.
The GEO was also consistent with the Provinceâs commitment to the UNDP/GEF/IMO Regional Program for protect
large marine ecosystems (LME) in the Bohai Sea and relevant to the Bankâs assistance strategy\.
b\. Relevance of Design:
Modest
The results matrix captured the dimensions of the PDO, the GEO, and most of the project's indicators, but the results
matrix did not elucidate the results chain\. In addition, some important baseline data (the number and size of septic
tanks in Yantai) were incorrect in the results matrix which also had no sector and municipality baseline indicators,
making it difficult to reconcile the project intentions with the tracking of progress against project indicators\.
As the ICR noted, project design, was consistent with the PDO and was based on extensive background analysis\. The
components were suitably chosen to support the achievement of the PDO and addressed the Borrower's crucial
priorities for improved waste water/solid waste management and improved water supplies (page 3)\.
The design fully considered lessons related to borrower ownership and the adequacy of environmental infrastructure
investments\. In this regard, it built on the past Bank financed projects that reflected commitment of Shandong
Province to sound environmental management\.
In terms of implementation arrangements, the highly experienced Shandong Provincial Project Management Office
(SPPMO) was designated to manage project preparation, coordinate project activities, including social and
environmental safeguards\.
The PAD identified the risk of a "delay in required tariff setting and collection mechanisms, and low user fee
collections, threatening financial sustainability" as substantial (para 39)\. This affected both utility tariffs and solid
waste tariffs\. In line with the mitigation measures proposed in the PAD the establishment of utility tariffs was
facilitated by defining utility revenues in the Project Agreement\. Mitigation measures for solid waste tariff reform was
"through a covenant requiring a study, recommendations and implementation of a tariff, which was appropriate in a
climate where levy of direct solid waste charges is relatively new in China" (ICR, Section 2\.1, page 4)\.
4\. Achievement of Objectives (Efficacy):
The development objective was to âimprove the environmental conditions in participating municipalities/counties
through a package of priority interventions, including upgrading and development of waste water collection and
treatment facilities, river embankment rehabilitation, solid waste management, water supply improvements, industrial
pollution monitoring, and enhancement of the financial performance and efficiency of key urban environmental service
agenciesâ\. This project development objective (PDO) embodied four sub-objectives which were assessed separately
in order to evaluate overall efficacy\.
1\. âUpgrading and development of waste water collection and treatment facilities , river embankment rehabilitation â
Substantial
Outputs (ICR, Data Sheet, Section F\. Results Framework)
(a) 90\.7% of population connected to waste water treatment plants (target 85%)
(b) Treated 239\.6 million cubic m/year of waste water (target 226 million cubic m/year)
(c) 91\.9% waste water treated in cities/counties (target 80%)
(d) 37,125 ton of Chemical Oxygen Demand (COD)/year reaching the recipient rivers (target 28,000)
Outcome
(a) The civil works financed by the project have improved waste water collection and treatment, and improved water
quality of river systems which contributed to a better environment in project towns (ICR, page 8, Section 3\.2)
(b) Overall citizen satisfaction with waste water services stood at 94\.8% at project closure (ICR, page 8, Section 3\.2)
2\. âUpgrading and development of water supply improvements "
Substantial
Outputs (ICR, Data Sheet, Section F: Results Framework)
(a) 99% of population with access to water supply (target 91%)
(b) Provincial regulations prohibiting the use of groundwater in urban areas were passed
Outcome
(a) Groundwater abstraction, compared to total water production, dropped from 85% at project start to zero at the
project's close, following provincial regulations prohibiting the use of groundwater in urban areas\. Over 730,000
people received improved water supply, including 340,000 people in fluoride-affected areas\.
(b) The citizen satisfaction level in the final survey was 99% for water supply (ICR, Section 3\.2, page 8)\.
3\. âUpgrading and development solid waste management â
Substantial
Outputs (ICR, Data Sheet, Section F: Results Framework)
(a) 351,660 tons/year of municipal waste collected and transferred to a sanitary landfill (target 78%)
(b) 95% of population provided with solid waste services closure (target 100%)
Outcome
The citizen satisfaction with solid waste services reached 98% at project closure\. (ICR, Section 3\.2, page 8)
4\.âEnhancement of the financial performance and efficiency of key urban environmental service agencies â
Modest
Output
Not available
Outcome
Though some of the utility companies were provided with funds by the government to meet operating costs, the cost
recovery ratio in some instances was at or close to 1\.0 because the subsidies did not allow companies to generate
cash in excess of their own needs\. The cost recovery ratio for Weihai, Yantai and Gaomi waste water companies was
0\.46, 1\.07 and 1\.5 respectively, for Rizaho solid waste company it was 0\.55 and for Gaomi water it was 1\.23\. (ICR,
Data Sheet, Intermediate Outcome Indicator No\. 8)
GEF Grant
The Global Environment Objective for the GEF grant was to âreduce land-based pollution along the Yantai coast and
the Bohai Sea through development of a pilot septic-tank management system in Yantai and dissemination of the
Yantai model in Shandong Province and in other parts of Chinaâ\. Two sub-objectives in this GEO were evaluated\.
1\.âReduce land-based pollution along the Yantai coast and the Bohai Sea through development of a pilot septic -tank
management system â
Modest
Output
Pollution discharge to the Bohai Sea was reduced by 806\.4 biochemical oxygen demand per year (BOD ton/year)
- Based on corrections in the number (1,056 rather than 1,700) and average volume of septic tanks (24 cubic
meter instead of 44 cubic meter) in the Pilot Area, the comments section on Intermediate Outcome Indicator No\.
1 for the GEO in the Data Sheet of the ICR states that the estimated achievement of 806\.4 BOD ton/year was in
line with the original BOD target of 1,700 tons/year\. Hence this indicator was achieved\.
Outcome
(a) Introduction of a lower cost technology for septic tank management; (ii) introduction of a culture of regular periodic
emptying of septic tanks
(b) Establishment of permanent institutional arrangements for septic tank management in Yantai, including
development of a GIS-based information management system to track and monitor tanker routes, operational data,
and the frequency of emptying septic tanks (page 9, ICR)\.
2\. âDissemination of the Yantai model in Shandong Province and in other parts of Chinaâ
Negligible
Output
The type and number of outputs of dissemination interventions were not recorded
Outcome
Commencement of a discussion on septic tank design, and changes to building code requirements for septic tanks in
Shandong Provincial Government (page 9, ICR)\.
5\. Efficiency:
Modest
Economic and Financial Efficiency
According to Section 3\.3 and Annex 3 of the ICR, economic analysis of the project at appraisal and closure was done
on a component by component basis for waste-water, water supply and solid waste components\. At appraisal, a Cost
Effective Analysis guided the selection of priority interventions for the project using least cost methodology\.
Alternative project designs were identified and evaluated in order to select the least cost investments for the project\.
The least cost methodology was applied for three project components and included financial comparison of the
alternatives based on capital investments and cost for operation and maintenance (O&M)\. The benefit/cost analysis
of the project's components was done by analyzing net present value (NPV) and the economic internal rate of return
(ERR)\.
End of project analysis was also carried out by assessing the economic return of waste-water, water and solid waste
components on individual basis\. The methodology followed an incremental approach to estimate "plusses and
minuses" to the economic rate of return as a result of project changes during implementation\. The resulting rates of
return for the waste water and river improvement program (Component 1) ranged from 12\.7% to 20\.2% although
estimates were acknowledged to be "rough" (ICR, Annex 3, Table 1\.2)\. For the water supply program (Component 3)
the economic rate of return was estimated at 8-10%\. The ICR asserted that overall "the results showed returns above
15% (page 9)\.
According to Annex 3 of the ICR, financial analysis was carried out at appraisal to determine cost recovery tariffs\.
Financial Internal Rate of Return (FIRR) analysis was not carried out at closure, as most of the components were not-
revenue generating\. Given the scenario, tariff analysis and comparison of utility tariff with the overall economic
development were undertaken\. Analysis of the tariff increases reflects affordability by low-income households\.
Comparison of the utility tariff revisions with the overall economic development indicates that these were fully
affordable to the beneficiary population\.
Administrative Efficiency
The project reflected strong SPG ownership and was administered by Shandong Provincial Project Management
Office (SPPMO)\. SPPMO had not only long experience in the field, but also in implementing Bank financed projects\.
These factors enabled: (i) strict follow through of environmental management policies and framework; (ii) problem-free
procurement performance in compliance with the Bank policies; and (iii) incorporation of SPG priorities, social and
environmental targets and achievable project covenants\.
The readiness for implementation was demonstrated by the completion of detailed designs and bid documents for the
first yearsâ implementation\. This facilitated early completion of the components in Weihai, Gaomi, Yantai, Heze and
Rizhao counties in 2010 and 2011, two years before the Loan closing date\. The Yantai Municipality established
permanent Office for Septic Tank Management was another factor that was instrumental to formulate and implement
the GEF supported pilot septic tank management system despite the bottlenecks (e\.g\. incorrect baseline data;
procurement and registration of foreign manufactured septic tank emptying vehicles; and challenges in emptying
septic with highly consolidated settled solids)\.
Location of the Task Team Leader, procurement, financial management and safeguard specialists in the country
office also contributed to the facilitation and early resolution of issues facing the project\.
However, notwithstanding the relatively effective implementation and the likely high social returns from the project, the
data on which the estimated economic rates of return were based were weak and incomplete\. Hence there are valid
doubts about the project's overall efficiency and it is therefore rated as modest\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The relevance of objectives and design for the NAIP are rated, respectively, substantial and modest\. With regard
to the efficacy rating for NAIP, IEG agrees with the ICR that, while many of the project's targets were exceeded,
several indicators had unclear linkage to the project activities, definition and monitoring method, causing difficulties in
verifying achievements (ICR, page 10, Section 3\.4)\. Nevertheless, the achievements of sub-objectives that focused
on (a) waste water collection and treatment facilities, river embankment rehabilitation; (b) water supply improvements;
and (c) solid waste management were rated as substantial\. On the other hand, the enhancement of the financial
performance and efficiency of key urban environmental service agencies was rated as modest\. Given that the
project's estimated rates of return were based on assumptions rather than observed results, efficiency was rated as
modest\. Overall, therefore the project had moderate shortcomings and was rated by this review as moderately
satisfactory\.
a\. Outcome Rating: Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Risk related to political, government and stakeholder ownership, institutional support, social and natural
disaster/exposure is relevant to the intervention and is noted to be low\. While they are well detailed in the ICR, IEG
considered some critical factors to determine the risk rating of the project\. They are: (i) strong Shandong Provincial
Government (SPG) and community ownership: (ii) Shandong Province environmental management strategy was
synchronized with the PDO; (iii) SPG support in autonomy of utility companies; and (iii) securing of the outfall pipeline
in Yantai at the sea bed reducing the risk from natural disasters such as typhoons and earthquake and other
repercussions of climate change\.
With regard to the GEO, Yantai Municipality has established a dedicated permanent office (Septic Tank Management
Office), with staff and annual budget allocations, and plans to expand the operation city wide (ICR) \. The septic tank
management system is also likely to be replicated in other municipalities in China\.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
a\. Quality at entry:
The PDO and GEO were substantially relevant to address the critical issues in Borrowerâs environmental
needs and management strategy\. They were consistent with the goals of Country Partnership Strategy\. The
design and the implementation arrangements were appropriate to achieve the outcomes on least cost basis\. The
goals set out for sector development were realistic, particularly in the waste water sector where a phased
development approach was adopted for cost recovery\.
The Bank task team reviewed and analyzed national and Bank policies to ensure informed project preparation\.
Specifically, the Bank team examined: (i) national policies and guidelines, past experience of similar projects in
China, and background conditions in the Province; and (ii) World Bank policies, practices and lessons from
experience\. The Bank also guaranteed that the client was well informed on the background information by
agreeing on a terms of reference (ToR) for preparation of the project feasibility studies\. The ToR required the
client to collect and analyze background information in a comprehensive manner\.
The Bank team comprised a sound skill mix of technical staff and was headed by a Chinese speaking senior
urban specialist\. Many of the key team members were based in Beijing and/or were Chinese speaking\. This
facilitated effective communication between the client and the Bank\. The project was prepared in about one and a
half years from Concept Review in October 2005 to Board approval in February 2007, at a cost of US$502,000\.
With regard to social safeguards, resettlement action plans were developed in consultation with affected persons
(AP), and publicly disclosed, complying with World Bank policies and procedures\. In terms of environment
safeguards, the project triggered Bankâs Operational Policy 4\.01 and was designated as Category A \. The
Environment Assessment and Environment Management Plans were prepared according to national policies and
regulations and the Bank's safeguard policies and were disclosed\.
The project design fell short in a few areas\. The performance indicators in the results matrix were poorly
designed, with unclear linkages to project activities and targets\. The baseline data was inadequate\. For instance
the baseline data of the Pilot Area of the GEF Component was a major weakness at entry\. The original baseline
data on the number and estimated volumes of septic tanks under the GEF Component in the pilot area in Yantai
were found to be incorrect when tank emptying commenced\. The number of septic tanks was found to be 1,056,
3
instead of 1,700, and the average volume of a septic tank was found to be about 24 m , instead of the figure of 44
3
m estimated during the baseline survey\.
Quality-at-Entry Rating: Moderately Satisfactory
b\. Quality of supervision:
The Bank was responsive and actively engaged with the Borrower during project implementation\. For instance,
Zhoucun county was selected and was included into the project in a timely manner when Huantai county was
removed from Components 1 and 2\. This contributed toward enabling achievement of the project outcome\. The
Bank worked very closely with the Borrower and provided a number of recommendations for utilizing the loan
savings for waste water in the Weifang municipality, though these attempts failed due to disagreements between
relevant stakeholders within Shandong Province and was finally cancelled\. The Bank proposed changes to
several results indicators which had weak linkages to the project, but was unable to revise these, partly due to the
failed attempt to carry out the restructuring\. The Bank worked closely with Yantai Municipality to accelerate the
slow implementation of the GEF supported septic tank management component and succeeded in enabling the
establishment of a permanent Office for Septic Tank Management, despite the bottlenecks (eg: incorrect baseline
data; procurement and registration of foreign -manufactured septic tank emptying vehicles; and challenges of
emptying septic with highly consolidated settled solid)\. Overall, the Bank team identified and addressed
implementation issues in a timely manner\.
Formal Bank supervision of the project was held twice a year\. Supervision team with adequate skills mix benefited
from the Bank Headquarters, expert guidance - particularly on the septic tank management component\. Mid-term
review mission was held timely in March/April 2009\. The mission: (i) agreed to substitute Huantai with Zhoucun
county from the same municipality; and (ii) recognized the need to correct a drafting error in the disbursement
percentage for civil works in the Loan Agreement in Zaozhuang county\. As such, the project was restructured in
January 2010 to implement the findings of the mid-term review\.
It should be pointed out, however, that the summary of the Borrower's ICR expressed concern about "frustrating
delays in obtaining some âno objectionsâ where there was no obvious reason for any delay\. From the
governments perspective there could also have been more flexibility shown by the Bank in dealing with the
changes proposed in Weifang, leading to a lost opportunity to fully utilize the loan" (ICR, Annex 8, page 49)\.
Annex 8 noted the "lack of a scientifically prepared proposal, acceptable to the Bank, from the Weifang
Government to justify its plans as an alternative means of achieving the project's PDO" (ICR, page 50)\.
The social specialist assigned to the project joined all formal supervision missions and carefully supervised
implementation of the resettlement action plans (RAPs)\. The location of the task team leader and the technical
specialist staff in the country office helped to maintain frequent contact and support to the Borrower and was cost
effective\. The average annual supervision budget of US$60,000 was recorded as sufficient to monitor progress
and provide guidance\. (ICR, page 12)
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Shandong Provincial Government (SPG) was fully committed to the PDO and ensured timely supply of
counterpart funds\. SPG maintained its strong environmental management agenda and provided high quality
project management in project cities/counties\.
SPG remained committed to sustainability of the development outcome by advocating full cost recovery, and
setting guidelines for minimum waste water and solid waste tariffs to be adopted by municipal governments\.
In addition, SPG continued to pursue industrial pollution control, online monitoring of industries; and water
conservation through regulatory measures to limit use of groundwater and re-use of treated waste water\.
Government Performance Rating Satisfactory
b\. Implementing Agency Performance:
The strong track record of Shandong Provincial Project Management Office (SPPMO) to manage project
preparation and coordinate project activities with close attention to social and environmental safeguards provided
a sound platform for project implementation\.
Implementing agencies in the project counties: (a) prepared detailed designs, (b) managed procurement and
contracts, and (c) provided quality control, and effective financial management\. During implementation,
implementing agencies in the project counties were in compliance with the financial and safeguard performance
covenants\. With regard to GEF intervention, the Yantai Septic Tank Management Office was established as part
of the project, with a plan to gradually expand its emptying activities to cover the 19,000 septic tanks in the
municipality\. The project closed on schedule on 12/31/2013\.
However, there were some shortcomings,\. While some implementing agencies completed their components in
about three years from project start, two project cities completed implementation only in 2013 largely due to the
slow pace of land acquisition and resettlement\. In addition, Weifeng municipality was not able to come up with a
satisfactory proposal to use its savings before the Loan closing date\. This left a large loan balance of about US$
11 M not disbursed and was canceled at project closure\. Qixia county was not able to utilize the completed waste
water treatment facility because of inadequate waste water flows\. According to the ICR (page 13), this facility will
be put into operation only by the middle of 2014\.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The design of several indicators was weak in terms of definition, link to project activities and monitoring methods
and targets\. For instance: (i) improvement of river water quality (from Class V to Class IV) was indicated in kilometers
with no explanation of how to measure; (ii) inclusion of a performance indicator for non-revenue water, even though
the project did not finance this activity; (iii) misalignment of the cost recovery ratio (Intermediate Outcome Indicator
No\. 8); and (iv) incorrect baseline data on the number and volume of septic tanks for the GEF component indicator,
which inflated the indicator targets for pollution discharge to the Bohai Sea, and no baseline indicators by sector and
by municipality\.
According to the ICR, more accurate measurement in improvement of environmental conditions would have been
possible had the Results Framework set baseline indicators by sector and by municipality\.
b\. M&E Implementation:
The Shandong Provincial Project Management Office (SPPMO) gathered timely information on various indicators
of the Project\. The reports were reliable, sound in quality and timely according the ICR (ICR, page 5)
c\. M&E Utilization:
Monitoring and evaluation information was used by the project cities, SPPMO and the Bank to support decisions on
any change to components\. The Environment Protection Bureau utilized the results of online monitoring to apply
sanctions on industries to ensure compliance, including imposition of fines and suspension of operations\.
The inaccuracies in the baseline data on the number and volume of septic tanks in Yantai was noted only after the
procurement and deployment of the septic tank emptying equipment\. However the extent to which the Biochemical
Oxygen Demand (BOD) reduction data were used is not reported\. Proposals to revise problematic indicators were
developed after the mid-term review, but they were not acted upon because it was too late into project
implementation\.
M&E Quality Rating: Modest
11\. Other Issues
a\. Safeguards:
Social Safeguards\. The project triggered the Bankâs operational policy OP 4\.12 on Involuntary Resettlement Action
Plans were prepared, in consultation with affected persons (AP), and publicly disclosed, complying with World Bank
policies and procedures\. During implementation, resettlement activities were carried out satisfactorily, except in Qixia
and Zaozhuang counties, due to the slow pace of land acquisition and resettlement\. External monitoring of safeguard
implementation was carried out by the Shandong Construction Development and Research Institute, in accordance
with the requirements of the legal agreements\. Implementing units regularly submitted annual safeguard compliance
reports\. The Resettlement Completion Report (RCR) indicates that resettlement implementation was successfully
completed with the full participation of the affected persons (Ref: ICR page 6) \.
Environmental Safeguards\. The project triggered Bankâs Operational Policy 4\.01 and was designated as Category A\.
The Environment Assessment and Environment Management Plan (EMP) were prepared according to national
policies and regulations and the Bank safeguard policies\. The EMP was implemented satisfactorily by SPPMO\. As
part of the January 2010 restructuring, the Bank conducted an environmental survey of the newly proposed waste
water collection component in Zhoucun, and based on the nature and potential impacts of the component, it would
be classified as Category âBâ\. An additional EA and EMP were prepared by the borrower and reviewed by the Bank\.
The final drafts were disclosed locally and in the Info shop on December 10, 2009\.
Dam Safety\. The project also triggered the Bankâs operational policy on Safety of Dams (OP 4\.37) and is noted to be
in compliance\. This included satisfactorily meeting dam safety requirements and completing remedial works\.
b\. Fiduciary Compliance:
Procurement
Procurement activities were carried out by all project cities in full compliance with Bank procurement procedures\. No
particular issues or problems are reported in the ICR\.
Financial Management
Financial management performance, including accounting, budgeting, internal control, funds flow, financial reporting
and auditing, were carried out with no reporting of problems or issues\. Audit compliance is noted without any audit
qualifications
c\. Unintended Impacts (positive or negative):
The ICR mentions that he completed waste water treatment plant (WWTP) in Qixia county was not utilized\. This
prompted an acceleration of the Qixia countyâs plan to relocate the existing WWTP within the city, and realize the
opportunity cost of the land currently occupied by it (page 11)\.
The ICR also states that "The project had no specific interventions on poverty reduction, and gender issues\.
However, it did improve the living environment for the broader population in the project cities, including women and
the poor who benefited from improved water supply, better sanitation services, and improved opportunities for income
enhancement from the extensive construction activities\.
However, Annex 8 (based on the Borrower's ICR) states that "Achievements in poverty alleviation and social benefits
included, inter alia: (i) significant local temporary job opportunities and over 200 new permanent jobs in O&M; (ii)
health benefits to a population of 730,000, including 340,000 in fluoride-affected areas; (iii) public health and amenity
benefits from improved flood control; (iv) extending solid waste collection and closure of unsanitary refuse dumps; (v)
increased waste water collection and treatment; and (v) equal access to services by the poor and vulnerable people
including improved affordability\.
d\. Other:
NA
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Moderately Moderately
Satisfactory Satisfactory
Risk to Development Negligible to Low Negligible to Low
Outcome:
Bank Performance: Satisfactory Moderately Design fell short in two areas\. The
Satisfactory performance indicators in the results
matrix were poorly designed, with
unclear linkages to project activities and
targets\. In addition the baseline data
were inadequate\. For instance, the
baseline data for the GEF financed Pilot
septic tank management system was a
major weakness at entry\.
Borrower Performance : Satisfactory Moderately There were shortcomings in the
Satisfactory performance of the Implementing
Agency as follows\. Two project cities
completed implementation only in 2013
largely due to the slow pace of land
acquisition and resettlement\. Weifeng
municipality was not able to come up
with a satisfactory proposal to use its
savings before the Loan closing date\.
This left a large loan balance of about
US$11 M not disbursed and was
canceled at project closure\. Qixia
county was not able to utilize the
completed waste water treatment
facility because of lower then expected
waste water flows
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR drew five lessons from the project\. However some of them were more in the nature of conclusions\. The
following lessons had implications for similar operations
(a) Accurate assessment of growth of supply driven economic development zones (EDZ) is essential when
planning for investments in these zones \. Investments plans based on inaccurate assessments of growth can incur
costs to both EDZ and the planned investments\. In the case of this project, EDZs established without the right
underlying economic drivers, had slow starts such as in Qixia\. Waste water investments planned in Qixia on the
basis of weak assessment of growth and government regulations without a contingency plan resulted in non-
commission of these investments at closure
(b) Septic tank emptying interventions should be supported by exit policies to allow for a smooth transition \. The
experience and knowledge gained from implementing the septic tank management component demonstrates the
need for regular septic tank emptying and their limited use when cities are fully compliant with a sewer system\. As
such these interventions should be supported by exit policies to allow for a smooth transition from septic tanks to
sewerage\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR is candid and follows the OPCS guidelines in format\. It provided a thorough description of the project
implementation and includes a good summary of the Borrower ICR\. The extensive report of project investments gave
the reader a good idea of the project activities and explained the triggers for speeding and delaying implementation\.
Stakeholders are well defined and the draft endorses their participation in various segments of the project cycle\. ICR
provided adequate reporting on social, environment and fiduciary compliance\. On the other hand the analysis of
efficiency was weak because of the use of assumed data instead of observed results\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P003472 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 19331-CHA
IMPLEMENTATION COMPLETION REPORT
CHINA
FOURTH RAILWAY PROJECT
(LOAN 2968-CHA)
FIFTH RAILWAY PROJECT
(LOAN 3406-CHA)
MAY 24, 1999
Transport Sector Unit
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Name = Renminbi
Currency Unit = Yuan (Y)
Yuan Rate per US$1\.00
1985 2\.94 1991 5\.32
1986 3\.45 1992 5\.53
1987 3\.72 1993 5\.76
1988 3\.72 1994 8\.62
1989 3\.76 1995 8\.35
1990 4\.78 1996 8\.32
1997 8\.29 1998 8\.28
1999 8\.28
FISCAL YEAR
January 1 - December 31
MEASUREMENT EQUIVALENTS
Metric System British/US system
1 meter (in) = 3\.281 feet (ft)
1 kilometer (km) = 0\.621 mile (mi)
1 square meter (m2 10\.764 square feet (ft2
1 hectare (ha) = 0\.01 km = 2\.47 acres (ac) = 15 mu
1 mu = 0\.1647 acre = 0\.0667 hectare
1 metric ton (t) = 2,208 pounds (lbs\.)
1 passenger-km (p-km) = 0\.621 passenger-miles
1 t-km = 0\.621 ton-mile
1 converted t-km (ctk) = 1 traffic unit (1 p-km + 1 t-km)
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED
EIRR - Economic Internal Rate of Return
FCTIC - Foreign Capital and Technical Import Center
FCTIO - Foreign Capital and Technical Import Office
FEPS - Final Executive Project Summary
ICB - International Competitive Bidding
ICR - Implementation Completion Report
ITC - International Tendering Company
JGF - Japanese Grant Fund
MOF - Ministry of Finance
MOR - Ministry of Railways
OIS - Operating Information System
PCR - Project Completion Report
SAR - Staff Appraisal Report
SPC - State Planning Commission
TMIS - Transport Management Information System
TMP - Telecommunications Master Plan
UNDP - United Nations Development Program
YIS - Yard Information System
Vice President Jean-Michel Severino, EAP
Country Director Yukon Huang, EACCH
Sector Manager Jitendra N\. Bajpai, EASTR
Staff Member Udo Marggraf, EASTR
CONTENTS FOR OFFICIAL USE ONLY
PREFACE\. i
EVALUATION SUM M ARY \.
PART I\. IMPLEMENTATION ASSESSMENT
A\. Project Objectives \. \.
B\. Achievement of Objectives\.3
C\. Implementation Record and Major Factors Affecting the Project\. 14
D\. Project Sustainability \.39
E\. Bank Performance \.40
F\. Borrower Performance \. \.43
G\. Assessment of Outcome\.44
H\. Future Operations \.46
1\. Lessons Learned\. \. \.47
PART II: STATISTICAL ANNEXES
FOURTH RAILWAY PROJECT \.49
Table 1: SUMMARY OF ASSESSMENTS \.49
Table 2: RELATED BANK LOANS/CREDITS \. \.50
Table 3: PROJECT TIMETABLE \.51
Table 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL\.51
Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION \.52
Table 6: KEY INDICATORS FOR PROJECT OPERATION\.52
Table 7: STUDIES INCLUDED IN PROJECT \.53
Table 8A: PROJECT COSTS \.54
Table 8B: PROJECT FINANCING \.55
Table 8C: ALLOCATION OF LOAN PROCEEDS \.55
Table 9: ECONOMIC COSTS AND BENEFITS \.56
(Yuan million, 1997 prices)
Table 10: STATUS OF LEGAL COVENANTS \. \.56
Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS \.57
Table 12: BANK RESOURCES: STAFF INPUTS \.57
Table 13: BANK RESOURCES: MISSIONS\.58
FIFTH RAILWAY PROJECT \.59
Table 1: SUMMARY OF ASSESSMENTS\.59
Table 2: RELATED BANK LOANS/CREDITS \.60
Table 3: PROJECT TIMETABLE \.61
Table 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL\.61
Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION \. \.62
Table 6: KEY INDICATORS FOR PROJECT OPERATION\.62
Table 7: STUDIES INCLUDED IN PROJECT\. \.63
Table 8A: PROJECT COSTS \.64
Table 8B: PROJECT FINANCING \. \.65
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
-2-
Table 8C: ALLOCATION OF LOAN PROCEEDS \. \.65
Table 9: ECONOMIC COSTS AND BENEFITS \. \.66
(Yuan million, 1997 prices)
Table 10: STATUS OF LEGAL COVENANTS \. \.67
Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS \.68
Table 12: BANK RESOURCES: STAFF INPUTS \. \.68
Table 13: BANK RESOURCES: MISSIONS\.69
Appendix A: ICR Completion Mission's Aide-Memoire\.70
Appendix B: Borrower's Contribution to the ICR\.71
Annex 1: Financial Evaluation of the Fourth and Fifth Railway Projects \. \.72
Annex 2: Economic Reevaluation of the Fourth and Fifth Railway Projects \. \.79
COMBINED IMPLEMENTATION COMPLETION REPORT
CHINA
FOURTH RAILWAY PROJECT - (LOAN 2968-CHA)
AND
FIFTH RAILWAY PROJECT - (LOAN 3406-CHA)
PREFACE
This is the combined Implementation Completion Report (ICR) for the Fourth and
Fifth Railway Projects in China\. Loan 2968-CHA in the amount of US$200 million for
the Fourth Railway Project was approved on June 23, 1988\. This loan was closed on June
30, 1998, after being extended twice, each time for a year\. Final refund was made on
February 10, 1999, and US$ 2\.1 million of the loan amount was canceled\.
A loan in the amount of US$330 million for the Fifth Railway Project (Loan 3406-
CHA) was approved on September 24, 1991\. This loan was closed on December 31,
1998\. Final disbursement was made on April 26, 1999, and US$7\.65 million of the loan
amount was canceled\.
The ICR was prepared by Messrs\./Mmes\. Udo Marggraf (Task Manager), Hennie
Deboeck (Financial Analyst), Richard Spero (Transport Economist, Consultant) of the
Transport Sector Unit, East Asia and Pacific Region, Daniel Gibson (Resettlement
Specialist, EASES) and Anil Somani (Environmental Specialist, EASES)\. It was
reviewed by Messrs\. Bajpai and Scurfield\. The borrower's implementation evaluation
summary for the project is included as Appendix B to the ICR\.
The ICR began before the project closing date, and was based on material in the
project file and data provided by the Ministry of Railways (MOR)\. The Borrower
contributed some data and comments during the preparation of the ICR\.

FOURTH RAILWAY PROJECT
(LOAN 2968-CHA)
AND
FIFTH RAILWAY PROJECT
(LOAN 3406-CHA)
CHINA
EVALUATION SUMMARY
Introduction
i\. China's economic development, which accelerated after the Government adopted
the open-door policy in 1978, substantially increased demand for railway transport\. In
order to sustain this pace of economic development, the Government has endeavored
since the 1980s to expand the capacity of its national railway system\. In 1984, the Bank
first became involved in the railway sub-sector\. By January 1987, three such railway
projects had become effective\. All three were designed to assist the Ministry of Railways
(MOR) to develop its national railway network\. The Fourth and Fifth Railway Projects
reflected this priority, as they were designed to help the MOR finance investments that
were urgently needed to increase its transport and production capacity\.
Project Objectives
ii\. The Fourth Railway Project aimed to enhance the productivity of existing assets by
raising the level of technology used in different activities within MOR, particularly in
train operations, maintenance, administration, and manufacturing\. The Fifth Railway
Project also focused on efforts to ensure that MOR became more efficient and continued
to be financially viable thorough better operations, maintenance practices, investment
planning, and tariff policies\. Three major objectives were to: (a) introduce recent
developments in rail technology and maintenance and rehabilitation practices; (b)
develop system-wide plans and planning tools for MOR's major sub-sectors; and (c)
develop modern planning and analytical techniques for establishing investment priorities
and tariff structure\. These objectives reflected the Government's development approach
and the Bank's evolving strategy for the sector\.
iii\. The Fourth Railway Project included two major investments: (a) to increase
capacity on the Yueshan-Xiangfan section of the Jiaozuo-Zicheng line in the Beijing-
Guangzhou railway corridor; and (b) the modernization of three locomotive and rolling
stock factories\. In addition, the project was supposed to carry out a Strategic Plan Study
in the areas of telecommunications and computerization in order to improve operational
management and transportation capacity\. Provision of technical assistance and training
was included in the factory modernization and Strategic Plan Study components\.
- 11 -
iv\. The Fifth Railway Project included two system-wide components to assist MOR in
introducing new technology and advanced materials for maintaining and rehabilitating
tracks\. The project was also intended to address the shortage of critically needed
materials, components and equipment for rehabilitating locomotives and rolling stock\. To
this end, two capacity expansion components were designed that would allow MOR to
complete the double-tracking of the 944 km Zhegan (Zhuzhou-Hangzhou) line and to
expand capacity at the Xuzhou marshalling yards\. An action plan was for developed to
implement the Railway Traffic Costing System\. This in turn led to the formulation of
recommendations for tariff restructuring\. In addition, the project relied heavily on five
studies initiated during project preparation, focussing on track maintenance and
rehabilitation, locomotive and rolling stock maintenance rehabilitation, an integrated
system plan for electrification, an integrated system plan for telecommunications, and a
railway investment prioritization\.
v\. Both project-planned investments were appropriate vehicles for reaching these
objectives\. While the study components in both projects were somewhat complex, the
other components were traditional and not too risky\.
Implementation Experience and Results
vi\. Implementation of the Fourth Railway Project proceeded somewhat slower than
expected, largely due to a change in the construction schedule of the Yueshan-Xiangfan
line\. Further delays were encountered when the alignment of the Longmen tunnel had to
be altered to avoid damage to a famous Buddhist temple\. Project start-up of the Fifth
Railway Project was postponed for about a year by the aftermath of the Tiananmen
incidents in May/June 1989\. Two components delayed the completion of the project
substantially: the Zhegan line capacity expansion and one of the five planning studies that
required the testing of foreign materials\. The main reasons for the Zhegan line's
implementation delay were design changes due to a switch to local technology for
signalling and to improve the original design for telecommunications\. Tests with the
foreign materials as part of the Permanent Way Maintenance and Rehabilitation Study
began about one year later than originally planned because the schedule was somewhat
over-optimistic and not in line with the SAR and the late loan effectiveness, and were
completed by October 1998\. A report evaluating the test results is currently under
preparation and is expected to be completed by June 1999\.
vii\. Project costs of the Fourth Railway Project were 58 percent higher than expected,
with an actual cost of US$945\.6 million compared to an appraisal estimate of US$600
million\. The main reasons for cost increase were: (a) the delayed start on the tunnel
works on the Yueshan-Xiangfan line by two years to April 1993; (b) a change in the
construction schedule of the Yueshan-Laoyang section; (c) inadequate estimates of local
costs for the Yueshan-Xiangfan line component; and (d) the impact of steep inflation on
the cost of materials and equipment in the early 1990s\. In terms of local currency, total
costs were 135 percent above appraisal estimates\. The difference between dollar and
Yuan costs was due to the devaluation of the Yuan over the life of the project from Yuan
3\.7 per dollar to Yuan 8\.3 per dollar\.
- Ill -
viii\. Project costs of the Fifth Railway Project were 61 percent higher than expected,
with an actual cost of US$1,550\.3 million compared to an appraisal estimate of
US$1,005\.7 million\. The cost increase stemmed mainly from the Zhegan line component\.
The main reasons included: (a) design changes to improve the original design for
telecommunications; (b) the impact of steep inflation on the cost of materials and
equipment in the early 1990s; (c) inadequate estimates of local costs for the Zhegan line
component; and (d) use of the US$43 million loan balance with procurement undertaken
in 1997\. In terms of local currency, total costs were 124 percent above appraisal
estimates\.
ix\. The Fourth and Fifth Railway Projects are likely to be sustained\. With respect to
physical sustainability, MOR's record in maintaining infrastructure, locomotives and
rolling stock is good and there is no reason to believe this will change\. Nevertheless,
deteriorating finances are a cause for some concern\. MOR has been operating at a loss
since 1993 and has recently announced an unprecedented near-term program designed to
improve dramatically bottom line earnings\. From an economic perspective, sustainability
was assessed in terms of the sensitivity of the project component's EIRR to changes in
benefit and cost assumptions\. All of the results were satisfactory\.
x\. Bank performance during identification, preparation and appraisal of the Fourth
Railway Project was moderately satisfactory\. The Fifth Railway Project was satisfactorily
identified, prepared and appraised\. Both projects were consistent with the Government's
objectives, which were to increase railway transport capacity so as to sustain economic
development, and to enhance expertise needed to manage the railway's future
development\. Project performance indicators, consistent with the practice in the 1980s,
were not developed with sufficient detail and specificity\.
xi\. Overall, MOR's administrative performance was generally satisfactory\. Civil
works were carried out according to current MOR standards and are of good quality\.
Although the three locomotive and rolling stock factories participating in the Fourth
Railway Project had little institutional experience with Bank projects, relatively few
problems arose during project implementation of both projects\.
xii\. The overall outcome of both projects is rated as satisfactory\. The objectives for the
Strategic Plan Study under the Fourth Railway Project were somewhat narrowly defined,
which made it quite easy for MOR to achieve them, although the study was intended to
help promote a broader-based dialogue between the Bank and MOR\. The outcome of the
study may also have been affected by the Bank's desire to retain it in the project even
though the Beijing-Shanghai line modernization component had been postponed\. The
Fifth Railway Project did not technically achieve several sub-components of the
Locomotive and Rolling Stock System-wide Component\. The objectives for the five
studies under this project were more ambitious than those in the previous railway project\.
This may help to explain why the objectives of the Locomotive and Rolling Stock
Maintenance and Rehabilitation Study were basically not achieved\.
- iv -
Summary and Findings, Future Operations and Lessons Learned
xiii\. Future operations will have to be consistent with the Chinese Government's
objectives for the transport sector\. A Strategy for the Transport Sector' identified two
primary objectives\. These were to: (i) enhance China's economic growth and increase its
competitiveness in world markets; and (ii) reduce income disparities between inland and
coastal provinces and rural and urban areas\. Achieving these objectives will require the
Government to: (i) stimulate competition; (ii) promote development of the transport
network to alleviate capacity bottlenecks and provide capacity for economic growth; (iii)
open up isolated areas; (iv) charge for the use of infrastructure so as to cover long-term
social costs; and (v) implement institutional reform that recognizes the transport sector as
a whole, rather than as an aggregation of independent modes\. Reducing the sector's
negative effects on the environment and improving its poor safety record should be a
third sector objective\.
xiv\. In recent years, the Bank has worked with the central and provincial governments
and MOR to assess the institutional changes, pricing and regulatory measures needed to
stimulate a more market-responsive transport sector, based upon concepts of integrated
transport systems\. The next stage, which is already underway, is to progress from
concepts to specific policies and actions, and then to their implementation\.
xv\. The problems identified in this ICR and new approaches taken by the Bank's
project team with respect to policy initiatives and technology are relevant to the
preparation and execution of future Bank-financed railway projects in China\. The main
lessons learned from these projects are as follows:
a) Bank management's re-assessment of the past lending strategies appears
to have had a fundamental impact on MOR's and the Bank's approach in
the Fifth Railway Project\. The ICRs for the Sixth and Seventh Railway
Projects should evaluate whether the Fifth Railway Project, which was
regarded as a transitional operation, really paved the way for more
meaningful cooperation with MOR\.
b) Extensive studies proved to be a challenge to MOR\. The Planning Studies
under the Fifth Railway Project were a somewhat ambitious attempt to
look at future investment requirements in a rational, system-wide context\.
Although the range of achievements varied substantially, the ICRs for
subsequent projects should evaluate whether they really enhanced the
MOR's contribution to the transport sector in China\.
c) The Fourth Railway Project had three studies and two physical
components with six different locations\. By contrast, the Fifth Railway
Project consisted of four physical components with nine different
China, Forward with One Spirit: A Strategy for the Transport Sector, April 23, 1998,
Report No\. 15959-CHA
locations and eight studies\. Both projects required a multitude of
professional skills for appraisal and supervision, which resulted in
expensive project appraisal and supervision\. This may explain why the
Bank's involvement was not always adequate during implementation\.
Therefore, in order for future projects to be more efficient, manageable
and cost-effective, they should consist of only a few components that are
specifically targeted to achieve the transport sector's objectives\.
d) MOR has historically been very reluctant to involve the Bank in broader
strategic planning, ostensibly because it has not wanted to spend Bank
loans on technical assistance\. Some of the studies' objectives and targets
in the Fifth Railway Project were somewhat ambitious and one of the five
Planning Studies basically did not achieve its objectives\. It is, therefore,
very important to receive MOR's full-hearted support and commitment
during appraisal of future projects\.
e) Future appraisals should avoid such arbitrary changes as were experienced
during the preparation of the Fourth Railway Project\. In addition, realistic
procurement plans, adequate estimates of local costs and implementation
schedules providing for inevitable delays are essential for successful
project implementation\.
(f) If the problem of MOR's inadequate progress reporting cannot be
resolved, supervision of ongoing projects should focus more on collection
of information in a format conducive to the production of ICRs\.

COMBINED IMPLEMENTATION COMPLETION REPORT
CHINA
FOURTH RAILWAY PROJECT - (LOAN 2968-CHA)
AND
FIFTH RAILWAY PROJECT - (LOAN 3406-CHA)
PART I\. IMPLEMENTATION ASSESSMENT
A\. PROJECT OBJECTIVES
1\. As with most other centrally planned economies, China's economy is transport-intensive\.
Railways, highways, inland water transport and coastal shipping are concentrated along the
eastern seaboard and serve high-intensity freight traffic\. Due to rapid economic growth--
particularly after the Government adopted an open-door policy in 1978--demand for transport
outpaced the supply\. This network has always been relatively small in proportion to China's
great land mass and enormous population\. From 1952-1983, the sheer length of the railway
system more than doubled while that of the highway system increased nine-fold\. Growth in rail
freight averaged 9 percent a year over this period, but slowed to around 4\.5 percent a year after
1978, as traffic saturated existing lines and rolling stock capacity\. Nevertheless, by 1983, the rail
system could not meet transport demand\. Aware of these shortcomings, the Government focused
on developing the transport sector, and railways in particular, which played a critical economic
role in China by transporting coal, the main energy source, throughout the country\.
2\. The Bank first became involved in the railway sub-sector in 1984\. By June 1988, three
projects had been designed to assist the Government to develop the railway network and to
enhance expertise needed to manage the railways' future development\. Another project, which
focused on expanding the capacity of "local railways", was also already approved when the Fifth
Railway Project was appraised\.
3\. The Fourth Railway Project, approved in May 1989, had three objectives that reflected
the Government's railways' development strategy during the Seventh Five-year Plan (1986-
1990)\. These were to: (i) increase the capacity of key routes and terminals; (ii) enhance the
productivity of existing assets by raising the level of technology within the Ministry of Railways
(MOR), e\.g\. in train operations, maintenance, administration, and manufacturing; and (iii)
expand rolling stock manufacturing facilities\.
4\. The project's four main components were to develop:
(a) the double-tracking and partial electrification of the Yueshan-Xiangfan section of
the Jiaozuo-Zicheng (Jiaozhi) line in the Beijing-Guangzhou railway corridor;
(b) the expansion and modernization of three locomotive and rolling stock factories;
-2-
(c) a Strategic Plan Study of telecommunications and computerization, to be pilot-
tested on the Beijing-Shanghai railway corridor in order to improve operational
management and transoortation capacity; and
(d) training and technical assistance needed for the factory modernization component
and the Strategic Plan Study\.
5\. All four components, but especially the Strategic Plan Study, were chosen to provide a
bridge to possible sector lending\. The priority given in the Strategic Plan Study towards
efficiency and modernization marked a significant departure from facility-oriented components
in previous railway loans to China\. This component was designed to promote a broader-based
dialogue between the Bank and MOR\.
6\. The Fifth Railway Project, approved in September 1991, had four objectives: (i) to
introduce recent developments in rail technology and maintenance and rehabilitation practices;
(ii) to develop system-wide plans and planning tools for MOR's major sub-sectors; (iii) to
develop modem planning and analytical techniques for establishing investment priorities and
tariff structure; and (iv) to add capacity where such additions were urgently needed and justified\.
7\. The project included:
(a) two system-wide components:
(i) the introduction of recent technology and advanced materials for
maintaining and rehabilitating tracks; and
(ii) eliminating the shortage of critically needed materials, components and
equipment for rehabilitating locomotives and rolling stock;
(b) two capacity expansion components:
(i) double-tracking of the 944 km Zhegan (Zhuzhou-Hangzhou) line; and
(ii) to expand capacity at the Xuzhou marshalling yards; and
(c) an action plan to develop and implement the Railway Traffic Costing System,
including recommendations for tariff restructuring\.
In addition, the project relied heavily on five studies initiated during project preparation,
focussing on: (i) track maintenance and rehabilitation; (ii) locomotive and rolling stock
maintenance rehabilitation; (iii) an integrated system plan for electrification; (iv) an integrated
system plan for telecommunications; and (v) setting priorities for future railway investments\.
8\. Project objectives were realistic, clearly articulated and consistent with the Government's
goals and the Bank's assistance strategy to develop the railway sub-sector\. Planned investments
to achieve these objectives were also appropriate\. While the study components in both projects
-3-
were somewhat complex, the other components were traditional and not too risky\. As has been
the case with previous projects, implementation timing was optimistic\.
B\. ACHIEVEMENT OF OBJECTIVES
9\. The Fourth and Fifth Railway Project's objectives were substantially achieved\. The
railway infrastructure network was improved and expanded, resulting in increased freight and
passenger traffic\. More specifically, progress towards achieving Fourth Railway project's
objectives were as follows:
Fourth Railway Project
10\. Increase the capacity of key routes and terminals: The project achieved this objective
by double-line tracking and partial electrification of the Yueshan-Xiangfan Line\. The aim was to
substantially enhance the capacity of the railway's highest density routes and thereby increase
coal transportation south from Shanxi to the Han River at Xiangfan or to the Yangtze River at
Wuhan\. The project resulted in double tracking 492 km of a single-track line and electrifying 113
km of the northern section from Yueshan to Luoyang\.' Freight traffic increased from 29\.3
million tons2 in 1992 to 64\.8 million tons in 1998\. By 2005, traffic is expected to reach a
maximum of 85\.3 million tons\. Passenger trips rose from 4\.9 million passengers in 1992 to 10\.9
million in 1998, and is expected to reach its highest level in 2005 with 17 million passengers\. By
these indicators the project has successfully met its first objective\.
11\. Enhance the productivity of existing technological assets: The project modernized
both the rail system's telecommunications network and the system's management of operational
information\. A Strategic Plan Study was designed to develop telecommunications and
computerization to be tested on the Beijing-Shanghai railway corridor\. The operating
information management part of the study analyzed a proposed Operating Information System
(OIS) and developed a Transportation Capacity Computer Modeling system\. Overall, these
project objectives have been achieved with one exception (para\. 15 (a) (i))\.
12\. Telecommunications\. The objective of the telecommunications study was to update
MOR's current telecommunications system based on such new technological developments such
as digitalization and fiber optics transmission\. Specifically, the data transmission alternatives
were to be analyzed and solutions proposed\. The study was successfully completed by the end of
1993, with the exception of one of the seven contracted tasks:
* Between 1991 and 1993, the study laid the technical foundation to set up a modem
package-switching network\. This covered the full cycle from design to bidding,
construction and cut-over\. In 1994, all hardware for the 800 nodes under phase I of the
The above kilometer lengths were planned; the actuals are 490\.8 km of double-tracking and 123\.1 km of
electrification\.
2 The SAR referred to traffic of 15\.9 million tons of freight between Jiyuan and Luoyang, and 25\.4 million tons
between Luoyang and Baofeng and six daily pairs of passenger trains in 1985 (para\. 3\.5)\.
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X\.25 project was installed, and ready to be used for TMIS\. Phase II is now underway,
and is designed to further enhance the system's capacity\.
* Staff training overseas and in China was so successful that those trained are now the
backbone staff for the expansion and application of TMIS\.
* The system master plan for telecommunications development elaborated through this
project began to be implemented in 1995\.
13\. Operating Information System (OIS)\. The objective of the data processing strategic plan
was to develop a computer-based operating information system for MOR\. The system uses a
real-time, integrated data base that can be used by MOR operating management at all levels to
monitor and execute transportation and other operating plans--including rolling stock
maintenance activities\. With approval by MOR of the recommendations and the overall OIS
design (software acquisition), the objective for this component was achieved in August 1993\.
14\. Transportation Capacity Computer Modeling\. Another objective of the operating
information management study was to demonstrate the usefulness of computer models to
evaluate the relative benefits and costs of alternative operating investments and practices\. To this
end, powerful computer models were introduced which permitted MOR study teams to evaluate
operating practices on the Beijing-Shanghai railway corridor\. The Government hoped to increase
the capacity of this line as much as possible over the next five years\. At negotiations, an
agreement was reached on the action plan to evaluate improvement measures on the Beijing-
Shanghai railway corridor\.
15\. In 1991, the MOR acquired five computer software programs called "Program of the Line
Transportation Capacity Analysis Models\." Three of the programs were successfully modified to
suit Chinese circumstances\. On the other hand, two programs proved to be of very limited value
because they were written in APL/2, a software language rarely used in China\. Nevertheless, the
objective of demonstrating the usefulness of computer models to help evaluate the relative
benefits and costs of alternative operating investments and practices was achieved\.
16\. Expand rolling stock manufacturing facilities: Accordingly, the project focused on the
expansion and modernization of three locomotive and rolling stock factories\. High-precision
machine tools were introduced that reduced or eliminated quality-control problems in the new
locomotives, coaches and freight wagons\. This step alone significantly reduced fuel consumption
and maintenance costs for new locomotives and other rolling stock\.
17\. The three factories assisted through the project have achieved the following:
a) The February 7 Locomotive Works (F7LW) has increased the production of
locomotives as well as improved its quality and capability to develop new or
improved products\. It was expected to achieve an annual production of 30 sets of
diesel locomotives model Beijing and 70 sets of shunting locomotives model
Dongfeng 7 (DF 7) in 1990\. All Bank-funded machine tools are performing to
their rated capacities\. The workshop authorities have set up an expert group of
software and electronic specialists who can provide a basic level of maintenance
-5-
for the new computerized controlled machines\. In this instance, project objectives
have been achieved, albeit 5 years later than planned\.
b) The Sifang Locomotive and Rolling Stock Works (SLRSW) had the following
objectives: (i) to enable SLRSW to produce 800 coaches and overhaul 100
annually by 1992, (ii) to increase locomotive production to 150 units annually by
1994, and (iii) to achieve quality improvements leading to lower fleet
maintenance and operating costs\.
(i) Coaches: While the coach factory modernization program was underway,
MOR introduced a more modern coach type YW25, for which the plant
capacity was now 600 coaches\. As the design of the new coach was more
complex than the YW22 coach, conversion factors were used to calculate the
achievement of targets\. For 1995, the result was 864 sets based on 1\.66 as
average of the revised factors\. In addition, SLRSW overhauled 120 coaches in
1993 and 117 coaches in 1994\. Since both average conversion factors are in line
the assessment of the Bank mission, and the production and overhaul targets set
at appraisal were met,3 the objective for coaches has been achieved\.
(ii) Locomotive Production: The objective of increasing locomotive production to
150 units annually by 1994 was in its literal sense not achieved\. In April 1988,
MOR unilaterally lowered the production target to 100 units, citing actual
transportation needs\. MOR's decision went undetected by the Bank for a
period of about six years\. Plant capacity, however, was nevertheless assessed
by a supervision mission in 1995 as being far in excess of the capacity of 100
locomotives per year now approved by MOR\. Indeed, in 1995 the Sifang
Works manufactured 122 locomotives\.
(iii) Product quality improvements: The production quality of coaches and
locomotives has improved substantially due to plant modernization and the
use of such new materials as corrosion proof steel and fiberglass reinforced
plastic\. Maintenance costs per locomotive were brought down from Yuan
500,000 to Yuan 80,000; and "warranty" repairs fell to insignificant numbers\.
To the extent that plant capacity was assessed as far in excess of the
production capacity this objective has been substantially achieved\.
c) Qigihar Rolling Stock Works (QRSW)\. Production targets at this factory
included: (i) increasing the manufacturing capacity to 9000 freight wagons per
year; (ii) improving freight wagon overhaul periodicity from the present five
years to an interval of 7 to 10 years with special emphasis on anti-corrosion
measures; and (iii) providing skill upgrading, especially to operate the new
equipment being procured as a part of this project component\. The project was
also to address questions of process engineering and pollution control\.
For reason of greater efficiency MOR re-directed coach overhauls to other factories from 1995 onwards\.
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(i) Manufacturing capacity: The objective of increasing freight wagon production
output to 9,000 units annually was not achieved, because in 1995 MOR used a
market forecast to set an annual production guideline of only 8,000 wagons for
QRSW\. Production figures show a maximum of 8,562 freight wagons were
produced in 1994, followed by 7,777 wagons in 1995, 8,192 wagons in 1996
and 8,190 wagons in 1997\.
(ii) Freight wagon overhaul periodicity: The objective of increasing this from five
years to an interval of 7 -10 years with special emphasis on anti-corrosion
measures was achieved\. A freight wagon overhaul interval of nine years was
reached in 1995\. In addition to better production methods and materials, a
contributing factor was MOR's policy of conducting more intensive repairs\. As
a result, overhaul capacity increased from 1,900 wagons in 1987 to 3,600
wagons in 1995, and has remained on the same level since 1995\.
(iii) Skills upgrading: Sufficient training and technical assistance was provided to
achieve this objective-particularly to operate the newly purchased equipment\.
18\. Based on the fact that sufficient technical assistance and training was provided to upgrade
skills, specially to operate the new equipment procured, it is judged that the sub-components
objectives have also been substantially achieved\.
19\. Technical Assistance and Training\. A program to educate staff in new technology and
management was included in the Strategic Plan Study and the Factory Modernization
components\. Factory Modernization was also supported through the financing of visits by
Chinese technicians to similar plants abroad, and by visits of foreign experts to factories in
China\. Retraining of staff whose skills became redundant after modernization was financed
domestically\.
20\. The technical assistance and training objectives were--with one exception--achieved\. The
MOR believed that the 12 person-months of international technical assistance contracted for the
Operating Information System was sufficient\. Evidently, the need for foreign assistance in this
area was over-estimated at appraisal\. A five-member team was trained to work on Transportation
Capacity Computer Modeling\. Of those, only the single staff member from CARS is still
working on this type of computer modeling\. Therefore, this objective has been only partially
achieved\.
Fifth Railway Project
21\. Introduction of new rail technology, maintenance and rehabilitation practices to
enhance efficiency and capacity: To achieve this objective, MOR formulated with Bank
assistance a system-wide component for regular investments in track maintenance machines\.
Enhancing MOR's long-range track upgrading program would permit an increase in the existing
maximum speed of passenger trains from 120 km/h to 140 km/h\. The maximum speed for freight
trains would rise from 70 km/h to 80 km/h, and the axle load for freight wagons would increase
from 21 tons to 23 tons and eventually to 25 tons\. The Bank's financial contribution focused on
the purchase of on-track machinery to install and maintain the rails, sleepers, fastenings and
-7-
imported switch components to observe their performance and evaluate the higher quality
materials and mechanized practices\. Hard rails were installed on selected high-density curved
line sections totaling 500 km of track including installation of imported concrete sleepers and
fastenings on a 5-km test section\.
22\. Following a study's recommendations (para\. 44), MOR organized track maintenance
machine groups\. Each of these maintenance groups came equipped with 2 tamping machines, I
ballast regulator, and 1 track stabilizer\. Similarly, track rehabilitation teams were equipped with
2 ballast cleaners, 2 one-tie tamping machines, I two-tie tamping machine, lballast regulator,
and I track stabilizer\. The purchase of the track machines enabled MOR to set up 3 maintenance
and 3 rehabilitation groups of a current total of 37 maintenance and 13 rehabilitation personnel\.
Some 487 km of hard rails were installed in 37 small curved track sections on heavy traffic lines\.
Subsequently, MOR's long-range track rehabilitation and upgrading program showed remarkable
progress\. Therefore, the component's objective under this project has been fully achieved\.
23\. Improvement in the Rehabilitation of Locomotives and Rolling Stock: This involved
three components: i) the alleviation of shortages in wheels for passenger coaches and freight
wagons; ii) a systematic diagnosis of maintenance problems; and iii) the preparation of action
plans for their long-term solutions (paras\. 37 to 39)\.
24\. Specific objectives included: (1) the provision of 4000 wheel sets which would restore to
service at least 200 passenger coaches and 1500 freight wagons awaiting wheel replacements; (2)
to achieve an availability rate of 82 percent for the imported diesel and electric locomotives; and
(3) to increase the overhaul capacity of the Shenyang Loco Works from 72 DFHI/2/5 diesel
locomotives per year to 150 locomotives annually; 4) to increase the production capacity of the
Shenyang Spare Part Works to manufacture 20,000 air brake sets of a new design per year; 5) to
increase the overhaul capacity of the Lanzhou Loco Works from 72 diesel locomotives per year
to 150 locomotives annually; 6) and to increase the production capacity of the Puzhen Works,
Roller Bearing Section to manufacture 35,000 sets of roller bearings of a new integral cage
design\. Taken together, all of these actions were designed to bring a qualitative change in the
manufacturing processes\.
25\. (1) Wheel sub-component\. Orders had been placed for forged wheels (10,000 t, delivered
as 26,179 pieces) and cast wheels (8,000 t and 10,000 t, delivered as 47,264 pieces in total) in
November 1993 and March 1994 respectively, and delivered ten to fourteen months later\. The
wheel inputs achieved the objectives stated in para\. 24 by using the cast wheels for new gondola
wagons type 63A with 60 tons capacity, which were then operated as coal wagons on the
Datong-Qinhuangdao line\. The forged wheels were used in coaches of a new design, the
improved type 25 G\.
26\. (2) Locomotive sub-component\. About US$8 million of the US$10 million earmarked
for critical components were used for maintenance of diesels locomotives and the balance for
electric locomotives\. The last deliveries were made in November 1994\. The objective to reach an
82 percent availability of imported diesel and electric locomotives (para\. 24, item 2) was
achieved in 1995 and the years thereafter\.
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27\. Workshops and depots sub-component\.
(3) Shenyang Locomotive Works\. The objective to increase the overhaul capacity from
72 DFH1/2/5 diesel locomotives per year to 150 locomotives annually (para\. 24, item 3)
was, in its literal sense, not achieved\. During project implementation (at the end of 1992),
MOR revised the annual periodic overhaul targets from the project target of 150
locomotives down to 60 locomotives of DFH3 type\. While acknowledging that the SAR
does state the higher capacity, MOR justified the downward revision by citing a change
in the nature of the workload\. Simply put, the newer locomotives were able to run for
longer intervals between maintenance overhauls\. The explanation is reasonable\. Installed
capacity is actually higher than the revised periodic overhaul target because of the
additional inputs provided by the project\. Quality of output has been increased
substantially\. Overhaul intervals were extended from 510,000 to 630,000 km depending
on the type of locomotive to 700,000 to 900,000 km, thus reducing maintenance costs\. In
addition, the locomotives' repair time in workshops was shortened\.
(4) Shenyang Spare Part Works\. Implementation was scheduled for completion by the
end of 1994\. Delay in procurement and a long testing and acceptance phase for
sophisticated machinery sets prevented the sub-component to become fully operational
before May 1996\. Once on stream, however, this spare-parts factory produced 22,000 air
brake sets of the new design, thus over-achieving the project objective of 20,000 sets
stated in para\. 24, item 4\. Actual production in 1997 was 20,026 sets\. In addition, quality
was improved to such a level, that the works passed the ISO 9001 standard in September
1997, which is higher than the standard set by MOR\.
(5) Lanzhou Locomotive Works\. The objective here was to increase the overhaul
capacity from 72 diesel locomotives per year to 150 locomotives annually (para\. 24, item
5)\. This goal was in its literal sense not achieved\. As for the Shenyang Locomotive
Works, MOR revised the annual periodic overhaul targets downwards at the end of 1992\.
After delivery and acceptance of the machines and equipment in November 1994, 50
locomotives should have been overhauled in 1994 according to phase I of the plan, and
150 Locomotives per year beginning in 1996 in a phase II\. During 1994, 60 DF4
locomotives were actually overhauled, 84 in 1995, 102 in 1996, 130 in 1997, and 127
locomotives in 1998\. Thus, the works' capacity has been increased substantially by the
Bank funded machines and equipment\.
(6) Puzhen Works\. All Bank funded machines were delivered by the end of 1994 and
became operational by the end of February 1995\. Implementation was on schedule and
the plant was to produce 24,000 sets of roller bearings of new design by mid 1995 and
35,000 sets in 1996\. The target for 1996 (para\. 24, item 6) was already achieved in 1995
with the production of 36,018 sets\. In 1998, 42,188 sets were manufactured\.
28\. Expansion of the Zhegan Line Capacity: One of the project's aims was to add capacity
where such additions were urgently needed and justified\. In the light of the rapid growth in
traffic, the Government's investment in railways had been inadequate\. Much investment had
been in large projects such as construction of new lines, conversion of motive power from steam
to diesel and electric, expansion of large marshalling yards, and new facilities for manufacturing
-9-
and equipment maintenance\. While these programs helped MOR carry more traffic, achievement
of the rapid rate of traffic growth was possible only because of more intense utilization of
existing infrastructure\. Consequently, much of the existing infrastructure was used at its
capacity\. Capacity of the Zhegan line had gradually been expanded, mainly by double-tracking
several sections and by expanding facilities at stations to handle longer trains\. The double-
tracking started during the Seventh Five-year Plan and covered the sections with the most serious
bottlenecks\. Bank assistance to MOR to complete double-tracking of the 944-km Zhegan line
was instrumental in achieving the objective of capacity expansion\. Work involved the doubling
of the remaining 594km, including the replacement of a 2\.6-km single-track bridge over the Gan
River with a double-track bridge at a new location to provide better clearance for ships\.
Operations on the new sections began in December 1995, but subsequent installations of
operational and telecommunications equipment are expected to be completed by March 1999
(para\. 95)\. The results are dramatic: freight traffic increased from 64\.4 million tons4 in 1991, to
136\.4 million tons in 1998\. By 2005, traffic is expected to reach a maximum of 145\.2 million
tons\. Passenger trips rose from 51\.2 million passengers in 1991 to 71\.5 million in 1998, and is
expected to reach its highest level in 2005 with 76\.7 million passengers\.
29\. Expansion of the Xuzhou Terminal\. Located at the junction of major trunk lines in
Jiangsu province, this terminal was already in the midst of a multistage expansion program
dating back to 1986\. To assist MOR in its capacity expansion program, the Bank's contribution
focused on high technology\. Specifically, this took the form of a computer-aided dispatching
system, including a Yard Information System (YIS)\. Also included in this package was
automation equipment for the marshalling yard, modernization of operational management
including appropriate communications equipment, and the pilot testing of high-speed switches
for marshalling yards\. The component was successfully completed with the hand-over of the
operating system for the whole terminal and the adjacent northern (98km) and the southern (56
km') line sections on December 10, 1998\. The systems are functioning well thus achieving the
objective of expanding the capacity of the terminal through improved operations\.
30\. Planning Studies\. In order to help MOR to deal better with system-wide issues that
affected the quantity and quality of its services, five studies were scheduled to be carried out by
teams composed of MOR staff supported by external specialists\. The achievement of their
objectives varied substantially as explained below\.
31\. Permanent Way Maintenance and Rehabilitation Study\. The objective of the study was to
undertake a comprehensive review of track rehabilitation and maintenance standards\. Also
studied were methods to help MOR develop a technically and economically optimal program\. A
research program involved the following four principal tasks: (a) general investigation and
analysis of track rehabilitation and maintenance standards and procedures at home and abroad;
(b) dynamic measures and tests, both on the test track and in the field; (c) tests to be conducted
using the Chinese Track Dynamic Test Laboratory; and (d) comprehensive high-volume
durability tests\.
4 The SAR's reference (para\. 3\.13) to a traffic of up to 30 million tons of freight and 13 to 22 daily pairs of
passenger trains on different sections of the line in presumably 1991 could not be substantiated for the economic
evaluation\.
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32\. With the submission of the study report to the Bank in April 1992 the objective of task
(a) was achieved\. The Bank judged the report as well done and very detailed, and supported its
action plan to achieve five objectives critical for MOR\. These included: (i) expedite track
rehabilitation and augment structural strength; (ii) complete a "soft research project"; (iii) install
heavy on-track machines; (iv) undertake a research program; and (v) set up a Permanent Way
Equipment Center at MOR\. The research program was to include two test sections on which
different track component designs and maintenance practices and management standards were to
be tested\. Foreign consultants' experience, however, was not reflected in the study report\. A visit
abroad in 1998 to study maintenance practices under conditions of heavy axle load combined
with heavy traffic and freight train speeds of 80 km/h and passenger train speeds of 160 km/h
rectified the earlier deficiency\. With this, the study objective was fully achieved, albeit much
later than planned\.
33\. Tasks (para\. 39, (b) and (c)) were to test the wear of foreign and local materials such as
head hardened rails and 60 kg/m rails under 21 ton and 25 ton axle loads in the field and the
Chinese Track Dynamic Test Laboratory\. Fatigue tests were applied to imported switch
components, and track sections under traffic were measured for changes of gauge, profile,
alignment, cross-level and twist\.
34\. Comprehensive high-volume durability tests dealing with the reactions between rolling
stock and track, task (d) of the study, were also combined with "tests in Chinese Track Dynamic
Laboratory" in September 1995\. In order to improve the depth of research, "computer simulation
analysis" was changed from "two-dimensional" to "three-dimensional" testing thereby delaying
completion of the activities\.
35\. The study did not establish target dates for the numerous recommendations to be made\.
During project supervision, however, they were provided upon the Bank's request\. Most of the
test due dates were in 1998\. A report evaluating the test results and presenting recommendations
is under preparation and expected to be completed by June 1999\. It is, therefore, not yet clear
whether the test objectives for tasks (b), (c) and (d) have been achieved\.
36\. One of the most important outcomes of the study was the recommendation to establish
track maintenance machine groups in eight of the twelve (at that time) railway administrations
covering 30,000 km of main line track with 30 million tons of traffic per year\. Since 1992,
however, traffic grew to such an extent that all administrations now have line exceeding the 30
million per year mark adding up to 45,000 km by the year 2000\. Therefore, MOR found it
necessary to provide each administration with at least one set of machines\. Because of the
creation of the Nanchang and Kunming administrations, depots with some equipment were
installed in Nanchang at the end of 1997, and in Kunming in 1998\. The rehabilitation machine
groups were created in six regional administrations\. By the end of 1998, 37 track maintenance
and 13 track rehabilitation groups were established\.
37\. Locomotive and Rolling Stock Maintenance and Rehabilitation Study\. The objective of
the study was to prepare action plans to optimize the maintenance, reliability, availability and
utilization of diesel locomotives and rolling stock\. Specifically, the objectives were to enable
MOR to:
- 11 -
a) reduce the total amount of time required for repairs, including periodic and
routine repairs (Part I);
b) improve its overall maintenance system, regulations, planning, facilities, methods
and procedures; apply the most economic methods so as to increase repair
efficiency and quality (Part II); and
c) provide a basis for future levels of expenditures required for maintenance and
rehabilitation of locomotives and rolling stock assets (for years 1991-1995 in
detail and indicated levels for 1995-2000)\.
38\. The scope of work was divided into ten short-term studies and seven long-term studies\.
In view of the diversity in stock and severity of maintenance problems, MOR decided to
concentrate first on studies related to diesel locomotives\. Attention thereafter was to focus on
coaches and wagons\.
39\. The study report, which was delivered on time in April 1992, constituted the final report
for the ten short-term studies\. It left much to be desired and was, therefore revised in October
1992\. The technical content needed to be improved and the report lacked a specific action plan\.
Following Bank advice, the revised report focused on the DF-4 locomotive only, but MOR was
also supposed to indicate which type of locomotive or rolling stock would be next in line after
the DF-4 locomotive program\. After completion of the Short Term Plan, MOR dismissed the
study team in December 1993\. Subsequently, nobody was delegated to implement the action plan
for the DF-4 locomotives\. The Long Term Plan was never developed\. Apparently, its draft action
plan faced internal difficulties\. During the ICR mission, MOR claimed that the study's range was
too ambitious, covering the whole railway network, substantial reforms as well as changes of
maintenance practices and workshop layouts\. The study's objectives were basically not achieved\.
40\. System Electrification Study\. The objective5 of the study was to prepare plans for the
electrification of railway lines for the 8th Five Year Plan\. The final selection of candidate lines
for electrification was to be determined on the basis of economic priorities and optimal timing of
investments\.
41\. The specific objectives of the study were to:
a) provide a basis for possible future lending operations involving the World Bank
and other financing sources;
b) identify the items required for electrification that require foreign exchange either
because they are only available from abroad or because local supplies are
inadequate; and
c) address technical issues related to design, operation and maintenance of
electrification projects\.
SAR Fifth Railway Project, para\. 3\.21\.
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42\. The study report was very detailed and satisfactory to the Bank\. Acceptable methodology
and technical design assumptions were used for each of the ten lines targeted for electrification\.
EIRRs for each of the lines provided a suitable ranking for future MOR activities\. Annual cash
flows properly reflected: (a) the year-to-year timing of initial investments in electrification
infrastructure and electric locomotives; (b) the year-to-year timing of the initial savings in
investment in diesel locomotives and rolling stock at the beginning of the assumed 25 year life of
the project; (c) the annual net operating cost savings up to full capacity utilization; and (d) the
incremental effects of extending an existing electrification to adjacent lines\. With this study
report the specific objectives were fully achieved\.
43\. System Telecommunication Study\. MOR intended to install a telecommunications
network to meet data communications needs for four principal users: a Transport Management
Information System; electronic mail; off-line management information system; and a passenger
seat reservation system\. Under the Fourth Railway Project, a package-switching network for
MOR's "backbone" telecommunications network was studied\. The System Telecommunication
Study was a continuation of MOR's efforts to modernize its telecommunications infrastructure\.
44\. The objective of the study was to prepare a long-range plan for modernization and
expanding MOR's telecommunications network including facilities for voice, data, radio,
facsimile, and teleconferencing\. Users of the system would include not only railway personnel,
but also individuals associated with such ancillary activities as factories, universities and other
schools, hospitals, various support activities, and MOR staff and families (particularly in isolated
locations not served by public telecommunications services)\.
45\. The specific objectives of the study were to:
a) provide a basis for possible future lending operations involving the World Bank
and other financing sources;
b) identify the items required for telecommunication that require foreign exchange
either because they are only available from abroad or because local supplies are
inadequate; and
c) address technical issues related to design, operation and maintenance of
telecommunication projects\.
46\. With the submission of a long term technical plan (Report A) and a short and medium
term implementation plan (Report B) the objectives of the study were fully achieved\. The Bank
review of these reports acknowledged that a major task had been completed and concluded that
the study Report B was very useful for the proposed Sixth Railway Project\. It contained a very
specific program, a detailed schedule and cost estimates for investments in the years 1993-1997\.
These investments included upgrading the transmission, telephone exchange, data
communication, video conference networks, and mobile communication facilities\. One of the
main study objectives - to assist in the preparation of the next project - was achieved\. But both
reports needed further improvement to achieve the second objective\. MOR also evidently needed
further assistance in developing a long term strategy in telecommunications by defining the short
and medium term plan (Report B) and the long term technical plan (Report A)\. The Bank,
- 13 -
therefore, recommended that both reports be treated as MOR's Telecommunications Master Plan
(TMP)\.
47\. Railway Investment Study (RIS)\. The primary objective was to develop and implement a
computer-based analysis system, within which the following specific objectives were identified:
a) preparation of economic evaluations of critical investment alternatives for
expanding railway capacity;
b) identification of expenditures which might expand capacity of 8th Five-year
Plan and more broadly of the 9t" and later Five-year Plans;
c) comparison of capital investment alternatives, particularly for additions to
capacity;
d) improvement of traffic forecast accuracy;
e) estimates of quantitative and credible economic benefits for each type of
investment alternative; and
f) identification of specific changes in operating practices with potential for
operating cost savings and energy conservation\.
48\. The RIS achieved its objectives by developing a decision support system of traffic
forecasting, performance, network optimization, benefit/cost, and geographic information system
models\. The February, 1993 Gray Cover Report, China 's Railway Strategy (Report No\. 10592-
CHA) summarized the achievement of all six of RIS's original objectives\. The first and third
objectives-evaluation of critical investment alternatives, and comparison of capital investment
alternatives-were closely linked\. As a result, it became clear that ii: made good economic sense
to shift some investment in the original MOR investment program away from new line
construction and towards double-tracking, electrification, and new locomotives and wagons\.
Electrification and double-tracking have lower unit costs of capacity expansion, while increasing
rolling stock would make use of underutilized existing lines\.
49\. The second and fifth objectives-identification and justification of capacity expansion
expenditures, and estimation of economic benefits-were much more targeted\. The RIS also
helped to identify ways of minimizing costs (investment costs + operating costs + costs of
unsatisfied demand) across a wide range of projects\. Two optimal sets of projects were designed,
one for a low 6 percent GNP growth forecast, and one for a high 8\.9 percent forecast\. Economic
benefit/cost ratios were calculated for 16 individual projects within the optimal sets\. The report
found that "the RIS methodology may help MOR design a railway network that offers 23 or 27
percent more traffic carrying capacity"6 for the same level of budget\. About 10 percent of the 23
to 27 percent throughput gain would be due to optimization of the scale, location, and timing of
investments\. Another 10 percent of the throughput gain could be attributed to improved train
routing\. The RIS "traffic assignment" methodology provided a powerful tool to coordinate
6 China 's Railway Strategy (Report No\. 10592-CHA), page 23\.
- 14 -
simultaneously among multiple routing options for tens of thousands of origin-destination pairs\.
Needless to say, optimal traffic assignment was impossible without computerization\.
50\. The fourth objective-improved traffic forecasting-was achieved by developing a
traffic forecasting module that predicted inter-zonal and intra-zonal freight traffic for coal and
non-coal freight\. The systematic nature of the methods introduced by the RIS was a significant
improvement over past methods used by MOR\. With this, the objectives of what later was to be
called Phase I were achieved\.
51\. Technical Assistance and Training\. The project did not provide for any specific
technical assistance and training except for the YIS sub-component of the Xuzhou terminal\.
During the period of project identification, US$200,000 was allocated for consultant services and
training\. The five planning studies (para\. 38) were taken out of the project after negotiations
because they are now financed from funds in the ongoing Second Railway Project and Japanese
Grant Facility Funds (para\. 87)\.
C\. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT
Implementation Schedule - Fourth Railway Project
52\. The Board approved this project on March 15, 1988, and the loan became effective on
March 27, 1989\.
53\. From the start, implementation proceeded with impressive speed due to advanced
preparation of procurement documents at Board presentation\. This raised expectations that the
project could be completed by the target date of December 1996\. By mid 1995, commitments
against the loan total of US$200 million had risen to US$197 million\. The remainder was to be
used for two crankshaft grinding machines procured together under the Fourth and the Fifth
Railway Projects\. A substantial delay in delivering the machines required two extensions of the
Loan Closing Date\.
54\. The project was finally completed with the delivery and acceptance of the delayed
crankshaft grinders in March 1998, resulting in an overall project completion delay of two and a
quarter years\. The planned project implementation time-a specific implementation schedule
was not included in the SAR-was, however, much more realistic than in previous projects\.
55\. Yueshan-Xiangfan Line Double-Tracking and Partial Electrification\. This project
component involved doubling or upgrading of 490\.8 km of track of which 123\.1 km was to be
electrified\. The associated works included tunneling, new bridges, changing to heavier rails and
improving track structure, communication and signaling\. Work had already begun in 1987, while
the project was still under appraisal\.
56\. The partial electrification of the line was completed in December 1995 and double-
tracking by the end of January 1996\. Electrical power, however, was not supplied by the Henan
Provincial Power Department in time, and, therefore, trains on the electrified line section were
hauled by diesel locomotive until April 4, 1997\. The economic benefits of electrification were
nevertheless achieved with a delay of 15 months\.
- 15-
57\. Originally, work was to be completed by the end of 1995\. The delay in project
completion was caused by two main factors:
a) The alignment of the Longmen tunnel to avoid damage to a famous Buddhist
temple\. Three alternatives were considered for the alignment of the second track,
20 km away, 5 km away and immediately adjacent to the existing line\. The
Ministry of Arts was afraid that a railway line too close to the temple might
damage this national treasure, even though seismic research suggested otherwise\.
The dispute with local authorities delayed work on the tunnel by two years\.
b) A change of the construction schedule of the Yueshan-Laoyang section was
required when delays were encountered in the newly built Houma-Yueshan line\.
Electrical power supply for both lines was designed as one integral system, thus
permitting the use of electric locomotives only after construction completion of
both lines\.
58\. The installation of a remote control facility for the electric sub-stations and the
construction of housing for staff, 6 underpasses for cars and 8 flood culvert, and water supply for
19 stations, was completed by the end of 1997\.
59\. Expansion and Modernization of Three Locomotive and Rolling Stock Factories\. The
Bank's assistance focused on the provision of modern machine tools, instruments and training\.
Local investments for plant modification and expansion were initiated as far back as 1987, while
Bank funding was planned for the years 1988 to 1991\. The individual amounts were:
* February 7 Locomotive Works - US$7 million;
* Sifang Locomotive and Rolling Stock Works - US$15 million;
* Qiqihar Rolling Stock Works - US$15 million\.
60\. Planned implementation, identifiable in the SAR only through the years of investment
allocation, commenced in September 1988 and ran through:
* December 1991 for the February 7 Locomotive Works;
* December 1992 for the coach system and - according to information from MOR - to
* December 1994 for the locomotive system for the Sifang Locomotive and Rolling
Stock Works; and
* December 1991 for the Qiqihar Rolling Stock Works\.
61\. Start-up, however, was delayed until May 1989 due to late effectiveness of the loan\.
Concerns over higher than estimated bid prices and technical difficulties during bid evaluation
resulted in the signing of first contracts in March 1991, except for the Qiqihar Rolling Stock
Works which signed contracts for the first lot of 11 items between October 15, 1990 and
November 20, 1990\.
62\. February 7 Locomotive Works\. Deliveries and installation posed no problems\. With the
last "acceptance" of equipment in March 1994, this sub-component was completed and fully
operational\.
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63\. This plant's capacity was to be raised to 100 locomotives per year in 1990\. In 1991,
MOR established a structural adjustment of the work's production program\. One line of diesel
locomotives was discontinued, and the resulting capacity allocated to the production of shunting
locomotives model Dongfeng 7\. Target capacity was set for 100 DF 7 locomotives per year, and
as a result of this project, 100 DF 7 shunting locomotives were actually produced in 1993\. A
supervision mission in 1995 established the work's capacity as follows:
* Manufacture of DF 7 shunting locomotives - 100 for MOR and 10 for others;
* Manufacture of diesel engines - 130 (110 for locomotives and 20 as spares);
* Supply of spare parts for repair of 150 diesel locomotives at Luoyang; and
* Supply of spare parts for diesel locomotives model Beijing and shunting locomotives
model Dongfeng 7\.
64\. In 1995, F7LW instituted the five-day working week thus reducing working time
substantially\. In spite of this, an output of 109 locomotives was achieved in that year\.
65\. The Bank-funded modernization of the February 7 Works included a new painting
factory, using painting and fog purifying equipment to improve labor conditions\. In addition, a
new sewage treatment station was built\.
66\. Sifang Locomotive and Rolling Stock Works\. The modernization program for the Sifang
Works focused on the production systems for locomotives and coaches\. The first batch of
machine sets, with one exception, arrived between July 1991 and April 1992\. These machine sets
were promptly commissioned in early 1993\.
67\. The original completion dates were revised three times: first to December 1993, than to
March 31, 1994 for the new coach facility and to June 30, 1994 for the modernization of the
existing locomotive works\. The third targets were set for March 1995 for the coach works and
December 1994 for the locomotive works\. A gantry type machine center, which was part of the
first batch, suffered quality problems\. Sifang's engineers themselves finally overcame these
problems and integrated the machine center into the production process in May 1995\. Similar
installation problems were encountered with two other machine sets, delaying their
commissioning until August 1995\.
68\. Overall, the sub-component's completion was delayed by either one year - accepting
MOR's account - or two years using the investment schedule of the SAR as guidance\. The delay
was primarily caused by the need to move the Bogie Shop to the new coach manufacturing
facility, a distance of about 40 km\. At the urging of the Bank, MOR's management made this a
priority at the highest level, and by the end of 1993, the shop was moved\. By the end of 1994, the
modernization program for the locomotive shop was completed\. However, as the local funds for
the modernization of the forge and foundry shops has not been made available, a shortfall of
various components is still being met by outside suppliers\. Technically, the locomotive shop was
fully operational by 1994\. MOR did rationalize the locomotive and coach repair activities, which
were seized in 1994 and 1995 respectively\. From then onwards, Sifang Works was to confine
itself only to the manufacture of new DF 5 locomotives and coaches\.
69\. While the Bank funded modernization of the Sifang Works took place, two water
treatment stations, one each for the locomotive and coach systems, were built\. Other pollution
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control measures funded locally addressed the problem of smoke control for the plants' coal
boilers\.
70\. Qiqihar Rolling Stock Works (QRSW) is the largest freight wagon factory in China\. It
manufactures a variety of freight wagons, as well as air brake equipment, wheel sets, bogie
components and couplers\. Many of these wagons, however, suffered from corrosion due to
inferior painting and metal preservation\. Bank funding was budgeted at US$15 million for the
critical machines necessary to solve this problem\. The machines were delivered from December
1991 to early 1994, and they were placed into operation in August 1994\. A second procurement
lot-instruments valued about US$784,000-were purchased between August 1992 and April
1993\.
71\. The sub-component's completion originally scheduled for the end of 1991 was
rescheduled four times\. The problem, which had been anticipated and addressed by various
missions, was a delay in the commissioning of the production line for a finishing machine used
to mount axles and wheels in the wheel shop\. The line should have been commissioned in June
1993\. Delivery of an imported axle journal grinder was delayed by 10 months because of a
design change\. At the same time, delivery of two domestic machines for the line was delayed by
13 months\. After installation, the imported machine failed and problems arose with the
integration of this machine with the domestic-made material handling system\. Test running at
low production capacity started September 1995, and the system was finally accepted in
February 1996, although the efficiency of the axle journal grinder did not fully satisfy the
production line capacity requirement\. Nevertheless, production quality has improved,
productivity has gone up and costs have been relatively contained\.
72\. Three machines were not purchased, either because the offers did not meet technical
specifications or because management decided that such a technically complicated machine was
not needed for the production of freight wagons\. Instead, management purchased simpler
domestic equipment to do the same job\.
73\. The Bank funded modernization of the Qiqihar Works resulted in pollution reduction due
to the use of the newly purchased machine sets\. Environmental improvements were achieved in
terms of dust, noise and gas emission in the steel preservation lines and better paint filtering in
the wagon painting shop\.
74\. Strategic Plan Study\. This study was intended to be replicated elsewhere on other major
railway lines in the country\. At negotiations, agreement was reached to test and evaluate
improvement measures on the Beijing-Shanghai line\. The study was to be carried out by a
project team (MOR staff) in collaboration with foreign experts where appropriate\.
75\. Telecommunications\. The scope of the study included:
a) a general overview of the existing network operated by MOR and, if possible, the
Ministry of Post and Telecommunications, and an analysis of the constraints
associated with the use of both networks;
b) traffic analyses and demand projections of communication requirements for 5 and 10
years;
-18-
c) a review of technological trends in voice and non-voice communications;
d) the formulation of overall system design principles;
e) the elements of technical plans;
f) a comparison of system architecture alternatives;
g) the principles of procurement policy;
h) a separate study to identify the optimal data transmission network for MOR by
analyzing options; and
i) a detailed cost comparison of alternative telecommunications approaches on the
Beijing-Shanghai railway corridor\.
76\. MOR's goal was to establish a data communication network\. Such technology was new
to MOR, and in order to understand fully its potential, MOR staff needed to compare network
systems from France, Germany and North America\. Consequently, system evaluation took much
longer than planned\. More than two years later than planned at appraisal, the technical service
contract was signed in January 1991 with Canadian/US consultants totaling US$499,900
financed from PHRD funds\.
77\. Of the seven items, six were completed by December 1993\. One item was a study of the
X\.25 project\. Its team began in early 1992 preparing technical specifications for procurement\.
This was followed by pilot testing of the X\.25 project at the end of 1994\. The latter was said to
have been funded under the Second and Third Railway Projects\. Part (i) of the study, the detailed
cost comparison of alternative telecommunications approaches on the Beijing-Shanghai railway
corridor was not carried out\. According to MOR telecommunications staff, this task was
included in the Beijing-Shanghai Corridor study funded by Canadian International Development
Agency\.
78\. The last task under the Telecommunications Study was the commissioning and trial
evaluation of a package-switching network\. This required the availability of an IBM mainframe
computer, purchased for TMIS under the Sixth Railway Project\. Due to a delivery delay of two
years, the consultants team returned home, and the seventh task was postponed\. When the IBM
machine was finally delivered, the consultants resumed work, and the task of evaluating a
package-switching network was completed in September 1997\.
79\. Operating hformation System\. This study re-examined the findings and conclusions
developed by a MOR working group in 1985\. Comparisons were made between the projected
benefits and costs of MOR's hierarchical computer architecture with the more common approach
of building an integrated data base that would support transportation decision-making at all
levels\.
80\. In August 1988, MOR formed the OIS project team\. In November and December 1989,
four foreign railway companies (two European, one US and one Canadian) presented their
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railway OIS to MOR\. For three weeks in August 1990, five MOR staff visited three foreign
railways to study the application of the OIS\. After the selection of a suitable consultant firm, a
technical team of 12 people was trained abroad for four weeks in the system architecture of
Transport Reporting and Control System (TRACS), the chosen O[S\. Foreign consultants began
their work in China, in January 1992, proposing the system architecture of a Transport
Management Information System in September 1992\. A formal report jointly produced by MOR
and the consultants was sent to the Bank in October 1992\. The report proposed a mainframe
based information system with central databases and transactions to serve railway operations at
every level\. At the same time, mini computers were installed in MOR's regional offices and
yards to enable local data processing at that level\. The use of a well proven existing information
system with some modifications to meet MOR's specific requirements was regarded as feasible\.
The recommendations and the overall design were examined and approved by MOR in August
1993\.
81\. Transportation Capacity Computer Modeling\. The scope of the study included:
a) the analysis of existing transportation capacity of busy sections of the Beijing-
Shanghai railway corridor;
b) the application of an existing network simulation model to evaluate various
alternatives on the Beijing-Shanghai railway corridor;
c) a study and analysis of possible types of investments, and changes in signaling and
operating practices at various traffic levels; and
d) the development of investment cost estimates for each of the above alternatives,
and formulation of least-cost solutions for increasing capacity of the Beijing-
Shanghai railway corridor as much as possible\.
82\. In 1991, MOR acquired a software set, "Program of the Line Transportation Capacity
Analysis Models," which contains five software programs:
a) The Personal Computer Train Performance Calculation (PCTPC) is for the
simulation of train performance with different traction weight under different
running conditions, calculation of running time, evaluation of train traction and
running characteristics\.
b) The Line Capacity Train Schedule System (LCTSS) is a management software for
train time-tables and train-working diagrams\. It provides the environment for the
management of the train-working diagram\.
c) The Capacity Model (C-Model) simulates train running\. It evaluates the line
passing capacity, technical line conditions, train organization modes and various
capacity expansion options\.
- 20 -
d) The Princeton Transport Network Model (PTNM) is an analytic network tool for
diagram analysis\. It is used to review traffic density and to select the optimized
routes\.
e) The Automatic Blocking Model-Geography (ABM-GE) compiles and optimizes
train formations\.
83\. After partial modification of the first three programs by the MOR team to suit Chinese
circumstances and to enhance the analysis of scientific research, the applicability of the model
was improved\. On the other hand, the applicability of the two last programs proved to be very
limited because they were written in APL/2 language which is rarely used in China, and,
therefore could not be modified\. Up to now, they have not been used\.
84\. In early 1995, the programs were used to study V-type windows and equipment
requirements for stations and yards on the Datong-Qinhuangdao line\. As a result, the calculated
running time of trains was used to draw the train-working diagram for the line\. The modified
LCTSS system can now be used not only for editing train-working diagrams and train time-
tables but also for drawing double track train-working diagrams\. The program was used to
prepare train-working diagrams for increased speeds and many other options on the Zhengzhou-
Wuhan and the Shenyang-Shanghai Guan lines\. The C-Model was used for the analysis of: (i)
the saturated capacity of two single line sections of the Xiangfan-Chongqing line, each about 140
km long; (ii) actual achievement of double tracking a part of a single line section and of
additional stations for train crossing and overtaking, and (iii) the effect of changing the train
operation plan in the 180 km double track section Xuzhou-Fuliji of the Beijing-Shanghai line\.
85\. Technical assistance for the Beijing - Shanghai Line Capacity Study resulted in five
computer models out of which three were used in MOR's studies of line capacity since 1995\.
Transport Capacity Computer Modeling has been a continuous task since 1991\.
86\. Technical Assistance and Training\. Training of staff in new technology and management
was included in the Factory Modernization and the Strategic Plan Study\. During negotiations, a
very specific program was agreed\. The technical assistance and training program totaled 366
man-months, of which 210 man-months were for training Chinese staff abroad and 156 man-
months for technical assistance by foreign experts in China\.
87\. Factory Modernization\. Each of the works carried out an intensive program
complementing the purchasing of the machines\. 150 man-months of Chinese staff training
abroad were planned at appraisal\. This training was mainly for operational and maintenance staff
for the new machines\. 118 man-months were carried out\. Taking into account that a few large
machine sets were not purchased, this objective has been achieved\. In addition, it was planned at
appraisal that foreign experts would spend 6 man-months in China in 1989\. Actually, foreign
assistance totaled 10\.5 man-months from 1991 to 1994\. In addition, the Qiqihar Rolling Stock
Works provided more than 1,100 man-months of training for operational and maintenance staff
for the Bank funded machines\. The Sifang Locomotive and Rolling Stock Works sent staff for a
total of 96 man-months to courses in China and other factories\.
88\. Strategic Plan Study\. 60 man-months of Chinese staff training abroad were planned at
appraisal\. Related to Telecommunications, MOR management and technical staff training was
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extended to 90 man-weeks or about 21 man-months\. US consultants provided this training on
their premises\. Trained staff played important roles in designing, constructing, operating and
managing the data network\. Under the Operating Information System section of the study, 15\.5
man-months were carried out\. In connection with the Transportation Capacity Computer
Modeling, 30 man-months of training were performed\.
89\. At appraisal, it was planned that foreign experts would spend 80 man-months in China
over a period of four years to assist in the Telecommunications part of the study\. Actually,
foreign assistance totaled 64 man-months from 1992 to 1997\. This objective has been achieved,
although with delay and a longer than planned implementation time\. Foreign assistance for the
Operating Information System totaled 12 man-months from December 1991 to May 1992,
although it had been planned that foreign experts would spend 40 man-months in China over a
period of two years\. In connection with the Transportation Capacity Computer Modeling, foreign
assistance totaled 30 man-months as planned from 1991 to 1994 instead of a period of two years\.
Implementation Schedule - Fifth Railway Project
90\. The Board approved the project on September 24, 1991, and the loan became effective on
January 9, 1992\. Negotiations were originally planned for end-April 1990\. They were, however,
seriously delayed for 13 months as an aftermath of the Tiananmen :incidents in May/June 1989,
which affected most investment projects\.
91\. Permanent Way System-wide Component\. This component comprised the purchase of
on-track machinery, hard rails, sleepers and fastenings\. Nearly all of the track maintenance
machines were delivered in 1993 and 1994; a track-recording car was delivered in December
1995\. Five rail flaw detectors were delivered in August 1997\. Test equipment for the
Professional Design Institute of MOR in Beijing was delivered in 1993\. Equipment for a sleeper
factory was delivered in 1994 to the sleeper factory in Zhuzhou (Hlunan)\. While the machines
and the track materials were purchased some procurement problems occurred\.
92\. There were some minor deviations from the agreed upon purchasing program\. Originally,
MOR planned to purchase 7 gauge measuring sets\. Later, MOR decided to procure only 5 sets
but bigger ones\. These were delivered in 1995 and distributed to Hohhot, Zhengzhou, Jinan,
Shanghai, and Lanzhou\. MOR decided after one procurement attempt not to purchase wheel
flange lubricators\. MOR wanted a specific technology--lubricators with sensors that can be used
on both curves and straight-line sections of railway track-but admitted later that it actually did
not know whether such technology existed\. All bidders had offered lubricators without sensors\.
93\. Locomotive and Rolling Stock System-wide Component\. Purchasing progress for the
three sub-components was satisfactory:
a) The wheel sub-component was to provide a Bank loan of US$28 million for
procurement of wheels, to meet partially the shortfall in domestic production\.
Orders for US$10\.26 million for forged wheels (10,000t), had been placed in
November 1993\. These wheels were delivered in September 1994\. For the cast
wheels, two orders for US$8\.24 million and US$10\.95 million for 8,000t and
10,000t were placed with two firms\. All deliveries from one of the firms had been
- 22 -
made by November 1994, and the last shipment from the second firm reached
China in May 1995\.
b) The locomotive sub-component was to provide a Bank loan of US$10 million for
provision of unit exchange and spare parts for diesel and electric locomotives in
seven depots\. They were delivered in 1993 and 1994\.
c) The workshops and depots sub-component was to provide a Bank loan of US$22
million for provision of critical machinery and plant at different locations, the
important sub-components being Shenyang Loco Works, Shenyang Spare Part
Works, Lanzhou Loco Works and the Puzhen Roller Bearing Section\.
Implementation was scheduled to be completed by the end of 1994\. A five months
of delay occurred due to late placement of some orders\.
94\. Zhegan Line Capacity Expansion\. By the end of 1990, 350 km of the 944-km Zhegan
(Zhuzhou-Hangzhou) line was already double-tracked\. Bank assistance to MOR was divided into
three sections of the line: (a) the 322 km section from Bailutang to Xingtangbian, (b) the 567\.8
km section from Xingtangbian to Laoguan, and (c) and the 52\.8 km section from Laoguan to
Zhuzhou (in SAR: Laoguan - Wulidan section, 48 km)\. Work under this project involved the
doubling of remaining 594 km including the replacement of a 2\.6-km single-tack bridge over the
Gan river with a double-track bridge at a new location to provide better clearance for ships\. Civil
works started in September 1983\. In the years up to 1989, progress was quite slow due to a
shortage of local funds\. Construction activities ceased in March 1989 and were resumed in May
1993 with funding from this project\. From then onwards, implementation progress was good\.
95\. The work program included: the construction of a second track; lowering of gradients
from 10 to 12 in a thousand to 6 in a thousand; the remodeling of stations and marshalling
stations; improvement of signaling through the installation of an automatic block system;
modernization of long-distance telecommunications, especially through the laying of a fiber
optical cable and setting up 'microwave telecommunications; and the installation of hot box
detectors, computers in marshalling yards, and operational equipment (minicomputers)\. The old
single track Gan River bridge (Zhang Shu bridge) was completely dismantled and replaced by a
double-track bridge of 3,069 meters total length at a cost of 255,218,400 Yuan (about US$32\.9
million)\. It was opened for traffic on June 9, 1995\. Operations on all new sections began in
December 1995\.
96\. At the end of 1995, it was decided to purchase a 12 core fiber optical cable instead of the
planned 8 core cable to increase telecommunication capacity\. Its installation was completed in
September 1998, and most of the subsequent installation of switching equipment was completed
in March 1999\. The final part of hot box detectors installation, which depends on the completion
of the new signaling system, was completed in March 1999\. Compared to SAR estimate, project
work completion on the Zhegan line was more than three years late\.
97\. These delays, as well as the cost increases, can be attributed to: (1) design changes
required by a switch to local technology for signaling; (2) insufficient funds in the early years,
especially from 1983 to 1985; (3) budget revisions due to inflation; and (4) the fact that work
- 23 -
time allocated was often insufficient, and traffic operations interfered more than had been
expected\.
98\. Xuzhou Terminal\. At appraisal, the terminal was already in the midst of a multistage
expansion program, which began in 1986\. MOR completed all infrastructure works without Bank
participation\. The proceeds of the loan were to be used to upgrade and modernize dispatching
and marshalling operations, and to improve communications\.
99\. Capital construction (bridges, track laying and buildings) for the marshalling was
completed in September 1990 and for the passenger station by the end of 1997\. The computer-
aided dispatching system was installed between September 1995 and March 1997\. Trial
operations and final acceptance occurred in November 1998\. The late construction of a signaling
and telecommunications tower and the subsequent installation of telecommunications equipment
affected implementation\.
100\. Progress of this component was also intimately linked to progress in procurement of
operational control equipment for the computer-based Yard Information System, because it
depended on the purchase of minicomputers\. Installation was scheduled to be completed between
February 1994 and September 1994\. The YIS encountered delays due to a Bank recommendation
that the hardware should be acquired only after software was completed\. In March 1994, the
Bank's computer expert consultant recommended that procurement of the YIS mini-computer be
delayed and re-submitted at a later date when the Transport Management Information System
(TMIS) project team under the Sixth Railway Project was able to give assurance that; (i) the
Xuzhou YIS hardware configuration was in conformance with the standardized approach for the
YIS systems within the overall TMIS design; (ii) a more definite and practical evaluation criteria
had been developed; and (iii) the maintenance approach for the Xuzhou computer was in
conformance with the planned approach for maintaining YIS computers under TMIS\. In April
1994, the Bank wrote the International Tendering Company (ITC) that it had decided to
recommend a delay in procurement\. The Bank finally gave approval for procurement of the YIS
system hardware in September 1994, and for the procurement of the Xuzhou sub-administration
hardware in May 1995\. The sub-component was completed in November 1998 with a delay of
about four years\.
101\. Planning Studies\. In order to assist MOR to deal better with system-wide issues that
affected the quantity and quality of its services, five studies were to be carried out by teams
composed of MOR staff supported by external specialists\. The five studies comprised:
a) permanent way maintenance and rehabilitation;
b) locomotive and rolling stock maintenance and rehabilitation;
c) system electrification;
d) system telecommunications; and
e) railways investment evaluation and priorities, or Railway Investment Study (RIS)\.
102\. Reports of the four technical studies were submitted to the Bank in April 1992\. Those for
Permanent Way, Electrification, and Telecommunications (Report B) were found satisfactory\.
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However, the Locomotive and Rolling Stock Maintenance and Rehabilitation Study Report was
unsatisfactory and MOR was, therefore, asked to revise it\.
103\. Permanent Way Maintenance and Rehabilitation Study\. The task of the study was to
undertake a comprehensive review of track rehabilitation and maintenance standards and
methods in order to help MOR develop a technically and economically optimal program\. The
China Academy of Railway Science (CARS) and the Permanent Way Bureau of MOR carried
out the research program\. It involved the following four principal tasks:
a) general investigation and analysis of track rehabilitation and maintenance
standards and procedures at home and abroad;
b) dynamic measures and testing on the test track and in the field;
c) tests to be conducted using the Chinese Track Dynamic Test Laboratory; and
(d) comprehensive high-volume durability tests\.
104\. Task (a): In 1989, the MOR study team began an extensive and in-depth investigation of
the permanent way of China's railway network\. The final report was supplemented by a schedule
for completion of study tasks during the 1992-95 period and observations on the technical visits
to Europe and North America\. After lessons from foreign consultants, MOR decided in 1997 to
conduct in 1998 a fourth and last visit abroad to study additional maintenance practices\.
105\. Task (b): Procurement of the imported track materials for this task (60 kg/m hardened
rails for 20 km; fastenings; concrete sleepers for 5 km; 16 turnouts (switches); and glued
insulated joints) funded by the Bank began in February 1992, immediately after loan
effectiveness\. The selected test line Beijing-Tianjin, which is part of the Beijing-Shanghai
corridor, was thought to have a quite constant traffic volume of 80 million gross tons per year\. A
volume of 600 million tons of traffic was regarded as necessary to evaluate the track\. Tests with
the foreign materials began in November 1994, about one year later than originally planned, and
were completed by October 1998\. During the same period, switch components also imported
under the Fifth Railway Project were tested in a section near Xuchang, a site on the Beijing-
Zhengzhou line\. A report evaluating the test results is currently under preparation and is
expected to be completed by June 1999\. Important tests related to defects and service life of rails,
sleepers, fastenings and switches, and to the long term problem of track sinking (due to
inadequate embankment soil) will require a further three years\. These tests cannot be finished in
the near future because: (1) track laying with the test material was completed in November 1994
instead of the end of 1991; and (2) a decrease of the annual transport load (68\.6 million gross
tons in 1997 instead of the assumed 80 million)\. Until the end of 1998, only about 400 million
gross tons or two thirds of the necessary total load have passed over the test materials\.
106\. Task (c): The study was to conduct tests using the Chinese Track Dynamic Test
Laboratory\. The October 1993 supervision mission, reported that construction of the laboratory,
which began in 1991, was completed and the continuous cycle operation ramp already in use\. All
testing equipment with the exception of a few small auxiliary items had been delivered\. An
extensive acceptance phase of the test equipment, and testing phase of the data acquisition,
analysis and processing system followed until the laboratory's full operation\. Tests began in
September 1995 and were finished by April 1998\.
-25-
107\. Task (d) of the study, comprehensive high-volume durability tests (task no\. 8), was
combined with task no\. 4 "test in Chinese track dynamic laboratory" in September 1995\. Part of
the task no\. 8 were 21 ton and 25 ton axle load tests to be carried out in AAR's Transport Test
Center (TTC) in Pueblo\. According to CARS's management, these tests could not be carried out
at the planned time because TTC was fully occupied with own 33 ton and 36 ton axle load tests,
and CARS had its own testing capabilities since February 1994\. The third reason given was to
save costs\. In addition, "computer simulation analysis" dealing with the reactions between
rolling stock and track was originally planned to be carried out as "two-dimensional" tests\.
CARS changed these to "three-dimensional" ones thereby delaying completion of the activities\.
Activities began in November 1993 and were completed in April 1998\.
108\. Locomotive and Rolling Stock Maintenance and Rehabilitation Study\. From the
beginning, MOR staff had been focussing on critical items identified in the Inception Report of
January 1990 for this study, which had been sent to the Bank\. The scope of work was divided
into ten short-term studies and seven long-term studies\. In view of the diversity (covering diesel
and electric locomotives, and passenger coaches and freight wagons) and severity of
maintenance problems, MOR decided to concentrate first on studies related to diesel
locomotives\. Attention thereafter was to focus on coaches and wagons\. In November 1991, seven
high-level MOR staff visited the USA, Canada and India for 15 days to study maintenance
practices, organization and characteristics of operations\.
109\. The study report, which was delivered on time in April 1992, was the final report for the
short-term studies\. It left much to be desired, because - according to MOR - a very young
translator had been used\. The resulting report was nearly incomprehensible\. In addition, the
report's technical content needed improvement and the report lacked a specific action plan\.
Following Bank advice, a revised report focused entirely on the DF-4 locomotive\. MOR also had
to indicate which type of locomotive or rolling stock would be next in line after the DF-4
locomotive program\. Preparation of similar analyses and action plans was also to begin for the
new program\. The Bank also suggested that MOR consider sending a team of locomotive
maintenance officers to selected North American railway shops for training in shop layout
planning, selection of shop machinery, and design and management of a unit exchange
maintenance system\.
110\. The quality of the revised report sent to the Bank in October 1992, while improved, was
still not fully satisfactory\. A detailed analysis of each of the submitted studies was handed over
to MOR in form of a check list\. While actions on most of the items could be started, these having
collected an adequate data base, MOR was advised to: (i) set up an adequate organization for the
duration of the studies - the strength of 37 staff was considered inadequate; (ii) translate all study
recommendations into implementation plans, and stipulate target dates; (iii) prepare and forward
the overall Master Plan for all the studies agreed to in the Inception Report; and (iv) re-submit
revised action plans with target dates for three unsatisfactory DF-4 studies items\.
111\. Work on the remaining studies related to freight wagons\., passenger coaches, electric
locomotives and other locomotives, was limited to a few studies, such as an evaluation of repair
technology and standardization of rules\. One report given to the Bank, a revised rules manual for
freight wagons, was not done in a structured manner\. Apparently, the organization assigned to
this task at that time could not cope with the studies in addition to its own regular work\.
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112\. After the completion of the Short Term Plan, MOR dismissed the study team in
December 1993 (MOR's original target date)\. This was in contradiction to the SAR, which
envisaged a study time up to 19957 with the effect that nobody was in charge to implement the
action plan for the DF-4 locomotives\. The Long Term Plan was never developed\. Apparently, its
draft action plan faced internal difficulties\. MOR claimed during the! ICR mission, that the
study's range was too ambitious, covering, as it did, the entire railway network\.
113\. System Electrification Study\. In 1989, the MOR Electrification Study Team began a
comprehensive study of ten lines proposed for electrification, including several technical
investigations as well as complete economic and financial analyses\. In December 1991, a first
study group of 9 specialists in the technical and economic evaluation of electrification proposals
visited railways in France, Germany, and Sweden for 30 days to investigate operational,
maintenance, technical design and economic issues\. The report submitted to the Bank in April
1992 reviewed those discussions and made several recommendations\. These included: methods
of inspection and maintenance; the remote operating of substations; design principles of reverse
running on double-tracked lines and complex junctions; appropriate harmonic interference
standards and mitigation measures; desirable technical design improvements; and organizational
changes\.
114\. A second group of 6 staff including a specialist from the Ministry of Energy visited the
same countries in May 1993 for 20 days focussing on electric system interference problems and
related locomotive and electric power distribution issues\. The group's mission report did not lead
to a revision of the April 1992 report, but influenced the design of electric locomotives and of
protective measures against electric power interference\.
115\. System Telecommunication Study\. Under the Fourth Railway Project, MOR designed a
package-switching network for MOR's "backbone" telecommunications network of five
principal and 40 sub-nodes with the assistance of foreign consultants\. Under this project, MOR
drafted a long term technical plan (Report A) and a short term implementation plan (Report B) to
meet all of its telecommunications needs\. This plan addressed not only the need for data
communications but also for voice, facsimile, and radio\. A draft Report B was provided to the
Bank in mid-1991 and the final report in October 1992\. Report A arrived at the Bank in July
1992\. Bank review was completed in March 1993 and concluded that both plans needed revision\.
116\. The Bank recommended that a long term Telecommunications Master Plan based on this
study be prepared\. MOR agreed and proposed five topics for a seminar to be held first in autumn
1993:
a) development trends of telecommunications technology (switch, transmission,
networking - IN, ISDN, BB-ISDN, - mobile radio, and new services such as seat
reservation, e-mail, voice mail);
b) network optimization for structure and capacity, including tools (software);
c) operations, maintenance, administration and commercialization;
d) benefit analysis of telecommunications networks; and
e) any other item the Bank may recommend\.
7 SAR Fifth Railway Project, para\. 3\.20\.
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117\. A 3-day workshop on railway telecommunications arranged by a telecommunications
expert of the Bank was held in China in October 1993\. Its purpose was to:
a) focus on complex factors influencing the development of MOR's
telecommunications system;
b) discuss if MOR's needs are properly planned, effectively implemented and
efficiently operated so that the latest technology is economically applied; and
c) introduce and disseminate MOR's draft Telecommunications Master Plan as a
vehicle to achieve the above-defined purpose\.
118\. The workshop's 70 participants reviewed and discussed the TMP under the guidance of
foreign experts\. The workshop endorsed the need for further studies and Chinese experts' study
visits abroad to get acquainted with the latest developments in the rapidly changing field of
telecommunications technology\. The draft TMP, a technical document aimed at facilitating
strategic decision making had shortcomings despite its overall usefulness\. It was recommended
to augment the plan with Section and Access Networks, operations and maintenance
organization, and network management\. A separate part of the Plan was to deal with reviews and
solutions for human resources management\. The final TMP was used as a basis for the system-
wide telecommunications components of the Sixth and the Seventh Railway Projects\.
119\. Railway Investment Study\. During appraisal, RIS was already underway\. Its TOR was
agreed between MOR and the Bank in February 1989\. Signing of the Japanese Grant Fund
followed in April 1989, and the RIS Inception Report was approved in November 1989\. A
policy/technical team consisting of experts and decision-makers visited the United States in July
1990\. Five core RIS team members came to the United States for technical training from January
to September, 1990\. With the production of the White Cover Report in July, 1991, phase I of the
study was essentially completed\. The final report titled China's Railway Strategy (Report No\.
10592-CHA), however, was finished as late as February 1993 because of the time needed for
MOR's official approval\.
120\. Railway Environmental Studies\. [see Environmental Protection (paras\. 144 to 146 below)
with regard to achievements]
121\. MIS Study\. MOR had agreed8 to broaden the MIS study effort in line with the study scope
described in SAR of the Second Railway Project\. The action plan was prepared leading to the
inclusion of a Transport Management Information System in conjunction with a system-wide
component for telecommunication\.
122\. Costing Study\. During appraisal of this project, agreement was reached to avoid further
delays\. Steps were taken to complete the implementation of a costing system on the railway
network and to formulate a tariff restructuring\. The study, which had been started with financing
SAR Fifth Railway Project, page 79, para\. 10\.
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from the First Railway Project in 1984, and continued under the Third Railway Project, was
considerably behind schedule and its costing manual needed improvement\.
123\. In April 1990, a Bank consultant reviewed MOR's draft costing manual and made
recommendations for changes\. MOR staff working on the development of the costing system
visited Northern American railways in June 1991 to learn about the costing systems applied by
these railways\. Between November 1991 and July 1992, MOR produced a costing system to
meet the requirements of the Tariff Reform Study under the Sixth Railway Project\. The results
were a unit cost system and the application of the unit cost system to the determination of a
cost/distance scale for each freight commodity, passenger seat type, train class and traction type\.
124\. In July 1992, a Bank consultant related the cost scales to the railway's financial
statements, and documented the relationships between accounting and statistical data sources and
cost scales\. The revised draft costing manual was reviewed by the Bank in March 1994\. After the
endorsement of the costing manual by the Department of Science and Technology of MOR in
December 1994, the Finance Bureau of MOR submitted the costing manual to the Minister of
Railways in October 1995\. Subsequently, an Evaluation Committee comprising representatives
of the State Planning Commission (SPC), the State Price Bureau (SPB), the Ministry of Finance
(MOF) and the Department of Science and Technology of MOR endorsed the manual\. Since
then, its application has been mandatory in MOR's administrations, sub-administrations and
stations\.
125\. In November 1995, the Bank received an English copy of the manual entitled, "Costing
and regulation for China's Railway Transportation\." The manual was incomplete because an
important element, the section for freight transport, was not included at that time; it was still
awaiting clearance from the Finance Bureau of MOR\. The freight manual was received on May
17, 1996\.
126\. The costing study activities under Fifth Railway Project led to the detailed design of a
costing system, and to a work plan for the actual development of such a system\. The costing
system developed under the Sixth Railway Project as part of the Tariff Reform Study represents
an early stage of the development of the system designed and recommended under the Fifth
Railway Project\. It was designed and used to develop cost-distance scales by commodity for
freight traffic, and passenger costs by seat and train class\. This information was applied to an
evaluation of the railway's tariff structure\.
127\. Use of Loan Balance - Fifth Railway Project\. When the Bank's remaining project
funds of US$43 million became available, MOR requested permission on June 7, 1995 to use
these for additional permanent way maintenance machines totaling US$22\.9 million,
telecommunications equipment for the Xuzhou terminal expansion totaling US$10\.38 million,
and items under "Industry System" totaling US$6\.3 million\. A 10 percent price contingency was
kept in reserve\.
128\. In April 1997, after an unduly protracted process lasting 22 months, an agreement was
reached on how to use the loan balance\. Nearly half of the total loan balance stemmed from the
unilateral decision of MOR to use local funds for the purchase of automatic block system
equipment for the Zhegan line\. The Bank funding for this purpose had been an estimated US$20
million\. Normally, Bank policy stipulates that surplus loan funds have to be canceled\. In this
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instance, the Bank indicated that it might agree to apply some or all of the savings to finance
additional project activities provided that these had high priority and were consistent with the
project's original objectives\. Because MOR's request fell short of meeting the Bank's
requirements, FCTIO was asked to:
* focus on the current project entities;
* provide sufficient explanation of each item;
* demonstrate the support to the project objectives including the benefits; and
* give consideration to the time needed for procurement ander ICB and especially the
delivery time needed when selecting items for proposal\.
In addition, it was made clear that the Bank would not grant an extension of the loan closing date
of December 31, 1998, for the purpose of completing procurement\.
129\. In August 1996, the Bank agreed to the permanent way maintenance machines and
telecommunications equipment proposals\. At the same time, the Bank informed MOR that the
proposed items under "Industry System" would not meet any of the project's stipulated
objectives\. MOR was informed that proposed items should be closely linked to those specific
operations for which an economic evaluation has been made during appraisal\. Eventually, MOR
responded by altering its request, and on April 24, 1997, the Bank provided the no objection\.
Three machines for the Puzhen Works (US$2\.0 million) would be included in the Fifth Railway
Project\. Additional telecommunications equipment (SPC lines) worth US$4\.3 million would be
folded into the project, while US$3\.42 million was kept as a contingency for all outstanding
procurement\.
130\. Environmental Protection - Fourth and Fifth Railway Projects\. In 1989, when the
Fourth Railway Project was approved by the Bank, there were few formal requirements for
integrating the environment into project design\. Neither a formal environmental assessment nor
an environment management plan was prepared\. (The Bank's Operational Directive (OD) 4\.01
on Environmental Assessment was only formalized in October 1991\.) As a result, the SAR was
vague and non-specific about the environmental impacts of the project and various measures to
mitigate them\. The SAR nevertheless asserted that "no negative impact on the environment is
expected from the project\." It stated that the electrification of the Yueshan- Luoyang line "will
significantly reduce air pollution in the area," and that the modernization of the three
locomotives and rolling stocks works "will bring about significant improvements in pollution\."
However, the report did not further specify the improvements nor how they would be achieved\.
131\. On its part, MOR has followed the State and local Environment Protection regulations, its
own environmental requirements and other applicable regulations in the design and construction
of the project\. The major project-related achievements and some outstanding issues are presented
below:
132\. Yueshan - Xiangfan Line\. In order to protect 1,500 years-old Longmen stone carvings
in a Buddhist temple, the alignment of the Longmen tunnel was shifted\. Where the tunnel used to
stand only 270m from the temple, it now rests 800m away\. This distance should be sufficient to
protect the temple and its 10,000 odd carvings in the hillside from damage due to vibrations from
the construction of the tunnel and the operation of the trains\. As an additional precaution, steel
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plates were installed under the sleepers to reduce and absorb the vibrations\. During the
construction of the tunnel and the line, sectional blasting and smaller explosive charges were
used to minimize the potential for damage to the grottoes from explosion related vibrations\.
133\. The environmental impact of construction and operational-related dust, noise, water
pollution, and traffic were minimized and mitigated by a variety of measures\. These measures
included: the construction of temporary haul roads to transport construction materials; the use of
water sprayers to suppress dust; construction of over 60 underpasses and overpasses to permit
movement of people, traffic and livestock; reclamation of nearly sixty percent of construction
land along the line through planting of grass, shrubs and trees; construction of enclosed
balconies; planting of trees; modification of a public address system to reduce and protect
residents living near the Luoyang terminal from excess noise; and the construction of 50 m3/h
wastewater treatment plants at Baofeng and Xiangfan to recover oil for recycling and wastewater
for reuse\.
134\. Despite the above improvements and changes, emissions from steam locomotives is still
an unresolved problem\. Although, China no longer produces steam locomotives, there is no
timetable to phase out the steam locomotives from the Yueshan-Xiangfan line\. Also, since the
steam locomotives receive minimal maintenance, the emissions issue will continue to fester\. In
the longer term, the lack of regular SOx, NOx and noise monitoring may dilute the positive
achievements in other areas\.
135\. Expansion and Modification of Three Locomotive and Rolling Stock Factories\. At
the Sifang Locomotive and Rolling Stock Works, the installation of modem machine tools and
equipment had a major impact on reducing production wastes and in providing better operating
conditions to the plant workers through reduction in dust and fumes\. The introduction of new
foundry technology and the use of self hardening resins has lowered dust emission and has
increased dust recycling to about 90 percent\. However, this still fell short of MOR's own internal
requirements and State regulations\. Dust emissions from the factory boilers comply with the
State regulations\.
136\. Two new wastewater treatment plants were also built - a 1,200 m3/d plant at the old
factory for removing oil and a 5,000 m3/d plant (with room to double the capacity) for treating
domestic and production wastes at the new factory\. Effluents from both plants comply with the
State regulations\. Noise from the diesel engine testing facility too has been reduced to State level
requirements through proper insulation of the test facility\. Overall, the investment has had a
positive impact on the work environment through reduction in waste, accidents and improved
working conditions\. However, due to lack of money and technology, Sifang Works has not been
able to handle SOx, NOx and other pollutants in emissions from boilers and diesel engines\. At
the old factory, Sifang is facing water shortages\. At the same time, it is unable to capitalize on
the use of recycled water because the factory's old architectural plans have been lost, making it
very difficult to identify underground connections\. At the new factory, only 10 percent of the
water is being recycled due to the low quality of the recycled water\. Cleaning of the molds at the
foundry is also presenting a major challenge\.
137\. The installation and use of new equipment at the February 7 Locomotive Works has led
to an integrated production operation\. The results are impressive: efficient space utilization,
better products, increased production and lower cost\. In particular, the introduction of gas cutting
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machinery has reduced material wastage from 20 percent to 5 percent, reduced grinding, lowered
energy consumption and has resulted in better product quality\. Similarly, the new milling
machines have resulted in a 80 to 90 percent reduction in the use of cutting fluids\. The
production of solid waste too has declined; most of it is now either recycled or returned to the
suppliers\. Finally, because some of these machines are housed in air conditioned enclosures,
there has been 5-7 dB(A) decrease in noise pollution\. Overall, the investment has lowered noise
pollution, reduced wastage and created a cleaner work environment\. The new investment has had
marginal impact on air emissions or on water quality\. Generally, wastewater is treated and
discharged without recycling\.
138\. The introduction of new technology at the Qigihar Rolling Stock Works has increased the
service life of equipment for corrosion related repairs from about 5 years to between 8-10 years\.
Overall, there has been a 5-8 years increase in the service life of the equipment\. The introduction
of new technology has had a dramatic impact on reduction in dust, paint aerosol and noise from
blasting machines\. Dust emissions dropped from 100 mg/I to 4-12 mg/\. Similarly, the use of
semi-enclosed environment for painting of wagons has led to a saving of 1\.7 kg of paint per
wagon\. The environmental benefits are indirect but tangible\.
139\. The double tracking of the Zhegan line under the Fifth Railway Project was basically
carried out on one side of the existing line\. The work was carried out according to the EIA report
approved by NEPA in 1993\. The environmental effect was mostly confined to construction
related impacts and MOR's own internal supervision and environmental management procedures
were used to minimize and mitigate the construction related environmental impacts\.
140\. However, to assist MOR on a broader front with the management and mitigation of
environmental problems throughout the railway system, the project arranged a US$200,000 grant
from UNDP to enable MOR's key environmental and health and safety experts to visit foreign
railway operations to review international practices first hand and to engage noise, waste
management and health and safety experts to visit MOR's operation in China and to advise MOR
in resolving some of the more pressing noise and sanitation problems\. The experts also assisted
MOR with scoping a long-term waste management strategy\.
141\. As a result of the UNDP grant, in September 1992 and 1993, two teams of six member
delegation from the Environmental Department of MOR, Design Institutes and Foreign Capital
Office, visited USA and Canada for about 15 days each time\. The missions visited Canadian
National Railways, Canadian Pacific Railways and Amtrak in USA\. The teams visited
government departments, research institutes, and railway headquarters and gathered first hand
information on sanitation, excreta disposal, garbage handling and disposal, coach sterilization,
water supply, food hygiene and handling, etc\. during the operation of short and long distance
passenger trains in North America\. The missions also gathered :information on railway noise
control standards and current practices to control excess noise, traffic noise barriers,
environmental monitoring, etc\.
142\. In June 1992, three Canadian experts visited China for about twenty days\. The experts
held meetings and training workshops on environmental issues pertaining to MOR and provided
advice to MOR on railway noise controls (noise barriers, locomotive noise reduction, reduction
in use of whistles, etc\.), environmental sanitation, garbage handling and disposal, food hygiene
and handling, passenger train sterilization, use of insecticides and rodent control measures, noise
- 32 -
monitoring, etc\. As a result of this new knowledge and exchange in ideas and discussions with
foreign consultants and overseas visits, MOR completed two internal reports on "Control Efforts
on Environmental Sanitation and Railway Environment Noise of North American Railways" and
"Study of China's Railway Environment Sanitation and Train Operation Noise" which
recommended environmental control measures for China Railway\.
143\. In December 1996, MOR completed the construction of a 10 t/hr wastewater treatment
plant at Jinzhou to treat oily wastewater and contaminated stormwater\. The plant is over
designed but operating successfully\.
144\. Environmental Protection - Areas for Assistance\. During the appraisal of the Fifth
Railway Project, the Bank proposed to assist MOR in the preparation of specific
recommendations for financing under future projects\. At MOR's request, United Nations
Development Program (UNDP) financing was sought for the following three critical study areas
for foreign experts:
a) noise pollution created by dense railway lines, high-speed trains and machines in
the railway workshops and factories;
b) night soil and garbage collection in passenger trains; and
c) sterilization of passenger coaches to eliminate/reduce health hazards caused by
infectious diseases carried by passengers on long journeys, rodents, vermin, etc\.
145\. The studies' objectives were to establish cost effective and technically sound strategies
for these areas, and the total costs were estimated at USS200,000\. Of this total, US$90,000-
100,000 were allocated to cover the costs of consulting services and US$40,000-50,000 to cover
the cost of study tours by Chinese counterpart teams to foreign railways\. In December 1991,
UNDP approved US$140,000 of the total estimated costs, and the remaining US$60,000 was
approved in August 1992\.
146\. Three foreign experts were engaged to visit China and study environmental problems in
the Beijing, Guangzhou, Shanghai, Shenyang and Zhenzhou administrations in June 1992\.
Following their diagnostic work, the consultants prepared a comprehensive report including
several cost-effective recommendations to fight against pollution and health hazards in the
above-stated three areas\. In September 1992, a Chinese railway delegation comprising six
environmental experts were sent to Canada and the United States to familiarize themselves with
foreign practices and procedures used in controlling environmental pollution\. This delegation
prepared a technical report and submitted their findings to MOR top officials who were very
pleased with the outcome\. With the hiring of an environmental expert to assist in the preparation
of the Seventh Railway Project the UNDP funds were fully used\.
147\. Land Acquisition and Resettlement - Fourth and Fifth Railway Projects\. As older
projects in the transport portfolio, both the Fourth and the Fifth Railway Projects were prepared
in accordance with Chinese law and procedures and approved by the Bank without the
requirement of a formal Resettlement Action Plan\. While land acquisition and resettlement-
related estimates were made available to the Bank prior to approval, formal and complete census
- 33 -
survey results were not provided and implementation arrangements and responsibilities were not
clear\. Without the baseline information provided by surveys, the effectiveness of resettlement
measures taken during implementation now can only be assessed in a nonsystematic manner\.
Moreover, because resettlement was not seen at the time to be an integral part of transport sector
projects, both projects received only irregular resettlement supervision and were not subject to
independent monitoring\. Site visits in some areas indicated that resettlement may have resulted
in hardship for some persons\. But limited supervision and project authorities suggest that most
affected people have restored their incomes and living standards\.
148\. The Fourth Railway Project was appraised in 1987 and declared effective in 1989 with no
systematic attention to land acquisition or resettlement issues evident in the SAR or other Bank
documentation\. Land acquisition and resettlement activities generally were completed in both
affected provinces (Henan and Hubei) by 1995\. Resettlement field supervision appeared to have
been limited to one multi-project thematic supervision exercise, conducted in late 1994\.
Additionally, project officials made a verbal presentation regarding project resettlement status to
a Bank mission in 1997\. Because of a lack of baseline data for comparative purposes, no separate
field mission was undertaken for the purposes of this completion report\.
The following aggregate data regarding the scale and cost of land
acquisition and resettlement have been provided by MOR:
Land Acquired: 13,975 mu
Structural Demolition: 70,632/m2
People Relocated: 3,973
Cost of Housing Compensation: 10\.73 million RMB
Cost of Land Compensation: 171\.84 million RMB
149\. Project records indicate that design alterations reduced the scope and potential impact of
land acquisition\. In general, most of the individuals who have been affected do not appear to
have been significantly harmed by the project\. The linear nature of the railway work means that
land acquisition has been spread along a long corridor, making it possible for the Chinese
practice of land redistribution to minimize the impact\. Field supervision also found that
households required to relocate now have access to newer housing with more modem amenities\.
But many if not most relocating households used their own savings or other resources in addition
to housing compensation to obtain new housing\.
150\. The 1994 supervision mission found that compensation for land and other assets was paid
by MOR to county land administration bureaus in a timely manner, but that county and local
governments sometimes withheld portions of the compensation from persons actually affected\.
MOR subsequently stated that compensation problems had been rectified, and provided reports
indicating that compensation levels in some cases were higher than initially agreed\. The mission
also reported that land acquisition in Hubei Province had left some persons landless or jobless,
resulting in significant hardship\. During the 1997 mission, MOR provided official statements
from local officials indicating that the episode of landlessness cited in 1994 followed from land
acquisition not associated with the Bank project\. MOR also indicated that there had been no
significant delay in providing employment; the apparent delay stemmed from the practice of not
providing employment until land was actually taken for project use\. MOR stated that all
- 34 -
resettlement activities have been completed and that there are no outstanding grievances or
issues\.
151\. The Fifth Railway Project was appraised in 1990 and declared effective in 1992 with very
little attention to land acquisition or resettlement issues evident in the SAR or other Bank
documentation\. Resettlement field supervision appears to have been limited to one multi-project
thematic supervision exercise conducted in late 1994 in Jiangxi and Zhejiang provinces, and a
field supervision in 1998 in the same provinces during preparation of this completion report\.
The following aggregate data regarding the scale and cost of land
acquisition and resettlement have been provided by MOR:
Land Acquired: 19,456 mu
Structural Demolition: 342,852/m2
People Relocated (est\.): 13,860 (2960 households)
Land and Housing Compensation: 316\.58 million RMB
152\. Project records indicate that land acquisition and its corresponding costs and impacts are
greater than anticipated in the SAR\. The project required 19,456 mu of land, against an estimate
of 15,827 mu in the SAR\. Structural demolition totaled 342,852 square meters, against an
estimate of 259,602 square meters\. As a consequence, land and housing compensation costs
totaled 316\.58 million RMB, as compared to 223\.2 million in the SAR\. It is likely that some of
the discrepancy reflects differences in categorical definitions as well as erroneous estimation\.
Some of the cost also reflects increases over agreed compensation rates\. In general, most of the
individuals who have been affected do not appear to have been significantly harmed by the
project\.
153\. In at least one instance, disputes over compensation led to a six-month implementation
delay\. MOR subsequently stated that compensation problems had been rectified, and that there
were no outstanding grievances\. Compensation rates for land and housing increased over time in
Zhejiang Province, but did not do so in Jiangxi Province (whether rates increased in Hunan
Province remains unknown)\. The mission also reported that jobs had been provided to those
losing access to land, but that some enterprises were not consulted regarding placement of
employees or were not provided compensation for employee training and placement\. During the
1998 mission, MOR stated that delays in payment of compensation to enterprises had been
corrected\. Employers visited during the 1998 mission indicated satisfaction with resettlement
arrangements\. In site visits, some individuals complained that they subsequently lost
employment they had been provided following loss of their agricultural land\. Project officials
indicated that this loss of employment reflects enterprise restructuring or failure, for which the
project cannot be considered responsible\. MOR stated that all resettlement activities have been
completed and that there are no outstanding grievances or issues\.
154\. Procurement - Fourth and Fifth Railway Projects\. During project preparation of the
Fourth Railway Project, the Bank was concerned about the fact that it had taken the authorities
some time to become fully familiar with the Bank's procurement procedures\. Therefore, staff
had worked with MOR during the year before Board presentation to establish a special office -
-35-
the Foreign Capital and Technical Import Office (FCTIO) to expedite procurement\. As a result,
preparation of procurement documents was regarded as well advanced at Board presentation\.
155\. At the beginning of the Fourth Railway Project, procurement progress was remarkable
and far better than in all previous projects\. The overall good performance exceeded appraisal
estimates with the exceptions addressed below (paras\. 156 and 157)\. However, these exceptions
were due to the Bank's insistence in receiving part of the bidding documents as soon as possible,
and should also be seen in relation to the slow implementation of the earlier projects\.
156\. Since all railway projects handled by MOR experienced procurement delays, it had been
agreed that MOR would prepare a detailed timetable for all procurement activities for the whole
Fifth Railway Project\. The procurement schedule, however, was extremely over-optimistic and
unsatisfactory\. It showed that all tenders would be issued within a short period of one year
(1993), which is an unrealistic goal\. A revised schedule, supposedly taking into account the
needs of the project and the usually extended time needed for preparing technical specifications,
was still very ambitious, concentrating most procurement in 1993\. After building up a good pace
of procurement activity through early 1994, the rate of entering into new commitments became
sluggish\. Except for two crankshaft grinding machines, procurement of the locomotive and the
rolling stock component for the Bank-funded items was good\. Preparation of technical
specifications for the automatic block system (ABS, US$20 million) for the Zhegan line had
been delayed\. MOR postponed procurement until a similar equipment with more advanced
technology was tested on the Beijing-Kowloon line\. According to the Shanghai Administration,
the domestically supplied new ABS functioned well by the end of 1994\. The administration then
proposed to MOR the purchase of the new system with domestic instead of Bank funds, and to
use the loan funds for "more important" items\. Consequently, FCTIO informed the Bank of the
decision to procure the ABS with domestic funds\.
157\. In June 1994, bids were opened for three crankshaft grinding machines to be procured
together under the Fourth (2 machines as part of the "other equipment" sub-component of the
Yueshan-Xiangfan line component) and the Fifth Railway Projects\. Evaluation of the bids lasted
for about seven months, and the Bank gave its "no objection" to the recommended award of
contract on June 6, 1995\. The price of each machine was about US$1\.38 million equivalent\. In
August, 1995, MOR requested an extension of the Closing Date by one year, explaining that at
the signing of the contract on July 3, 1995, it became clear that the last payment for the machines
would have to be made in February 1997\. The long delivery schedule can be attributed to the
advanced technology required in the technical specifications which in turn required a lengthy
manufacturing schedule\. On April 1, 1997, MOF requested an extension on the Closing Date to
June 30, 1998 on the grounds that the supplier had gone bankrupt and, therefore, was unable to
deliver on time\. The machines were finally delivered in February 1998\.
158\. Managers of the three factories participating in the Fourth Railway Project realized early
on that their planning assumptions did not correlate well with reality\. This was admittedly caused
by a lack of experience with foreign advanced equipment and international procurement\. Bid
prices substantially higher than estimated forced MOR to annul the purchase of some items, the
lack of which was reported to have had no or little negative effect on realizing the objectives\.
Longer than expected internal approvals, and installation and commissioning added about one
year to the total implementation time of the component\.
-36-
159\. One complaint by a bidder caused considerable trouble during implementation of the
Fourth Railway Project\. An order for six full-section ballast cleaners (four of which were
financed under the Fifth Railway Project) was recommended by MOR to be placed with the
second lowest bidder\. The Bank did not object because the bid evaluation report gave convincing
reasons for rejecting the cheaper bidder\. This bidder launched an official protest, and the Bank
instructed MOR not to sign the contract until the matter was clarified\. After intensive review, the
Bank settled this case and confirmed the award to the second lowest bidder\.
160\. Although all previous railway projects experienced some procurement problems, the
Fifth Railway Project was the first project where bid evaluation reports had to be rejected by the
Bank due to quality problems in the evaluations, and which saw several major complaints from
bidders\. The project had several complex products for which the technical specifications were
not adequately prepared\.
161\. To counterbalance this, Bank reviews of draft bidding documents became more
cumbersome, correcting many details which should have been know at this stage\. The example
of the YIS mini-computers for Xuzhou and TMIS computers procurement illustrates the
problems encountered\. The bid evaluation criteria were too indefinite; it was not clear from the
technical specifications who would be responsible for performing maintenance on the YIS
computers, and for how long\. Without good reasons, MOR wanted to have two very different
procurements combined in a single tender\. The following excerpt from a Bank fax highlights
typical difficulties with bid evaluations: "We are unable to approve the bid evaluation report
because it did not contain full information and was not prepared in a satisfactory manner\. The
evaluated prices were different from the corresponding bid prices, but were not explained in a
supplemental sheet listing the reasons why items were added or subtracted, with their costs\."
162\. In another case, a tender was issued for the purchase of 20,600 tons of alloy steel rails\.
MOR recommended the rejection of the lowest bidder because of its unsatisfactory financial
condition\. The government of this bidder's country had already put up the firm for sale, but a
deal had not been concluded\. The matter was reviewed at different levels in the Bank following
which the Bank decided in favor of the lowest bidder and suggested that MOR should obtain
additional guarantees from the firm's government satisfactory to the ITC and MOR\. The
guarantee would have to cover fully the performance of the contract without any conditions and
restrictions\. Upon the ITC's recommendation reversing the original outcome of the bid
evaluation, the Bank expressed its "no objection" to award the contract to the lowest bidder\.
163\. Bidders challenged bid evaluations\. There were two additional cases:
a) A bidder for a Production Line for Pre-stressed Concrete Sleepers complained to
the ITC for not being awarded the contract\. The Bank requested a justification for
this rejection but recognized in the case a very spiny procurement problem,
involving the word of a bidder (and certain corroborative evidence) against that of
the ITC's\. After an exhaustive review, the Bank came to the conclusion that the bid
of the protesting company was incomplete and non-responsive\.
b) On December 6, 1994, a US firm filed an official complaint with both the Bank and
a US Senator\. This firm stated that it had been informed verbally by MOR that the
contract for two Crankshaft Grinding Machines (a third grinder was funded under
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the Fourth Railway Project) would go to a European firm, at a higher price, because
the end-user preferred machines from that particular country\. At that time, the Bank
had not yet received the bid evaluation report\. Although twice requested, the report
was not received until March 1995\. A retired Bank staff was sent to Beijing to
clarify technical points in this report\. The Bank expert confirmed that the US bidder
should not be awarded the contract because of technical deficiencies of the machine
offered\. Nevertheless, although the Bank normally did not require complete
financial evaluation when a bidder was rejected on technical grounds, a full analysis
of all bids was requested\. In the end, the Bank accepted the tendering company's
original proposal for award, because the complaining bidder also would have lost
on price\.
164\. Project Costs - Fourth and Fifth Railway Projects\. In terms of US dollars, project
costs of the Fourth Railway Project were 58 percent higher than expected, with an actual cost of
US$945\.6 million compared to an appraisal estimate of US$600 million\. The main reasons for
this cost increase were: (a) the delay by two years to April 1993 for the tunnel works on the
Yueshan-Xiangfan line; (b) a change of the construction schedule of the Yueshan-Laoyang
section; (c) inadequate estimates of local costs for the Yueshan-Xiangfan line component; and
(d) the impact of steep inflation on the cost of materials and equipment in the early 1990s\.
Mainly factors (a) and (b) but also the six months delay in project effectiveness pushed the
implementation period into the high inflation years\. In terms of local currency, total costs were
135 percent above appraisal estimates\. The difference between dollar and Yuan costs was due to
the devaluation of the Yuan over the life of the project from Yuan 3\.7 per dollar to Yuan 8\.3 per
dollar\.
165\. In terms of US dollars, project costs of the Fifth Railway Project were 61 percent higher
than expected, with an actual cost of US$1,550\.3 million compared to an appraisal estimate of
US$1,005\.7 million\. This cost increase stemmed mainly from the Zhegan line component\. The
main reasons were: (a) design changes to improve the original design for telecommunications;
(b) the impact of steep inflation on the cost of materials and equipment in the early 1990s, (c)
inadequate estimates of local costs for the Zhegan line component, and (d) use of the US$43
million loan balance with procurement undertaken in 1997\. In terms of local currency, total costs
were 124 percent above appraisal estimates\. The difference between dollar and Yuan costs was
due to the devaluation of the Yuan\.
166\. Financing of US$3,535,000 of foreign costs for the four planning studies was provided
by the Second Railway Project\. In addition, MOR spent US$1\.47 million of its own funds mainly
on the installation track materials and tests under the Permanent Way Maintenance and
Rehabilitation Study\. The fifth study, the Railway Investment Study was financed by the
Japanese Grant Facility Fund\. Expenditures for the Costing Study were borne by the Third
Railway Project\.
167\. Financial Performance - Fourth and Fifth Railway Projects\. The detailed financial
evaluation for both projects is given in Annex 1\. The most important points are:
168\. The financial evaluation in the SAR for the Fourth Railway Project focused only on the
income statement covering the 1982 - 1990 period\. Of particular importance is the fact that the
Fifth Railway Project was the first railway project in China for which a complete set of financial
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statements (income statement, cash flow statement and balance sheet) was obtained\. This was a
significant step forward compared to the first four railways projects\. However, during the
financial discussions in subsequent railway projects it became apparent that the focus of the
financial statements was not uniform\. The balance sheet focused on transport and non-transport
enterprises, the income statement focused on transport enterprises only, and the cash flow
statement was a hybrid of the two statements\. Because different principles were applied in the
preparation of the statements, and because the railways are currently in the process of
segregating non-transport enterprises from transport enterprises (five financially independent
firms will be set up covering construction, engine building and components, telecommunications
and support) the remainder of this analysis focuses on the consolidated income statement of the
transport enterprises only\.
169\. The 1987-1992 income period\. As reflected in the consolidated income statements in
Annex 1, MOR had a positive net income in this period\. Income improved from 1987 to 1989
mainly because MOR was exempted from income taxes\. In 1990, MOR benefited from an
across-the-board increase in freight tariffs\. Since 1991, revenues from base tariffs have been
supplemented by a freight surcharge\. The reported operating ratios (operating expenses relative
to operating revenues), deteriorating gradually, were low\. If reported costs were not understated
or distorted by subsidies (several input factors didn't reflect market prices), operating ratios
would have been even lower\.
170\. The 1993-2002 income period\. MOR has been operating at a loss since 1993\. In general,
these negative results were attributable to a decline in market share vis-A-vis the other transport
modes, an inadequate operating ratio and a rising level of debt obligations\. Acknowledging these
trends, MOR has announced an unprecedented near-term program designed to improve
dramatically bottom line earnings\. Specifically, as the forecast income statement in Annex 1 also
shows, losses are projected to decline sharply in 1999 and breakeven status is anticipated by the
year 2000\. To achieve these ambitious targets, the measures described in Annex 1 will be
undertaken\.
171\. Economic Reevaluation - Fourth and Fifth Railway Projects\. From the reevaluation
presented in Annex 2, the net present values (NPV) and economic rates of return (EIRR) of the
various components of the Fourth and Fifth Railway projects reflect economic outcomes that
range from satisfactory to highly satisfactory\.
172\. With respect to the Yueshan-Xiangfan double tracking and partial electrification
component of the Fourth Railway Project, the NPV is just under Yuan 23 billion in 1997 prices
and the EIRR is 19\.8 percent\. This rate of return, though significantly lower than the SAR figure
of 36\.9 percent, is satisfactory\. The primary reason for the decline in the EIRR relates to the
greater amount of local direct project outlays (foreign costs were about 17 percent lower than
projected in the SAR)\. Restated in terms of 1997 values, the SAR anticipated that this
component would require about Yuan 2\.3 billion in direct local expenditures\. Nonetheless, the
reevaluation indicates that actual local costs amounted to Yuan 5\.9 billion -- more than 2\.5 times
greater than the SAR-derived figure\. Over half of this sum traces to the latter stages of the
project during a period when more than 90 percent of the foreign costs already had been
incurred\.
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173\. The economic performance of the traditional components of the Fifth Railway Project has
been quite similar to what was expected in the SAR\. Thus, both the SAR and the reevaluation
here calculate EIRR's for the Zhegan line component of 35 percent\. Similarly, the recomputed
EIRR of the Xuzhou terminal expansion, 29\.2 percent, is only slightly higher than the 26 percent
value in the SAR\.
174\. The rates of return derived here for the pilot track rehabilitation and freight wagon wheel
components of the Fifth Railway Project (106 percent and 233 percent, respectively) are
substantially higher than those reported in the SAR (27 percent and 26 percent, respectively)\.
This apparent discrepancy results from the SAR's reluctance to use the value-added approach to
measuring the benefits of these components even though this methodology is adopted elsewhere
in the SAR (and in this ICR as well)\. Indeed, the SAR, conceding that the value-added approach
provides "a better estimate" of the benefits, indicates that it would yield rates of return for these
components in excess of 100 percent - more in line with those calculated here\.'
D\. PROJECT SUSTAINABILITY
175\. Both, the Fourth and Fifth Railway Projects are likely to be sustained\. With respect to
physical sustainability, MOR's record in maintaining infrastructure, locomotives and rolling
stock is good and there is no reason to believe this will change\. However, deteriorating finances
cause some concern\. MOR has been operating at a loss since 1993 but has recently announced an
unprecedented near-term program designed to dramatically improve bottom line earnings (Annex
2)\.
176\. From an economic perspective, sustainability was assessed in terms of the sensitivity of
the project component's EIRR to changes in benefit and cost assumptions\. All of the results were
satisfactory\.
177\. Because of the Strategic Plan Studies prepared under the Fourth Railway Project MOR
possesses now the basis of a modern telecommunications network into which major investments
funded by the Bank under the Sixth and Seventh Railway Projects are currently being carried\.
MOR is installing the Operating Information System as a Transport Management Information
System under the ongoing projects\. Three of the five models adopted under Transportation
Capacity Computer Modeling are used by CARS to analyze some line sections that have the
potential for speed increase; eleven staff members are working under this contract\.
178\. The five Planning Studies prepared under the Fifth Railway Project resulted in: a
program to purchase track maintenance machines for ongoing projects and with other foreign aid
funding; improved design, operation and maintenance of electrification projects; establishment
of a Telecommunications Master Plan, which became the basis for subsequent investments under
later railway project; and a system to enable MOR to conduct economic evaluations necessary to
identify desirable capacity expansion expenditures\.
9 See SAR Fifth Railway Project, p 56, note 2\.
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E\. BANK PERFORMANCE
179\. Bank performance during identification, preparation and appraisal of Fourth Railway
Project was, in the end, moderately satisfactory\. The activities were eventful as described below
(paras\. 180 to 185)\. The Fifth Railway Project was, however, satisfactorily identified, prepared
and appraised\. Both projects were consistent with the Government's objective, which was to
increase railway transport capacity so as to sustain economic development, and to enhance
expertise needed to manage the railway's future development\. Project performance indicators,
consistent with the practice in the 1980s, were not developed with sufficient detail and
specificity\.
180\. Project Preparation for the Fourth Railway Project\. Originally, the project focused on
four major components and technical assistance with a loan amount of US$200 million\. During
pre-appraisal in March/April 1987-just one year after negotiations for the Third Railway
Project-the Government withdrew two of the four components totaling US$44 million and
proposed two new components instead, namely the Zhuzhou-Hangzhou line-doubling (US$85
million) and the Beijing-Shanghai line modernization (US$72 million), for a total of US$157
million\. At the same time, it also requested an increase of the remaining component from
US$130 million to US$163 million\. Without any explanation, the Final Executive Project
Summary (FEPS) indicated that Bank financing would be US$357 million\.
181\. By March 1988, the project content had changed again\. The two large components
introduced in March/April 1987 were withdrawn because of SPC and MOF concerns about an
uncommitted balance of some US$420 million from three previous loans\. The deleted
components were expected to form the core of a Fifth Railway Project in FY 89\. The project now
comprised the three final components with a loan amount of US$202\.5 million including the
Strategic Plan Study, which was retained even though the Beijing-Shanghai line modernization
component had been postponed\. The main reason given by the Bank for retaining the study was
that otherwise the Bank would be supporting only traditional hardware investments, and the
rationale for Bank financing of this project would be very weak\.
182\. Following the FEPS, the appraisal mission attempted, but failed to obtain agreement with
MOR to conduct a formal study in factory modernization strategy\. Nevertheless, it was the
Bank's expectation that MOR staff would receive technical assistance and training in order to
improve the preparation of future factory modernization projects\. To improve upon the dialog
between MOR and the Bank, an executive summary report on factory modernization strategy
was prepared for discussion with MOR during negotiations\.
183\. The questionable nature of the Strategic Plan Study's appraisal was underscored by the
invitation-to-negotiations telex of March 16, 1988\. It stated: "we will wish to discuss the current
status and detailed arrangements for implementation of Strategic Plan Study as broadly outlined
in Annex Two of the draft Appraisal Report to ensure that this very important component is not
delayed and that it progresses quickly well to meet China Railway's needs\." [Underlining
added]\. Later, on April 21, 1988, the Bank acknowledged that "MOR reserves the right not to
implement proposals that it considers not appropriate for the railways in China" while indicating
that grant funds would assure financing the study\.
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184\. That a certain lack of clarity existed about the essence of the Strategic Plan Study came to
light shortly after Negotiations\. A Bank memorandum of September 21, 1988, recorded that the
letter of invitation issued to MOR relating to telecommunications was not in accordance with the
understandings as described in the SAR, Loan Agreement and the agreed Minutes of
Negotiations\. The main issue of contention was that MOR was confining its request for foreign
assistance to the development of dedicated railway data network instead of a far more ambitious
telecommunications Strategic Plan for MOR\. The dedicated data network might-or might not-
be part of a larger telecommunications plan for MOR\. But MOR's insistence on confining the
project to the narrow goal of a dedicated data network represented a substantial deviation from
the objective to develop a plan for telecommunications as a whole\.
185\. A major concern raised at the loan package clearance with regard to the Strategic Plan
Study was the fact that MOR had historically been very reluctant to involve the Bank in broader
strategic planning\. Ostensibly, this reluctance was explained by its desire not to spend the
proceeds of the Bank's loan on technical assistance, citing the excessive wages and living
expenses earned by expatriate technical experts\. This concern, however, could be alleviated
through the possible availability of Japanese grant funds of about US $2 million\.
186\. At Negotiations, it was finally agreed that the loan amount vould be reduced by US$2\.5
million to US$200 million\. "The reduction resulted from (a) the reluctance of the Chinese
Government to borrow US$2\.5 million at Bank rates for the estimated foreign cost of the
Railway Strategic Plan Study; (b) the availability of US$1\.5 million from the Japanese Yen
Grant Facility; and (c) our agreement to relocate US$1\.0 million from unallocated funds in the
Third Railway Project"\. By obtaining the grant funds, the issue was resolved\. Actually, Bank
staff described this solution as a breakthrough when two Board speakers raised the matter\.
187\. The Minutes of the Board Presentation of the Fourth Railway Project, recorded and
emphasized that, "in view of a team of railway experts organized by the World Bank last year,
the railways may be able to increase throughput substantially on key corridors by investments in
technological modernization, which at the same time would significantly enhance the quality of
services offered to the railway's customers\. That work has given rise to the Strategic Plan Study
for railway computerization and telecommunication, and it is this aspect -- and the potential it
promises -- which makes this project such an exciting one \.
188\. The above summary of project appraisal allows the following conclusions:
a) Although the Bank may have had a clear view of its assistance strategy, there was
no apparent concept of what would be the best project approach under the given
circumstances\.
b) The Bank's acceptance of MOR's oscillation with regard to the project content
could be interpreted as an indication that this project followed too closely to the
approval of Third Railway Project\.
c) The compromise to acquire US$1\.5 million from the Japanese Yen Grant Facility
and to relocate US$1\.0 million from unallocated funds in the Third Railway
Project for the Strategic Plan Study demonstrates clearly MOR's lack of
interest-and the Bank's substantial interest-in keeping the study in the project\.
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189\. Staff training was strongly emphasized as a key component during the project's design
phase\. Although called an "outline" in the SAR text of the Fourth Railway Project, the
corresponding annex conveys the impression of in-depth preparation for staff training\. It is,
therefore, quite surprising that apparently little attention was given to training implementation
during supervision\. Bank files are silent on this matter\.
190\. When the Fourth Railway Project became effective, the Bank expressed its
management's increasing uneasiness about lending for railways to China\. A letter'o to the
Minister of Railways explained that, unlike in other countries, railway projects in China had been
prepared in a narrow and restrictive way\. All non-study components in the past projects had dealt
with upgrading, expanding and modernizing of individual physical plants of the railways\.
Although there was nothing wrong with these "plant-specific" components themselves, the
problem was that the Bank had had to appraise these components not only with limited
information, but also in isolation from the rest of the railways\. As a result, the Bank knew too
little about the railway system and the economic priorities of the components appraised relative
to other investments\.
191\. To enable the Bank to continue its cooperation with MOR and enhance its contribution in
the sector, the letter suggested that, as a minimum, it would be necessary for:
a) The Bank to acquire more knowledge on China railways, in order to determine the
most needy areas for Bank assistance, and to design future railway sector-type
operations for China\. This would involve conducting a comprehensive dialogue
covering the railway's operations, motive power, rolling stock, infrastructure,
telecommunications, maintenance, expenditure programs, investment planning,
and finances; and
b) Future railway operations should comprise "system-wide" components, which
entail upgrading, expansion, modernization, and efficiency improvements of
major aspects of the railways on a network-wide basis, instead of plant-specific
components as in the past\.
192\. The letter also stated that such operations would require considerable preparation by both
MOR and the Bank and, therefore, were not likely to be feasible for at least two years\. However,
it would be essential for the Fifth Railway Project to be a transitional operation, in order to pave
the way for more meaningful cooperation in the future\.
193\. This letter appears to have had a fundamental impact on MOR's and the Bank's approach
to the Fifth Railway Project\.
194\. Although both projects were sufficiently supervised in terms of short, standard missions,
Bank involvement was not always adequate during implementation\. The Bank's supervision
should have focused more heavily on environmental protection and resettlement\. This is a fair
10 Draft letter of March 14, 1989, marked Attachment 5\. Bank files do not contain a signed copy\.
- 43 -
judgment even though at the time of project effectiveness, environmental protection and
resettlement did not play the role it does now\. The projects were approved without the
requirement of a formal Environmental Assessment and Resettlement Action Plan\. It would have
been of great advantage if an environmental management plan had identified the various
environmental impacts of the projects and measures to mitigate them\. And if resettlement action
had been preceded by socio-economic baseline studies against which social impacts could have
been measured, this too would have been very helpful\.
F\. BORROWER PERFORMANCE
195\. Overall, MOR's administrative performance was generally satisfactory\. Civil works were
carried out according to current MOR standards and are of good quality\. With the exceptions
addressed below, there were only a few problems during implementation of both projects\. This
was the case even though the three locomotive and rolling stock factories participating in the
Fourth Railway Project had little institutional experience with Bank projects\. MOR and its
regional organizations which benefited from the Fourth and Fifth Railway Projects were very
cooperative and helped prepare information for this ICR\. They provided some data to
complement those available in the Bank's project file, which produced a more comprehensive
picture of project implementation\.
196\. Planning Studies - Fifth Railway Project\. The SAR reported that MOR gave the
studies high priority since they would assist it in looking at future investment requirements in a
rational, system-wide context\. Furthermore, the studies were to recommend investment plans in
their respective areas for the 8th Five-year Plan, and at the same time provide the basis for future
Bank Group assistance to MOR\. Finally, the studies were to be linked directly to improving
operational performance in their respective functional areas, and, where practical, to identify
meaningful parameters of performance, set targets for these parameters, and measure actual
results against the targets\. These were quite ambitious promises\. The achievement of the studies'
objectives varied substantially from "fully achieved" to "basically not achieved\." With the
exception of the Permanent Way Maintenance and Rehabilitation Study and the RIS, they failed,
however, to provide a link to improving operational performance in their respective functional
areas\. In the case of the Locomotive and Rolling Stock Maintenance and Rehabilitation Study,
there was also a failure to provide a basis for possible future lending operations involving the
Bank and other sources\.
197\. Procurement\. Tender documents for procurement (luring the first year of
implementation of the Fourth Railway Project were supposed to be submitted to the Bank prior
to Negotiations\. This did not happen\. The Minutes of Negotiations recorded that they were to be
provided by the date of the Government's final agreement to the negotiated documents, i\.e\. two
weeks later\. This agreement was given on May 24, 1988, but because of "domestic reviewing
works for the bidding documents" they were not ready by the date planned\. On June 6, the Bank
expressed its disappointment and pointed out that "during appraisal in October 1987, MOR
assured our mission that it would be easy to send these documents to the Bank before
Negotiations"\. Some of them were received on June 20, which facilitated Board approval of the
project\. With a telex of October 26, 1988, the Bank admonished MOR that documents for only
two tenders had been received, although bidding documents for all tenders for materials and
equipment to be procured during the first year of implementation were to be sent to the Bank
- 44 -
before Negotiations\. On November 11, 1988, MOR replied that adjustments for the purchasing
lists and some necessary domestic procedures prevented them from fulfilling the obligation\. This
historical summary suggests that preparation work for appraisal was not as mature and finalized
as it appeared to be in the SAR\.
198\. Since all railway projects handled by MOR experienced procurement delays, MOR
prepared a detailed procurement schedule for the Fifth Railway Project\. It was over-optimistic
and unsatisfactory\. This tendency has been observed in subsequent railway projects, which raises
the question of MOR's willingness to learn from past experience\.
199\. Since 1992, the issue of streamlining MOR's procurement process had been addressed by
several Bank missions\. Although they were informed that "MOR would continue efforts in
streamlining of procurement process and engage experienced staff," substantial improvements
were not made\. On the contrary, the Fifth Railway Project was the first with an increasing
number of quality problems and complaints by bidders\.
200\. Progress Reports\. Implementation reporting was scant and became irregular beginning
in the early 1990s\. With the exception of procurement tables, MOR did not provide
comprehensive sets of progress reports\. The quality of those reports was also unsatisfactory\.
Bank missions pointed out that MOR's reports were merely a collection of construction
schedules with incomplete explanatory text\. FCTIO staff, however, repeatedly stressed that they
had difficulties in obtaining the basic information in project implementation from MOR's
administrations\. On several occasions, FCTIO's management gave the impression that it
considered the preparation of progress reports to be an onerous task, one that had to be carried
out solely for the benefit of the Bank\. In response, Bank staff repeatedly explained that the
reports ought to be very useful to MOR's senior and middle management in monitoring project
implementation progress\.
201\. Some of these deficiencies were offset by extensive information provided during
supervision missions; this did not apply, however, to the expansion and modernization of three
locomotive and rolling stock factories, a major component of the Fourth Railway Project\. For
example, although several times requested, MOR never provided the Bank with a realistic
assessment of plant capacities to facilitate the evaluation of the Bank-funded investments and
SAR objectives\.
G\. ASSESSMENT OF OUTCOME
202\. The overall outcome of both projects is rated as satisfactory, although this assessment
needs to be qualified with regard to the Fifth Railway Project\. Several sub-components of the
Locomotive and Rolling Stock System-wide Component under this project were technically not
achieved\. The objectives for the Strategic Plan Study under the Fourth Railway Project were
somewhat narrowly defined although this component was intended to help promote a broader-
based dialogue between the Bank and MOR which made it quite easy for MOR to achieve them\.
The outcome of the study may also have been affected by the Bank's desire to retain it in the
project even though the Beijing-Shanghai line modernization component had been postponed \.
The objectives for the studies under the Fifth Railway Project were more fundamental which
-45 -
may have contributed to the minimal outcome of the Locomotive and Rolling Stock Maintenance
and Rehabilitation Study; the objectives were basically not achieved\.
203\. The Fourth Railway Project, had three particular objectives, which reflected the main
thrust of the Government's development strategy for railways during the 7th Five-year Plan
(1986-1990)\. Of these, and it was not necessarily the most important one, was the aim of
increasing the capacity of key routes and terminals\. The double-tracking of the 492 km single-
track line and the 113 km electrification of the northern section from Yueshan to Luoyang met
this objective by providing value added to the economy; new goods production (and incremental
passenger movement) were made possible by the additional transport capacity of the railway
route\.
204\. The second and third objectives were to enhance the productivity of existing assets by
raising the level of technology used in different activities within MOR, e\.g\. in train operations,
maintenance, administration, and manufacturing; and to expand rolling stock manufacturing
facilities\. These were mainly achieved through an extensive expansion and modernization
program of three locomotive and rolling stock factories\. Although envisaged production targets
were not met due to major changes in the work allocation of MCR's locomotive and rolling
stock, the expected enhancement of the existing assets enabled MOR to raise production and
overhaul capacity of locomotives, coaches and freight wagons\. It also permitted MOR to
improve both quality and productivity, while enhancing its capability to develop new products\.
205\. The second project objective was also addressed through a Strategic Plan Study, which
was to develop strategic plans in the fields of telecommunications and computerization in order
to improve operational management and transportation capacity\. This was consistent with the
Government's goal and the Bank's assistance strategy to develop the railway sub-sector; but it
also raised quite high expectations with regard to a broader-based dialogue between the Bank
and MOR\. One tangible outcome of the study is the fact that in telecommunications, MOR has
established the foundation for a data communication network\. In addition, the OIS study defined
a strategic approach to develop a computer based operating information system, and since 1991,
MOR has been operating a computerized line transport capacity analysis of its railway system\.
206\. The Fourth Railway Project had a further, important general objective'1, which was to
provide a bridge to possible sector lending through the choice of the components, in particular
the Strategic Plan Study\. The study, which was to be tested on the Beijing-Shanghai railway
corridor, was to be an innovation that could be replicated elsewhere on other major railway lines
in the country\. Recorded implementation history, however, reveals little about whether this
objective was achieved\. As the evaluation of the relative benefits of alternative operating
investments and practices on the Beijing-Shanghai railway corridor was not carried out, and
information provided by MOR during the ICR completion mission did not convincingly address
the issue, it appears that this secondary objective was not achieved\.
207\. During preparations for the Fifth Railway Project, the Bank's project team claimed that a
new era in the Bank's relationship with MOR had commenced with the identification mission in
May 1989\. Various approaches and the project scope were discussed, especially the concept of a
" SAR Fourth Railway Project, para\. 3\.2\.
- 46 -
"system-wide component" and the new railway project's link to future lending through the
preparation of studies and action plans\. Actually, the four objectives for the Fifth Railway
Project--which were to ensure that MOR became more efficient and continued to be financially
viable through better operations, maintenance practices, investment planning, and tariff policies--
demonstrated a departure from previous conventional projects\.
208\. The first objective of the Fifth Railway Project was to introduce recent developments in
railway technology and maintenance and rehabilitation practices\. This was fully achieved when
MOR established a long-range track rehabilitation and upgrading program\. This program
included the creation of track maintenance and track rehabilitation machine groups, and required
the purchasing of track machines\. This investment in a modem maintenance program was
replicated in subsequent railway projects and with other foreign funding\. In addition, the
placement of imported heat-treated rails in 500 km of mainline track with the most severe
curvature resulted in savings due to longer life than domestic rails; these heat-treated rails
reduced replacement and maintenance costs substantially\.
209\. The second and third objectives were to develop system-wide plans and planning tools
for MOR's major sub-sectors and to develop modem planning and analytical techniques for
establishing investment priorities and tariff structure\. The five wide-ranging studies prepared
under the Fifth Railway Project became the basis for preparation of later operations\. They also
introduced more efficient techniques in track maintenance, at least pertaining to the evaluation of
repair technology and standardization of rules for one locomotive type\. They also detenrined the
final selection of candidate lines for electrification under the 8th Five-year Plan\. Finally, the
project produced what later became MOR's Telecommunications Master Plan\. This substantially
improved the operating efficiency of the Chinese railway system by providing MOR with the
capability of conducting economic evaluations necessary to identify desirable capacity expansion
expenditures\.
210\. Finally, capacity was added where urgently needed and justified\. The Zhegan line
capacity expansion added value to the economy through the additional shipping capacity for new
goods and more passengers\. The enhanced capacity of the expanded Xuzhou terminal produced
value added benefits in terms of both coal and non-coal traffic\. The system-wide locomotive and
rolling stock component helped to meet a few critical materials, machinery and equipment
requirements for increasing overhaul and production capacity\.
H\. FUTURE OPERATIONS
211\. Future operations will have to be consistent with the objectives China has for its transport
sector\. A Strategy for the Transport Sectorl2 identified two primary objectives: (i) to enhance
China's economic growth and increase its competitiveness in world markets, and (ii) to reduce
income disparities between inland and coastal provinces and between rural and urban areas\.
Achieving these will require: stimulating competition; promoting development of the transport
network to alleviate capacity bottlenecks and provide capacity for economic growth; the opening
up of isolated areas; charging for the use of infrastructure so as to cover long-term social costs;
12 China, Forward with One Spirit: A Strategy for the Transport Sector, April 23, 1998,
Report No\. 15959-CHA
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and implementing institutional reform that recognizes the transport sector as a whole, rather than
as an aggregation of independent modes\. Reducing the sector's negative effects on the
environment and improving the sector's poor safety record should be the third of the sector's
objectives\.
212\. In recent years, the Bank has worked with the central and provincial governments, as well
as with MOR, to assess the institutional changes and pricing and regulatory measures needed to
stimulate a more market-responsive transport sector, based on concepts of integrated transport
systems\. The next stage, which is already underway, is to progress from concepts to specific
policies and actions, and then to their implementation\.
213\. One result of the inadequate transport infrastructure is its contribution to perpetuating
large income disparities between rural and urban areas and,between inland and coastal provinces\.
Highway and railway links between the inland provinces and principal domestic markets in the
coastal provinces and their deep-water ports used for international trade are so poorly developed
that it can take weeks for a container to move the typical 1,000kms involved\. Future projects
should build on the experience of those recently implemented that include components to address
physical isolation that will improve access to inland provinces\.
214\. After seven railway lending projects, success has been achieved in the form of physical
investments, studies and pilot projects that lead the railway towards a more commercial and
businesslike approach to its operations\. Policy and institutional reform has come more slowly
than the Bank has hoped for, but this is in keeping with China's conservative approach to such
fundamental changes\. Future lending may have less emphasis on physical components and
studies, and more on implementation of policies to stimulate competition, and create an enabling
environment for more user-oriented multi-transport services\.
I\. LESSONS LEARNED
215\. Both projects, like the earlier ones, were relatively simple with regard to their physical
components\. However, procurement problems arose during implementation\. The appraised
estimates of costs and implementation timing proved optimistic\. These deficiencies are less
understandable since the Bank and MOR had accumulated sufficient experience in implementing
Bank-assisted railway projects in China by the time of their appraisal\. The main lessons learned
were as follows:
a) Bank management's re-assessment of previous lending policies appears to have had
a fundamental impact on MOR's and the Bank's approach in the Fifth Railway
Project\. The ICRs for Sixth and Seventh Railway Projects should evaluate whether
the Fifth Railway Project, which was regarded as a transitional operation, really
paved the way for more meaningful cooperation with MOR\.
b) Extensive studies proved to be a challenge to MOR\. The Planning Studies under the
Fifth Railway Project were a somewhat ambitious attempt to look at future
investment requirements in a rational, system-wide context\. Although the range of
the studies' achievements varied substantially, the ICRs for subsequent projects
-48 -
should evaluate whether they really enhanced MOR's contribution to the transport
sector in China\.
c) The Fourth Railway Project had three studies and two physical components with 6
different locations\. (The Yueshan-Xiangfan line double-tracking and partial
electrification was split into three distinctive sections\.) By contrast, the Fifth
Railway Project consisted of four physical components with 9 different locations
and 8 studies (the five Planning Studies and three additional studies)\. Both projects,
but especially the Fifth Railway Project, required a multitude of professional skills
for appraisal and supervision, which caused expensive project appraisals and
supervisions and may have contributed to the Bank's involvement not having been
always adequate during implementation\. Therefore, future projects should consist of
only a few components, which are specifically targeted to assist in achieving the
transport sector's objectives in order to make them more efficient, manageable and
cost-effective\.
d) MOR has historically been very reluctant to involve the Bank in broader strategic
planning, ostensibly because it has not wanted to spend Bank loans on technical
assistance\. Some of the studies' objectives and targets in the Fifth Railway Project
were somewhat ambitious; and one of the five Planning Studies basically did not
achieve its objectives\. It is, therefore, very important to receive MOR's full-hearted
support and commitment during appraisal of future projects\.
e) Future appraisals should avoid such arbitrary changes as experienced during the
preparation of the Fourth Railway Project\. In addition, realistic procurement plans,
adequate estimates of local costs and implementation schedules providing for
inevitable delays are essential for successful project implementation\.
f) If the problem of MOR's inadequate progress reporting cannot be resolved,
supervision of ongoing projects should focus more on collection of information in a
format conducive to the production of ICRs\.
- 49 -
PART II: STATISTICAL ANNEXES
FOURTH RAILWAY PROJECT
Table 1: SUMMARY OF ASSESSMENTS
A\. Achievement of Objectives Substantial Partial Negligible Not applicable
Macro policies x
Sector policies x
Financial objectives x
Institutional development x
Physical objectives
Poverty reduction x
Gender issues x
Other social objectives x
Environmental objectives x
Public sector management x
Private sector development x
Other - Resettlement x
B\. Project Sustainability Likely Unlikely Uncertain
x
C\. Bank performance Highly satisfactory Satisfactory Deficient
Identification x
Preparation assistance x
Appraisal x
Supervision x
D\. Borrower performance Highly satisfactory Satisfactory Deficient
Preparation x
Implementation x
Covenant compliance x
Operation (if applicable)
Highly Highly
E\. Assessment of outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactory
x
-50-
FOURTH RAILWAY PROJECT
Table 2: RELATED BANK LOANS/CREDITS
Year of
Loan/Credit Title Approval Status
Preceding Operations:
1\. First Railway Project Line capacity expansion; doubling 1984 Completed on
(Ln\. 2394) locomotive production; costing study\. 12/31/90 (PCR
6/24/91)
2\. Second Railway Line capacity expansion through upgrade 1985 Completed on
Project (Ln\. 2540) and electrification; expand passenger 06/30/94 (PCR
coach production capacity; strengthen 6/30/95)
applied research; modernize
management techniques; advise on
improvements in university curricula\.
3\. Third Railway Capacity expansion of two lines; 1986 Completed on
Project (Ln\. 2540, improvement of technology in a 06/30/95 (ICR
Cr\. 1680) signaling factory; improvement of track 6/26/96)
maintenance; continuation of costing
study\.
Following Operations:
1\. Inner Mongolia Construction of single track line; 1989 Completed on
Railway Project acquisition of operational equipment; 12/31/96 (ICR
(Ln\. 3060/Cr\. 2014) training and recruitment of staff\. 6/25/97)
2\. Fifth Railway Track rehabilitation and maintenance; 1991 Completed on
Project (Ln\. 3406) acquisition of locomotives and rolling 12/31/98
stock; line capacity expansion; expansion
of Xuzhou terminal; implementation of
costing study\.
3\. Sixth Railway Project Line capacity expansion; technological 1993 To be
(Ln\. 3581) moderization for track maintenance, completed on
telecom, MIS and container transport\. 06/30/99
Policy reforms to rationalize tariffs,
modernize accounting standards and
improve railway management and
regulation\.
4\. Seventh Railway Policy reform and institutional 1995 To be
Project (Ln\. 38970) development to provide TA to completed on
implement railway restructuring, tariff 12/31/02
reform and labor productivity
enhancement\. Investments include: line
electrification; purchase of locomotives;
upgrading telecomn system;
commercializing container transport; and
protecting the environment\.
- 51 -
FOURTH RAILWAY PROJECT
Table 3: PROJECT TIMETABLE
Item Date Planned Revised Date Actual
Identification
Pre-appraisal March 1987 June/July 1987
Appraisal June/July 1987 October 1987
Negotiations January 1988 May 9 to 13, 1988
Board approval March 15 1988 June 23, 1988
Signature End November 1988 January 25, 1989
Effectiveness September 30 1988 March 27, 1989
Project completion Dec\. 31, 1995 March 30, 1998
Loan closing June 30, 1996 June 30, 1998
FOURTH RAILWAY PROJECT
Table 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL
(US$ million)
FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98
Appraisal estimate 6\.00 34\.00 50\.00 44\.00 26\.00 16\.00 16\.00 8\.00 --
Actual 1\.16 42\.59 38\.71 28\.24 17\.14 48\.09 19\.54 1\.76 - 0\.68
Actual as% of estimate 19\.30 125\.30 77\.70 64\.20 65\.90 300\.60 122\.10 22\.00
Date of refund: February 10, 1999
- 52 -
FOURTH RAILWAY PROJECT
Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION
Completion
Planned Actual Delay
Item/Year Start Completed Start Completed (months)
Yueshan-Xiangfan Line 1987 1995 1987 12/97 /a 24 months
Three Factories 09/88 1991 12/91 12/95 48 months
Strategic Plan Study 08/88 06/91 08/88 12/95 /b 54 months
la Two machines costing about $2\.8 million were delivered in February 1998, and accepted on March 30, 1998\.
/b By December 1995, the study was essentially completed\. Due to a delivery delay of a computer purchased under the Sixth Railway
Project, consultants services lasted until September 1997\.
FOURTH RAILWAY PROJECT
Table 6: KEY INDICATORS FOR PROJECT OPERATION
The SAR did not define key indicators for operation\.
- 53 -
FOURTH RAILWAY PROJECT
Table 7: STUDIES INCLUDED IN PROJECT
The project contained a Strategic Plan Study as one of the four main components\. Details
are provided in the text part of this ICR\.
Study Name Purpose as defined at Status Impact of Study
appraisal/redefined
Strategic Plan Develop strategic plans
Study in the fields of
telecommunications and
computerization in order
to improve operational
management and
transportation capacity\.
Telecommunicatio Review MOR's current Satisfactorily Study resulted in a
ns telecommunications completed system master plan for
strategy plans and to telecommunications
update them based on development, which,
new technological since 1995, is being
developments\. implemented under
the ongoing projects\.
Operating Define and obtain Satisfactorily Study defined a
Information management agreement completed strategic approach to
System (OIS) on a strategic approach to develop a computer
developing a computer based operating
based operating information system\.
information system for
MOR as a whole\.
Transportation Demonstrate the Satisfactorily Computer models
Capacity usefulness of computer completed except helped evaluate the
Computer models to help evaluate for the evaluation relative benefits and
Modeling the relative benefits and of the relative costs of alternative
costs of alternative benefits of operating investments
operating investments alternative and practices\.
and practices\. operating
investments and
practices on the
BeiJ ing- Shanghai
railway corridor\.
- 54 -
FOURTH RAILWAY PROJECT
Table 8A: PROJECT COSTS
Planned
Local Foreign Total Local Foreign Total
----- (Yuan mil) ----- ----- (US$ mil)-
Yueshan-Xiangfan Line 692\.9 737\.8 1,430\.7 187\.3 199\.4 386\.7
Three Factories
February 7 83\.4 35\.0 118\.4 22\.5 9\.5 32\.0
Sifang 204\.7 80\.9 285\.6 55\.3 21\.9 77\.2
Qiqihar 81\.8 62\.6 144\.4 22\.1 16\.9 39\.0
Strategic Plan Study 1\.9 9\.3 11\.2 0\.5 2\.5 3\.0
Total Base Costs 1,064\.7 925\.6 1,990\.3 287\.7 250\.2 537\.9
Physical Contingencies 106\.3 45\.8 152\.1 28\.7 12\.4 41\.1
Price Contingencies 149\.9 148\.6 298\.5 10\.5 10\.5 20\.0
Total Project Cost 1,320\.9 1,120\.0 2,440\.9 326\.9 273\.1 600\.0
Actual
Local Foreign Total Local Foreign /b Total
----- (Yuan mil) ----- ----- (US$ Mil) -----
Yueshan-Xiangfan Line /a 2,314\.4 2,464\.4 4,778\.8 361\.5 384\.9 746\.4
Three Factories
February 7 148\.4 44\.3 192\.7 30\.7 7\.9 38\.6
Sifang 374\.7 93\.3 468\.0 82\.1 16\.0 98\.1
Qiqihar 174\.2 114\.7 288\.9 38\.8 22\.0 60\.8
Strategic Plan Study -- 9\.1 9\.1 -- 1\.6 1\.6
Total Base Costs 3,011\.7 2,725\.8 5,737\.5 513\.1 432\.4 945\.5
Physical Contingencies -- --
Price Contingencies -- --
Total Project Cost 3,011\.7 2,725\.8 5,737\.5 513\.1 432\.4 945\.5
Notes: /a The same cost distribution as in the SAR has been used to reflect the indirect foreign exchange
costs\.
- 55 -
FOURTH RAILWAY PROJECT
Table 8B: PROJECT FINANCING
Appraisal Estimate Actual/Latest Estimate
Responsible Party / Component Yuan US$ Yuan US$
Million Million Million million
IBRD 740\.0 200\.0 1,201\.1 197\.92
Japanese Grant Facility (PHRD) /a 1\.5 9\.1 1\.59
Government 1,474\.5 398\.5 4,527\.3 745\.94
Total 2440\.9 600\.0 5,737\.5 945\.45
Notes: /a By the time of Board presentation, co-financing of Yen 200 million from the Government of
Japan to assist in the financing of the Strategic Plan Study had been granted\.
FOURTH RAILWAY PROJECT
Table 8C: ALLOCATION OF LOAN PROCEEDS
Planned Actual
Category US$ '000 US$ '000
1\. Equipment and materials 186,100 197,803\.6
(including transfer of
technology)
2\. Consultants' services 2,800 114\.4
(including software and
training)
3\. Unallocated 11,100 --
4\. Special Account /a 1\.6
Cancellation 2,080\.4
Total 200,000 200,000\.0
la The amounts indicated under the Special Account category represent the exchange rate fluctuation from
the time of the advances to the Special Accounts to the time of documentation/recovery of the account\.
-56-
FOURTH RAILWAY PROJECT
Table 9: EcoNoMIC COSTS AND BENEFITS
(Yuan million, 1997 prices)
Total Total NPV EIRR
Costs /a Benefits /b (@ 12%) %
Yueshan-Xiangfan Line
Double-Tracking and Partial
Electrification
ICR: 41,644 340,004 22,913 19\.8
SAR: 17,304 219,268 30,363 36\.9
/a Sum of undiscounted cost stream\.
/b Sum of undiscounted benefit stream\.
FOURTH RAILWAY PROJECT
Table 10: STATUS OF LEGAL COVENANTS
Covenant Original Revised
Section Description of Covenant Class Status Date Date Comments
Loan Open and maintain a special account I C N/A N/A
Agree\.t
2\.02 (b)
Loan Borrower to carry out the Strategic 9 C N/A N/A
Agrec\.t Plan Study for Railway Capacity,
3\.03 Operation Information System and
Telecommunications
Loan Borrower to carry out the training 10 C N/A N/A
Agree\.t under Part D in accordance with a
3\.04 program (in new technology and
management) agreed with the Bank
Loan Submit Annual Audit Reports by June 1 C N/A N/A
Agree\.t 30 each year
4\.01
Covenant Class: Status:
= Accounts/audits 8 = Indigenous people C = Complied with
2 = Financial performance/revenue 9 Monitoring, review, and reporting CD= Compliance after delay
generation from beneiciaries 10 = Project implementation not CP = Complied with partially
3 = Flow and utilization of project covered by classes 1-9 NC Not complied with
funds II Sectoral or cross-sectoral SOON = Compliance expected in
4 = Counterpart funding budgetary or other resources reasonably short time
5 = Management aspects of the allocation
project or executing agency 12 Sectoral or cross-sectoral policy!
6 = Environmental covenants regulatory/institutional action
7 = Involuntary resettlement 13 p Other
-57-
FOURTH RAILWAY PROJECT
Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS
Statement Number and Title Describe and Comment on Lack of Compliance
There was no significant lack of compliance --
with an applicable Bank Operational Manual
Statement (OD or OP/BP)
FOURTH RAILWAY PROJECT
Table 12: BANK RESOURCES: STAFF INPUTS
(Weeks)
FY FY FY FY FY FY FY FY FY FY FY FY FY FY Total
86 87 88 89 90 91 92 93 94 95 96 97 98 99
Pre-appraisal 44\.4 108\.9 36\.5 189\.8
Lending Dev\. 3\.2 1\.9 5\.I
Appraisal 85\.4 85\.4
Negotiations 16\.4 16\.4
Supervision 11\.8 12\.9 12\.7 11\.3 14\.3 8\.9 11\.7 4\.0 12\.9 9\.9 1\.8 112\.2
SPNP 0\.5 0\.5
Completion 9\.6 9\.6
Total 44\.4 112\.1 140\.2 11\.8 12\.9 12\.7 I1\.3 14\.3 9\.4 11\.7 4\.0 12\.9 9\.9 11\.4/a 419\.0
/a As of May 11, 1999
-58-
FOURTH RAILWAY PROJECT
Table 13: BANK RESOURCES: MISSIONS
Performance Rating /b
Stage No\. Days Specialized Imple- Develop- Types
Of Month/ of in Staff Skills mentation ment of
Project Cycle Year Persons Field Represented /a Status Objectives Problems /c
Identification None
Preparation None
Pre-appraisal June/July 1987 11 14 ECN, ENG, FNA,
MISC, TC, OC, SC
Appraisal October 1987 10 13 ECN, ENG, FNA,
MEC, MISC, OC,TC
Supervision 1 January 1989 3 2 FNA, ECN, ENG (C) 2 1 P
Supervision 2 May 1989 1 2 ENG, ENG (C) d/
Supervision 3 January 1990 5 4 ENG, ENG (C), ECN, d/
TC, MEC, MISC
Supervision 4 June/July 1990 3 5 FNA, ENG, ENG (C) 1 1 TA
Supervision 5 Oct\./Nov\. 1990 2 1 FNA, ENG (C), I I TA
Supervision 6 Feb\./Mar\. 1991 6 4 FNA, ENG, MEC, TC, I I TA
MISC
Supervision 7 Oct\./Nov\. 1991 3 2 FNA, ENG (C), MEC 2 1 P, TA
Supervision 8 March 1992 1 2 TC -- -- --
Supervision 9 May/June 1992 4 2 FNA, ENG (C), MEC, 2 1 TA
MISC
Supervision 10 November 1992 4 3 FNA, ENG (C), MEC, 2 1 TA
MISC
Supervision 11 April 1993 3 2 FNA, ENG, MEC 2 1 P, TA
Supervision 12 October 1993 3 7 FNA, ENG, MEC 2 1 P, TA, T
Supervision 13 May 1994 3 2 FNA, ENG (C), MEC S S TA, T
Supervision 14 May/June 1995 3 7 ENG, MEC S S TA, T
Supervision 15 September 1995 1 2 FNA S S TA, T
Supervision 16 July 1996 1 6 ESP -- -- --
Supervision 17 October 1996 1 6 ENG S S F, TA, T
Supervision 18 April 1997 1 4 ENG S S --
Supervision 19 May 1997 1 4 RES -- -- --
Supervision 20 October 1997 1 1 ENG S S --
Supervision 21 March 1998 1 1 ENG S S --
Supervision 22 December 1998 1 1 RES -- -- --
ICR Jan\./Feb\. 1999 1 3 ENG -- -- --
/a C = consultant; ENG = engineer; ECN = cconomist; FNA = financial analyst; ESP = environment specialist; MEC
mechanical engineering consultant; MISC = MIS consultant; OC = operations consultant; RES= resettlement
specialist; SC = signaling consultant; TC = tciccom engineer\.
/b I= no significant problems; 2 = moderate problems; 3 = major problems; S = satisfactory\.
/c F= financial; M = management; P = procurement; S = studies progress; TA = technical assistance; T = training\.
/d No Back-to-Office report in Files\.
- 59 -
FIFTH RAILWAY PROJECT
Table 1: SUMMARY OF ASSESSMENTS
A\. Achievement of Objectives Substantial Partial Negligible Not applicable
Macro policies x
Sector policies x
Financial objectives x
Institutional development x
Physical objectives x
Poverty reduction x
Gender issues x
Other social objectives x
Environmental objectives x
Public sector management x
Private sector development x
Other - Resettlement x
B\. Project Sustainability Likely Unlikely Uncertain
x
C\. Bank Performance Highly satisfactory Satisfactory Deficient
Identification x
Preparation assistance x
Appraisal x
Supervision x
D\. Borrower Performance
Preparation x
Implementation x
Covenant compliance x
Operation (if applicable)
Highly Highly
E\. Assessment of outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactory
x
- 60 -
FIFTH RAILWAY PROJECT
Table 2: RELATED BANK LOANS/CREDITS
Year of
Loan/Credit Title Approval Status
Preceding Operations:
1\. First Railway Project Line capacity expansion; doubling 1984 Completed on
(Ln\. 2394) locomotive production; costing study\. 12/31/90 (PCR
6/24/91)
2\. Second Railway Line capacity expansion through upgrade 1985 Completed on
Project (Ln\. 2540) and electrification, expand passenger 06/30/94 (PCR
coach production capacity; strengthen 6/30/95)
applied research; modernize
management techniques; advise on
improvements in university curricula\.
3\. Third Railway Capacity expansion of two lines; 1986 Completed on
Project (Ln\. 2540, improvement of technology in a 06/30/95 (ICR
Cr\. 1680) signaling factory; improvement of track 6/26/96)
maintenance; continuation of costing
study\.
4\. Fourth Railway Line capacity expansion; expansion and 1988 Completed on
Project (Ln\. 2968) quality improvement for three 06/30/98 (ICR
locomotive and rolling stock factories; combined with
strategic plan development for Beijing- ICR Railways
Shanghai line\. V)
5\. Inner Mongolia Construction of single track line; 1989 Completed on
Railway Project acquisition of operational equipment; 12/31/96 (ICR
(Ln\. 3060/Cr\. 2014) training and recruitment of staff\. 6/25/97)
Following Operations:
1\. Sixth Railway Project Line capacity expansion; technological 1993 To be
(Ln\. 3581) modernization for track maintenance, completed on
telecom, MIS and container transport\. 06/30/99
Policy reforms to rationalize tariffs,
modernize accounting standards and
improve railway management and
regulation\.
2\. Seventh Railway Policy reform and institutional 1995 To be
Project (Ln\. 38970) development to provide TA to completed on
implement railway restructuring, tariff 12/13/02
reform and labor productivity
enhancement\. Investments include: line
electrification; purchase of locomotives;
upgrading telecom system;
commercializing container transport; and\.
protecting the environment\.
-61-
FIFTH RAILWAY PROJECT
Table 3: PROJECT TIMETABLE
Item Date Planned Revised Date Actual
Identification -- May 1989
Preappraisal September 1989 September 1989
Appraisal January 1990 January 1990
Pre-negotiation -- June 1990
Negotiations April 30 - May 4 August 5 - 7, 1991
1990
Board approval -- September 24, 1991
Signature -- October 28, 1991
Effectiveness before Dec\. 31 1990 January 9, 1992
Project completion June 30, 1998 June 1999 /a
Loan closing December 31, 1998 December 31, 1998
/a Most of the Permanent Way Maintenance and Rehabilitation Study' test due dates were in 1998\. A
report evaluating the test results and presenting recommendations is under preparation and expected to be
completed by June 1999\.
FIFTH RAILWAY PROJECT
Table 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL
(US$ million)
FY92 FY93 FY94 FY95 Y96 FY97 FY98 FY99
Appraisal estimate 14\.8 99\.7 117\.0 45\.6 25\.6 17\.6 9\.7 --
Actual -- 43\.0 90\.93 130\.6 25\.6 9\.8 1\.0 6\.6
Actual as % of estimate 0\.0 43\.1 77\.7 286\.4 99\.9 55\.9 10\.3 --
Date of final refund: April 26, 1999
- 62 -
FIFTH RAILWAY PROJECT
Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION
Completion
Planned Actual Delay
Item/Year Start Completed Start Completed (months)
P-way System-wide 1992 1994 /a 1993 10/98 46 months /b
Locomotives and 1992 1994 /a 1993 02/98 50 months /c
Rolling Stock System-
wide
Zhegan Line 1993 1995 05/93 12/97 24 months /d
Xuzhou Terminal 1991 1994 1993 11/98 47 months
Planning Studies 1990 1995 1990 12/97 24 months
/a The SAR did not provide an implementation schedule\. Therefore, the list of goods was used, however
with one added to accommodate for testing and acceptance of equipment and machinery\.
/b Loan savings financed additional track maintenance equipment\. Without this, the component would have
been completed by August 1997\.
/c Loan savings financed additional factory equipment\. Without this, the component would have been
completed by May 1995\.
/d Loan savings financed additional telecommunications equipment to improve safety and quality of
operations\. With this, the components have been completed by September 1998\.
/e Most of the Permanent Way Maintenance and Rehabilitation Study test due dates were in 1998\. A report
evaluating the test results and presenting recommendations is under preparation and expected to be
completed by June 1999\.
FIFTH RAILWAY PROJECT
Table 6: KEY INDICATORS FOR PROJECT OPERATION
The SAR did not define either performance or efficiency indicators for operation\. Bank
management was advised' that the Bank's assessment was more quantitative than
qualitative, and neither MOR nor the Bank was in a position to the extent to which
performance should improve in any particular area\. For this reason the Bank sought and
obtained MOR's agreement to carry out the five planning studies\.
1 OM to Vice President dated January 17, 1990\.
- 63 -
FIFTH RAILWAY PROJECT
Table 7: STUDIES INCLUDED IN PROJECT
Study Name Purpose as defined at Status Impact of Study
appraisal/redefined
Permanent Way Comprehensive review Task (a) MOR established a long-
Maintenance and of track rehabilitation satisfactorily range track rehabilitation
Rehabilitation Study and maintenance Completed, the and upgrading program and
standards and methods research program the concept of track
in order to help MOR (task b) is expected maintenance and track
develop a technically to be completed by rehabilitation machine
and economically June 1999\. groups, and began
optimal program\. purchasing track machines,
which it continued under
the following railway
projects and with other
foreign funding\.
Locomotive and Prepare action plans to Partially Negligible except for the
Rolling Stock optimize the completed evaluation of repair
Maintenance and maintenance, reliability, technology and
Rehabilitation Study availability and standardization of rules for
utilization of diesel one locomotive type\.
locomotives and rolling
stock\.
System Electrification Prepare plans for the Satisfactorily Determined the final
Study electrification of railway completed selection of candidate lines
lines for 8tlb Five-year for electrification for the 8
Plan\. Five-year Plan on the basis
of economic priorities and
optimal timing of
investments\.
System Prepare a long-range Satisfactorily Produced what later
Telecommunication plan for modernization completed became MOR's
Study and expanding MOR's Telecommunications
telecommunications Master Plan\.
network\.
Railway Investment Improve the operating Satisfactorily Developed and applied a
Study (RIS) efficiency of the Chinese completed decision support system
railway system by consisting of an integrated
providing MOR with the suite of traffic forecasting,
capability of conducting cost, performance, network
economic evaluations optimization, benefit/cost,
necessary to identify and geographic information
desirable capacity system models\.
_ expansion expenditures\.
- 64 -
FIFTH RAILWAY PROJECT
Table 8A: PROJECT COSTS
Planned
Local Foreign Total Local Foreign Total
----- (Yuan mil) ----- ----- (US$ mil) -----
System-wide Components
Permanent Way 168\.3 443\.6 611\.9 32\.3 85\.0 117\.3
Locomotive/rolling stock 18\.3 293\.0 311\.3 3\.5 56\.1 59\.6
Zhegan Line 1,765\.9 1,544\.6 3,310\.5 338\.4 295\.9 634\.3
Xuzhou Terminal 300\.3 302\.2 602\.5 57\.5 57\.9 115\.4
Base Costs 2,252\.8 2,583\.4 4,836\.2 431\.7 494\.9 926\.6
Physical Contingencies 119\.0 59\.7 178\.7 22\.8 11\.6 34\.4
Baseline Estimate 2,371\.8 2,643\.1 5,014\.9 454\.5 506\.5 961\.0
Price contingencies 214\.3 274\.8 489\.1 19\.5 25\.2 44\.7
Total Project Cost 2,586\.1 2,917\.9 5,504\.0 474\.0 531\.7 1,005\.7
Actual
Local Foreign Total Local Foreign Total
- (Yuan mil) ----- ----- (US$ mil) -----
System-wide Components
Permanent Way 348\.7 862\.4 1,211\.1 44\.9 109\.6 154\.5
Locomotive/rolling stock 10\.9 505\.2 516\.1 1\.4 61\.4 62\.8
Zhegan Line /a 4,652\.0 4,067\.7 8,719\.7 642\.1 561\.5 1,203\.6
Xuzhou Terminal 621\.9 156\.5 778\.4 110\.2 19\.2 129\.4
Base Costs 5,633\.5 5,591\.8 11,225\.3 798\.6 751\.7 1,550\.3
Physical Contingencies
Baseline Estimate 5,633\.5 5,591\.8 11,225\.3 798\.6 751\.7 1,550\.3
Price contingencies
Total Project Costs 5,633\.5 5,591\.8 11,225\.3 798\.6 751\.7 1,550\.3
Notes: la The same cost distribution as in the SAR has been used to reflect to indirect foreign exchange
costs\.
- 65 -
FIFTH RAILWAY PROJECT
Table 8B: PROJECT FINANCING
Appraisal Estimate Actual/Latest Estimate
Responsible Party / Component Yuan US$ Yuan US$
Million Million Million million
IBRD 1,722\.6 330\.0 2,531\.3 322\.4
Government 3,781\.4 675\.7 8,694\.0 1,227\.9
Total 5,504\.0 1,005\.7 11,225\.3 1,550\.3
FIFTH RAILWAY PROJECT
Table 8C: ALLOCATION OF LOAN PROCEEDS
Planned Actual
Category US$ '000 US$ '000
1\. Equipment and materials 329,800 322,249\.0
2\. Consultants' services 200 119\.0
3\. Unallocated 0 0
4\. Special Account /a (17\.3)
Cancellation 7,649\.3
Total 330,000 330,000\.0
/a The amounts indicated under the Special Account category represent the exchange rate fluctuation from
the time of the advances to the Special Accounts to the time of documentation/recovery of the account\.
- 66 -
FIFTH RAILWAY PROJECT
Table 9: EcoNOMIC COSTS AND BENEFITS
(Yuan million, 1997 prices)
Total Total NPV EIRR
Costs /a Benefits /b (@ 12%) %
Zhegan Line
ICR: 48,150 831,365 97,709 35\.0
SAR: 17,674 149,688 15,427 34\.8
Xuzhou Terminal
ICR: 53,506 419,754 31,879 29\.2
SAR: 26,181 266,247 25,818 31\.0
Track Rehabilitation
Materials
ICR: 831 3,689 1,197 105\.7
SAR: 917 1,088 73 26\.8
Wheels for Freight Wagons
ICR: 898 22,408 12,120 233\.0
SAR: 514 4,764 850 36\.0
/a Sum of undiscounted cost stream\.
/b Sum of undiscounted benefit stream\.
-67-
FIFTH RAILWAY PROJECT
Table 10: STATUS OF LEGAL COVENANTS
Covenant Original Revised
Section Description of Covenant Class Status Date Date Comments
Loan Open and maintain a special account I C N/A N/A
Agree\.t
2\.02 (b)
Loan Submit Annual Audit Reports by June 30 1 C N/A N/A
Agree\.t each year
4\.01
Loan MOR to maintain a ratio of total 2 C N/A N/A Actual performance was better than
Agree\.t operating expanses to total operating target
revenues not higher than 82% for each
4\.02 year following )ecember 30, 1990
Loan Achieve self-financing ratio of 20% for 2 C N/A N/A
Agree\.t 1991 - 93 and of 25% or more thereafter
4\.03
Loan (1) Achieve locomotive availability of 10 C N/A N/A
Agree\.t 82%; (ii) carry out resettlement of the
affected people; (iii) implement traffic
Sched\. 6 costing system as per agreed plan, and
(iv) furnish to the Bank by March 31,
1992, a report on the initial phase of the
planning studies being carried out under
the Second Railway Project, and use the
findings and recommendations of the
studies\.
Covenant Class: Status:
1 = Accounts/audits 8 = Indigenous people C Complied with
2 = Financial performance/revenue 9 Monitoring, review, and reporting CD= Compliance after delay
generation from beneficiaries 10 Project implementation not CP = Complied with partially
3 = Flow and utilization of project covered by classes 1-9 NC = Not complied with
funds 11 Sectoral or cross-sectoral SOON = Compliance expected in
4 = Counterpart funding budgetary or other resources reasonably short time
5 = Management aspects of the allocation
project or executing agency 12 Sectoral or cross-sectoral policy/
6 = Environmental covenants regulatory/institutional action
7 =Involuntary resettlement 13 eOther
- 68 -
FIFTH RAILWAY PROJECT
Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS
Statement Number and Title Describe and Comment on Lack of Compliance
There was no significant lack of compliance --
with an applicable Bank Operational Manual
Statement (OD or OP/BP)
FIFTH RAILWAY PROJECT
Table 12: BANK RESOURCES: STAFF INPUTS
(Weeks)
FY FY FY FY FY FY FY FY FY FY FY FY Total
88 89 90 91 92 93 94 95 96 97 98 99
Pre-appraisal 3\.3 19\.3 110\.2 132\.8
Lending Dev\. 0\.1 0\.1
Appraisal 52\.4 52\.4
Negotiations 14\.5 31\.7 18\.2 64\.4
Supervision 27\.9 21\.5 15\.7 16\.7 10\.7 8\.5 14\.6 8\.6 124\.2
SPN Core- 5\.7 0\.3 0\.3 0\.3 2\.6 0\.6 9\.8
Procurement
Completion 5\.5 5\.5
Total 3\.3 19\.4 177\.1 31\.7 46\.1 21\.5 21\.4 17\.0 11\.0 8\.8 17\.2 14\.7/a 389\.2
/a As of May 11, 1999
- 69 -
FIFTH RAILWAY PROJECT
Table 13: BANK RESOURCES: MISSIONS
Performance Rating /b
Stage No\. Days Specialized Imple- Develop- Types
Of Month/ of In Staff Skills mentation ment of
Project Cycle Year Persons Field Represented /a Status Objectives Problems /c
Pre-Identification January 1989 4 ECN, ENG no TOR
Identification May 1989 5 5 ENC, FNA, ENG
Preparation Sept,/October 7 16 ECN, ENG, FNA, TC,
1989 MISC
Appraisal January 1990 11 20 ECN, ENG, FNA, MEC,
TC, ESP, MISC
Pre-negotiation June 1990 2 4 ENG, FNA
Discussion Feb\./March 1991 7 9 ECN, ENG, FNA, MEC,
TC, MISC
Supervision I Oct\./Nov\. 1991 4 4 ECN, ENG FNA,MEC l 1
Supervision 2 March 1992 1 2 TC - -
Supervision 3 May/June 1992 4 5 ECN, ENG, FNA, MEC 2 1 P
Supervision 4 November 1992 4 3 FNA, ENG, 2 1 P
ENG (C), MEC
Supervision 5 April 1993 4 6 FNA, ENG, ESP, MEC 2 1 P
Supervision 6 October 1993 3 5 FNA, ENG, MEC 2 1 P
Supervision 7 May 1994 3 6 FNA, ENG (C), MEC S S P
Supervision 8 May/June 1995 3 7 ENG, MEC, TC (C) S S P
Supervision 9 September 1995 1 2 FNA S S P
Supervision 10 June 1996 2 2 ENG, TC (C) S S P
Supervision II April 1997 I 2 ENG S S --
Supervision 12 September 1997 I 3 ESP -- -- --
Supervision 13 October 1997 I 8 ENG S S --
Supervision 14 March 1998 I 2 FNA -- -- --
Supervision 15 December 1998 I 7 RES - - --
ICR Jan\./Feb\. 1999 1 11 ENG
ICR February 1999 1 5 RES
la C = consultant; ENG = engineer; ECN = economist; FNA = financial analyst; ESP= environment specialist; MEC
mechanical engineering consultant; MISC= MIS consultant; RES= resettlement specialist;
TC = telecom engineer\.
/b I = no significant problems; 2 = moderate problems; 3 = major problems; S= satisfactory\.
/c F= financial; M = management; P = procurement; S = studies progress; TA = technical assistance; T = training\.
/d No Back-to-Office report in Files\.
70
APPENDIX A: ICR COMPLETION MISSION'S
AIDE-MEMOIRE
CHINA
FOURTH AND FIFTH RAILWAY PROJECTS
(LOANS 2968 and 3406-CHA)
IMPLEMENTATION COMPLETION REPORT MISSION
(February 2, 1999)
AIDE-MEMOIRE
A World Bank mission comprising Mr\. U\. Marggraf visited the Ministry of
Railways as a post completion mission for the Fourth and Fifth Railway Projects to seek
updated information on implementation and achievement of objectives\. The mission
discussed the completeness and accuracy of the draft Implementation Completion Report
(ICR) for the Fourth Railway Project dated January 11, 1999, which had been sent to
FCTIC of MOR prior to the mission's arrival\. Data and information collection for the
Fifth Railway Project was based on component papers made available to FCTIC in mid-
October 1998\. This aide-memoire records the understandings reached with regard to
FCTIC's contribution to the ICRs\.
MOR and its regional organizations which benefited from the project were very
cooperative and helped prepare information for this ICR\. They provided some data to
complement those available in the Bank's project file, which produced a more
comprehensive picture of project implementation\. The mission wishes to express its
sincere thanks to MOR, especially to the staff from FCTIC and the project teams of the
MOR administrations for their excellent cooperation, detailed information provided, and
for courtesies extended\.
It is the Bank's intention to combine the ICRs for both projects into one report\.
Because this report shall be delivered to the Bank's Operations Evaluation Department by
May 1, 1999, it was agreed with FCTIC that:
- a final draft combined ICR will be sent to MOR and the Ministry of Finance to
obtain their comments shortly after the mission's return to Washington; and
- comments from MOR and the Ministry of Finance and the Borrower's
contribution to the combined ICR would be sent to the Bank within two weeks after
receipt of the final draft combined ICR\.
- 71 -
APPENDIX B: BORROWER'S CONTRIBUTION TO THE
ICR
Projects Objectives
Due to the Ist development of China's national economy since carrying out the reform and
open policy, railway sector has been remained as one of the bottlenecks\. The objectives for
these two Projects are to increase railway's transport capacity, so as to meet the requirement\.
The FourtLh Railway Project includes the components of doubIc-tracking Yucshan-Xiangfan
railway line, imodcrnization of QiQihar, Sil'ang and February Seventh Locomotives and
Rolling Stocks Works\. Due to protecting the state-key relic called Longmen Stone carvings
in I lnan ProvinicC, the design and construction of Yuenshan-Xianglan railway line was
special revision, which Iade the construction schedule delay fI two years\.
Ii fth Rai lwav Project covers the components ofihegan railway line upgrading, Xuzhou
termiial Cxpansion, mlanutheturing system-wide, and Permanent way system-wide\. Due to
revising design ofZhengan railway line, closing date was extended for one year\.
All the targets are achieved\. According to the criteria, the State Acceptance committee and
the National Environmental Protection Agency reviewed and accepted all the sub-
cornmponents\.
Thc comments to the World Bank:
The Bank mission stals worked very hard during the project cycle and their hard-working
was highly appreciated by the Borrower\. The periodical supervision mission to the fields
were necessary, which lacilitates implementation schedule greatly\.
- 72 -
ANNEX 1: FINANCIAL EVALUATION OF THE FOURTH
AND FIFTH RAILWAY PROJECTS
1\. The financial evaluation in the Staff Appraisal Report for The Fourth Railway Project
focuses on the income statement covering the 1982 to 1990 period (1982 to 1986 is historical
information; 1987 to 1990 are projected results)\. The evaluation in the Staff Appraisal
Report for the Fifth Railway Project includes for the first time all consolidated financial
statements (income statement, cash flow statement and balance sheet) and focuses on the
1985 to 1995 period (1985 to 1989 is historical information; 1990 to 1995 are projected
results)\.
2\. The inclusion of all financial statements in The Fifth Railway Project is an important
step forward\. However, during the financial discussions in subsequent railway projects it
became apparent that the focus of the financial statements is not uniform: the balance sheet
focuses on transport and non-transport enterprises, the income statement focuses on transport
enterprises only, and the cash flow statement is a hybrid of the two statements\. Because
different principles are applied in the preparation of the statements, and because the railways
are currently in the process of segregating non-transport enterprises from transport
enterprises (five financially independent firms will be set up covering construction, engine
building and components, telecommunications and support) the remainder of this analysis
focuses on the consolidated income statement of the transport enterprises only\.
3\. The evaluation of the actual consolidated income performance from 1987 to date and
projections through 2002 for the fourteen railway administrations managed by the Ministry
of Railways (MOR) is presented in Tables I and 2\. It was done in two parts, i\.e\. from 1987
to 1992, and from 1993 to 2002 because on July 1, 1993 the Ministry of Railways adopted
new accounting guidelines which are more aligned to international accounting standards\.
Hence, financial information before and after 1993 is not comparable\.
4\. Context\. In evaluating MOR's performance following factors need to be taken into
account:
* Railway revenues accrue from two sources: base tariffs, which are applied
against operating expenses, and a Railway Construction freight surcharge,
introduced in 1991, which is earmarked for capital investments, including
interest payments on loans for such investments;
* In 1986, the Government and MOR entered into a contract under which the
latter had to finance all its operating and capital expenditures (until 1984, the
Government financed capital expenditures from the national budget, while in
1985, these were financed from a budget loan)\. In return, MOR was to keep
its net income after it paid taxes\.
- 73 -
* MOR's capacity to set tariffs is limited because changes to base tariffs and
freight surcharges for all the trunk lines and for most of the local lines have to
be approved by the State Planning Commission (SPC) and the State Council\.
* Inflation was two digits until 1995 and from 1993 to 1994 input subsidies for
energy and electricity were phased out\.
* MOR revalued its fixed assets in 1994, which affects the amount of
depreciation in its income statement\.
5\. 1987-1992 period\. As reflected in the consolidated income statements in Table 1 MOR
had a positive net income in this period\. Income improved from 1987 to 1989 mainly
because MOR was exempted from income taxes\. In 1990, MOR benefited from an increase
in freight tariffs, across-the-board\. Since 1991, revenues from base tariffs have been
supplemented by those from a freight surcharge\. The reported operating ratios, deteriorating
gradually (see below)\. If reported costs were not understated or distorted by subsidies,
because several input factors didn't reflect market prices, they would have even be worse
(see ratios under paragraph 7 when input subsidies had been phased out)\. The working and
operating ratios for the 1987 to 1992 period were as follows:
MOR WORKING AND OPERATING FLATIOS
Percentages/Year: 1987 1988 1989 1990 1991 1992
Working Ratio:
Appraisal Forecast-SAR IV ------------------------No forecasts-----------------------
Appraisal forecast-SAR V 56 63 70 60 62 64
Actual 1/ 53 60 67 57 62 70
Operating Ratio:
Appraisal Forecast-SAR IV 62 64 66 68 No forecasts
Appraisal forecast-SAR V 70 76 83 71 73 75
Actual 1/ 66 72 79 68 73 81
1/ Excluding freight surcharge revenues because at Appraisal of the Fourth and Fifth Railway Projects, it was not known that such
surcharge would be introduced in 1991\.
6\. 1993-2002 period\. As reflected in the consolidated income statements in Table 2,
MOR has been operating at a loss since 1993\. In general, these negative results are
attributable to a decline in market share vis-a-vis the other transport modes, an inadequate
operating ratio (operating expenses relative to operating revenues), and a rising level of debt
obligations\.
a) Market Share\. In 1990, in terms of ton-km, the railways accounted for 40\.5
percent of total ton-km transported by all modes; in 1997 the railway share
- 74 -
had fallen to 34\.3 percent\. In terms of passenger-kn, the railways accounted
for half of the traffic in 1989, while their share fell to 35\.4 percent in 1997\.
Aside from the declining market share, there appears to be some change in the
nature of the non-railway competition for freight and passenger traffic\. This
change suggest that the railways may also be losing its comparative advantage
to transport long-distance bulk commodities, and passengers over medium and
long distances\.
b) Operational Results\. These results are obtained by comparing operating
expenses with operating revenues\. In summary, increases in operating
revenues between 1993 and 1997, Yuan 41 billion, have outpaced increases in
operating expenses, Yuan 33\.6 billion, during the same period\. However, the
Yuan 7\.4 billion difference has not been sufficient to cover the Yuan 8\.1
billion increase in interest expenses between 1993 and 1997\. This increase in
interest expenses is attributable to high interest rates (double digits) and to
increasing debt obligations\.
c) Long-term debts, which comprise domestic loans from the State Development
Bank and the Capital Construction Bank, and foreign loans from OECF, ADB,
the Bank and others, increased by Yuan 95\.8 billion between 1993 and 1997\.
Of this increase, Yuan 79\.2 billion or about 83 percent of the increase, are
attributable to increases in domestic loans\. The increase in debts results in
MOR reporting losses on transport operations\.
7\. The deteriorating trend in MOR's net results is also reflected in the forecast and actual
working and operating ratios\.
With respect to freight traffic in the 1980s the railways appear to have lost considerable merchandise traffic to
the highways; in the 1990s there appears to be a shift in the transport of bulk commodities from the railways
to the waterways\. To illustrate, between 1980 and 1988, the railway share experienced a drop from 47\.5
percent to 41\.5 percent; during this period the market share by trucks increased from 6\.4 percent to 13\.5
percent\. In the more recent 1990-1996 timeframe, the truck share has increased by only 0\.9 percentage
points - from 12\.8 percent in 1990 to 13\.7 percent in 1996\. By contrast, the proportion of freight traffic
handled by China's water carriers (including the ocean portion of domestic movements) has grown by
almost 5 percentage points - from 44\.2 percent in 1990 to 49\.1 percent in 1996\.
Likewise, with respect to passenger traffic, most of the traffic lost by the railways initially was
accommodated by the highway modes (between 1980 and 1988, the 8\.1 percentage point decline in the
railway share of passenger-km was matched by a 8\.7 percentage point gain in the highway share)\. More
recently, the loss in the rail passenger market share is attributable to the aviation sector as well as the
highway modes\. Thus, since 1990, the road share grew by 7\.1 percentage points; the aviation mode was up
by 4\.1 percentage points, while the railways' share declined by 10\.0 percentage points\.
- 75 -
MOR WORKING AND OPERATING RATIOS
Percentages/Year: 1993 1994 1995
Working Ratio:
Appraisal Forecast-SAR IV ---------Not Applicable--------
Appraisal forecast -SAR V 65 65 65
Actual 1/ 75 86 89
Operating Ratio:
Appraisal Forecast-SAR IV --------Not Applicable-------
Appraisal forecast -SAR V 76 76 76
Actual 1/ 85 97 101
I! Excluding freight surcharge revenues because at Appraisal of The Fourth/Fifth Railway Poject, it was not known that such surcharge
would be introduced in 1991\.
8\. Acknowledging these trends, MOR has announced an unprecedented near-term
program designed to dramatically improve bottom line earnings\. Specifically, as the forecast
income statement in Table 2 also shows, losses are projected to decline sharply in 1999 and
breakeven status is anticipated by the year 2000\. To achieve these ambitious targets, the
following measures will be undertaken:
a) Recapturing Passenger Traffic\. Having experienced both absolute and relative
declines in inter-city passenger business, the railways are instituting wholesale
improvements in train services and pricing\. Under a new operating plan, 286
train-pairs will be discontinued, while other services will be re-configured to
enable the operation of more express and high-speed trains\. A greater number
of overnight and air-conditioned trains also will be introduced\. In addition, on
April 1, 1998 the State Development Planning Commission approved a MOR
proposal whereby the railways would be allowed to adjust passenger tariffs
within a zone of pricing flexibility for trains operating on lines parallel to
highways\. This proposal is currently before the State Council\.
b) Reducing costs by: (i) implementing the policy (starting in 1998) that
operating expenses can only be incurred if operating revenues are generated;
(ii) reducing transport staff by 300,000 from 199B to 2000; (iii) reducing staff
in the Ministry of Railways from 800 to 400 in 1998; (iv) linking employee
salaries to financial results (instead of physical output results) for freight
transport and to number/value of tickets sold for passenger transport; (v)
enhancing the performance efficiency of locomotives and rolling stock; (vi)
introducing competitive bidding for the procurement of fuel, materials, and
some equipment needed by the 14 Railway Administrations and (vii)
- 76 -
implementation of the Asset-Liability Management System from January 1,
1999 onwards\.'
2 By implementing the "Asset-Liability Management System" MOR is taking the first step in restructuring
railway transport operations\. The 14 Railway Administrations will become railway enterprises\. The
purposes of this restructuring are to separate Government functions from enterprise functions, resolve the
issue of the ownership of assets, maintain/increase value of railway assets, and reach the target of revenues
and expenses breaking even by the year 2000\.
The salient features of the Asset-Liability Management system are that railway lines, once construction is
completed, and locomotives and passenger coaches allocated by MOR to the Administrations from 1992
onwards, will become the fixed assets of the Administrations on January 1, 1999\. MOR will assume the
debt servicing for the lines; debts related to the rolling stock will be serviced by the Administrations\. Inter-
administration traffic will be dispatched by MOR; intra-administration traffic will be dispatched by MOR or
the Administrations pending on the available capacity at the borders between Administrations\. MOR will
no longer monitor Administrations revenues/expenses on a monthly basis\. Instead the management of the
Administrations will have to deposit a sum of money with MOR at the beginning of a fiscal year\. At the end
of the fiscal year, the performance of the administrations will be evaluated based on three indicators: rate of
return on assets, rate of return on equity and financial gains/losses\. The level of return rates and gains/losses
will determine whether the Administrations get the original deposit returned with a bonus or at the original
amount or whether MOR keeps the original deposit\.
- 77 -
Table I
Actual and Forecast Consolidated Income Statements
For the year ended December 31
(in Yuan millions)
Actual Actual Actual Actual Actual Actual
1987 1988 1989 1990 1991 1992
(per audit) (per audit) (per auditi (per audit) (per audit) (per audit)
VOLUME
Freight (Ton-km bil\.) 946 986 1\.037 1,048 1,081 1,141
Passenger (Pass-km bil\.) 284 326 303 260 281 313
Total (C\.Ton-km bil\.) 1,230 1,312 1,340 1,308 1,362 1,454
REVENUES
FREIGHT 19,186 19,925 22\.007 27,213 31,139 39,229
From rates 19,186 19,925 22,007 27,213 29,143 30,625
From surcharge 1/ 1,996 8,604
PASSENGERS 5,563 6,381 7,665 11,090 12\.180 13,814
OTHER 1\.463 1,756 1,935 2,802 3,385 3,428
TOTAL OPERATING REVENUES 26,212 28,062 31,607 41,105 46,704 56,471
OPERATING EXPENSES:
Payroll 2,897 3,444 3\.905 4,277 5,566 7,400
Materials 1,820 2,598 2\.870 3,258 3,772 4,825
Energy 2,644 3,075 3,383 3,846 4,351 5,393
Electricity 389 530 740 897 1,023 1,290
Major Repairs 2/ 3,314 3,414 5,874 6,527 7,277 8,085
Depreciation 2/ 3,314 3,414 3,924 4,356 4,864 5\.402
Other 3/ 2,912 3,797 4,286 \. 4,646 5,656 7,231
TOTAL OPERATING EXPENSES 17,290 20,272 24,982 27,807 32,509 39,626
OPERATING INCOME 8,922 7\.790 6,625 13,298 14,195 16,845
Non-Operating Income from
Subsidiaries & Factories 4/ 992 865 47) 200 49 237
NON-OPERATING EXPENSES
Interest and repayments 5/ 992 754 1,871 1,940 2,115 3,011
INCOME BEFORE TAXES 8,922 7,901 5,233 11,558 12,129 14,071
Business tax on book tariffs and book fares 1,382 1,487 1,675 2,188 2,392 1,597
revenues 6/
Business tax on surcharge revenues 107 1,096
Transfers to Gov't 0 0 2,000 2,000 2,000
NET INCOME 7\.540 6,414 3,558 7,370 7,630 9,378
of which allocated to:
Capital Construction Fund 6,121 4,952 2,258 5,870 4,111 0
Special Fund for Health & Welfare 1,419 1,462 1,300 1,500 1,630 1,870
Railway Construction Fund 0 0 0 0 1,889 7,508
Working Ratio:
Excluding Surcharge Revenues 8/ 53% 60% 679o 57% 62% 70%
Including Surcharge Revenues 8/ 59% 62%
Operating Ratio:
Excluding Surcharge Revenues 8/ 66% 72% 79% 68% 73% 81%
Including Surcharge Revenues 8/ 70% 72%
PRO-MEMOIRE
Allocation to Railway Construction Fund
Surcharge Revenues before Taxes 1,996 8,604
Minus Surcharge Business Taxes (107) (1,096)
Net Transfer 1,889 7,508
I/ Introduced on March IS, 1991 at 0\.2 fen per ton-km\. On July 1, 1992, the surcharge was Increased to 1\.2 fin per
ton-km\. The Railway Construction Fund replaced the Capital Construction Fund\.
2/ Depreciation is pre-determined at 4% of historical costs of fixed assets, for 1987-1991 provisions for major repairs
were 6% of historical costs of fixed assets; In 1992 the provision for major repairs was 10% of the historical costs of
fixed assets\.
3/ Includes funds collected by Railway Administrations to build staff houses\.
4/ Net contributions, i\.e\. after deducting expenses including depreciation\.
5/ Under the accounting rules prior to July 1, 1993, plterest and principal repayments were shown in the Income
statement\.
615\.35% on gross operating revenues\.
7/ Net of business taxes on freight surcharge revenues\.
- 78 -
Table 2
CHINA
FOURTH AND FIFTH RAILWAY PROJECTS
Actual and Forecast Consolidated Income Statements
For the year ended December 31
(in Yuan millions)
Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
(per audit) (per audit) (per audit) (per audit) (per audit) MOR sub MOR sub MOR sub MOR sub\. MOR sub\.
VOQUM 10/27198 10/27/98 10/27/98 10/27/98 10/27/98
Freight (Ton-kmb l 1\.192 1,226 1,262 1,292 1\.305 1,073 1\.136 1\.203 1\.273 1\.348
Passenger (Pass-km bil 348 361 352 319 355 379 409 441 476 514
Total (C Too-km bil ) 1\.540 1,587 1,614 1\.611 1\.660 !,452 1\.545 1\.644 1,749 1\.862
REVENUES
FREIGHT 58,402 68\.535 70,369 75\.422 81,196 84\.900 92\.100 98,600 105,600 113\.100
From rates 34\.055 34,600 35\.607 40\.103 46,081 49\.500 54\.600 58\.900 63\.600 68\.600
From surcharge 24\.347 33,935 34,762 35,319 35,115 35,400 37\.500 39\.700 42,000 44\.500
PASSENGERS 15\.882 17,328 20\.160 23\.716 26\.093 29\.300 31\.600 34,100 36\.800 39\.700
OTHER 6\.010 7\.745 8\.838 12,866 13,994 12,800 13\.800 14,900 16\.000 17,200
TOTAL OPERATING REVENUES 80\.294 93\.608 99,367 112\.004 121\.283 127\.000 137,500 147,600 158,400 170,000
EXPENSES
OPERATING EXPENSES
Payroll 9,500 11,578 13,956 16\.141 18\.484 19,480 21\.280 23\.180 25\.280 27,280
Matenals 6,777 7,011 8\.553 8,048 9\.039 9,143 9\.433 10\.783 11,616 12\.858
Energy 8\.513 9,764 10\.108 10,598 12\.132 12,559 13\.631 14\.481 15,239 16,035
Electrcity 2\.285 3\.003 3,218 4,038 4\.833 5\.258 5,880 6\.497 7,348 8\.423
Major Repairs 8,915 11,581 11,689 13,067 15\.398 16,475 17,429 18\.462 19\.533 20\.396
Depreciation 5,943 6\.580 7\.373 9\.684 11\.316 12\.210 13\.050 13,860 14,953 16\.089
Other 1/ 5\.708 7\.569 9\.159 8,877 10,024 10\.825 11,358 12,003 13,051 13,933
TOTAL OPERATING EXPENSES 47\.641 57\.086 64\.056 70,453 81,226 85\.950 92,061 99\.266 107,020 115\.014
OPERATING INCOME 32\.653 36,522 35,311 41\.551 40,057 41,050 45,439 48\.334 51,380 54\.986
Non-Operating Income from
Subsidiaries & Factories 21 399 (28) (858) (1\.036) (453) -500 -500 -500 (500) (500)
NON-OPERATING EXPENSES
Interest3/ 3\.092 4\.627 7,836 10\.819 11\.252 13\.400 14,100 14\.900 15,900 15\.300
Non-operating expenses 41 4,445 3\.536 4,011 4\.090 4\.310 4,610 4,623 4,638 4,753 4,848
INCOME BEFORE TAXES 25,515 28,331 22\.606 25\.606 24,042 22,540 26\.216 28,296 30,227 34,338
Business tax on book tariffs and book fare (2,994) (1\.934) (2\.094) (2,485) (1\.807) (1,906) (2\.115) (2\.305) (2\.511) (2,731)
revenues 5/
Business tax on surcharge revenues 6/ (136) (1,099) (1,126) (1,144) (2,151) (2\.209) (2,340) (2,477) (2\.621) (2\.777)
Transfer to Water Resource Fund (985) (1\.062) (1,125) (1,191) (1\.260) (1,335)
Income tax
TransferstoGovt (2\.000) 0 0 0 0 0 C 0
NET INCOME 20,395 25\.298 19,386 21\.977 19\.099 17,363 20\.636 22\.323 23,835 27\.495
of which allocated to
Retained Profits (734) (2,911) (6,414) (1\.379) (2,613) (2\.428) (424) 0 356 1,072
Railway Construction Fund 71 21\.119 28,209 25\.800 23,356 21\.712 19,791 21,060 22,323 23,479 26,423
Working Ratio
Excluding Surcharge Revenues B/ 75% 86% 89% 60% 83% 82% 81% 81% 81% 81%
Including Surcharge Revenues 8/ 52% 55% 58% 55% 59% 59% 58% 59% 59% 59%
Operating Ratio
Excluding Surcharge Revenues 8 85% 97% 101% 93% 97% 96% 94% 94% 94% 94%
Including Surcharge Revenues 8/ 59% 62% 65% 64% 68% 69% 68% 68% 69% 69%
PRO-MEMOIRE
Allocation to Railway Construction Fund
Surcharge Revenues before Taxes 24,347 33\.935 34,762 35\.319 35,115 35,400 37,500 39\.700 42,000 44,500
Minus Surcharge Business Taxes (136) (1,099) (1,126) (1,144) (2\.151) (2\.209) (2\.340) (2\.477) (2\.621) (2,777)
Minus Interest (3\.092) (4,627) (7\.836) (10,819) (11\.252) (13,400) (14\.100) (14,900) (15,900) (15\.300)
Net Transfer 21,119 28,209 25,800 23,356 21,712 19,791 21,060 22,323 23,479 26\.423
1/ Includes pensions for retired employees\. welfare benefits (housing, health, educaton, cost of living
adjustments), and general administrafive expenses
2/ Expenses, including depreciation, charged to subsidiaries and factories exceed their revenues
3/Pror to 1995, MOR had to pay interest on loans from September 21 in year x to September 20 in year x+1\.
From 1995 onwards\. MOR had to pay interest on loans from September 21 in year x to December 31
in year x+1 (i\.e 5 quarters of interest)\. In 1996, MOR had to pay interest from Jan 1 to Dec 31 (check with MOR)\.
4/ Includes expenses for schools, police, natural disasters, etc
5/ In 1994, the business tax percentage on book tariffs/fares revenues decreased from 5 35% to 3\.24%\.
& The tax percentage on freight surcharge revenues is 3\.24%\.
7/ Net transfer to railway construction fund (equals surcharge revenues before taxes minus surcharge business taxes minus interest)
8 Net of business taxes on surcharge revenues
Source: MOR Staff\. October 1998\.
- 79 -
ANNEX 2: ECONOMIC REEVALUATION OF THE
FOURTH AND FIFTH RAILWAY PIROJECTS
Introduction
1\. This annex presents economic reevaluations of the major components comprising the
Fourth and Fifth China Railway projects\.' These include the Yueshan-Xiangfan line of the
Fourth Railway Project and the Zuzhou-Hangzhou line, the Xuzhou terminal, and the track
rel iitz m and the wheels for freight wagons system-wide components of the Fifth
Railway Project\. For the most part, the benefits produced by these components center on the
ability of the railways to accommodate additional traffic as a consequence of capacity
expansion (either by means of the double-tracking of a line, the enlargement of a
marshalling yard, or the provision of supplemental freight wagons)\. Accordingly, in addition
to the direct costs of the project, the economic evaluation of these components necessarily
must comprehend the complementary capital investments associated with this incremental
traffic\. It is against these direct and indirect cost streams that the value-added benefits of the
additional traffic should be properly measured\. For the respective components, each of these
subjects is considered in turn\.
YUESHAN LINE (FOURTH RAILWAY PROJECT)
Direct Project Costs
2\. On a financial basis, the total direct outlays of the Yueshan double-tracking and
partial electrification project amounted to Yuan 4\.8 billion (see Table A below)\. Local costs
by year were furnished by MOR, while the annual US dollar amount of foreign costs were
converted into Yuan at the appropriate annual exchange rate\. Direct project economic costs
were derived from the financial costs by shadow pricing the labor component of local costs\.
Based on the data supplied by MOR, about a fifth of local labor costs were classified as labor
outlays\. This amount (Yuan 807 million) was shadow priced at a rate of 1\.6 reflecting the
factor employed in Railways VII\.' Nonlabor local costs were not shadow priced\. These
figures were then transformed into constant 1997 Yuan using the annual overall Gross
Domestic Product deflator for local costs and the annual Imports of Goods and Non
Nonfactor Services deflator for foreign costs, respectively\. On this basis, the economic direct
costs of the project in constant 1997 values are equal to Yuan 7\.7 billion\.
Two of the components - completion of the double-tracking of the Zhuzhou-Hangzhou (Zhegan) line, and
expansion of the Xuzhou terminal - initially had been part of the Fourth Railway Project but subsequently
were withdrawn because of their impact on the overall size of the proposed loan\. See, SAR Fifth Railway
Project, para 3\.4 and SAR Fourth Railway Project, para 3\.1\.
2 See SAR, Eighth Railway Project, Report No\. 13795-CHA, Working Paper No\. 24, p\. 2\.
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Table A: ICR Financial and Economic Direct project Costs
(Yuan million)
Local Foreign Total
Financial 3,967\.1 811\.7 4,778\.8
(current)
Economic 5,939\.6 1,725\.7 7,665\.3
(constant, 1997)
3\. By restating the economic costs of the SAR in 1997 Yuan, it is possible to compare
the direct project costs of the ICR and the SAR\. The results are shown in Table B\. The
annual economic costs presented in the SAR were apportioned into local and foreign
categories on the basis of the designations presented therein\.3 Employing the same domestic
and import deflators referenced above, these outlays were converted into constant 1997
Yuan\. As can be seen in Table B, the ICR direct project cost figure of Yuan 7\.7 billion is 74
percent higher than the comparable 1997 Yuan 4\.4 billion derived from the SAR\.
Table B: Economic Direct Project Costs
(Yuan million, 1997 prices)
ICR SAR ICR/SAR
1988 n\.a\. 1,719\.2 n\.a\.
1997 7,665\.3 4,395\.9 1\.74
Source: SAR, Table 4\.1 and Table A\.
Complementary Capital Costs
4\. Several types of complementary capital outlays should be included in the overall cost
stream of the project\. These include the investment costs associated with providing new
production capacity for the incremental coal and non-coal traffic to be carried on the line as
well as for the additional locomotives and freight wagons needed to handle the new traffic\.
New Production Capacity Investment Costs\. In the Fourth Railway Project
SAR, the 1988 economic cost of developing new production capacity for both
coal and non-coal commodities was estimated at Yuan 160 per ton\.4 This
figure is substantially lower than the Yuan 210 per ton value provided in the
SAR for The Fifth Railway Project\.5 In both analyses, the figure used for the
3 SAR Fourth Railway Project, p\. 39, para 1\.
4 SAR Fourth Railway Project, p\. 41, para 2(c)\.
s SAR Fifth Railway Project, p\. 62, para 6\.
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new coal investment is the same as for the new non-coal investment\. 6 For the
calculations in the ICR, the higher figure of The Fifth Railway Project
expressed in 1997 prices (Yuan 403 per ton) is employed for the new coal
investment\. In addition, to reflect its greater value, the non-coal investment
amount in the ICR has been doubled (Yuan 806 per ton)\.
* The additional line capacity for freight traffic made possible by the Yueshan
project is equal to about 50 million tons per year\.7 MOR's traffic data for the
line (see Table 1) indicate that about half of the incremental freight traffic will
be comprised of coal\. Under these conditions, the ICR analysis assumes that a
similar share of the additional new production capacity will be coal-related\.
Accordingly, the complementary costs of new coal investments embrace 25
million tons of capacity at Yuan 403 per ton, while the comparable figure for
25 million tons of non-coal capacity is Yuan 806 per ton\. The resulting
amounts have been spread equally over the five-year period, 1988-1992\.
* Additional Railway Capital\. MOR provided an annual schedule of
locomotive and rolling stock acquisitions related to the incremental traffic
made possible by the project\. For the period 1987-2005, these include 34
electric locomotives, 148 diesel locomotives, 5,335 freight wagons, and 208
passenger coaches\. Based on the economic unit prices utilized in the
Restructured Seventh Railway Project,8 the total amount of additional
investment required for railway equipment for each year were derived\.
Project Benefits
5\. The benefits from the project stem from the value added to the economy from the
new goods production (and incremental passenger movement) made possible by the
additional transport capacity of the railway route\.9 These benefits were separately calculated
for coal and non-coal traffic\.
6\. Consistent with the SAR, the international price of coal at Shanghai was the
benchmark\. From the Bank's Commodity Price Data Base, the average 1997 price for U\.S\.
and Australian export coal was $35\.75 per metric ton or Yuan 296 per metric ton\. As for the
delivered price of domestic coal, the starting point is the cost of production\. According to the
SAR, the minemouth economic cost of production as of 1988 was Yuan 10 per ton\.
SAR Fifth Railway Project, p\. 62, para 7 and electronic data in the Fourth Railway Project file\.
SAR Fourth Railway Project, p\. 11, paras 3\.6 and 3\.7\.
These 1997 unit prices are: electric locomotives (Yuan 11\.158 million); diesel locomotives (Yuan 8\.778
million), freight wagons (Yuan 0\.344 million), and passenger coaches (Yuan 1\.232 million)\. See, China:
Seventh Railway Project (Loan No\. 3897-CHA) Document No\. R99-2 (January 13, 1999) p\. 27, Table 4\.4\.
Modest operating cost savings result from the substitution of electric for diesel traction, but since this only
applies to the 122 km between Yueshan and Luoyang, no such calculation was made for the SAR\.
- 82 -
Allowing for Yuan 47 per ton in transport and loading expenses from mine to Shanghai,'o the
overall costs of domestic coal are equal to Y57 per ton\. Expressed as a 1997 value, this total
cost amounts to Yuan 125 per ton\. Thus, the value added benefit is Yuan 171 per ton -- the
difference between the border price of Yuan 296 per ton and the Yuarn 125 per ton cost of
domestic coal transported via the project route\.
7\. For non-coal traffic, the SAR assumed that the value added per ton was twice that of
coal\.' Consistent with this approach, the calculations in the ICR place the value added of
non-coal traffic at 1997 Yuan 342 per ton (i\.e\., double the Yuan 171 amount determined for
coal\.)
8\. Similarly, the benefits for passenger traffic replicate the methodology employed in
the SAR whereby it is assumed that the economic value of a passenger trip is at least equal to
the economic value of the freight traffic displaced\. Essentially, this figure is commensurate
with the per ton amount for non-coal traffic just discussed\. Consequently, in the ICR, the
value added accorded each incremental passenger trip amounts to Yuan 342\.
Economic Rate of Return and Sensitivity Analysis
9\. For the economic reevaluation, net benefits are calculated for the 29-year period
1987-2015 to derive estimates of NPV and EIRR (a discount rate of 12 percent was used)\.
As reported in Table 2, the estimated NPV is Yuan 22\.9 billion in 1997 prices and the EIRR
is 19\.8 percent\.
10\. Adjustments were made in three of the base case assumptions in order to test the
sensitivity of these results\. Two of these related to the valuation of benefits, while the third
concerned the calcula*ion of the major complementary cost component (see the
accompanying Table C\.
* Freight Traffic Growth\. The base case adopts the projections provided by
MOR\. When these volumes are adjusted downward by a third (for both coal
and non-coal tonnage) in each year of the forecast, the NPV fell to Yuan 10\.5
billion in 1997 prices and the EIRR declined to 15\.9 percent\.
* Coal Border Price\. As an input to the value-added calculation, the base case
adopts the 1997 average border price of coal (Yuan 296 per ton)\. To test the
sensitivity of this assumption, the coal border price was reduced by 15 percent
(in 1998, the annual decline was equal to 12\.3 percent)\. Under these
conditions, the NPV amounts to 1997 Yuan 10\.6 billion and the EIRR is
equivalent to 16\.0 percent\.
0 This figure includes the following per ton amounts: loading to rail, Yuan 3; rail to river transport, Yuan 15;
river transport, Yuan 24; and transshipment at Shanghai, Y5\. See SAR Fourth Railway Project, p\. 41, para
3\.
" SAR Fourth Railway Project, p\. 42, para 5\.
- 83 -
Development Costs\. The sensitivity of the complementary costs of coal and
non-coal development was tested by increasing these values by 25 percent\.
This adjustment yielded a NPV of 1997 Yuan 18\.1 billion and EIRR of 17\.4
percent\.
All of these adjustments result in acceptable NPV and EIRR outcomes\.
Table C: Sensitivity Analysis
NPV EIRR
(1997 Y %
million)
Base Case 22,913 19\.8
Reduce freight traffic volume by 1/3 10,475 15\.9
Reduce coal border price by 15 percent 10,619 16\.0
Increase development costs by 25 18,052 17\.4
percent
ZHEGAN LINE (FIFTH RAILWAY PROJECT)
Direct Project Costs
11\. Table D presents the financial and economic direct project costs for the Zhegan line
component of the Fifth Railway Project\. The sources and methodology supporting these
calculations are identical to those employed for the analysis of the Yueshan line described
earlier\. Compared to a current financial cost of Yuan 8\.7 billion, the component after
shadow pricing of the labor costs (about 16 percent of overall local expenses) and conversion
to constant 1997 values is equal to Yuan 12,023\.1
Table D: ICR Financial and Economic Direct Project Costs
(Yuan million)
Local Foreign Total
Financial 7,691\.0 1,018\.6 8,709\.6
(current)
Economic 10,593\.2 1,429\.9 12,023\.1
(constant, 1997)
12\. MOR estimates that since 1991 outlays of Yuan 664 million have been devoted to
resettlement\. Expressed in constant values, this is equivalent to 1997 Yuan 905\.2 million\.
- 84 -
The SAR estimate for resettlement in the period 1991-1996 was equal to Yuan 223 million
or, in 1997 terms, Yuan 347 million\.'2 Thus, viewed on equivalent terms, actual resettlement
expenses were 2\.6 times what had been estimated in the SAR\.
13\. When translated into constant 1997 Yuan, the direct project costs estimated in the
SAR amount to almost Yuan 8\.4 billion\. This is approximately 43 percent higher than the
comparable ICR calculated figure (see Table E)\.
Table E: Economic Direct Project Costs
(Yuan million, 1997 prices)
ICR SAR ICR/SAR
1990 n\.a\. 4,266\.1 n\.a\.
1997 12,023\.1 8,384\.5 1\.434
Source: SAR, Table 4\.5 and Table D\.
Complementary Costs
14\. As was the case for the Yueshan line discussed earlier, complementary costs
involving both new production capacity as well as incremental railway equipment need to be
included in the analysis\. With minor exceptions, the procedure for quantifying these costs
follows that employed in the Yueshan reevaluation\.
* New Production Capacity Investment Costs\. Stated in 1997 prices, the cost
per ton for new coal mine investment is Yuan 403, while the comparable
number for non-coal investment is Yuan 806\. These are the same values as
were used in the updated Yueshan line assessment above\."
* The additional line capacity for freight traffic made possible by the Zhegan
project is equal to about 40 million tons per year\.14 MOR's traffic data for the
line (see Table 3) indicate that about a fifth of the incremental freight traffic
will be comprised of coal with the remaining 80 percent associated with other
commodities\. Under these conditions, the ICR analysis assumes that similar
shares of the additional new production capacity will be oriented to coal and
non-coal products respectively\. Accordingly, the complementary costs of new
coal investments embrace 8 million tons of capacity at Yuan 403 per ton,
while the equivalent figure for 32 million tons of non-coal capacity is Yuan
12 SAR Fifth Railway Project, p\. 30\.
13 In contrast to the analysis in The Fourth Railway Project, the Fifth Railway Project evaluation assumed that
the unit investment costs for coal and non-coal commodities would be the same\. See SAR Fifth Railway
Project, p\. 62, para 7\.
14 SAR Fifth Railway Project, p\. 34, para 4\.11\.
- 85 -
806 per ton\. The resulting amounts have been spread equally over the five-
year period, 1986-1990\.
* Additional Railway Capital\. MOR provided an annual schedule of
locomotive and rolling stock acquisitions related to the incremental traffic
made possible by the project\. For the period 1991-2005, these include 713
diesel locomotives, 19,500 freight wagons, and 1,545 passenger coaches\. The
1997 economic unit prices for these equipment categories used in the Yueshan
reevaluation also were adopted here\.
Project Benefits
15\. As with the Yueshan line, the benefits from the Zhegan line project stem from the
value added to the economy from the new goods production (and incremental passenger
movement) made possible by the additional transport capacity of the railway route\. In
accordance with the previously outlined methodology, these benefits were separately
calculated for coal and non-coal traffic\.
16\. Due to somewhat shorter transport hauls and less in the way of transloading
operations, the delivered cost of domestic coal via the Zhegan line is equal to 1997 Yuan 101
per ton -- Yuan 24 per ton lower than for the Yueshan line\. With the international border
price at 1997 Yuan 296 per ton (see discussion of the Yueshan line), the value added benefit
is equivalent to Yuan 195 per ton (Yuan 296 less Yuan 101)\.
17\. For non-coal traffic, the SAR assumed that the value added per ton was the same as
that of coal\.15 This is inconsistent with the approach adopted in The Fourth Railway Project
where the value-added of non-coal traffic was deemed to be higher than that of coal\.'6
Consistent with the methodology used in The Fourth Railway Project and in the reevaluation
of the Yueshan line above, the value added of additional non-coal traffic for the Zhegan line
is assumed to be 1997 Yuan 390 per ton (i\.e\., double the Yuan 195 amount determined for
coal\.) Likewise, the benefits for incremental passenger traffic are assumed to be
commensurate with that of non-coal traffic (1997 Yuan 390 per trip)\.
Economic Rate of Return and Sensitivity Analysis
18\. For the economic reevaluation, net benefits are calculated for the 30-year period
1986-2015 to derive estimates of NPV and EIRR (a discount rate of 12 percent was used)\.
As reported in Table 4, the estimated NPV is Yuan 97\.7 billion in 1997 prices and the EIRR
is 35\.0 percent\.
1s SAR Fifth Railway Project, p\. 63, para 11\.
16 SAR Fourth Railway Project, p\. 42, para 5\. This inconsistency is further complicated by the fact that the
1990 international border price for coal in The Fifth Railway Project ($18\.36 per ton) is significantly higher
than that of the 1988 price in The Fourth Railway Project ($9\.19 per ton)\. SAR Fourth Railway Project, p\.
41, para 3 and SAR Fifth Railway Project, p\. 63, para 9\.
- 86 -
19\. Adjustments were made in four of the base case assumptions in order to test the
sensitivity of these results\. Three of these relate to the valuation of benefits, while the third
concerns the calculation of the major complementary cost component (see the accompanying
Table F)\.
* Freight Traffic Growth\. The base case adopts the projections provided by
MOR\. When these volumes are adjusted downward by a third (for both coal
and non-coal tonnage) in each year of the forecast, the NPV fell to Yuan 65\.6
billion in 1997 prices and the EIRR declined to 29\.3 percent\.
* Coal Border Price\. As an input to the value-added calculation, the base case
adopts the 1997 average border price of coal (Yuan 296 per ton)\. To test the
sensitivity of this assumption, the coal border price was reduced by 15 percent
(in 1998, the annual decline was equal to 12\.3 percent)\. Under these
conditions, the NPV amounts to 1997 Yuan 69\.2 billion and the EIRR is
equivalent to 30\.1 percent\.
* Traffic Mix\. Based on MOR data, 80 percent of the freight traffic on the
Zhegan line is comprised of non-coal commodities that bear a higher value-
added than does the coal traffic\. This sensitivity test altered the proportions
such that coal and non-coal volume each accounted for 50 percent\. With this
adjustment, the NPV declined to 1997 Yuan 96\.6 billion and the EIRR
dropped to 34\.5 percent\.
* Development Costs\. The sensitivity of the complementary costs of coal and
non-coal development was tested by increasing these values by 25 percent\.
This adjustment yielded a NPV of 1997 Yuan 92\.4 billion and EIRR of 31\.2
percent\.
On the basis of these adjustments, the NPV and EIRR outcomes remain satisfactory\.
Table F: SENSITIVITY ANALYSIS
NPV EIRR
(1997 Y %
million)
Base Case 97,706 35\.0
Reduce freight traffic volume by 1/3 65,587 29\.3
Reduce coal border price by 15 percent 69,223 30\.1
Shift freight traffic mix to 50% coal; 50% non- 96,591 34\.5
coal
Increase development costs by 25 percent 92,415 31\.2
- 87 -
XUZHOU TERMINAL (FIFTH RAILWAY PROJECT)
Direct Project Costs
20\. The financial and economic direct project costs for the Xuzhou terminal expansion
and modernization component of the Fifth Railway Project are displayed in Table G\. The
sources and methodology supporting these calculations are identical to those employed for
the analyses of the prior components\. Compared to a current financial cost of Yuan 778
million, and after shadow pricing of the labor costs incurred since 1992 and conversion to
constant 1997 values, this component is equal to Yuan 1,361 million\.
Table G: ICR Financial and Economic Direct Project Costs
(Yuan million)
Local Foreign Total
Financial 621\.9 156\.5 778\.4
(current)
Economic 1,173\.1 188\.0 1,361\.1
(constant, 1997)
21\. When translated into constant 1997 Yuan, the direct project costs estimated in the
SAR amount to almost Yuan 1,610 million\. This is approximately 15 percent lower than the
comparable ICR calculated figure (see Table H)\.7
Table H: Economic Direct Project Costs
(Yuan million, 1997 prices)
ICR SAR ICR/SAR
1990 n\.a\. 816\.0 n\.a\.
1997 1,361\.1 1,610\.0 0\.845
Source: SAR, Table 4\.6(a) and Table G\.
17 The expansion of the Xuzhou terminal involved a multistage program that commenced in 1986\. About 70
percent of the outlays were expended before 1991 prior to Bank funding\. SAR Fifth Railway Project, p\. 23,
para 3\.16 and Table 3\.17, p\. 114\. In the absence of adequate pre-1991 data, the aggregate values provided
in the SAR for these years could not be updated\. In the economic reevaluation, therefore, the direct project
costs for the pre-1991 as reported in the SAR have been adopted with the only adjustment being for
inflation\. Under these conditions, comparisons of direct project costs in the SAR with those in the ICR must
be qualified\.
-88-
Complementary Costs
22\. Complementary costs involving both new production capacity as well as incremental
railway equipment need to be included in the analysis\. With the minor exceptions noted
below, the procedures for quantifying these expenditures follow that employed in the
reevaluation of the prior components\.
* New Production Capacity Investment Costs\. Stated in 1997 prices, the cost
per ton for new coal mine investment is Yuan 403, while the comparable
number for non-coal investment is Yuan 806\. These are the same values as
were used in the updated Yueshan and Zhegan lines assessments above\. IS
* The additional capacity for freight traffic made possible by the Xuzhou
project is equal to about 65 million tons per year\." MOR's traffic data for the
line (see Table 5) indicate that about two-fifths of the incremental freight
traffic will be comprised of coal with the remaining 60 percent associated with
other commodities\. Under these conditions, the ICR analysis assumes that
similar shares of the additional new production capacity will be oriented to
coal and non-coal products respectively\. Accordingly, the complementary
costs of new coal investments embrace 26 million tons of capacity at Yuan
403 per ton, while the equivalent figure for 39 million tons of non-coal
capacity is Yuan 806 per ton\. The resulting amounts have been spread equally
over the five-year period, 1992-1996\.
* Additional Railway Capital\. The incremental traffic made possible by the
project, will require periodic acquisitions of both new locomotives and
additional rolling stock\.20 The 1997 economic unit prices for these equipment
categories are the same as those provided in the assessments of the prior
components\.
Project Benefits
23\. The enhanced capacity of the Xuzhou terminal expansion produces value added
benefits in terms of both coal and non-coal traffic\. Each of these benefit categories has been
quantified in accordance with the methodology outlined in the discussion of the Zhegan line\.
Accordingly, the value-added for coal traffic is 1997 Yuan 195 per ton and for non-coal
commodities 1997 Yuan 390 per ton\. (As noted, MOR indicates that approximately 40
percent of the incremental tonnage will be accounted for by coal traffic with 60 percent
18 In contrast to the analysis in The Fourth Railway Project, the Fifth Railway Project evaluation assumed that
the unit investment costs for coal and non-coal commodities would be the same\. See SAR Fifth Railway
Project, p\. 62, para 7 and p\. 67, para 7\.
19 SAR Fifth Railway Project, p\. 35, para 4\.15\.
20 In roughly five year increments, these purchases include six diesel locomotives and 7,300 freight wagons\.
The wagon purchases are based on 1997 utilization rates of 57\.3 tons per wagon, 332 days per wagon per
year, a wagon cycle time of 4\.57 days, resulting in 72 wagonloads per year\. On this basis, about 7,300
wagons would be required to accommodate 30 million incremental tons\.
- 89 -
associated with non-coal movements\.) Consistent with the SAR, for this component,
passenger traffic was not assumed to yield quantified benefits\.
Economic Rate of Return and Sensitivity Analysis
24\. For the economic reevaluation, net benefits are calculated for the 30-year period
1986-2015 to derive estimates of NPV and EIRR (a discount rate of 12 percent was used)\.
As reported in Table 6, the estimated NPV is Yuan 31\.9 billion in 1997 prices and the EIRR
is 29\.2 percent\.
25\. Adjustments were made in three of the base case assumptions in order to test the
sensitivity of these results\. Three of these relate to the valuation of benefits, while the third
concerns the calculation of the major complementary cost component (see accompanying
Table I)\.
* Freight Traffic Growth\. The base case adopts the projections provided by
MOR\. When these volumes are adjusted downward by a third (for both coal
and non-coal tonnage) in each year of the forecast, the NPV fell to Yuan 15\.0
billion in 1997 prices and the EIRR declined to 21\.2 percent\.
* Coal Border Price\. As an input to the value-added calculation, the base case
adopts the 1997 average border price of coal (Yuan 296 per ton)\. To test the
sensitivity of this assumption, the coal border price was reduced by 15 percent
(in 1998, the annual decline was equal to 12\.3 percent)\. Under these
conditions, the NPV amounts to 1997 Yuan 29\.4 billion and the EIRR is
equivalent to 28\.1 percent\.
* Development Costs\. The sensitivity of the complementary costs of coal and
non-coal development was tested by increasing these values by 25 percent\.
This adjustment yielded a NPV of 1997 Yuan 28\.1 billion and EIRR of 25\.6
percent\.
From an economic perspective, all of these results are satisfactory\.
Table I: SENSITIVITY ANALYSIS
NPV EIRR
(1997 Y %
millions)
Base Case 31,879 29\.2
Reduce freight traffic volume by 1/3 15,030 21\.2
Reduce coal border price by 15 percent 29,396 28\.1
Increase development costs by 25 percent 28,054 25\.6
- 90 -
SYSTEMWIDE COMPONENTS (FIFTH RAILWAY PROJECT)
26\. Several permanent way and rolling stock system-wide components were included in
the economic evaluation of The Fifth Railway Project\. Of these, the most significant
concerned Track Rehabilitation Materials (heat-treated, head-hardened rails) and wheels for
freight wagons; each is considered here\.
Track Rehabilitation Materials
27\. This component involved the import of heat-treated rails and their placement in 500
km of mainline track with the most severe curvature\. Compared to their domestically
manufactured counterparts, these imported rails possess a longer useful life and cost less to
maintain\. Hence, as Table 6 summarizes, the benefits from this component are significant\.
28\. Based on MOR records, the average cost of the imported rails was equal to just under
Yuan 425,000 per km\. Inclusive of other track materials (OTM) (Yuan 47,150 per km) and
labor (Yuan 75,800 per km), the total installation cost for 500 km of rail amounts to slightly
less than Yuan 274,000\. Because of the longer life, these rails can remain in service for three
years before replacement assuming that annual maintenance is performed (Yuan 2,104 per
km or about Yuan 1,000 for 500 km)\. Taken together, these items constitute the costs of the
component\.
29\. The benefits are comprised of the savings incurred by not using domestic rails in
these critical curved sections\. Even with maintenance, these rails are unable to withstand the
effects of frequent (and often heavy weighted) train service\. Consequently, they need to be
replaced annually\. As supplied by MOR, the unit costs of the domestic rail is Yuan 481,250
per km and its annual maintenance amounts to Yuan 10,620 per km (OTM and labor costs
are identical to those shown for heat-treated rail)\.
30\. Over a thirteen-year period, three installations of the heat-treated rails would take
place\. Based on this cycle, the NPV of this component is about Yuan 1\.2 billion and the
EIRR is 106 percent\.
Wheels for Freight Wagons
31\. This component calls for the import of wheel for railway rolling stock - primarily
freight wagons - in order to compensate for shortfalls in domestic wheel production\.21 At a
relatively low cost, MOR would be able to place more new as well as out of service
equipment into service\. Again, as Table 7 reveals, the benefits of this additional freight
carrying capacity are substantial\.
32\. In conjunction with this component, MOR in 1994 and 1995 imported more than
47,000 wheels which were installed on just over 5,900 freight wagons\. Along with the direct
cost of the wheels themselves (Yuan 165 million), the economic assessment also includes the
1 SAR Fifth Railway Project, p\. 21, para 3\.11 and p\. 57, para 14\.
-91-
complementary outlays associated with the additional wagon and locomotive supply required
to handle the incremental traffic made possible by the component\.22
33\. Utilizing the value-added methodology developed for other components, the benefits
of additional wagon capacity can be calculated\.23 Assuming that each wagon would carry
about 3,900 tons per year,24 and adopting the comparatively low value-added of coal (Yuan
195 per ton), the annual benefits produced by the 5,900 incremental wagons approximates
Yuan 4\.5 million\.
34\. Postulating a five-year period of use, the NPV of this component is 1997 Yuan 12\.1
billion and the EIRR is 233 percent\. As a sensitivity test, the value added was reduced by 15
percent\. This resulted in a NPV of 1997 Yuan 11\.6 billion and an EIRR of 217 percent\.
Clearly, these returns remain satisfactory\.
22 These complementary costs are estimated at about Yuan 733 million based on a restatement (in 1997 prices)
of the values calculated in the SAR\. See SAR Fifth Railway Project, p\. 57, para 16\.
23 For this and other system-wide components, the SAR acknowledges that the value-added methodology
employed here would "provide a better estimate of the benefits" producing rates of return exceeding 100
percent\. Nonetheless, claiming that "it is difficult to identify the commodities carried" and "to evaluate the
commodities' value added," the SAR does not adopt this approach here\. SAR fifth railway Project, p\. 56,
note 2\. At the same time, however, the SAR, in its assessment of the Zhegan line and the Xuzhou terminal,
does use the value-added procedure even though a variety of coal and non-coal products are involved\.
24 This figure is based on the following system-wide data for 1997: 57\.3 tons per wagon; 85 percent utilization
rate or 310\.25 days per wagon per year; 4\.57 days per wagon cycle; and 67\.9 wagonloads per wagon per
year\.
-92 -
Table 1
Yueshan-Xiangfan Line Freight and Passenger Traffic, 1992-2015
Freight Passenger Trips
(tons, (millions)
millions)
Without With Without With
Year Project Project Increment Project Project Increment
1992 29\.262 44\.508 15\.246 4\.908 6\.668 1\.760
1993 29\.262 46\.229 16\.967 4\.908 7\.479 2\.571
1994 29\.262 50\.492 21\.230 4\.908 8\.539 3\.631
1995 29\.262 54\.344 25\.082 4\.908 8\.501 3\.593
1996 29\.262 57\.705 28\.443 4\.908 9\.218 4\.310
1997 29\.262 61\.065 31\.803 4\.908 10\.000 5\.092
1998 29\.262 64\.754 35\.492 4\.908 10\.857 5\.949
1999 29\.262 68\.688 39\.426 4\.908 11\.779 6\.871
2000 29\.262 64\.344 35\.082 4\.908 12\.760 7\.852
2001 29\.262 67\.951 38\.689 4\.908 13\.520 8\.612
2002 29\.262 71\.885 42\.623 4\.908 14\.318 9\.410
2003 29\.262 76\.065 46\.803 4\.908 15\.159 10\.251
2004 29\.262 80\.492 51\.230 4\.908 16\.037 11\.129
2005 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2006 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2007 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2008 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2009 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2010 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2011 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2012 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2013 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2014 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
2015 29\.262 85\.246 55\.984 4\.908 17\.002 12\.094
Freight: Baofeng-Nanyang segment; passenger: Luoyang-Xiangfan segment\.
Source: Ministry of Railways\.
Table 2
Yueshan-Xiangfan Double Tracking and Partial Electrification (Railways IV)
Economic Rate of Return Calculation
COSTS BENEFITS
Coal Non-Coal Additional Coal Non-coal Passenger Transport Total NET
BENEFIT
Year Direct Develop- Develop Rwy Total Value Added Value Added Value Added CostSavings Benefits CASH FLOW
Pje ct ment ment Equip\. Costs
1987 299 21 320 (320)
1988 525 2,014 4,028 9 6,576 - (6,576)
1989 534 2,014 4,028 19 6,595 - (6,595)
1990 740 2,014 4,028 32 6,814 - (6,814)
1991 825 2,014 4,028 45 6,913 - (6,913)
1992 770 2,014 4,028 29 6,841 1,300 2,600 600 4,500 (2,341)
1993 700 114 813 1,447 2,893 877 5,216 4,403
1994 866 221 1,087 1,810 3,620 1,238 6,668 5,581
1995 874 422 1,297 2,138 4,277 1,225 7,640 6,344
1996 624 139 764 2,425 4,850 1,470 8,745 7,981
1997 907 367 1,274 2,711 5,423 1,736 9,871 8,596
1998 318 318 3,026 6,052 2,029 11,106 10,789
1999 281 281 3,361 6,723 2,343 12,427 12,146
2000 314 314 2,991 5,982 2,678 11,650 11,337
2001 247 247 3,298 6,597 2,937 12,832 12,585
2002 261 261 3,634 7,268 3,209 14,110 13,849
2003 318 318 3,990 7,980 3,496 15,466 15,148
2004 296 296 4,368 8,735 3,795 16,898 16,602
2005 316 316 4,773 9,546 4,124 18,443 18,127
2006 4,773 9,546 4,124 18,443 18,443
2007 4,773 9,546 4,124 18,443 18,443
2008 4,773 9,546 4,124 18,443 18,443
2009 4,773 9,546 4,124 18,443 18,443
2010 4,773 9,546 4,124 18,443 18,443
2011 4,773 9,546 4,124 18,443 18,443
2012 4,773 9,546 4,124 18,443 18,443
2013 4,773 9,546 4,124 18,443 18,443
2014 4,773 9,546 4,124 18,443 18,443
2015 4,773 9,546 4,124 18,443 18,443
Total 7,665 10,070 20,139 3,770 41,644 89,001 178,002 73,000 340,004 298,360
NPV@12%: 22,913
IRR: 19\.84492%
- 94 -
Table 3
Zhuzhou-Hangzhou (Zhegan) Line Freight and Passenger Traffic, 1991-2015
Coal (tons, millions) Non-coal (tons, millions) Passenger Trips (millions)
Without With Without With Without With
Year Project P2ject Increment Project Pject Increment Project Project Increment
1991 15\.366 21\.237 5\.871 49\.049 80\.839 31\.790 51\.192 55\.836 4\.644
1992 15\.366 22\.926 7\.560 49\.049 86\.015 36\.966 51\.192 56\.498 5\.306
1993 15\.366 24\.027 8\.661 49\.049 89\.468 40\.419 51\.192 63\.737 12\.545
1994 15\.366 24\.533 9\.167 49\.049 92\.134 43\.085 51\.192 67\.785 16\.593
1995 15\.366 25\.487 10\.121 49\.049 99\.519 50\.470 51\.192 65\.571 14\.379
1996 15\.366 27\.955 12\.589 49\.049 102\.054 53\.005 51\.192 62\.093 10\.901
1997 15\.366 27\.387 12\.021 49\.049 101\.569 52\.520 51\.192 65\.386 14\.194
1998 15\.366 29\.171 13\.805 49\.049 107\.224 58\.175 51\.192 71\.495 20\.303
1999 15\.366 29\.441 14\.075 49\.049 108\.389 59\.340 51\.192 72\.200 21\.008
2000 15\.366 29\.628 14\.262 49\.049 115\.310 66\.261 51\.192 72\.750 21\.558-
2001 15\.366 29\.846 14\.480 49\.049 110\.302 61\.253 51\.192 73\.550 22\.358
2002 15\.366 30\.065 14\.699 49\.049 111\.065 62\.016 51\.192 74\.200 23\.008
2003 15\.366 30\.284 14\.918 49\.049 111\.836 62\.787 51\.192 74\.850 23\.658
2004 15\.366 30\.533 15\.167 49\.049 112\.597 63\.548 51\.192 75\.500 24\.308
2005 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2006 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2007 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2008 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2009 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2010 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2011 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2012 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2013 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2014 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
2015 15\.366 30\.871 15\.505 49\.049 114\.359 65\.310 51\.192 76\.700 25\.508
Source: Ministry of Railways\.
Table 4
Zhuzhou-Hangzhou (Zhegan) Double Tracking (Railways V)
Economic Rate of Return Calculation
(1997 Yuan, millions)
COSTS BENEFITS
Direct Additional Coal Non-Coal Coal Non-coal Passenger Total NET BENEFIT
Year Project Rwy Equip\. Development\. Development\. Total Costs Value-Added Value-Added Value-Added Benefits CASH FLOW
1986 644\.448 5155\.584 5,800\.0 - (5,800\.0)
1987 644\.448 5155\.584 5,800\.0 - (5,800\.0)
1988 644\.448 5155\.584 5,800\.0 - (5,800\.0)
1989 644\.448 5155\.584 5,800\.0 - (5,800\.0)
1990 1,415\.8 644\.448 5155\.584 7,215\.8 - (7,215\.8)
1991 716\.8 240\.2 957\.0 1,467\.5 11,740\.1 1,809\.6 15,017\.2 14,060\.2
1992 941\.1 140\.1 1,081\.2 1,735\.0 13,880\.1 2,067\.6 17,682\.7 16,601\.4
1993 1,778\.1 290\.3 2,068\.4 1,912\.5 15,299\.7 4,888\.3 22,100\.5 20,032\.2
1994 2,153\.1 320\.3 2,473\.4 2,036\.1 16,288\.6 6,465\.7 24,790\.3 22,316\.9
1995 1,755\.7 370\.4 2,126\.1 2,361\.0 18,888\.1 5,603\.0 26,852\.1 24,725\.9
1996 1,186\.5 430\.4 1,616\.9 2,556\.0 20,447\.7 4,247\.7 27,251\.3 25,634\.4
1997 2,058\.3 1331\.3 3,389\.6 2,514\.9 20,119\.4 5,530\.9 28,165\.2 24,775\.6
1998 10\.2 730\.7 740\.9 2,804\.8 22,438\.4 7,911\.3 33,154\.5 32,413\.6
1999 7\.8 760\.8 768\.6 2,860\.7 22,885\.7 8,186\.0 33,932\.5 33,163\.9
2000 790\.8 790\.8 3,137\.7 25,101\.5 8,400\.4 36,639\.5 35,848\.8
2001 310\.3 310\.3 2,951\.0 23,608\.3 8,712\.1 35,271\.4 34,961\.1
2002 210\.2 210\.2 2,989\.3 23,914\.4 8,965\.4 35,869\.1 35,658\.9
2003 310\.3 310\.3 3,027\.9 24,223\.0 9,218\.7 36,469\.6 36,159\.3
2004 700\.7 700\.7 3,067\.2 24,537\.9 9,471\.9 37,077\.1 36,376\.4
2005 200\.2 200\.2 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,080\.9
2006 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2007 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2008 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2009 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2010 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2011 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2012 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2013 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2014 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
2015 - 3,149\.1 25,192\.5 9,939\.5 38,281\.1 38,281\.1
Total 12,023\.2 7,137\.1 3,222\.2 25,777\.9 48,160\.5 70,061\.3 560,490\.6 200,813\.4 831,365\.3 783,204\.9
NPV@12% $97,706\.29
EIRR 35\.0%
- 96-
Table S
Xuzhou Terminal Expansion and Modernization (Railways V)
Economic Rate of Return Calculation
(1997 Yuan, millions)
COSTS BENEFITS
Direct Coal Non-Coal Railway Total Coal Non-coal Total NET BENEFITS
Year Costs Develop Develop Equipment Costs Value Add Value Add Benefits CASH FLOW
1986 227\.4 227\.4 (227\.4)
1987 216\.4 216\.4 (216\.4)
1988 193\.0 52\.67 245\.7 (245\.7)
1989 177\.4 177\.4 (177\.4)
1990 167\.9 2,511\.20 2,679\.1 (2,679\.1)
1991 61\.0 61\.0 (61\.0)
1992 9\.9 2,094\.5 6,283\.4 8,387\.7 (8,387\.7)
1993 53\.0 2,094\.5 6,283\.4 8,430\.8 (8,430\.8)
1994 74\.3 2,094\.5 6,283\.4 8,452\.1 (8,452\.1)
1995 95\.9 2,094\.5 6,283\.4 2,563\.87 11,037\.6 4,560\.7 14,274\.0 18,834\.7 7,797\.1
1996 22\.1 2,094\.5 6,283\.4 8,399\.9 4,755\.6 12,948\.0 17,703\.6 9,303\.7
1997 31\.0 31\.0 4,287\.8 10,803\.0 15,090\.8 15,059\.9
1998 25\.6 25\.6 3,703\.1 8,190\.0 11,893\.1 11,867\.5
1999 6\.3 6\.3 3,313\.3 10,920\.0 14,233\.3 14,227\.0
2000 2,563\.87 2,563\.9 3,118\.4 17,160\.0 20,278\.4 17,714\.5
2001 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2002 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2003 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2004 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2005 2,563\.87 2,563\.9 3,898\.0 17,550\.0 21,448\.0 18,884\.1
2006 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2007 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2008 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2009 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2010 - 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2011 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2012 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2013 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2014 3,898\.0 17,550\.0 21,448\.0 21,448\.0
2015 - 3,898\.0 17,550\.0 21,448\.0 21,448\.0
Total 1,361\.11 10,472\.28 31,416\.84 10,255\.47 53,505\.70 82,209\.1 337,545\.0 419,754\.12 366,248\.4
NPV @12% 31,878\.72
EIRR 29\.2%
Table 6
Track Rehabilitation Materials (Railways V)
Economic Rate of Return Calculation
(1997 Yuan, thousands)
COSTS SAVINGS
Heat-
Treated Total Domestic Total NET BENEFITS
Year Rail OTM* Labor Maintenance Cost Rail OTM* Labor Maintenance Savings CASH FLOW
One 212,285 23,575 37,900 273,760 (273,760)
Two 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Three 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Four 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Five 212,285 23,575 37,900 273,760 240,625 23,575 37,900 5310 307,410
33,650
Six 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Seven 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Eight 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Nine 212,285 23,575 37,900 273,760 240,625 23,575 37,900 5310 307,410 33,650
Ten 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Eleven 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
Twelve 1,052 1,052 240,625 23,575 37,900 5310 307,410 306,358
"'' ~ f%dVn =qIfn -20V7Af 410
Thirteen 240,625 23,57-15 j,7V0 5310 307,410I37,41
Totals 636,855 70,725 113,700 9,468 830,748 2,887,500 282,900 454,800 63,720 3,688,920 2,858,172
* OTM= Other track material\. NPV@12% 1,197,100\.96
EIRR= 105\.7%
- 98 -
Table 7
Wheels for Freight Wagons (Railways V)
Economic Rate of Return Calculation
(1997 Yuan, millions)
COSTS BENEFITS NET BENEFITS
Year Direct Costs Mfg\. Costs Total Costs Value Added CASH FLOW
1994 71\.13 366\.49 437\.62 (437\.62)
1995 94\.31 366\.49 460\.80 (460\.80)
1996 4,481\.52 4,481\.52
1997 4,481\.52 4,481\.52
1998 4,481\.52 4,481\.52
1999 4,481\.52 4,481\.52
2000 4,481\.52 4,481\.52
165\.44 732\.98 22,407\.60 21,509\.17
NPV@12%= 12,120\.48
EIRR= 233%
IBRD 22097
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MAY 1991 | REVIEW |
P002365 |  ICRR 12191
Report Number : ICRR12191
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 07/27/2005
PROJ ID : P002365 Appraisal Actual
Project Name : Urban Development & Project Costs 110\.6 114\.5
Decentralization US$M )
(US$M)
Country : Senegal Loan/
Loan US$M ) 75\.0
/Credit (US$M) 81\.4
Sector (s): Board: UD - General public Cofinancing 10\.0 10\.0
administration sector US$M )
(US$M)
(36%), Other social
services (16%), Health
(16%), General water
sanitation and flood
protection sec (16%),
General transportation
sector (16%)
L/C Number : C3006
Board Approval 98
FY )
(FY)
Partners involved : AfDB Closing Date 06/30/2003 12/31/2004
Prepared by : Reviewed by : Group Manager : Group :
Roy Gilbert John R\. Heath Alain A\. Barbu OEDSG
2\. Project Objectives and Components
a\. Objectives
a) To improve the financial and organizational management of municipalities \.
b) To improve the programming of priority urban investments \.
c) To rationalize and simplify the financing of urban infrastructure -related investments\.
d) To rehabilitate and upgrade the basic infrastructure in urban and rural communities \.
b\. Components
1\. Institutional Development (appraisal cost - US$10\.0 million; actual cost - US$16\.7 million) - including: a
Municipal Action Program (MAP) based upon a Municipal Contract (MC); technical advisory services to eligible
municipalities; acquisition of vehicles and equipment; urban, financial and organizational audits of participating
municipalities; training, and studies to help central government mobilize and transfer resources to municipalities \.
2\. Municipal Physical Investments (appraisal cost - US$100\.6 million; actual cost - US$97\.8 million) - including:
roads; education and health facilities; socio -collective facilities (schools, sports centers ); administrative buildings;
revenue generating facilities (markets, bus stations); environmental sub-projects (on-site sanitation and solid waste
management stations); and rehabilitation of historic buildings \.
c\. Comments on Project Cost, Financing and Dates
Actual costs exceeded planned costs in US dollars thanks to the declining value of the latter \. The IDA credit was
fully disbursed, as was cofinancing, and central and local government counterpar \. Loan closing was extended by one
year to make up for initial delays at start -up when new regulations of local finance had to be approved by the Ministry
of Finance\.
3\. Achievement of Relevant Objectives:
a) Fully achieved: - Through implementing the project's MAP's, municipalities were able to reduce the payroll share of
their current revenues from 37% in 2001 to 28% in 2003 (the project's ceiling of 40% meant a radical change for
some municipalities that had even exceeded 100% beforehand)\. Municipal financial budgeting was placed on a
sound footing and adhered to, as confirmed by financial audits \.
b) Fully achieved: - municipal capacity to invest increased, as measured by the capital investment as a share of
current revenues, that rose from 10% in 2001 to 17% in 2003\. Priorities among investments were made explicit for
the first time\.
c) Fully achieved: - Municipalities have fully adopted the principles and procedures of borrowing for infrastructure
investment, and the record of loan repayment is good (above 95%)\. Also, municipalities accept their counterpart
funding obligations and have financed them fully, from increased resource mobilization from local sources in
particular\.
d) Fully achieved: - the project financed 310 infrastructure projects in 212 rural districts throughout Senegal \.
Additionally, it financed 421 sub-projects--mostly of basic infrastructure and commercial facilities (markets)--across
Senegal's 67 urban municipalities\.
4\. Significant Outcomes/Impacts:
First time introduction into the Africa region of working "municipal contracts", participating agreements between
local governments and central authorities for municipal reform \.
Project exposed municipalities to borrowing that had to be repaid \.
The project succeeded in closing down the dysfunctional "Compte de Crédit Communal"\.
All 67 urban municipalities in Senegal received some benefits from the project \. None was left outside the new
institutional framework created by the project \.
Openness of municipalities toward reform and receiving outside advice (particularly from the Municipal
Development Agency (MDA) set up under the project)\.
Project stimulated the development of the local consulting industry in Senegal \.
Beyond the results originally intended, the project succeeded in introducing systematic street address systems
for the first time into 11 municipalities--some of which were part of the agglomeration of the capital
Dakar--together street name plaques \.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
(none)
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Highly Satisfactory Highly Satisfactory
Institutional Dev \.: Substantial High The project helped completely re -tool and
decentralize the way urban development
business is done in Senegal, by bringing
municipalities fully on-board in ways that
helped ensure the country's effective use
of limited resources for urban
development\.
Sustainability : Likely Likely
Bank Performance : Highly Satisfactory Highly Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
Assisting a large number of municipalities at the same time can work effectively if sound mechanisms of support
on a robust institutional foundation are in place \. In other words, when the objective of improving urban
infrastructure and different agencies' responsibilities are clear in this "wholesale" approach\.
Achievements of a successful municipal development project such as this one can be undermined if
municipalities are offered funding from other sources --or even World Bank funding that comes with weaker
policy requirements on cost recovery, for instance --that do not demand the same institutional responses by the
borrowing local governments\.
It is essential for project implementation arrangements to be clearly defined and for responsibilities to be legally
and contractually assigned for a municipal development program such as this to be successful \.
Municipal contracts or participation agreements can work even where municipalities have traditionally been
weak and in existence for only a short time, such as Senegal \.
Capacity building and institutional strengthening at the local level especially works best when institutional
progress is rewarded by financial assistance for investments in infrastructure, that generally have a higher
priority locally\.
Beyond learning to invest effectively in infrastructure, the next step for municipalities will be to learn more about
how to operate and maintain these assets efficiently \.
8\. Assessment Recommended? Yes No
Why? To learn more lessons from this successful operation that could be applied to countries with little
tradition of municipal government\.
9\. Comments on Quality of ICR:
Overall this is a satisfactory ICR that, for the most part, adequately documents the project experience leading to the
very successful outcome \. Despite being twice the length recommended by ICR guidelines, though, the report does
not fully clarify: (i) why actual institutional development spending was 67% more than expected at appraisal and
exactly what items this money was spent on; (ii) what the institutional development components actually were (the
ICR's description of "activities" under this component does not help, since it lists the results of the activities (e\.g\.
"improved financial health") rather than showing the "activity" or component upon which project expenditures were
made) ; (iii) the role (if any) of the project in setting up the MDA; (iv) the participation of the municipalities (if any) in
setting up the project's institutional arrangements; (v) infrastructure project investments by type of municipality
(large/small; region etc\.); (vi) links between the degree of a municipality's participation in the project and its
institutional progress; (vii) between exactly which parties the municipal contract (or participation agreement) is made\.
Finally, the values of project costs reported in Annex 2 are different from those in the text \. | REVIEW |
P063584 |  ICRR 12912
Report Number : ICRR12912
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 07/29/2008
PROJ ID : P063584 Appraisal Actual
Project Name : Social Investment US$M ):
Project Costs (US$M): 74\.2 76\.4
Fund (zamsif)
Country : Zambia Loan /Credit (US$M):
Loan/ US$M ): 64\.7 68\.7
Sector Board : SP US$M):
Cofinancing (US$M ):
Sector (s): Sub-national
government
administration (27%)
General education
sector (19%)
Health (18%)
Roads and highways
(18%)
General water
sanitation and flood
protection sector
(18%)
Theme (s): HIV/AIDS (20% - P)
Rural services and
infrastructure (20% -
P)
Poverty strategy
analysis and
monitoring (20% - P)
Improving labor
markets (20% - P)
Participation and civic
engagement (20% - P)
L/C Number : C3355
Board Approval Date : 05/25/2000
Partners involved : Closing Date : 12/31/2005 12/31/2005
Evaluator : Panel Reviewer : Group Manager : Group :
Kris Hallberg Nalini B\. Kumar Monika Huppi IEGSG
2\. Project Objectives and Components:
a\. Objectives:
The Zambia Social Investment Fund (ZAMSIF) was intended to be the first of a two -phase program (over 10 years)
to support two of the objectives outlined in the Government's National Poverty Reduction Strategic Framework and
Action Plan (1999-2004): decentralization and empowering local authorities to improve governance and efficiency in
service delivery; and increasing access to basic social services through direct poverty interventions \. The main
beneficiaries of the project were to be poor communities in rural areas of the country, with special attention to
vulnerable and disadvantaged groups \.
The original Project Development Objective of Phase I was "to achieve improved, expanded, and sustainable use of
services, provided in a governance system whereby local governments and communities are mutually accountable \."
The project was restructured in 2004 in response to lagging implementation performance \. The revised PDO, which
was approved by the Board, was "to achieve improved, expanded, and sustainable use of services, provided in a
governance system whereby local governments and communities would become mutually accountable\." (italics
added) This ICR Review evalutes the project against the revised PDO \. The restructuring also included a reduction
in the scope of activities, a change in some output and outcome indicator targets, and changes in some of the
triggers for moving to the second phase of support \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
Yes
Date of Board Approval: 03/26/2004
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Community Investment Fund (CIF) CIF) ($42\.0 million estimated at appraisal; $45\.8 million actual) to finance
community-based small sub-projects selected through participatory processes \. The sub-project menu included
social and economic infrastructure; natural resources management sub -projects; capacity building; and basic skills
training for stimulating local productivity \. Communities were expected to contribute 15 percent of sub-project costs in
cash or in kind\.
DIF ) ($13\.0 million estimated at appraisal; $6\.15 million actual) to finance larger district
Direct Investment Fund (DIF)
level infrastructure covering more than one community, including district health facilities and marketplaces \. The
component also supported training and activities aimed at strengthening the planning, management, and
implementation skills of local authorities and community members \.
PMA ) ($3\.5 million estimated at appraisal; $3\.6 million actual) to support activities
Poverty Monitoring and Analysis (PMA)
initiated under the previous Social Recovery Projects (SRP I and SRP II) related to data collection, analysis, and
assessing the impact of poverty reduction programs and government policy on poverty \.
ZAMSIF Institutional Support ($15\.7 million estimated at appraisal; $21\.83 million actual) to support administration
and operating costs, beneficiary assessment, environmental impact assessment, poverty maps and other targeting,
training and capacity building for ZAMSIF staff \.
The initial design of ZAMSIF was to progressively transfer responsibilities from ZAMSIF to the local (district)
authorities\. However, the Government's commitment to local participation and management of resources, expressed
in the National Decentralization Policy (NDP), did not materialize\. The project restructuring shifted resources from
district-level projects (DIF) to community-level projects (CIF) and changed the training implementation arrangements
to get ZAMSIF staff more involved in implementation in the absence of the NDP \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The increase in project cost over appraisal estimates was due to exchange rate gains between the US$ and SDR \.
The credit closed on schedule on December 31, 2005\. The ICR does not explain why the ICR was prepared more
than two years later (March 26, 2008)\.
3\. Relevance of Objectives & Design:
The relevance of the objective "to achieve improved, expanded, and sustainable use of services ", was substantial \.
The project was directly relevant to poverty reduction, and attempted to address the low access to and quality of
basic social services, as well as the inefficient provision of services by weak local governments \. The objective was
consistent with the 1999 CAS, which supported the Government's PRSP objectives of (i) decentralization and
empowering local authorities to improve governance and efficiency in service delivery, and (ii) increasing access to
basic social services through direct poverty interventions \. The objective was also consistent with the current (2004)
CAS\.
The relevance of project design was modest\. The objective of "providing [services] in a governance system whereby
local governments and communities are mutually accountable ", as well as project design, were based on the
Government's National Decentralization Policy \. This policy was not yet in place at the project design stage, although
the Government had stated a clear commitment to this policy as part of its Public Sector Reform Program \. The
design assumption that the decentralization policy would be implemented did not materialize; in hindsight, this should
have been identified as a major risk to achieving the PDO \.
The project was designed under a participatory process with wide consultations with stakeholders, and reflected
lessons from international experience with social funds as well as the experience with the first and second Social
Recovery Projects (SRP I and II)\. ZAMSIF was the first social investment fund in the Africa Region that included an
explicit exit strategy for the fund as a semi -autonomous institution\. It was expected that there would be a gradual
transfer of ZAMSIF capacity to the public sector, making the impact more sustainable \.
4\. Achievement of Objectives (Efficacy):
Improved, expanded, and sustainable use of services : overall, this objective was substantially achieved \. There
is evidence that the goal of expanding the use of services was substantially achieved \. A total of 549 CIF
sub-projects were completed (compared to the revised target of 500) and a total of 62-67 DIF sub-projects were
completed (compared to the revised target of 30)\. (Note that there is a discrepancy in the data in the ICR : p\. 2
states 67 projects and p\. 4 states 62 projects\.) Thus both targets were over -achieved\. The number of beneficiaries
greatly exceeded targets : for CIF, more than 2\.5 million beneficiaries compared to the target of 400,000; and for DIF,
3\.0 million beneficiaries versus the target of 800,000\. The ICR states that there was a 10 percent increase in the
number of community-driven activities, but does not cite evidence supporting this claim \. The sectors with the
greatest number of CIF sub-projects were education (45 percent), health (22 percent), water and sanitation (11
percent), and roads (9 percent)\. DIF sub-projects were concentrated in health (60 percent of sub-projects), water
and sanitation (13 percent), food security and markets (11 percent), community welfare (10 percent), and roads (5
percent)\. The CIF component provided training to 5,550 sub-project management committee members\.
However, there is less evidence that the goals of improving services and making them more sustainable were
achieved\. The ZAMSIF evaluation study reported that only two -thirds of sub-projects were operational in 2008, an
important issue for the sustainability objective \. In addition, it is difficult to assess the achievement of the quality and
sustainability objectives due to the lack of baseline data and unavailability of quantitative data on outcome indicators \.
The ICR gives some data on post -project distance to facilities, but does not provide pre -project data\. There is some
qualitative data: the ZAMSIF Impact Evaluation Report indicates that 47 percent of households in sampled areas
expressed that the project had "extremely changed" their lives in terms of access and use of educational facilities \.
Data from the Ministry of Education shows that there was a decrease in the dropout rate in ZAMSIF areas from 1\.8 in
2002 to 1\.5 in 2005, although it is not clear whether the decrease is attributable to the ZAMSIF project \. There is
some evidence that maternal and child attendance in health facilities increased in sub -project areas more than the
national average\. The ICR states that the Implementation and Risk Management Strategy Report (July 2005) found
ZAMSIF-supported infrastructure to be of good quality \.
There is incomplete evidence on the project's reach to vulnerable groups (children, orphans, the elderly, and those
affected by HIV/AIDS)\. The ICR (Annex 2) shows that the project directly assisted 3,034 orphans and vulnerable
children (compared to the revised target of 1,000), and indirectly assisted another 66,460 (compared to the revised
target of 80,000)\. No information is available on the reach to the elderly and those affected by HIV /AIDS\. Targeting
of investments to the poor was to be achieved through the use of an index of poverty, population, and accessibility,
but the ICR does not provide evidence on the implementation of this methodology \. In comments on the draft ICR
Review, the Region noted that ZAMSIF did make available funding to districts based on poverty levels, population,
and accessibility\.
Providing [services ] in a governance system whereby local governments and communities would become
mutually accountable : modestly achieved \. There is evidence of community participation and ownership of
sub-projects financed under ZAMSIF\. The average community contribution to sub -projects was 16 percent,
compared to a target of 15 percent\. All sub-projects had maintenance committees and maintenance plans; 75
percent of the O&M committees were functional when the project closed in 2005\. The community participation in
ZAMSIF provides some evidence that communities will become more accountable in the future \. At the level of local
governments, ZAMSIF provided inputs (resources and training) to build the capacity for improved local governance at
the community and district levels \. The ICR provides some evidence of increased coordination in planning and
service delivery at the district level and a positive change in attitude and behavior towards communities (p\. 16)\.
However, the impact of these changes on the accountability of local governments is likely to be limited in the
absence of a decentralization policy from the central Government \. The Government's commitment to local
participation and local management of resources, as expressed in the NDP, did not materialize, and there is little
indication that the policy will be adopted in the near future \. Partly for this reason, the Bank has decided not to
proceed with ZAMSIF II\.
5\. Efficiency (not applicable to DPLs):
It is difficult to evaluate efficiency due to lack of information in the ICR \. An ERR was not calculated at appraisal,
nor in the ICR\. The ICR assumes that the sub -projects chosen reflected community priorities, since the sub -projects
were chosen by the communities themselves, and since they demonstrated their commitment through contributions
exceeding the target of 15 percent\. However, there is no information on cost -effectiveness in the ICR, nor any
comparisons with other social fund projects \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re -estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
There is evidence that, by supporting community investments, the ZAMSIF project increased access to basic
social services\. However, there is little evidence to show that the ZAMSIF project improved the quality and
sustainability of these services \. Achievement of the objective of providing services in a governance system in which
local governments and communities would become mutually accountable has been limited by the Government's
failure to implement its decentralization agenda \. Project outcome is rated moderately unsatisfactory based on
substantial/modest relevance and substantial /modest efficacy; it is difficult to assess the project's efficiency \.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
As noted above, the 2008 ZAMSIF evaluation indicated that only two -thirds of sub-projects supported by the
ZAMSIF project were operational at the time the study was prepared \. Although O&M committees and plans were
formed, there is a risk that local government budgets will not be sufficient to fund O&M expenses \. The sustainability
of capacity improvements at the district level will be affected by staff attrition and inadequate resources \. The Bank
does not plan to continue its support for ZAMSIF through a second project \.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
Quality at Entry was moderately unsatisfactory\. The Bank was responsive to the Government's request for a
follow-on project to SRP II, and consulted widely with communities, stakeholders, and other donors during project
preparation\. However, the Bank underestimated the risk that the Government would not implement its
decentralization agenda, and based project design on the assumption that the policy would be adopted \.
Quality of Supervision was moderately unsatisfactory\. On the positive side, the Bank team maintained good
relationships with key ministries\. However, the Bank bears the main responsibility for the failure to implement the
M&E system\.
Although the triggers for Phase II of ZAMSIF were substantially met, the Bank decided not to proceed with
ZAMSIF APL II because of the abrupt change in the operating environment at the district level in terms of
resource availability for the districts to continue the capacity development program, to sustain existing basic
social and economic infrastructure, and to fund new capital investments \.
at -Entry :Moderately Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Unsatisfactory
c\. Overall Bank Performance :Moderately Unsatisfactory
9\. Assessment of Borrower Performance:
Government Performance was unsatisfactory \. Although the Government was committed to reducing poverty, the
failure to implement the National Decentralization Policy negatively affected the implementation and outcome of
the project\.
Implementing Agency Performance was moderately satisfactory \. The ZAMSIF Management Unit was sufficiently
staffed with qualified personnel, and systems and procedures were in place to ensure transparency and
accountability\. However, there were some problems with financial monitoring and budgeting during the final year
of the project, and the implementation of the M&E system was neglected \.
Overall Borrower Performance is rated moderately unsatisfactory \. According to the OPCS/IEG Harmonized
Evaluation Criteria, when one dimension of Borrower Performance is in the satisfactory range and the other is in
the unsatisfactory range, the overall rating for Borrower Performance normally depends on the outcome rating \. If
the outcome rating is in the unsatisfactory range, overall Borrower Performance is rated moderately
unsatisfactory\.
a\. Government Performance :Unsatisfactory
b\. Implementing Agency Performance :Moderately Satisfactory
c\. Overall Borrower Performance :Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
The quality of M&E design was modest\. Outcome indicators were defined for access (time and distance to
facilities), attendance in schools and maternal and child health facilities, and people using safe water \. The success
of local responsibility and decision -making was to be measured by beneficiary satisfaction with local government
authorities and NGOs\. Outputs of the PMA component -- poverty surveys and analysis -- were to be monitored\.
However, M&E design did not consider collecting baseline data on the outcome indicators \.
The implementation and utilization of the M&E system were modest\. Due to the lack of baseline data, the final
impact evaluation had to rely on "with project/without project" comparisons\. Most of the information in the final
evaluation study was qualitative \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
None\.
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately There is little evidence to show that the
Satisfactory Unsatisfactory project improved the quality and
sustainability of social services \. There
is no information available to assess
project efficiency\.
Risk to Development High High
Outcome :
Bank Performance : Moderately Moderately Both Quality at Entry and Quality of
Satisfactory Unsatisfactory Supervision were moderately
unsatisfactory\.
Borrower Performance : Moderately Moderately Government Performance was
Satisfactory Unsatisfactory unsatisfactory\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Drawing on the lessons in the ICR, the project shows that :
In social fund projects where a decentralized structure is necessary to achieve project objectives, and where
decentralization reforms are outside the scope of the project, the Bank needs to take into account the risk that
decentralization may not occur \. This risk need to be carefully assessed during project preparation, and
mitigating measures proposed\. When they happen, governance problems need to be flagged early so that
project implementation arrangements can be adapted \.
Implementation of the M&E system needs to start early in the project with the collection of baseline data \. If
outside agencies (such as the Central Statistical Office ) are responsible for data collection, the project's
implementing agency needs to take an active role to ensure that the necessary information is collected \.
Methods for allocating project resources to the poor and other vulnerable groups need to be monitored to
ensure that resources flow to intended target groups \.
14\. Assessment Recommended? Yes No
Why? To add to the lessons of experience with social investment fund projects \.
15\. Comments on Quality of ICR:
The ICR is generally satisfactory, but with some shortcomings \. No attempt was made to provide evidence on project
efficiency; there is discrepancy in data on the number of DIF projects completed (see Section 4 above); it is not
explained why the ICR was prepared nearly two years late; and no information is provided on the methodology of the
beneficiary survey\. The ICR's basic information table (p\. v) states that the revised PDO was not approved by the
Board, when in fact it was\. A positive aspect is the Borrower's substantial contribution to the ICR \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P074486 |  ICRR 11683
Report Number : ICRR11683
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 03/17/2004
PROJ ID : P074486 Appraisal Actual
Project Name : Private & Financial Sector Project Costs 85 85
Structural Adjustment US$M )
(US$M)
Credit (PFSAC)
Country : Serbia and Montenegro Loan/ US$M ) 85
Loan /Credit (US$M) 85
Sector (s): Board: PSD - Banking Cofinancing
(50%), Other industry US$M )
(US$M)
(50%)
L/C Number : C3643
Board Approval 2
FY)
(FY)
Partners involved : Closing Date 06/30/2003 06/30/2003
Prepared by : Reviewed by : Group Manager : Group :
Elliott Hurwitz Alice C\. Galenson Kyle Peters OEDCR
2\. Project Objectives and Components
a\. Objectives
Support the governments of the Federal Republic of Yugoslavia (FRY, now known as Serbia and Montenegro ), in
implementing financial and enterprise sector reforms that can significantly accelerate private sector -led growth
through: (i) strengthening the financial system by liquidating troubled banks and improving the environment under
which banks operate; (ii) privatizing and restructuring socially -owned enterprises that crowd out private sector
growth, hamper banking sector recovery, and incur significant fiscal and quasi -fiscal costs; and (iii) improving the
investment climate and business enabling environment \.
b\. Components
Banking sector reform: Resolution of large banks and other troubled banks; improved framework for bank liquidation \.
Reform of socially-owned enterprises: Tender privatization of large enterprises; auction privatization of smaller
enterprises; improvement of legal and institutional framework for privatization /restructuring/liquidation of enterprises;
amendment of the Enterprise Law to facilitate the privatization process; forgiving of tax arrears (as part of closing
transaction); strengthening institutional framework for enterprise restructuring; mitigating the social costs of
enterprise restructuring and privatization \.
Bank assets and enterprise workouts : Create framework to ensure that the obligations of the Bank Rehabilitation
Agency (BRA), as liquidator of banks with large exposure to enterprises scheduled to be privatized, can be fulfilled in
a manner that does not adversely affect privatization objectives, and does not adversely affect the interests of
creditors of banks under liquidation \.
Financial sector regulatory and supervisory framework : Improve existing Law on Banks and Other Financial
Institutions; review the existing law on the National Bank of Yugoslavia (NBY); introduce new prudential regulations
for commercial banks; strengthen supervisory capacity of the NBY \.
Business environment reform: Reduce barriers to entry by reforming business registration; eliminate cash
management restrictions on business accounts \.
c\. Comments on Project Cost, Financing and Dates
The PFSAC was a single tranche credit of US$ 85 million that disbursed completely in August, 2002\. PFSAC was
envisioned as a framework of medium -term reforms to serve as a foundation for further reform under PFSAC II,
approved in June, 2003\. PFSAC was accompanied by considerable TA from the Bank and other donors \.
3\. Achievement of Relevant Objectives:
Banking sector reform: The capacity of BRA was strengthened substantially; BRA closed 23 banks, comprising 61%
of total system assets, with the 4 largest being put into bankruptcy; BRA continued remediation of banks that had
been intervened earlier, with 3 of these being merged and recapitalized \.
Reform of socially-owned enterprises: In tender privatization of large enterprises, 28 firms were grouped into 6 pools,
with an international investment bank contracted to facilitate the sale of each pool; 20 firms have been sold thus far,
with the process ongoing under PFSAC II (under which some of the sales took place )\. The institutional framework for
privatization was strengthened by the establishment of the Privatization Agency (PA) and the promulgation of several
implementing decrees under the 2001 Privatization Law\. The capacity of the PA was greatly strengthened by TA
provided in support of PFSAC\. In auction privatization of smaller enterprises, a pilot effort was undertaken that
resulted in 9 firms sold; subsequently, the governing legislation and procedures were modified, and firms were sold
at auction in much larger numbers (see sec\. 4); for privatization by restructuring , 50 enterprises, assessed as
unviable, were identified as candidates for restructuring \. Utilizing TA provided by the Bank and other donors, the PA
retained specialized consultants and proceeded to begin restructuring these firms \. They will ultimately be sold either
in their restructured form or they will be liquidated \. Resident Advisors were retained, funded from other sources, to
strengthen PA capacity in this area \. Amendments to the Federal Enterprise Law were enacted that provided the
legal framework for enterprise privatization, restructuring, and liquidation (however, when the federation was
dissolved in early 2003, work began on a Serbian enterprise law, a condition of PFSAC II; a new Serbian Insolvency
Law, incorporating international best practice, is also being prepared as a PFSAC II condition)\. Finally, the
government implemented a program to provide support, including cash payments and retraining, for workers leaving
SOEs undergoing privatization\.
Bank assets and enterprise workouts : BRA, as liquidator of banks with large exposure to enterprises scheduled to be
privatized, signed an MOU with the Privatization Agency (PA) that subordinated the debt owed by enterprises to
bankrupt banks to the claims of other creditors of these enterprises; the Privatization Law provided for out -of-court
debt restructuring of qualifying enterprises scheduled to be privatized; a decree was issued allowing enterprises to
write off most tax arrears when they were privatized \.
Financial sector regulatory and supervisory framework : The Law on Banks was amended, and the institutional
framework for bank supervision was significantly strengthened; enhanced prudential regulations were issued
regarding capital adequacy, investment limitations, liquidity, internal control and audit, and credit classification \. In
addition, amendments to the Law on the National Bank of Yugoslavia (NBY) were enacted by parliament, part of the
program to strengthen NBY oversight capacity and tighten banks' operating requirements \.
Business environment reform: The project was successful at making modest improvements in the business
environment, including deregulation of foreign trade and investment, tax simplification, and modernization of labor
legislation\. A network of regional agencies to provide assistance to SMEs was established \. The credit also
supported the establishment of a regulatory framework conducive to leasing and secured financial transactions; this
comprised a foundation for further progress under PFSAC II \.
4\. Significant Outcomes/Impacts:
Twenty large firms were sold under tender privatization (including some under PFSAC II), considerably more
progress than envisioned under PFSAC
After the legislation and procedures governing auction privatization were modified, more than 1,000 small firms
were sold by end-2003, which was also considerably greater progress than had been envisioned under PFSAC
The authorities' decision to put into bankruptcy the four largest insolvent banks helped restore confidence in the
banking system and encouraged domestic savings \. The number of banks declined from 83 in late 2001 to 47 in
late 2003, and total credit to the nongovernmental sector expanded from Euro 1\.6 billion at end-2001 to over
Euro 3 billion in November, 2003\.
As one provision of the new Law on Banks, the minimum capital requirement was increased from Euro 5 million
to Euro 10 million\.
The time required to register a limited liability company in Serbia declined from 59 days to 45 days following the
changes initiated by the PFSAC
5\. Significant Shortcomings (including non-compliance with safeguard policies):
The Government failed to deposit credit funds into a separate account in the name of the FRY Ministry of
Finance as required by the credit, which provided access to the foreign currency proceeds instead of the Dinar
equivalent as foreseen under the DCA \. In addition, Euro 6 million of credit funds was used to liquidate bonds
held by former depositors of a failed bank, a violation of the "negative list" prohibition on the use of credit
proceeds to fund local expenditures \. The Bank considered that these errors were made in good faith and did not
pursue available remedies\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Highly Satisfactory Highly Satisfactory The shortcoming noted in section 5 is not
considered to have detracted from the
highly successful outcome of the project \.
Institutional Dev \.: Substantial High
Sustainability : Highly Likely Likely Given the highly fluid situation and the
potential for social unrest, a rating of
"likely" is more appropriate
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Unsatisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
An integrated approach is critical to enterprise and financial sector reform --The problem of debts owed by
unviable firms and the weak balance sheets of banks are integrally related and is best approached in an
integrated manner\.
Efforts to provide adequate protection to those displaced by privatization and restructuring are critical to
reform success --Otherwise, social unrest and opposition have the potential to delay or derail reforms
The availability of extensive TA was critical to project success
8\. Assessment Recommended? Yes No
9\. Comments on Quality of ICR:
The ICR is unsatisfactory\. In many instances, it fails to provide information that is important to project evaluation :
The ICR does not describe what progress has been made in the key areas of restructuring or liquidating
enterprises that were unattractive privatization candidates, nor does it provide detail on the increased capacity of
government in these areas (objective 2 and para 42 of the President's Report, or PR)\. In terms of progress in
enterprise restructuring, the ICR restates what is contained in the PR, without describing progress, if any, in the
20-month period since then\.
The PR states that specific amendments to the Law on Banks were made (e\.g\., definitions of ownership and
equity capital, minimum capital requirement )\. These were core conditions of PFSAC, but the ICR does not
mention them, or provide detail on improvements that may have occurred since their submission \.
The PR states that specific amendments to the Law on the National Bank of Yugoslavia (NBY) were submitted to
parliament--a credit condition\. These were key elements of the program to strengthen NBY oversight capacity
and tighten banks' operating requirements, but the ICR does not mention them or any progress that may have
occurred since their submission \.
The PR states that amendments to the Enterprise Law (intended to facilitate privatization ) were submitted to
Parliament--a core condition of the credit \. However, the ICR does not mention them or any progress that may
have occurred since their submission \. | REVIEW |
P057234 | Document of
The World Bank
Report No: ICR00001507
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-25922 IDA-3604A IDA-36040 TF-52283)
ON A
CREDIT
IN THE AMOUNT OF SDR 24\.6 MILLION
(US$ 31\.1 MILLION EQUIVALENT)
AND A
GLOBAL ENVIRONMENTAL FACILITY GRANT
IN THE AMOUNT OF US$ 7\.0 MILLION
TO THE
UNITED REPUBLIC OF TANZANIA
FOR THE
FOREST CONSERVATION AND MANAGEMENT PROJECT
AND THE
EASTERN ARC FOREST CONSERVATION AND DEVELOPMENT PROJECT
June 24, 2010
Environmental and Natural Resources Management
Sustainable Development Department
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 1, 2010)
Currency Unit = Tanzania Shillings (TShs)
US$ 1\.00 = TShs 1,483
FISCAL YEAR
July 1 June 30
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
CBFM Community Based Forest Management
CSO Civil Society Organization
CDD Community Driven Development
CE Chief Executive
CITES Convention on International Trade in Endangered Species
CSD Civil Service Department
DCA Development Credit Agreement
DFO District Forest Officer
DfID United Kingdom Department for International Development
DP Development Partner
EAFCMP Eastern Arc Forest Conservation and Management Project
EAMCEF Eastern Arc Mountains Conservation Endowment Fund
EIA Environmental Impact Assessment
ERR Economic Rate of Return
FAO Food and Agriculture Organization of the United Nations
FBD Forestry and Beekeeping Division
FRMP Forest Resources Management Project
GEF Global Environment Facility
GEO Global Environmental Objective
GOT Government of Tanzania
ICR(R) Implementation Completion and Results Report
IDA International Development Association
IOI Intermediate Outcome Indicator
ISRR Implementation Status and Results Report
JAS Joint Assistance Strategy
JFM Joint Forest Management
JMA Joint Management Agreement
KPI Key Performance Indicator
M&E Monitoring and Evaluation
MFA Ministry of Foreign Affairs (Finland)
MKUKUTA National Strategy for Growth and Development 2005-2010 (Swahili
Acronym)
MNRT Ministry of Natural Resources and Tourism
MoU Memorandum of Understanding
MTR Mid-Term Review
NAFOBEDA National Forest and Beekeeping Database
NAFORMA National Forest Resources Monitoring and Assessment
NFBKP National Forest and Beekeeping Program
NFP National Forestry Program (2001-2010)
NGO Non-Governmental Organization
NPV Net Present Value
NRM Natural Resource Management
PAD Project Appraisal Document
PCD Project Concept Document
PDO Project Development Objective
PFM Participatory Forest Management
PIM Project Implementation manual
PMORALG Prime Minister's Office Regional Administration and Local
Government
PO PSM President's Office Public Service Management
PPA Project Preparatory Advance
PSI Private Sector Involvement
QER Quality Enhancement Review
RAP Resettlement Action Plan
SFM Sustainable Forest Management
SWAp Sector Wide Approach
TASAF Tanzania Social Action Fund
TFCMP Tanzania Forest Conservation and Management Project
TFGA Trust Fund Grant Agreement
TFS Tanzania Forest Service
TTL Task Team Leader
UNDP United Nations Development Program
VLFR Village Land Forest Reserve
Vice President: Obiageli K\. Ezekwesili
Country Director: John Murray McIntire
Sector Manager: Idah Pswarayi-Riddihough
Project Team Leader: Christian Peter
ICR Team Leader: Christian Peter
ICR Primary Author: Frits Ohler
UNITED REPUBLIC OF TANZANIA
Forest Conservation and Management Project
Eastern Arc Forests Conservation and Management Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development and Global Environment Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes \. 6
3\. Assessment of Outcomes\. 12
4\. Assessment of Risk to Development and GEO Outcome\. 15
5\. Assessment of Bank and Borrower Performance\. 16
6\. Lessons Learned \. 17
7\. Comments on Issues Raised by Borrower/Implementing Agency\. 18
Annex 1\. Project Costs and Financing \.
Annex 2\. Outputs by Component \.
Annex 3\. Estimated Benefits\.
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\.
Annex 5\. Detailed Description of PDO, GEO and KPIs\.
Annex 6\. Detailed Description of Project Components \.
Annex 7\. Conclusions of the Verification of the Derema Corridor RAP\.
Annex 8\. Changes Summary of Borrower's ICR and Comments on Draft ICR\.
Annex 9\. List of Supporting Documents \.
MAP\.
A\. Basic Information
Forest Conservation
Country: Tanzania Project Name: and Management
Project
IDA-36040,IDA-
Project ID: P058706,P057234 L/C/TF Number(s): 3604A,TF-25922,TF-
52283
ICR Date: 06/25/2010 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: SIL,SIL Borrower:
TANZANIA
Original Total
XDR 24\.6M,USD 7\.0M Disbursed Amount: XDR 24\.6M,USD 7\.0M
Commitment:
Environmental Category: B,B Focal Area: B
Implementing Agencies:
Eastern Arc Mountains Conservation Endowment Fund
Ministry of Natural Resources and Tourism (MNRT)
Cofinanciers and Other External Partners:
B\. Key Dates
Forest Conservation and Management Project - P058706
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 04/20/2000 Effectiveness: 05/29/2002 05/29/2002
06/29/2006
Appraisal: 10/08/2001 Restructuring(s):
06/29/2007
Approval: 02/26/2002 Mid-term Review: 09/25/2006 09/25/2006
Closing: 12/31/2007 12/31/2009
Eastern Arc Forests Conservation and Management Project - P057234
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 04/20/2000 Effectiveness: 05/18/2005 05/18/2005
Appraisal: 04/08/2002 Restructuring(s): 06/29/2007
Approval: 07/03/2003 Mid-term Review: 09/25/2006 09/25/2006
Closing: 12/31/2007 12/31/2009
i
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes Moderately Unsatisfactory
GEO Outcomes Moderately Satisfactory
Risk to Development Outcome Substantial
Risk to GEO Outcome Substantial
Bank Performance Moderately Unsatisfactory
Borrower Performance Moderately Unsatisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Moderately Moderately
Quality at Entry Government:
Unsatisfactory Unsatisfactory
Moderately Implementing Moderately
Quality of Supervision:
Unsatisfactory Agency/Agencies: Unsatisfactory
Overall Bank Moderately Overall Borrower Moderately
Performance Unsatisfactory Performance Unsatisfactory
C\.3 Quality at Entry and Implementation Performance Indicators
Forest Conservation and Management Project - P058706
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No): (QEA)
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA)
DO rating before Moderately
Closing/Inactive status Unsatisfactory
Eastern Arc Forests Conservation and Management Project - P057234
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No): (QEA)
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA)
GEO rating before
Satisfactory
Closing/Inactive Status
ii
D\. Sector and Theme Codes
Forest Conservation and Management Project - P058706
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 57 40
Forestry 17 35
Other social services 26 25
Theme Code (as % of total Bank financing)
Biodiversity 33 10
Environmental policies and institutions 33 20
Infrastructure services for private sector development 17 10
Other environment and natural resources management 17 35
Participation and civic engagement 25
Eastern Arc Forests Conservation and Management Project - P057234
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 4 25
Forestry 96 75
Theme Code (as % of total Bank financing)
Biodiversity 28 40
Environmental policies and institutions 29 20
Other environment and natural resources management 29 20
Participation and civic engagement 14 20
E\. Bank Staff
Forest Conservation and Management Project - P058706
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo
Country Director: John McIntire James W\. Adams
Sector Manager: Idah Z\. Pswarayi-Riddihough Agnes I\. Kiss
Project Team Leader: Christian Albert Peter Peter A\. Dewees
ICR Team Leader: Christian Albert Peter
ICR Primary Author: Frits Ohler
iii
Eastern Arc Forests Conservation and Management Project - P057234
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo
Country Director: John McIntire Judy M\. O'Connor
Sector Manager: Idah Z\. Pswarayi-Riddihough Richard G\. Scobey
Project Team Leader: Christian Albert Peter Nathalie Weier Johnson
ICR Team Leader: Christian Albert Peter
ICR Primary Author: Frits Ohler
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The project objective is to assist Government in policy implementation, in particular by
developing a framework for the long-term sustainable management and conservation of
Tanzania#s forest resources, strengthening the role of individuals, communities, villages,
and the private sector in management and conservation of forests, and implementing this
framework on a pilot scale\.
Revised Project Development Objectives (as approved by original approving authority)
Global Environment Objectives (from Project Appraisal Document)
The global environmental objectives of the project is to assist within the TFCMP, to
promote sustainable conservation and management of the biological biodiversity and
ecosystems of the Eastern Arc Mountains Forest through; inter alia, strengthened
institutional capacity, pilot community-based conservation and development and
implementation of participatory forest conservation strategies\.
Revised Global Environment Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Forest and woodland cover is brought under effective management by
Indicator 1 :
community and individuals in project areas
Value No Target value
(quantitative or 0 provided 1\.75 million 4\.8 million
Qualitative) (significant areas)
Date achieved 02/26/2002 02/27/2002 06/29/2007 12/31/2009
Comments In order to measure the impact of the project, the indicator wording was changed
iv
(incl\. % in the 2007 restructuring to read: Area of forests on Tanzania Mainland managed
achievement) according to approved forest management plans (incl\. CBFM & JFM)
Indicator 2 : Private sector is involved in forest plantation management\.
Value
No target value
(quantitative or 0 20,000 16,563
provided
Qualitative)
Date achieved 02/26/2002 02/27/2002 06/29/2007 12/31/2009
Reworded in 2007 to enable measurability: Area of forest plantations under
Comments
private management agreements (hectares)\.
(incl\. %
Achie ved 16,563 has of forest plantations managed only under MOU
achievement)
arrangement, no contract signed\.
(b) GEO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Mechanisms for forest biodiversity conservation are more fully established
Indicator 1 :
(Areas of mountainous forest reserves managed unde r IUCN codes)
GEF Capital
Endowment
Limited capacity to carry
invested, GEF Capital
out natural resources
fundraising efforts Endowment
Value management in a way that
well under way\. invested\. 5,350
(quantitative or conserves and protects
5,350 sqkm sqkm gazetted and
Qualitative) vital forest ecosystems
gazetted and managed according
and v alues, including
managed to IUCN categories\.
livelihoods\.
according to IUCN
categor ies\.
Date achieved 05/15/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
(c) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Indicator 1 : TFS framework documents approved by PO-PSM (Head of Public Service)
New Institution in
Value Forests are managed by place with
(quantitative or MNRT/ Forest and improved capacity Yes Yes
Qualitative) Beekeeping Department\. for implementing
policy objectives,
v
improved financial
sustainability and
wit h greater focus
on service
delivery\.
Date achieved 02/26/2002 02/27/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 2 : TFS establishment order signed, CEO appointed and TFS operational\.
New Institution in
place with
improved capacity
for implementing
Value Forests are managed by
policy objectives,
(quantitative or MNRT/ Forest and Yes No
improved financial
Qualitative) Beekeeping Department\.
sustainability and
wit h greater focus
on service
delivery\.
Date achieved 02/26/2002 02/27/2002 06/29/2007 12/31/2009
Comments
(incl\. % Acting CE assigned, TFS not operational
achievement)
Indicator 3 : MNRT/FBD assets evaluated and transferred to TFS\.
FBD assets
Value Information on FBD assets
evaluated, in the
(quantitative or MNRT/FBD Assets not evaluated and
absence of TFS not
Qualitative) available transferred to TFS\.
transferred\.
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 4 : Revenue collected from forest goods and services (in Tanzania Shillings)
Value
Target not
(quantitative or 2 billion 24 billion 24 billion
established
Qualitative)
Date achieved 02/26/2002 02/27/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
New transport based fees and market-based forest produce pricing systems
Indicator 5 :
introduced and operational
Systems developed,
Value only piloted and
System operational
(quantitative or None operational in two
in selected regions\.
Qualitative) regions (Coast,
Mwanza)
Date achieved 02/26/2002 06/29/2007 12/31/2009
vi
Comments
(incl\. %
achievement)
Indicator 6 : Revenue Tracking System introduced and decentralized at district level
Revenue Tracking
Value Revenue Tracking
System operational,
(quantitative or None System operational
roll out at district
Qualitative) at district level
level underway
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Total area of forest under Village Land Forest Reserves (VLFRs) or Joint
Indicator 7 :
Management Agreements (JMAs) (hectares)\.
Value
(quantitative or 0 50,000 4\.1 million
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Number of villages with preparatory or established PFM processes (according to
Indicator 8 :
approved guidelines)
Value
(quantitative or 0 150 2,475
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 9 : Total village forest revenue collected per district per year (Tanzanian Shillings)
Value
(quantitative or None 50 million Unknown
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 10 : Number of Facilitators trained and implementing PFM
Value
(quantitative or 0 150 400
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Up-to-date and reliable forest & ecosystem resource data available for Mainland
Indicator 11 :
Tanzania
vii
NFI methodology
Value National Forest
developed, field
(quantitative or None Inventory (NFI)
crews trained, NFI
Qualitative) completed by 50%
not started
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Routine Forest & ecosystem data stored and publicly available in central
Indicator 12 :
database (NAFOBEDA)\.
Value
(quantitative or None Yes No
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
NAFOBEDA developed, but lacks data and is not fully functional at all levels (in
(incl\. %
part due to capacity at local level to use the system)
achievement)
Forest management plans for both protection & production forests updated or
Indicator 13 :
revised (hectares)
Value
Forest Management Plans
(quantitative or 150,000 1\.3 million
outdated
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Area of forests set aside and sustainably managed for charcoal production
Indicator 14 :
(hectares)\.
Value
(quantitative or None 4,000 4,500
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 15 : Number of projects piloting innovative economic instruments
Value
(quantitative or None 5 6
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 16 : Plantation resource base information available (hectares)
Value
(quantitative or None 80,000 80,000
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
viii
Comments
(incl\. % The information refers to publicly owned plantations\.
achievement)
Forest management guidelines revised and approved to reflect benefits and costs
Indicator 17 :
of multi-stakeholder arrangements in forest p lantation management
Value
Guidelines Gidelines
(quantitative or None
operational operational
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 18 : Number of plantation management agreements in place
Value
(quantitative or 0 3 3
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
Partly achieved, as MOUs agreed upon, but no formal management contract in
(incl\. %
place\.
achievement)
Increase in capital of the Eastern Arc Mountains Conservation Endowment Fund
Indicator 19 :
(EAMCEF) (US$)\.
Value
(quantitative or 0 No target set 11 million 7\.2 million
Qualitative)
Date achieved 04/08/2002 07/03/2003 06/29/2007 12/31/2009
Comments
(incl\. % Few (US$35,000) raised, fundraising campaign not started\.
achievement)
Indicator 20 : Number of grants provided by EAMCEF for biodiversity conservation projects\.
Value
(quantitative or 0 80 80
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
Indicator 21 : Forest area under protection status (including IUCN categories) (sqkm)
Value
(quantitative or Not available 5,350 5,350
Qualitative)
Date achieved 02/26/2002 06/29/2007 12/31/2009
Comments
(incl\. %
achievement)
ix
G\. Ratings of Project Performance in ISRs
-
Actual
Date ISR Disbursements
No\. DO GEO IP (USD millions)
Archived
Project 1 Project 2
1 05/13/2002 S S 0\.00 0\.00
2 12/23/2002 S S 1\.15 0\.00
3 05/25/2003 S S 1\.58 0\.00
4 11/26/2003 S S S 1\.92 0\.00
5 05/28/2004 S S S 2\.05 0\.00
6 12/15/2004 U U U 3\.03 0\.00
7 06/29/2005 MU S MU 4\.43 0\.00
8 12/19/2005 MU S MU 8\.35 0\.00
9 06/18/2006 MU S MU 10\.15 0\.00
10 06/29/2006 MU S MU 10\.15 0\.00
11 12/19/2006 MU S MU 12\.71 7\.00
12 06/29/2007 MU S MU 16\.69 7\.00
13 11/06/2007 MU S MU 19\.11 7\.00
14 12/13/2007 MS S MS 20\.88 7\.00
15 05/22/2008 MS S MS 24\.59 7\.00
16 11/24/2008 MU S U 26\.44 7\.00
17 05/24/2009 MU S U 30\.51 7\.00
18 07/04/2009 MU U 31\.28 0\.00
19 01/09/2010 MU S MU 36\.64 7\.00
x
H\. Restructuring (if any)
Amount Disbursed
ISR Ratings at
Board Approved at Restructuring in Reason for
Restructuring Restructuring
USD millions Restructuring & Key
Date(s)
PDO GEO Changes Made
DO GEO IP Project1 Project 2
Change Change
Adding a CDD
component to
implement
06/29/2006 N MU MU 10\.15
Participatory Forest
Management throgh
TASAF
As a result, the
following amendments
were agreed to better
deliver on improving
enabling environment
for sector reform throu
gh strengthening
existing and promoting
new tools for
sustainable forest
management:
(a) Adding two sub-
components under the
first component, to
include the
implementation of
06/29/2007 MU MU 16\.69
forest resources and
ecosystem assessment,
and the preparation
and pilot
implementation of
forest management
plans, as well as GOT
s increased emphasis
on alternative sources
of energy and
associated strategies
with foc us on the
unsustainable
production and use of
woodfuels, including
charcoal\.
To enable the
implemenattion of a
06/29/2007 MU 7\.00 Resettlement Action
Plan for the set up of a
prtected area
xi
I\. Disbursement Profile
P058706
P057234
xii
1\. Project Context, Development and Global Environmental Objectives and Design
1\.1 Context at Appraisal
1\. Country and sector background\. At the time of Project design (as is the case today), Tanzania's
extensive woodlands and forests were extremely important for mitigating the impact of rural poverty,
providing critical wood resources and other forest products to both rural and urban communities, and
perform important services such as watershed catchments and grazing areas\. Most of the forests and
woodlands, between 30 and 40 million hectares (ha), are comprised of dry woodlands, primarily miombo\.
Much of the country's forest biodiversity is found in the relatively small areas of humid tropical mountain
forest\. Among the most important of these are the Eastern Arc Mountain forests representing one of the
oldest terrestrial ecosystems on the continent, with high concentrations of endemic species under
considerable threat\. In addition to the natural forests, there were an estimated 135,000 ha of (mainly
industrial) plantations in Tanzania, of which 80,000 ha are under Government control and management\.
In 1998, the export of wood products amounted to US$6\.5 million while imports totaled around US$4\.2
million\. Tanzania's forests and woodlands were under growing pressure from population growth and
economic development\. Many forested areas had no protection status, and many of those officially
categorized as protected were still under pressure\.
2\. Institutional, policy and legal framework\. The Forestry and Beekeeping Division (FBD) of the
Ministry of Natural Resources and Tourism (MNRT) provided overall policy guidance for the forestry
sector, and some technical oversight and supervision\. Much of the management and protection of forest
reserves was the responsibility of the District Forest Officers (DFOs)\. The institutional framework was
considered to be problematic and in need of reform\. The fundamental orientation was toward regulation
and enforcement of forest legislation, while forest protection and management could no longer be
undertaken independently of the needs of rural communities\. At the same time, there was very limited
capacity to take on wider issues associated with biodiversity conservation\. Resources to finance forest
management were tightly constrained, and the sector depended heavily on donors\. The more effective
collection and use of revenues could have made a difference, but poor governance and the lack of
accountability and supervision were important constraints\. In 1998, the Cabinet approved an innovative
National Forest Policy that recognized the need for substantive institutional reforms and proposed the
creation of a new Tanzania Forest Service (TFS)\. With regard to biodiversity conservation, the new policy
committed the Government of Tanzania (GOT) to establish nature reserves in areas of high biodiversity
value\. Most importantly, however, the policy argued that local institutions and communities should have a
central role in forest conservation and management\. The policy provided the framework for the
preparation of the National Forest and Bee-Keeping Program (NFBKP), which was approved by
Government in November 2001\. The Project Appraisal Document (PAD) noted that the innovations
indicated in the policy had yet to be formally legislated\.
3\. International conventions\. At the time of Project design, Tanzania was already party to the
Convention on Biological Diversity, the African Convention on the Conservation of Nature and Natural
Resources, the Convention on the Protection of World Cultural and Natural Heritage, the Convention on
International Trade in Endangered Species (CITES), and the RAMSAR Convention on Wetlands of
International Importance\.
4\. Project concept\. Using a consultative process, proposals for Project preparation were an outcome
of a strategic planning workshop held in June 1999\. Initially, a follow-on Project from the Bank-financed
Forest Resources Management Project (FRMP) was considered\. However, it became apparent that forest
management and conservation, as well as village and community-based forestry would not succeed within
the existing institutional structure\. Major institutional reform would be necessary for any future forestry
interventions to be successful\.
5\. Project contribution to Government Strategy\. The Project was designed to address a number of
pressing sector issues and to support GOT's efforts to move forward with: (i) substantive institutional
1
reforms; (ii) developing and implementing service standards to support village-based forest and
woodlands management and conservation; (iii) an institutional framework for biodiversity conservation;
(iv) improving financial and procurement management and a sustainable financing mechanism; (v) fuller
involvement of the private sector in industrial plantation management; and (vi) improving the framework
for planning and implementation of biodiversity conservation initiatives\.
6\. Project contribution to the CAS\. The Project was to address specifically the CAS objectives of
supporting sustainable rural development and private sector development through: (i) the promotion of
off-farm activities; (ii) the management of woodlands and forests by communities; and (iii) the
establishment of a framework for the involvement of the private sector in industrial plantation
management\. The establishment of the TFS was to be consistent with the CAS goal of public sector
reform and institution building, to increase the effectiveness of public service delivery and improve
governance\.
7\. Project consistency with GEF Strategic Priorities\. The Project's GEF activities were to be
consistent with the GEF Strategy for Biodiversity Conservation, specifically the objectives of Operational
Programs 3 and 4 on Forest Ecosystems and Mountain Ecosystems\. GEF support was to provide finance
to: (i) create and strengthen participatory and co-management schemes to build support and ownership for
biodiversity conservation; (ii) develop socio-economic activities to reconcile biodiversity conservation
with human needs; (iii) identify processes which were likely to have significant adverse impact on the
conservation and sustainable use of biodiversity; and (iv) support capacity building efforts while focusing
primarily on a mountain tropical forest ecosystem at risk\.
8\. Two complementary PADs were prepared for this Project: the first, Report No 22743-TA dated
January 25, 2002, on a proposed IDA Credit for the (Tanzania) Forest Conservation and Management
Project (TFCMP P058706); the second, Report No 23901-TA dated May 28, 2003, on a proposed GEF
Grant for the Eastern Arc Forest Conservation and Management Project (EAFCMP P057234)\. TFCMP
became effective in May 2002, while the EAMCEF (Grant) became effective in April 2004\.
1\.2 Original Project Development Objective (PDO) and Key Indicators
9\. Considering the inconsistencies in scope and wording of the TFCMP PDO in Project Appraisal
Document and Development Credit Agreement, this ICR uses the PDO of the PAD LogFrame that has
been consistently used throughout implementation and as the basis for the restructurings in 2006 and
2007\. This PDO was to assist Government in policy implementation, in particular by developing a
framework for the long-term sustainable management and conservation of Tanzania's forest resources,
strengthening the role of individuals, communities, villages, and the private sector in management and
conservation of forests, and implementing this framework on a pilot scale\. EAMCEF, which uses the
same PDO was developed as a component of TFCMP, yet had been appraised separately from that Project
due to timing of the GEF approval process\.
10\. Key Indicators as included in the Main Text of the TFCMP-PAD are formulated differently (and
are more numerous) from those included in Annex 1 "Project Design Summary" of the same PAD (the
different versions of the Indicators are included in Annex 5)\. In this particular case, the Development
Credit Agreement (DCA) included the Indicators as defined in the main text, rather than in the Project
Design Summary\. Nevertheless, despite different formulation, indicators are substantially similar and/or
related\. The Key Performance Indicators (KPIs) as outlined in Schedule 5 of the DCA were:
A functioning TFS established with clearly defined service delivery functions and responsibilities
with regard to natural forests, woodlands, and industrial plantations\.
Significant areas of natural forest and woodlands under effective management as an outcome of
partnerships and initiatives with multiple partners (primarily communities and local governments)\.
A range of mechanisms for improving revenue collection involving partners such as the Tanzania
Revenue Authority and/or the private sector are tested and implemented; time-bound forest revenue
2
collection targets established and achieved; and effective mechanisms for sharing revenues with
villages put in place\.
An institutional framework consistent with overall civil service reforms in place which enables
Government to undertake forest biodiversity conservation initiatives, in particular in the Eastern Arc
Mountains; institutional capacity strengthened\.
The modalities for the establishment of a sustainable financial mechanism for conservation of Eastern
Arc mountain forests developed and implemented\.
A framework for the private sector participation in the management of industrial plantation
established, including guidelines, incentives, regulatory monitoring and control mechanisms\.
11\. By using the PDO as defined in Annex 1 of the PAD, the ICR assesses the project against the
associated PDO Outcome Indicators, which were (i) Forest and Woodland cover is brought under
effective management by communities and individuals in project area; (ii) Private sector is involved in
plantation management; and (iii) Mechanisms for forest biodiversity conservation are more fully
established\. This approach is based on a number of issues that need to be highlighted\. First, neither PAD
nor DCA provided any baselines against which results were to be assessed\. Secondly, the KPIs provided
were a mix of Outcome and Output Indicators\. Finally, as Annex 1 has been used to guide project
implementation during the early years, the Mid Term Review (MTR) in September 2006 based the
development of a new Results Framework (formalized at the 2007 Restructuring) on the LogFrame
provided in Annex 1\.
1\.3 Original Global Environmental Objectives (GEOs) and Key Indicators
12\. The GEO as defined in the Trust Fund Grant Agreement (TFGA), the EAFCMP is being used:
"The objective of this Project is to assist within the TFCMP, to promote sustainable conservation and
management of the biodiversity and ecosystems of the Eastern Arc Mountains Forest through; inter alia,
strengthened institutional capacity, pilot community-based conservation and development and
implementation of participatory forest conservation strategies\." The related Indicator was: "The
Endowment Fund has been capitalized and the Eastern Arc Mountains Conservation Endowment Fund is
implementing the proposed conservation program\."
1\.4 Revised PDO and Key Indicators and reasons/justification
13\. June 2006 Restructuring\. After the Project was launched in June 2002, Bank Supervision
Missions (Feb 2003) started expressing concern at the slow pace of implementation and disbursement\. By
December 2004, the Project was downgraded to Unsatisfactory (U)\. A Supervision Quality Enhancement
Review (QER), carried out in April 2006 in preparation of the September 2006 Mid-Term Review
(MTR), anticipated the need for restructuring of the Project\. However, as Participatory Forest
Management (PFM) had gained momentum, in June 2006 a Restructuring Memo to the Regional Vice
President was prepared to amend the DCA\. The restructuring focused mainly on adjusting the
implementation modalities of the PFM sub-component\. The PDO and associated outcome indicators
remained unchanged\. It needs to be noted that the Amendment did not accurately reflect the approved
restructuring memo, rather than modifying the Component 1 by adding a sub-component, it created an
additional project component as well as inserted an additional KPI (see Annexes 5 and 6)\.
14\. June 2007 Restructuring\. By June 2007, the Project had been in problem status for 30 months\.
Development Objective and Implementation Progress were rated as Moderately Unsatisfactory and key
milestones had not been achieved five years after project launch\. Stated reasons included: (i) an overly
ambitious project design focusing on institutional reform; (ii) the failure to engage actively with the
private sector; (iii) frequent changes in leadership at both the Bank and FBD, leading to the loss of
institutional memory and subsequent lack of ownership on the client side and disrupting the institutional
reform process; and (iv) serious capacity constraints of the implementing agency\. This coincided with a
move by MNRT to attend to pertinent issues such as the degradation of water catchment areas;
3
uncontrolled logging; and unsustainable production and use of charcoal\. Redirecting of staff to address
these challenges resulted in further constraints on already overstretched FBD resources\.
15\. The June 2007 Restructuring Project Paper addressed these changes by strengthening existing and
promoting new tools for sustainable forest management, rather than focusing on an institutional change
process in need of political leadership, outside the Project's control\. The restructuring (i) included a
Results Framework, (ii) adjusted Project components (see below), (iii) reallocated credit proceeds, (iv)
added a new disbursement category (to allow for land compensation), (v) changed the financing
parameters (to 100% of Expenditures, and (vi) extended the original closing date by two years, to
December 31, 2009\. As PDO and associated indicators were essentially not changed, the restructuring
was approved at Regional Vice President Level\.
16\. The Results Monitoring Matrix modified the Outcome Indicators of the original PAD Project
design summary to improve measurability:
Area of forests on Tanzania Mainland managed according to approved forest management plans
(including Community Based Forest Management (CBFM) and Joint Forest Management (JFM)
Agreements)\.
Area of forest plantations under private management agreements (concessions, co-management, or
communities designated)\.
Mechanisms for forest biodiversity conservation are more fully established (Areas of Forest Reserves
Mountains managed according to IUCN Codes)\.
17\. The second DCA amendment signed in August 2007 also did not accurately reflect the approved
restructuring proposal; instead it expanded on the already existing divergence between DCA and Revised
Results Framework and added new KPIs, without adjusting existing Indicators\. As a result, the
amendment did not use the opportunity to address discrepancies between the previous DCA and the
adjusted Results Framework\.
1\.5 Revised GEO and Key Indicators and Reasons/justification
18\. The GEO and related KPI were not revised\.
1\.6 Main Beneficiaries
19\. According to both PADs, the Project was to provide benefits to rural households that depend on
woodlots and forests to meet consumptive demands, as well as job seekers who would find employment
in a revitalized forest industry (based on sustainable plantation production)\. The Project was expected to
develop lessons from innovative pilot activities and as a result of institutional development, which was
supposed to have potential benefits for the vast majority of the country's population\. Direct benefits that
would accrue to communities through the Project included improved consumption and income through
the use and sale of forest products obtained from sustainably managed resources, and an improved
environment associated with enhanced forest conservation and protection\. National benefits of
biodiversity conservation were expected to accrue as a result of watershed catchment protection, which in
turn would yield significant benefits in terms of long-term hydroelectric energy production and urban
water supplies\.
1\.7 Original Components
20\. The Project was originally designed with the following four components and nine sub-
components (see Annex 6)\.
21\. Component One: Supporting institutional change and improving delivery service (US$ 25\.6
Million), was to assist GOT with the design and establishment of the Tanzania Forest Service (TFS) as a
specialized "executive agency" as defined by the Executive Agencies Act (1997), and consistent with the
wider and on-going national program of civil service reform\. It was envisaged that the TFS would have
responsibility for bringing about improvements in the protection and management of natural forests and
the development and management of industrial plantations\. The concept was that an agency with a
4
national mandate would eventually be established\. The component would have three sub-components: (i)
Establishment of the TFS; (ii) Improving service-delivery mechanisms for participatory forest and
woodland management; and (iii) Improving revenue collection from forests and woodlands\.
22\. Component Two: Private sector involvement in the management of industrial plantations (US$
3\.0 Million), would provide resources to develop and implement a framework for this initiative of the
management of existing industrial plantations, as well as to strengthen the potential for the development
and management of new plantations\. There would be four sub-components: (i) Improving the plantation
resource information base and management planning capacity; (ii) Strengthening institutional support
services for private sector involvement; (iii) Piloting alternative management of selected industrial
plantations; and (iv) Monitoring and Evaluation\.
23\. Component Three: Eastern Arc forests conservation and management (US$ 13\.4 Million), which
was co-financed with US$ 7 Million by GEF\. The component had sub-components: (i) Institutional
reforms for forest biodiversity conservation, in particular of the Eastern Arc forests; and (ii) Mechanisms
for sustainable financing of biodiversity conservation, including the establishment of the Eastern Arc
Mountains Conservation Endowment Fund (EAMCEF)1\.
24\. Component Four: Project Administration and Management (US$ 2\.7 Million), to finance the cost
of administration and management\.
1\.8 Revised Components
25\. The Project was restructured twice, in 2006 and in 2007, and this led to revisions of Project
components\. However, as described above, the Amendments to the DCA did not accurately reflect the
introduced changes, which led to inconsistencies in the documentation and retroactively made the
assessment of the project outcomes difficult\.
26\. The July 2006 First Amendment to the DCA reflected the restructuring memo by adjusting the
implementation modalities of the PFM sub-component\. The restructuring introduced a new Expenditure
Category of "Sub-Projects" and reallocating Credit Proceeds\.
27\. Rather than having the Forest and Beekeeping Division (FBD) directly implementing the
participatory forest component, a new sub-component was to enable sub-grants to communities through a
PFM window under the Tanzania Social Action Fund (TASAF) using Community-Driven Development
(CDD)\. Funds under the PFM sub-component that were not transferred to TASAF were used to create the
enabling environment, infrastructure and advice on sub-project development\. The new CDD sub-
component was implemented by the TASAF Management Unit, under a MoU with the Ministry of
Natural Resources and Tourism (MNRT)\. The funds allocated to this component, under a separate special
account, were managed by the TASAF Management Unit\. There was no transfer of funds among
projects\.
28\. The restructuring memo makes no reference to the need for creating a new component\. Rather
than changing scope of the existing sub-component and creating a new one, the DCA did create a new
component "Supporting community-based management of forests and woodland" (part D of the Project)
and introduced a new KPI, without considering the need for rectifying discrepancies within the legal
agreement\.
29\. The 2007 restructuring formalized the shift of resources from a focus on the institutional
framework toward the creation of the enabling environment\. Among the changes introduced were three
new sub-components, under Components 1 and 3 to (i) allow for the implementation of a National Forest
1
Two additional sub-components to be implemented by UNDP were complementary to the Bank-implemented activities,
and are not formally reported upon in this report: (i) Development and preparation of an integrated Conservation Strategy
for the Eastern Arc Mountain Forests; and (ii) a forest conservation intervention through government and community
partnership initiatives\.
5
Inventory and forest management plans, (ii) support the development and piloting of a fuelwood strategy;
and (iii) provide financing for the implementation of the Derema Corridor Resettlement Action Plan\. The
latter was an activity, initially unforeseen, yet directly related to the GEO\. GOT established the "Derema
Corridor", linking two protected forests in the Usambara Mountains, which are part of the Eastern Arc
Mountains\. In this process, villagers had to cease farming in forestland, for which they were to be
compensated\. Different development partners, including the Government of Finland and Conservation
International joined GOT and provided financial resources for the compensation\. However, as financing
was insufficient, GOT requested the Bank to reallocate TFCMP credit proceeds toward this exercise\. The
Derema Corridor RAP was subsequently included in the 2007 restructuring of the Project\.
1\.9 Other Significant Changes
30\. Financing and Funding Allocations\. Credit proceeds were reallocated at several instances during
Project implementation and are detailed in Annex 8\. Considering the significant exchange rate gains
(about US$6 million) over the implementation period, the additional funding allowed financing of
planned activities and also facilitated the inclusion of new priorities as outlined above\.
31\. Implementation Arrangements\. The 2006 Amendment to the DCA introduced the TASAF
Management Unit as additional Implementing Agency to support community-based management of
forests and woodlands\. To that extent MNRT and TASAF entered a Memorandum of Understanding
(MoU) dated February 6, 2006\. As the GOT had embarked on discussions with development Partners to
work toward a Forestry Sector Wide Approach (SWAp), it replaced its "National Forest Program Steering
Committee" with a "National Forest and Beekeeping SWAp Steering Committee"\. Considering that the
former had been the entity responsible for overall guidance of the Project, the 2007 DCA reflected this
change\. The 2007 Amendment of the DCA also included specifications for the implementation of the
Derema Corridor Resettlement Action Plan\.
32\. Implementation Schedule\. The 2007 Amendment to the DCA extended the Project closing date by
two years, to December 31, 2009\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design, and Quality at Entry
Sound background analysis
33\. Overall reasoning, justification, strategic choices and design of TFCMP (and EAFCMP) were
based on sound analysis and genuine sector priorities, some of which are as relevant today as they were at
the time of Project preparation, The basic framework of the Project was developed at a Strategic Planning
Workshop convened by MNRT in June 1999, which focused on the findings of the Implementation
Completion Report (ICR) of the Forest Resource Management Project (FRMP), and used some of the
evaluation studies to provide strategic guidance for the design of TFCMP\. This was followed by a series
of four missions, starting with identification in January 2000, and ending with appraisal in October 2001\.
34\. The inclusion of the GEF component in TFCMP was an outcome of a UNDP-implemented
Project Identification Activity following the December 1997 International Conference on the
Conservation and Management of the Eastern Arc\.
Lessons learned and incorporated in Project design
35\. Project preparation was influenced by the previous FRMP, which implemented a number of
activities on a pilot scale, in particular those related to Participatory Forest Management (PFM), forest
extension, forest collection and monitoring as well as regional and local planning of forest activities\.
Considering these experiences, the TFCMP/EAFCMP was designed to upscale these pilot activities to a
national scale\.
6
Assessment of Project Design
36\. The PDO (and GEO) captured the Government's vision of forest policy reform, strongly
influenced by the (at preparation) ongoing general Public Service Reform Program championed by the
UK Department for International Development (DFID) at the time\. The PDO was adequately broad, given
the transition underway in the sector\. The PDO was supported by the scope and composition of funded
activities\. The Project's aim to support wide-ranging policy revisions was based on the 2002 Forest Act's
provision to establish a semi-autonomous agency in the forest sector, which was to be operationalized by
the Project\. In hindsight, the ambitious focus on the implementation of institutional changes, that had not
yet taken place at appraisal and depended on continued political support outside the Project's control, was
one of the main contributors for experienced problems during Project implementation from the onset\.
37\. The design did assume that the implementation of the new forest policy would take place within
two years of appraisal, with a framework and institutional set up for the long-term sustainable
management and conservation of forest resources in place\. A number of critical activities were therefore
planned and depended on the establishment of TFS\. This affected Project implementation early on, as the
assumption was that TFS would be the precondition to carry out other activities\. In hindsight, the design
should have allowed a more flexible approach, considering that there was a need for: (i) assessing and
consolidating the information base of forest resources; (ii) improving transparency; as well as (iii)
establishing accountability mechanisms which would benefit the envisaged service delivery function of
the forest sector, regardless, whether TFS was in place, or FBD will continue to be the responsible GOT
agency\. This would have enabled sustainable management and conservation of forest resources within the
existing legal and institutional framework, in partnership with relevant stakeholders, such as communities
and private sector, even in the absence of the TFS\.
38\. The PAD provides references to the decentralization process and attempts to make use of and
contribute to this process\. The actual decentralization took a different course than anticipated, with a
steeply increasing role of the Prime Minister's Office Regional Administration and Local Government
(PMO-RALG) at the field level\. Project design did not foresee these changes, which are affecting
reporting and resource distribution mechanisms, leading to a less prominent role of the central
government at district level\. The Project also missed the opportunity to specify how TFS could have
operated in a decentralized environment\.
Assessment of Risks
39\. The five "from output to objective" risks were reasonable but their assessment was not
sufficiently rigorous (and not formulated as risks)\. These included: (i) insufficient support for introducing
institutional reforms; (ii) underdeveloped revenue sharing mechanisms; (iii) encroachment of forest areas;
(iv) lack of commitment to engage with the private sector; and (v) insufficient commitment to biodiversity
conservation\. As outlined above, the risk for non-establishment of the TFS should have been rated as
substantial as it required continued political level decision making\. In this respect, the mitigation
measures should have taken into account what the consequences would have been of substantial delays in
the establishment of the agency\. In addition, the design underestimated the risk that GOT would not
engage constructively with the private sector and seize opportunities for outsourcing/concession
development and management of forest areas\. In retrospect, this had an impact on the performance under
this component as mitigation measures not being considered\. While the GOT commitment was strong to
improve the mechanism for financial sustainability of forest conservation, the predicted difficulties of the
Endowment Fund to generate sufficient financial support should have been assessed as substantial\.
Quality at Entry
40\. Quality at Entry was not recorded at the time of Project approval\. In view of issues discussed
above and despite less rigorous criteria and instructions used at the time it would likely have been rated
Moderately Unsatisfactory\.
7
2\.2 Implementation
41\. The Project has been under implementation since July 2002\. Even though the progress was not as
swift as expected the overall Project rating remained Satisfactory for almost 2\.5 years\. In December 2004,
the rating was strongly downgraded to Unsatisfactory\. By June 2005, it was upgraded to Moderately
Unsatisfactory, where it remained until November 2007\. In December 2007, it was again upgraded, to
Moderately Satisfactory, but by November 2008, it was once more downgraded to Moderately
Unsatisfactory, where it has remained until the closing date of the Project\.
(a) Factors that have negatively affected Project implementation
42\. A Project design that depended too strongly on political commitment to innovations, in particular,
establishment of the TFS and private sector involvement in industrial forest plantations\. The focus on
establishment of the TFS drew attention away from the other equally important innovative elements in the
Project (for instance community based forest management)\. In 2008 and again in 2009, the Bank
suggested a restructuring of the Project and withdrawal of the establishment of TFS as a Project
performance indicator, but senior FBD/MNRT staff advised against this, fearing that its withdrawal as an
indicator would give a negative signal to political decision makers and decrease the likelihood that TFS
would be established\. The original commitment to involve the private sector in forest plantation
management was weakened as a result of: (i) a lack of inventory data, (ii) a reluctance to pursue
privatization in the absence of reliable information on the forest resource base; (iii) an inappropriate
regulatory and procedural framework to allocate concessions; and (iv) a more general backlash against
privatization after mixed results in other sectors; and (v) a widespread (but unrelated) illegal logging
practices (mainly in natural forests) and the high profile attention this received\.
43\. Changes in leadership and weak supervision\. Frequent changes of MNRT political and technical
leadership occurred during Project implementation\. It has been argued that even if incoming leadership
wanted to establish TFS, they would have required time to understand all implications before actually
confirming such a decision\. On the Bank side, the Task Team Leader (TTL) at preparation stage left the
region before the Project became effective\. The incoming TTL was not familiar with the country, the
sector, and the implications of the institutional reforms proposed\. Subsequently, supervision in initial
years was weak\. Additional management changes happened between 2003 and 2005, with some stability
coming in October 2005 when the Project was managed from the Bank's Dar es Salaam Office\.
44\. Capacity constraints\. Although FBD, the main implementing agency, allocated financial and
human resources to a departmental (mainstreamed) implementation unit, the appointed accounting and
procurement staff lacked experience and understanding of Bank procedures\. This negatively impacted
procurement activities, including contract management, and subsequently led to slow disbursement\.
Frequent transfers of FBD fiduciary staff also made it difficult to provide incentives for staff working on
the project through the provision of training\. The situation was eventually overcome with the contracting
of financial management and procurement consultant expertise\.
45\. Delays caused by third parties\. During Project preparation, it was expected that Denmark would
complement certain TFCMP supported activities\. For instance, TFCMP would work at central
government level on awareness raising, engage and train a pool of service providers, as well as M&E of
community based forest management (CBFM), and Denmark was expected to support local level CBFM
implementation\. Once TFCMP was approved, Finland joined Denmark in supporting CBFM at local level
through the provision of financing directly to a number of districts\. However, the implementation
arrangements were different from what had been anticipated; their support was not nationwide and started
later than had been expected\. In order to roll out CBFM on a larger scale, the GOT requested the Bank to
finance local level activities in addition\. Considering the existing IDA financed TASAF II project, the
Bank responded positively to the request and financed sub-projects through a window for CBFM support
through TASAF, covering 25 districts, not covered by Danish/Finnish support\. As this approach was
8
different from the one used by the other Development partners, required capacity building delayed the
actual approval and implementation of sub-project proposals by about one year\.
(b) Factors that have positively contributed to Project implementation
46\. Improved supervision and stability in task team leadership\. The appointment in 2005 of a
country-based TTL, supported by team members in the Country Office, made for more concerted
supervision; improved and timely dialogue with the government and responses to issues in real time\.
47\. Pragmatic approach of the FBD-TFCMP team and the Bank's Task Team to "make the best of
it", even in the absence of the promised establishment of TFS, and the attitude to "move forward where
possible", resulted in overachievement of certain activities, while others could not be achieved\.
48\. MTR and Restructuring exercises\. The restructuring on Component One, helped refocus attention
from institutional change associated with the TFS, to service delivery in the field of sustainable (i\.e\.
participatory) forest management\. This was supported by the development of a Results Framework and a
Results Monitoring Matrix to replace the earlier Project Design Summary and formal establishment of
existing baselines against which progress could be measured\. In addition, the extension of the Project
duration by two years to December 2009 helped the Project to adjust the anticipated results and achieve
more than would have been the case had the earlier closing date been maintained\. Finally, increasing to
the maximum the percentage of financing parameters to be financed by Credit Proceeds for all Categories
helped to overcome implementation delays caused by the lack of counterpart funding\.
49\. Joint Development Partner approach to participatory forest management\. This resulted in good
coordination, cooperation and information exchange with DPs in the forestry sector (in particular
Denmark, Finland, and Norway)\. It also facilitated increased joint policy level discussions, therefore,
eliminating potential duplication or opposing advice to the government; while leveraging each of the
donor's comparative strengths in the management of forest resources\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
50\. The M&E arrangements of the Project were weak from the outset and suffered from divergent
indicator formulations\. During the Supervision Mission (Sept\. 2003), the lack of a system "that would
allow effective evaluation of the achievements of Project specific outputs and development objectives"
was noted and measures included to develop such a system\. However, a serious attempt to address this
shortcoming was not undertaken until 2006\.
51\. Original design\. At the time of Project design, M&E was not as rigorous as it is today\. The
original Project design had several M&E related weaknesses:
The PDO was very broadly defined, but also referred to a "pilot scale";
The PAD included indicators that were formulated differently from the ones in the DCA and Project
design summary\. The DCA used the KPIs as included in the Main Text, even though these consisted
of not only indicators at PDO level, but also indicators at component and sub-component levels (such
as for instance the establishment of the TFS)2;
Original Project components included a sub-component on M&E to cover Component Two (private
sector involvement in forest plantations), because of the innovative nature of that component\. Since
the whole Project design was innovative, the same reasoning could have justified an M&E system that
would have covered the entire Project\. However, both TFS and the restructured MNRT were expected
to have clearly defined monitoring roles, which is probably why no comprehensive M&E system was
included in TFCMP itself\.
The original set of indicators consisted of two types: a yes/no type (for instance, TFS established or
not) and an open-ended type, such as "forest brought under effective management"\. The latter type
2
This was not addressed properly and subsequent non-achievement of certain lower level indicators contributed to the
Project performance ratings as included in the ICR\.
9
would have required a baseline against which to measure progress, and a target value that should be
achieved\. But, there was no baseline and no targets\.
52\. NAFOBEDA and Results Framework\. As a consequence of the weak M&E system, the borrower
developed a proposal for a National Forest & Beekeeping Database (NAFOBEDA), which was designed
and field tested over the following two years\. Nevertheless, the nationwide roll-out and implementation
was delayed due to capacity constraints and lack of enabling infrastructure at local level\. The 2006 MTR
agreed on a proper Results Framework to replace the original Project Design Summary\. It also took the
initiative to start sharpening the indicators and belatedly formally establish a baseline\. The June 2007
restructuring Project Paper included a fully-fledged Results Framework and a Results Monitoring Matrix,
introducing systematic measurable Intermediate Outcome Indicators, mainly relying on already existing
baselines\. Reporting against these baselines was done during supervision by utilizing data from existing
reports (both published and unpublished) to satisfy data requirements in the results framework to ensure
the availability of sufficient data as evidence for the achievements of the Project against its PDO\. This
process was a result of the fact that the list of indicators that can be generated by NAFOBEDA (including
the majority of the performance indicators under TFCMP/EAFCMP) had yet to be fully entered into the
database\.
2\.4 Safeguard and Fiduciary Compliance
(a) Social and Environmental Safeguards
53\. Overall, Project compliance with social and environmental safeguards has been satisfactory\.
During preparation, the Project was categorized as a Category B Project under the Bank's Safeguard
policies and guidelines\. Safeguard policies triggered by the Project at appraisal were: Environmental
Assessment (OP 4\.01), Natural Habitats (OP 4\.04) and Forestry (OP 4\.36)\. An analysis of Environmental
and Social issues related to the Project was carried out during Project preparation and included as an
Annex to the PAD\. This analysis recommended that: (i) an environmental and social safeguards checklist
should be incorporated into the Guidelines for the establishment of Village Forest Reserves, but that it
would not be necessary to prepare an Environmental Management Plan; (ii) detailed socio-economic
studies should be carried out in the pilot industrial plantation areas affected by private sector involvement;
and (iii) the impact of the Participatory Forest Management sub-component and other Project activities on
the integrity of tropical high forests should be monitored\. The analysis concluded that overall Project
impact on environmental management and conservation in forests would be positive\. Considering the
subsequent strengthening of the environmental compliance mechanism as stipulated in the Environmental
Management Act of 2004, as well as the development of Forest Sector-specific Environmental Impact
Assessment Guidelines, the compliance with the above mentioned safeguard policies was rated
"satisfactory"\.
54\. At appraisal, no social safeguard was triggered, which was confirmed by the GOT (as stated in the
PAD) that involuntary resettlement would not be carried out in conjunction with any Project
implementation activity\. However, and as outlined above, the GOT's request to use credit proceeds to
compensate 1,130 local farmers who had seized cultivating inside a forest reserve targeted to become a
connector between two protected areas, triggered OP 4\.12 (Involuntary Resettlement) and necessitated the
preparation of a Resettlement Action Plan (RAP) for the area\. Once the RAP had been approved by the
Regional Safeguard Coordinator and been disclosed, a request was put forward to the Bank's Land
Acquisition Committee in March 2007 to review the request for financing land acquisition/compensation
under BP 6\.00\. The request was subsequently approved and RAP implementation started\.
55\. As part of its due diligence, in May 2009 the Bank carried out an independent verification of the
RAP implementation\. The verification report outlined the achievements reached at the time and drew
attention to some of the implementation constraints experienced (see Annex 7 for a more detailed
description of conclusions)\. It states that: (i) cash compensation had been duly paid out, grievance settling
mechanism was implemented and easily accessible; (ii) land compensation had not yet been finalized; (iii)
10
the resettlement and compensation exercise had been implemented in a piece-meal manner and with
delays, (iv) the M&E had not started; and (v) OP 4\.10 (Indigenous Peoples) and OP 4\.11 (Physical
Cultural Resources) did not apply\.
56\. By December 2009, a number of activities highlighted in the verification report had been
addressed, such as: (i) developing and implementing a M&E system for the RAP; and (ii) identifying and
demarcating a total of 921 ha of land for compensation, currently forming part of an idle, state-owned
sisal plantation estate\. The fact that the RAP has been incorporated into the District Development Plan
indicates strong local and regional commitment (including from the local Member of Parliament)\.
Furthermore, the Forest and Beekeeping Division will retain its RAP coordinator until the land
compensation exercise is concluded\. During a meeting with affected farmers in late March 2010, the
Board of the Consolidated Holding Corporation (successor of the former Parastatal Sector Reform
Commission - in charge of administering former state holdings), agreed that the ownership of the farm
should be revoked by the President and distributed to the affected farmers as stipulated in the RAP\. The
necessary follow up is being undertaken by the local MP through the Commissioner for Land at the
Ministry for Lands, Housing and Human Settlements\.
57\. In order to resolve this last outstanding issue, the World Bank will continue to monitor the
progress with respect to the land compensation and work with all relevant stakeholders to ensure that the
affected farmers will be allocated the farm land as outlined in the Resettlement Action Plan\.
(b) Fiduciary Compliance
58\. A Country Financial Accountability Assessment was completed at the time of Project preparation,
and a Financial Management Capacity Assessment of MNRT was undertaken in conjunction with the
Appraisal Mission\. This, and the positive experience with the previous Bank operation in the sector, led to
the conclusion that there would be no major financial risks to the Project\. Procurement would be carried
out using existing MNRT structures, and MNRT was to retain its Procurement Specialist\. The overall
procurement risk assessment rate was "average"\.
59\. The MTR in 2006 found the Project's financial management to be weak: "the accounting systems
of the Project are inadequate and cannot be relied upon to produce understandable, relevant and reliable
financial information required by the Bank"\. Considering the fact that the Project was operated by a
"mainstreamed PIU", capacity constraints were mainly related to insufficient understanding and skill mix
of fiduciary staff in the Project office\. In addition, high staff turnover at implementation made capacity
building and strengthening difficult, as capable staff seldom remained with the Project but were
transferred to other (Bank financed) Projects\. By 2007, the situation had improved: ineligible expenses
prior to FY2005/06 were refunded in full by MNRT; and additional procurement and financial expertise
had been hired\. The latter improved the capacity of the implementation team and resulted in a Satisfactory
rating (for FM) and Moderately Satisfactory rating for procurement at Project closure\.
60\. Particular weaknesses existed in management of civil works contracts, specifically the
construction of the (TFS) offices\. Notably, there was improper application of the exchange rate formula
and substantial cost over-runs, which were only formally reported at a very late stage, triggered complex
contract amendment procedures that could have been avoided by timely reporting\.
2\.5 Post-completion Operation/Next Phase
61\. No direct follow-up operation is planned\. The current Tanzania Joint Assistance Strategy (JAS)
covers 2007-2010, and it is uncertain to what extent forestry or natural resources management issues will
have a prominent place in the next CAS\.
11
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
62\. The PDO remains relevant to Tanzania's "National Strategy for Growth and Reduction of
Poverty" 2005-2010 (MKUKUTA)3, particularly to its "Economic Growth and Reduction of Income
Poverty" cluster, which specifically mentions natural resources management, including forestry and is
currently under revision\. This is also true for the Bank's Joint Assistance Strategy 2007-2010 (now
extended through a CAS Progress Report until June 2011)\. For the latter, governance and accountability
in the forest (and NRM) sector are important, as is the role of the sector in economic growth\. Considering
the importance of the Eastern Arc Mountains, the GEO remains as relevant today as it was at appraisal\.
63\. Based on solid preparatory work and preceding FRMP, the Project design was relevant at the
time, considering the ongoing public service reform processes championed by some Development
Partners and perceived strong GOT ownership\. However, achieving the associated outcomes (such as the
establishment of TFS) was dependent on political commitment, which has been outside the Project's
control\. The Project's focus on institutional reform assumed that other sector priorities would fall into
place once the TFS had been established, yet did not prepare for the possibility that this process could
stall or change\. As some Development Partners changed funding modalities (to General Budget Support)
and frequent changes at FBD management level led to the loss of institutional memory and subsequent
lack of ownership on the client side, critical assumptions made at appraisal changed within the first 18
months of implementation\. Once the institutional restructuring could not be achieved, the main factor to
success was lost and despite the achievement of the activities in some of the other components
sustainability in the long term remains questionable\. In the absence of TFS, there is still a need to build
functional and long-term alternatives\. The decentralization process is a factor that could help in the long-
term, but some work will need to be done to ensure that there will be adequate linkages between the
central and decentralized (local) government levels\. In particular, there is a need for adequate provision
of human and financial resources, to ensure that joint planning and implementation can be done and
sustained in the future\. As a result and regardless, whether TFS or FBD would be the responsible agency,
sustainable forest management and conservation approaches could have been developed, in partnership
with relevant stakeholders, such as communities and private sector as foreseen in the Project design\.
While some of these ideas have been introduced into the Project through the 2007 restructuring,
considering the remaining implementation period, these changes could not make up for the time lost
during the first five years of implementation\.
3\.2 Achievement of Project Development Objective and Global Environmental Objectives
64\. Taking into account the broad PDO and the above discussed divergence of indicators, assessing
the achievement of indicators is done in two ways: (i) by assessing whether different sub-objectives
within the PDO have been achieved; and (ii) within the different components\. The PDO (which remained
unchanged) contained four sub-objectives: (i) implementing Tanzania's forest policy, by developing a
framework for the long-term sustainable management and conservation of Tanzania's forest resources;
(ii) strengthening the role of individuals, communities, villages and (iii) the private sector in management
and conservation of forests; and (iv) implementing this framework on a pilot scale\.
65\. Today more than 4\.1 million hectares (or 13% of all forests in Tanzania) are under either
Community-based or Joint (GOT-Community) Forest Management, the Project clearly helped to
strengthen forest management by individuals, communities and villages\. In addition, within the existing
framework a number of innovative activities have been implemented on a pilot scale (e\.g\. forest produce
pricing systems, decentralized revenue tracking system, establishment of NAFOBEDA, carbon projects
participating in the voluntary market)\. Revenues have increased by 33% over the last three years of the
project\. As these results were achieved without TFS being established, a Moderately Satisfactory rating
was considered\. However, the project's objective was the implementation of the policy and associated
framework, focusing on (i) providing more independence of the sector from Government Budget, (ii)
12
creating the autonomy to make strategic decisions for the allocation of resources, and (iii) ensuring a
commitment to engage with relevant stakeholders in the long-term\. The establishment of this semi-
autonomous agency would have been an important milestone in sector reform process\. The fact that even
management arrangements on a pilot were not formalized at project closure raises concern\. Considering
that the overall policy and legal framework in the sector has not changed since the appraisal of the project,
with pressures on forest resources greater than ever due to increasing population impact, expansion of the
agricultural frontier and escalating demand for fuelwood in urban centers, the failure to change the
institutional set up of the sector raises concern about the sustainability of outcomes and outputs achieved\.
As a result, the achievement of the PDO has been rated Moderately Unsatisfactory\.
66\. Achievement of the GEO as measured by the single KPI formulated in the 2003 EAFCMP TFGA,
is rated Moderately Satisfactory\. It is not fully Satisfactory because of the initial delays in meeting the
benchmark triggers for the disbursement of the endowment funds and the inability to raise additional
capital for the endowment fund\. The GEF provided the initial US$7 million for the endowment with the
goal under the Project to raise at least an additional US$1 million\. While there is no concern about the
institutional and financial sustainability of the EAMCEF, the revenue generated from the capital at US$7
million is well below what would be optimal to cater for conservation activities in all the forest blocks of
the Eastern Arc\.
3\.3 Efficiency
67\. The Project was a blended IDA Credit/GEF grant and counterpart funding from the Government
of Tanzania\. During preparation of the Project economic and financial considerations were discussed,
focusing on: (i) community-based forest management; (ii) environmental values and the national
economy; (iii) carbon sequestration; (iv) industrial plantation production; and (v) fiscal revenue collection
in relation to FBD expenditures and budget allocation\. Annex 3 revisits these considerations and attempts
to quantify the benefits achieved through the different activities undertaken by the project\.
68\. Institutional management efficiency: The investment of US$10 million for the building enabled
not only the Forest and Beekeeping Division, but also the whole Ministry to consolidate staff previously
based in several locations around Dar es Salaam\. In addition to the beneficial credit conditions (to be
repaid over 40 years at a minimal interest rate), the efficiency gain can also be measured in (i) lower
travel costs (fuel, maintenance, etc\.), (ii) more time spent on productive tasks due to less time spent in
traffic, and (iii) better monitoring and evaluation of civil servants' performance by management\.
69\. Plantation inventory: The inventory of the public plantation estate (of 80,000 hectares) has been
carried out incurring the expenses for (i) quality and supervision consultancy, (ii) incremental cost for
field crews for data collection and analysis, durable goods (vehicles, computers) and (iv) training of
crews\. While the total cost of US$2\.59 million seems relatively high, the inventory has not only provided
field data for all public plantations, established systems (including site stratification, permanent sample
plots, production of maps, and development of country-specific yield tables and set up of a databases)\.
Goods procured under this sub-component and training provided has not only benefitted the plantation
inventory, but also enabled FBD to set up, train and equip inventory crews, which will be used to carry
out the planned National Forest Monitoring and Assessment (NAFORMA)\. Therefore, the amount of
valuable information gained and systems established will make all subsequent inventories much more cost
effective\.
70\. Improved Revenue Collection: Under this sub-component, a number of innovative consultancies
(e\.g\. redesign of log sale system, transport based fee system for charcoal and fuelwood) were developed
and implemented\. Key support was provided in establishing and equipping Forest Surveillance Units
(FSUs) in strategic parts of the country\. This strengthened the field presence and enforcement capacity of
FBD\. As a result of the project's investment of US$ 3\.68 million, a 33% increase in revenue collection
(from TShs\.18 billion in 2007 to TShs\. 24 billion in 2009) has been achieved\. In addition, the introduced
tracking system of forest produce has become mandatory for all other departments in the Ministry\.
13
71\. Management planning in Natural Forests: As a result of the 2007 restructuring, operational
support was provided to the FBD catchment office\. The objective was to develop and implement
management plans for 1\.3 million hectares of critical Nature Reserves (Kilombero, Nilo, and Uluguru)\.
With a cost of US$2 per hectare, this exercise was carried out efficiently, considering an average cost
between US$1\.50 to US$4 per hectare for comparable forest ecosystems\.
72\. Participatory Forest Management: Compared to the cost per unit of doing this through traditional
"project based approaches", PFM implemented under TFCMP (and parallel financed by Denmark and
Finland) represented a significant reduction in transaction cost, while subsequently increasing coverage
both of forest areas and villages\. The funds implemented through TASAF under the credit (US$3\.76
Million) reached 25 districts and around 100 villages\. The cost for developing a sub-project under this
component was on average US$1,500, which is in the same range as ring fenced funds in other sectors\. In
the eight districts where the local government capacity was low, the support provided under the project to
engage Local Service Providers has increased the efficiency of the delivery mechanism and sped up the
project development and approval process\. Earlier support provided under a "traditional project" financed
by Denmark had a budget of US$5 Million and worked in 22 villages in one district\. While there are
issues about quality versus quantity - and trade-offs to be made, the present model developed and
implemented by the GOT represents value for money\. Compared with other countries Tanzania should be
considered in a stage between Nepal, where unit costs are lower and Cambodia or Kenya, where much of
implementation is being done at a pilot scale or by NGOs using project based models\. However, Nepal
has over 40 years experience and PFM now operates in 14,000 villages and touches around 23% of the
total population\. Recurrent costs are low because capacity, systems and modalities have been established\.
The development of a national system for Tanzania is well on its way, but requires additional support to
make it sustainable\.
3\.4 Justification of Overall Outcome and GEO Outcome Rating
73\. The Overall Outcome Rating of the Project, measured by combining relevance, achievement of
PDO (including explicit or implicit key associated outcome targets), and efficiency is Moderately
Unsatisfactory\. Reasons for this rating include:
The institutional reform and enabling environment associated with Component One are insufficient to
be confident about the sustainability of the achievements under the first KPI (area of forest under
effective community management)\. The main pending issue is the sharing of benefits and revenues
from participatory forest management between local communities, local government authorities,
MNRT and the Treasury\.
Similarly the sustainability of the achievements under the private sector involvement indicator
remains in doubt until the current MoUs are replaced by formal contracts\.
Project efficiency suffered as a result of unsatisfactory elements in Bank and Borrower performance,
in particular: (i) political level decision making (or the lack thereof) by the Borrower regarding TFS
establishment and (participatory managed) forest revenue sharing; and (ii) three years (2002 2005)
of unsatisfactory Project supervision by the Bank and increasing deviation between revisions to the
results framework and amendments to the DCA\.
74\. Based on achievements made toward the GEO with respect to (i) establishing of the Eastern Arc
Mountain Conservation Endowment Fund (EAMCEF); (ii) selecting and implementing of a sound capital
investment strategy; as well as (iii) GOT's commitment in supporting the EAMCEF operation as well as
its grant facility, its outcome could be considered Satisfactory\. However, the failure to ensure the
development and implementation of an effective fundraising strategy to secure necessary financing to
implement its long-term strategies resulted in an overall GEO rating of Moderately Satisfactory\.
14
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
75\. Natural resources from forests and woodlands (predominantly miombo) contribute significantly to
household economies in rural Tanzania\. However, in the majority of cases, poor rural households are not
becoming rich by tapping into markets for forest and miombo woodland products, but are vitally
dependent on forests because of their role as a safety net\. Forests are providing for a very substantial
proportion of total household consumption\. This proportion increases significantly among households that
encounter serious income shocks because of illness or environmental stress\. Forest and woodland
resources are a critical element of the rural household economy and contribute significantly to mitigating
the impacts of poverty\. In cases where these resources are lost as a result of deforestation or other
proximate causes, the need for alternative safety nets is likely to place further and quite large burdens on
public service delivery institutions, already poorly equipped to handle the problem of rural poverty\.
76\. The expansion of Participatory Forest Management has been a result of improving capacity for
local management of forest resources, supported under the TFCMP in collaboration with other
Development Partners\. As communities take on responsibility, become owners of villages forests and
engage jointly with the GOT in managing and conserving forest and woodland resources sustainably, the
role of safety nets for mitigating the impacts of rural poverty can be greatly enhanced\. While the
management of the dry woodlands is unlikely to provide a path out of poverty, it can help to reduce its
negative impacts\.
(b) Institutional Change/Strengthening
77\. Institutional change was the main focus of the original Project design, primarily the early
establishment of both the TFS and the EAFCMP and the subsequent strengthening of the capacity of these
new institutions to undertake a series of core functions\. In the case of EAFCMP this was implemented as
planned, resulting in an established mechanism (operated as a NGO) that provides long-term support to
conservation and management of the Eastern Arc Mountain forest\.
78\. In the case of the institutional reform, TFS was never established\. Instead, the Project had to take
a pragmatic approach, formalized through the 2007 restructuring, and focused on the different core
functions, such as: (i) financing of sub-Projects implemented through TASAF; (ii) carrying out of
natural and plantation forest inventories and the creation of relevant databases; (iii) ensuring the delivery
of improved forest services in for instance the formation of village forest land reserves and in the
management and utilization of industrial forest plantations; (iv) improving control of transport of forest
products and the associated increases in revenue collection as well as the tracking and utilization of these
revenues; (v) preparing woodfuel action plan; as well as (vi) operationalizing of a series of practical
manuals and guidelines\.
(c) Other Unintended Outcomes and Impacts
79\. While the preparation and implementation of the Derema Corridor Resettlement Action Plan was
not intended at appraisal, the fact that it was directly related to the Project's GEO facilitated the Bank's
positive response to a GOT request to allocate credit proceeds and enable the GOT to overcome a
financing gap under a different (non Bank) operation\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
80\. Not available\.
4\. Assessment of Risk to Development and GEO Outcome
Rating for Risk to Development Outcome: Substantial
81\. The Project consisted of many different activities, some more successful and sustainable than
others\. With regards to major outcomes, i\.e\. those related to the actual management of forest and
15
woodland, in particular the sizable areas under CBFM and JFM, sustainability will depend to a large
extent on the use of the forest resources and the sharing of benefits\. These issues are yet to be resolved at
policy level, and therefore all CBFM and JFM forests remain at significant risk\.
Rating for Risk to GEO Outcome: Substantial
82\. Though the EAMCEF has been capitalized and is implementing its conservation program,
sustainability of both the general functioning of the Endowment Fund, as well as, the sustainability of
some of its sub-Projects remains questionable\. The Endowment Fund has lost much of its value as a result
of the global financial crisis\. Also, it has not been particularly successful in fund-raising\. The current size
of the Fund is too small to effectively cover the whole EAMCEF target area\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Unsatisfactory
83\. At the time of Project preparation, no Quality at Entry rating was recorded\. Taking into account
the fact that the Project preparation team could not have foreseen some of the changes that would take
place, if measured against today's standards Quality at Entry would be considered Moderately
Unsatisfactory because of the following shortcomings: (i) the underestimation of the risk that the TFS
would not be established and the resulting impact on Project implementation; (ii) the absence of a
comprehensive M&E system; (ii) internal inconsistencies within the PAD and between PAD and DCA\.
(b) Quality of Supervision
Rating: Moderately Unsatisfactory
84\. During the first three years of Project implementation, supervision was Unsatisfactory and critical
momentum for institutional reform, generated during Project preparation, was completely lost\. The
situation improved in early 2006 when the TTL relocated to Dar es Salaam\. The 2006 and 2007
restructuring exercises included both satisfactory (e\.g\. revised Results Framework) and unsatisfactory
elements (e\.g\. lost opportunities in rectifying earlier shortcomings)\. Even the constructive and pragmatic
approach to "make the best of it" and "move forward wherever possible" with some considerable success
until the very end of the Project cannot justify a better rating\.
(c) Justification of ratings for Overall Bank Performance
Rating: Moderately Unsatisfactory
85\. Both lending and supervision performances are rated Moderately Unsatisfactory, hence the rating
for the overall performance\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately Unsatisfactory
86\. Satisfactory elements of GOT performance include among others: (i) the relatively quick approval
at all concerned levels, except MNRT itself, of TFS establishment, for instance the President's Office
Public Service Management; (ii) the approval by the Ministry of Finance, that a major share of revenues
generated by GOT owned forest plantations can now be retained for the management of these plantations;
(iii) the weight GOT gives to its commitment to respect social and environmental safeguards, as
exemplified by its request to include the Derema Corridor RAP in TFCMP\.
87\. Unsatisfactory elements of GOT performance include among others: (i) the failure to establish
TFS despite all the obtained clearances; (ii) the indecision on the sharing of benefits and revenues derived
from CBFM and JFM; (iii) the problems of contract management, as demonstrated in particular by the
construction of the Mpingo House office building; and (iv) the weakness in delivering on funding
16
commitments as evidenced by its requests to fund the Derema Corridor RAP and its contribution to
NAFORMA from TFCMP Credit Proceeds\.
88\. On balance, the impact of the unsatisfactory elements of GOT performance warrants an overall
GOT performance rating as Moderately Unsatisfactory\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately Unsatisfactory
89\. There have been three implementing agencies: FBD as the main implementing agency, TASAF
and EAMCEF\. Satisfactory elements in its performance included: (i) a pragmatic approach to Project
implementation, despite the very much delayed formation of TFS; and (ii) much improved working
methods, both in natural forest management (i\.e\. JFM and CBFM) and plantation forest management\.
Unsatisfactory elements in FBD performance (which outweigh the positive ones) included: (i) persistent
weakness in procurement, contract management, as well as financial management; (ii) lack of counterpart
funding during the first five years of implementation; as well as (iii) its isolation from other sectors and
mainstream decentralization initiatives\.
90\. While the performances for TASAF and EAMCEF can be rated Moderately Satisfactory,
considering the fact that both relied heavily on FBD as the main implementing agency, (whose
performance has been Moderately Unsatisfactory at best due to the above outlined reasons), justifies an
overall performance of Moderately Unsatisfactory\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Unsatisfactory
91\. When comparing achievements (and considering the time it took to achieve those) with
opportunities lost, and the role the Borrower played in this, the overall Borrower performance rating
cannot be better than Moderately Unsatisfactory\.
6\. Lessons Learned
92\. Sustainable forest sector reforms require strong political and technical leadership\. Reforms
also need to be in line with government priorities\. Transparency in the consultative process ensures that
staff/employees, at all levels, feel ownership and consider change as an opportunity rather than a threat to
their livelihood\.
93\. Projects implemented during times of significant policy change require enhanced, constant
engagement and supervision\. This includes utilizing outside expertise with strong in-country experience,
mobilizing senior Bank management, and ensuring flexibility in the design to respond to changes in
priorities while retaining the overall goals\.
94\. Forest sector projects tend to be overly ambitious, aiming to address multiple challenges (e\.g\.
sector reform, sustainable management, governance, community participation, etc\.) in a single
operation\. Recipient implementation capacity is often insufficient to address existing complexities within
the given timeframe and limited resources are spread too thinly\. As a consequence, restructuring is often
required to adjust ambitious project designs to realities on the ground, helping to achieve a few tangible
results\. So as to yield sustainable project outcomes, project designs should be more focused, allocating
sufficient and targeted financial resources\.
95\. Although community involvement in forest management has become a mainstream activity in
Tanzania, it involves complex social, institutional and regulatory issues\. Awareness and capacity
building during start up and implementation require time and expertise, which need to be identified during
Project design preparation\. In addition, considering that community forestry at local government level
competes with other sectors (e\.g\. health, education, agriculture), incentives need to be provided in order to
ensure that forestry and natural resource management (NRM) remains a priority for long-term
development and growth\. When cost-benefit sharing mechanisms between governments and communities
17
(e\.g\. in Joint Forest Management) are being considered, it is important the collaboration with the Ministry
of Finance is sought upfront\. This is critical as the development of a sharing formula cannot be decided
within the sector alone, but would need to be based on established criteria that need to be transparent and
acceptable to all parties\.
96\. Where Projects introduce innovative and technically sophisticated tools (such as Log Tracking
System, NAFOBEDA), capacity and infrastructure constraints need to be taken into account\. This
could include the consideration of "low-tech" solutions, comprehensive training programs and investment
in necessary infrastructure improvement\.
97\. Inconsistencies between different Project documents (PAD, Project Implementation Manual,
etc\.) and Financing/Credit Agreements are likely to negatively affect Project implementation,
particularly where key performance indicators are incorporated in the Financing Agreement\. While this
issue has been recognized and guidance has been provided for new Projects in the Africa Region3, the
restructuring of ongoing Projects with such problems require the country lawyer and TTL to collaborate
closely throughout the process\. Such collaboration would help identify inconsistencies early on and
outline measures to overcome issues\.
98\. Fundraising efforts for the endowment of conservation funds must be varied, and commence in
a timely fashion if targets for capitalization are to be achieved\. There are often restrictions on bi-lateral
funds being invested directly into endowment funds and therefore alternative, creative ways to attract and
contribute to the overall fund must be developed\. Fund-raising efforts must target all potential sources of
monies including bi-lateral, foundation and the private sector\.
7\. Comments on Issues Raised by Borrower/Implementing Agency
99\. The Borrower's Completion Report (summarized in Annex 9 A) provides an assessment similar to
the findings of the Bank's ICR\. The Ministry of Natural Resources and Tourism (MNRT), in its
communication of June 14, 2010 principally agreed with the World Bank ratings and observations\.
100\. Nevertheless, the MNRT felt that an upgrading of its performance rating could be considered, as
the Tanzania Forest Service was established in April 2010, with an acting Chief Executive Officer in
place and the TFS budget prepared and to be tabled as part of MNRT's budget at the Parliament in June
2010\. In addition, it was proposed to rate Implementation Agencies, in particular TASAF and EAMCEF
separately, subsequently obtaining a higher than Moderately Unsatisfactory rating\.
100\. While respecting the efforts undertaken by the MNRT, as the establishment of TFS is being
affected only after project closure, it could not be considered for the assessment under this ICR\. The
comment regarding the individual performance assessment of the implementing agencies has been taken
into account under paragraph 90\.
3
See joint "Ensuring Consistency between Project Documents" message from the LEGAF Chief Counsel and AFTQK
Director dated March 12, 2010\.
18
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in US$ million equivalent)
Appraisal Estimate Actual /Latest Estimate Percentage of Appraisal
Components
(US$ million) (US$ million)4
1\. Creating an enabling environment
for sustainable forest management 22\.1 25\.6 116%
and improved service delivery
2\. Multi-stakeholder participation in
2\.9 3\.0 103%
plantation forestry
3\.Eastern Arc Mountains
9\.2 13\.4 146%
Conservation Endowment Fund
4\.Project Administration and
0\.6 2\.7 433%
Management
Total Baseline Cost 34\.8 44\.7 128%
Physical Contingencies 2\.4
Price Contingencies 2\.8
Total Project Costs 40\.0 44\.7 112%
Project Preparation Facility (PPF)
Project Development Facility (PDF)
Front-end fee (IBRD only)
Total Financing Required
(b) Co-financing
Appraisal Actual/Latest
Percentage of
Source of Funds Type of Financing Estimate Estimate
Appraisal
(US$ million) (US$ million)
Borrower 1\.7 1\.3
IDA 31\.1 34\.93
GEF 7\.0 7\.0
NGO of Borrower Parallel financing 0\.2 0\.0
country
4
The appreciation of the SDR value over the duration of the project was about US$6 million\. These additional
resources allowed the GOT to dedicate significant added finance, beyond what was originally budgeted, to a number
of key activities under the Eastern Arc Forests Conservation and Management component without having to
jeopardize support for other components\. The additional resources supported the following activities: establishment
and operation of the EAMCEF secretariat and field staff, implementation of the EAMCEF small grants program
giving grants for applied biodiversity research, improving the ecological function of the ecosystem and management
capacity, and community development activities in the Eastern Arc region\. These additional resources also allowed
GOT to develop and implement the Derema Corridor Resettlement Action Plan, which created a corridor between
two established protected areas\.
Annex 2\. Outputs by Component
1\. The following undertakes an assessment of achievements under each of the component, providing
more detailed rationale for the PDO rating:
(a) Component One: Creating an enabling environment for sustainable forest management and
improved service delivery\.
2\. Sub-component 1\.1: New institutional framework with clear service delivery functions and
responsibilities with regard to natural forest, woodlands and plantations (in other words, establishment
of the Tanzania Forest Service)\. The TFS framework documents were approved by the President's Office
Public Service Management in 2006\. A valuation of FBD assets is available since 2007, a suitable
candidate for the post of Chief Executive (CE) was identified in 2007, and a substantial office building
was constructed for TFS by 2008\. However, the appointment of the CE was not confirmed, the new office
building was occupied by MNRT (with the commitment to handover to TFS upon its establishment)\. The
process stalled and while an Acting CE was appointed in November of 2009, TFS had not been
established by the closing of the Project\.
3\. Sub-component 1\.2: Participatory forest and woodland management, which would put in place
effective mechanisms for sharing benefits and cost of forest management\. TFCMP contributed to this in
two main ways:
By supporting the preparation of relevant guidelines for: (i) Community-Based Forest Management,
(ii) Preparation of Management Plans for natural forests; and (iii) Participatory Forest Management
Legal Guidelines\.
By (i) establishing a window to finance PFM activities in 25 districts under TASAF, (ii) training
some 400 Local Government and other local service providers to facilitate PFM processes\. A total of
273 sub-Projects were financed for a total of about US$3\.8 million\.
4\. Sub-component 1\.3: Coherent forest revenue system designed and implemented to increase net
revenues was designed to be operated through TFS\. Though good progress was made, the absence of TFS
hampered the final achievements: (i) a proposal on the redesign of forest goods and services revenue
collection system has been ready since 2006, but testing and full implementation was put on hold pending
TFS establishment; (ii) a transport fee based system for charcoal and firewood was developed in 2008 and
has since been tested and rolled out, including drafting of a Government Notice; (iii) a revenue tracking
system for decentralized district level utilization is now operational in 25 pilot districts; (iv) a log sales
and pricing system has been designed; and (v) forestry surveillance has been strengthened, and 12 forest
product checkpoints have been constructed in strategic locations\.
5\. Checkpoints and improved surveillance had a positive impact, increasing overall revenues
collected and decreasing the unauthorized transport of forest products\. However, it may be difficult to
statistically demonstrate these improvements since policy changes regarding the export of logs have also
had an impact on the quantities of logs and other products transported\. Meanwhile, the annual revenue
collected from forest goods and services is likely to reach the set target of TShs\.24 billion\.
6\. Sub-component 1\.4: Capacity of forest sector in undertaking forest and ecosystem inventory and
mapping as well as management planning reinforced (added in the 2007 restructuring)\. The intermediate
outcome is "capacity of forest sector in undertaking forest and ecosystem inventory and mapping as well
as management planning reinforced", achieved through:
Up-to date and reliable forest and ecosystem resource data available for mainland Tanzania, with
50% of the National Forest Resource Monitoring and Assessment completed by December 2009\. As
the assessment was delayed and only started in 2009, the anticipated result was not achieved\.
Forest and ecosystem data stored and publicly available in a central database\. The National Forestry
and Beekeeping Database (NAFOBEDA) was developed and field tested\. NAFOBEDA is not fully
functional yet and will require continued capacity development before being operational as intended\.
Completion of 150,000 hectares of forest management plans for (natural) production forest by
December 2009\. Plans for some 1\.3 million hectares including both production and protection forest
have been prepared and approved, including management plans for eight critical ecosystems\.
7\. Sub-component 1\.5: Sustainable wood fuel utilization and development of energy strategy (added
in the 2007 restructuring)\. The intermediate outcome indicator is "sustainable woodfuel utilization
integrated in an overall energy strategy with a view to contributing to economic development and long-
term land-use planning"\. A Woodfuel Action Plan was prepared, and an area of 4,500 ha has been set
aside within Ruvu Plantation Scheme, while at least six sustainable woodfuel utilization Projects have
been initiated by different organizations\.
(b) Component Two: Multi-stakeholder participation in plantation forestry
8\. The indicator for this component is "public and private sector as well as communities engaged in
management and development of plantation forestry"\. The component focused on the 16 existing state-
owned forestry plantations with a total planted area of about 80,000 hectares\. At the time of appraisal
these plantations were not managed well\. Under direct management by FBD, there was no mechanism to
retain income generated at the plantation level for management and investment operations\. The
component has three intermediate outcome indicators:
Plantation information base available\. The plantation inventory of 80,000 ha was completed in 2009\.
Forest management guidelines revised and approved to reflect benefits and costs of multi-stakeholder
arrangements in forest plantation management\. This was achieved in 2006 with the publication of the
Framework and Guidelines for Evaluating and Awarding Forest Concessions in Tanzania\.
Number of plantation management agreements in place\. By the end 2009 three Memoranda of
Understanding had been agreed upon, but no contracts in place for: (i) Community based
management for Kiwira Plantation Forest; (ii) Co-management for Meru/Usa Plantation Forest; and
(iii) Utilization Concessions with private companies and individuals in Sao Hill Plantation\. According
to the guidelines, a management agreement needs to be vetted by a Forest Advisory Committee,
which had not been established by December 2009\. In the absence of this committee no management
agreement could be approved\.
(c) Component Three: Eastern Arc Forest Conservation and Management\.
9\. Sub-component 3\.1: Sustainable financing mechanism for long-term biodiversity conservation in
place\. The Eastern Arc Mountains Forest Endowment Fund (EAMCEF) was officially registered in
Tanzania in 2001\. It was established as a mechanism to provide long-term reliable support for community
development and conservation Projects, as well as applied research activities, which promote the
biological diversity, ecological functions and sustainable use of natural resources\. Governed by a Board
of Trustees, the EAMCEF operates as a not-for-profit NGO\. It is operated by a Secretariat based in
Morogoro, headed by an Executive Director\. Funding of field activities is done in three priority thematic
areas, 80 grants had been awarded by the end of the Project:
Community based conservation and development activities for improvement of rural livelihoods of
forest adjacent communities\. Largest category of grants (about 50%), activities included training and
awareness building for tree nursery establishment and planting, beekeeping, improved cooking stoves
and brick making, fish ponds, dairy goats and supporting local saving and credit schemes\.
Applied biodiversity research relevant to the conservation of biodiversity in the priority Eastern Arc
Mountain, including carbon sequestration and financing, distribution of different plants, mushrooms
and animals, both of indigenous and invasive species, beekeeping, participatory forest management,
impact of pesticides (about 15% of grants)\.
Improving the ecological functions of the ecosystem and strengthen the management capabilities of
the responsible institutions\. This category includes about one third of all grants, used for activities,
such as improving boundary demarcation, removal of illegally planted crops within forest boundaries,
training of villagers in forest use and management, awareness raising, improved surveillance\.
10\. Until 2009 EAMCEF operated as a component of TFCMP, the operational costs were covered
from credit proceeds in order to allow the received endowment of US$7 million from GEF to grow\. The
Endowment Fund is managed by an external fund manager\. Due to the volatile global economic situation,
the income generated by the fund has been less than expected, and a more defensive investment strategy
than originally foreseen had to be adopted, which has had negative implications for the Projected income
and growth of the Fund\. After a decline due to the financial crisis (to a low of US$5\.8 million) the
invested capital increased in value again to US$ 7\.2 million by the end of the Project\. Though a
fundraising framework was prepared in 2008, the actual amount of additional funds raised has been
limited to a grant of US$370,000 from Unilever (a multi-national company)\. The Fund is expecting to
receive additional support to cover its operational cost from both GOT and the Royal Embassy of Norway
starting in June 2010\. EAMCEF grant activities have been limited to a subset of five districts to ensure
that available resources achieve results on the ground\. A gradual expansion to cover the total area under
its mandate is foreseen\. However, this would necessitate a fourfold increase of its current capital
according to some calculations\.
11\. Sub-component 3\.2: Protection of selected forests in the Eastern Arc Mountains (added in 2007)\.
Three results indicators were defined: (i) bringing the whole forest area in the Eastern Arc Mountains of
Tanzania, or 5,350 km2, under protection status (consolidation of protected area forests and nature
reserves); this was achieved, though not all areas officially acquired IUCN status; (ii) preparation and
pilot implementation of management plans of selected critical watershed forests, which is very similar to
and overlaps with the activities reported under Sub -component 1\.4 (iii); and (iii) implementation of the
Derema Corridor Resettlement Action Plan\.
Annex 3\. Estimated Benefits
1\. The Project Appraisal Document did not include calculations of the Net Present Value (NPV) or
of the Economic Rate of Return (ERR)\. The annex on economic and financial considerations did include
a review of: (a) poverty impacts, (b) environmental values and the national economy, (c) carbon
sequestration, (d) industrial plantation production, and (e) fiscal revenue collection in relation to FBD
expenditures and budget allocation\.
2\. Community benefits\. The PAD pointed out that Tanzania's woodland and forests are extremely
important for mitigating the impacts of rural poverty, stating that studies had shown that some 40 percent
of total household consumption in some rural areas was accounted for by forest and woodland products,
(such as honey production, firewood, construction material, and wild fruit), as well as an important source
of dry season grazing and reducing household exposure to environmental risks\. In addition, it stated that
the poor were more dependent on woodland and forest resources than the rich\.
3\. The Project contributed to participatory forest and woodland management in two main ways: (a)
by supporting the preparation of a series of relevant guidelines that are used nationally in the two
principle types of participatory forest management (Community Based Forest Management and Joint
Forest Management), with a total area of 4\.1 million ha; and (b) by funding the establishment of
participatory forest management activities through TASAF\. The latter included 273 sub-Projects in 25
districts with about of 520,000 beneficiaries\.
4\. Benefits of about 520,000 TASAF forestry sub-Project beneficiaries are conservatively estimated
at an average of US$100 per person per year and a total of US$52 million per year in real terms\. It should
be noted, however, that most of these benefits amount to ensuring sustainability (i\.e\. maintaining benefits
in perpetuity) as opposed to a gradual reduction that would result from uncontrolled resource use\.
5\. Environmental benefits\. Here the PAD focused on two main values, first and foremost water and
(hydroelectric) energy production, and secondly biodiversity, without attempting to calculate specific
values\. A 2007 Tanzania Forest Account study on the willingness of water users to pay some amount as
contribution to watershed protection to ensure improved water services indicated the willingness to pay
was in the range of US$0\.15-2\.00 per household per year\. Based on this finding, the value of watershed
services associated with the TFCMP, particularly the Eastern Arc mountain forests, has been estimated at
approximately US$1\.1 million per year\.
6\. The same study attempted to estimate the biodiversity value of Tanzanian forest resources, with
assumed values ranging from US$2\.1- $811\. per ha per year\. In the case of TFCMP it would be prudent
to include the 5,350 km2 of protected Eastern Arc mountain forests in such estimates\. With an assumed
biodiversity value of US$100 per ha per year, the total biodiversity value of these forests would amount to
US$53\.5 million per year\.
7\. Carbon sequestration benefits\. The PAD includes a calculation of carbon sequestration in
Tanzania's miombo woodlands\. It assumes 30 million ha of miombo with an average stocking of 150 tons
of carbon per ha and an average woody biomass increase of 3 percent per year, equivalent to 4\.5 tons of
carbon sequestration per ha per year\. It states that the reduction of fire frequency is the main technique for
increasing carbon uptake\. It subsequently assumes that an increase of carbon sequestration in the miombo
area of a tenth of percent (or 0\.15 tons per ha) over the life of the Project would yield 4\.5 million tons of
carbon, which at a value of US$5 per ton would have a value of US$22\.5 million\.
8\. The actual impact of the Project is not on the total 30 million ha of miombo, but it is fair to
assume that the Project has had some impact on the 4\.1 million ha of participatory managed forests
(CBFM plus JFM)\. It is also fair to assume that in the participatory managed forests the actual increase of
woody biomass per ha has been higher than 0\.15 tons of carbon per ha (and not just due to reduced fire
frequency)\. If we assume this increase to be 0\.5 tons of carbon per ha per year, the total amount of carbon
sequestered over 4\.1 million ha of forest and woodland would amount to 2\.0 million tons per year\. With a
value of approximately US$10 per ton, this amounts to a total value of US$20 million per year\.
9\. It should be noted, however, that the extra carbon sequestered on the 4\.1 million ha of
participatory managed forest is at least partly offset by the likely increased harvesting from other forest
areas by those who were earlier harvesting in an unregulated way in the now managed forest areas\. In
addition, TFCMP can only partially claim credit for this 4\.1 million ha of participatory managed forests,
other stakeholders include for instance the DANIDA and MFA Finland supported forestry and natural
resource management Projects\. Assuming that 50% of the additional carbon sequestered is offset by
increased harvesting elsewhere, and that no more than 25% of the remaining additional carbon
sequestered can somehow be attributed to TFCMP, the value of additional carbon sequestered thanks to
TFCMP would be 20*0\.5*0\.25= US$2\.5 million per year\.
10\. Assuming a current average stocking of 150 tons of carbon per ha and an average potential
stocking of 250 tons of carbon per ha, the 4\.1 million ha of participatory managed forests include a
current total of 615 m tons of carbon with a value of approximately US$6 billion\. The potential at full
stocking would amount to 1 billion tons of carbon with a value of US$10 billion\.
11\. Benefits from industrial plantation production\. The PAD includes six pages of economic
considerations in relation to industrial plantation production, elaborating on elements such as domestic
demand for sawn timber and pulpwood, international markets for softwoods and teak, the potential value
of the Sao Hill Plantations, financial benefits of private sector involvement and benefits from improved
management\.
12\. It was noted that Southern Paper Mills in Mufindi had been closed since 1997, leaving the
considerable pulpwood resources of the nearby Sao Hill Plantations unutilized, thereby endangering its
viability\. Scenarios were presented to value the Sao Hill Plantations depending on whether the mills
would be operational or not\. In the best scenario, the maximum capacity of the mills is 315,000 m3 over
bark, the related pulpwood price was supposed to be US$14 per m3, and the value of Sao Hill Plantation
would then amount to US$12\.5 million\. In the second best scenario (no large paper mill) this value would
be only US$2\.5 million\. It was argued that it would be essential to transfer state plantations under private
sector management\. The expected improved management, combined with improved pricing (marketing)
systems would then result in substantial benefits\.
13\. During the Project, several factors played an important role in reviving the industrial forest
plantation sub-sector\. First, the Ministry of Finance agreed that a major share of revenues generated from
government owned plantations could be retained for the management of these plantations\. Second,
Government stopped exports of timber logs, now only sawn timber can be exported\. Third, plantation
inventories (80,000 ha) under TFCMP provided plantation managers with the required information to
improve plantation management\. These three factors combined helped revive and improve FBD
management of government owned plantations\. Fourth, the Southern Paper Mills reopened, and are now
harvesting 200,000 m3 of pulpwood in the Sao Hill Plantations; while a series of small scale sawmills
have sprung up for instance around the Longuza Teak Plantations\. Finally, private sector involvement in
plantation management (including communities) was accepted and some 16,563 ha of government forest
plantations are now under some form of private sector management regime\.
14\. It still remains difficult to put figures to the value created as a result of TFCMP\. It is for instance
questionable that the Southern Paper Mills would have been able to reopen and obtain harvesting
concessions in the absence of TFCMP\. It is estimated that improved plantation management would
increase annual average annual harvest values by US$32 per ha\. If we assume that a total of 80,000 ha of
industrial forest plantations is now better managed, the additional annual value created would be US$2\.5
million, of which US$0\.5 million would be generated in the area managed by the private sector and
US$2\.0 million in the area managed by FBD\.
15\. Fiscal revenue collection in relation to FBD expenditures and budget allocation\. The PAD noted
that public funding for the forestry sector was generally inadequate, irregular, and supplemented by donor
funding\. Improvements in the framework for royalty collection were expected to strengthen the overall
financial sustainability of the Tanzania Forest Service\.
16\. The collection of forest revenues increased much during the Project and much of this increase is
due to the Project\. The PAD mentions that in 1999/2000 revenues from Central Government Forest
Reserves (including plantations) totaled roughly TShs\. 2 billion\. In 2008/09 this had increased to TShs24
billion\.
17\. The increase in forest revenues has been so significant that they now are of the same magnitude
as the FBD overall funding requirements\. This means that if TFS had indeed been established earlier in
the Project and if it were fully operational with the TFCMP assistance on offer, chances are that it would
have been financially viable\.
18\. Overall economic and financial benefits resulting from TFCMP\. The above calculations are
indicative yet incomplete, they do not for instance include expected benefits from sub-component 1\.5 on
sustainable wood fuel utilization\. However, the calculated direct and indirect economic and financial
benefits amount to a total of US$13\.7 million per year (see Table 1)\. This without counting the annual
US$52\.2 million benefits of TASAF forestry sub-Projects and the US$53\.5 million biodiversity value,
because it could be argued that these benefits largely existed already\.
Table 1\. Economic and financial benefits attributed to TFCMP
Description US$ million/yr
Watershed services 1\.1
Carbon sequestration 2\.5
Industrial plantation production 2\.5
Forestry royalties 7\.6
TOTAL 13\.7
19\. TFCMP made a considerable difference in the forestry sector, though the institutional reform did
not in the end result in an established, operational, functioning and financially sustainable TFS, though all
necessary elements seem to have been put in place with some considerable results\. However, the non-
establishment of TFS weighs heavy, and is an important factor in rating Borrower performance as
Moderately Unsatisfactory\. Similarly, Bank supervision was insufficient during the early years of the
Project, and, in later years, could not catch up with these early omissions\. Both Borrower and Bank
performance, therefore, had a negative impact on Project efficiency\. Project efficiency could have been
much improved had Bank and Borrower been more consistent in the support provided to TFCMP from
start to finish\.
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending (from Task Team in PAD Data Sheet)
Peter A\. Dewees Lead Environmental Specialist AFTES Task Team Leader
Ladisy Komba Chengula Sr\. Agricultural Economist SASDA
Pascal Tegwa Sr\. Procurement Specialist AFTPC
Mercy Sabai Sr\. Financial Management Specialist AFTFM
Kithinji Kiragu Institutional Change Specialist EASER
Supervision (from Task Team Members in all archived ISRs)
Sr\. Natural Resources Mgmt\.
Christian Albert Peter AFTEN Task Team Leader
Specialist
Task Team Leader
Nathalie Weier Johnson Sr\. Environmental Specialist ECSS3
(EAFCMP)
Bella Lelouma Diallo Sr\. Financial Management Specialist AFTFM
Mercy Mataro Sabai Sr\. Financial Management Specialist AFTFM
Gisbert Joseph Kinyero Procurement Specialist AFTPC
Luis M\. Schwarz Sr\. Finance Officer CTRFC
Jean O\. Owino Finance Analyst CTRDM
Cherumaine Perumal Finance Assistant CTRDM
Jane Kibbassa Senior Environmental Specialist AFTEN
Ida Manjolo Social Protection Specialist AFTSP
Vildan Verbeek-
Senior Economist AFTRL
Demiraydin
Zainab Z\. Semgalawe Senior Rural Development Specialist AFTAR
Klas Sander Natural Resources Economist ENV
Elizabeth F\. Sakaya Temporary AFTEN
Faith-Lucy Matumbo Team Assistant AFCE1
Edith Ruguru Mwenda Sr\. Counsel LEGAF
Marjory Mpundu Counsel LEGAF
Indumathie V\. Hewawasam Sr\. Environmental Specialist AFTEN Task Team Leader
Pascal Tegwa Sr\. Procurement Specialist AFTPC
Paavo Eliste Sr\. Economist EASER
Dean W\. Housden Program Assistant AFTCS
Donald Paul Mneney Sr\. Procurement Specialist AFTPC
Jorge O\. Pena Portfolio Officer CTRCF
Abu Mvungi Consultant AFTEN
Aza A\. Rashid Program Assistant SASFP
Geoffrey D\. N\. Shoo Consultant AFTFM
Godius Kahyarara Consultant AFTEN
Richard John Kaguamba Consultant ENVCF Task Team Leader
Modupe A\. Adebowale Consultant CFPPM
Rogati Anael Kayani Consultant AFTPC
Mohammed Bekhechi Lead Counsel LEGEN
Serigne Omar Fye Consultant AFTEN
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle US$ Thousands
No\. of staff weeks (incl\. travel & consultant
costs)
Lending
FY99 24\.2
FY00 11 58\.3
FY01 17 133\.1
Total: 28 215\.6
Supervision/ICR
FY02 16 88\.1
FY03 43 178\.3
FY04 35 138\.4
FY05 38 79\.9
FY06 44 112\.3
FY07 40 126\.1
FY08 19 79\.6
FY09 13 84\.0
FY10 13 55\.9
Total: 261 942\.6
Annex 5\. Detailed Description of PDO, GEO and KPIs
A\. Detailed Description of PDO and KPIs
Original PDO and KPIs
The original PDO in both TFCMP- and EAFCMP-PADs was "to assist Government in policy
implementation, in particular by developing a framework for the long-term sustainable management and
conservation of Tanzania's forest resources, strengthening the role of individuals, communities, villages,
and the private sector in management and conservation of forests, and implementing this framework on a
pilot scale\." This PDO was never revised\.
Both PADs each contain two different sets of KPIs\. The first set is included in the PAD Main Text,
section A\.2/3 "Key performance indicators"; the second set is included in PAD Annex 1 "Project Design
Summary"\. All different sets of KPIs as included in the TFCMP- and EAFMCP-PADs are included
below\. The internal inconsistencies in the TFCMP-PAD have led to misinterpretation at later stages\.
(i) According to TFCMP-PAD Main Text section A\.3 "Key performance indicators", the Project was
to be considered successful if:
(a) A functioning TFS is established with clearly defined service delivery functions and
responsibilities with regard to natural forests, woodlands, and industrial plantations\.
(b) Significant areas of natural forests and woodlands are under effective management as an
outcome of partnerships and initiatives with multiple partners (primarily communities
and local governments)\.
(c) A range of mechanisms for improving revenue collection involving partners such as the
Tanzania Revenue Authority and/or private sector are tested and implemented; time-
bound forest revenue collection targets are established and achieved; and effective
mechanisms for sharing revenues with villages are put in place\.
(d) A framework for private sector participation in the management of industrial plantations
is established, including guidelines, incentives, and regulatory, monitoring and control
mechanisms; 3 pilot operations are in place and have been evaluated\.
(e) An institutional framework consistent with overall civil service reforms is in place which
enables Government to undertake forest biodiversity conservation initiatives, in particular
in the Eastern Arc Mountains; institutional capacity to do so is strengthened\.
(f) The modalities for the establishment of a sustainable financial mechanism for
conservation of the Eastern Arc Mountain forests are developed and implemented\.
(i) The EAFCMP-PAD Main Text section A\.2 "Key performance indicators" includes one additional
KPI:
(g) The endowment has been capitalized and the Eastern Arc Mountains Conservation
Endowment Fund is implementing the proposed conservation program\.
(iii) According to both TFCMP- and EAFMCP-PADs Annex 1 "Project Design Summary" the KPIs
(or Outcome/Impact indicators) related to the PDO included:
(a) Forest and woodland cover is brought under effective management by communities and
individuals in Project areas\.
(b) Private sector is involved in plantation management\.
(c) Mechanisms for forest biodiversity conservation are more fully established\.
PDO and KPIs in the Development Credit Agreement (DCA)\. The IDA Development Credit
Agreement (DCA) dated March 13, 2002, retains the PDO and KPIs as included in the Main Text of the
TFCMP-PAD\. Normally the CDA would have retained the KPIs as included in the "Project Design
Summary" (the equivalent of the "Results Framework") of PAD Annex 1\.
Revised KPIs following the 2006 restructuring
The June 2006 restructuring proposal did not propose to change the KPIs, the TFCMP Task Team
assumed the KPIs to be those included in Annex 1 of the PAD\. However, the July 2006 First Amendment
to the DCA did revise the KPIs:
(i) According to the June 2006 TFCMP restructuring proposal the KPIs related to the PDO included:
(a) Forest and woodland cover is brought under effective management by communities and
individuals in Project areas\.
(b) Private sector is involved in plantation management\.
(c) Mechanisms for forest biodiversity conservation are more fully established\.
(ii) According to the July 2006 First Amendment to the DCA the revised KPIs included:
(a) A functioning TFS is established with clearly defined service delivery functions and
responsibilities with regard to natural forests, woodlands, and industrial plantations\.
(b) Significant areas of natural forests and woodlands are under effective management as an
outcome of partnerships and initiatives with multiple partners (primarily communities
and local governments)\.
(c) A range of mechanisms for improving revenue collection involving partners such as the
Tanzania Revenue Authority and/or private sector are tested and implemented; time-
bound forest revenue collection targets are established and achieved; and effective
mechanisms for sharing revenues with villages are put in place\.
(d) A framework for private sector participation in the management of industrial plantations
is established, including guidelines, incentives, and regulatory, monitoring and control
mechanisms; 3 pilot operations are in place and have been evaluated\.
(e) An institutional framework consistent with overall civil service reforms is in place that
enables Government to undertake forest biodiversity conservation initiatives, in particular
in the Eastern Arc Mountains; institutional capacity to do so is strengthened\.
(f) The modalities for the establishment of a sustainable financial mechanism for
conservation of the Eastern Arc Mountain forests are developed and implemented\.
(g) Increased area under sustainable forest management, providing multiple benefits to
forest adjacent communities in the long term\.
Revised KPIs following the 2007 restructuring
The June 2007 restructuring Project Paper proposed relatively small changes (precisions) to the KPIs, the
TFCMP Task Team assumed the KPIs to be those included in Annex 1 of the PAD\. However, the August
2007 Second Amendment to the DCA included different changes to the KPIs than proposed, and further
increased the divergence between the Results Framework and Results Monitoring Matrix as used by the
TFCMP Task team and the KPIs as included in the DCA:
(i) According to the June 2007 TFCMP restructuring Project Paper the revised KPIs related to the
PDO included:
(a) Area of forest on Tanzania Mainland managed according to approved forest management
plans (including Community Based Forest Management (CBFM) and Joint Forest
Management (JFM) Agreements)\.
(b) Areas of forest plantations under private management agreements (concessions, co-
management, or communities designated)\.
(c) Mechanisms for forest biodiversity conservation are more fully established (Areas of
Forest Reserves Mountains managed according to IUCN Codes)\.
(ii) According to the August 2007 Second Amendment to the DCA the revised KPIs included an ever
increasing list:
(a) A functioning TFS is established with clearly defined service delivery functions and
responsibilities with regard to natural forests, woodlands, and industrial plantations\.
(b) Significant areas of natural forests and woodlands are under effective management as an
outcome of partnerships and initiatives with multiple partners (primarily communities
and local governments)\.
(c) A range of mechanisms for improving revenue collection involving partners such as the
Tanzania Revenue Authority and/or private sector are tested and implemented; time-
bound forest revenue collection targets are established and achieved; and effective
mechanisms for sharing revenues with villages are put in place\.
(d) A framework for private sector participation in the management of industrial plantations
is established, including guidelines, incentives, and regulatory, monitoring and control
mechanisms; 3 pilot operations are in place and have been evaluated\.
(e) An institutional framework consistent with overall civil service reforms is in place which
enables Government to undertake forest biodiversity conservation initiatives, in particular
in the Eastern Arc Mountains; institutional capacity to do so is strengthened\.
(f) The modalities for the establishment of a sustainable financial mechanism for
conservation of the Eastern Arc Mountain forests are developed and implemented\.
(g) Increased area under sustainable forest management, providing multiple benefits to forest
adjacent communities in the long term\.
(h) A national forest assessment is carried out in at least 50% of the Borrower's mainland
territory (by December 31, 2009)\.
(i) About 4000 hectares of forest land is set aside and sustainably managed for charcoal
production (by June 30, 2009)\.
(j) About 5,350 square kilometers of forests is maintained under protection status and
management effectiveness is monitored regularly (by June 30, 2008)\.
B\. Detailed Description of GEO and KPIs
The GEOs in the PADs\. The PADs contain three different versions of GEOs, the first version is included
TFCMP-PAD Main Text section A\.2 "Global Objective", but it has been removed from the EFCMP-
PAD; the second version is included in both PADs under section C\.1 "Project Components"; and the third
version is included in Annex 1 "Project Design Summary" of both PADs\. For the sake of completeness
all three versions are included here:
(i) According to TFCMP-PAD Main Text section A\.1, the GEOs were to:
i\. Develop and begin to implement an integrated biodiversity conservation strategy for the
Eastern Arc Mountains (which account for 40 percent of Tanzania's remaining tropical
high forest cover), which will, in turn, strengthen Tanzania's capacity to coordinate and
lead forest biodiversity conservation interventions\.
ii\. Support an integrated community-based pilot intervention in a priority conservation area
to achieve sustainable impact related to both biodiversity and human development\.
iii\. Improve the institutional mechanisms and capacity to undertake forest biodiversity
conservation;
iv\. Develop, and implement on a pilot basis, a sustainable financing mechanism for
conservation activities in the Eastern Arc forests\.
(ii) According to both PADs Main Text section C\.1 the GEO was to promote the sustainable
conservation and management of the Eastern Arc forests\.
(iii) According to both PADs Annex 1 the GEOs were:
(a) Promoting in-situ use mechanisms for biodiversity conservation\.
(b) Promoting sustainable use mechanism for biodiversity conservation\.
(c) Promoting cost-effective conservation measures\.
GEOs in the GEF Trust Fund Grant Agreement (TFGA)\. According to the GEF-TFGA, the objective
of the Project is to assist the Recipient within the Forest Conservation and Management Project, to
promote sustainable conservation and management of the biological biodiversity and ecosystems of the
Eastern Arc Mountains Forests through, inter alia, strengthened institutional capacity, pilot community-
based conservation and development and implementation of participatory forest conservation strategies\.
KPIs for the GEOs: The PADs also contains different sets of KPIs for the GEOs\. The first set is
included in the Main Text, section A\.2/3 "Key performance indicators" (see paragraph above on KPIs in
the PAD); the second set is included in Annex 1 "Project Design Summary"\. However, the GEF-TFGA
includes only one KPI\. For the sake of completeness, the three different sets of KPIs are included here:
(i) The relevant KPIs included in the GEF-PAD Main Text section A\.2 are:
(a) An institutional framework consistent with overall civil service reforms is in place that
enables Government to undertake forest biodiversity conservation initiatives, in particular
in the Eastern Arc Mountains; institutional capacity to do so is strengthened\.
(b) The modalities for the establishment of a sustainable financial mechanism for
conservation of the Eastern Arc Mountain forests are developed and implemented\.
(c) The endowment has been capitalized and the Eastern Arc Mountains Conservation
Endowment Fund (EACMEF) is implementing the proposed conservation program\.
(ii) According to both PADs Annex 1 the KPIs related to the GEO included:
(a) Extent of forests brought under community-based conservation\.
(b) Forest cover loss is slowed\.
(c) Conservation measures are financially sustainable\.
(iii) According to the TFGA there is only one KPI related to the GEO: The Endowment Fund has
been capitalized and the EAMCEF is implementing the proposed conservation program by
December 31, 2006\.
PAD (Annex 1) DCA Results Framework (post 2007 Restructuring)
Project Development Objective:
The PDO is to assist GOT in implementing its new The PDO is to assist the Borrower in the The PDO is to assist GOT in implementing its forest
policy, by developing a framework for the long- establishment of a framework for long-term policy by developing a framework for the long-term
term sustainable management and conservation of sustainable management and conservation of its sustainable management and conservation of Tanzania's
Tanzania's forest resources, strengthening the role forest resources by strengthening the role of all forest resources, strengthening the role of individuals,
of individuals, communities, villages and private stakeholders, that is, local institutions, communities communities, villages and private sector in management
sector in management and conservation of forests, and the private sector in management and and conservation of forests, and implementing this
and implementing this framework on a pilot scale\. conservation of forests\. framework on a pilot scale\.
Outcome Indicators
Forest and woodland cover is brought under Significant areas of natural forest and Forest and woodland cover is brought under
effective management by community and woodlands under effective management as an effective management by community and
individuals in project areas\. outcome of partnerships and initiatives with individuals in project areas\.
multiple partners (primarily communities and
local governments)\.
Private sector is involved in forest A framework for the private sector Private sector is involved in forest plantation
plantation management\. participation in the management of industrial management\.
plantation established, including guidelines,
incentives, regulatory monitoring and control
mechanisms; and three pilot operations are in
place and have been evaluated
Mechanisms for forest biodiversity An institutional framework consistent with Mechanisms for forest biodiversity conservation
conservation are more fully established\. overall civil service reforms in place which are more fully established\.
enables Government to undertake forest
biodiversity conservation initiatives, in
particular in the Eastern Arc Mountains;
institutional capacity strengthened\.
Intermediate Outcome Indicators
Component 1
Establish a new national forestry framework A functioning TFS established with clearly TFS framework documents approved by PO-
effectively to support the sustainable defined service delivery functions and PSM\.
management and protection of Tanzania's responsibilities with regard to natural forests, TFS establishment order signed, CEO appointed
forest woodland and industrial plantation woodlands, and industrial plantations\. and TFS operational\.
resources\. MNRT/FBD assets evaluated and transferred to
TFS\.
Revenue collected from forest goods and
services\.
New transport based fees and market-based
forest produce pricing systems introduced and
operational\.
Revenue Tracking System introduced and
decentralized at district level\.
Total area of forest under Village Land Forest
Increased area under sustainable forest Reserves (VLFRs) or Joint Management
management, providing multiple benefits to Agreements (JMAs)\.
forest adjacent communities in the long-term\. Number of villages with preparatory or
established PFM processes (according to
approved guidelines)\.
Total village forest revenue collected per district
per year\.
Number of Facilitators trained and
implementing PFM\.
Up-to-date and reliable forest & ecosystem
A national forest assessment is carried out in at
resource data available for Mainland Tanzania\.
least 50% of the Borrower's mainland territory\.
Routine Forest & ecosystem data stored and
publicly available in central database
(NAFOBEDA)\.
Forest management plans for both protection &
production forests updated or revised\.
Number and area of Forests set aside and
About 4,000 hectares of forest land is set aside sustainably managed for charcoal production\.
and sustainably managed for charcoal Number of projects piloting innovative
production\. economic instruments\.
Intermediate Outcome Indicators
Component 2
Establish a framework for involvement of the Plantation resource base information available\.
private sector in industrial plantation Forest management guidelines revised and
development and management\. approved to reflect benefits and costs of multi-
stakeholder arrangements in forest plantation
management\.
Number of plantation management agreements in
place\.
Component 3
Develop the institutional capacity within the About 5,350 square kilometers of forest is Increase in capital of the Eastern Arc Mountains
forest sector for coordination, financing, maintained under protection status and Conservation Endowment Fund (EAMCEF)\.
and management of biodiversity management effectiveness is monitored Number of grants provided by EAMCEF for
conservation interventions within regularly\. biodiversity conservation projects\.
Tanzania's forests in particular in the Forest area under protection status (including
forests of the Eastern Arc Mountains\. IUCN categories)\.
Annex 6:
Detailed Description of Project Components
A\. Original Project Components and Sub-Components according to the PAD
Component One: Supporting institutional change and improving delivery service, was to assist GOT
with the design and establishment of the Tanzania Forest Service (TFS), as a specialized 'executive
agency' as defined by the Executive Agencies Act (1997), and consistent with the wider and on-going
national program of civil service reform\. It was envisaged that the TFS would, among other things, have
responsibility for bringing about improvements in the protection and management of natural forests and
the development and management of industrial plantations (including promoting private sector
involvement)\. The concept was that an agency with a national mandate would eventually be established\.
Technical assistance would be provided to work with FBD and the Civil Service Department (CSD) and
other relevant government agencies to design the structure and functions of the agency and to draw up the
necessary implementation plans and guidelines for establishment of the agency, including the formulation
of business and staff recruitment plans\. This component would also provide support to build on
experience from previous operations, and upon the opportunities posed by the new Forest Policy, and
planned legislation\. The component would have three sub-components:
Sub-Component 1\.1: Establishment of the TFS, focusing on the phased-in introduction of the new
executive agency, with clearly defined roles, functions, performance standards, and monitoring\.
This sub-component would provide resources to manage the change process, to strengthen the
capacity for administration and management, to rationalize and to strengthen the capacity for
tasks related to policy, planning, and legislation (which would remain with the Ministry), and
would support a badly-needed program of investments in infrastructure, including headquarter
and field facilities for the TFS\.
Sub-component 1\.2: Improving service-delivery mechanisms for participatory forest and woodland
management, in particular, support for the establishment of Village Forest Reserves, woodland
management by individuals and communities and Joint Forest Management, building on
experiences piloted in earlier operations\. This sub-component, which would focus on facilitating
the expansion of community based forest management activities, was envisaged to be supported
by the Government of Denmark\.
Sub-component 1\.3: Improving revenue collection from forests and woodlands, to meet the dual
objectives of improving the capacity of the TFS to become self-financing, and of ensuring that
revenues are reinvested in forest protection and management at the local level\. This component
would develop alternative revenue collection mechanisms, and monitoring systems to improve
rates of collection\.
Component Two: Private sector involvement in the management of industrial plantations, would
provide resources to develop and implement a framework for the involvement of the private sector in the
management of existing industrial plantations as well as to strengthen the potential for the development
and management of new plantations\. This would include an analysis of the technical and financial
feasibility of the industrial plantations with reference to existing and potential markets, as well as, the
formulation of steps and guidelines for the private sector's involvement\. Multiple mechanisms for the
involvement of the private sector would be developed and implemented on a pilot basis, and were
expected to include leasing or concession arrangements, joint forest management, and co-management\.
Consistent with policy, the objective was eventually to introduce fully commercial plantation
management, building on information and experience gained through Project activities\. There were four
sub-components:
Sub-component 2\.1: Improving the plantation resource information base and management planning
capacity would provide resources to develop the information needed to allow for the
identification and selection of priority sites and for designing pilot activities\. It would finance
aerial photography, interpretation, mapping, and indicative inventories of around 40,000 ha of
state-owned plantations; a rapid socio-economic assessment which identifies key stakeholders,
their concerns, and expectations and any mitigating steps which might be needed; the
development of a plantation database for management purposes; preparation of basic guidelines
to assist plantation management and to establish parameters for monitoring commercial plantation
operations; preparation of basic growth and yield tables for key species relying on existing data;
preliminary estimates of growing stock and allowable cut; and capacity building of staff in
selected areas\.
Sub-component 2\.2: Strengthening institutional support services for private sector involvement would
support the creation of an enabling institutional and market environment for private sector
involvement in plantation development and management\. It would provide resources for the
design and implementation of a communication strategy; the development of an action plan with
clear principles and objectives for private sector involvement; strengthening the capacity within
MRNT or within the planned forest agency to handle PSI; the development of legal procedures
and instruments for tendering to ensure transparency and consistency with GOT guidelines and
with social and environmental safeguards; the preparation of model information memoranda,
leases, model contracts, and transparent bidding assessment procedures, as well as community
and environmental action plans where they are needed; prepare recommendations on an improved
log sales system; an action plant for improving forestry taxation and the investment environment
for plantation forestry; and study tours and staff training to increase an understanding of the
principles surrounding private sector involvement\.
Sub-component 2\.3: Pilot alternative management of selected industrial plantations\. Three pilot activities were
envisaged: (a) the development of leasing or concession arrangements for involving the private
sector in plantation management; (b) the development of co-management arrangements where
responsibility for plantation management is shared between GOT and a partner (for example, a
village or a company); and (c) designated community management for a plantation area where
responsibilities and control are assumed by a village\. The Project would provide resources to
establish boundaries of each pilot area, to carry out rapid inventories or aerial surveys as needed,
to prepare legal documentation as needed, and to carry out stakeholder surveys and assessments
where communities would be involved or otherwise affected by the program\.
Sub-component 2\.4: Monitoring and evaluation\. The Project would place a strong emphasis on the
monitoring and evaluation (M&E) of performance under the pilot operations\. It would provide resources
to establish a mechanism for M&E; to determine performance indicators for the pilot operations; to
implement a regular monitoring process which reports against quantitative and qualitative performance
indicators; and to provide feedback to MNRT to modify mechanisms and procedures on the basis of
results from the pilot operations\.
Component Three: Eastern Arc forests conservation and management, which was largely to be
financed by GEF\. The GEF-financed elements of this component were separately appraised\. The
component would support institutional reform, strategy development, pilot community-based
conservation, and the development of sustainable financing for tropical high forest conservation in
Tanzania\. The component had four sub-components:
Subcomponent 3\.1: Institutional reforms for forest biodiversity conservation, in particular of the Eastern
Arc forests at central, district and local partnership levels to incorporate specific responsibilities
for biodiversity conservation, oversight, monitoring and coordination\. Such reforms would be
linked with other reforms and institutional restructuring proposed for the forestry sector as a
whole, which were to be financed by IDA\. The GEF implementing agency for this sub-
component would be the Bank;
Sub-component 3\.2: Mechanisms for sustainable financing of biodiversity conservation, would be
developed including the establishment of the Eastern Arc Mountains Conservation Endowment
Fund (EAMCEF)\. It was envisaged that a pilot endowment trust fund would be established by the
Project with GEF resources\. The EAMCEF's initial operations and programs would be co-
financed by IDA\. The GEF implementing agency for this sub-component would be the Bank\.
Two additional sub-components to be implemented by the UNDP were complementary to the Bank-
implemented activities, and are not formally reported upon in this report:
Subcomponent 3\.3: Development and preparation of an integrated Conservation Strategy for the Eastern
Arc Mountain Forests using a broad-based participatory process, with a focus on institutional
capacity building, and which considers links to other sectoral activities, such as agriculture,
water, land, and energy\. A wider dialogue on the impacts of sectoral activities on forest
biodiversity conservation in the Eastern Arc would be developed amongst the key institutions
involved in sectoral activities\. Mapping and baseline activities would be undertaken as part of the
Strategy development, and would include an assessment of the multiple tenure regimes found in
the forests of the Arc\. The GEF implementing agency for this sub-component would be UNDP\.
Sub-component 3\.4: A forest conservation intervention through government and community partnership
initiatives which would be undertaken at priority sites in the Uluguru Mountains one of the
most important mountain forest blocks in the Arc\. Firm linkages would be established with
partners (other donors, NGOs, Community-based organizations, government agencies, etc\.) The
GEF implementing agency for this sub-component would be UNDP\.
Component Four: Project administration and management\. The Project would finance the costs of
administration and management of the Project components, in a manner consistent with World Bank
guidance with respect to accounting, financial management, and procurement\. This fourth component was
not included in the DCA\.
B\. Original Project Components and Sub-Components according to the DCA
The DCA describes a Project with three instead of four components; it does not include a component four
Project Administration and Management\. It also changed the sequence of sub-components under
component one (i\.e\. 1\.2 became 1\.3 and vise versa); and it excluded sub-components 3\.3 and 3\.4, since
these were to be implemented by the UNDP\.
C\. Revised Project Components according to the June 2006 Restructuring Proposal
The June 2006 restructuring proposal did not include any changes to the structure of components and sub-
components\. It proposed to open a window (through TASAF) for financing of community-based forest
management under the sub-component 1\.2 improving service-delivery mechanisms for participatory
forest and woodland management\.
D\. Revised Project Components according to July 2006 First Amendment to the DCA
The July 2006 First Amendment to the DCA altered and reduced the contents of sub-component 1\.3
(equivalent to sub-component 1\.2 in the PAD); and created a new fourth Project component:
Revised sub-component 1\.3: Improving service-delivery mechanisms for participatory forest and
woodland management, including facilitating networking and information sharing, and
monitoring activities, through the provision of technical advisory services, training, goods,
acquisition of goods and equipment\.
New Component Four: Supporting community-based management of forests and woodland to
accommodate sub-Projects financed through TASAF\.
E\. Revised Project Components according to the June 2007 Restructuring Project Paper
The 2007 Restructuring Paper introduced Intermediate Outcome Indicators (IOIs) at the sub-component
level\. The differences with the original components as in the PAD are indicated in italics\.
Component One: Creating an enabling environment for sustainable forest management and improved
service delivery, with five instead of three sub-components:
Sub-component 1\.1: Establishment of the Tanzania Forest Service, with three IOIs:
(a) TFS framework documents approved by the President's Office Public Service
Management (PSM)\.
(b) TFS establishment order signed, Chief executive Officer (CEO) appointed and TFS
operational\.
(c) MNRT/FBD assets evaluated and transferred to TFS
Sub-component 1\.2: Improving service delivery mechanisms for participatory forest and woodland, the
main changes introduced is that the "Sub-Projects" would be financed and implemented through
TASAF, and four IOIs were defined (see also Section 1\.9 Other significant changes):
(a) 50,000 ha of forest under Village Land Forest Reserves (VLFRs) or Joint Management
Agreements (JMAs)\.
(b) 150 villages with preparatory or established PFM processed\.
(c) TSh 50 million village forest revenue collected per district per year\.
(d) 150 Facilitators trained and implementing PFM\.
Sub-component 1\.3: Improving revenue collection from forests and woodlands, with three defined IOIs:
(a) TSh 24 billion revenue collected annually from forest goods and services\.
(b) New transport based fees and market-based forest produce pricing systems introduced
and operational\.
(c) Revenue Tracking System introduced and decentralized at district level\.
Sub-component 1\.4: Reinforcing capacity of the forest sector to undertake forest and ecosystem inventory,
mapping and management planning, a new sub-component with three IOIs:
(a) Up-to-date and reliable forest and ecosystem resource data available for 50% of
Mainland Tanzania (see also Section 1\.9 "Other significant changes")\.
(b) Routine forest and ecosystem data stored and publicly available in the National Forestry
and Bee Keeping Database (NAFOBEDA)\.
(c) 150,000 ha of forest management plans for production forests updated or revised\.
Sub-component 1\.5: Integration of sustainable woodfuel utilization in an overall energy strategy a new
sub-component with two IOIs:
(a) 4,500 ha of forests set aside and sustainably managed for charcoal production\.
(b) Five Projects piloting innovative economic instruments\.
Component Two: Multi-stakeholder participation in plantation forestry with no instead of three sub-
components, and three IOIs:
(a) 80,000 ha of plantation resource base information available\.
(b) Forest management guidelines revised and approved to reflect benefits and costs of
multi-stakeholder arrangements in forest plantation management\.
(c) Three plantation management agreements in place\.
Component Three: Eastern Arc forests conservation and management, with two sub-components:
Sub-component 3\.1: Eastern Arc Mountains Conservation Endowment Fund, with two IOIs:
(a) Increase in capital of the EAMCF to US$ 11 million\.
(b) 80 grants provided by EAMCEF for biodiversity conservation Projects\.
Sub-component 3\.2: Effective protection and management of selected forests in the Eastern Arc
Mountains, with three
(a) 5,350 km2 of forest area under protection status\.
(b) 50,000 ha of preparation and pilot implementation of management plans of selected
critical watershed forests\.
(c) Derema Corridor Resettlement Action Plan (RAP) implemented (see also Section 1\.9
"Other significant changes")\.
Component Four: Project administration and management, unchanged\.
F\. Revised Project Components according to August 2007 Second Amendment to the DCA
Significant differences with the Restructuring Project Paper are in italics\.
Component One: Supporting institutional change and improving delivery service, with three sub-
components:
Sub-component 1\.1: Establishment of the TFS as a specialized executive agency (etc\.) including:
(a) Change management in FBD\.
(b) Capacity building for administration and management\.
(c) Strengthening policy and planning services and capital investment in infrastructure\.
Sub-component 1\.2: Improving service delivery mechanisms for participatory forest and woodland,
including facilitating networking and information sharing, and monitoring activities\.
Sub-component 1\.3: Improving revenue collection from forests and woodlands, including:
(a) Improving non-tax revenue administration\.
(b) Redesigning a revenue collection system\.
(c) Centralizing revenue collection and accounting;
(d) Governance information and social marketing\.
Sub-component 1\.4: Reinforcing capacity of the forest sector to undertake forest and ecosystem
inventory, mapping and management planning\.
Sub-component 1\.5: Integration of sustainable woodfuel utilization in an overall energy strategy\.
Component Two: Private sector involvement in the management of industrial plantations, with four
sub-components:
Sub-component 2\.1: Improving the plantation resource information base and management planning
capacity\.
Sub-component 2\.2: Strengthening institutional support services for private sector involvement\.
Sub-component 2\.3: Pilot alternative management of selected industrial plantations\.
Sub-component 2\.4: Monitoring and evaluation
Component Three: Eastern Arc Forests Conservation and Management, with four sub-components:
Sub-component 3\.1: Operating the EAMCEF\.
Sub-component 3\.2: Strengthening institutional support services for biodiversity conservation\.
Sub-component 3\.3: Effective protection and management of selected forests in the Eastern Arc
Mountains\.
Sub-component 3\.4: Supporting implementation of the Derema Corridor RAP\.
Component Four: Supporting Community-Based Management of Forests and Woodland\.
Annex 7:
Conclusions of the Verification of the Derema Corridor RAP (May 2009)
and subsequent GOT action
The RAP has been integrated into the Muheza District Development Plan and its delivery is,
therefore, now part of the responsibility of the Local Administration beyond the project life\.
The RAP document was translated into Swahili, intensively discussed by the Project Affected People
(PAPs) before acceptance and the approval process documented\.
The cash compensation to the PAPs has been duly paid out in compliance with the World Bank's
safeguards policies\.
The grievance settling mechanism was easily accessible\. As a result of the thorough crop counting
process, few complaints were received and they were settled amicably\.
Delays in procuring important equipment (e\.g\. vehicle and motorcycles) led to higher operational cost
in implementing the RAP\.
The implementation of the RAP had been done in a piece-meal manner, focusing initially on cash
compensation, while other important activities, such as income and livelihood restoration and M&E
have been carried on afterwards\.
Land compensation to the PAPs, which has been an integrated part of the RAP, had not been
finalized, by the time of verification\. Since May 2009, the following progress has been made:
o About 921 hectares of farmland in the low lands (formerly owned by the defunct Tanzania Sisal
Authority) have been surveyed and demarcated by the Ministry of Lands and Human Settlements
Development (MoLHSD) facilitated by the RAP Coordinator, local authority and regional
leadership\.
o The District Executive Director officially requested the Commissioner of Lands to revoke the
Right of Occupancy of the land in question\. This is a necessary step to allow the allocation of
land to the affected farmers\.
o Until the land will be distributed to the affected farmers, the Forest and Beekeeping Division has
assigned one senior staff at Muheza District to work with the affected farmers, district, provincial
and national level institutions, including the local Member of Parliament, to finalize the land
compensation\. This has facilitated continuous follow up with the MoLHSD and the Ministry of
Finance and Economic Affairs\.
o During a meeting with affected farmers in late March 2010 the Board of the Consolidated
Holding Corporation (successor of the former Parastatal Sector Reform Commission - in charge
of administering former state holdings), recommended that the ownership of the farm should be
revoked by the President and distributed to the affected farmers as stipulated in the RAP\. The
necessary follow-up is currently undertaken by the local MP through the Commissioner for Land
at the Ministry for Lands, Housing and Human Settlements\.
o Considering the fact that all relevant parties are now in agreement to allocate the land to the
affected farmers, the final decision lies now with the President as the sole authority on land
issues\. While this process might be lengthy, there is an expectation that the issue can be solved in
due time\.
While the Monitoring and Evaluation component of RAP implementation had not yet been conducted
by the time of RAP verification, this activity has been carried out subsequently through WWF, with a
final report delivered by the time of project closure\. The report confirms (i) the implementation of
activities for restitution of income capacities and living standards; (ii) ongoing efforts to settle the
land allocation as well as (iii) that neither OP 4\.10 (Indigenous Peoples) and OP 4\.11 (Physical
Cultural Resources) were triggered\.
The Derema corridor boundary demarcation has been effected and the gazettement of the Derema
Corridor as a forest reserve is in its final stages\.
The preparation of forest management plans has started involving PAPs to ensure the provision of
access and benefit sharing mechanisms\. This will take into consideration the demand of PAPs for the
implementation of income generating activities, which has been wrongly considered part of the RAP\.
While boundaries for the forest have been demarcated and the majority of people have abstained from
returning to the former forest farms, the development and implementation of the management plan is
critical to ensure that the forest area is conserved\. Providing opportunities to benefit from and actively
engage in the protection of the forest, will aid all parties in the long term\.
Annex 8\. Summary of Borrower's ICR and Comments on Draft ICR
A\. Summary of Borrower's ICR
The Borrower has prepared a detailed ICR using the Bank's template, which is available in the project
files\. The following summarizes the main findings and assessment of that ICR:
Assessment of the achievement of Project Development Objectives, Outputs and Outcomes
Rationale for Achievement Rating
The project was implemented since July 2002\. It faced many implementation problems\. The speed of
implementation was very slow initially (2002 2004)
Based on the achievements made the project, its Overall implementation performance was rated
"Satisfactory"
Factors that have positively contributed to project implementation included:
The commitment of FBD-TFCMP team and the TFCMP-Task Team to see the success even in the
face of constraints and challenges;
Improved supervision and Task Team competence including the appointment of a forester as a TTL in
2005;
The reviews which were carried out and use of the feedback to steer the Restructuring exercises
Joint Development Partner (Denmark, Finland, and Norway) approach to participatory forest
management;
The decision to incrementally refocus the project, revise indicators and reorganize activities had a
positive impact on project implementation although perceived limitations of the approval processes
limited a more comprehensive and holistic restructuring of the project;
Improvements later on in terms Financial management and accounting systems in particular with
respect to World Bank and National Audit Office reporting requirements\.
The implementation the project was negatively affected by5:
Some components like the establishment of the TFS and private sector involvement in industrial
forest plantations did not achieve the desired outputs\. The project was over-dependent on the
establishment of the TFS at the expense of other project activities and without taking into
consideration the risk factors involved\. There was weak commitment in the involvement of the
private sector in forest plantation management;
Inadequate project supervision due to frequent changes in leadership in the MNRT which affected
continuity of operations and institutional memory on the project\. There were also changes on the
Bank's side too- TFCMP Task Team leader (TTL);
Delays caused by other parties including; delays in expected DANIDA support for local level
implementation of CBFM and the FAO/NAFORMA project\.
5
Moderately Satisfactory: Project achieved some of its major relevant objectives, and has achieved (or is expected to achieve)
some satisfactory development results\. There were moderate shortcomings in achievement of its objectives\.
Achievements of project objectives envisaged at planning stage including developmental
(Institutional Reform, Forest Conservation and Management) and harmonized national
management programs
Despite the constraints during implementation, the project has achieved (in some areas even over-
achieved) many of the anticipated intermediary outcome targets\. For example PFM supported by the
Bank and other Development Partners, has reached a total coverage of almost 15 % of the total forest
area of the country\.
Instruments and tools to improve the enabling environment for sustainable forest management have
been introduced and/or developed, including the Log Tracking, forest control and surveillance as well
as the set up of the NAFOBEDA\.
The implementation of the NAFORMA had been delayed and therefore no direct support to the actual
field work was provided\. However, critical logistical ground works, Institutional arrangements and
procurements have been realized under TFCMP, which will ensure that the field work starts in early
2010 and beyond\.
Coordination and monitoring of revenue collection has been made possible because of the system
which involves registration for dealing with forest produce, licensing, FSUs, checkpoints and use of
Transit Passes\. Compliance with the Forest Law and regulations has increased significantly as a result
of TFCMP interventions as more people now have licenses allowing them to engage in timber
business\. This notwithstanding, illegal harvesting of forest products is still persistent owing to
inadequate funds to sustain FSUs activities and absence of harvesting plans\. Discussion with FSUs
staff indicated that while the objective of forming FSUs was to curb illegal harvesting, large amounts
of timber and charcoal impounded were wrongly recorded as achievement\.
Achievement of expected project outputs and outcomes of each component based on the
performance indicators data, lessons learnt and synthesis reports\.
Supporting Institutional Change and Improving Service Delivery
(a) Activities accomplished under the TFS sub-component have provided the basis for establishing the
new executive agency\. The Acting Chief Executive was appointed in November 2009\.The TFS
Framework Document (FD) (2006) and the TFS Strategic Plan (SP) 2010/2013 are being revised on
the basis of the Executive Agencies Act Cap\. 245 (Revised edition 2009)\. The next stage is for the FD
and SP documents to be sent for approval by the Chief Secretary (CS) who is the Head of Public
Service\. The approval by the CS will pave the way for the signing of the establishment order by the
Minister for Natural Resources and Tourism after which TFS will be launched\. The launching will be
followed by the reviewing of the TFS Business Plan 2010/2011\. At this stage a substantive TFS Chief
Executive Officer (CEO) will be recruited\. All this will be completed in time so that the Strategic
Plan is operationalized in the July 20010/June 2011 financial year\.
(b) The technical document for the planned Forest Resources and Ecosystem Assessment prepared by
FBD has been approved by FAO\.
(c) A wood fuel strategy had been prepared and action plan was being implemented\. This is expected to
help FBD in advancing the agenda to address the "charcoal/wood fuel challenge", an important cause
of deforestation and land degradation\. However, it should be realized that the strategy was a
nationwide effort and involves the Ministry of Energy (MoE) as the key player and other
stakeholders\.
Participatory Forest Management
With the funding available for the ring-fenced forest window under TASAF, local service providers have
been hired to assist communities in the formulation of "fundable" sub-projects\. The forest area under
Community Based Management and Joint Forest Management has increased to more than 4\.1 million
hectares in 67 Districts\. With the funding available for the ring-fenced forest window under TASAF, and
the technical assistance of local service providers, a total 166 sub-projects have been funded, while
another 62 have been technically approved and are awaiting financing\. In addition, there are 59 sub-
projects which have been "deferred" (returned for improvement and re-submission to the project deferred\.
This was a result of efforts made by both FBD and TASAF staff (agreed upon in November 2008) to
increase the number of acceptable sub-projects, as that the project development progress was slow\. The
total coverage of the program is now about 15% of the total forest area of the country, a target which far
exceeds the end of project goal\.
Progress of the PFM program
The change of forest management paradigm under new forest policy and legislation has enabled local
communities to have more responsibility in forest management under PFM\. Based on PFM goals, its
progress can be assessed with regard to:
1\. Improved forest quality and condition;
2\. Enhanced livelihoods; and
3\. Improved forestry governance\.
Improved forest quality and condition
The progress for this goal can best be measured through research, either by use of permanent forest
sample plots established in the forest with baseline established before PFM, or through the use of
successive aerial photos or satellite images\. Unfortunately very little had been done on this\. However,
the Tanzania Forestry Research Institute (TAFORI) was spearheading a research component on PFM,
and has over the past three years provided quantifiable evidence of forest recovery under various
PFM governance models\.
Other useful ecological studies have been done by other research/ training institutions but it seems
there is not much horizontal link among forest research centers in the country\. Improved networking,
e\.g\. formalized through an annual research seminar, would facilitate the establishment of
comprehensive collection of literature on PFM with regard to forest quality and condition\.
Enhanced livelihood
Local livelihood enhancement is increased through forest revenues and secured supply of subsistence
forest products\. It was anticipated that launching of the NAFOBEDA during FY 2006/07 would have
acquired information to track progress of this indicator but by the end of TFCMP national-level data
had not yet been processed\.
The proportion of household subsistence and cash based income derived from harvesting, processing,
marketing and sale of forest products was another outcome indicator under this goal\. The target was
that by 2010 at least 15% of household subsistence and cash income should be derived from forest
products\. This indicator was monitored under the household Budget Survey of the National Bureau of
Statistics (NBS)\. No up-to-date data was available which showed the extent to which this had been
achieved\.
Tree planting, though not systematically dealt with in PFM, was an important means of supporting
the villagers\. The districts often provided seedlings and advice to the communities on how and where
to establish woodlots on village land\. Since tree planting provided opportunities for community
benefits, and also added to improvement of the environment, there was scope for including tree
planting in the PFM guidelines as one of the important means within PFM for both compensating and
adding to the livelihoods of the villages in question\. The District Forest Officer (DFO) should
therefore include such training in the PFM training programs\.
Improved forestry governance at village and district levels
The institutional setting at village level was well set to accommodate good governance in PFM\. Each
village had a Village Environmental Committee\. When PFM was introduced this committee either
became the Village Natural Resources Committee (VNRC) or a new VNRC was set up\. VNRC was
responsible to arrange for law enforcement (e\.g\. patrolling) and progress reporting on natural
resources management issues\. The VNRC was answerable to the village government, which is an
autonomous organ at village level\. For monitoring and evaluation (M&E) purposes, the VNRC was
responsible for collecting and summarizing all data and information and for submitting to the DFO
who was answerable to the District Land, Natural Resource and Environment Office under the
District Executive Director\. Monitoring information is submitted directly to the MNRT from DFO
whereas progress reports are submitted to PMO-RALG with copy to the MNRT\. It, however,
appeared that the `copying' procedure was a too loose link between the Local Government (PMO-
RALG) and the line Ministry (MNRT), and this adversely affected effective accountability in forest
governance\.
The PFM guidelines had been prepared\. A proposal on benefit sharing with regard to Joint Forest
Management (JFM) was sent to the Ministry of Finance and Economic Affairs for approval but until
the closure of the project the approval was yet to be granted\. The proposal suggests a 60% benefit to
the government and 40% to the other partner Taking into account The continuous delays on an
acceptable sharing mechanism jeopardizes the achievements made so far and planned The sharing
formula needs to be seen as a priority issue\.
Improved Revenue Collection (IRC)
A performance review in 2006 of the IRC system in 25 districts and Mwanza and Dar es Salaam regions
was undertaken by INDUFOR/Ernst & Young\. Revenue collection continued to be a serious problem for
FBD\. The main constraints to improved revenue collection include: (i) inadequate human capacity in
revenue collection and law enforcement; (ii) lack of appropriate incentive structures; (iii) lack of clear
mechanism for sharing accrued revenue to the District; (iv) retention of resources at FBD\.
A proposal to introduce a transport fee based system for charcoal and firewood had been developed and
was awaiting formal approval for implementation\.
A contract to develop a log sales and pricing system was awarded and expected to provide guidance of
revamping price and royalty setting, which in the past had been done centrally with little regard to market
supply and demand\.
FBD HQ had played its role in coordinating collection of central government revenue from the districts\.
Collection performance for 2004/05, 2006\.07 and 2007/08 were above estimates by 64\.5%, 27\.3% and
40% respectively\. In the 2005/06 and 2008/09 financial years, collections were below estimates by 16%
and 34\.5% respectively\. Collections in the year 2008/09 were significantly less (by 34\.5%) than the target
because harvesting and operations of forest based industries were closed for almost half of the year\.
Coordination and monitoring of revenue collection has been made possible because of the system which
involves registration for dealing with forest produce, licensing, Forest Surveillance Units (FSUs),
checkpoints and use of Transit Passes\. Compliance with the Forest Law and regulations was said to have
increased significantly as a result of TFCMP interventions as more people now had licenses allowing
them to engage in timber business\. This notwithstanding, illegal harvesting of forests product was still
persistent owing to inadequate funds to sustain FSUs activities and absence of harvesting plans\. Area
covered by a unit was way too big and could not be effectively be patrolled owing to the inadequate
funding and transport\.
Eastern Arc Forests Conservation and Management
The major element of the component was the formation of an Endowment Fund\. Increasing the capital of
the Fund has been identified as a priority for EAMCEF\. The Endowment has realized a decline from a
high of USD7\.7 million in September 2007 to a low of USD5\.8 million in December 2008 due the world
financial crisis\. The Fund has started to recover and has recorded USD 7\.2 million in September 2009\.
Efforts at specific fund raising opportunities have been mixed\. The Trust successfully negotiated a
corporate partnership with Unilever PLC who has committed to contribute â250,000 into the endowment
through a specific window to support projects in the Mufindi Forest area\. The Trust has also received a
positive response to proposals to the Norwegian Embassy to provide budgetary support to cover its
operations and grant program starting January 2010\. Additionally, EAMCEF has secured commitment
from the GOT to be included in the MNRT Ministerial budget for three years beginning July 2010\.
The proposal to launch a joint fund raising program through the Critical Ecosystems Partnership Fund
(CEPF) has not been successful\. EAMCEF is also seeking to engage a professional fund raiser on a
commission basis to help raise funds\. The mission recommends that EAMCEF concentrates all its efforts
on this key priority with special attention to bi-lateral donors who in the current economic climate may be
the most promising partners for additional funding\. )
The four Key Performance Indicators for this component were achieved as shown in the following table:
Table 1: Status of Achievement of performance indicators for EAMCEF
Key Performance Indicator Status
EAMCEF is established and is fully functional by June EAMCEF established and fully functional
2005 by October 2005
9 Benchmark and indicators for the GEF capital All attained by March 2007
endowment attained by 2007
At least 20 field projects funded by December 2009 49 projects funded by March 2009
Endowment Capital increased to USD 8\.5 by December Endowment reached USD 7,229,698\.00 by
2009 September 2009
After the closure of TFCMP on 31st December 2009, EAMCEF has been operating using proceeds from
the invested Endowment Capital\. Assets procured under TFCMP (transport, some furniture, office
machines and equipment) have been transferred to EAMCEF to enable it to continue carrying out its
planned activities\.
Secondly like when it was under TFCMP, EAMCEF will continue to enjoy VAT exemptions since it is a
not-for profit organization\. The component has been able to establish operational structures,
arrangements as well as strong stakeholder commitment for the achievement of the Global Environmental
Objectives which are Institution reform for forest biodiversity conservation and Mechanism for
sustainable financing of biodiversity conservation\.
There is a need to change the strategy to fund raising\. It has been recommended that EAMCEF should
concentrate all its efforts on fund raising with special attention to bi-lateral donors who in the current
economic climate may be the most promising partners for additional funding\.
The Fund should also ensure there is a forum for the Funds stakeholders to meet and share experiences\.
Further the Fund should train and encourage village based proposals\. Projects based on such proposals
will not only be more efficient, effective and sustainable but also cheap as there will be savings on fuel
that could have been used by a proposal writer from outside the village
Derema Corridor Biodiversity Conservation
The Implementation of the Resettlement Action Plan (RAP) for the Derema Corridor is almost complete\.
Most of key activities (Implemented through WWF such as RAP have been completed (the title of the
report provided in Reference list)\. The cash compensation part of the RAP has been successfully
completed, with 100% of the payments disbursed\. WWF was contracted to undertake a Participatory
M&E for the RAP and have submitted a final report\. Land compensation to Project Affected Persons
under RAP for the Derema Corridor is yet to be finalized although some significant progress on the issue
has been made\. About 921 ha of farmland in the low lands have been surveyed and demarcated by the
Ministry of Lands and Human Settlements Development thanks to the efforts of the RAP Coordinator, the
local authorities and the regional leadership\. This land (formerly owned by the defunct Tanzania Sisal
Authority) has not yet been allocated to the PAPs\. The District Executive Director for Muheza has sent a
letter to the Commissioner of Lands in the Ministry of Lands, Housing and Human Settlements
Development proposing revocation of right of Occupancy of the land in question\.
The MP for Muheza, WWF and MNRT's RAP coordinator joined forces to finalize the land
compensation issue\. They took the issue with the Ministry of Lands, Housing and Human Settlements
Development and the Ministry of Finance and Economic Affairs so that the land compensation part of
RAP would be concluded by December 2009\. However until the closure of the project (31st December
2009) the land allocation to the PAPs was not yet concluded\.
Monitoring and Evaluation
A Results Framework (RF) with clear measurable indicators was developed much later during the project
implementation\. It is also aligned with the approved National Forestry and Beekeeping Database
(NAFOBEDA)\.
Updating the RF has not been done routinely to ensure that the project has sufficient data as evidence for
the achievements of the project against its PDO\.
NAFOBEDA is now in place, but not yet operational at all levels of FBD\. This is supposed to work at
local government level also\. A total of 300 employees from both central and 67 district councils and
plantations have been trained in the use of NAFOBEDA system\. In addition the project has also trained a
number of NGOs and private sector\. What needs to be done now is to update the system, retrain the users
and deal with the virus that had proved a serious problem With respect to the list of indicators, which can
be generated by NAFOBEDA, the majority of performance indicators (including those being tracked
under this project) are not yet entered into NAFOBEDA and therefore not available electronically\.
Currently only data from PFM is being entered\.
FBD needs to make NAFOBEDA functional at all levels by (i) improving capacity to maintain the
database, (ii) entering readily available data (with the help of an IT capable staff) and (iii) assign
additional staff to enter existing data and update the database at least twice a year (iv) monitoring and
evaluations This would ensure that all data collected by FBD is kept in a central location, is analyzed and
used for policy making decisions\. Moreover, once updated and maintained NAFOBEDA should be linked
to the NBS thus making the database available and accessible to the general public\.
Private Sector Involvement (PSI)
National Plantation Forest Reserves' inventory which covered 80,000 ha was completed in December
2008\. This created a useful Plantation Information Resource base and an inventory system to save as a
baseline for future resources assessment under NAFORMA\. Management Plans for all 15 government
plantation forest reserves have also been updated providing the critical basis for the involvement of the
private sector in the management of public forest plantations and a sound economic base to kick start the
TFS\. The progress on this component with respect to Management Concessions and Public Private
Partnership had been stalled by the delay in putting in place a National Forestry Advisory Committee
(NaFAC) which is legally charged with the role of advising on the issuance of the concessions and Joint
Management Agreements\. Members to the NaFAC have recently (November 2009) been appointed which
was a step towards instituting PSI in management of State owned Plantation Forests\.
There is high enthusiasm among local stakeholders and they seem to be possessive as they do not want
the plantations they depended on to fall into hands that would jeopardize their livelihoods\. In Sao Hill the
small dealers feared that they might miss out in the privatization process in favor of the big dealers\. In
Kiwira plantation the local NGOs and dealers should be given priority in the joint management venture\.
There is good progress in planning and management with TFCMP support in the Sao Hill and Kiwira
Plantations, despite existing constraints, such as lack of market based pricing and marketing mechanisms
as well as access to quality seeds, to improve and diversify the current stock\.
The project made some progress in involving the private sector, for example for the Kiwira plantation a
memorandum of understanding has been established to facilitated the participation of the surrounding
communities\. These communities are quite enthusiastic and they already engage in the opportunities for
community plantation management (through tending operations, fire fighting, fire patrols, thinning etc\.)\.
However there was a risk that the current achievements might not be sustainable if the management
contract agreements with the government which spells out the benefits accruing to the communities
continue to be delayed\. The trust and enthusiasm among the private sector operators as waning and this
was detrimental to efforts to involve the Private sector in Management and development of public forest
plantations\.
Assessment of impact of project intervention on the national and local institutional development
The project had institutional change as its major focus in the original project design\. It should have started
with the establishment and strengthening of TFS\. The realization of this became problematic and despite
promises official inauguration continued to be elusive time and again\. The focus then shifted to actual
management and conservation of Tanzania's forests hence the 2007 restructuring Project Paper stipulates
that to deliver on improving enabling environment for sector Reform through strengthening existing and
promoting new tools for sustainable forest management\.
The support to and formation of JFM and CBFM\.
Involvement of the Private sector and the community in public plantation forest management\.
Formation of village land forest Reserves through TASAF
Preparation of a series of manuals and guidelines (including management plans)
The establishment of the EAMCEF for the management and conservation of the Eastern Arc
Mountains\.
The project also leaves behind an important institutional landmark in the Mpingo house which
was supposed to house TFS but is now occupied by MNRT with promises that it will be
relinquished to the former upon its official inauguration\. In addition there was the DEREMA
corridor RAP which the project took over upon request by the government
In their review of the impacts of PFM in the Eastern Arc Mountains forests of eastern Tanzania,
Vyamana et al\., (2008) established that by laws established for JFM in Change village, Morogoro
district appear to have been applied within the forest area under joint management but no similar
management practices were introduced into other forests on village land\. The net result of this is
simply a displacement of harvesting from one area of forest to another\.
The establishment of the TFS was a central element of the project design\. Unfortunately the establishment
of TFS was much delayed and became increasingly uncertain\. The delay and uncertainty prompted a
refocus in 2007 on "to deliver on improving enabling environment for sector reform through
strengthening existing and promoting new tools for sustainable forest management"\. The "new tools for
sustainable forest management" referred to CBFM and JFM of natural forests and woodlands; while in
relation to plantation forest management the original focus on private sector involvement widened to also
include community involvement\. These are institutional changes at the field or forest level\. Here TFCMP
had two types of distinct impacts: (i) direct, for instance through inventories of GOT owned forest
plantations, and the formation of village land forest reserves through TASAF; and (ii) indirect, for
instance through the preparation of a series of manuals and guidelines\. Other institutional changes
included the instruments and tools to improve the enabling environment for sustainable forest
management that were in place by the closure of the project in December 2009\. These include the Log
Tracking, forest control and surveillance as well as the setting up of NAFOBEDA and the National Forest
Resources Monitoring and Assessment (NAFORMA)
Towards the end of the project an Acting CEO for the TFS was appointed and she will preside over the
activities that will see to it that TFS is operational starting FY 2010/11\. Among others the Acting CEO is
expected to undertake the following activities (i) updating all TFS establishment documents (ii) process
approval of the Framework Document and Strategic Plan documents (iii) Gazettement of TFS (iv)
Launching of TFS (v) Review TFS business Plan for Financial Year 2010/2011 and (vi) complete the
Assignment of Financial Management and Accounting Systems (FMAS) and training of Accounts Staff\.
The recruitment of the substantive CEO will then follow\. The substantive CEO will facilitate the
recruitment of directors and determine other staff levels\. It was planned that the foregoing will be
achieved in time for the TFS to be operational in Financial Year 2010/2011\. This shows that moderately
satisfactory achievements have been made in these respects\. With regards to the Eastern Arc Mountains,
the project successfully established the Endowment Fund and hence enhanced the respective institutional
conservation and management mechanisms\. The Progress is assessed as being satisfactory\.
Other useful outcomes of the project included the following
The Derema Corridor RAP was included in the project at the request of GOT to fulfill commitments
made under a different non Bank operation\.
The office building constructed for the TFS (Mpingo House located in Ivory Room), which has in the
absence of TFS been occupied by MNRT and its all departments\. The building will be handed over to
TFS upon its launching in the first half of 2010\.
B\. Borrower's Comments on draft ICR
This is to acknowledge the World Bank ICRR, and inform The World Bank that; the
Management Meeting of the Ministry of Natural Resources and Tourism(MNRT), on its extra
ordinary meeting held on the 14th June 2010, and based on both the Government ICRR and the
World Bank ICRR have principally agreed with the World Bank ratings and observations\.
However, the Management of MNRT is of the opinion that:
1\. The overall rating for TFCMP Could be upgraded to Moderately Satisfactory from the
Current Moderately Unsatisfactory, this is due to the fact that the Tanzania Forest Service is
already established since April 2010, the acting Chief Executive Officer is in Place and the TFS
budget will be tabled as part of MNRT budget at the Parliament this month of June 2010, to be
followed by Launching\.
2\. Implementing Agencies such, as TASAF and EAMCEF could be considered separately in
the process of rating and could be rated at a rate they deserve without the influence of overall
TFCMP rating, hence could get a higher rate than Moderately Unsatisfactory they are having
now under the Bank's ICRR\.
The Ministry argues the World Bank to consider this together with other arguments contained in
the GOT-ICRR\.
Regards,
Gerald Jones Kamwenda
For: Permanent Secretary
Annex 9\. List of Supporting Documents
World Bank Documents
Project Concept, Appraisal, Restructuring and Review Documents
Project Concept Document, TFCMP, April 7, 2000\.
Project Appraisal Document, TFCMP, Report No\. 22743-TA, January 25, 2002\.
Mid-Term Review Report, TFCMP, September/October 2006\.
Project Paper on a Proposed Restructuring of TFCMP, June 29, 2007
Verification of the Resettlement Action Plan for the Derema Corridor, May 2009\.
IDA Development Credit Agreement and Amendments to the Agreement
Development Credit Agreement, TFCMP, Credit 3604 TA, March 13, 2002\.
(First) Amendment to the DCA, TFCMP, Credit 3604 TA, July 18, 2006\.
(Second) Amendment to the DCA, TFCMP, Credit 3604 TA, August 6, 2007\.
(Third) Amendment to the DCA, TFCMP, Credit 3604 TA, August 21, 2009\.
Minutes of QER and Decision Meetings
Minutes of the TFCMP Concept Review Meeting, April 20, 2000\.
Minutes of the TFCMP Decision Meeting for Appraisal, September 27, 2001\.
Minutes of the TFCMP Supervision Quality Enhancement Review (QER), April 18 19, 2006\.
Aide Memoires
Aide Memoire, TFCMP Pre-appraisal Mission, January 29 February 16, 2000\.
Aide Memoire, TFCMP Appraisal Mission, October 8 17, 2001\.
Aide Memoire, TFCMP Launch Mission, 23 29 June, 2002\.
Aide Memoire, TFCMP Supervision Mission, January 26 February 21, 2003\.
Aide Memoire, TFCMP Supervision Mission, August 19 to September 2, 2003\.
Aide Memoire, TFCMP Supervision Mission, May 31 June 18, 2004\.
Aide Memoire, TFCMP Supervision Mission, June 6 17, 2005\.
Aide Memoire, TFCMP Mid-Term Review Mission, September 25 October 3, 2006\.
Aide Memoire, TFCMP, Supervision Mission, September 24 29, 2007\.
Aide Memoire, TFCMP Supervision Support Mission, June 16 July 4, 2008\.
Aide Memoire, TFCMP Implementation Support Mission, June 1 11, 2009
Aide Memoire, TFCMP Final Implementation Support Mission, November 9 13, 2009
Implementation Status and Results Reports
ISRR # 1, May 13, 2002
ISRR # 2, December 23, 2002\.
ISRR # 3, May 25, 2003
ISRR # 4, November 26, 2003
ISRR # 5, May 28, 2004
ISRR # 6, December 15, 2004
ISRR # 7, June 29, 2005
ISRR # 8, December 19, 2005
ISRR # 9, June 18, 2006
ISRR # 10, June 29, 2006
ISRR # 11, December 19, 2006
ISRR # 12, June 29, 2007
ISRR # 13, November 6, 2007
ISRR # 14, December 13, 2007
ISRR # 15, May 22, 2008
ISRR # 16, November 24, 2008\.
ISSR # 17, May 24, 2009
ISRR # 18, July 11, 2009
ISRR # 19, November 18, 2009
Other relevant World Bank Documents
Environmental crisis or sustainable development opportunity? Transforming the charcoal sector in
Tanzania, a Policy Note, May 2009\.
GEF Documents
Project Brief, EAFCMP, 2001\.
Project Appraisal Document, EAFCMP, Report No\. 23901-TA, May 28, 2003\.
Trust Fund Grant Agreement, EAFCMP, Grant No\. May 2003
FBD/MNRT Documents
Manuals and Guidelines and Plans prepared for TFCMP or with TFCMP support
TFCMP Project Implementation Manual, October 2001
Business Analysis, the Tanzania Forest Service (TFS), July 2003
Tanzania Forest Service Framework Document, June 2006\.
Tanzania Forest Service Strategic Plan July 2006 June 2011, June 2006\.
The Tanzania Forest Service Establishment Order, 2006 (not signed)\.
Resettlement Action Plan for farm plots displaced for biodiversity conservation in the Derema
Forest Corridor, September 2006\.
The Framework and Guidelines for Evaluating and Awarding Forest Concessions in Tanzania\.
September 2006\. MNRT-FBD\.
Community-Based Forest Management Guidelines (for the Establishment of Village Land Forest
Reserves and Community Forest Reserves\. October 2007\. MNRT-FBD\.
Guidelines for Preparation of Management Plans for Natural Forests in Tanzania (a Synthesis Guide
for Forest Managers)\. December 2007\. MNRT-FBD\.
Participatory Forest Management Legal Guidelines\. Undated (2007 or 2008) Folder\. MNRT-FBD\.
TFCMP Consultancy Reports
National Training Programme for Sustainable Forestry and Beekeeping Management\. Draft TFCMP
Consultancy Report, September 2003\. R\.C\. Ishengoma\.
Audit of the Performance and Redesign of the Revenue Collection System for Forestry and
Beekeeping Division\. Draft Final TFCMP Consultancy Report, January 2006\. Savcor Indofur Oy,
Finland, in Cooperation with Ernst & Young Advisory Services Ltd, Tanzania\.
Tanzania Consulting Engineers and Planners Ltd in Cooperation with LTS International\.
Review of the Organisational Structure of the Tanzania Forest Services\. Draft Final TFCMP
Consultancy Report, April 2006\. Resource Development and Management Associates (REDMA)\.
Consultancy Service for Development, Establishment and Institutionalization of National Forest
Programme Monitoring Facility and Database\. TFCMP Consultancy Inception Report, May 2006\.
COWI
National Forest and Beekeeping Programme Monitoring Database, NAFOBEDA Version 2\.8,
Monitoring Manual Monitoring Procedures\. TFCMP Consultancy Report, December 2006\.
COWI Tanzania Consulting Engineers\.
Implementation of the Resettlement Action Plan (RAP) for the Derema Corridor\. TFCMP
Consultancy Report, May 2007\. World Wide Fund for Nature (WWF) Tanzania Programme
Office\.
Valuation and Registration of Fixed Assets for the Forest and Beekeeping Division (Valuation of
FBD Forest Resource)\. Final TFCMP Consultancy Report, May 2007\. Property Market Consult
Limited\.
Provision of Consultancy Services for Implementation of Private Sector Involvement Activities\.
Final TFCMP Consultancy Report, June 2008 (Helsinki)\. Indofur in consortium with the Institute
of Resource Assessment, University of Dar es Salaam\.
Forest Reserve Digitization Project, Tanzania Mainland\. TFCMP Consultant Report, 2008\.
InfoBridge Consultants\.
TFCMP Performance Reports
Performance Report July to September 2007\. TFCMP Quarterly Report\. October 2008\.
Performance Report October to December 2007\. TFCMP Quarterly Report\. January 2008\.
Performance Report January to March 2008\. TFCMP Quarterly Report\. April 2008\.
TASAF - TFCMP, Participatory Forest Management Component Implementation Status "January-
March 2008"\. Progress Report for the Third Quarter (January March 2008)\. June 2008\.
Other relevant FBD/MNRT documents
National Forest Programme in Tanzania 2001-2010\. November 2001\.
National Beekeeping Programme 2001-2010\. November 2001\.
Participatory Forest Management in Tanzania, Facts and Figures\. July 2006\.
Forestry, Governance and National development: Lessons learned from a logging boom in Southern
Tanzania\. Prepared by Simon Milledge, Ised Gelvas and Antje Ahrends in 2006\.
National Forest and Beekeeping Programme Joint Sector Review 2007 Report\. February 2007\.
Joint Financing Arrangement Between MNRT, PMO-RALG and Development Partners for the
National Forest and Beekeeping Programme (NFBKP)\. November 2007\.
Aide Memoire/Final Report of the Joint Review of the Participatory Forest Management
Programme, December 2008\.
Participatory Forest Management in Tanzania, Facts and Figures\. December 2008\.
Proceedings of the First Participatory Forestry management Research Workshop: PFM for Improved
Forest Quality, Livelihood and Governance, June 2009\.
Participatory Forest Management in Tanzania: 1993 2009, Lessons learned from experience to
date\. Prepared by Tom Blomley and Sai Iddi, September 2009\.
Eastern Arc Mountains Conservation Endowment Fund (EAMCEF) Documents
EAMCEF Financial, Operations and Management Manual, October 2001 (Annex 5 to TFCMP PIM)
Guidelines for Local Advisory Committees\. November 2005\. EAMCEF\.
Strategic Plan 2006-2010\. August 2006\. EAMCEF\.
1st Quarter Progress Report, FY 2007/2008 (July-September 2007)\. September 2007\. EAMCEF\.
3rd Quarter Workplan & Budget, FY 2007/08 (January-March 2008)\. December 2007\. EAMCEF
2nd Quarter Progress Report, FY 2007/2008 (October-December 2007)\. January 2008\. EAMCEF\.
Fundraising Framework\. March 2008\. EAMCEF\.
Guidelines for Preparation of Project Proposals and Procedures for Making Grants, May 2008\.
EAMCF\.
Progress Report, July 2007 June 2008\. EAMCEF\.
Other Relevant Documents
FAO Project Document GCP/GLO/194/MUL, July 2008: National Forest Resources Monitoring and
Assessment in Tanzania (supported by Finland)
Value for Money Audit Participatory Forest Management and Sustainable Wetlands Management,
Draft Final report prepared in September 2009, by Ernst & Young, for the Royal Danish
Embassy\.
Tanzania Forest Accounts, Report to The Centre for Environmental Economics and Policy in Africa,
University Of Pretoria, June 2007
IBRD 32235R
32° 36° 40°
U G A N D A
Bukoba
Musoma
RWANDA
Lake
MARA
K E N Y A
Victoria
KAGERA
Mwanza EASTERN ARC MOUNTAINS
Longido
MWANZA CLOSED WOODLANDS, OPEN WOODLANDS
W\. KILIMANJARO AND NATURAL FORESTS
N\. KILIMANJARO
SHINYANGA Lake MERU MAIN INDUSTRIAL PLANTATION AREAS
BURUNDI Eyasi
Oldeani
Lake
Arusha Moshi
MAIN CITIES AND TOWNS
Kibondo Arusha
Shinyanga Manyara KI PROVINCE CAPITALS
Kahama
Chini LIM
4°
Mwadukani
ARUSHA AN NATIONAL CAPITAL
4°
Same JA PROVINCE BOUNDARIES
Nzega
Lake Babati RO
KIGOMA Kitangiri
INTERNATIONAL BOUNDARIES
Kasulu LUSHOTO
Kigoma Singida Mgori
LONGUZA
Kondoa
Ujiji Uvinza Malagarasi Kaliua Tabora
Kalema
TANGA Wete
Tanga
O F
Korogwe
Pemba
La
TABORA Kijungu Hale Island
Handeni Pangani
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C O N G O
DODOMA
D E M \. R E P
Mkata
Zanzibar
SINGIDA Island
DODOMA Zanzibar
Mpanda
Mpwapwa Bagamoyo I N D I A N
Chalinze
RUKWA Kilosa
Dar Es Salaam
Morogoro This map was produced by the Map Design Unit of The World Bank\.
Rungwa The boundaries, colors, denominations and any other information shown
Mtera
DAR ES SALAAM on this map do not imply, on the part of The World Bank Group, any
judgment on the legal status of any territory, or any endorsement or
O C E A N acceptance of such boundaries\.
Ta
Mikumi Kisiju
ng
Namanyere COAST
an
Kipembawe Kidatu
Lake Kibiti
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Rukwa Iringa Mafia DJIBOUTI
ka
Sumbawanga Island CHAD
8° MBEYA 8°
ETHIOPIA
Ifakara
SUDAN
Kasanga SAO HILL CENTRAL
Chunya
Mufindi Mahenge AFRICAN REPUBLIC
Kilwa Kivinje SOMALIA
Mbeya
Vwawa
UGANDA
Z A M B I A Tukuyu
MOROGORO
CONGO
Njombe
32°
KENYA
LINDI
Lake
Liwale Victoria
D E M\. R E P\. RWANDA
TANZANIA Lindi OF CON G O BURUNDI
INDIAN
FOREST CONSERVATION AND Nachingwea Mikindani
Mtwara
DODOMA OCEAN
MANAGEMENT PROJECT/ Songea TA N Z A N IA
Masasi MTWARA
EASTERN ARC FORESTS CONSERVATION Mbinga RUVUMA Newala
AND MANAGEMENT PROJECT Tunduru
ANGOLA
COMOROS
MALAWI
Mayotte
0 100 200 300 400 KILOMETERS Z A M B I A (Fr\.)
MOZAMBIQUE MOZAMBIQUE
MADAGASCAR
36° 40°
12° 12°
JUNE 2010 | REVIEW |
P006414 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 19468
IMPLEMENTATION COMPLETION REPORT
BRAZIL
SAO PAULO NATURAL GAS DISTRIBUTION PROJECT
(LOAN 3043 - BR)
June 24, 1999
Finance, Private Sector and Infrastructure Departnent
Country Management Unit: Brazil
Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Unit = Cruzeiro until July 31, 1993
Cruzeiro Real August 1, 1993 to June 30, 1994
Real from July 1, 1994
Average Exchange Rates
Real/US$
1990 1991 1992 1993 1994 1995 1996 1997 1998 April 1999
154 939 11,151 279,382 0\.85 0\.97 1\.04 1\.11 1\.21 1\.66
WEIGHTS AND MEASURES
CM cubic meter ( = 35\.31 cubic feet)
MMCMD million cubic meter per day
BTU British thermal unit
MMBTU million BTU
kcal kilocalorie ( = 3\.968 BTU)
ABBREVIATIONS AND ACRONYMS
BNDS National Bank of Economic and Social Development
COMGAS Companhia de Gas de Sao Paulo
CSPE Comission of Public Energy Services of Sao Paulo
ELETROBRAS = Centrais El6tricas Brasileiras S\.A\.
IERR Internal Economic Rate of Return
GNP Gross National Product
NG Natural Gas
NGE Natural Gas Equivalent
PETROBRAS Petr6leo Brasileiro S\.A\.
HSFO High Sulfur Fuel Oil
LSFO Low Sulfur Fuel Oil
ICB International Competitive Bidding
SCADA Supervisory Control and Data Acquisition
FISCAL YEAR OF BORROWER
January 1 - December 31
Vice President: Shahid J\. Burki, LCRVP
Country Director: Gobind T\. Nankani, LCC5F
Sector Director: Danny Leipziger, LCSFP
Task Manager: Luis M\. Vaca-Soto, LCSFP
FOR OFFICIAL USE ONLY
TABLE OF CONTENTS
PREFACE \.I
EVALUATION SUMMARY \.II
PART I PROJECT IMPLEMENTATION ASSESSMENT
A\. BACKGROUND \.1
B\. STATEMENT AND EVALUATION OF OBJECTIVES \.2
THE PROJECT OBJECTIVES \.2
C\. ACHIEVEMENT OF OBJECTIVES \.3
D\. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT \.7
E\. PROJECT SUSTAINABILITY \.9
F\. BANK PERFORMANCE \.9
G\. PERFORMANCE OF THE BORROWER \. 10
H\. ASSESSMENT OF OUTCOME \. 11
I\. FUTURE PROJECT OPERATION \. I I
J\. KEY LESSONS LEARNED \. 12
PART II: STATISTICAL TABLES
TABLE 1: SUMMARY OF ASSESMENTS \.13\. 3
TABLE 2: RELATED BANK LOANS/CREDITS \. 14
TABLE 3: PROJECT TIMETABLE \. 14
TABLE 4: LOAN DISBURSEMENTS \. 15
TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION \. 16
TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS \. 17
TABLE 7: STUDIES INCLUDED IN THE PROJECT \. 18
TABLE 8A: PROJECT COST \. 19
TABLE 8B: PROJECT FINANCING \. 20
TABLE 9: ECONOMIC EVALUATION \. 21
TABLE 10: STATUS OF LEGAL COVENANTS \. 22
TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS \. 24
TABLE 12: BANK RESOURCES: MISSIONS \. 25
TABLE 13: BANK RESOURCES - STAFF INPUT \. 26
APPENDIX A: ICR MISSION'S AIDE MEMOIRE
APPENDIX B: BORROWER'S CONTRIBUTION TO THE ICR AND ITS EXECUTIVE
SUMMARY IN ENGLISH
MAPS - IBRD 20809 - 20810
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization
i
BRAZIL
SAO PAULO NATURAL GAS DISTRIBUTION PROJECT
(LOAN 3043 - BR)
PREFACE
This is the Implementation Completion Report (ICR) for the Brazil Sao Paulo Natural
Gas Distribution Project (Loan No\. 3043-BR, US$94 million equivalent) approved on April 25,
1989\. The Companhia de Gas de Sao Paulo (COMGAS) was the Borrower and the Federal
Republic of Brazil was the Guarantor\.
The IBRD loan will close on August 31, 1999, four years behind the original schedule\.
The last disbursement for the loan took place on January 12, 1999\. From the original amount of
US$94 million, US$41,058\.26 remained undisbursed\. They are expected to be fully disbursed by
the loan closing date\.
The ICR was prepared by Luis M\. Vaca-Soto (Task Manager-LCSFP) with the assistance
of Marcelo Osorio (Consultant), Peter Law (EMTOG), and Sati Achath (LCSFP)\. It is based on
the Staff Appraisal Report, the Loan and Guarantee Agreements, supervision reports, a visit to
Brazil in May 1999 and the Borrowers contribution report prepared by COMGAS (Appendix B)\.
The ICR was reviewed by Mr\. N\. de Franco (Energy Team Leader for Brazil, LCSFP), and Ms\.
Maria Victoria Lister (Quality Assurance Officer, LCSFP) and cleared by Mr\. J\. A\. Carvalho
(LEGLA)\.
ii
IMPLEMENTATION COMPLETION REPORT
BRAZIL
SAO PAULO NATURAL GAS DISTRIBUTION PROJECT
(LOAN 3043 - BR)
EVALUATION SUMMARY
Introduction
i\. The Sao Paulo Natural Gas Distribution project was part of the Brazilian Government's
strategy for the energy sector developed in co-operation with the World Bank\. The key elements
of this strategy focussed on the rationalization of energy prices, energy conservation,
environment protection, and institutional restructuring\. It was consistent with Bank's strategy to
encourage economic growth and social development by promoting efficient energy resource
allocation, ameliorating atmospheric pollution by substituting clean burning natural gas by high
polluting fuels, and increasing efficiency in the public sector\. The project aimed at utilizing
natural gas available from newly discovered offshore fields in the Santos and Campos basins\.
The Sao Paulo Natural Gas Distribution Project was IBRD's first project to support the Brazilian
natural gas sector\. The project was executed by the Companhia de Gas de Sao Paulo
(COMGAS)\.
Project Objectives
ii\. The objectives of the project were to: (a) extend and convert the existing network for the
supply of natural gas to industrial, commercial and residential consumers to enable, after Project
completion, daily distribution of about 3 million cubic meters per day (MMCMD) from Campos
and 0\.4 MMCMD of refinery gas; (b) strengthen the management and organization of
COMGAS, its project implementation capacity, and the efficiency and safety of its gas
distribution; (c) assure COMGAS' financial viability and cash generation capacity for further
expansion; (d) help COMGAS to mobilize capital, including private capital, to reduce demand
for public funds; (e) enhance the regulatory framework of Brazil's gas industry; (f) reduce
environmental pollution in Sao Paulo, and (g) develop and implement a gas utilization strategy
for the State of Sao Paulo, including economically efficient gas pricing policies\.
Implementation Experience and Results
iii\. The project was approved in April 1989 and became effective in June 1990\. It was
restructured after the December 1993 Mid-Term Review in response to the changing
requirements of the potential gas market in Sao Paulo, and the scope of the project components
was adjusted accordingly\. COMGAS was the Borrower of the US$94 million Bank loan, and the
Federal Republic of Brazil was the Guarantor\.
iii
iv\. The project has substantially achieved its key physical and institutional objectives,
although at a slower pace than originally envisaged\. As a highly-complex urbane infrastructure
project requiring close involvement and co-operation of the civil society, particularly the Sao
Paulo municipal authorities and the many thousands of residential consumers whose dwellings
needed to be entered, the project succeeded in achieving its physical objectives without a single
major gas escape or hazard-related incident\. The project has made a major contribution to the
expansion of natural gas use in Sao Paulo, to the implementation of institutional reforms in the
energy sector, and to the mobilization of private capital\. Consumption of natural gas in Sao
Paulo achieved the appraisal target of 3\.4 MMCMD and the project was highly successful in
introducing modem gas distribution technology to COMGAS\. New national and state legislation
has been approved introducing substantive institutional reforms and creating regulatory agencies
for the energy sector at national and state levels\. The State Assembly of Sao Paulo approved a
constitutional amendment to terminate the State monopoly in the distribution of natural gas\. The
project helped COMGAS to mobilize private capital through the issuance of convertible bonds
and the privatization of the company was successfully completed following a transparent and
competitive bidding process\.
v\. The financial project objectives were partially achieved\. Although the financial
covenants had not been met during project implementation, COMGAS obtained positive rates of
return on net assets, achieved a net profit in each year except 1995 and its net internal cash
generation was sufficient each year to cover a substantial portion of the investment program\.
Moreover, the key financial objective - to assure COMGAS' financial viability and cash
generation for further expansion - was achieved by mobilizing private capital through its
privatization\. During project implementation, COMGAS' financial performance was impaired by
the macroeconomic problems that affected Brazil in 1990 and 1994 and the subsequent freezing
of gas tariffs by the Federal Government\.
vi\. Final project cost was US$270\.8 million equivalent compared to US$285\.0 million
estimated at appraisal\. The loan amount of US$94\.0 million was fully disbursed, except for
some $40,000 that COMGAS expects to disburse by closing date\. BNDES, Sao Paulo State and
end-use consumers cofinanced the project in the amounts of US$48\.9, US$30\.5 and US$59\.3
million respectively\. COMGAS' own funds were used to finance the balance of US$38\.1
million\. The loan was extended to August 31, 1999, four years behind the original schedule\.
vii\. The major factors that affected project implementation were: (i) delays in meeting
conditions for loan effectiveness; (ii) weak project management, poor project organization and
cumbersome and overly-complex procurement procedures of the Borrower during the first four
years of project implementation; (iii) frequent changes in the senior management of COMGAS
during the first four years causing a "temporary ownership" mindset toward the project; (iv)
macro economic problems that affected COMGAS' financial conditions; (v) unforeseen technical
problems in the upgrading of existing cast iron gas distribution network and in the conversion of
residential consumers from manufactured to natural gas; and (vi) more than expected time
required for the approval of legislative changes and institutional reforms\.
iv
viii\. Without the project's incremental natural gas expansion, most industrial consumers
would have needed to use high sulfur fuel oil (HSFO) instead of natural gas\. On the basis of
replacement of HSFO by natural gas, the project is credited with an annual emissions reduction
from HSFO burning of about: (a) 208,000 tons of sulfur dioxide; (b) 26,140 tons of nitrogen
oxide; (d) 110,200 tons of carbon monoxide; and (e) 989,000 tons of carbon dioxide\.
ix\. The Bank's performance is considered to have been mostly satisfactory when viewed over
the whole eight years of project implementation\. This recognizes that up to the Mid-Term
Review in 1994, the project implementation would have benefited from a more pro-active role by
the Bank in reviewing procurement documents prepared by COMGAS, and after 1994 the Bank
maintained a very close supervision for the remaining period of project implementation\. The
Bank maintained a substantive dialogue with both the State and Federal government authorities
to promote improvements in legislation and institutional reforms\. After an initial four-year
period of very slow progress on project implementation, the Bank took a strong position that was
instrumental for fundamental changes in the performance of the management contractor and the
project management within COMGAS', and for actions to enhance the safety of the project and
reduce the likelihood of gas escapes, and improve the company's efficiency and productivity\.
The performance of the Borrower was also satisfactory overall\. Although the Borrower was
mainly responsible for the delays, which occurred during the first years of project
implementation, from 1994 on, when the Borrower took strong ownership on all matters related
to the project, implementation improved resulting in satisfactory project completion\.
x\. The outcome of the project is rated as satisfactory\. The project has achieved its major
objectives\. Furthermore, these objectives appear to have a high likelihood of being sustainable\.
The project, however, is expected to generate an internal economic rate of return (IERR) and net
present value (NPV) lower than the ones estimated at project appraisal\. The project ex-post
IERR and NPV (discounted at 11%) are estimated at 25\.7 % and US$501\.0 million respectively\.
The main reasons for these reductions are less than expected (a) total sales as a consequence of
reduced amounts of natural gas available from PETROBRAS and reduced demand; (b) less than
expected sales to the commercial and residential consumers, which are the market segments that
produce the highest economic returns\.
Summary of Findings, Future Operation and Key Lessons Learned
xi\. During project implementation, the Bank's dialogue with the State Government directly
contributed to the formulation of a new energy sector strategy for the State of Sao Paulo, the
enactment of new legislation for the energy sector, and the establishment of a modem regulatory
framework for the State of Sao Paulo which is now helping attract private investments to the
energy sector\.
xii\. The project has been instrunental in transforming COMGAS from a State-owned,
medium-sized gas-manufacturing company into a bigger privately-owned natural gas distribution
company ready for further expansion\. During 1999, COMGAS was listed in the local stock
market, issued convertible bonds to finance its expansion, and was ultimately entirely privatized
with majority ownership taken by international oil and gas companies of high repute\. Thanks to
v
the conversion of the manufactured-gas distribution network and final consumers to natural gas
achieved under the project, consumption of natural gas in Sao Paulo is increasing substantially\.
This allows COMGAS to play a key role in regional natural gas trade, to be further enhanced by
its planned service coverage expansion using natural gas imported from Bolivia\.
xiii\. The key lessons learned from the project are:
(a) The good response obtained from private companies to COMGAS privatization process
confirmed the importance of having in place a satisfactory regulatory framework and adopting a
transparent privatization process\.
(b) National energy strategies should take into account the environmental advantages of gas
with respect to other fuels\. One option could be the application of differentiated tax rates to fuels
in accordance with their respective impact on the environment\.
(c) Implementation of institutional reforms in a sector like the energy sector is a complex
and often time-consuming process\. Changes of legislation and implementation of measures
aimed at the restructuring of large state companies have in general to be gradually introduced\.
(d) Use of project management contracts requires a careful design to make the contractor
accountable for the risks that it could manage, define responsibility lines, and provide an
adequate interface with the owner, taking into consideration its managerial capacity\. In the
project, the consulting firm appointed to manage the project did not feel accountable ifor timely
results because some of the tasks were out of its control\.
(e) The design of complex projects that include several components should take into
consideration the constraints of management capacity of the executing agency\. In the case of the
project, implementation of the diverse project components in parallel, as originally planned,
would have obliged COMGAS to increase management staff\. Considering its overall
institutional objective of reducing staff, COMGAS preferred to implement some project
components in stages\.
1
IMPLEMENTATION COMPLETION REPORT
BRAZIL
SAO PAULO NATURAL GAS DISTRIBUTION PROJECT
(LOAN 3043 - BR)
PART I - PROJECT IMPLEMENTATION ASSESSMENT
A\. BACKGROUND
1\. The Sao Paulo Gas Distribution Project was the Bank's first lending operation in Brazil's
hydrocarbon subsector, although several pieces of sector work had been conducted previously,
including the Oil and Gas Sector Review in 1983 and the Public Sector Investment Review in
1985\. The Project was intended to support Federal Government's policies that encouraged
economic growth and social development in a context of macroeconomic stability\. These
policies emphasized efficient resource allocation and increased efficiency in the public sector\.
The energy sector was a key element in the Government's policies: on one side, capital intensity
and high foreign exchange requirements had had a significant impact on public investment, the
balance of payments and the external debt\. On the other side, a secure supply of energy at the
lowest cost was considered indispensable to economic growth and the improvement of social
welfare\.
2\. The resources needed to increase the domestic supply of petroleum, hydroelectricity and
alcohol had contributed significantly to the country's macroeconomic problems, particularly in
terms of the fiscal deficit and inflation\. During the period 1984-86, Brazil's energy sector
absorbed almost half of all Federal and Federally funded investment in the country\. The bulk of
this investment was undertaken by two of Brazil's parastatals: the national oil company Petr6leo
Brasileiro, S\.A\. (PETROBRAS), which was responsible for about 18%; and the national
electricity holding company Centrais Eletricas Brasileiras S\.A\. (ELETROBRAS), for about 22%\.
3\. The high level of world oil prices in the 1970's and early 1980's had led to a national
energy strategy that emphasized increased energy self-sufficiency and the development of
domestic energy sources, particularly petroleum, alcohol, and hydropower\. The pricing of coal,
alcohol and biomass had been heavily influenced by Brazil's efforts to reduce its dependence on
imported oil and oil products\. However, differing views among various government agencies
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regarding the priorities for the development of natural gas resources contributed to the scarce
utilization of natural gas, despite its large proven reserves (93 billion cubic meters)\.
4\. In the last 1980's, the expectation of lower world oil prices called into question the past
energy strategy\. To design a new energy sector strategy, the Government started the Integrated
Energy Strategy Study (IESS) under terms of reference agreed with the Bank\. The aims of this
study were to asses the macroeconomic impact of past and proposed energy sector strategies,
analyze and recommend policies for energy pricing, energy conservation, environment
protection, and institutional restructuring, and asses investment planning and related policies
regarding major supply subsectors such as power, petroleum, gas, alcohol, coal and biomass\.
The project was intended to be a vehicle to make progress on three important issues in the gas
subsector, namely pricing, utilization and institutions\.
B\. STATEMENT AND EVALUATION OF OBJECTIVES
The Project Objectives
5\. The objectives of the project were to: (a) extend and convert the existing network for the
supply of natural gas to industrial, commercial and residential consumers to enable, after Project
completion, daily distribution of about 3 MMCMD from Campos and 0\.4 MMCMD of refinery
gas; (b) strengthen the management and organization of COMGAS, its project implementation
capacity, and the efficiency and safety of its gas distribution; (c) assure COMGAS' financial
viability and cash generation capacity for further expansion; (d) help COMGAS to mobilize
capital, including private capital, to reduce demand for public funds; (e) enhance the regulatory
framework of Brazil's gas industry; (f) reduce environmental pollution in Sao Paulo; and (g)
develop and implement a gas utilization strategy, for the State of Sao Paulo, including
economically efficient gas pricing policies\.
6\. To meet these objectives, the project comprised three parts: Part I was cofinanced by
BNDES (Banco Nacional de Desenvolvimento Economico e Social); Part II was partially
financed by the World Bank loan, and natural gas customers financed Part III\.
7\. Part I included: (i) the Suzano-Sao Paulo gas pipeline connecting the PETROBRAS
pipeline to the distribution ring around Sao Paulo; (ii) a southern cross-connection from the
northeast to the southwest section of the Sao Paulo ring; and (iii) distribution network expansion
to supply about 7,000 new residential customers and for 200 new industrial consumers in 14
areas of greater Sao Paulo\.
8\. Part II included: (i) distribution network expansion to supply about 31 industrial
consumers in two areas of the city; (ii) upgrading of part of the existing cast iron networks and
connections for about 205,000 new residential consumers; (iii) conversion of the existing
networks and 201,000 residential consumers to natural gas; (iv) a telemetering and supervisory
control and data acquisition (SCADA) system for remote control of the network; and (v)
laboratory and pipeline repair equipment for four maintenance and repair centers\.
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9\. Also under Part II, the loan provided partial financing for the following technical
assistance, training, and studies: (i) technical assistance to strengthen COMGAS' capabilities for
carrying out the Project and enlarging its role to include testing and certification of industrial and
commercial appliances; (ii) training of COMGAS' managerial and operational staff locally and
abroad; (iii) a study to improve COMGAS' organization and information system; (iv) a study on
the possible forms of private participation in COMGAS; (v) a gas utilization study and a tariff
study for the State of Sao Paulo; and (vi) assistance in the creation of a gas technology institute\.
10\. Part III included: (i) conversion of 455 industries and 4,800 commercial consumers to
natural gas; (ii) installation within consumer premises to connect 231 new industrial consumers;
and (iii) internal installation to connect 212,000 new residential consumers\.
Evaluation of Objectives
11\. The project objectives are considered to have been well designed and similarly
interpreted by the Borrower and the Bank\. They were consistent with the Government's policies
to enhance efficient resource allocation and increased efficiency in the public sector\. They
supported the Government's efforts to formulate a new rational energy strategy based on
essential infornation on the economics of alternative patterns of gas supply and demand\. They
were consistent with the Government's need to resolve the contradictions in natural gas
utilization priorities, which were apparent among different agencies of Government\. They
stimulated economic utilization of Brazil's natural gas resources that had been limited by
distortions affecting the natural gas subsector and that would help to reduce environmental
pollution\. Finally, the project objective to help COMGAS to mobilize private capital was
appropriate to reduce the demand for public funds\. The objectives were also well aligned with
the Bank strategies for sector reforms, pricing policies and reduction of environmental pollution\.
However, the timescale envisaged for the implementation of institutional reforms required for
enhancing the regulatory framework of Brazil's gas industry proved too short\.
C\. ACHIEVEMENT OF OBJECTIVES
Overview
12\. Although there was a delay of four years, the project substantially achieved its objectives\.
The project has made a significant contribution to the expansion of natural gas use in Sao Paulo,
the implementation of institutional reforms and mobilization of private capital\. Consumption of
natural gas in Sao Paulo increased to the appraisal targets and the project was highly successful
in introducing modern gas distribution technology to COMGAS\. New national and state
legislation has been approved and substantive institutional reforms implemented\. COMGAS has
been reorganized, its efficiency improved to satisfactory levels (as shown by its performance
indicators), and fully privatized\. New independent energy regulatory commissions at the
national and state level have been established and a new strategy for the energy sector has been
developed and is being implemented\.
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13\. The financial objectives of the project were partially achieved, COMGAS obtained
positive rates of return on net assets but these were below its covenanted obligations\. The
project has been very successful in helping COMGAS to mobilize private capital\. The
privatization of COMGAS was successfully completed in April 1999 following a transparent and
highly competitive process\. The shares of the company were sold for about 117% above the base
price, which indicates the high valuation the bidder assigned to the overall conditions and
prospects for COMGAS\.
Sector Policies
14\. The Bank's dialogue with the Federal and State Governments, enhanced by the
preparation of the Gas Sector Development Project (Bolivia-Brazil Gas Pipeline), directly
contributed to the formulation of new legislation and regulations for the gas industry\. On August
1997, the National Parliament approved Law No\.9\.478 that defined the objectives of the national
energy policy and created a National Energy Policy Council (Conselho Nacional de Politica
Energetica) and the regulatory agency for the energy sector (Agencia Nacional de Petroleo,
ANP)\. The Law mandates that the national energy policy should seek to promote competition
for the development and use of energy sources\. At state level, the Government of Sao Paulo
enacted, in October 1997, the Complementary Law No\. 833, creating the Commission of Energy
Public Services as the regulatory agency for the energy sector\. In addition, on December 1998,
the State Assembly of Sao Paulo approved a constitutional amendment to abolish the State
monopoly in the distribution of natural gas\.
15\. The objective of developing a gas utilization strategy for the State of Sdo Paulo was
achieved although with delays\. The project assisted the State Government in the design of a new
energy sector strategy for the State of Sao Paulo by providing it with fundamental analysis of
energy and investment policies, practices in the public sector, existing legislation and contractual
practices on private participation and natural gas regulation\. The Natural Gas Tariff Study
provided the State Government with substantive analysis for the efficient pricing of natural gas in
the state of Sao Paulo and with recommendations on the structure, level and rates for the sale of
natural gas\. Based on the recommendation of this study, the Government of Sao Paulo
implemented a new tariff system that enhanced interfuel competition, and improved COMGAS'
financial health\. However, due to the macroeconomic problems Brazil faced during 1994-98, the
Government applied a stabilization program (Plano Real) which temporarily froze natural gas
tariffs so they were temporarily underpriced and did not cover increases in costs of raw materials,
salaries, goods and services\. In 1999, the adequate level of natural gas tariffs compared with
other fuels, the adjustments mechanisms included in the new concession contract, the increased
efficiency of COMGAS, the availability of natural gas from foreign sources, and the existence of
a new regulatory framework for the energy sector, consolidated a global strategy that allowed for
the successful privatization of the company and is expected to attract new private concessionaires
to enhance natural gas utilization in Sao Paulo\.
5
Physical Objectives
16\. The physical objectives of the project were achieved although with a delay of four years\.
The objective of substantially increasing the supply of natural gas to industrial, commercial and
residential consumers was fully achieved\. Natural gas sales in 1997 and 1998 reached to the
appraisal target of 3\.4 MMCMD\. Under Part II of the Project, about 40 industrial customers,
278,000 residential customers and 290 network sectors were converted from manufactured
naphtha gas to natural gas, and the existing cast iron network was upgraded to connect about
205,000 new residential consumers\. Upgrade of the cast iron network comprised the insertion of
polyethylene pipes into the medium-pressure system and the treatment of cast iron joints using a
range of modem technologies\. Project components under Part I and Part III, financed by
resources other than the loan, have been fully implemented\.
17\. The Government now considers natural gas as an important energy alternative for
industrial consumption\. On October 1996, COMGAS signed an agreement with PETROBRAS
to receive 4 million cubic meters per day (MMCMD) of imported natural gas starting in
December 1998, to be increased gradually to 8\.1 MMCMD during a period of eight years\. To
meet this demand, PETROBRAS signed a contract for the purchase of natural gas from Bolivia
through the new gas pipeline between Bolivia and Sao Paulo, for which construction was
completed in December 1998\. The total supply of natural gas (domestic plus imported)
distributed by COMGAS is expected to increase to about 7 MMCMD in 1999 and to 11
MMCMD in 2004\. The gas pipeline connection with Bolivia has a capacity to transport up 30
MMCMD and the Federal Government's expectation is that participation of natural gas within
the total energy consumption of Brazil will increase from 2% at present to 10% in year 2010,
with most of the increase being taken up in the State of Sao Paulo\.
18\. A modem telemetering/SCADA system in line with current international gas industry
practices as well as equipment to improve COMGAS' information system were procured and
implemented under the project\.
Environmental Objectives
19\. The objective of reducing environmentally polluting emissions in Sdo Paulo has also
been achieved\. Without the project's incremental gas distribution, most industrial consumers
would have needed to use HSFO instead\. Based on such replacement (assuming 3\.5% sulfur
content in fuel oil), the project is credited with an annual emissions reduction of about: (a)
208,000 tons of sulfur dioxide; (b) 26,140 tons of nitrogen oxide; (c) 110,200 tons of carbon
monoxide; and (d) 989,000 tons of carbon dioxide\.
20\. During project execution, COMGAS implemented a program to reduce gas leakage
propensity after the conversion of the network, and to improve its operational capability to deal
with potential gas leakage incidents in the future\. In addition, the bidding documents for the sale
of COMGAS included safety regulations for gas distribution that must be observed by the new
owners of the company\.
6
Financial Objectives
21\. The objective of assuring COMGAS'financial viability and cash generation capacity for
further expansion has been partially achieved\. COMGAS obtained positive rates of return on net
assets, achieved a net profit in each year except 1995 and its net internal cash generation was
sufficient each year to cover a substantial portion of the COMGAS' investment program\.
Moreover, the final objective - to assure COMGAS' financial viability and cash generation for
further expansion - has been achieved by mobilizing private capital through COMGAS'
privatization\. However, financial covenants were not fully met\. COMGAS' financial
performance was impaired by the macroeconomic problems that affected the country in 1990 and
1994\. Following the 1994 crisis, the Government froze gas tariffs under the stabilization policy
of Plano Real\. In addition, COMGAS' financial performance was negatively affected by the
reduction in the provision of natural gas supplied by PETROBRAS during some periods\.
However, as COMGAS implemented a rigorous set of measures to increase its productivity and
efficiency, reduce costs and increase sales, its financial situation improved\. The company
achieved a net profit in each year except 1995 and its net internal cash generation was sufficient
each year to cover a substantial portion of the COMGAS investment program\. The rate of return
on net fixed assets improved from -2\.4% in 1990 to 5\.5% in 1996 and to 3\.6% in 1997\.
However, in 1998, due to the economic and financial crisis in Brazil, this rate of return was of
only about 1%\.
22\. The objective of helping COMGAS to mobilize private capital to reduce demand for
public funds has been successfully achieved\. First, COMGAS was listed in the local stock
market and the utility issued convertible bonds to finance its expansion\. Second, the
Municipality of Sao Paulo sold its COMGAS shares to Shell, a major oil international private
company\. Third, the city of Sao Paulo was divided in three areas to be concessioned to different
companies for the distribution of gas\. COMGAS provides gas service on only one of the three
areas\. Finally, the COMGAS shares owned by the Government of Sao Paulo were sold to
international private investors through a competitive process\. The other two areas of Sao Paulo
will be concessioned in the near future\.
Institutional Developments
23\. The institutional objective of enhancing the technical andfinancial regulatoryframework
of Brazil's gas industry has been substantially achieved\. Following the approval of the
Complementary Law No\. 833 in 1997, the Government of Sao Paulo structured an energy
regulatory commission, the Commission of Energy Public Services, as the regulatory agency for
the energy sector at state level\. The Commission has the authority to regulate, control and
supervise (i) the quality of the public energy services; and (ii) the prices, tariffs and other
conditions for the supply of these services\. Comprehensive technical and financial regulations
were included in the Concession Contract, which was part of the documents for the selling of
COMGAS' shares\. These regulations include indicators on among others producit quality,
service quality, losses, odor concentration, duration of outages, and time of reconnections\.
7
24\. The objective of strengthening the management and organization of COMGAS, its
project implementation capacity, and the efficiency and safety of its gas distribution has been
satisfactorily achieved\. COMGAS's productivity and efficiency substantially increased as
shown per the following perfornance indicators: (i) number of customers per employee was 289
in 1998 compared with 168 in 1993; (ii) number of cubic meters of natural gas sold per employee
was 1\.2 million in 1998 compared with 0\.3 million in 1993; and (iii) present level of safety of
gas distribution is satisfactory\.
25\. The study of gas pricing and gas utilization was fundamental in assisting COMGAS to
devise and implement a modem gas tariff policy\. The study on the restructuring of COMGAS
shareholdings has been instrumental for the mobilization of private capital and the final
privatization of COMGAS\. The project has provided technical assistance to COMGAS for the
creation of a technology institute for research and training in gas-related matters\.
D\. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT
Implementation Record
26\. The project was originally expected to be completed by December 31, 1994 and the loan
to be closed on June 30, 1995\. The closing date was extended four times, the last one to August
31, 1999\. Final project cost was US$270\.8 million equivalent, compared to US$285\.0 million
estimated at appraisal\. Total loan disbursements amounted to US$94\.0 million\. BNDES, Sao
Paulo State and consumers cofinanced the project with the amounts of US$48\.9, US$30\.5 and
US$59\.3 million respectively\. COMGAS' own funds financed the balance, US$38\.1 million\.
27\. Project implementation progressed very slowly during the first four years but
substantially improved after that\. Poor progress during the initial years was due mainly to
inadequate project organization, poor project management and procurement problems within
COMGAS\. By end of 1993, none of the bidding process under Part II of the project, except for
consultant services, had concluded, the Bank had objected the proposed bidding documents and
the project staff was unable to reconcile the Bank's comments with COMGAS' internal position\.
As a result of the Mid-term Review carried out jointly by the Bank and COMGAS in December
1993, COMGAS' management took decisive and effective actions\. It reorganized the project
implementation unit, appointed qualified staff to project management positions, agreed to rewrite
the bidding documents to conform to the new Bank Sample Bidding Documents, and agreed on
specific targets for project implementation\. With these actions, project implementation improved
substantially\. However, conversion of household appliances to gas and institutional reforms
demanded considerable more time than expected\. The Sao Paulo Municipal authorities did not
allow the contractor to perform works for the upgrading of the existing cast iron networks during
daylight hours because of the interruption to traffic\. The authorities permitted work to proceed
only for a few hours during the night and imposed severe noise limitations\. At the beginning of
the conversion process, COMGAS received an order of magnitude increase in the number of
complaints from consumers reporting an odor usually associated with leakage of natural gas\.
This caused concern by COMGAS management and the Bank that the displacement of
8
manufactured gas by natural gas could be resulting in unacceptable leakage and safety hazards\.
The Bank acted quickly to arrange a review of the system leakage situation by an experienced
consultant, which resulted in a comprehensive report and recommendations to improve the safety
aspects of the conversion through improved natural gas odorization procedures, cast iron joint-
strengthening technologies, and management of possible future leakage incidents\. This provided
COMGAS management a deeper understanding of the safety issues of the conversion process
and was invaluable in enabling the project to proceed with strengthened safety procedures and
technologies in place\. Changes of legislation required for institutional reforms and privatization
of COMGAS proved to require much more time than scheduled at appraisal\.
28\. The extensions of the closing date were linked to specific implementation progress
targets\. Although the targets were not met after the successive extensions, improvements in
project implementation were notable\. Further extensions were granted in view of these
implementation improvements and considering that some delays in project implementation were
outside the control of COMGAS\. In addition, the extensions permnitted the Bank to support the
entire process for the privatization of COMGAS until the transaction was successfully
completed\.
Major Factors Affecting Implementation
29\. Factors outside the control of the Borrower\. The key factors that affected
implementation of the project were: (i) initial delays in completing negotiations and loan
effectiveness, which meant that the loan did not become effective until 14 months after approval;
(ii) the macroeconomic instability and slackening of Brazil's economic activity in 1990 which in
turn reduced demand for gas and negatively affected the financial situation of COMGAS; (iii)
the 1994 financial crisis that affected Brazil, which prompted the Government to apply
macroeconomic stabilization measures through the Plano Real\. The tariffs for natural gas were
frozen in June 1994 between annual adjustments by the Plano Real, while the raw materials,
salaries, services and other costs continued to increase; (iv) strikes by PETROBRAS' workers
that affected the supply of gas to COMGAS, which in turn affected its sales and its financial
condition; (v) delays in the enactment of new legislation for the Sao Paulo gas industry by the
State Legislative body; (vi) unforeseen problems in the execution of works, mainly in the
insertion of polyethylene pipes\. A four-year old bidding process for polyethylene insertion had
been canceled by COMGAS to introduce changes in technical scope; and (vii) the Municipality
of Sao Paulo did not authorized working seven days a week in the upgrading of the existing
network during day time to avoid interruption of traffic\. Instead, it extended an authorization for
only a few hours at night\. As the works involved numerous residential customers living in
apartments, and public works at night were restricted in many areas to reduce noise,
implementation became more difficult and polyethylene insertion progress was slowed down
significantly\.
30\. Factors subject to Government control\. These factors included, at Federal level: (i) the
freezing of gas tariffs in 1990 with no compensatory measures; and (ii) the implementation of
the Plano Real in 1994 which froze the tariffs between annual adjustments, while the cost of raw
materials, salaries and services continued to increase\. In the State of Sao Paulo, there were
9
delays in the approval of legislation for the gas industry in spite of the efforts of the executive
branch\. A law that includes the creation of a regulatory energy commission and regulations for
the gas industry was enacted only in October 1997\.
E\. PROJECT SUSTAINABILITY
31\. The achievements of the project are sustainable\. The physical components have been
built using modem gas distribution technology introduced under the project\. To ensure proper
operations and maintenance of project financed equipment, the project provided technical
assistance and training to COMGAS' staff in modem gas distribution technologies, thus
improving their technical competence and field operating skills\. It is highly likely that the
increase of natural gas consumption achieved under the project will not only be sustained, but
will be substantially increased as more Bolivian gas becomes available\. The new concession
contract includes the obligation of the company to expand the service area and specifies the
minimum number of new customers that must be served annually\. The contract also specifies
penalties if these numbers are not achieved\. In addition, since the profitability of the utility is
highly dependent on the volume of sales, the newly -privatized COMGAS will have a very
strong commercial incentive to increase gas sales\.
32\. Privatization of COMGAS is irreversible\. COMGAS' majority shares are now owned by
private investors who will aim to build on and increase the efficiency and productivity gains
obtained with the project\. Also, the Government of Sao Paulo is committed to preserving and
enhancing the modem regulatory framework introduced for the gas industry\.
F\. BANK PERFORMANCE
33\. Over the eight years of project implementation, Bank's performance is considered
satisfactory\. Since this was the first lending operation to Brazil's hydrocarbon subsector, project
identification required a substantive dialogue with government authorities to stimulate their
interest in a relatively small but important subsector\. At preparation, the Bank accompanied the
studies and engineering work carried out by COMGAS for the project\. It also contributed to the
preparation of the terms of reference for the Integrated Energy Strategy Study (IESS) as basis for
the design of a new energy sector strategy, which was indispensable for the success of the
proposed project\. At appraisal, the Bank obtained Government's commitment for the design of a
new sector strategy and the enactment of financial, technical and safety regulations for the
natural gas industry, and assisted COMGAS in the definition of the project components\. The
appraisal rightly identified most of the main issues for project implementation and the actions to
be taken by Government and COMGAS\. At implementation, Bank's performance was mostly
satisfactory\. Based on the conclusions of the Mid-tern Review of the project, the Bank took a
strong position that was instrumental for fundamental changes in project management,
COMGAS' organization and actions to improve the utility's efficiency and productivity\. The
Bank exercised a close monitoring of the benchmarks agreed with the Borrower at the Mid-term
Review but was flexible enough to accept delays for causes outside of the Borrower's control\.
10
The decision of extending the closing date four times is considered to have been fully justified\.
It permitted the Bank to accompany the process of COMGAS' privatization until its conclusion
and permitted COMGAS to conclude the works that improved the safety operation of the
distribution network\.
34\. However, Bank's performance could have been better in some specific areas\. The first
relates to the organization for project implementation\. The project was very complex and its
implementation required a very well organized executing unit with strong management\. It
appears that, during appraisal, the Bank did not pay enough attention to examine in detail the
proposed organization for project implementation\. Project organization needed to define the
authority lines between the project unit and other COMGAS' departments that vvere to be
involved in project execution\. It also needed to define the coordination between the consultants
to be appointed to supervise the project and the departments responsible for the procurement\. As
a result of this weakness, the project suffered many problems during the first four years of
implementation\. The second performance area that deserves comment refers to procurement\.
Although the appraisal specifically mentions that COMGAS had already prepared sample
bidding documents for Bank review, final agreement on the bidding documents between the
Bank and COMGAS occurred only in 1994 as a consequence of changes in the procurement
national legislation and agreements between the national government and the Bank on standard
documents for local bidding\. Although much of the blame for the preparation of inadequate
bidding documents could be on COMGAS side, the Bank could have taken a more proactive role
to help find a solution earlier\. It appears that the Bank played a passive role in this respect,
limiting itself to providing comments on the bidding documents prepared by COMGAS and
waiting for their response\.
G\. PERFORMANCE OF THE BORROWER
35\. Despite the poor performance during the first four years of project implementation,
overall, the performance of the Borrower was satisfactory\. At preparation, COMGAS
satisfactorily carried out the basic and detailed design of the project part in-house and part with
the support of local engineering firms\. Preparation of all information required for appraisal was
carried out very professionally by COMGAS\.
36\. Although the Borrower was mainly responsible for the delays occurred during the first
years of project implementation, from 1994 on the Borrower's new management took strong
ownership on all matters related to the project\. The delays in project implementation occurred
during the 1990-94 period were mainly due to lack of adequate organization for project
implementation, poor project management and COMGAS' inadequate organizational capacity
for procurement\. The lines of responsibility between COMGAS and the engineering firm that
was appointed to manage the project were unclearly defined\. In theory, the engineering firm was
responsible for the management of the entire project but, in practice, the engineering firm did not
have authority over the COMGAS' departments that were involved in project execution\. Project
management was poor because the project unit lacked the skills and authority to coordinate the
services provided by the consulting firm with the participation of COMGAS departments\. The
11
procurement for the project experienced substantial delays because responsibilities for the
compliance of procurement schedules were widely diluted among several departments\.
37\. In 1994 and at the insistence of the Bank, COMGAS appointed a qualified Project
Director responsible for the entire project execution, introduced changes in COMGAS'
organization to improve project implementation and set up a permanent procurement committee
for the project\. With these changes and COMGAS' top management support, project
implementation improved substantially\. The benchmarks agreed with the Bank after project
restructuring were achieved (although with delays) and the process for the privatization of
COMGAS was carried out with transparency and efficiency\.
H\. ASSESSMENT OF OUTCOME
38\. The outcome of the project is rated as satisfactory\. The project has achieved its major
objectives and is highly likely that they will be sustainable\. During project implementation, the
Bank's dialogue with the Government directly contributed to the formulation of a new energy
sector strategy, to new legislation for the energy sector and to the establishment of an adequate
and clear regulatory framework in the State of Sao Paulo\.
39\. The project has been instrumental in transformning COMGAS from a State-owned,
medium-size, gas-manufacturing company into a bigger natural gas distribution company ready
for further expansion\. COMGAS was listed in the local stock market, issued convertible bonds
to finance its expansion, and at last, was entirely privatized\. Thanks to the works made by
COMGAS under the project to convert its network and consumers from naphtha gas to natural
gas, consumption of natural gas is increasing substantially and COMGAS is now playing a
critical role in regional natural gas trade\. The process for the privatization of COMGAS was
transparent and highly competitive\. It constituted a model process for future privatization of
government owned energy enterprises\.
40\. The outcome of the project is rated as satisfactory\. The project has achieved its major
objectives and is highly likely that they will be sustainable\. The project is expected to generate
an IERR lower to that estimated at project appraisal\. The project ex-post IERR and NPV
discounted at 11% are estimated at 25\.7 % and US$ 501\.0 million respectively\.
I\. FUTURE PROJECT OPERATION
41\. Future project operation will be monitored by the Comissao de Servi,os Puiblicos de
Energia (CSPE) of the State of Sao Paulo\. It will monitor COMGAS' compliance with the
service coverage and technical, financial and safe regulations specified in the Concession
Agreement between the Government of Sao Paulo and COMGAS\. The main indicators to
monitor are included in Annex 6: Performance Indicators for Project Operation\. A summary of
the service coverage targets are as follows:
12
(a) COMGAS will extend its service to at least 10,000 new customers per year but
totaling not less than 70,000 new customers during the next five years and no less
than 200,000 new customers during the next ten years;
(b) The distribution network would be expanded by at least 400 km of additional
pipeline;
(c) COMGAS will replace the customers' meters as follows: 20% of the meters
during the next two years; and 65% of the meters during the next ten years;
(d) The cast iron network will be renewed as follows: 25% of the total network during
the first five years; and from year six to ten, 3% per year; and
(e) COMGAS will install, during the first five years, pressure and temperature meters
for all consumers with consumption above 50,000 cubic meters per month\.
J\. KEY LESSONS LEARNED
42\. The key lessons learned from the project are:
(a) The good response obtained from private companies to COMGAS privatization process
confirmed the importance of having in place a satisfactory regulatory framework and
adopting a transparent bidding process for the concession of public services\.
(b) National energy strategies should take into account the environmental advantages of gas
with respect to other fuels\. One option could be the application of differentiated tax
rates to fuels in accordance with their respective impact on the environment\.
(c) Implementation of institutional reforms in a sector like the energy sector is a complex
and often time-consuming process\. Changes of legislation and implementation of
measures aimed at the restructuring of large state companies have in general to be
gradually introduced\.
(d) Use of project management contracts requires a careful design to make the contractor
accountable for the risks that it could manage, define responsibility lines, and provide
an adequate interface with the owner, taking into consideration its managerial capacity\.
In the project, the consulting firm appointed to manage the project did not feel
accountable for timely results because some of the tasks, to be performed by COMGAS,
were out of its control\.
(e) The design of complex projects that include several components should take into
consideration the constraints of management capacity of the executing agency\. In the
case of the project, implementation of the diverse project components in parallel, as
originally planned, would have obliged COMGAS to increase management staff\.
Considering its overall institutional objective of reducing staff, COMGAS preferred to
implement some project components in stages\.
13
PART II- STATISTICAL TABLES
TABLE 1: SUMMARY OF ASSESSMENTS
A\. Achievement of Objectives Substantial Partial Negligible Not applicable
Macro Policies EE ] El
Sector Policies iCi = i D
Financial Objectives 0 Z 0 [l
Institutional Development El3 a al
Physical Objectives l E E l
Poverty Reduction El El
Gender Issues El E 0
Other Social Objectives 5 El E t>
Environmental Objectives E El El
Public Sector Management nl El El
Private Sector Development El E El
B\. Project Sustainability ikel Unlikely Uncertain
[El El El1
C\. Bank Performance Highly
Satisfactory Satisfactory Deficient
Identification [3 E E
Preparation Assistance l E l
Appraisal El nE
Supervision D 3 D
D\. Borrower Performance
Preparation El u
Implementation al Ixl El
Covenant Compliance al E
Operation (if applicable) l E E
E\. Assessment of Outcome Highly Higly
Satisfactory Satisfactory Unsatisfactory unsatisfactory
El l E l
14
TABLE 2: RELATED BANK LOANS/CREDITS
Preceding operations Nil\. This Project is thel
Bank's first lendingl
operation in Brazil's
hydrocarbon sector
Following operations
1\. BR-PE-6492- Hydrocarbon To enhance natural' gas 1991 Ongoing
Transport and Processing utilization as a substitute
Project for other sources of energy
3\. BR-PE-6549 - Bolivia- To transport natural gas 1997 Ongoing
Brazil gas Pipeline produced in central Bolivia
to major industrial centers
in Brazil
TABLE 3: PROJECT TIMETABLE
Identifiscation _____12/ 19/86
Preparation 3/14/87 =
Appraisal 5/87 12/18/87
Negotiations 8/87 5/27/88
Board Presentation 10/87 4/25/89
Signing 2/16/90
Effectiveness 6/12/90
Project Completion 1/95 2/28/99
Loan Closing 6/95 8/31/99
15
TABLE 4: LOAN DISBURSEMENTS
(CUMULATIVE - US MILLION)
FY 90 17 0 0
FY 91 43 12 28
FY 92 70 20 29
FY 93 84 26 31
FY 94 90 35 39
FY 95 94 5154
FY 96 63 67
FY 97 79 84
FY 98 92 98
FY 99 94 10o
FY 2000 94 100
16
TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION
Increase the supply of natural gas to industrial, 3\.4 3\.4
commercial and residential consumers, in million of
cubic meters per day
Rate of Retum 1990: 8% -2\.4%
1991: 10% 2\.3%
1992:11% 3\.5%
1993: 12% 7\.7%
1994: 12% 2\.8%
1995: 12% 0\.7%
1996: 12% 5\.5%
1997: 12% 3\.6%
1998: 12% 0\.8%
Ratio of current assets to current liabilities 1991: 1\.0 1991: 0\.9
1992: 1\.1 1992:0\.7
1993: 1\.2 1993: 1\.1
1994: 1\.2 1994: 0\.7
1995: 1\.2 1995: 0\.3
1996: 1\.2 1996: 0\.3
1997: 1\.2 1997: 1\.14
1998:1\.15 1998: 1\.15
Strengthening of COMGAS management/
organization:
(a) Number of employees: 1991: 1,343 1998: 1,028
(b) Number of customers (Thousand) 1991: 235 1998: 300
(c) Number of customers per employee: 1991: 175 1998: 292
(d) Number of million of cubic meters of natural 1991: 0\.3 1998: 1\.2
gas sold per employee:
Helping COMGAS to mobilize capital: No figure was (a) COMGAS issued
estimated convertible bonds
(b) COMGAS was
privatized
Enhancing technical and financial regulatory New regulatory New independent
framework framework in place regulatory commissions at
the national and state
level has been established
Reducing Environmental pollution in Sao Paulo No figure was Qualitative analysis
estimated indicates that pollution
has been reduced
Developing a gas utilization strategy (a) New Strategy (a) New gas strategy
(b) New gas pricing implemented
policy (b) New gas pricing
policy is in place
17
TABLE 6: KEY 1INDICATORS FOR PROJECT OPERATION
Number of new customers connected 1999: 10,000
2000:10,000
2001: 10,000
2002: 10,000
1999-2004: 70,000
1999-2009: 200,000
Expansion of the distribution network in 400 km
1999-2003 period
Substitution of meters 1999-2001: 20%
2002-2004: 50%
2005-2009: 65%
Renewal of the cast iron network 1999-2004: 25%
Pressure at the distribution system in k PA:
High 1700-3500
Mid 400-700
Low 220-400
Distribution Losses (°O) To be defned
Commercial Losses
Technical Losses
Total Losses
Gas odor concentration in mglm3 15-25
Duration equivalent of service interruptions To be defined
in hours
Emergency response time To be defined
Frequency of emergency calls To be defined
18
TABLE 7: STUDIES INCLUDED IN THE PROJECT
1\. Study of To study the The study was completed and Efficiency and productivity
Organization and organizational and its recommendations have improved\. Sales per employee
Administration administrative process of been imnplemented\. increased from 226 Thousand
COMGAS COMGAS was restructured M3/employee in 1991 to 240 in
and privatized\. 1997\. Productivity increased from
543 Thousand M3/employee in
production to 786 in 1998\.
2\. Study of natural To support the State of Studies completed by two The new expansion plan of
gas utilization in Sao Paulo's use of consultants\. COMGAS was based on the market
Sao Paulo and tariffs simulation tools to evaluation studies that assessed the
identify and encourage potential demand of natural gas in
changes in the supply and new regions in the State of Sao
demand of natural gas Paulo\.
3\. Study for the To diversify shareholders' The operation to open the Convertible debentures were sold in
shareholding participation in COMGAS company to the participation the local stock market\. The
structure of and increase its equity of new shareholders debentures were converted to shares
COMGAS happened in July 1997 worth 50 million Reais
19
TABLE 8A: PROJECT COST
(US$ million)
COSTS
Part I
A\. Materials 10\.0 4\.4 14\.4 5\.0 2\.2 7\.2
B\. Works/Construction 37\.2 9\.7 46\.9 38\.7 10\.1 48\.8
C\. Engineering Services 3\.7 0\.9 4\.6 3\.8 0\.9 4\.7
D\. Metering & Regulation Stations 21\.7 12\.5 34\.2 16\.7 9\.6 26\.3
Subtotal Part I 72\.6 27\.5 100\.1 63\.2 23\.8 87\.0
Physical Contingencies 7\.3 2\.7 10\.0 0\.0 0\.0 0\.0
Price Contingencies 1\.3 0\.5 1\.8 0\.0 0\.0 0\.0
Total Part I 81\.2 30\.7 111\.9 63\.2 23\.8 87\.0
Part II
A\. Materials 7\.2 10\.5 17\.7 5\.7 8\.4 14\.1
B\. Works/Construction 21\.8 5\.6 27\.4 45\.3 11\.6 56\.9
C\. Engineering Services 4\.0 1\.0 5\.0 0\.0 0\.0 0\.0
ID\. Metering & Regulation Stations 2\.0 2\.2 4\.2 0\.5 0\.7 1\.2
E\. Special Equipment 2\.0 8\.0 10\.0 0\.3 1\.1 1\.4
F\. Tech\. Assistance, Training, & 2\.8 6\.1 8\.9 10\.6 23\.0 33\.6
Studies
Subtotal Part II 39\.8 33\.4 73\.2 62\.4 44\.8 107\.2
Physical Contingencies 4\.7 3\.6 8\.3 0\.0 0\.0 0\.0
Price Contingencies 3\.8 3\.2 7\.0 0\.0 0\.0 0\.0
Total Part II 48\.3 40\.2 88\.5 62\.4 44\.8 107\.2
Part III
A\. Materials 8\.1 2\.0 10\.1 10\.1 2\.5 12\.6
B\. Works/Construction 27\.7 7\.0 34\.7 32\.1 8\.1 40\.2
C\. Engineering Services 4\.9 1\.0 5\.9 5\.4 1\.1 6\.5
Subtotal Part III 40\.7 10\.0 50\.7 47\.6 11\.7 59\.3
Physical Contingencies 4\.0 1\.0 5\.0 0\.0 0\.0 0\.0
Price Contingencies 2\.0 0\.5 2\.5 0\.0 0\.0 0\.0
Total Part III 46\.7 11\.5 58\.2 47\.6 11\.7 59\.3
Total Base Cost 153\.1 70\.9 224\.0 173\.2 80\.3 253\.5
Total Physical Contingencies 16\.0 7\.3 23\.3 0\.0 0\.0 0\.0
Total Price Contingencies 7\.1 4\.2 11\.3 0\.0 0\.0 0\.0
Total Project Cost 176\.2 82\.4 258\.6 173\.2 80\.3 253\.5
Interest During Construction 6\.5 20\.1 26\.6 0\.0 17\.3 17\.3
NANCNG -
IREQUIREEM[ENT : M\.
20
TABLE 8B: PROJECT FINANCING
(US$ million)
Estimate at appraisal Actual
Total Total
Part I 111\.8 87\.0
BNDES 60\.0 48\.9
Sao Paulo State 30\.0 30\.5
COMGAS 21\.8 7\.6
Part II 88\.4 107\.2
World Bank 67\.4 76\.7
COMGAS 21\.0 30\.5
Part III 58\.2 59\.3
Consumers 58\.2 59\.3
Total Project Cost 258\.4 253\.5
Interest During Construction 26\.6 17\.3
World Bank 26\.6 17\.3
_ ~~~~~~~~~~\.~
21
TABLE 9: ECONOMIC EVALUATION
Year ~~~~~~1987 \.1988 \.1989 1990 1991 1992 1993 1994 19 1996 1997 1998 1999 2000 2001 2002 2003
Base Case (Staff Appraisal Report, Annex 3\.13)
A Economic Costs
PETROBRAS ~~~170\.0 33\.1 6\.2 6\.4 78 7\.8 78 7\.8~
~COMGAS - 833\. 57343931\.9: 25,8 25\.8'58 25\.8
Inus-trial 10\.01 30\.0:
ToaCapital Costs I208\.3 78\.7 71\.9 42\.8 44\.7: 397 33 336 25\.8 25\.8
b :Recurrng O&M Costs 6\.27 2\.4 2\.2 1\.3 1\.3 1\.2 1\.0 1\.0 0,8 0\.8
c=b4c Toa ot U$mlin 214\.5 81\.1 74\.1 441 46 4094 34\.6 34\.6 26\.6 26\.6
B --Economic Benefits
d 'otal Volumne(MM3d0\.0 0,6 1\.4 2\.4 3\.0 3\.7 4\.7 5\.7 60 6\.0 60W 6\.0 6\.0 6\.0 60 6
e Benefits (US$MM) from substituting NG for:
F\.O 0\.0 0\.5 14\.9 33\.3 53\.4 +65\.7+ 79\.0: 97\.814\. 116\.8 116\.8 116\.8 1 16\.8 116\.8\.116\.8 116\.8 116\.8
LPG ~~~~~~~~0\.0: 0\.0: 1\.2\. 4\.1; 9\.0 14-5 21\.5: 27\.3' 38\.6; 46\.4: 46\.4: 46\.4 46\.4 i46\.4 46,4 46\.4 46\.4
~Naphta Gas 00O 00 3\.1 8\.9 17\.0 23\.0 28\.3 42\.0 58\.2 61\.2 61\.2 61\.2 61\.2 61\.2 61\.2 61\.2 61\.2
,Power 0\.0 0\.0 4\.1 19\.3' 48\.6: 82\.9; 115\.0 162\.31 216\.5 248\.8 248\.8: 248\.8: 248\.8 288 4\. 4\. 4\.
!Total Benefits (US$MM) 0\.0 0\.5 23\.3 65\.61 128\.0 161 2\.43'\.8, 329\. 427343\.1 7\. 7\. 7\. 7\. 7\. 7\. 7\.
g 'Annual Replaced million MMBTU 0\.2\. 7\.7: 18\.0: 30\.3~ 38\.7:\.47\.7 6061 73\.6 77\.3 77\.3:\.7\.177 ;7737\.:7\.
h=f-c TotalBenefits-TotalCosts-(US$ million) \.-1\.-80\.6: -50\.8 21\.5: 82\.0: 145\.2:0\.92 294\.8!400\.7: 446\.5\. 473\.1 473\.1 473\.1 473\.1 43471 71
I Net Present Val~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ue (discounted at 1 1%) is: 1172\.41 millionUS
\.Intmal Economic Rate of Return is: :33\.8\.%
Actual Case (At Conclusion)-
A ' Economic Costs
a Capital
- PETROBRAS ~~~1600 170\. 6\.0 7\.0 7\.0 6\.2: 6\.4 7\.8 7\.8 7\.8 7\.8 i
\.COMGAS 38\.3 14\.0 1406 147 6 662716 9 21\.1 46 4
Industrial ~~0\.1 ~0\.1 0\.1\. 0\.1 7\.0 100 20 8\.0 6\.0 4\.5 3\.5 0\.6
\.Total Capital Costs 198\.4\. 31\.1 20\.121 30\.0 42\.8 47\.1 31\.9 43\.0 33\.4 549 45\.2
b 'RecutTin O&M 6\.0 0\.9 0\.6 0\.7 0\.9 1\.0 10 1\.0 1\.0 1\.0 1\.0 1\.0 1\.0 10 1\.0 10 1
c--aTh- Total Costs 204\.4 32\.0' 20\.7 22\.5 30\.9 43\.8 48\.1 32\.9 44034 5 46 0; 1\.0 1\.0 1\.Oi 1\.0
B +Economic Benefits
d 'Total Volumne(MM3d) 0\.0 0\.3 0\.7 0\.8 1~0 1\.3 1 2 3\.0 3\.4 3\.3 3\.6 4\.3 5\.7 6\.0 6\.0
e Benefits (US$MM from subsbtitlinq\.NG for:
~F\.O 0\.0 00O 2\.7 6\.9 9\.0 13\.2 18\.1 27\.5 38\.849 58\.6 60\.3 69\.3'87\.7 ilso0 120\.6117\.9
LPG 00 00~~~~~\.O 2\.8 6\.3 7\.5 10\.0 124 17 24\.3 29\.0 32\.7 31\.8 34\.7 41\.6 542\. 57\.7\. 58\.0
Naphita Gas 0\.0 0\.0 20\.4 41\.8 44\.3 53\.8 61\.2 80\.0 94\.5 95~8 89\.5 71\.5 62\.9 52\.8 62\.7i 71\.1i 80\.1
Power ~~~~~0\.0 0,0 0\.5 2\.0 3\.5 6\.3 94 19 34\.0 46\.9 57\.3 60\.5 72\.7 91\.0 120\.6 13423 142\.4
f Total Benefits (US$MM) 0\.0 0\.0 26\.3 57\.0 64\.2 83-3 101\.2 144\.4 191\.5 220\.8 238\.1 224\.1 239\.6 271352\.5 383\.6'3984
g -Annual Replaced million MMBTU 0\.0 0\.0 3\.7 8\.4 9\.9 13\.3 16\.8 24\.3 32\.5 38\.7 i43\.5 42\.5 46\.7 56\.1 72\.91 77\.4: 77\.4
h=f-c \.TotalBenefits-TotalCosts-(US$ million) 1-204\.4-3\.0 5\. 453\.3 39\.5 53\.1: 1 11\.5 147\.5 186\.4 182\.2:177\.91238,6 2721: 351\.5 382-6 397\.4
-I Ne rsnaue (discounted at 1 1%) is: 501\.0\. million US$
j Intemal Economic Rate of Retum is: 25\.7i%
22
TABLE 10: STATUS OF LEGA-L COVENANTS
systems ~~~~~on information system
improvement
3\.05 1 1 NC 04/30//93 The Borrower shall, not later Clause was deleted\. Asth
than April 30, 1993, enter into original potential consumers
financial arrangements with lost interest, Bank financing
industrial consumers to finance was reinstated
part of the Project
4\.04 09 C ~~~~~~~~~~~The Borrower shall: (i) present Studies carried out regularly
every six months to the and furnished to the Bank\.
Guarantor, through CNP and the
State, as necessary, studies
showing whether the distribution
margin available to the
Borrower from its estimated gas
sales for the period will enable
the Borrower to comply with its
obligations under Section 5\.02;
and (ii) fumnish to the Bank,
_____ ~~~~~~~~~~~~~~~~~copies of such reports
4\.07 09 CD 10/31/94 The Borrower shall furnish the
Bank an investment budget for
the next following year and
financial projections for the
following three years, not later
than October 31 of each year
5\.02 02 NC The Borrower shall earn, for The actual levels were
each of its fiscal years 1990, -2\.4% in 1990,
1991, 1992,1993 and each FY 2\.3% in 199 1,
thereafter, an annual return of 3\.5% in 1992,
not less than 8%/,lI0O/o,l 1I% and 7\.7% in 1993,
12%, respectively, of the 2\.8% in 1994,
average current net value of the 0\.7% in 1995,
Borrower's fixed assets in 5\.5% in 1996,
operation 3\.6% in 1997,
_____ ___ _____ ~~~~~~~~~~~~~~~~~~0\.8% in 1998
5\.02(e) 09 CP 08/31/94 The Borrower shall complete The study was performed------as
every fourth year a study on the part of the preparatory work
evaluation and useful life of for COMGAS' privatization
fixed assets (deadline: August
___ ~~~~~~~~~~~~~~~~31, 1994)
5\.03 02 NC The Borrower shall maintain a The actual levels were 0\.9%
ratio of current assets to current in 1991, 0\.7% in 1992, 1\.1I%
liabilities for FY's 1990119911 in 1993, 0\.7% in 1994, 0\.3%
1992/1993 and each FY in 1995, 0\.3 %in 1996,
thereafter, of not less than 1\.0,I\.lI 1\. 14% in 1997, 1\.15% in
and 1\.2, respectively 1998\.
23
5\.04 02 C The Borrower shall not incur
any debt: (i) unless the net
revenues for FY immediately
preceding the date of such
incurrence or for a later 12
month period, whichever is the
greater, shall be at least 1\.5
times the estimated maximum
debt service requirements of the
Borrower for any succeeding FY
or (ii) if after the incurrence of
such debt the debt ratio to equity
shall be greater than 60:40
2\.01(b) 12 SOON 12/30/90 The state shall: (i) test in 1990 a The Govemment of Sio
periodic adjustment mechanism Paulo enacted new
for distribution margins; and (ii) legislation creating the
enact by December 30, 1993, energy regulatory
financial regulations for the gas commission
sector, including periodic
adjustment mechanism based on
experience gained while testing
during 1990, mechanism
referred in (i) above
2\.01(c) 04 C 12/31/90 The State shall take all such
action on its part as shall be
necessary to increase the State
contributions to the Borrower's
equity directly or indirectly
through increases in CESP's
capital specifically destined to
result in equivalent increases in
the Borrower's capital by an
amount of US$30 million\. The
proceeds of such contribution
shall be fully paid-in no later
than 12/3 1/90
l 2\.04 10 CD 07/31/93 The State shall complete a study The study was completed in
about gas utilization and tariff in November 1993 and training
the State, by July 31, 1993 was provided in March_1994
l2\.05(b) 1 2 SOON The State needs to make the Technical and safety
necessary administrative regulations were included in
arrangements to enact the the Concession Agreement
technical and safety norms and to COMGAS\.
standards currently applied by
Borrower throughout the State
Covenant Class: Status:
1\. Accounts/audit C= Complied with
2\. Financial performance/generate revenue from beneficiaries CD= Complied after delay
3\. Flow and utilization of Project funds NC= Not complied with
4\. Counterpart funding SOON= Compliance Expected in Reasonably Short Time
5\. Management aspects of the Project or of its executing agency CP= Complied with parttially
6\. Environmental convenants NYD= Not Yet Due
7\. Involuntary resettlement
S\. Indigenous people
9\. Monitoring, review and reporting
10\. Implementation
11\. Sectoral or cross-sectoral budgetary or other resource allocation
12\. Sectoral or cross-sectoral regulatory/institutional actions
13\. Other
24
TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS
/ // /
The Project complied with the Bank's Operational Manual
Statements
25
TABLE 12: BANK RESOURCES: MISSIONS
1 Prearatr woks0 ctviis n
Tprough appraisal l
Identification 12/86 7 11tE,S,FaN NA
Pre-Appraisal 2-3/S7 4 25 NA
Appraisal 12/8<7 _ 7 16 E,S,F,N XN-
Appraisal-Boar Nii
Su ervision_ _____I
Supervision I 3/90 F 1 Preparatory works, activities and
_ _ _ ~~~~~~~~~~~~~~~~~~~~~~procurement are proceeding with delays
Initial delay in loan signing &l
Supervision VI 8/90 3 5 F,EN I I effectiveness\. Implementing schedule is
also delayedl
Supervision III 3/91 2 3F,N II Project is expected to be completed witl
\. \. ~~~~~~~~~~~~~~~~~~~delays (up to one year)
Supervision IV 12/91 2 8 F,N I I No major problemsl
Supervision V 4/92 2 12F,N 32No major problems
Supervision VI 12/93 4 13 F,N,E,P S Delays in project execution and cost
over runs
Delays in procurement\.
Supervision VII 8/94 3 8 F,S U S No compliance with rate of return
covenant
Supervision VIII 12/94 4 5 F,N,S,P U S Delays in procurement
Delays in implementation physical
Supervision IX 3/95 4 5 FN, P,PA U S components, and deterioration in
financial situation caused beyond the
control of COMGAS
Delays in implementation of physical
Supervision X 10/95 2 8 F,S U S components, and deterioration in
financial situation beyond the control of
_______ _ _____ _ ____ ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _CO M GiAS
Implementation delays due to
Supervision XI 5/96 2 4 F,S U S procurement problems and deterioration
in financial situation due to Piano Real
Supervision XII 3/97 1 4 F S S Delays in procurement
The macroeconomic crisis affected the
Supervision XIII 10/98 1 4 F S S performance of COMGAS in 1998 and
continued to affect its financial results
Supervision XIV 5/99 1 1 F S S Issues related to the polyethylene
insertion contract need to be addressed
Implementation 5199 1 2F S S
Completion | I 5/9 \. S_S |
1) - Specialization 2) - Performance Rating 3) - Type of Problems
E = Economist I = Minor or No Problems F = Financial
F = Financial Analyst 2 = Moderate Problems P = Procurement
N = Engineer 3 = Major Problems T = Technical
S = Energy Specialist U = Unsatisfactory M = Managerial
ENV = Environmental Specialist S = Satisfactory
P = Procurement Specialist
PA= Project Advisor
26
TABLE 13: BANK RESOURCES - STAFF INPUT
(Weeks; US$ thousand)
Preparation to Appraisal 125\.6 194\.9
Appraisal to Board 71\.6 125
Negotiations to Effective 110\.7 195\.5
Supervision 242 727\.8
Completion 5* 15\.0*
TOTAL 554\.8 1258\.2
* Estimated
27
APPENDIX A
AIDE MEMOIRE
PROJETO DE DISTRIBUIC,AO DE GAS NATURAL
EM SAO PAULO
(CONTRATO N° 3043-BR)
MISSAO DE SUPERVISAO DO BIRD
MAIO DE 1999
INTRODUICAO
Este "Aide Memoire" registra os principais assuntos tratados e os acordos alcan,ados
entre os representantes da COMGAS e do BIRD, no periodo de 27 a 29 de maio de 1999, durante
a Missao da Supervisao do BIRD, para a Conclusao do Contrato de Emprestimo n° 3043-BR\.
Foram tratados nesta missao os seguintes aspectos:
i\. Preparac,ao do Relat6rio de Conclusao da Implementa,ao do Projeto - ICR
ii\. Privatizacao da COMGAS\. Participagao acionaria dos novos donos\. Reorganizacao\.
Planos de investimento e expansao\. Contrato de Concessao - principais obriga,ces\.
Regulav6es sectoriais e venda das novas areas de concessao\.
iii\. Situa,co da COMGAS\. Resultados operativos e financeiros de 1998\. Relat6rios da
Auditoria Extema\. Bug do milnio\.
iv\. Situacao do projeto\. Contrato para inser,co de polietileno\.
v\. Principais conclusoes e acordos
PREPARA(AO DO RELATORIO DE CONCLUSAO DA IMPLEMENTACAO DO
PROJETO-- ICR
A Missao entregou o rascunho do relat6rio preparado pelo Banco e recebeu o relat6rio
preliminar preparado pela COMGAS\. 0 Banco concordou com o escopo do relat6rio
proposto pela COMGAS\. A COMGAS concordou com as conclusoes do relat6rio do
Banco e entregara as informa,ces requeridas para suo completamento ate 10 de junho de
1999 e completara e enviara seu pr6prio relat6rio ate o 17 de junho de 1999\.
PRIVATIZA,AO DA COMGAS
i\. Privatizaqao de COMGAS\.
O processo de privatizacao da COMGAS foi concluido de forma satisfat6ria com a
reafizaJcao do leilao na Bolsa de Valores de Sao Paulo - BOVESPA, em 14 de abril de
1999, sendo vendidas pela Companhia Energetica de Sao Paulo - CESP, 52% das a,6es
ordinarias nominativas ao Cons6rcio British Gas e Shell, pelo valor de R$ 1\.
28
APPENDIX A
652\.579\.242,00 ( Um bilhao, seiscentos e cinquienta e dois milhoes, duzentos e quarenta e
dois mil reais)\., aproximadamente U$ 1 bilhao ( Um bilhao de d6lares americanos)\.
ii\. Participa,co acionaria dos novos donos\.
Os novos controladores da COMGAS, British Gas Intemacional e Shell detem,
respectivarnente 72,74% e 23,22% do bloco de controle da Companhia\.
iii\. Reorganiza,ao\.
A reorganiza,ao da COMGAS, proposta pelos novos controladores e com um periodo
estimado de 6 meses para ser totalmente implementada, preve uma acao completamente
integrada de todas as areas da Companhia, focada no atendimento aos clientes e aos
Agentes Reguladores, com qualidade e seguran,a na prestacao do servi,o de distribuig-ao
de gas canalizado\.
A estrutura proposta contempla um Presidente e sete diretorias assim distribuidas:
a) Diretoria para Assuntos Corporativos\.
b) Diretoria Financeira e de Rela,ao com o Mercado\.
c) Diretoria Administrativa\.
d) Diretoria de Marketing Industriais\.
e) Diretoria de Marketing Residencial e Comercial\.
f) Diretoria de Operacao\.
g) Diretoria de Suprimento e Marketing de Energia\.
iv\. Planos de investimento e expansao\.
A COMGAS tera como meta de expansao triplicar, o tamanho do seu mercado em tres anos
e multiplicar este mercado em dez vezes nos pr6ximos dez anos\.
Para tanto ira investir aproximadamente US$ 300 milhoes objetivando a distribuicao de 30
milhoes de m3/dia em 2009\.
v\. Contrato de Concessao - principais obrigac6es\.
0 Contrato de Concessao, a ser assinado entre British Gas e Shell e o Governo do Estado
de "ao Paulo, preve varias de expansao de redes para atendimento de novos consumidores
em varios segmentos de mercado, metas de seguranca da rede existente e metas de
Qualidade na presta,cao do servico de distribui9ao do g6s aos municipios que integram sua
area de concessao, definida pelas Regioes Administrativas de Sao Paulo, Sao Jose dos
Campos, Santos e Campinas\.
A responsabilidade de fiscalizar o cumprimento das metas previstas no Contrato de
Concessao sera da Comissao de Servicos Puiblicos de Energia - CSPE, que e a Agencia
Reguladora legalmente constituida para regular e fiscalizar os servicos de distribuicao de
gas canalizado em Sao Paulo\.
29
APPENDIX A
vi\. Regulaq6es sectoriais e venda das novas areas de concessao
A missao se reuniu com o Comissario Geral, Dr\. Zevi Kann, para discutir as regras que se
aplicarao no futuro para regular a presta,ao do servi,o de gas natural canalizado a cargo da
COMGAS e das concessionarias das novas areas\. Em 31 de maio de 1999, a COMGAS
assinara um novo contrato de concessao, como previsto na estrategia de privatiza,ao, que
determina os direitos e obriga,ces do concessionario em termos de fixa,ao de tarifas,
exclusividade de comercializa,ao limitada no tempo continuada com o sistema de livre
acesso de terceiros a rede de distribui,ao mediante pagamento de uma tarifa, normas
operacionais e de seguran,a, metas fisicas de investimento, qualidade do servi,o, etc\. Em
termos de seguran,a do servi,o, a COMGAS estarA obrigada a continuar com a substitui,ao
da rede de ferro ftndido, a substitui,ao de rarnais de servi,o e com as metas fisicas
estabelecidas no contrato\.
O controle de qualidade tecnica dos trabalhos nas redes da COMGAS continuara a cargo do
Conselho Regional de Engenharia e Arquitetura, e a avalia,ao ambiental e analises de
riscos a cargo da CETESB\. A CSPE monitorara os aspetos da seguran,a do servi,o como
indicados no contrato de concessao, incluindo a aplica,cao das normas ANSI 31\.8 para
opera,ao e manuten,ao de redes de gas durante o primeiro ano de servi,o, e as que venham
a ser negociadas com a COMGAS para serem aplicadas posteriormente\. Adicionalmente, a
COMGAS estarf obrigada a submeter relat6rios peri6dicos sobre a seguran,a da opera,Ao,
inclusive planos para situa,ces de emergencia, e ocorrencia de vazamentos\. Em termos de
qualidade do servi,o, a COMGAS operara de acordo com patamares monitorados pela
CSPE quanto A pressao e perdas; prazos maximos de atendimento de liga9ao, religac,es, e
interrup,co de fornecimento; e prazos minimos de pre-aviso de interrup,ces por servi,o de
manuten9ao programada, entre outros\.
A licita,ao das novas areas de concessao no estado do Sao Paulo acontecera ao fine de
1999\.
SITUACAO DA COMGAS
i\. Resultados operativos e financeiros de 1998\.
O resultado do exercicio de 1998 foi menor do que o de 1997\. 0 principal motivo foi o
efeito financeiro do plano de aposentadoria incentivada\. Alem disso, nao conseguiu colocar
os volumes de gas natural previstos em fun,ao de nao haver ocorrido a recupera,co da
economia e da atividade industrial\.
O volume distribuido no ano 1998 foi de 1\.206,05 milhoes de m3, 3,70% inferior ao do ano
anterior, 1\.252,3 milhoes m3\. A receita de venda de gas, diminuiu em 1,1%, atingindo o
montante de R$ 328 milh6es 0 nu:mero de consumidores atingiu a 306\.900 consumidores,
com acrescimo de 10\.951 consumidores, representando aumento de 3,79% em rela,ao a
1997\.
30
APPENDIX A
Os custos e despesas operacionais, exceto gastos com materia prima, apresentaram
aumento em rela,ao a 1997, principalmente gastos com pessoal, em fun,co do programa de
incentivo A aposentadoria, que teve neste ano custo de R$ 17,4 milhoes, com efeito liquido
no resultado de R$ 7,2 milhoes\.
O prograina de incentivo A aposentadoria, que foi prorrogado ate 31/05/2000, vem ao
encontro do objetivo da empresa em ter um menor quadro de pessoal, tendo ate o presente
recebido a adesao de 270 empregados; mantido o nivel atual de adesao, no final do
programa a empresa estima ter um quadro total de 900 empregados\. A adocao desta e de
outras medidas reduziram o quadro total de empregados significativamente conforme
demonstrado na tabela abaixo\.
Evolusao do Nuimero de Empregados
Ano 1993 1994 1 1995 1996 1 1997 1998 6/05/99
Niunero de empregados 1\.443 1\.472 1\.242 1\.190 1\.188 1\.030 984
A estabilizacao dos precos dos combustiveis - principalmente dos 6leos, seu maior
concorrente no setor industrial - decorrente da reduc ao dos precos do petr6leo no mercado
internacional, causou dificuldades para colocacao pela COMGAS do gAs natural,
reduzindo o crescimento das vendas e das margens, com repercussao no resultado\.
Recentes medidas do Govemo mudararn a forma de estabelecer os pre,os dos combustiveis
no mercado intemo, em base as modificacoes mensais nos pre,os em Nova York e a
varia,ao cambial\.
A crise do setor financeiro no Brasil comeco a afetar a capacidade da COMGAS em obter
recursos financeiros necessarios para expandir e melhorar a rede de distribuicao de gas
natural\. A prorroga,co do "closing date" do contrato contribuiu para melhorar essa
situacao\. A negociacao de emprestimo junto ao BNDES (R$ 53 milhoes) foram
interrompidas e serao retomadas tao logo seja redefinido o plano de investimento da
Companhia\.
A taxa de retorno para 1998 foi de 0,75%, inferior a originalmente estimada de 4%\. Os
valores e taxas para os anos seguintes estao sendo revistos\. A seguir apresenta-se a
evolucao dos indices econ6micos acordados\.
Indices Economicos
Descricao 1995 1996 1997 1998 1999(1)
Retomo Anual Acumulado 0,71% 5,49% 3,63% 0,75% 6,14%
Liquidez Corrente 0,33 0,33 1,14 1,15 0,95
Rela,cao entre Capital pr6prio e de Terceiros 2,18 1,72 2,54 2,52 2 2,56
(1) Estimativa, estes indices serao revistos\.
31
APPENDIX A
ii\. Relat6rio da Auditoria Externa
Foi apresentado a missao o Relat6rio da Administracao, Demonstracoes ContAbeis
1998/1997 e o Parecer dos Auditores Independentes, sem ressalvas\. 0 Relat6rio da
Auditoria do Projeto, Conta Especial, e SOE estao em fase de conclusao e serao
encaminhados ate o dia 07/06/1999\.
iii\. Bug do milenio\.
A COMGAS continua implementando o programa para reduzir ao minimo possivel os
riscos resultantes do denominado o Bug do Milenio - Ano 2000\. 0 hardware do
mainframe da Companhia e os microcomputadores estao sendo substituidos por
equipamentos sem o problema\.
Os sofiwares estao sendo atualizados\. Os sistemas considerados criticos: atendimento ao
pulblico, faturamento e materiais ja foram ajustados pelas mesmas equipes que atuaram
nasua concepcao, e estao programados testes de envelhecimento da data para completar e
analisar a adequacao dos sistemas\. Os sistemas financeiro, de pessoal e de contabilidade
estao sendo substituidos por sistemas de novo desenho sem o problema\.
Os principais meios e interfaces de comunicacao eletr6nica com clientes, fomecedores,
parceiros, govemos, entidades publicas, servicos puiblicos estao sendo verificados e
analisados\. Os principais fornecedores, parceiros e clientes, incluindo PETROBRAS, estao
sendo contatados para verificacao dos eventuais problemas ligados ao BUG 2000, bem
como sobre seus respectivos Planos de Contingencia\. Se estao testando os processos
referentes A recepcao e envio de dados relativos a recebimento de Notas Fiscais e Contas de
GAs junto A rede bancaria\.
O inventArio e a Avaliacao de Riscos dos possiveis problemas estao 95% realizados, e
todas as areas da COMGAS estao elaborando Planos de Contingencia, prevendo possiveis
impedimentos de fincionamento e as respectivas correcoes, incluindo o Plano de
Emergencia para Situacoes Anormais de Funcionamento (vazamentos, incendios, greves,
etc\.)\.
Se espera que todos os testes e verificacoes possam ocorrer ate julho de 1999\.
SITUACAO DO PROJETO
i\. Situacao e estAgio geral do projeto\. A Missao do Banco Mundial revisou o andamento do
projeto que se encontra concluido com a excepcao do contrato de inser,co de polietileno\.
ii\. Contrato para insercao de polietileno\. Seu andamento esta aquem do previsto em contrato,
o qual previa a conclusao dos trabalhos em 15 meses, sendo posteriormente estendido a 27
meses a pedidos do consorcio Henisa/ CGE e COMGAS\. Hoje a condicao tecnica dos
trabalhos de insercao ja realizados esta sendc) analisada pelos novos controladores da
COMGAS, que enviarao ao Banco relat6rio sobre o tema ate meados de junho/99\.
32
APPENDIX A
O lider do consorcio, Henisa, e COMGAS nao resolveram o problema da falta de
participacAo do parceiro tecnico no contrato, Consumer Gas/Enridge (CGE), para assegurar
o desenvolvimento dos trabalhos dentro dos padroes de seguranca e qualidade requeridos,
conforme se acordara durante a ultima missfo de Banco\. A missfo do Banco reconhece
tres assuntos principais pendentes a serem resolvidos, a seguir relacionados: (a) A
necessidade de continuar desenvolvendo empreiteiros qualificados para atender os
programas de expansao da COMGAS\. (b) A necessidade de assegurar que no futuro os
trabalhos de inser,ao atendam aos padroes requeridos, e (c) Verificar de forma urgente que
os trabalhos feitos durante o periodo em que CGE nao participou das atividades de insercao
programadas pelo cons6rcio e COMGAS, os padroes requeridos neste tipo de obras foram
respeitados\.
A Missao anterior do Banco considerou satisfat6rias as medidas tomadas pela COMGAS a
fim de definir precos unitarios para trabalhos parciais que nao eram previstos, sem
modificacao do valor total do contrato\.
A COMGAS ainda nAo informou ao Banco sobre esses precos e os aditivos do contrato,
como tampouco sobre a proposta de mudan,a na forma de pagamento\. Hoje paga-se 100%
dos servicos A Lider do Cons6rcio, Henisa; nao havendo recebimento algum por parte da
CGE\. Foi solicitado o pagamento de 12% do valor liquido a receber das medicoes mensais,
diretamente a CGE, o que acabou por nfo se concretizar pela nao alteracfo do contrato \.
Para atender a estes problemas, a nova administra,co da COMGAS, alem das providencias
que estao sendo tomadas, conforme relatado anteriormente,, concorda em buscar
urgentemente uma solucao para a situa,ao comercial do contrato com Henisa/CGE, criada
ap6s o pedido de concordata da Henisa\.
PRINCIPAIS CONCLUSOES E ACORDOS
* A COMGAS comunicara ao Banco ate 15/06/99: (a) as medidas tomadas para acelerar o
termino do contrato de insercao, e (b) o resultado da revisao dos trabalhos feitos no
periodo em que CGE nao trabalhou no contrato de insercao e as medidas corretivas
adotadas, se for necessario\.
* A COMGAS mandara ao Banco ate 15/06/99, o relat6rio de progresso correspondente a
marco de 1999; e ate o 31/07/99, o relat6rio de progresso de junho de 1999\. Estes
relat6rios serao sinteticos e somente indicarao as novidades dos componentes do projeto
todavia em andamento e as novidades institucionais e setoriais\.
* A COMGAS mandara ao Banco minuta do ICR ate 10 de junho de 1999\.
* 0 Banco remitira versao final do ICR ate 17 de Junho de 1999 para receber comentarios
finais de COMGAS ate 18 de Junho de 1999\.
* A COMGAS encaminhara o Relat6rio da Auditoria do Projeto, Conta Especial, e SOE ate
o dia 07/06/1999\.
33
APPENDIX A
SIGNATARIOS:
Pelo
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT - BIRD
Luis Maria Vaca-Soto
Project Manager
Pela
COMPANHIA DE GAS DE SAO PAULO - COMGAS
Fran,ois Moureau
Diretor de Assuntos Corporativos
LISTA DE PARTICIPANTES:
BIRD
Luis Maria Vaca-Soto
COMGAS
DIRETORIA:
Oscar Alfredo Prieto
Angus MacCallum
Fran9ois Moreau
Roberto Lage
Paul Trimmer
Mario Rosito
John Dewar
OUTROS:
Carlos Eduardo de Freitas Brescia
Luiz Augusto MichelinArnaldo Prestes de Oliveira
Anton Schwyter
Jose Carlos
John Fletcher
COMISSAO DE SERVICOS PUBLICOS DE ENERGIA:
Zevi Kann
34
APPENDIX B
Executive Summary in English
of Borrower's Contribution
IMPLEMENTATION COMPLETION REPORT - SUMMARY
BRAZIL SAO PAULO NATURAL GAS DISTRIBUTION PROJECT
(Loan N° 3043-BR)
JUNE 22, 1999
Introduction
The Sao Paulo Natural Gas Distribution project was part of the Government of
Brazil's strategy for the energy sector developed in co-operation with the World Bank\.
The key elements of this strategy focused on the rationalization of energy prices, energy
conservation, the environment, and institutional restructuring\. It was consistent with the
Bank's strategy to encourage economic growth and social development by promoting
efficient energy resource allocation, ameliorating atmospheric pollution by displacing
high polluting fuels by clean burning natural gas, and increasing efficiency in the public
sector\. The project aimed at utilizing the gas resources that had become available from
newly discovered offshore gas fields in nearby Santos and Campos basins, in the nearby
urban areas of Sao Paulo\. The Sao Paulo Natural Gas Distribution Project was IBRD's
first project to support the Brazilian natural gas sector\.
I) Project Components
The project comprised three parts\. Part I included the connection of two major
regional pipelines and distribution to new residential and industrial consumers in Sao
Paulo\. Part II included further expansion of the distribution network, upgrading and
conversion of some existing networks, and modernization of network control and
maintenance\. Part II also included technical assistance, training and studies\. Part III
included conversion of industrial and commercial consumers to natural gas and
installation of new connections to consumers\. A detailed description of project
components (the project comprised three parts) can be found in the Implementation
Completion Report\.
II) Organization of Project Implementation
The beginning of the project dates back to April 1987, when COMGAS decided
to put gas into its operating system by initiating a program that would convert users of
other forms of energy into users of natural gas\. On October 10, 1987, management
approved the "User and Network Conversion to Natural Gas Program - Pro-Consumer\."
In February 1989 a Conversion Coordinator was established\. At this point Program-
related activities commenced such as the acquisition of a line of credit from the World
35
APPENDIX B
Bank, creation of a Task Group with a central operational headquarters and hiring of
contractors\.
The following activities were realized during the implementation of Phase 11 of the
project: development of engineering studies, planning of work needed to be done in the
gas fields, definition of the exact supply needs of the consumers, establishment of all
logistical needs, elaboration of various informational manuals, partial completion of a
consumer census, implantation of means of communication with the public, consumers
and the press, as well as the development of safety and security norms\.
111) Major Studies, Recommendations and Actions Taken upon the
Recommendations
Three major studies were conducted for the project\.
The first study had as an objective to suggest the most effective methods for attracting
investment and for strengthening the financial structure of COMGAS through
privatization\. June of 1995 witnessed the approval and issuance of convertible debt
securities for COMGAS with a total value of R$50 million\. By July 1998, all the debt
securities had already been converted into preferred stock\.
The second study, finished in October of 1992 by the French consultant BEICIP, looked
at the natural gas market in Sao Paulo, which included the price of demand, viability of
extending pipelines into the interior of the state, regulations, etc\.
The third study, finished in 1994 by the consultant TECHNOPLAN, proposed a new
tariff model for COMGAS, which was introduced in June 1994\. The new model
consisted of tariffs calculated with both a fixed and variable base that moved in
conformance with the volume of gas consumed, therefore obtaining a reasonable and
equitable tariff level\. The exceptions to this model were the cases in which the volumes
involved were very large and therefore tariffs would depend on direct negotiation\.
IV) Major Factors Affecting Implementation
Factors affecting project implementation can be divided into factors subject to
Government control and factors outside the control of the Borrower\.
Factors subject to Government control
* Freezing of gas tariffs in 1990 with no compensatory measures\.
* Implementation of the Plano Real in 1994 that froze the tariffs between annual
adjustments, while the cost of raw material, salaries and services continued to
increase\.
36
APPENDIX B
* Delays in the enactment of new legislation and regulations for the Sao Paulo gas
industry by the State Legislative body and the government\.
Factors outside the control of the Borrower
* Initial delays in completing negotiations and loan effectiveness\.
* Macroeconomic instability and slackening of Brazil's economic activity in 1990
which in turn reduced the demand for gas and weakened the financial position of
COMGAS\.
* Financial crisis in 1994 that prompted the government to freeze tariffs for natural
gas\.
* Strikes by PETROBRAS' workers that affected the supply of gas to COMGAS\.
* Unforeseen problems in the execution of works\.
The Municipality of Sao Paulo only gave contractors authorization to work a few
hours a night in the streets\. This was in order to avoid interruption of traffic and
reduce noise in residential areas\.
V) Performance of COMGAS and the World Bank in the Preparation and
Implementation of the Project
The performance of COMGAS was satisfactory considering the numerous
inconveniences brought about by changes in company management\. Beginning in
1994, the direct involvement of one of the directors of COMGAS in project
coordination greatly improved implementation\.
The Bank provided full support in project preparation, implementation and
coordination\.
VI) Future Plans for Project Operation
Natural gas has shown itself to be an increasingly important energy alternative for
industry in Sao Paulo, helping to bring about the renowned agreement between Brazil
and Bolivia for the long-term supply of natural gas\. Currently, natural gas provides
approximately 2 percent of Brazil's energy needs; this is expected to surpass 10 percent
in the year 2010\.
COMGAS has signed contracts to distribute gas for new market segments, including
cogeneration and thermal electric plants, besides the traditional residential, commercial,
industrial and automotive sectors\. This expansion is a direct result of the improvement
in the distribution system to reach new clients in and around the State of Sao Paulo\.
37
APPENDIX B
VII) Lessons Learned
During project implementation it was learned that large differences exist between cities
with regard to the kind of difficulties that complex infrastructure projects must face\. To
this end, the project implementers must take into account the unique situation of each
city to ensure timely and successful project completion\. Problems may arise due the
different characteristics of each city in topics such as traffic patterns and rules,
operational capacity of contractors and service providers, street work norms, noise
regulations, and attitude of local authorities and population\. Furthermore, careful
attention must be given to the project implementers' capacity to provide support
services to the contractors in each particular area, e\.g\., obtaining permits for working in
the street, and operation and complementary works in the areas of the gas network
where the contractors are working\.
38
APPENDIX B
BORROWER'S CONTRIBUTION
PROJECT COMPLETION REPORT
BRASIL
PROJETO DE DISTRIBUI(C:AO DE GAS NATURAL EM SAO PAULO
(Contrato N2 3043-BR)
Junho de 1999
1\. OBJETIVOS DO PROJETO
Os principais objetivos estabelecidos quando do inicio do projeto foram os seguintes:
(a) Estudar e converter a rede de distribuigao da COMGAS, de forma a possibilitar ap6s
a conclusao do projeto, a distribui,ao de 3\.000\.000 m3/dia do gas natural de Campos
e 400\.000m3/dia de gas da refinaria\.
(b) Fortalecer a administragdo e organiza,ao da COMGAS, a capacidade de
implanta,ao de projetos (gerencial) e a eficiencia e seguran,a das operag6es de
distribui,ao de gas\.
(c) Assegurar a viabilidade financeira da COMGAS e a capacidade de gera,ao de caixa
de distribui,co de gas\.
(d) Auxiliar a COMGAS a mobilizar capital\.
(e) Melhorar a estrutura regulamentadora tecnica e financeira da industria do gas no
Estado de Sao Paulo\.
(f) Reduzir a poluigao ambiental no Estado de Sao Paulo\.
(g) Desenvolver a implementar uma estrategia de utilizagao de gas para o Estado de Sao
Paulo\.
A COMGAS considera que todos os objetivos do projeto foram atingidos com sucesso\.
2\. COMPONENTES DO PROJETO
0 projeto esta dividido nas seguintes partes:
Parte I
A\. - Constru,co do "gasoduto" interligando o gasoduto da PETROBRAS ao RETA\.P\.
B\. - Construcao e utiliza,co de uma ligag&o transversal no RETAP\.
39
APPENDIX B
C\. - Contrucao de redes de distribui9ao para liga,co de 7\.000 novos consumidores
residenciais localizados em Jacarei e na cidade de Sao Paulo, alem de 200 novos
clientes industriais\.
Parte II
(a) - Constru,ao e utiliza,ao da rede de distribui,ao para aproximadamente 11
consumidores industriais em Mogi das Cruzes e outros 20 consumidores ao longo da
Via Dutra\.
(b) - Melhorar as redes de ferro fundido, inserindo aproximadamente de 84km a 240km
de tubula,ao de polietileno nas redes de media e baixa pressao\.
(c) - Conversao de gas manufaturado nas redes existentes e das instala,ao de 201\.000
consumidores residenciais, incluindo execu,ao de 20km de interligac,es, conversao de
297\.000 aparelhos, instala,ao de aproximadamente 13 estac6es redutoras e recupera,ao
de aproximadamente 24\.000 juntas feitas no sistema de ferro fundido\.
(d) - Contrata,cao dos servi,os de engenharia, aquisic, o de materiais e estac6es de
regulagem e medi,ao para os itens (A), (B) e (C) acima\.
(e) - Aquisi,ao, instala,ao e utiliza,ao de sistemas de telecomunica,oes, telemetria e
controle supressivo e de dados para valores de operac,ao e controle de rede\.
(f) - Fortalecimento da capacidade da COMGAS no que diz respeito a: testes e
certificacao de aparelhos industriais e comerciais, verificacao de amostragem de
modelos de producao de aparelhos, programa de apoio a melhoria da finalidade dos
aparelhos fabricados no Brasil\.
(g) - Estabelecimento de 4 estagoes adicionais de emergencia e aquisi;ao de
equipamento m6vel para bloquear fluxo de gas, seccionar tubula,6es e fazer reparos de
emergencia\.
(h) - fortalecimento da capacidade de consultores para prestar assistencia conforme
requerido em diversos aspectos do projeto, tais como:
* planejamento de sistema de distribui,co;
* conversao da rede para gas natural;
* conversao de clientes industriais e grande comercio para gas natural;
* controle de corrosao;
* mediqZo da vazao e pressao do gas;
* telemetria, controle supervisivo e aquisi,ao de dados;
* analise de demanda e tarifas e sistemas de informa,co\.
40
APPENDIX B
(i) - Atualiza,co de conhecimento e habilidades das equipes de COMGAS\.
Treinamentos\.
() - Realiza,ao de estudos para:
* melhoria da administra,co, organiza,co e sistema de informa,ao da
COMGAS;
* op,ces e alternativas de restrutura,ao das participag6es acionarias da
COMGAS;
* utiliza,ao de gas no Estado de Sao Paulo, incluindo taxas e tarifas; e
* estabelecimento de um Instituto de Tecnologia do Gas\.
Parte III
(a) - Conversao para gas natural de approximadente 455 consumidores industriais e\.
4\.800 comerciais existentes, bem como de 231 consumidores industriais, e
(b) - Ligar aprosximadamente 212\.000 novos consumidores residenciais\.
3\. ORGANIZACAO PARA IMPLANTACAO DO PROJETO
o inicio do projeto remonta a 27/04/87, quando a Diretoria de Opera,ces da COMGAS
apresentou em reuniao da diretoria o relat6rio "Subsidios para definiao das diretrizes
da COMGAS, relativas a introdu,cao do gas natural em seu sistema operacional", alem
de subsidios de missoes tecnicas estrangeiras do Canada e da Fran9,a, bem como de
envio de tecnicos da COMGAS ao exterior\.
A COMGAS optou entao em colocar o gas natural em seu sistema operacional, atraves
de um programna de conversao\. Em 02/10/1987 foi aprovado em reuniao da Diretoria o
"Programa de Conversao de Usuarios e Redes para Gas Natural - Pr6-Consumidor"\. No
dia 17/10/1988, o gas natural come,ou a fluir pela nova rede da COMGAS implantada
na regiao de Suzano\.
Em 01/02/1989, em cumprimento ao estabelecido na etapa 2 do "Pro-Consurnidor", foi
criada a Coordenadoria da Conversao\. A partir dai se iniciaram os trabalhos relativos ao
Programa, quais sejarn: obten,co de linha de credito junto ao Banco Mundial,
montagem do Grupo Tarefa, montagem do escrit6rio especifico para coordenar a
opera,cao da conversao e contrata,co de empresas necessarias ao desenvolvimento dos
trabalhos\.
No inicio da implanta,ao da Fase II do projeto foram realizados os estudos de
engenharia relativos a adequa,co da rede de distribui,ao, no que diz respeito as
interliga,coes necessarias para refor,ar as condi,ces de rede em ponto estrategicos,
evitando que durante a troca do gas os consumidores tivessem problemas de
suprimento\. Tambem foram feitos estudos para a divisao da rede em setores com ate
41
APPENDIX B
1\.000 consumidores, para definicao das areas cujas redes deveriam receber algum tipo
de tratamento e o levantamento e estudo dos aparelhos a serem convertidos, para
posterior definicAo de componentes, procedimentos e criterios de informacao aos
consumidores, alem dos aspectos de seguranca, suprimentos, comunicacao\.
Foram definidas as especificacoes tecnicas de componentes para sua aquisicao e
elaborados os editais de acordo com os "guide-lines"\. Foi desenvolvido um sistema de
informnaco com conexao eletr6nica entre a empresa gerenciadora e a COMGAS, para
que esta pudesse acessar o Sistema de Atendimento ao Consumidor - ATP e a partir
deste programa o Recenseamento de Aparelhos de Consumidores Residenciais\.
Enfim, nesta fase foramn desenvolvidos os estudos de engenharia, o planejamento dos
trabalhos de campo, definidas as necessidades de suprimentos e suas especificac6es e
editais, estabelecida a logistica, elaborados os manuais, executado parte do trabalho de
recenseamento, estabelecidos os materiais de comunicacao com o puiblico, com os
consumidores e com a imprensa, assim como as normas de seguranca a serem adotadas\.
Todo este trabalho foi executado sob supervisao da Coordenadoria de Conversao, com
participacao dos tecnicos das diversas areas da COMGAS, designados para trabalhar em
conjunto com as empresas de gerenciamento, engenharia e consultoria\. Com a criacao
do Grupo Tarefa e com a contratacao das empresas de gerenciamento, engenharia e
consultoria internacional, a Coordenadoria da Conversao iniciou os trabalhos\.
42
APPENDIX B
4\. AQLJISIAO DE BENS E SERVICOS
Valor Valor BIRD
CONTRATOS Contratado (US$ 1000)
(US$ 1000)
- C\. 1157/90 - Consultoria em Marketing 33\.0 30\.0
- C\. 1191/90 - Engenharia da Convers§o 3,049\.6 2,326\.3
- C\. 1216/91 - Gerenciamento da ConversAo 11,827\.9 5,703\.4
- C\. 1195/90 - Assistencia Tecnica Internacional 6,834\.9 4,794\.5
- C\. 1133/90 - Estudo de Utilizago do Gas 822\.8 604\.6
- AF\. 4261/10/92 - Dispositivo para Reguladores 44\.1 43\.7
- C\. 3414/10/91 - Tubos e Conex6es de Polietileno 246\.2 227\.8
- C\. 1447/92 - Servi,os de Bloqueio de Redes 51\.8 51\.8
- C\. 3512/10/91 - Molas para Reguladores 19\.6 10\.9
- C\. 3515110/91 - Fomecimento de Materiais 402\.6 234\.3
- C\. 3863/10/91 - Sistema de Nebulizagco 30\.7 30\.5
- C\. 1377/92 - Servicos de Interliga,co 2,098\.9 2,098\.9
- C\. 1401/92 - Conversao de Aparelhos Domesticos 10,194\.2 10,194\.2
- C\. 4960/10/92 - Sistema de Nebuliza,ao 572\.4 568\.8
- C\. 5355/10/92 - Fornec\. de Injetores, Adapt\. e Registros 1,073\.2 769\.8
- AF\. 3511/10/93 - Fornecimento de Manipulos 10\.6 5\.5
- AF\. 5749/10/92 - Fornecimento de Injetores Estampados 8\.5 6\.1
- C\. 3731/10/91 - C\. 3731/20/91 - C\. 3731/30/91 - C\. 3731/10/94 211\.4 150\.0
- C\. 3731/20/94 - Fomec\. de Tubos, VAIv\. e Conex6es Aqo
- C\. 4948/10/92 - Fomecim de Queimadores p/ Aquecedores 1,000\.2 813\.1
- C\. 1533/93 - Servigos de Setoriza,co da Etapa II 6,987\.7 6,987\.7
- C\. 1536/93-1 - Servi,os de Tratamen Definitivos de Juntas 7,099\.7 7,099\.7
- C\. 4953/10/93 - Fornecimento de VAlvulas de Bloqueio 541\.4 476\.8
- C\. 4957/10/93 - Fomecimento de Fios de Cobre 19\.7 10\.6
- C\. 4950/10/93 - Fomec\. de Conexoes e Acess\. de FoFo 36\.4 29\.7
- C\. 4952/10/94 - Fomecimento de Conexoes de Ago Carb\. 50\.0 46\.4
- C\. 4951/10/94 - Fomecimento de Tubos de Ago Carbono 146\.2 111\.4
- C\. 4954/10/94 - Fornecimento de Bloqueadores de Borr\. 87\.9 74\.2
- C\. 4958/10/94 - Fomecimento de Tela de Protegao 62\.3 50\.2
- C\. 7768/10/94 - Fomecimento de Servigos de Bloqueio 2,500\.9 2,080\.5
- C\. 4959/10/94 - Fornecimento de Esta,oes Redutoras de PressAo 959\.9 844\.7
- C\. 4961/10/94 - Fornecimento de Reguladores de Pressao 130\.6 130\.6
- C\. 4950/94 - I - Fomecimento de Tubos de FoFo 74\.7 56\.8
- C\. 5563/10/93 - Fomecimento de Te em Ago Carbono 0\.8 0\.8
- C\. 2312/95 - Consultoria e Treinamento em GQT 82\.4 82\.4
- AF\. 5493/10/92 - Fornecimento de Molas p/ ERD's 1\.9 1\.3
- AF\. 5467/10/92 - Fornec\. de Molas p/ Reguladores Resid\. 2\.6 0\.8
- AF\. 7653/10/94 - Fomecimento de Fita Termoplastica 8\.0 5\.7
- AF\. 8266/10/94 - Fomecimento de Uniao de Ferro Maleavel 8\.8 7\.6
- C\. 2391/96 - Obras de Setorizaqao da Rede 2,945\.3 2,945\.3
- C\. 2388/96 - Construiao de Rede - Gde\. S§o Paulo 2,904\.5 2,904\.5
- C\. 2402/96 - Constru,co de Rede - Mogi das Cruzes 2,802\.4 2,802\.4
- C\. 2403/96 - Constru,ao de Rede - Vale do Paraiba 2,606\.1 2,606\.1
- C\. 2404/96 - Constru,co de Rede - Guarulhos 2,372\.2 2,372\.2
- C\. 2491/96 - Corte e Renova,co de Ramais 800\.9 800\.9
- C\. 5160/92- MAquina de furar tubula,ao em carga 650,7 461,9
- C\. 2568/97 B- Recuperac§o de 2\.000juntas Extemas 1,270\.7 1,270\.7
- C\. 2568/97 A- Recuperac,o de 7\.350 Juntas Internas 1,391\.2 1,391\.2
43
APPENDIX B
5\. POSIC(AO FISICA REAL DO PROJETO
(a) Conversao de gas de nafta para gas natural das redes existentes e de cerca de 240 mil
consumidores residenciais (atende ao Objetivo (a) do Projeto)\.
A fase de campo iniciou-se em 15/09/93 e toda a conversao estava concluida em
07/02/97\.0 resultado final da conversao de consumidores residenciais estA relacionado
abaixo:
N0 de consumidores 240\.037
N° de aparelhos 311\.142
N° de setores 323
N° de bloqueios na rede 1\.306
(b) Ampliacao da capacidade do Sistema de Distribui,cao (atende ao Objetivo (a) do
Projeto)\.
Este programa consistiu da melhoria das redes de ferro fundido existentes, media e
baixa pressao, utilizando tecnicas de inser9Ao de tubulag6es e recupera,cao de juntas,
que incluem os seguintes programas:
* Setorizacao da Rede e Obras de Interliga,ao
* Programa de Inser,cao da Rede de Media B
* Programa de Recupera,co de Juntas (interno e externo)
* Programa de Renova,ao da Rede Baixa Pressao
(c) Expansao industrial (atende ao Objetivo (a) do Projeto)\.
Este programa consiste na constru,ao de 84,6 km de redes de distribui,ao, nas regi6es
Metropolitana de Sao Paulo, Mogi das Cruzes e Guarulhos, atendendo a 40 novos
consumidores industriais\. 0 programa foi concluido em 1997\.
(d) Expansao residencial (atende ao Objetivo (a) do Projeto)\.
Este programa consiste na constru,co de novas redes de distribui,ao para atender a
bols8es residenciais, que vem sendo construidas com recursos pr6prios\.
(e) Aquisi,co e implanta,ao de Sistema de Seguran,a, Supervisao e Controle (atende ao
Objetivo (b) do Projeto)\.
A especificacao tecnica para compra do Sistema SCADA, Sistema de Aquisi,ao de
Dados Supervisao e Controle, foi elaborada pela COMGAS e revisada pela Consultoria
44
APPENDIX B
PLE\. Durante a Missao de maio de 1994 os trabalhos foram suspensos, ate que
considera,ces adicionais relativas a escopo e custos fossem analisadas para atingir sua
otimiza,co, face as necessidades operativas da COMGAS\.
Em agosto de 1994, a COMGAS apresentou ao Banco um estudo basico para a
implanta,ao de um Sistema de Leitura Automatica de Medidores para os grandes
consumidores, permitindo a monitora,co de cerca de 70% do volume de gas natural
distribuido\. Em 1995 foratn elaboradas as especifica,oes tecnicas e a contratacao deu-se
no filtimo trimestre de 1996\. Todos os softwares e equipamentos foram fomecidos e
instalados, estando o sistema operando, porem, em fase de aceitac,o final, o que devera
ocorrer ate marco de 1999\. Foram constatados problemas na elabora,ao dos relat6rios, o
que vem sendo corrigido pela empresa americana METRETECK, sub-fomecedora do
software da Central de Operacao\.
O sistema de SCADA - Sistema de Aquisi,co de Dados Supervisao e Controle, com
escopo reduzido incluindo somente a automa,co dos City-Gates, foi implementado com
recursos pr6prios da COMGAS, tendo sido concluido em dezembro de 1997\. 0
Sistema encontra-se atualmente sendo ampliado, com a inclusao dos novos city-gates do
Vale do Paraiba e dos Sistemas do gasoduto Bolivia -Brasil\.
(f) Centro de Tecnologia do Gas (atende ao Objetivos (b) e (f) do Projeto)\.
Este programa previa a meihoria do Laborat6rio de Combustao\. 0 laborat6rio foi
reequipado, com novas bancadas e salas de testes e reforma total de sua area fisica\. Foi
concluida no inicio de 1998 a implementa,cao do Sistema de Qualidade, sendo hoje o
i ico laborat6rio no Brasil credenciado na Rede Nacional de Laborat6rios do
INMETRO para a realiza,co de testes em fog6es e aquecedores a gas para uso
domestico\. Este trabalho foi desenvolvido com recursos pr6prios da COMGAS\.
(g) Esta,ces de Emergencia Adicionais (atende ao Objetivo (b) do Projeto)\.
Ap6s andlise mais criteriosa, verificou-se a nao necessidade de constru,ao de esta,ces
de emergencia\. Contudo, foi diagnosticado que era necessario manter a compra dos
equipamentos inicialmente previstos para utiliza,ao nessas estacoes\. Esses
equipamentos foram comprados em 1997\.
(h) Treinamento para pessoal pr6prio (atende ao Objetivo (b) do Projeto)\. Principais
realiza,ces:
* Seminario sobre licita,ao e desembolso envolvendo emprestimos do Banco Mundial
* Envio de funciondrio para treinamento no Japao em Gerenciamento de Qualidade
Total
* Ado,ao do Programa de Gestao pela Qualidade Total em 1995, que significou
educa,ao e treinamento dos empregados no conceito de Qualidade Total\. Foram
45
APPENDIX B
realizados cursos, palestras, seminarios, reunidos grupos internos de discussao, com
o intuito de disseminar os conceitos da Qualidade Total dentro da COMGAS\. Para
tanto, foi contratada consultoria extema, a Funda,co Christiano Ottoni\. Cerca de
200 empregados, incluindo todos os gerentes participaram de diversos cursos
externos e seminarios para reorientar suas a,ces na busca da satisfa,co do
consumidor\. Como resultados gerais obteve-se: redu,ao do prazo de atendimento
do consumidor, criacao da area de Ouvidoria, implanta,ao de novo sistema de
cobran,a e moderniza,ao do sistema de comunica9,ao da empresa\.
(i) Aquisi,ao de servi,os de consultoria e engenharia\.
* Servi,os de Consultoria Internacional (atende ao Objetivos (a) e (b) do Projeto) -
Foi contratada a CONSULTORIA PLE - Servi,o de Assistencia Tecnica
Internacional, cujo contrato previa a transferencia de tecnologia e treinarnento, para
o programa de conversao\.
* Servi,os de Consultoria em Marketing (atende ao Objetivos (g) do Projeto)\. - Foi
contratado consultor para elabora,ao de trabalho de pesquisas e analises para cria,ao
de um modelo de planejamento de marketing para a COMGAS\.
- Servi,os de Engenharia (atende ao Objetivos (a) e (b) do Projeto)\.- COPLASA -
Estudo de Mercado e Plano Diretor do Sistema de Distribui,cao, Especificac6es
Thcnicas para Conversao de Aparelhos e Tecnicas para Adequa,co de Redes de
Ferro Fundido
Vale lembrar que a implantacao de todos os projetos contribuiram direta ou indiretamente aos
prop6sitos do objetivo [fl\.
6\. ESTUDOS ELABORADOS (recomenda,ces e implementa,ces feitas em fun9do
do estudo)
* Estudo Reestrutura,co Acionaria da COMGAS (atende ao Objetivo (d) do
Projeto)\.- objetivando arrecadar fundos para expansao e fortalecer a estrutura de
financiamentos, atraves da abertura de capital\. 0 estudo permitiu definir a
percentagem de participa,ao de capital privado, identificar os investidores, avaliar
as implica,6es legais em rela,co ao estatuto e a organizavao e identificar os fatores
que poderiam dificultar a introdu,ao da participa,ao privada no setor\. Em junho de
1995 foi realizada A\.G\.E aprovando a abertura de capital e a emissao de debentures
conversiveis em a,ces preferenciais\. A coloca,ao das debentures se encerrou em
Julho de 1996, com valor de R$ 50 milhoes\. Em julho de 1998, todas as debentures
ja haviam sido convertidas em a,6es preferenciais\.
* Estudo de Utiliza,ao do Gas (atende ao Objetivos (e) e (g) do Projeto)\. - consultoria
francesa BEICIP, cujo trabalho foi concluido em outubro de 1992\. Este trabalho
46
APPENDIX B
teve como finalidade estudar o mercado de gas natural em SAo Paulo, incluindo
pre,os de demanda, viabilidade de implantacao de redes no interior, regula,ao etc\.
Estudo Tarifario (atende ao Objetivos (c) do Projeto)\.- Foi contratada empresa de
consultoria TECHNOPLAN\. 0 estudo conclui por elaborar uma nova proposta de
modelo tarifario para a COMGAS, que foi introduzido a partir de junho de 1994\. 0
novo modelo consiste de tarifas, calculadas com base em termo fixo e variAvel, que
mudam conforme o volume consumido, obtendo-se assim modicidade e equidade
em termos tarifarios, nao se aplicando porem em casos excepcionais, onde os
volumes envolvidos sao muito grandes e que dependem de negocia,ao\.
7\. ESTATISTICAS DO FINANCIAMENTO E DOS CUSTOS REAIS DO
PROJETO
As estatisticas de financiamento e dos custos reais do projeto se encontram inclufdas no
relat6rio do Banco e na pagina da WEB mantida pelo Banco\.
8\. DESEMBOLSOS DO EMPRiSTIMO DO BANCO
O desembolsos do projeto se encontram incluidas no relat6rio do Banco e na pagina da
WEB mantida pelo Banco\.
9\. FATORES QUE AFETARAM A IMPLANTAOAO DO PROJETO
* Atrasos na assinatura e efetividade do Contrato de Emprestimo - por motivos
alheios A vontade do Banco Mundial e da COMGAS, fazendo com que a assinatura
do contrato de emprestimo sofresse atraso de um ano - repercutindo negativamente
no o inicio de implanta,ao do Projeto\. Tal atraso se deveu A negociacao de dividas
entre o Governo do Estado de Sao Paulo e o Govemo Federal, que uma vez
equacionada, permitiu que a operacao fosse submetida a aprovacao do Senado
Federal, fator esse que esta fora de controle da COMGAS\.
* 0 processo de conversao dos aparelhos para gas natural, dado seu pioneirismo no Pais,
apresentou abrangencia e complexidade maior do que a prevista\.
* 0 grau de intervengcao na rede existente levou a necessidade de execu,ao de obras em via
puiblicas, por periodos prolongados de tempo e que, devido a restricao da autoridade do
transito e leis municipais que regulam execu,ao de obras noturnas, somente puderam ser
realizadas por prazos restritos\. Tais fatos nao sAo tambem de responsabilidade da
COMGAS\.
47
APPENDIX B
* Os processos de licita,ao de bens e servi,os sofreram sucessivas dilata,ces de prazo
em virtude de divergentes interpretag6es entre as leis brasileiras e as orienta,6es do
Banco\.
* Alterac,es no escopo do Projeto, para atender as condi,ces do mercado de gas
natural\.
10\. PERFORMANCE DA ORGANIZA,AO DA COMGAS
A performance da organiza,ao da COMGAS foi satisfat6ria dentro das limita,6es
ocorridas como consequencia das numerosas modifica,oes na Diretoria da empresa e
conseqtientes trocas na dire,cao do projeto\. 0 envolvimento direto de um Diretor da
COMGAS na coordena9ao do projeto a partir de 1994 melhoro expressivamente sua
implementa,ao\.
11\. PLANOS FUTUROS PARA A OPERACAO DO PROJETO
O gas Natural tem-se se mostrado como importante energetico altemativo para a
industria de Sao Paulo, provocando a assinatura de contrato entre o Brasil e a Bolivia
para fomecimento de gas natural\. A oferta de gas passara dos 3 milhoes de gas nacional
para 7 milhoes em 1999, com volumes crescentes ate atingir 11,1 milhoes por dia de
gas boliviano no ano de 2004\. 0 Gasoduto Bolivia Brasil (GASBOL) tem capacidade
para transportar ate 30 milhoes de m3 por dia\. A estimativa do Ministerio de Minas e
Energia e de que o gas natural passe dos atuais 1,9% de participa,ao na matriz
energetica brasileira para 10% ate 2010\.
A COMGAS tem assinados contratos no sentido de distribuir gas natural para novos
segmento de mercado, como cogerac,o e termeldtricas, alem dos atuais segmentos
residencial, comercial, industrial e automotivo\. Com isso, ampliara a participa,ao da
COMGAS no mercado de energia\. Essa expansao e resultado da melhoria da rede de
distribui,ao e de sua capacidade, bem como da amplia,ao em termos de poder atender a
novos clientes e em novas regi6es, como no Interior do Estado de Sao Paulo\.
12\. PERFORMANCE DO BANCO NA PREPARAVAO E IMPLANTACAO DO
PROJETO
0 Banco deu todo o apoio na prepara,ao do projeto, na sua implementa,co e na
condu,cao do mesmo, procurando sempre orientar-nos para a procura da melhor e mais
exeqilivel solu,ao, quer administrativa ou tecnica\.
48
APPENDIX B
13\. LICOES APRENDIDAS
Durante a implementa,ao do projeto aprendemos que existem grandes diferen,as entre
as cidades com rela,ao ao tipo de dificuldades que projetos complexos de infraestrutura
devem enfrentar\. Para este fun, os executores do projeto devem considerar a situai;ao
particular de cada cidade para assegurar a conclusao exitosa do projeto dentro do prazo
pre-estabelecido\. Podem surgir problemas devido as caracteristicas de cada cidade em
quest6es tais como padroes de transito e regras, a capacidade operacional de
empreiteiros e de fornecedores de servi,os, normas de trabalho nas ruas, limites de
ruido, e atitudes das autoridades locais e da popula,ao\. Alem disso, minuciosa aten,ao
deve ser prestada a capacidade dos executores do projeto de prestar servi,os de apoio
aos empreiteiros em cada area especifica, como, por exemplo obter licen,as para
trabalhos de rua, e realizar opera,ao e obras complementares nas areas da rede de gas
onde os empreiteiros estao trabalhando\.
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SAARCH I 98-8 | REVIEW |
P065126 |  ICRR 14574
Report Number : ICRR14574
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 02/09/2015
Country : Guinea
Project ID : P065126 Appraisal Actual
Project Name : Health Sector Support US$M ):
Project Costs (US$M): 27\.79 26\.33
Project
L/C Number : C4072 Loan /Credit (US$M):
Loan/ US$M ): 25 23\.53
Sector Board : Health, Nutrition and US$M):
Cofinancing (US$M ):
Population
Cofinanciers : Board Approval Date : 06/02/2005
Closing Date : 09/30/2011 12/31/2013
Sector (s): Health (70%); Central government administration (30%)
Theme (s): Health system performance (34% - P); Population and reproductive health (33% - P); Child
health (33% - P)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Gisela M\. Garcia Judyth L\. Twigg Lourdes N\. Pagaran IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
The original objective of the project, according to the Legal Agreement (LA, 2005), was: "to contribute to
reaching the maternal and under -five mortality reduction objectives of the Borrower âs Five -Year Plan,
Program, and Poverty Reduction Strategy Paper, and the Millennium Development Goals MDGs )" (LA p\. 25)\.
(MDGs)"
The objective as stated in the Project Appraisal Document (PAD) is identical\.
At an October 2011 restructuring, the Project Development Objectives (PDO) remained unchanged, but PDO
indicators were rephrased for clarity, specifying that in the 18 targeted districts the project would "contribute
particularly to reaching the following impacts : (a) help decrease maternal mortality from 528 per 100,000 live
births in 1990 to slightly above 200 per 100,000 live births at the end of the project; and (b) help decrease infant
mortality from 98 deaths of children under one year of age per 1,000 live births in 1999 to around 50
deaths/1,000 at the end of the project\. This would be achieved by avoiding the death of at least 12,000
pregnant women, and avoiding the death of 27,500 children less than one year of age " (PAD pp\. 4-5)\.
The objective was formally revised at a Level 1 restructuring in 2012, and key indicators and targets were
adjusted\. The revised objective, as stated in the LA (2012), was: "to improve the coverage and quality of
maternal and child health services in targeted districts and targeted health centers in the peri -urban areas of
Conakry " (LA p\. 26)\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
Yes
Date of Board Approval: 03/20/2012
c\. Components:
Two components were supported under the project (planned commitments at appraisal and restructuring, and
actual commitments, are detailed in parentheses ):
1\. Strengthening Health Care Services (Appraisal US$ 18\.99 million, Actual US$ 17\.62 million), with three sub
components aimed at: (a) improving quality of care through health personnel training, better standards and
referral systems, performance agreements between the Ministry of Health (MOH) and health centers and district
hospitals, and contracts with private clinics and NGOs ; (b) increasing demand for health services through
community mobilization activities; and (c) expanding GTZ-tested and evaluated quality assurance activities to
the project's targeted 18 districts\. At the 2012 restructuring, sub component (c) was dropped\.
2\. Institutional Strengthening (Appraisal US$ 8\.37 million, Actual US$ 5\.91 million)\. Activities supported under
this component mainly aimed at increased coordination and better monitoring and evaluation within the MOH \. In
addition, this component was to fund equipment at the Reproductive Health Training and Research Center in
Conakry and to support the improvement of medical waste management at the hospital, health center and health
post levels\. Original sub components (as listed in the LA) included:
(a) Integration of maternal mortality into the health information system \.
(b) Support to implementation of a Medical Waste Management Plan (MWMP)\.
(c) Support to the Reproductive Health Training and Research Center \.
(d) Development of a national health insurance scheme \.
(e) Carrying out of an annual tracking survey of health expenditures \.
(f) Strengthening the leadership and policy -making capacity of the MOH and health sector reform \.
(g) Strengthening the Directorate for Finance and Administration (DAAF) of the MOH and its decentralized
units in financial, procurement, and contract management \.
(h) Project management and coordination \.
At the 2012 restructuring, subcomponents (d), (e) and (f) were dropped, and subcomponents (g) and (h) were
merged\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project cost, financing and borrower contribution : At appraisal it was estimated that the project's total cost
would be funded through an IDA credit of US$ 25 million and a borrower contribution of US$ 2\.8 million\. At the
2012 restructuring, an estimated reduction of total project costs of US$ 1\.8 million was expected due to the
above-mentioned dropping of some subcomponents \. Actual IDA disbursements amounted to US$ 23\.53 million
due to the difference between estimated and actual project costs after restructuring and exchange rate gains
over the project life\. (Table A in the ICR reports a slightly different total disbursement amount, US$ 23\.46
million\.) The actual borrower contribution was US$ 2\.8 million as planned\.
Dates :
December 2008 - January 2011: 2011 Bank operations were suspended in the country for two years following a
military coup\.
2011 The project's closing date was extended by three months, until December 30, 2011, to
October 2011:
finalize a level 1 restructuring (Project Paper (PP) Sept 2011, p\. 6)\.
201 2: A level 1 restructuring allowed for a new closing date of December 30, 2013\. At the time of
January 2012
restructuring, 53% of the financing (US$ 12\.58 million) had been disbursed\. The restructuring simplified
project design through: the revision of PDOs and related indicators and targets; a streamlining of project
activities and subcomponents (with a subsequent reallocation of funds ); and a revision of institutional
arrangements\. The need for restructuring was justified in the ICR as follows : "(i) the PDO are unsuitable; (ii)
the design is complex; and (iii) institutional arrangements are not working properly " (PP Dec 2011, p\. 5)\.
Two different dates for this restructuring are noted in the ICR (January 4 and March 20, 2012)\. The
restructuring package was approved by the Board on January 4, 2012, but the signed documents were not
the most updated, thus a corrected package of documents and agreements was signed on March 20, 2012
(ICR p\. 14)\.
2013 The project was restructured to allow for reallocation of expenses from equipment for the
May 2013:
Reproductive Health Training and Research Center to midwife training \. The reallocation was needed due to
delays in Center completion\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Relevance of Original Objectives : Substantial
Relevance of Revised Objectives : Substantial
The projectâs objectives, as originally formulated, were substantially relevant to the country context as identified
in the 2002 Country Status Report on Health, including poor health outcomes, inequity and insufficient allocation
(and execution) of public health expenditures and of human resources for health (PAD pp\. 1-2)\. The projectâs
objectives were consistent with the MOH Five -Year Plan 2003-2007 aimed at improving the health status of the
population while reducing inequities (PAD p\. 3)\.
The revised objective of improving the coverage and quality of MCH services remains substantially relevant in a
country with one of the highest maternal and infant mortality rates in Africa : 980 per 100,000 and 67 per 1,000,
respectively (2014-17 Country Partnership Strategy (CPS) p\. 14)\. The revised project objective is substantially
relevant to the 2014-17 CPS objective of strengthening human capital, specifically with regard to improving
access to social services \. The revised objectives are also well aligned with the MDG 4 and 5 goals for the
country and the goals of the 2013 Poverty Reduction Strategy Paper (PRSP) pillar 4 (CPS p\. 35) and with the
2011 National Gender Strategy (CPS p\. 8)\. The project targeted prefectures that were among the poorest
(based on the national poverty map ) and with the worst health indicators \. The Government had announced that
antenatal care and deliveries would be provided free of charge (Dec 2011 PP, p\. 2), a change that would
potentially increase the demand for those services \.
b\. Relevance of Design:
Relevance of Original Design : Modest
Relevance of Revised Design : Substantial
As stated in the ICR (p\. 24), there were several shortcomings in the original project design, including : " (i) the
number and complexity of the various interventions considered (quality assurance, compulsory health insurance,
sector financing, human resource management, etc \.); and (ii) the appropriateness of the proposed
implementation arrangements\." A causal chain between the multiplicity of proposed activities and the original
objectives is difficult to establish in the absence of prioritization or proposed sequencing of activities \.
At project restructuring, "PDO were simplified, projectâs interventions streamlined, implementation arrangements
improved, and a performing monitoring and evaluation system was established " (ICR p\. 24)\. The restructuring
produced a more clear alignment between planned activities and expected outcomes \. However, there were still
minor shortcomings\. While a streamlining of activities was needed to strengthen the project's focus, important
features of the institutional strengthening component were dropped in that process (i\.e\. the annual tracking
survey of health expenditures and strengthening the leadership and policy making capacity of the MOH )\. This, in
conjunction with the realization that the MOH's Administrative Unit -- the DFAA -- was not able to take over the
responsibilities given to the contracted Fiduciary Management Agency (FMA), limited the ability of the project to
positively impact the MOH via institutional strengthening \.
4\. Achievement of Objectives (Efficacy):
Note: at the time of project restructuring, 53% of financing (US$ 12\.58 million) had been disbursed\.
Original objective : to contribute to reaching the maternal and under -five mortality reduction objectives of the
Borrower âs Five -Year Plan, Program, and Poverty Reduction Strategy Paper, and the Millennium
Development Goals is rated Substantial \. Although full achievement of the MDGs was not reached, mortality did
decrease significantly\. The project exceeded most output targets, making it plausible that these outputs
contributed to reaching maternal and under-five mortality reduction\.
Outputs relevant to original and revised objectives :
health centers providing standard health services for integrated management of childhood illnesses (IMCI)
increased from 67 to 213, achieving 85% of the original target of 250, and surpassing the revised target of
175
health centers providing basic emergency obstetric services (SOUB) increased from 0 to 213, surpassing
the original target of 200 and the revised target of 175
hospitals and improved health centers providing full emergency obstetric services (SOUC) increased from 0
to 22, surpassing the original (and revised) target of 20
training was provided to 1416 health personnel, surpassing the original target of 844, and more than
doubling the revised target of 700
53 community health insurance schemes (mutuelles) were initiated, equivalent to 46% of the 130 original
target (the ICR reports that this is equivalent to 60% of the revised target, but that revised target is not cited
in the Dec 2011 Project Paper)
establishment of a referral and counter referral system
implementation measures for medical waste management
Outcomes relevant to original objective :
The ICR reports a reduction in maternal mortality from 980 in 2005 to 724 per 100,000 live births in 2012,
far short of the 220 target\. Based on data available from the 2004 and 2012 Demographic and Health
Survey (DHS), the ICR estimates the number of deaths avoided for pregnant women at 15,596, surpassing
the target of 12,000; there are no details in the ICR on how this was calculated \.
The ICR does not report on under five mortality \. Instead, it reports a reduction of infant mortality from
91/1,000 in 2005 to 67/1,000 in 2012, far short of the 50 target\. Based on data available from the 2004 and
2012 DHS, the ICR estimates the number of deaths avoided for children under one year of age at 14,542
deaths (or 53% of the 27,500 needed to achieve the target )\. Again, there are no details in the ICR on how
this was calculated\. While a high proportion of under -five mortality might be captured under the infant
mortality indicator, the data reported in the ICR do not fully measure achievement of the objective as stated
in the loan agreement\.
There is no discussion of attribution in the ICR but, as was correctly noted at time of restructuring, "some of
these outcomes require actions beyond the health sector that are not part of project activities, such as
improvements in water supply, sanitation and women âs education" (PP Dec 2011 p\. 3)\.
Revised Objective :
To improve the coverage of maternal and child health (MCH)MCH ) services in targeted districts and targeted
health centers in the peri -urban areas of Conakry is rated Substantial, as most targets were met for expansion
of services\.
MCH ) services in targeted districts and targeted health
To improve the quality of maternal and child health (MCH)
centers in the peri -urban areas of Conakry is rated Negligible, due to lack of data\.
Outcomes related to improving coverage of MCH services :
Institutional deliveries assisted by trained health personnel increased from 14% to 38%, surpassing the
target of 25% [baseline is not consistent between PP Dec 2011 (38%) and ICR table]
The percentage of pregnant women receiving at least one antenatal care visit to a health provider increased
from 83% to 93%, surpassing the target of 90% (ICR reports a slightly higher baseline of 85%)
The number of pregnant women receiving antenatal care during a visit to a health provider increased from
194,475 to 249,030 (93% of the target of 267,774) [numbers are not consistent between PP Dec 2011
(350,500 at baseline) and ICR table]
Percentage of children 12-23 mos\. old fully immunized (DPT3+M) showed little change from a baseline
value of 38\.2% to an end value of 36\.5%, short of the 41% target (ICR table reports a slightly lower baseline
of 37\.2%)
Percentage of children 0-11 months immunized (DPC3) increased from a baseline of 50\.3% to 86%, close
to the original target of 90% and surpassing the revised target of 54% (the baseline value was
approximately equal to the revised target, and the ICR reports a higher baseline of 70%)
Outcomes related to improving quality of MCH services :
Some of the output level indicators aimed at measuring quality, but there is no outcome level indicator \.
The ICR reports on the comparison of two studies conducted by the United Nations Population Fund in
2003 and 2012 aimed at measuring the quality of obstetric care \. Results were mixed: "(i) the completeness
and coverage of the services offered had not materially improved; but (ii) all of the other indicators
(treatment of obstetrical complications, caesarian sections, and maternal death rates ) improved" (ICR p\.
29)\. With regard to the quality of treatment of childhood illnesses, the ICR reports "results of supervision
measures of a sample of health centers in the project zone, which found that 80 percent of the facilities
were evaluating and treating/referring cases correctly" (ICR p\. 29)\.
5\. Efficiency:
Efficiency : Modest
The project did not conduct a cost -effectiveness analysis at appraisal or at closing but instead focused on the
value of MCH interventions, known for their cost -effectiveness in improving maternal and child health outcomes
in a context of low and poor allocation of expenditures \. The project focused its attention in the poorest
prefectures of the country \. Overall, however, project resources substituted for the shortage of Government
investment in the sector\. Before restructuring, the project attempted to implement a multiplicity of activities with
no prioritization\. Several activities were not implemented or were partially funded and then dropped, reducing
the efficiency of allocation of project resources \. Late effectiveness and slow disbursement rates in the first
years of implementation, the two-year suspension of activities, and the restructuring all resulted in lower
efficiency\. After restructuring, project efficiency improved with regard to disbursement \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Original objective: rated Moderately Satisfactory (equivalent to a rating of 4 on the 6-point scale) based on
Substantial relevance of objectives, Modest relevance of design, Substantial achievement of the development
objective, and Modest efficiency \.
Revised objective: rated Moderately Unsatisfactory (equivalent to a rating of 3 on the 6-point scale) based on
Substantial relevance of objectives, Substantial relevance of design, Substantial achievement of the objective to
improve coverage of MCH services, Negligible achievement of the objective to improve quality of CH services,
and Modest efficiency\.
The final outcome rating takes into consideration the percentage of the loan disbursed before and after project
restructuring, as per the harmonized OPCS /IEG guidelines for restructured projects \. At restructuring, 53% of the
financing (US$ 12\.58 million) had been disbursed\.
Overall rating: 4*0\.53 + 3*0\.47 = 3\.55 (Moderately Satisfactory)
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Insufficient allocation of Government resources to the sector and related low commitment, a shortage and
ineffective distribution of human resources, and poor financial management capabilities at the MOH, paired with
a context of social and political fragility, pose a high risk to development outcomes \. In addition, the Ebola
situation is overwhelming the country's health systems \.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
a\. Quality at entry:
Several different financing instruments were initially considered, with an appropriate choice eventually made
for a traditional investment operation \. Many concerns about the project's risks were reflected in conditions
for negotiation and effectiveness \.
However, there were serious shortcomings in identification, preparation, and appraisal that resulted in a
complicated and overly ambitious project \. No quality at entry assessment (QEA) was conducted\. Despite its
reference in the PAD (PAD p\. 17), it is not clear how project design internalized lessons learnt from the
Population and Reproductive Health project funded by the Bank that closed in 2003 with Unsatisfactory final
IP and DO ratings\. Furthermore, an impressive number of studies were conducted at the time of
identification, preparation and appraisal, but the PAD design does not seem to reflect their findings \.
The project design did not adequately take into account the constraints posed by the country context,
especially the lack of commitment, resources and leadership in the sector, along with the limited institutional
capacity within the MOH to carry out and oversee the proposed decentralization efforts \. The multiplicity of
activities proposed shows the lack of focus and ingenuity at time of design, especially with regard to the
project PDOs and the selection of outcome indicators \. The projectâs targets were overly ambitious, identical
to Guineaâs health MDGs\.
Originally envisaged as a budget support operation, the project did not establish an implementing agency but
instead was set up within existing MOH structures \. A Task Force comprised of high level MOH directors and
staff, under the leadership of the MOH Secretary General, was to oversee project implementation \. However,
there were no detailed implementation plans that outlined clear responsibilities or timing for the proposed
activities\. Furthermore, the proposed decentralization efforts and performance agreements with private
service providers were not realistic given the readiness assessment of the MOH, especially with regard to its
ability to supervise and oversee performance contracts, and the low level of government allocation of
resources to the sector, as repeatedly reported in project documents and Project Expenditures Reviews
carried out during project implementation \.
at -Entry Rating :
Quality -at- Moderately Unsatisfactory
b\. Quality of supervision:
No quality of supervision assessment (QSA) was conducted for the project \. The ICR (p\. 35) commends the
Bankâs flexibility and proactivity of supervision missions, highlighting the continuity of the TTL and its role in
ensuring availability of data to monitor project results \. Project restructuring addressed many of the
shortcomings in design outlined in the quality at entry section but still did not include outcome indicators to
monitor achievement of the quality of MCH services \.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
Institutional arrangements for project implementation did not work properly, mainly due to the lack of
Government allocation of resources and commitment to sustain the reforms initiated \. According to the ICR,
"the daily operations to monitor implementation were ineffective : the steering committee functioned poorly,
the reform initiatives were not followed up, and the lack of central -level support was felt particularly at
regional and district levels\.the Governmentâs long-term underfinancing of the sector (as shown by the latest
Public Expenditure Review) has seriously undermined sector performance " (ICR p\. 36)\.
Government Performance Rating Unsatisfactory
b\. Implementing Agency Performance:
At appraisal it was decided that no Project Coordination Unit would be established, but rather that specific
project implementation responsibilities would be allocated to the appropriate directorates within the MOH,
except for financial management \. Assessment of this arrangement's performance varied during
implementation but improved after project restructuring \.
A Fiduciary Management Agency (FMA) was contracted to overcome MOH's lack of capacity in financial
management\. Financial management arrangements were not considered satisfactory at the time of
appraisal\. The FMA was to be evaluated yearly with the objective of phasing out and transferring its
responsibilities back to the MOH, but this transfer of responsibilities did not happen and the FMA continued
to be responsible for financial management and procurement until project closing \. The ICR (p\. 37)
commends the FMA for its performance with regard to strengthening financial management capabilities at
the regional and district levels, but there is no evidence presented to substantiate this assessment\.
There is little information on the performance of other MOH directorates responsible for implementing project
activities, but implementation delays were associated with the need for the Secretary General to approve
administrative decisions (ICR p\. 18)\.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
At time of project design, several tools were envisioned to support the M&E of project results, including yearly
health expenditures tracking and client satisfaction surveys \. In addition, the utilization of performance -based
contracts required the identification of indicators against which results at decentralized levels would be
monitored, to be complemented with the independent financial management monitoring carried out by the FMA \.
Moreover, the project benefited from recently collected data at time of project preparation (DHS 2004), and it
was envisioned that project funds would support another survey for evaluation purposes towards the end of the
project (PAD p\. 24)\.
However, the M&E framework at project design showed serious shortcomings :
(i) baselines did not correspond to estimated MDG values for 2005 as per info listed in the PAD (p\. 4), but rather
to the estimated 2000 values;
(ii) targets for the original outcome indicators proposed were overly ambitious, as they were below or exactly at
the 2015 MDG targets (in the case of maternal mortality and infant mortality, respectively );
(iii) there was no discussion of attribution of expected results on the selected outcome indicators in the PAD to
Bank interventions;
(iv) avoided deaths needed to achieve the original targets were not supported by evidence;
(v) infant mortality is not a good indicator to monitor under -5 mortality;
(vi) some of the listed needed actions to achieve the proposed goals were also overly ambitious and unrealistic;
for example, coverage of assisted births had to improve more than 50% over baseline in order to achieve the
proposed targets\.
Some of these shortcomings were acknowledged during restructuring and, as a result, project goals were scaled
back significantly with the following rationale given in the ICR (p\. 12): "since reductions in maternal and infant
mortality will require: (i) more than the project lifetime to change; and (ii) actions beyond the health sector that
are not part of project activities " (ICR p\. 12)\.
Despite the streamlining of the objectives and indicators, targets proposed at the time of restructuring were quite
modest (4% increase in the proportion of institutional deliveries, 2% increase in the proportion of children
immunized, etc)\. New indicators aimed to capture changes in coverage of MCH services, but it was an important
shortcoming that there was no indicator aimed at measuring the objective to improve the quality of those
services\.
b\. M&E Implementation:
The project contributed to the development of a health management information system that produced annual
statistical reports during the period 2007-2013\. Project funds also contributed to the 2012 DHS\. All health
centers and district hospitals were supervised at least twice annually \. Monitoring information was collected at
the facility and district level as planned, although there were issues with its quality \. Some activities were not
carried out as planned, including : (i) the annual monitoring of Government implementation of the five -year plan;
(ii) the health expenditures tracking surveys; (iii) assessment of quality of health services delivered; and (iv)
client satisfaction surveys \.
c\. M&E Utilization:
The project itself had no arrangements for collecting and analyzing data \. As a result, and despite the collection
of information at the facility and district level, the regional and central levels did not use the M&E information for
decision making\. This shortcoming was noted in supervision missions and reported in the ICR (p\. 20)\.
M&E Quality Rating : Modest
11\. Other Issues
a\. Safeguards:
The project was classified a Category "B" project, triggering OP/BP 4\.01 on Environmental Assessment due to
works involving improving medical waste management \. A Medical Waste Management Plan (MWMP) was
prepared and revised at time of project restructuring \. The project funded improvement of medical waste
management, safety equipment and training, and public awareness campaigns \. According to the ICR, the ICR
mission confirmed health staffâs awareness and implementation of appropriate waste management practices
(ICR p\. 21)\. Overall safeguards ratings were Satisfactory both before and after restructuring \.
b\. Fiduciary Compliance:
Fiduciary Compliance : The FMA was responsible for financial management and procurement until project
closing due to MOH Financial Management arrangements not considered satisfactory at appraisal \. The FMA
performed satisfactorily despite not transferring its responsibilities back to the MOH as expected (see Section 9b
for further discussion on this )\.
The project aimed at improving financial management tools at decentralized levels, and incentives were in place
for decentralized health structures to attend financial and procurement courses (i\.e\. performance contracts with
MOH were to be awarded only to those health structures who undertook the training ) (PAD p\. 11)\. There is no
information in the ICR regarding results of this training at decentralized levels \.
Annual audits were timely except for 2012, and generally without qualification (ICR p\. 22)\. Overall, the ICR (p\.
22) considers financial management satisfactory despite citing recurring problems in transferring project funds
to the implementing units at the central, regional, district, and facility levels (ICR p\. 22)\. Delays in transferring
project funds were associated with Government delays in budget and annual plan approvals and the consequent
inavailability of funds, and difficulties in arriving to acceptable justification of use of funds by the Bank \.
Procurement : Procurement was a responsibility of the FMA, given low procurement capacity of the MOH \.
Arrangements were detailed and supervision missions monitored its implementation \. According to the ICR (p\.
22), several delays occurred in all stages of the procurement process but no major problems were reported \.
Performance was overall satisfactory \.
c\. Unintended Impacts (positive or negative):
Unintended positive impacts : The contract with the Central Pharmacy (PCG) to procure and distribute drugs
had the unintended positive impact of recapitalizing the PCG without providing a direct project subsidy (ICR p\.
33)\.
d\. Other:
Reason for
12\.
12\. Ratings : ICR IEG Review
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development High High
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately Government performance was rated
Satisfactory Unsatisfactory Unsatisfactory due to the continuous
lack of allocation of resources and
commitment to the sector during the
duration of the project\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
Lessons drawn from the ICR (pp\. 37-38):
Risk assessment has to be internalized in project design \. While overall risk was rated as high, the
components of this rating were underestimated and the mitigation measures were insufficient \. A more
rigorous assessment might have concluded that : (i) significant risks (political, socio-cultural, technical,
and financial) existed; and (ii) the feasibility of completing the project as designed was questionable \.
There is a need to temper expectations that a single health project can impact the entire health sector \.
Political leadership and financial commitment by the Government are needed for sectoral change \.
Inadequate sector financing, as well as shortage and poor distribution of health personnel, remain issues
in Guinea that can only be tackled with increased Government spending for the sector \. This is all the
more important in the context of the introduction of a results based financing approach to strengthen the
sectorâs focus on results towards impro ved availability and quality of health services \.
mpro ved throughout the project \. Projects can recover from
Monitoring and evaluation can be i mproved
inadequate M&E design\. While the timing of the DHS (in 2005 and 2012) was fortuitous for evaluating the
project, the projectâs sustained efforts to establish the annual HMIS reports (2007-2013) and reconstruct
project data for the entire period were essential in providing an evidentiary trail for the project \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR follows guidelines and is internally consistent and well articulated \. Its presentation of the evidence
could be strengthened\. The analysis is candid and critical, although it could be more concise in the assessment
of project efficacy and it would have benefited from a more detailed discussion of attribution \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P000649 | Document of
The World Bank
FOR OFFICLIL USE ONLY
Report No\.: 19955
IMPLEMENTATION COMPLETION REPORT
REPUBLIC OF EQUATORIAL GUINEA
HEALTH IMPROVEMENT PROJECT
(CREDIT 2348-EG)
December 17, 1999
Human Development 2
Africa Region
This Document has a restricted distribution and may be used by recipients only in the performance ofl
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Unit: CFA Francs (XAF)
US$1\.00 = CFAF 263 (1992)
US$1\.00 = CFAF 288 (1993)
US$1\.00 CFAF 536 (1994)
US$1\.00 = CFAF 512 (1995)
US$1\.00 = CFAF 512 (1996)
US$1\.00 = CFAF 583 (1997)
US$1\.00 = CFAF 590 (1998)
MEASURES
I m = 1\.09 yd
Im2 = 10\.76 sq ft
I km2 = 0\.38 sq mi
ABBREVIATIONS AND ACRONYMS
AFU Administrative and Financial Unit
DCA Development Credit Agreement
DRF Drug Revolving Fund
BMIS Health Management Information System
ICR Implementation Completion Report
IDA International Development Association
MC Managing Committee
MCH / FP Maternal and Child Health / Family Planning
MOH Ministry of Health
MTR Mid - Tenn Review
NGO Non-Governmental Organization
PHC Primary Health Care
PROMESSA (Proyecto de Mejoramiento del Sector Salud)
Health Improvement Project
PU Planning Unit
SAR Staff Appraisal Report
SDR Special Drawing Rights
STD Sexually Transmitted Diseases
TA Technical Assistance
UNDP United Nations Development Programme
UNFPA United Nations Population Fund
UNICEF United Nations Children's Fund
WHO World Health Organization
FISCAL YEAR
January 1 to December 31
Vice President : Jean-Louis Sarbib, AFRVP
Country Director : Serge Michailof, AFC07
Sector Manager : Nicholas Burnett, AFTH2
Cluster Leader : Michele Lioy, AFTH2
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
EQUATORIAL GUINEA
HEALTH IMPROVEMENT PROJECT
(CR\. 2348-EG)
CONTENTS
PREFACE \.i
EVALUATION SUMMARY \. ii
PART I\. PROJECT IMPLEMENTATION ASSESSMENT
A\. Project Objectives \.1
B\. Achievement of Project Objectives \.2
C\. Implementation Record and Major Factors Affecting the Project \.7
D\. Project Sustainability \.9
E\. Bank Performance \. 10
F\. Borrower Performance \. 11
G\. Assessment of Outcomes \. 12
H\. Future Operation \. 13
I\. Key Lessons Learned \. 13
PART II\. STATISTICAL ANNEXES
Table 1: Summary of Assessments \.15
Table 2: Related Bank Credits \.16
Table 3: Project Timetable \.16
Table 4: Credit Disbursements: Cumulative Estimated and Actual \. 17
Table 5: Key Indicators for Project Implementation \.17
Table 6: Key Indicators for Project Operation \.17
Table 7: Studies Included in Project \.18
Table 8A\.1:Project Costs by component \. 19
Table 8A\.2: Project Costs by category \. 20
Table 8B: Project Financing \. 21
Table 9: Economic Costs and Benefits \. 21
Table 10: Status of Legal Covenants \. 22
Table 11: Compliance with Operational Manual Statements \. 28
Table 12: Bank Resources: Staff Inputs \. \. 28
Table 13: Bank Resources: Missions \. 29
Appendices: A\. Mission's Aide-Memoire
B\. Borrower Contribution to the ICR
C\. Map of Equatorial Guinea
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
IMPLEMENTATION COMPLETION REPORT
EQUATORIAL GUINEA
HEALTH IMPROVEMENT PROJECT
(CR\. 2348-EG)
PREFACE
This is the Implementation Completion Report (ICR) for the Health Improvement
Project in Equatorial Guinea (EQG), for which Credit 2348-EG in the amount of SDR 3\.9
million (US$5\.5million) was approved on March 26, 1992 and made effective on
September 15, 1992\.
The Credit was extended twice from the original closing date of December 31,
1996\. The final closing date is August 31, 1999\. Final disbursement took place on
December 9, 1999, at which time a balance of US$1,119,298\.60 (SDR 812,375\.19) was
canceled\. The project did not involve any cofinancing\.
The ICR was prepared by Seung-Hee F\. Lee (AFTH2) and Michele Lioy, Health
Cluster Leader (AFTH2) on the basis of a draft written by Carlos M\. Sarmiento
(Consultant) and Wendy Ravaonoromalala, Health and Population Specialist (AFTH2)
who led the ICR mission, and comments from Angelika Pradel, Task Manager (July 1998
-May 1999)\. Myrina McCullough (AFHT2) and Eavan O'Halloran (ATC07) assisted
with its preparation\. It was reviewed by Nicholas Burnett, Sector Manager (AFTH2) and
Serge Michailof, Country Director for Equatorial Guinea (AFC07)\. The Borrower
contributed to the report by providing its own evaluation of the project (see Appendix B)
and by commenting on the Bank's evaluation\. These comments are incorporated into this
report\.
Preparation of this ICR was begun one month before the Bank's ICR mission of
April 1999\. It is based on the assessment carried out during the ICR mission, the Staff
Appraisal Report, the Development Credit Agreement, supervision reports,
correspondence between the Borrower and the Bank, and other relevant material from the
project files\.
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EVALUATION SUMMARY
Introduction
1\. The Health Improvement Project -- Proyecto de Mejoramiento del Sector Salud
(PROMESSA) -- was the first IDA financed health project in EQG\. This project was
approved on March 26, 1992, and made effective on September 15, 1992\. Two Project
Preparation Facilities (PPF) funds were provided to the Ministry of Health (MOH) in
1988 and 1990 to do a health sector needs assessment that was to be used in designing
this project\.
Project Objectives
2\. According to the Development Credit Agreement (DCA), the project objective was
to strengthen the Borrower's capacity in planning, coordinating and monitoring health
sector activities\. Additionally, according to the Staff Appraisal Report (SAR)
PROMESSA proposed to improve service delivery of priority health programs\.
3\. The objectives were to be achieved by implementing the following components: (i)
institutional strengthening of the health sector management capacity at the central level
and at the hospital management level via establishment of managerial units; (ii)
improving MOH's health strategy development and implementation planning capacity by
establishing a health information management system (HMIS); (iii) strengthening priority
health programs through: (a) malaria control; (b) mother and child health/family planning
(MCH/FP); (c) sexually-transmitted diseases (STD) control; and (d) essential drugs\. Not
specified in the DCA but included in the SAR, was a fourth component: (iv) developing
human resources by training staff at all levels of the health system\.
4\. The objectives were appropriate for the country's needs but the implementation
plan was too complex for the level of institutional capacity of the Borrower\. The
implementation plan also relied heavily on the newly created managerial committee
(MC) of the MOH that had no experience in managing a project\. Additionally, the
project lacked adequate monitoring indicators\. Other weaknesses that were not identified
or were not adequately addressed ultimately adversely affected the project\.
Implementation Experience and Results
5\. The overall project outcome was unsatisfactory\. The tangible project
achievements were limited to the construction of four health centers, the extension of the
health school in Bata, and the rehabilitation of MOH buildings and drug warehouses\. Yet
at the end of the project, all of these were found to be underutilized and deteriorating\.
The project failed to strengthen management capacity at central, regional and delivery
levels\. The HMIS never became operational so that the health strategy and decision
capacity at central and decentralized levels of the MOH did not improve\. The priority
programs, such as Malaria control, Mother and Child Health/Family Planning (MCH/FP),
and Sexually-Transmitted Diseases (STD) control, received little support from the
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project\. Finally, much resources (US$650,000) were expended in establishing a public
system for essential drug\. However, at project close there was a shortage of essential
drugs in the entire public health system which is blamed on the Bank by the Borrower\.
6\. Timely and quantified outputs and outcomes that could demonstrate the
achievements were not recorded\. However, secondary data from the UNICEF
information system show that morbidity and mortality trends and patterns remain almost
identical to those of 1992-1993, the year the project implementation began\. Therefore, it
seems that the project had no known positive impact on the overall health status of the
population of EQG\.
7\. There were numerous factors that contributed to the poor outcome of this project\.
The critical factors were within the control of the two main actors: the Borrower (the
Government/MOH) and the Bank\. Conclusive assessments could not be made about the
level of performance of the Bank and Borrower during preparation because of insufficient
information, but available evidence and testimonials suggest that both Bank and
Borrower performances were substandard during preparation\. Much more definitive and
critical assessments can be made about their performances during implementation\.
8\. Bank performance was negligent during negotiations and supervision\. During
negotiations, Bank failed to address the Borrower's inability to pay the counterpart funds,
therefore, the DCA included difficult counterpart fund requirements that effectively
blocked project implementation\. Quality of Bank performance was highly unsatisfactory
during project supervision\. During supervision missions, poor project performance was
neither addressed nor rectified, and no suggestions (for examples, technical assistance
(TA) or training) were made to improve the management of the project\. Furthermore, the
Task Team Leader (TTL) made agreements with the Borrower and did not follow up on
the agreements\. Finally, Bank management failed to notice the lapses in project
supervision by the TTL\.
9\. Borrower performance was deficient during implementation and non-compliant
of DCA clauses\. It was noted by Bank staff and in documents that Borrower capacity
was very low and there is no record that MOH supervised or monitored the project
activities as agreed during implementation\. The Borrower failed to employ sufficient
health personnel, did not recruit all the needed advisers, did not have a manual of
procedures, and files and records were not properly kept\. Finally, the Borrower had great
difficulty meeting counterpart funding requirements that delayed project effectiveness
and the Borrower's continued inability to meet these requirements during implementation
effectively shut down the project\.
Summary of Findings, Future Operations, and Key Lessons Learned
10\. Very few if any structures were established during the project to ensure
sustainability\. There is no evidence of improved health in Equatorial Guinea and the
Borrower is indebted to the Bank for over US$ 4 million\. No Bank funded operation is
foreseen in the near future for the health sector in EQG\.
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11\. The following lessons, relevant for health projects everywhere, for other projects in
EQG, and for Bank management, can be learned from the failed Health Improvement
Project\.
* Once a risk has been identified, such as the poor capacity for management and
implementation of the Borrower, adequate TA and institutional support should be
planned and implemented by the project\. Although TA is not a panacea, as
underlined by the Borrower, appropriate TA could have been useful\. However,
technical assistants should work in close collaboration with and transfer skills to
qualified national counterparts/experts who are committed to the success of the
project\. As this was the first IDA-financed health project in EQG, the project
administration or project implementation unit's need for TA should have been
better assessed and appropriate TA provided and committed counterparts should
have been identified during project preparation\.
* As much as possible, the project implementation team should be staffed by the
same people as the preparation team to ensure ownership of the project\. The
same people from the Ministry should be involved in the project during all stages
of project development and implementation\. Good plans developed during
preparation were not implemented because the implementers did not take
ownership of the plans\. Good plans are not enough for success without proper
follow-up\.
* Effective and adequate supervision by Bank staff is as vital to the success of a
project as a good appraisal\. Although the preparation seems to have included
MOH staff and addressed possible risks, intensive supervision, as indicated in
SAR, should have been provided to address quickly and appropriately difficulties
in implementation, especially with a project of this complexity and a Borrower
with weak capacity\.
* The continued lack of reaction by Bank management to the lapses in project
supervision by the TTL indicates an institutional weakness of the Bank\. Bank
management needs to monitor better its staff\. The credibility of the Bank has
been severely compromised in EQG by the unmonitored activities of the TTL\. As
indicated, the Borrower still holds the Bank accountable for some of the
inappropriate agreements made by the TTL\.
* Counterpart funds should be negotiated on realistic terms\. Unrealistic demands
that could not be fulfilled led to disbursement suspensions that impeded this
project critically\.
* Good indicators and reports are needed to monitor and evaluate project activities\.
Obtaining the baseline data for these indicators should be included in the
preparation of the project and monitoring of these indicators should be an
integrated activity during supervision of the project\. Accurate assessment of the
impact of this project was virtually impossible\.
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Physical rehabilitation or construction of health centers will not necessary lead to
better or more service delivery\. The four health centers built did not change the
practices of the population to seek quality health service elsewhere\. None of the
civil-works made an observable impact on the health sector\. The Borrower must
realize the importance of training and capacity building for improving health
services rather than rely solely on physical construction\. Additionally, the
Borrower must also consider numerous other factors that affect service delivery\.
Some other factors are motivation of personnel, location and hours of operation of
health centers, availability of drugs and quality of services offered\.
EQUATORIAL GUINEA
HEALTH IMPROVEMENT PROJECT
(CR\. 2348-EG)
PART I: PROJECT IMPLEMENTATION ASSESSMENT
A\. PROJECT OBJECTIVES
1\. The objective of the Health Improvement Project in Equatorial Guinea -- Proyecto
de Mejoramiento del Sector Salud (PROMESSA) -- was to strengthen the Borrower's
capacity in planning, coordinating and monitoring health sector activities\. Additionally,
PROMESSA aimed at improving service delivery of priority health programs\. The
project was the main instrument for achieving the Borrower's new national strategy for
the health sector, which was developed during the project preparation period and which
focused on delivering primary health care to all\.
2\. The objectives were to be accomplished by implementing the following
components:
(i) institutional strengthening of the health sector management capacity at the central
level (health policies, planning and coordination of health sector activities and
investments, decentralization, accounting and management) and at the hospital
management level by establishment of managerial units in the Ministry of Health
(MOH) -- the Managing Committee (MC), the Planning Unit (PU), the
Administrative and Financial Unit (AFU);
(ii) improving MOH's health strategy development and implementation planning
capacity by establishing a health management information system (HMIS);
(iii) strengthening priority health programs: (a) malaria control, including training and
vector control; (b) mother and child health/family planning (MCH/FP), including
the construction of four health centers and provision of technical and management
training and equipment; (c) control of sexually transmitted diseases (STD) by
establishing a national STD control center in Bata; (d) provision of essential drugs
by establishing a more sustainable drug supply via the introduction of a cost
recovery system, a central drug supply unit and a therapeutic committee\.
Not specified in the Development Credit Agreement (DCA) but included in the
Staff Appraisal Report (SAR), was a fourth component:
(iv) developing human resources by training staff at all levels of the health system\.
The training activities were integrated into the other three components of the
project\.
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3\. The objectives and components of the project were not changed during project
implementation\. There was no retrofitting of the objectives during the mid-term review
(MTR) which had been indicated as a possibility in the SAR\.
4\. Based on the assumption that MOH's weak capacity for management and
implementation was the key obstacle to the delivery of adequate health services, the
project planned to mitigate this weakness by creating managerial committees within the
MOH and by recommending intensive technical assistance to compensate for the
weakness and to assist in the increased delivery of services in key sub-sectors\.
5\. Assessment of Project Objectives: The objectives were appropriate for the
country's needs but the implementation plan was too complex for the level of institutional
capacity of the Borrower\. Although the SAR claimed to mitigate the risk implied by the
low capacity of the Borrower by simplifying the project and by including continuous
technical support during the project, the objectives were ultimately overly ambitious for
the capacities of the Borrower\. During pre-appraisal, concern about the scope of the
project, among other issues, was raised within the Bank's review committee and one of
the components (health and nutrition education) was subsequently dropped in an effort to
simplify the project\. The implementation plan -- without contingency plans -- also relied
heavily on the newly created Managing Committee (MC) of the MOH that had not yet
proven capable of managing such a complex and comprehensive project\.
6\. The project lacked adequate monitoring indicators: indicators for the service
delivery objective (malaria control, MCH/FP, essential drug supply) and for human
resources development were defined but not quantified in the SAR, and there were no
performance indicators for the achievement of the development objectives\. The general
national strategic outcome goals outlined in the SAR were quantified, but the link
between the national outcome indicators and the project goals was not established\.
Finally, quantitative and more qualitative indicators were added to supervision reports in
1998, but no records exist of these indicators being monitored by the project or by Bank
supervision\.
7\. Finally, other weaknesses were not identified or were inadequately addressed that
ultimately adversely affected the project such as lack of ownership of the project by
MOH mid-level and technical staff and insufficient capacity to meet counterpart fund
requirements\.
B\. ACHIEVEMENT OF PROJECT OBJECTIVES
8\. The project's achievements are rated as unsatisfactory\. After a period of over
seven years and an investment of US$4\.4 million: (i) the institutional strengthening
component was not achieved; (ii) the development and implementation of a health
strategy have not been realized; (iii) the MOH's capacity to deliver priority health
programs is still very weak and appears not to have been strengthened; and (iv) the
development of the health sector's human resources was very limited\.
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9\. According to the available financial statements, the project spent only about 80
percent of its original credit of SDR 3,900,000 (considered to be equivalent to US$5\.5
million at DCA signing\. Actual expenditures for civil works, and furniture and equipment
were much higher than the original allocations (165 percent and 108 percent
respectively)\. They were much lower, on the other hand, for drugs, and consulting
services and training (62 percent and 44 percent respectively)\. Part of the unallocated
funds -- an amount of SDR171,590 of the original SDR620,000 -- were not utilized\. The
balance of the unallocated funds was reallocated to civil works and furniture and
equipment categories\. This reallocation appears to have been discussed and authorized
in the field between the Borrower and the Bank supervision staff, which explains the
increased spending in these two categories\. Although a reallocation of unallocated funds
to drug purchase was also requested, this was not authorized officially and was ultimately
considered unnecessary\. There was disagreement between the Borrower and the Bank on
this, which is further explained in paragraph 20\.
10\. The first component -- strengthening institutional capacity of health sector
management -- was not achieved\. This component was composed of three sub-
components: the creation and operation of core units in the MOH, the general support of
MOH, and the improved management of the two major hospitals\.
According to the SAR, the managing committee (MC) was formned and
functioning during project preparation under a PPF advance\. However after the
mid-term review (MTR), records of any activities of the MC ceased to exist
despite the fact that the MC was to be the core managerial and strategic planning
unit for MOH and the project itself\. Additionally, it is unclear if the
administrative and financial unit (AFU) was ever staffed\. The MC, the planning
unit (PU) and the AFU seem not to have functioned continuously during the life
of the project as agreed in the DCA\.
* PROMESSA financed some questionable (low quality and low priority) civil-
works and procurement of vehicles and other equipment for MOH that were either
misused and/or ill-maintained\. The project did some rehabilitation work on the
MOH central building in Malabo in 1993-1994 but, by credit closing, the building
still had structural weaknesses, which caused it to be flooded during heavy rains\.
In Bata, the project financed the expansion of regional delegation offices to
include two rooms that were needed for the project and also an office for the
exclusive use of the Minister during his infrequent visits on the continent\. The
project also supplied the MOH with office furniture and equipment, whose
location and present condition were not recorded and records of purchase were
not available\. Some of the furniture and equipment found on-site during the ICR
mission were identified with World Bank labels but again, without any inventory
documents, these items could not be verified as part of the project procurement\.
During its life, the project provided MOH with 13 vehicles of which only 5 were
seen during the ICR mission\. During supervision missions, the Bank staff raised
questions about the use of the vehicles for non-project use : MOH confirmed that
vehicles were being used only for the project, however, only one was seen by the
ICR mission team remained for project use\.
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* No evidence was available that the two major hospitals of Malabo and Bata
received any systematic technical assistance (TA) from the project that could have
led to financial and management autonomy\. The project also reported that it
supplied 1000 mattresses for public hospitals, some of which were found in these
two hospitals visited by the mission\. But no inventory was available\.
* Additionally, PROMESSA was responsible for the coordination of existing donor
programs (WHO, Spain, France, UNICEF and UNFPA) to avoid duplication\.
However, by the end of the project, there had been almost no coordination of
activities initiated by the project with these agencies\.
11\. The second component -- the development of a health strategy and its
implementation by establishing a HMIS -- was not achieved\. The Planning Unit (PU) at
the MOH was created in 1994 and staffed including an HMIS director who designed a
well-structured prograrn to set up an HMIS\. However, no evidence was available that
indicates that PROMESSA supplied the resources and support needed for the system to
become operational\. According to MOH technicians and the HMIS director, the support
was not provided because of frequent turnover of policy-makers in the upper echelons of
MOH that needed to make key decisions concerning the implementation of HMIS\. At
the end of the project, the HMIS was unable to collect, process, or analyze health data
due to lack of support\. The only equipment observed by the ICR mission was a
typewriter, which may or may not have been purchased with project funds\.
12\. The third component -- strengthening priority health programs -- was achieved
only in regard to questionable civil-works for one of the four targeted programs\. The
construction was of non-priority items and inappropriately expensive\. (See the third
point below\.) None of the priority programs seem to have had any known impact on the
health status of the Equato-Guineans\.
* The first program, "Malaria Control," did not receive consistent or medium and
long-term support from the project, lacked coordination with other programs and
showed no visible impact on the population's health status\. (a) Before the MTR,
the project presumably supplied health centers with 25 microscopes and basic
equipment for malaria control, but their location and physical inventory were not
available to the ICR mission\. The ICR mission did observe few examples of said
microscopes during field visits but could not, however, verify the presence of all
25\. Technical assistance financed by the project was used very little\. For
instance, the services of a malariologist were used for two months instead of the
twelve months projected in the SAR\. No further support was given to this
program by the project after 1995\. (b) The Malaria Technical Assistance Project,
financed by the Spanish Government, and which was on-going during
PROMESSA project life, was not informed of the support given by the
PROMESSA to this program\. (This is another evidence that PROMESSA did not
coordinate with other donors as required\.) (c) Strong evidence of endemic
malaria still persists on Bioko Island where the program was to be piloted\. At the
end of the project, malaria due to Plasmodium Falciparum was severe; 75 percent
of existing cases were resistant to Chloroquine; and malaria was responsible for
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38 percent of the morbidity of children under 5, and 34 percent of the morbidity
among the general population on Bioko, according to data collected by University
of Madrid\.
* The second program, "Maternal and Child Health/Family Planning" (MCH/FP),
which included the construction and equipment of four health centers and
technical and management training, was partially completed\. The four MCH/FP
centers were constructed in Beayop (Micomeseng District), Oveng and Ngolosoc
(Acurenarn District) and Mongomeyen (Mongomo District)\. They were not
finished until 1997\. The selection criteria for the location of these centers were
more political than technical or epidemiological, which contributed to their
current low utilization and their higher than expected construction cost\. The
construction cost estimated in the SAR was US$80,000 per unit, but the actual
cost was $228,841 per health center, which can be partially accounted for by the
geographical remoteness of the health centers\. The cost estimates were based on
more accessible locations than were actually chosen during implementation\. The
centers and the quarters for the directors of each center were also unnecessarily
expensively equipped (e\.g\. the clinics are equipped with orthopedic beds and
imported tiles from Spain)\. The existence and operation of the health centers
which lack medical supplies have not reduced the incidences of local community
members seeking medical attention in the district hospital or even in neighboring
countries\. The centers have already begun deteriorating physically and have an
unsustainably low level of activity\. The rate was around 1\.1 patients/day over a
15-month period for one of the centers, according to the health center's log sheet
from 1997 to 1998\.
The third program, establishment of a national STD control center in Bata, may
have been completed, but it is no longer operational\. According to the SAR, the
STD control center did not exist and needed to be established\. But MOH staff
stated that a center had been functioning with support from other donors and that
these donors withdrew their support in anticipation of support from PROMESSA\.
The project did not provide adequate support, therefore, the center was not in
operation at project close\. Preparation and publication of a useful booklet on
treatment of STDs was financed by the project and was reported to be in use in
health clinics in 1995\. Copies were observed in clinics by the ICR mission\. A
clinical survey performed by WHO among young adults in 1997 showed that a
very high percentage of them have STD symptoms\. The method of survey used is
not known\.
* The fourth program, essential drugs, including (i) the establishment of a more
sustainable drug supply by introduction of a cost-recovery system, (ii) a central
drug supply unit, and (iii) a therapeutic committee that would establish norms and
minimum quality standards for imported drugs and for the training of local
pharmacists was not successful\.
(a) The PROMESSA project disbursed approximately US$400,000 for drug
purchases and US$250,000 for warehouse rehabilitation and equipment to
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protect the drugs\. At the end of the project, the drug warehouses in Malabo
and Bata were practically empty, and there were no power generators or air
cooling systems to protect drugs from high temperatures and humidity\.
Moreover, in spite of the high investment in warehouse rehabilitation, the
physical conditions of the Malabo warehouses and the project offices, which
are in the warehouses, were well below acceptable standards\. The Bata
warehouse was in an acceptable condition\.
(b) During project preparation, Drug Revolving Fund (DRF) procedural
guidelines were written for the cost-recovery program\. Under
implementation, however, the fund was not managed according to the plan,
or to generally accepted management procedures, which resulted in high risk
of financial fraud and misuse\., There are also no reliable accounts of drug
sales or revenues, and funds were deposited in a bank account separate from
other project accounts\. The ICR mission had trouble obtaining pertinent and
objective information on this separate account\. The mission also heard
contradictory statements about mark-ups on drug sales: although financial
statements tend to indicate that drugs were sold at purchasing price, sources
who worked in the pharmaceutical unit of the MOH claim drugs were sold
with a 30-50 percent mark-up\.
(c) Before the MTR, the Therapeutic Committee produced and published, with
project support, the National Essential Drugs List, revised in August 1996,
covering the three health service levels -- primary, secondary and tertiary
(hospital)\. However, the Therapeutic Committee has not met since 1995 and
is no longer functioning because of lack of financial support from the project\.
The MOH Pharmacy Directorate did not participate in project
implementation with the result that, during emergency epidemic situations,
drugs were purchased by the project unit without technical advice from MOH
or WHO, thereby inflating inventories of some drugs to levels greater than a
normal 10-year consumption rate (e\.g\. ringher lactate and glucosaline
solution)\. These drugs were destroyed after expiration\. The total amounts of
drugs destroyed are unknown and the figures in the final audit are not
reliable\. The lack of collaboration between the project and the MOH's
pharmacy unit was a continuous problem and, according to MOH staff, there
was little or no support of this unit since 1995\.
13\. The fourth component, human resource development, was partially achieved\. A
1996 supervision report recorded that 50 nurses, 40 traditional birth attendants and 18
hospital administrators were trained\. Furthermore, the ICR mission learned from
available records and from the MOH staff that two training courses for mid-level
administrators were held in 1993 and 1997 and one training course for pharmacy
administrators was held in 1998\. Records about training courses such as curricula,
participant lists, current status of participants are not complete and, therefore, total
number of participants and curricula are unknown\. For the MCH/FP program two
auxiliary nursing courses took place (in Malabo and Bata in 1998) which trained an
additional 97 nurses; however, four other similar courses planned by the MOH human
- 7 -
resources department were not carried out\. It is unclear if the training had any positive
effect on the quality of health services and whether the trained nurses are still serving the
communities\. Based on anecdotal evidence, it is unlikely that the trained staff members
have remained in the same communities\. Also according to the director of planning of
MOH, he requested training courses in early 1997 for high level MOH staff but these
courses were not provided\. Finally, the National School of Health building in Bata was
extended for the purpose of increasing its capacity to train more health staff, but the
extension has not been used or equipped since its construction in 1997\. The physical
extension was not necessary as there were very few training courses that occurred even
before the extension\. Since the extension, there has been no financial support for the
school and the courses have ceased\. According to the SAR, the rehabilitation of this
school was to be coordinated by the Spanish aid mission and the project planned to
utilized the school for some of its programmed training\. The project did not follow-up
with the training courses and it is unknown what became of the Spanish support with
whom the ICR mission did not meet\.
C\. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT
14\. There were numerous factors that contributed to the poor outcome of this project\.
The critical factors were the responsibility of the two main actors: the Borrower (the
Government/MOH) and Bank staff\.
15\. Project Financing: Although the Bank noted the high possibility of the Borrower
not being able to meet its counterpart funding requirements based on experience from
previous agreements between the Borrower and the Bank and other donors, the DCA
included difficult counterpart fund requirements\. The total cost of the project was
estimated to be US$6 million, and the Borrower was expected to provide US$500,000
(see the financing plan in Annex: Table 8B)\. Yet, according to the DCA, the Borrower's
financial responsibilities included the annual payment of counterpart funds of "at least
CFAF 150\.8 million (about US$ 270,000) in four quarterly installments of CFAF
37,700,000 to cover incremental costs and increases in operating costs in the Ministry as
a whole\. The SAR states that the counterpart fund requirements were based on a
"structural increase of CFAF 115 million (about US$400,000 equivalent) in the budget of
MOH" and "an additional US$500,000 (or about US$125,000 annually) to cover [the
Government's] share of the project incremental recurrent costs\." These calculations and
rationale differ from normal practices: it is unusual to include the structural increase to
MOH budget into the project counterpart funds and US$500,000 does not equal
US$125,000 annually since the project was planned to last 6 years according to the SAR\.
(However, the DCA recorded that the "project is expected to be completed by June 30,
1996" -- an unrealistic 4 years - which would account for the calculation of US$500,000
being US$125,000 per annum\.) Based on these assumptions, the counterpart fund
requirements of CFAF 150\.8 million (approximately US$525,000) per year was
determined\. Additionally, the Borrower was responsible for the co-financing of drug
purchases (at 10 percent through December 31, 1994, and at 40 percent thereafter), and
incremental operating costs (at 10 percent through December 31, 1993, 40 percent
through December 31, 1995, and 70 percent thereafter) which included the project staff
salaries\.
8-
16\. Counterpart Funds: The lack of provision of counterpart funds effectively
blocked project implementation\. The Borrower paid its counterpart funds only once --
for the first quarter of the project -- and still owes its share of 10 percent and 40 percent
to the drug suppliers\. It recently paid its share of the staff salaries (70 percent) for the
period from April to December 1998 after a request from the Bank to fulfill this
commitment as part of the closing procedures\. The counterpart funds were intended to
cover "incremental operating costs" according to Schedule 1 of the DCA so, in their
absence, the project was in perpetual deficit and could not cover its recurrent costs or
pay the project staff\. In addition, the Borrower's delays in paying its arrears to the Bank
led to frequent country-wide disbursement suspensions that impeded project
implementation\.
17\. Although situations outside the Borrower's control - such as the devaluation of the
CFA franc in early 1993 and the unstable political situation in EQG in 1995- contributed
to the Borrower's inability to provide the counterpart funds and arrears, the situation was
not remedied once EQG began earning oil revenue in 1996 and was in a position to pay
its arrears to the Bank\.
18\. Institutional Set-Up: Contrary to what was recorded in the SAR, the project was
not viewed as an integral part of the MOH or as bringing resources and investments to the
health sector by the MOH's technical managers and by the international assistance
community such as UNICEF, WHO, France and Spain\. Reinforcing this lack of
ownership by MOH, the project was managed by staff outside the MOH\. According to
the DCA, the project should have been managed by the Managing Committee with the
MOH Secretary General as chairman\. However, this committee was not operational and
instead the project was managed by the project administrator himself\. Although he was
supposed to report directly to the Secretary-General of the MOH, each project
administrator managed the project independently of MOH\. Implementation plans
developed during preparation were not followed: for example, a technical assistance
expert and MOH staff developed several well-designed procedural documents (especially
those related to the Drug Revolving Fund (DRF) management) but these documents were
not complied with by the project administrators during implementation\. The Borrower
also did not fully utilize the on-site technical assistance which was to mitigate the low
capacity for management as planned in the SAR, e\.g\. the utilization of the international
malariologist for fewer than allocated months\. Technical assistance from international
donors was widely available but the project was reluctant to request the technical
assistance even though it was a key component of the project plan and budget\.
Unfortunately, as noted by the Borrower, when international technical assistance was
utilized, it was not done in collaboration with local staff and appropriate knowledge and
skills were not transferred to local counterparts\.
19\. Furthermore the high turnover of the Borrower's staff (7 Health Ministers, 5 MOH
General Secretaries, and 3 Project Administrators in 7 years of the project's life)
undermined consistency and continuity of the project and diluted any ownership of the
project by MOH that may have existed\. The turnover also added many delays to
decision-making that effectively shut down key components\.
- 9 -
20\. Management and Communication Problems: There were many lapses in
communication between the Bank and the Borrower during the life of the project, which
led to implementation delays and hampered project performance\. There were also some
serious breaches of Bank procedure by the Task Team Leader (TTL), which caused great
confusion and many problems\. Due to the difficulty that the Borrower was facing in
meeting its financial requirements as outlined in the DCA, in March 1994 the TTL
granted a one-year waiver of the counterpart obligation and also allowed that the
revenues from drug sales be used as counterpart funds\. These arrangements represented
substantial changes from the obligations outlined in the DCA and, according to Bank
procedures, required formal amendments to the DCA\. However, this formal amendment
to the DCA was never processed by the TTL and, therefore, it never became effective\.
However, the Borrower assumed it was effective, which created much resentment on the
Borrower's part when it became apparent that the arrangements could not be
implemented\. The Borrower also had continued problems with processing Withdrawal
Applications (WA) due to poor knowledge of Bank procedures by the project staff and to
lack of proper support and guidance from the TTL\. In 1997, after almost five years of
inability to execute WAs causing a total drug shortage in the country's public health
sector, the project redesigned the revolving fund procedures and requested a reallocation
of US$200,000 from the unallocated budget for drug purchases and Bank financing of
100 percent of the drug purchase\. This was again accepted by the TTL without duly
amending the DCA\. Based on this agreement with the TTL, the Borrower believed that
the Bank would fund 100 percent of the drug purchases: this was contrary to the
conditions stated in the DCA which specified that the country would cover 40 percent of
this category after 1994\. The Borrower did not realize that the Bank had not agreed
formally to these changes (the TTL did not process an amendment to the DCA)\. The
Bank, therefore, was legally blocked from providing the 100 percent financing\. To date,
the Borrower contends that the Bank is responsible for the drug shortage in the country,
as the Bank did not comply with the agreement made with the TTL\.
21\. Moreover, there were physical difficulties such as the frequently non-functioning
telecommunications system in EQG that contributed to the lack of prompt
communication between the two main actors that impeded project implementation\.
D\. PROJECT SUSTAINABILITY
22\. Very few if any structures were established by the project to ensure sustainability\.
The absence of an operating HMIS at central level hinders the decision-making process\.
Central staff were not trained in management, and decentralized management still
requires capacity building\. No sustainable public system for essential drugs was
developed\. In fact, at project close there was a shortage of essential drugs in the entire
public health system\. As stated previously, the four health centers built by the project are
barely operational with insufficient supplies and low utility and similarly, the extended
Bata health school has not been used since 1997\. There is evidence that over 200 health
personnel took courses organized and paid by the project, however, no records were
found concerning the quality of training or the current competence of the trained staff
(See paragraph 13)\.
- 10 -
E\. BANK PERFORMANCE
23\. Overall, Bank perfornance is rated as unsatisfactory at nearly all stages of the
project life-cycle\. Despite the fact that it was difficult to assess Bank performance during
identification, preparation, and supervision stages because the ICR team was unable to
interview most of the various team members responsible for these, it can be concluded,
without a doubt, that Bank performance was at best negligent and at worst highly
unsatisfactory\.
24\. A review of Bank documents indicates that the preparation team worked with
MOH, other donors in EQG, and peer reviewers at the Bank\. It is recorded that Bank
staff expressed reserved satisfaction with the appraisal documents\. Identification and
preparation correctly focused on the most relevant health problems affecting the
population of EQG\. The SAR, appeared to be of acceptable quality, identified most of
the major risks, and attempted to mitigate them: however it outlined no contingency plans
or adequate indicators as noted in paragraph 5\. These and other deficiencies, in particular
the unusual and unrealistic calculation of counterpart fund requirements, indicate that the
project could have been better prepared\. The Bank's performance during negotiations can
also be determined to be unsatisfactory from available documents\. Although the Bank
noted the high possibility of the Borrower not being able to meet its counterpart funding
requirements, the DCA included difficult counterpart fund requirements that effectively
blocked project implementation (see paragraph 15)\. This negative assessment was
collaborated during interviews with members of the SAR review committee and appraisal
team who felt that the project had been rushed to meet the Bank's internal administrative
deadline\.
25\. The quality of Bank performance was highly unsatisfactory during project
supervision\. As shown in Table 13, for most years only one supervision mission was
carried out by the TTL\. Out of nine supervision missions performed during the project's
life, eight were performed solely by the TTL\. The ninth mission, carried out in 1998 with
technical support from LOAAF, was the first one that identified many irregularities\.
Given the diagnosed weak institutional capacity of the Borrower, the Bank should have
provided more frequent technical, legal and financial support to identify problems
quickly and advise appropriate solutions as suggested in the SAR\. Annual reviews of
health sector investment expenditures was requested in the DCA but the TTL did not
request them during his supervision missions\. Agreements reached during supervision
were not followed up on; poor project performance was rarely addressed and, when
addressed, was not formally rectified; and no technical assistance was suggested to
improve project management during the annual supervision missions and MTR\. The
project status reports consistently rated the project as satisfactory and were similar
throughout several years even though lack of counterpart funding and other problems
remained unresolved\. The TTL also did not follow the Bank procedures, which caused
serious negative impacts on the project as explained in paragraph 20\.
26\. Bank management failed to notice the serious lapses in project supervision by the
TTL who was responsible during the majority of the project's life\. Bank management
did not discern the numerous shortcomings of the supervision by the TTL or detect the
- 11 -
misguided advice given by TTL as recorded on supervision reports\. Many problems
were mentioned in the supervision reports, but the project was still rated as satisfactory\.
This contradiction in the rating and the assessment should have caused concern\.
Although there was only one TTL from identification in 1988 until July 1998, there was
high turnover of Bank management as evident in the various supervision reports that
were signed off by at least five different managers during the life of the project that
contributed to the lack of adequate oversight of the TTL's performance\.
F\. BORROWER PERFORMANCE
27\. It is difficult to assess the Borrower performance conclusively during the
preparation stages of the project without input from previous Bank TTLs\. However, it is
evident that Borrower performance was deficient during implementation and was non-
compliant with DCA clauses\.
28\. Appraisal and SAR review team members questioned the readiness of the Borrower
to implement this rather complicated project and noted that the low capacity of the
Borrower during all stages of preparation was a problem\. During preparation, MOH staff
participated in project design and start-up activities under two Project Preparation
Facility (PPF) advances\. The two PPF advances granted totaled US$750,000:
US$500,000 in 1988 and US$250,000 in 1990\. This total amount seems to be excessive
since it represents one fifth of the total credit amount and the impact of these advances is
unclear\. Of the 1988 amount of $500,000, $207,000 was earmarked for a joint
Bank/UNDP/WHO malaria control project\. PROMESSA's malaria control activities
were to be implemented by the same unit that also implemented this joint
Bank/UJNDP/WHO project\. The remaining $293,000 was to cover several activities
including: 1) studies on (a) the institutional framework of the sector including the
organization and functioning of the MOH, (b) training needs for the health staff, (c) the
prevalence of malaria in the general population and the nesting and breeding sites of the
mosquito vector of malaria; 2) an inventory of health facilities and the assessment of
rehabilitation needs, 3) a review of the Malabo and Bata hospitals' finances and
operation; and 4) support for the project unit\. According to a memo of May 1990
requesting a supplemental PPF advance, these studies were being carried out\. The
additional US$250,000 was requested and granted for: 1) continued support of the project
unit (including the salary of the expatriate administrator), 2) consultant services to
prepare the recommendations and an action plan for limited cost recovery at the main
hospitals of Malabo and Bata; and 3) proposals for the storage and distribution of
essential drugs to project-financed health centers\. Although most of the studies have not
been recovered, some activities could be linked to these studies: the re-organization of the
MOH which was an effectiveness conditionality can be assumed to have been a result of
one of the studies: the inventory must have contributed to the project plan for
rehabilitation and the DRF plan was observed as well-planned and detailed\. The project
administrator during preparation was an expatriate who provided valuable technical
assistance funded by the PPF advance\. Although it is evident that some of the studies
were carried out, it is unclear how many of the studies were completed\. But it is also
clear that none had any impact after preparation (See table 7)\.
- 12 -
29\. During implementation, there is no record that MOH supervised or monitored the
project activities as agreed in the SAR and DCA\. The Borrower failed to employ
sufficient health personnel and did not recruit all the needed advisers as agreed\.
Therefore, the Borrower could not ensure appropriate technical levels in management,
administrative or financial practices and, at project close, there was no accuracy in the
project records\. For instance, there was no accurate accounting of project assets and
physical inventories\. The project did not have a manual of procedures, the human
resources management was highly deficient, and files and records were not properly kept\.
Annual audits required by the DCA were often delayed so that a multi-year audit was
required: there were three audits completed during the life of the project (one for 1993,
one for 1994, 1995 & 1996, and one for 1997)\. The final audit covering 1998 and part of
1999 was received late in December 1999\. The auditors (an international firm) have
been unable to express an opinion on the state of the project financial situation since
1993\. Moreover, the non-reliability of drug inventories and recorded sales led to the
1997, 1998 and 1999 audits containing a disclaimer\. Despite recurrent recommendations
and agreements reached during supervision missions, the project's bank accounts,
particularly the Special Account opened in a commercial bank, were not managed under
the terms and conditions of Schedule 4 of the DCA\.
30\. Finally, the Borrower's non-compliance with counterpart funding requirements,
which delayed effectiveness, continued during implementation which had dire effects on
the project (See paragraphs 16 & 17)\.
G\. ASSESSMENT OF OUTCOME
31\. The overall project outcome is highly unsatisfactory\. The tangible project
achievements were limited to the construction of four health centers, the extension of the
health school in Bata, and the rehabilitation of MOH buildings and drug warehouses\. Yet
at the end of the project, all of these were found to be underutilized and deteriorating\.
The project failed to strengthen management capacity at central, regional and delivery
levels, including in the major hospitals\. The HMIS never became operational so that the
health strategy and decision capacity at central and decentralized levels of the MOH did
not improve\. The priority programs, Malaria control, Mother Child Health/Family
Planning (MCH/FP) and Sexually Transmitted Diseases (STD), received little support
from the project\. Furthermore, there is little evidence that the project support had any
effect on these programs\.
32\. Timely and quantifiable outputs and outcomes that could demonstrate the
achievements were not recorded\. Performance indicators monitored during the mid-term
review in November 1995 were mostly qualitative\. Trends in morbidity and mortality
could not be assessed since the unique source of monitoring was the 1994 census results
published in November 1997\. However, secondary data from the UNICEF information
system show that morbidity and mortality trends and patterns remain almost identical to
those of 1992 the year the project implementation began\. Therefore, it seems that the
project had no known positive impact on the overall health status of the population of
EQG\.
- 13 -
H\. FUTURE OPERATION
33\. No Bank funded operation is foreseen in the near future for the health sector in
EQG\.
I\. KEY LESSONS LEARNED
34\. The following lessons, relevant for health projects everywhere, for other projects in
EQG and for Bank management, can be drawn from the failed Health Improvement
Project\.
* Once a risk has been identified, such as the poor capacity for management and
implementation of the Borrower, adequate TA and institutional support should be
planned and implemented by the project\. Although TA is not a panacea, as
underlined by the Borrower, appropriate TA could have been useful\. However,
technical assistants should work in close collaboration with and transfer skills to
qualified national counterparts/experts who are committed to the success of the
project\. As this was the first IDA-financed health project in EQG, the project
administration or project implementation unit's need for TA should have been
better assessed and appropriate TA provided and committed counterparts should
have been identified during project preparation\.
* As much as possible, the project implementation team should be staffed by the
same people as the preparation team to ensure ownership of the project\. The
same people from the Ministry should be involved in the project during all stages
of project development and implementation\. Good plans developed during
preparation were not implemented because the implementers did not take
ownership of the plans\. Good plans are not enough for success without proper
follow-up\.
- Effective and adequate supervision by Bank staff is as vital to the success of a
project as a good appraisal\. Although the preparation seem to have included
MOH staff and addressed possible risks, intensive supervision, as indicated in
SAR, should have been provided to address quickly and appropriately difficulties
in implementation, especially with a project of this complexity and a Borrower
with weak capacity\.
* The continued lack of reaction by Bank management to the lapses in project
supervision by the TTL indicates an institutional weakness of the Bank\. Bank
management needs to monitor better its staff\. The credibility of the Bank has
been severely compromised in EQG by the unmonitored activities of the TTL\. As
indicated, the Borrower still holds the Bank accountable for some of the
inappropriate agreements made by the TTL\.
* Counterpart funds should be negotiated on realistic terms\. Unrealistic demands
that could not be fulfilled led to disbursement suspensions that impeded this
project critically\.
- 14 -
* Good indicators and reports are needed to monitor and evaluate project activities\.
Obtaining the baseline data for these indicators should be included in the
preparation of the project and monitoring of these indicators should be an
integrated activity during supervision of the project\. Accurate assessment of the
impact of this project was virtually impossible\.
* Physical rehabilitation or construction of health centers will not necessary lead to
better or more service delivery\. The four health centers built did not change the
practices of the population to seek quality health service elsewhere\. None of the
civil-works made an observable impact on the health sector\. The Borrower must
realize the importance of training and capacity building for improving health
services rather than rely solely on physical construction\. Additionally, the
Borrower must also consider numerous other factors that affect service delivery\.
Some other factors are motivation of personnel, location and hours of operation of
health centers, availability of drugs and quality of services offered\.
- 15 -
PART II: STATISTICAL TABLES
TABLE 1: SUMMARY OF ASSESSMENTS
A\. Achievement of
Objectives Substantial Partial Negligible Not Applicable
Macro policies [ I [ ] I I [X]
Sector policies [ ] [ I [X] [ I
Financial objectives [ ] [ ] [X ] [ I
Institutional development [ ] [ ] [IX [ ]
Physical objectives [ ] [X] [ I I I
Poverty reduction [ ] [ ] [ ] [X]
Gender issues [] [3 [3 [X]
Other social objectives [ ] [ ] [ ] [X]
Environmental objectives [ ] [ ] [ ] [X 3
Public sector management I ] [ I [X] I ]
Private sector development [ ] [ I I [X I
Other (specify) I ] [ I I [XI
B\. Project Sustainability Likely Unlikely Uncertain
[ I [XI [I
C\. Bank Performance Highly satisfactory Satisfactory Deficient
Identification [ I [X I I
Preparation Assistance I 3 [ I [XI
Appraisal [ [ ] [ X
Supervision [ ] ] [X]
D\. Borrower Performance Highly satisfactory Satisfactory Deficient
Preparation [ I [ ] [X]
Implementation [ I [XI
Covenant Compliance [ [ I [ X
E\. Assessment of Outcome Highly satisfactory Satisfactory Deficient
[I [] [X]
- 16 -
TABLE 2: RELATED BANK CREDITS
Credit Title Purpose Year of Status
Approval
Preceding Operations
Not applicable
Following Operations
No operations planned
TABLE 3: PROJECT TIMETABLE
Steps in Project Cycle Date Planned Date Actual/
Latest Estimate
Identification April 4, 1988 December 1988
Preparation June 1990
Appraisal January 1991 October 17, 1991
Negotiations April 1991 January 27, 1992
Board Presentation June/July 1991 March 26, 1992
Signing April 6, 1992
Effectiveness June 30, 1992 September 15, 1992
Midterm review/Re-launch mission June 30, 1994 November 11, 1995
Project Completion June 30, 1996 December31, 1998
Credit Closing December 31, 1998 August 31, 1999
- 17 -
TABLE 4: CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL (IN US$ THOUSAND)
Fiscal
Year FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01
Appraisal 2\.00 3\.59 4\.59 5\.28 5\.48 5\.50
Estimate
Actual 1\.04 1\.42 2\.69 3\.24 3\.61 4\.35 (4\.39) (4\.46) (5\.50)
Actual as
%of 52 39\.6 58\.6 61\.4 65\.9 79\.1
Estimate
Date of final disbursement: December 9, 1999
TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION
Key indicators for project implementation were not provided\.
TABLE 6: KEY INDICATORS FOR PROJECT OPERATION
Key indicators for project implementation were not provided\.
- 18 -
TABLE 7: STUDIES INCLUDED IN PROJECT - PPF FUNDED (US$ 750,000)
Study Purpose as defined at Status Impact of the study
__ __________________ appraisal/redefined
1\. The institutional To identify required Completed\. New MOH organizational
framework of the sector institutional reforms\. structured adopted as part of
including the credit effectiveness
organization and conditionality on April 1992\.
functioning of the MOH\. However, unclear if there
has been lasting impact\.
2 The training needs for To redefine manpower Completed but not None\.
the health staff\. policies, and to implemented\.
rationalize skills mix
and staff development\.
3\. The prevalence of To help design a Status unknown\. N/A
malaria in the general medium-term program
population and the to combat malaria a
nesting and breeding sites major cause of
of the mosquito vector of morbidity and
malaria\. mortality\.
4\. An inventory of health To determine MOH's Status of actual Several centers were built or
facilities and the civil-work needs to report unknown reconstructed, however, no
assessment of improve basic health but project measurable impact on health
rehabilitation needs\. services delivery\. included services observed\.
rehabilitation and
construction of
health centers\.
5\. a) A review of the To improve quality and Status unknown\. N/A
Malabo and Bata cost-effectiveness of
hospitals' finances and services and to improve
operation; b) hospital management\.
recommendations and an
action plan for limited
cost recovery at the main
hospitals of Malabo and
Bata
6\. Proposals for the To built the foundations Completed, but not None
storage and distribution of a sustainable used\.
of essential drugs to essential drug supply
project-financed health program\.
centers
- 19 -
TABLE 8A: PROJECT COSTS
1\. By component
Appraisal Estimate (US$000) Actual (US$000)
Item Local Foreign Total Total
Costs Costs
1\. Institutional Strengthening of
MOH
1\. (a) MOH's organization planning 435 353 788 N/A
and management
1\. (b) Rehabilitation of MOH offices 61 148 209 N/A
in Malabo and Bata
2\. Health Strategy Development and 266 41 307 N/A
Implementation
3\. Strengthening Priority Health
Programs
3\. (a) Malaria Control 94 210 304 N/A
3\. (b) PHC and MCH/FP Centers 35 1,137 1,172 N/A
(works and equipment)
3\. (c) Sexually Transmitted Diseases 60 166 226 N/A
3\. (d) Pilot Program for Essential 33 967 1,000 N/A
Drugs (including repairs to drug
warehouses)
4\. Human Resource Development 235 70 305 N/A
Training Fellowships and Studies
5\. Project Preparation Advance 0 750 750 N/A
Total Base Costs 1,219 3,842 5,061
Physical Contingencies 122 309 431
Price Contingencies 149 359 508
TOTAL 1,490 4,510 6,000 N/A
N/A: Not Available\.
- 20 -
TABLE 8A: PROJECT COSTS
2\. By category
Appraisal Actual Actual
Estimate (US$000) (US$000) 2
(US$000)
Item Total Total Total
1 Civil Works 1,020 1,551 1,602
2\. Furniture, Equipment, Vehicles and Materials 943 1,005 1,034
3\. Drugs 631 385 396
4\. Consultants' Services Training and Fellowships 1,093 522 474
5\. Incremental Operating Costs 273 274 154
6\. Refunding of Project Preparation Advance 750 733 3 763 3
7\. Unallocated 790
Special Account A 26
TOTAL 5,500 4,470 4451 4
(1) NOTE: Actual data according to project financial statements submitted by national consultants report, and include the
salaries and severance payment calculated expense\.
(2) NOTE: Actual data in Bank's Controller' Systems, Items 1, 2, 4, 6 were financed 100% by the Bank so should
correspond to project financial statements\. Some or all the difference may be accounted by exchange rate
differences, possible misallocation at project level may also explain some of the difference\. Figures from
October 19, 1999\.
(3) NOTE: According to Bank's Controller' Systems, the PPF was repaid in full in SDR - SDR520,000 for SDR
520,089\.42\. The difference may be accounted for by exchange rate differences\.
(4) NOTE: Total is not the sum of 1-Special Account because of rounding of figures\.
- 21 -
TABLE 8B: PROJECT FINANCING
Appraisal Estimate (US$M) Actual (US$M)*
Source Local Foreign Total Local Foreign Total
Costs Costs Costs Costs
IDA 1\.17 4\.23 5\.50 4\.47
Government of EQG 0\.18 0\.32 0\.50 (0\.2)
Total 1\.35 4\.65 6\.00 4:67
* These figures are based on project financial statements\.
TABLE 9: ECONOMIC COSTS AND BENEFITS
Cost-benefit analyses were not undertaken, and a net present value or an economic rate of return were not
calculated\.
- 22 -
TABLE 10: STATUS OF LEGAL COVENANTS
Agreement Section Covenant Present Original Revised Description of Comments
type Status fulfillment fulfillment date Covenant
date
2348-EG 2\.02 (a) 4 CP The amount of the Credit may be The project did not use most
withdrawn from the Credit Account in of the training expenditures,
accordance with the provisions of nor the consultant services\.
Schedule I to this Agreement for
expenditures made (or, if the
Association shall so agree, to be made)
in respect of the reasonable cost of
goods and services required for the
project described in Schedule 2 to this
Agreement and to be financed out of the
proceeds of the Credit\.
2\.02 (b) 3 CP The Borrower shall, for the purposes of There have been 36 rejected
the project, open and maintain in CFAF withdrawal applications for
a special deposit account in a ineligible expenditures\.
commercial bank on termns and
conditions satisfactory to the
Association, including appropriate
protection against set-off, seizure or
attachment\. Deposits into, and payments
out of, the Special Account shall be
made in accordance with the provisions
of Schedule 4 to this Agreement\.
2\.02 (c) 2 C Promptly after the Effective Date, the Complied with\.
Association shall, on behalf of the
Borrower, withdraw from the Credit
Account and pay to itself the amount
required to repay the principal amount
of the project Preparation Advance
withdrawn and outstanding as of such
date and to pay all unpaid charges
thereon\. The unwithdrawn balance of
the authorized amount of the project
Preparation Advance shall thereupon be
cancelled\.
2\.03 10 C The Closing Date shall be June 30, Closing date extended to
1996, or such later date as the August31, 1999\.
Association shall establish\. The
Association shall promptly notify the
Borrower of such later date\.
3\.01 5 PC The Borrower declares its commitment The Management
to the objectives of the project as set Committee was only
forth in Schedule 2 to this Agreement effective during the first
and, to this end, shall carry out the phase of the project\. High
project through its Ministry responsible turnover of MOH officials
for Health with due diligence and and project Administrators
efficiency and in conformity with hindered the project
appropriate administrative, financial and implementation\. MOH was
health practices, and shall provide, not as involved as should
promptly as needed, the funds, facilities, have been and there was no
services and other resources required for due diligence\.
the project\.
- 23 -
Agreement Section Covenant Present Original Revised Description of Comments
type Status fulfillment fulfillment date Covenant
date
3\.02 5 UN- Except as the Association shall The ICR Mission could not
KNOWN otherwise agree, procurement of the confirm the compliance as it
goods, works and consultants' services had no access to the
required for the project and to be documents\. The final audit
financed out of the proceeds of the of the project should review
Credit shall be governed by the the compliance\.
provisions of Schedule 3 to this
Agreement\.
3\.03 5 NC The Borrower shall prepare and submit The Mission could not see
to the Association by December 31, any Plan related to the fee
1993, an action plan to extend the fee policy in the hospitals, and
policy applied on the date of this did not have any evidence
Agreement at the Malabo and Bata of implementation of such
hospitals to other hospitals, and plan\.
implement such plan, satisfactory to the
Association, not later than June 30,
1994\.
3\.04 9 NC The Borrower and the Association shall There is no record of an
review in October of each year during annual review of health
the execution of the project: (a) all expenditures or of
investment expenditures in the health allocation for the recurrent
sector during the previous year and budget in October during
those planned for the coming three project execution\.
years, with particular attention on their
recurrent cost implications; and (b) the
allocation of the recurrent budget across
existing programs and services to cover
at least their estimated annual operating
costs for materials, drugs, fuel,
maintenance and equipment\.
3\.05 I10 CD March 1993 The Borrower shall prepare and submit Complied with delay\. The
to the Association by March 31, 1993, first revised version of the
for review, a new list of national Essential Drugs List was
essential generic drugs, guidelines on published in August 1996
prescriptions, norms for imported drugs
and the qualifications of pharmacists
and their assistants\.
3\.06 9 NC The Borrower shall: (a) evaluate each The plan that included
year during the execution of the project, WHO support was not
technical and management training implemented\.
activities undertaken during the previous
year; (b) furnish to the Association for
its review and approval by October of
each year revised training plans based
on such evaluation; and (c) implement
such plans taking into consideration the
Association's comments\.
- 24 -
Agreement Section Covenant Present Original Revised Description of Comments
type Status fulfillment fulfillment date Covenant
date
3\.07 2 NC Quarterly The Borrower shall: (a) starting in fiscal The Government only
year 1992, increase MOH's budgetary provided 9% of the
allocation to cover part of its non- wage expected counterpart funds\.
recurrent expenditures by at least CFAF Government made first
150\.8 million and maintain such deposit; but did not
allocation in subsequent years during the continue\.
execution of the project; and (b) open
and maintain a counterpart fund account
in BEAC and annually deposit therein
the amount referred to under paragraph
a) above, in four quarterly installments
of CFAF 37,700,000 each made not
later than March 31, June 30, September
30 and December 31 of each year\.
3\.08 5 NC The Borrower shall maintain The MC is no longer in
Management Committee (MC), project operation, and the AFU has
Unit(PU) and MOH Administrative and never been staffed\.
Financial Unit (AFU) operational and
fully staffed with qualified and
experienced persons in adequate
numbers during the execution of the
project\.
3\.09 5 NC For all fellowships financed out of the There was no foreign
proceeds of the Credit, the Borrower training program and the
shall: (a) submit to the Association for training category was only
its review the functions and disbursed up to 41%\.
qualifications of the candidates and the
proposed training program; and (b) take
all necessary measures to ensure that all
trained staff remains assigned to the job
for which it was trained for a period of
at least three years\.
- 25 -
Agreement Section Covenant Present Original Revised Description of Comments
type Status fulfillment fulfillment date Covenant
date
3\.10 9 CD June 30, 1994 November 1995 The Borrower and the Association shall The Mid - Term Review
not later than June 30, 1994, conduct a (MTR) was done in
mid-term project implementation review September 1995, more than
to monitor progress in carrying out the one year after expected in
project and meeting its objectives\. Section 3\.10 of DCA\. The
Without limitation upon the generality result of the MTR was that
of the foregoing, such review shall the PROMESSA project
include an evaluation of the: (a) had satisfactory
functioning of essential management achievements, and made
structures of MOH; (b) progress of cost some recommendations for
recovery measures for drug sales and future implementation,
medical fees and their impact on health which were not totally taken
care service quality and utilization; (c) into account during the rest
progress of training activities and the of the project
performance of trained staff; (d) implementation\. The result
progress of the priority programs, of the MTR itself was also a
particularly the MCH/FP, malaria problem since the rating of
control and essential drugs programs; satisfactory does not seem
and (e) general administration of the to correspond to the actual
project, including timely availability of status of the project with its
counterpart funds and their use, many problems\.
compliance with agreed procurement
and auditing requirements, maintenance
of equipment and facilities financed
under the project, and MOH reporting
duties\.
3\.11 10 PC December 31, October 1997 In order to carry out Part C\.2 of the The four health centers
1993 project, the Borrower shall: (a) submit to constructed by the project
the Association for review not later than and in operation since
December 31, 1993, proposals for staff October 1997, have been
nominations to the four rural health staffed\.
centers; and (b) thereafter ensure that
such centers are staffed at all times with
qualified and experienced persons in
adequate numbers\.
3\.12 10 N/A Notwithstanding the provisions of There is no record of
Section 3\.04 of this Agreement, the requests or works paid by
Borrower shall obtain the Association's the project equivalent or
prior approval for any hospital higher than this amount\. No
renovation/construction estimated to new projects were
cost the equivalent of $1,500,000 or undertaken\.
more\.
4\.01(a) 5 NC (a) The Borrower shall maintain or The 1996 Audit concluded
cause to be maintained records and with "no opinion on
accounts adequate to reflect in financial statement" and
accordance with sound accounting 1997 Audit concluded with
practices the operations, resources and a disclaimer\. The main
expenditures in respect of the project of reason, in both cases, was
the departments or agencies of the the absence of accurate
Borrower responsible for canrying out inventory data\.
the project or any part thereof\.
- 26 -
Agreement Section Covenant Present Original Revised Description of Comments
type Status fulfillment fulfillment date Covenant
date
4\.01(b) 5 NC Yearly See comments The Borrower shall have the records and There have been 3 Audits,
(i) accounts referred to in paragraph (a) of one for 1993, one for 1994,
this Section including those for the 1995 and 1996, and one for
Special Account and the counterpart 1997\. At the ICR
fund account for each fiscal year preparation, the 1998 and
audited, in accordance with appropriate 1999 audit contract had
auditing principles consistently applied, been signed and terms of
by independent auditors acceptable to reference modified\.
the Association;
4\.01(b) 2 NC Yearly See comments Fumish to the Association, as soon as See above comments\.
(ii) available, but in any case not later than
six months after the end of each such
year, a certified copy of the report of
such audit by said auditors, of such
scope and in such detail as the
Association shall have reasonably
requested;
4\.01(b) I NC Yearly See comments Fumish to the Association such other See above comments\.
(iii) information conceming said records,
accounts and the audit thereof as the
Association shall from time to time
reasonably request\.
4\.01(c) I NC For all expenditures with respect to The Mission had no access
which withdrawals from the Credit to records and accounts
Account were made on the basis of reflecting expenditures\.
statements of expenditure, the Borrower The financial follow-up of
shall: (i) maintain or cause to be the project by funding
maintained, in accordance with sources, by counterpart
paragraph (a) of this Section, records funds, by orders, purchases
and accounts reflecting such and providers, by cash-flow
expenditures; (ii) retain, until at least and budget, and by
one year after the Association has cumulative expenditure do
received the audit report for the fiscal not exist\. Financial
year in which the last withdrawal from statements by the categories
the Credit Account or payment out of of the DCA were available\.
the Special Account was made, all The generally recognized
records (contracts, orders, invoices, accounting system was not
bills, receipts and other documents) in operation\.
evidencing such expenditures; (iii)
enable the Association's representatives There is no planning of
to examine such records; and (iv) activities and budget
ensure that such records and accounts forecasting was not done\.
are included in the annual audit referred Activity reports were not
to in paragraph (b) of this Section and regularly submitted\.
that the report of such audit contains a
separate opinion by said auditors as to
whether the statements of expenditure
submitted during such fiscal year,
together with the procedures and
intemal controls involved in their
preparation, can be relied upon to
support the related withdrawals\.
- 27 -
Agreement Section Covenant Present Original Revised Description of Comments
type Status fulfillment fulfillment date Covenant
date
5\.01 1 C September The following events are specified as Complied with at
1992 additional conditions to the effectiveness effectiveness but some of
of the Development Credit Agreement the measures taken were not
within the meaning of Section 12\.01 (b) enforced through out the
of the General Conditions: (a) the project life\.
account referred to under Section 3\.07
(b) of this agreement has been opened in
BEAC, and the initial deposit of CFAF
37,700,000 for the first quarter has been
made therein; (b) MOH's revised
organizational structure referred to
under Part A\.I (a) of the project,
satisfactory to the Association, has been
adopted; and (c) an adequate accounting
system for the Malabo and Bata
hospitals has been prepared and is
operational, and MOHWs staff has been
trained to operate it\.
5\.02 5 PC June 1992 September 15, The date ninety (90) days after the date Project effectiveness was
1992 of this Agreement is hereby specified for delayed\.
the purposes of Section 12\.04 of the
General Conditions\.
Covenant types:
1\. = Accounts/audits 8\. = Indigenous people
2\. = Financial performance/revenue generation from 9\. = Monitoring, review, and reporting
beneficiaries 10\. = Project implementation not covered by categories 1-9
3\. = Flow and utilization of project funds 11\. = Sectoral or cross-sectoral budgetary or other resource
4\. = Counterpart funding allocation
5\. = Management aspects of the project or executing 12\. = Sectoral or cross-sectoral policy/
agency regulatory/institutional action
6\. = Environmental covenants 13\. = Other
7\. = Involuntary resettlement
Present Status:
C = Covenant complied with
CD = Complied with after delay
CP = Complied with partially
NC = Not complied with
N/A = Not applicable
- 28 -
TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS
The Project Unit has no operational manuals\.
TABLE 12: BANK RESOURCES: STAFF INPUTS
Stage of project cycle Planned* Actual
Weeks US$(000) Weeks US$ (000)
To Appraisal N/A 68\.7 189\.0
Appraisal to Board Approval N/A 15\.6 47\.5
Board Approval to Effectiveness N/A 0 0
Supervision 35\.6 115\.9 44\.7 154\.4
Completion 12\.8 38\.0 8\.0 21\.1
Grand Total N/A N/A 137\.0 412\.0
N/A = Not available: Planned and revised work programs were not computerized until
1994\. Therefore, the data recorded before 1994 could not provide a comprehensive
estimate and are not included in this ICR\.
- 29 -
TABLE 13: BANK RESOURCES - MISSIONS
Performance Ratings from Form
590/Supervision Reports/PSRs
Stage of Month/ Number Days in Specialized Implemen- Development Types of
Project Cycle Year Of Field Staff Skills tation Status Objectives Problems
Persons Represented
Through Appraisal 12/88 1 5 TTL N/A
Through Appraisal 05189 1 9 TTL N/A
Through Appraisal 11/89 1 21 TTL N/A
Through Appraisal 7/90 1 9 TTL N/A
Through Appraisal 01/91 1 15 TTL N/A
10/91 3 24 TTL, HLT, N/A
Appraisal ACT
Appraisal through Board None
Approval
Board Approval through None
Effectiveness
Supervision 11/92 1 5 TTL 2 2 FC
Supervision 5/93 1 8 TTL 2 2 NONE
Supervision 1/94 l 8 TTL 2 2 FC
Supervision 3/95 1 5 TTL S S FC, LC, PM
Supervision 10/95 1 11 TTL S S FC, LC, PM
Supervision 12/96 1 10 TTL U S PM, FC, LC
Supervision 5/97 1 15 TTL S S FC, PM, LC
Supervision 10/97 1 6 TML S S FC, PM, LC
Supervision 03/98 2 10 TTL, LOA U U FC, PM, LC
Supervision 05/99 3 14 PHN, COF, U U FC, PM, LC, ME, TP
PRO
Completion 05/99 2 7 PHN, PRO U U FC, PM, LC, ME,
TP, TA
KEY TO STATUS
Performance Rating Specialized Staff Types of Problems
I = Problem Free ACT: Accountant FC: Financial Covenants
HS = Highly Satisfactory COF: Project Finance / Co-finance LC: Legal Covenants
2 = Moderate Problems HLT: Health Services ME: Monitoring and Evaluation
3 = Major Problems LOA: Loan Administrator OC: Other Legal Covenants
S = Satisfactory PHN: Population / Health / PM: Project Management
Nutrition
U = Unsatisfactory PRO: Project Operation PR: Procurement
NA = Not available\. TTL: Task Team Leader ST: Studies Progress
TA: Technical Assistance
TP: Training Progress
APPENDIX A
P age 1 of 9
Translation of the "Aide Memoire" of the Evaluation Mission on the Health Improvement
Project (Cr\. 2348-EG), Malabo, May 5, 1999\.
REPUBLICA OF EQUATORIAL GUINEA
MINISTRY OF HEALTH AND SOCIAL WELFARE
HEALTH IMPROVEMENT PROJECT
PROYECTO DE MEJORAMIENTO DE LOS SERVICIOS DE SALUD
"PROMESSA"
AIDE MEMOIRE
SUPERVISION AND FINAL EVALUATION MISSION
WORLD BANK
APRIL 20 TO MAY 9,1\.999
The World Bank's mission for the last supervision and final evaluation of the
"PROMESSA' Health Improvement Project in Equatorial Guinea was conducted by the
following: Dr\. Wendy RAVAONOROMALALA, World Bank Health and Population
Specialist, and mission leader, Mr\. Prosper BIABO, Consultant Financial Analyst, and
Mr\. Carlos Mario SARMIENTO NARANJO, Consultant in Project and Drug Management\.
The mission had meetings with the following National Authorities:
From the MINISTRY OF HEALTH AND SOCIAL WELFARE
H\.E\. Dr\. Salomon NGUEMA OWONO, Minister of State of Health and Social Welfare
Mr\. Bienvenido EKUA ESONO, Secretary General,
From the PROMESSA project
Mr\. Gabriel AMUGU AKUMU, Project Administrator,
And other people related to the health sector and with the management of the project
and its assets\. (Annex 1)\.
!\. INTRODUCTION AND EVALUAllON JUSTIFICATION
The "PROMESSA" Health Improvement Project in Equatorial Guinea is the result of the
Development Credit Agreement (DCA) Nr\. 2348/EG signed by the Republic of Equatorial
Guinea and the Intemational Development Association (IDA), in April 6, 1992, had June
30, 1996, as ending date, and was prorogued until December 31, 1998\.
A Mid-Term Review was done in November, 1995, as stated in Section 3\.10 of the DCA\.
According to the General Conditions that rule the DCA and the procedures and
Operational Policies of the World Bank and IDA, a final evaluation should be done within
a six months period after the project closing\.
APPENDIX A
Page 2 of 9
The mission objectives, as stated in the Terms of Reference (in Annex) werei) conduct
the final supervision, ii) assist in the orderly closing of the project, and iii) discuss the
Borrower's Evaluation Report prepared by national consultants\.
For the implementation mission, the different levels of project implementation were
considered: Central level (institutional strengthening, support to priority health programs
and the essential drugs revolving fund) and at Local level (4 health centers construction
and equipment)\. Divers sector actors were contacted (Ministry of Health, International
organizations, Bilateral cooperation, NGOs, auditors and project staff)\.
11\. GENERAL OBJECTIVE OF THE PROMESSA PROJECT
The PROMESSA project has as general objective to strengthen the Borrower's capacity
in planning, coordinating and monitoring health sector activities\.
111\. PROJECT COMPONENTS
According to the DCA, the project components are:
Part A: Institutional Strength of Health Sector
1\. STRENGTHEN OF THE MINISTRY OF HEALTH (MOH):
a) Strengthening of: i) Management Commiftee (MC), ii) the Planning Unit
(PU), and, iii) Administration and Finance Section (AFS)\.
b) Strengthen the Human Resources and support to the decision making
decentralization process, rehabilitation and equipment of MOH offices\.
2\. STRENGHTEN HOSPITAL ADMINISTRATION
Strengthening of the financial autonomy of Malabo and Bata Hospitals\.
Part B: Health Strategy preparation and implementation
Establishment of a Health Information System, MOH staff training and equipment\.
Part C: Strengthening of priority health programs
1 \. Malaria control
2\. Mother Child Health / Family Planning (MCH / FP)
3\. Sexually Transmitted Diseases (STD)
4\. Pilot Program for Essential Drugs
IV\. MISSION DEVELOPMENT
After the formal introductions to the Ministry of Health Authorities, the mission started the
data collection process through interviews with main actors of the Health Sector in the
country, and visits to health structures on the Bioko Island and in the Continental
Region\.
The mission positively appreciates and thanks the collaboration received from those
interviewed, for the quality of the meetings and the spirit of cooperation that has been
expressed\. However, the mission mentions its great reserve for the low level of
coordination, the unavailability of sufficient logistic means and the difficulties on
obtaining the necessary information for its outcome\.
For its work, the mission was structured in two parts, technical and financial\. The
technical was implemented by Dr\. Ravaonoromalala (Chief of mission) and Mr\.
* Sarmiento, and thle financial was implem-ent7d by Mr\. Biabo\. Duringits visit to the
APPENDIX A
Page 3 of 9
Continental Region, Mr\. Amugu Akumu accompanied the mission, as national evaluation
consultant\.
Technical Area: The technical area team interviewed MOH civil servants, trying to
include all areas related to the above mentioned project objectives, It also interviewed
with the UN System representatives (PNUD, WHO, FNUAP, UNICEF), of other
international cooperation (Spain, France, European Commission), NGOs (FERS, MSF)
and technical Assistance for vertical programs (malaria, oncocercsis)\. The mission also
visited the PROMESSA Project offices in Malabo, and Malabo Hospital\.
In the Continental Region, the mission visited the Health delegation in Bata, the School
of health and Nursing, the Health Center in Beayop, Micomeseng District, and the
project offices and warehouses in Bata and Malabo\.
Financial Area: Mr\. Biabo interviewed the different financial actors of the project, such
as the former Administrator, representatives of the Banks in which there were projects
accounts (BEAC, SGBGE and CCEI), the Cameroon Price Waterhouse auditors, and the
national consultants contracted to prepare the project closing economic and financial
information\.
V\. RESULTS
The following are the missions' results, according to the mentioned terms of reference:
a) Assess the Borrower in the last disbursement requests before April 30, and
support its preparation:
Result: Upon arrival, the mission supported Mr\. Amugu Akumu, national consultant,
to prepare the following withdrawal applications, which were sent the Bank
on April 23, 1999:
i\. 30% of the Consulting Contract for the Evaluation Report, to be
prepared by the national consultants Mr\. Amugu Akumu, Mr\. Nsue
Anguesomo and Mr\. Gori, joint venture\.
ii\. 30% of the Consulting Contract for the closure project accounting and
financial information, to be prepared by the national consultant, Mr\.
Ntutumu\.
iii\. Consulting Contract for the December 31, 1998 Audit Report, to be
prepared by Price Waterhouse Coopers\.
iv\. Payment of the 1997 audit, prepared by the same Audit Company\.
b) Review the previous Withdrawal Applications in order to determine the necessary
corrections, e\.g\. percentage and category application for disbursements\.
Result: Previous Withdrawal Applications were reviewed with Mr\. Amugu Akumu
and was supported to make corrections of the one related to the project staff
severance payments, according to the Equatorial Guinea Ministry of Labor\.
It was sent to Washington with the ones mentioned in a)\.
c) Review the main issues pointed out in the 1997 Audit Report\.
Result: The mission reviewed the problems pointed out by the 1997 Audit Report,
coming to the following conclusions:
i\. Financial statements: The issue on the reality, genuineness, and
regularity of the 1997 financial statements has not been solved yet\. There
is a difference between the data given brthe project administratiorr to the
APPENDIX A
Page 4 of 9
mission and those given by the Price Waterhouse Coopers (PWC) audit
(note of translation: according to data made available during the audit)
particularly those related to inventories, PWC have accepted to do the
corrections to their report so that it reflects the reality\. The national
consultant, Mr\. Ntutumu's, work will prepare his financial statements
based on the corrected data\.
ii\. Financial statements model: Project Administration has the project's
financial statements according to the World Banks' models\. Mr\. Amugu
Akumu will work with his administrative assistant to computerize this data
and present the statements so that the auditors can start their work\.
iii\. Uncertainty of Inventories, Clients, and Deposits accounting: Taking into
account that no drug and physical inventories were done before 1997,
and that there is no convincing documentation on sales, product
deliveries for charity, revenues, and deposits of those, revenues in the
project banks accounts, there has been a high risk of financial fraud and
misuse\. Despite the efforts done by the last administrator to improve
management, and in spite of the improvements achieved, there is no total
control of inventories, products and revenues\. The inability of the project
to supply the ecuatoguineans with essential drugs, as agreed in the DCA,
was highlighted\.
iv\. Withdrawal applications and Disbursement: The mission notes that the
World Bank's disbursement procedures were not followed during project
implementation\. The mission did not find disbursement manuals nor staff
trained on these procedures\. The high level of staff turnover both in
project coordination (General Secretary of MOH), and project
administration have specially aggravated this situation (note of
translation: resulting in lack of follow-up and continuity)\.
v\. Credit Account follow-up: The mission expressed its satisfaction for the
fact that the project direction has the World Banks monthly extracts that
allows them to make a good follow-up on disbursements\. By the
contrary, expressed its dissatisfaction as the project does not have an up
to date accounting system\.
vi\. Files: The mission did not find enough and complete files that reflect
the project activities during its seven years\. The low exhaustiveness of
the documents is a persisting problem, and brings doubts on the real
justification of the credits accounts and figures that were given by the
administrators\.
vii\. Assets follow-up and accounting: During the last two years there has
been an improvement on the projects assets\. Nevertheless, the mission
found that the amortization tables applied to some investments are
incorrect and impedes the project from knowing the real value of its
assets\. The auditors must analyze this situation\.
Viii\. Treasury accounts: The mission has verified that the actual project
bank accounts are the ones necessary for project closure\. The mission
recommends that after all pending payments are done, those bank
accounts should be closed making transfers of its balance to the Public
Treasure or to the World Bank through the Special Account\.
d) Assess the Borrower on the 1998 Audit Report, as well on the respective financial
statements:
Result: The mission did various working sessions with the national consultant
contracted to prepare the financial statements and with the audit mission
AtWNDIX A
Page 5 of 9
responsible with the objective of a) establish agreements on the strategy to
be used for the good implementation of the audit; b) define the tasks and
responsibilities of each one of the participants; c) avoid the blocking that
have occurred previously and that have hazarded for the audit report quality\.
The mission recommends the project management (i) accelerate the
withdrawal applications for the ongoing contracts (audits and nationals
consultants); (ii) program the night working schedule, as it is the only time
when the project offices have electricity; (iii) prepare, for the project's
closing preparation, all the project's accounting information (assets files,
bank accounts statements, amortization tables, drug revolving funds'
financial statements, records from the warehouses inMalabo and Bata), as
well as and exhaustive inventoriers of all projects assets; (iv) plan all the
interviews with the different public and private administrative actors related
to the project, (v) close the project's bank accounts, as previously
mentioned; and, (vi) accelerate the Final Evaluation Report prepared by the
group of national consultants, and (vii) the final version of the financial
statements prepared by the consultant, before May 15, 1999\.
e) Look over the counterpart funds, including the dates and amounts of payment, as well
as the implications of the temporary waiver accepted by the Bank\.
Result: The mission recognizes the effort made by the Government of Equatorial
Guinea for the counterpart funds financing but points out the fact that there
have been no payments during the last three years\. The total amount of
counterpart funds paid to the PROMESSA project by the Equatoguinean
Government is of the 9% of the expected 943 Million CFAS that were
expected during the project duration\. Additionally, the mission saw that the
counterpart funds were used to pay projects' staff salary and other operative
costs, which is against the DCA\. Furthermore, none of the drug suppliers
have received yet the governmental part (10% of total purchases)\.
f) See the Drug Revolving Fund's (DRF) performance and its financial management;
determine the DRF agreements made between the Bank and the Borrower, including the
agreements that the revenues from drug sales be substituted to the counterpart funds
and that sales to private pharmacies will be permiKted, and examine the consequences
of these agreements on the project\.
Result: After the analysis of the available information about the performance and
management of the DRF, the mission concluded as follows:
i) The PROMESSA project has not created a reliable efficient public
system for essential drug supply in Equatorial Guinea\. In spite of a
US$417\.553 investment in essential drug purchases, upon its closure the
project has not left a functioning DRF\. The mission identified the following
as the main obstacles for the DRF success:
a) The unpayment of counterpart funds by the Borrower, that should be
used, according to Section 3\.07, Article IlIl of the DCA, "to pay part of the non
wages ordinary costs of the Borrower in the Health Sector and the projects
current costs"\. The unpayment created a deficit situation in project
accounts\. On this issue, the mission considers important to underscore (i)
The Borrower only paid once the counterpart funds stated in the DCA (only
for the forth trimester of 1992, and first trimester of the project), ii) the Bank
appfoved, on May 23, 1994, "a onte year temporary waiver-of bte counterpart
APPENDIX A
Page 6 of 9
funds payment in recognition of the situation of the country, a new
counterpart funds financing plan \. and iii) after the one year period
finished, the Borrower continue without paying the funds stated in the DCA\.
Additionally, the Borrowers' delays in paying its obligations with the Bank,
affected the projects performance\.
b) The Bank acceptance, on May 1994, that the revenues from drug sales
would be considered as counterpart funds\. This reduced the ability of the
DRF to provide the necessary funds to repurchase drugs, as the counterpart
funds were designed for activities different than drug purchases\. From the
good practices in revolving funds management, it is of utmost importance
that when sale prices are calculated, all additional expenses to drug
purchases are taken into account (administrative expenses, management
expenses, infrastructure maintenance, transport, etc\.) and avoid to charge
other expenses not included in the original price calculations , which will
reduce the possibility subsequent purchases of drugs\. The Bank's
acceptance of the revenues from drug sales as counterpart funds, meant the
loss of DRF in its capacity of autosustainability, and was not able to
establish itself as a more sustainable essential drug supply and cost
recovery system for the public health sector\.
c) The common practice of hospitals and health centers to use part of the
funds from drug sales to cover part of its expenses, also helped to diminish
the DRF's capacity to repurchase drugs\.
d) Drug purchases were done under public health emergency situations
(blood diarrhea and cholera epidemics) without using the planning capacity
of the international technical assistance available to MOH\. This resultedin
excessive purchase of some low consumption products that expired in the
project warehouses, after the emergencies were covered (glucosaline and
ringher lactate solutions)\.
e) The Borrower did not follow Bank's procedures and rules, especially on
the issue related to the drug and medical services sales revenues
management, in spite of the reiterated requests stated in the Aides
Memoires and letters sent to the Borrowers between 1995 and 1998
(management of the revenues funds bank accounts)\.
f) With the issue of the authorization from the bank to sell drugs to the
private sector of the DRF, the mission considers it as a negative decision, as
the main objective of the DRF is to allow the population to access to drugs
at a reasonable price, reducing intermediaries and its profit margins,
assuring the administrative, logistic and repurchase costs coverage\. The
objective of this agreement was to open the market and was done without a
drug expert's assessment\. Nevertheless, it was never put into practice
because the total drugs lack\.
g) At last, but the most important issue for the last phase of the project,the
disagreement between the Bank and the Borrower on the percentages
covered by each other in the last drug tender\. (i) On the Bank supervisions'
mission, done from September 24 to October 4, 1995, it appears ' The
Government requests the Bank to consider the modification of the
percentages to cover by each part for drug purchases, so that the Bank will
pay 100% (of the purchase), taking into account the difficult treasury
situation of the Country"\. (ii) On the Aide Memoire dated December 21,
1996, appears "\. an agreement has been done to reallocate US$200\.000
for drug purchases" \. (iii) On letter to the- Bank, dated March 10, -1998, the
APPENDIX A
Page 7 of 9
Health and Social Welfare Minister says 'The Government requests to the
Bank the 100% financing of the signed contract for drug purchases with the
suppliers Interpharma and Interagraria"\. After exchanges of
correspondence, on August 19, 1998, the Bank sent a letter to the MOH
which saying that "The World Bank informed you through fax dated June 23,
1998, that the DCA does not authorize the Bank to cover 100% purchases of
the essential drugs\." This situation, the impossibility (according to the
DCA) for the Bank to finance 100% of drug purchases, and the inability of
the Government to pay the 40% of the cost, strangulated the DRF, and all
the PROMESSA project activities during one and a half year\. None of both
parts made a gesture to unblock the situation, and the last opportunity to
save the PROMESSA Projects DRF was lost\.
g) Inform the Borrower on the procedure to prepare the Implementation Completion
Report (ICR) and discuss the Borrower's Evaluation Report, prepared by the national
consultants\.
Result: According to the General Conditions of the DCA, the Borrower must prepare
the Borrower's Evaluation Report before the period of 6 months after
project's closure\. This is before June 30, 1999\. (i) The Project
Administrator sent his plan on January, 1999, which was accepted by the
Bank\. (ii) The Bank authorized to contract a group of national consultants to
do this assignment, and its budget\. Messrs\. AMUGU AKUMU, NSUE
ANGUESOMO and GORI form the team\. The Bank also authorized to
contract Mr\. NTUTUMU as consultant for the preparation of the project's
final financial statements\. iii) The first drafts of these reports are expected
by the mission before its departure\.
h) Discuss with the Borrower any possible way for future collaboration in the health
sector as well as the conditions for such cooperation\.
Result: As the Borrower's Evaluation Report has not been received, the mission
does not have a discussion framework\. After appraisal of the project
achievements, interviews with multilateral and bilateral organizations and
NGOs, the mission highlights the importance of support with new resources
for the social sector (education, health, food availability at household level
and water and sanitation) and development in Equatorial Guinea\. The
Mission recommends that any intervention in the (health) sector should
include the following aspects in order to achieve sustainability:
i) There should be more coordination and communication between the
political decision making level and the technical implementing level (upwards
and downwards communication channels must be warranted);
ii) The actual capabilities of the MOH make necessary to deploy technical
assistance staff for project implementation;
iii) There should be a census of trained personnel and they should be
kept in the positions for which they were trained;
iv) There should be more activities toward improvement of community
participation in projects, especially at the first level, with the Revolving Funds
management\.
APPENDIX A
Page 8 of 9
v) The mission found good planning capacity, which is in enormous
contrast with the very low achievements (e\.g\. the Health management
Information System)
VI\. GOVERNMENT'S OBSERVATIONS:
Despite all difficulties, and the lack of follow-up and supervision from the World Bank
official, Mr\. Loso K\. Boya, as had been agreed in the Development Credit Agreement,
the Government has concluded the implementation of the Project, and considers it has
complied with its responsibilities in a reasonable fashion\. Unfortunately, the
Government sees the project has come to the final phase of its final evaluation without
fully achieving its objectives, yet leaving one more debt that Government will have to
face\.
The main deficiencies of the project, as well as the under-achievement of project
objectives are due to the arbitrary behavior of the World Bank official, Mr\. Loso K\. Boya,
which manifests itself especially in:
1\.- Civil works appointment (of the civil works company - remark of the translator)
along personal criteria such as:
(a) The MOH's roof rehabilitation works, without positive results as after the
works water keeps coming into the building\.
(b) The works in the health centers of Beaypo, Mongomeyen and Ngolesork
that have deficiencies\.
2\.- Lack of compliance of the World Bank official Mr\. Loso K\. Boya, with the
agreements signed in Malabo in Aide-Memoires, especially the one dated December 21,
1996\. Upon arrival to Washington he forgot what was signed in Malabo, and did not
start the procedures needed to apply those agreements\. This has had its consequences
especially in the break-down of the essential drug supply system, lack of payment to
project staff, lack of payment for operating costs for 4 years, delays in disbursements for
training, and other various deficiencies from the Bank that will be pointed out in the Final
Evaluation Report\.
3\.- The auditing company, PRICE WATERHOUSE, chosen by personal selection of
the World Bank's official Mr\. Boya, in all its reports, never reported to Government nor to
the World Bank the real management problems of the Project, limiting itself to purely
formal aspects\.
All these circumstances are those which brought the project to a situation of
strangulation one and a half years before its official closure, with US$1\.1 million still
being available in the account in Washington
APPENDIX A
Page 9 of 9
The Mission thanks again the cooperation given by the participants\.
Malabo, May 15,1999
THE WORLD BANK THE MINISTRY OF HEALTH AND
SOCIAL WELFARE
Dr\. Wendy RAVAONOROMALALA Dr\. Salom6n NGUEMA OWONO
Mission leader Minister of State
APPENDIX B
Page i of 10
41\.-
LOGROS POR OBJETIVOS
FORTALECIMIENTO INSTITUCIONAL
Se restructur6 el Ministerio con:
- Elaboraci6n y aprobaci6n del reglamente organico
- Elaboraci6n y aprobaci6n de los demas reglamentos y procedimientos
- Creaci6n del Consejo directivo
- Creaci6n de la Secci6n de Planificaci6n y Recursos Humanos
- Rehabilitaci6n de la Sede del Ministerio de Sanidad y Bienestar Social y de la
Delegaci6n Regional de Bata\.
- Rehabilitaci6n de los almacenes del Repuestos General de Medicamentos
de Malabo, Bata y la Escuela Nacional de Sanidad de Bata\.
- Equipamiento de las oficinas, material informaticp, erquipos m6dicos,
vehiculos y material de oficina\.
FORMACION Y CAPACITACION DE RECURSOS HUMANOS
Asi mismo se han realizado durante el afio 1\.998 cursos de:
- Formaci6n de enfermeras en Malabo
- Formaci6n de enfermeras en Bata
- Formaci6n de auxiliares de framacia en Malabo
Se envi6 la correspondiente documentaci6n e informes al BANCO
Otros cursos y becas programadas no se han podido efectuar por falta del
correspondiente envio de fondos por parte del BANCO
ADMINISTRACION DE HOSPITALES
En la medida en que el BANCO envi6 el dinero se realiz6 las siguientes actividades\.
- Organizado en 1\.993 un curso de formaci6n de Directores y Administradores de
Hospitales en materia de contabilidad y finanzas hospitalarias habiendo mejorado un
poco el nivel de los mismos\.
- Asi mismo durante el verano de 1\.998 se organiz6 otro curso de administradores de
Hospitales, al que asistieron todos los administradores de Hospitales del ambito
Nacional, en las que se imparti6 entre otras las siguientes disciplinas, estructura
Sanitaria de Guinea Ecuatorial, Planificaci6n y Recursos Humanos para la salud,
estadistica aplicada, contabilidad y economia de empresas, la evaluaci6n de este
curso ha sido enviada al BANCO MUNDLAL\.
APPENDIX B
Page 2 of 10
42\.-
ELABORACION DE LA ESTRATEGIA DE SALUD
El Proyecto PROMESSA preconiz6 el establecimiento de un sistema de informaci6n
sanitaria nacional, formaci6n de Recursos Humanos y adquisici6n de equipos (aunque se
detalla mejor en la categoria de equipamiento)\.
Es evidente senialar los siguientes logros:
- En 1\.993 se realiz6 un curso de formaci6n sanitaria con un total de 51 participantes
corTespondiente a la Regi6n Insular\.
- En 1\.998 en dos fases se hizo un curso de formaci6n y reciclaje de auxiliares
sanitarios con un total de 142 alumnos de donde 89 correspondio a la Regi6n
Continental y 53 Insulares del Pais - consiste en capacitar a este personal en los
cuidados basicos de enfermeria y otros aspectos inherentes de este tipo de recurso
para mejorar la capacidad asistencial propia en todos los centros sanitarios del Pais
siendo la guia del auxiliar de enfermeria el instrumento didactico principal utilizado
- Igualmente en el mismo ano 1\.998 se hizo un curso de auxiliares de farmacia en la
Regi6n Insular para la actualizaci6n de conocimientos en esta area\. Participaron 37
Auxiliares de farmacia\.
MEJORA DE LOS PROGRAMAS PRIORITARIOS DE SALUD
Al respecto el Proyecto PROMESSA (Proyecto de Mejoramiento Sanitario) decidi6
apoyar los siguientes programas:
a) Programa de Lucha Antipaludica (PLA)
b) Programa de Salud Materno Infantil y Planificaci6n Familiar (SMI/PF)
c) Programa de ETS - Enfermedades de Transmisi6n Sexual\.
Referente a estos programas se destacan los siguientes logros:
1\.- Programa de Lucha Antipalidica (PLA)
- Adquisici6n de 25 Microscopios binoculares que fueron distribuidos a todos los
centros del Pais con los reactivos correspondientes\.
- La compra de medicamentos antipaludicos para el Programa LPA se incluia en la
adquisici6n general de medicamentos (ver programa piloto de medicamentos
esenciales)\.
- Fue contratado un Consultor Malarioloogo por un anio para asesorar el programa
LPA y evaluar la situaci6n de la endemia palustre en el pais 1\.99 1\.
2\.- Programa Salud Matemo Infantil y Planificacion Familiar (SMI/PF)
- En relaci6n a este programa es importante expresar que son objetivas el apoyo de
las actividades del SMI/PF de parte de PROMESSA a nivel de la periferia
concretamente en Micomiseng, Mongomo y Acurenam, distritos donde se ubican
los cuatro centros de salud construidos por el Proyecto\.
APPENDIX B
Page 3 of 10
43\.-
3\.- Enfermedades de Transmisi6n Sexual (ETS)
- En el marco de este programa el proyecto financi6 la edici6n de normas de
enfermedades de transmisi6n sexual - pendiente su revisi6n consensuada nacional
y su distribuci6n\.
PROGRAMA PILOTO DE MEDICAMENTOS ESENCIALES
Se implement6 el programa de compra y distribuci6n de medicamentos esenciales, que
del lado sanitario fue positivo, pero del econ6mico y financiero no podemos decir lo mosmo\.
Su objetivo de crear un fondo rotatorio de medicamentos no se ha conseguido\.
No obstante los medicamentos adquiridos por el Proyecto PROMESSA, tuvieron un
gran impacto en la poblaci6n guineana, ya que eran medicamentos de calidad garantizada y a
precio muy asequibles\. Estos medicamentos contribuyeron a la extenci6n de la cobertura
sanitaria y a la utilizaci6n de los servicios\.
EXTENSION DE LA COBERTURA SANITARIA
Con la construcci6n de cuatro Centros de Salud
- Beayop
- Oveng
- Mongomeyeng
- Ngolesork
Situados en los lugares de mas dificil acceso de la geografia Nacional\. Completamente
equipados con los equipos medicos e instrumentales necesarios y amueblamiento
correspondiente\.
LOGROS POR CENTROS
En nuestra observaci6n se ha constatado los siguientes logros por centros
CENTROS BENEFICUIDOS CENTROS NO BENEFICIADOS
Sede Ministerio de Sanidad - Hospital Regional Malabo
- Delegacion Sanidad Bata - Hospital Regional de Bata
- Repuesto Medicamentos Malabo - Escuela de Sanidad Bata
\. Repuesto Medicamentos Bata - Resto de Hospitales
- Los cuatro centros de salud
APPENDIX B
Page 4 of 10
44\.-
OTRAS ACCIONES DIVERSAS
Igualmente, ya con mas experiencia de los problemas y manejo del Proyecto con la
Misi6n del BANCO MUNDIAL del 11 al 21 de diciembre de 1\.996 siempre dirigido por el
Oficial Sr\. Loso BOYA, se evalu6 profundamente la situaci6n del proyecto decidiendo que a
pesar de las deficiencias constatadas, el GOBIERNO manifestaba su voluntas de proseguir,
con lo que se redact6 el documento (Ayuda Memoria ACUERDO DE NORMALIZACION
INSTITUCIONAL Y DEL FUNCIONAMIENTO DEL PROYECTO PROMESSA), en que
se recogia todas las acciones a realizar para el mejor funcionamiento y performancia del
Proyecto, pero si por una parte el GOBIERNO cumplio razoblemente sus compromisos, el
BANCO no ha tomado en consideraci6n las decisiones adoptadas en dicho documento, con lo
que buena parte de las acciones decididas para la mejor implementaci6n y relanzamiento del
Proyecto han quedado en aguas de borrajas\.
DEFICIENCIAS Y PRINCIPALES PROBLEMAS\.
De este lado destacamos fundamentalmente:
Fortalecimiento institucional del Ministerio de Sanidad (MS)
En este objetivo, se constata fundamentalmente que la unidad del Planificaci6n y
Recursos Humanos, solo ha alcanzado un nivel de funcionamiento muy incipiente, con lo cual
no puede cumplir su cometido de planificar y programar la capacitaci6n de los Recursos
Humanos necesarios, lo que es mas no alcanza siquiera a tener una informaci6n real y a
tiempo de los recursos humanos totales disponibles y de sus movimientos\.
Asi mismo hay que sefialar que no se ha llegado a crear la Secci6n de Administraci6n
y Finanzas (SAF) tal como preveia el Proyecto, con lo cual una macrounidad economica
como es el Ministerio de Sanidad y Bienestar Social, no cuenta con ninguna persona que se
ocupe de forma adecuada y profesional de la materia\.
En cuanto a los Recursos Humanos y Fotalecimiento de la Administraci6n de los
Hospitales, tal cormo ya se ha indicado anteriormente, el resultado constatado es
completamente insatisfactorio\.
En lo referente al establecimiento de un sistema de informaci6n sanitaria (SIS) y
capacitaci6n de personal de MS y equipamisnto indicar:
- No se pudo establecer el sistema de informaci6n sanitaria para disponer de datos de
calidad en el sistema\.
- Desde el punto de vista del equipamiento ha sido deficiente porque no se abarc6 a
todos los hospitales y limitandose solo a los cuatro Centros de Salud construidos
- Otros aspectos de forrnaci6n contemplados por PROMESSA como: curso de
auxiliares del SIS (sistema de informaci6n sanitaria), curso de informatica, auxiliares
de radiologia, auxiliares de laboratorio y otros (formaci6n local), asi como la
formaci6n en el exterior dentro del plan general de formaci6n de personal
1\.997/1\.998 no se han podido efectuar por falta del correspondiente envi6 de fondos
de parte del BANCO\.
APPENDIX B
Page 5 of 10
PAGE MISSING FROM THE ORIGINAL
APPENDIX B
Page 6 of 10
46\.-
c) El Proyecto en coordinaci6n con el servicio de farmacia con el fin de garantizar la
reposici6n de los fondos invertidos en las compras, al precio final del medicamento
puesto en el almacen, para la tarificacion se establecieron los siguientes parimetros:
1) Una carga del 10% previsto para gastos administrativos, 2) Una carga de 10% para
el centro asistencial que vende los medicamentos, 3) Una carga del 5% previsto para
revalorizaci6n en la futura compra y 4) Una carga del 5% para compensaci6n por
indigentes y beneficiarios\. En resumen se afiadia al precio de compra un 30% previsto
para el Sector Publico, con to cual en teoria se garantizaba la recuperaci6n del costo
inicial invertido\. Pero al quedar excluidos del funcionamiento del Proyecto los
tecnicos del Sector Farmaceutico del Ministerio, conocedores -del sistema de
reposici6n de fondos, ya no se puso en practica la estructura de precios establecida
despues de la segunda compra, lo que contribuy6 tambi6n a no poderse crear el FRM\.
Por otra parte, las practicas contables y auditorias fueron guiadas unicamente por un
criterio de tesoreria y no revelaron nunca las perdidas que se producian\.
d) En la distribuci6n de medicamentos a los centros sanitarios no se tuvo en cuenta que
una gran parte de la inversi6n en la compra de medicamentos, estaba constituido de
material sanitario, que no se vende directamente en las farmacias, sino mas bien este
se distribuye en los diferentes servicios de hospitales para los actos asistenciales
(curas, operaciones, etc) y que el coste de este material debia ser incluido en el cobro
de dichos actos asistenciales y ser reintegrados a la farmacia y al Proyecto, la entrega
gratuita de este material contribuy6 a la no recuperaci6n de gran parte de las
inversiones\.
e) Se elabor6 un documento sobre el "Sistema de distribuci6n y gesti6n de Fondos de los
Medicamentos" este documento incluia en sus anexos varias fichas de control de
consumo y venta de medicamentos, asi como instrucciones de como debian se
manejados los libros de contabilidad de ingresos\. El documento debi6 ser distribuido
a todos los centros sanitarios en un seminario de formaci6n sobre el manejo de los
medicamentos del Proyecto\. Esta fornmaci6n no se realizo por no haber sido
transferidos los fondos necesarios por el BANCO\. En consecuencia, se entregaron los
medicamentos a un personal que no habia sido preparado para su gesti6n\.
Cabe sefialar la actuacion personalista del Oficial del Banco Mundial Sr\. Loso K\.
BOYA en la concesi6n de contratos de compra de medicamentos a empresas que no habian
ganado la licitaci6n internacional lanzada por el Ministerio en 1\.996, asi como acuerdos
particulares suyos en contratar personal no especializado para la gesti6n de los medicamentos
en los almacenes\.
Todo lo aqui expuesto unido a lo recogido en la Ayuda Memoria de la Misi6n del
BANCO del 20/04 al 9105/99, contribuy6 a la no consecuci6n del objetivo del Proyecto de
crear un fondo rotatorio de medicamentos\.
Para ilustrar nuestras aseveraciones, ver los cuadros EVOLUCION Y MARGEN
BRUTO DE LA ACTIVIDAD DE VENTA DE MEDICAMENTOS, EVOLUCION Y
BALANCE DE EXISTENCIA AL 31/12/98\.
APPENDIX B
Page 7 of 10
PAGE MISSING FROM THE ORIGINAL
APPENDIX B
Page 8 of 10
48\.-
ASPECTOS POSlrIVOS EN LA ACTUACION DEL GOBIERNO Y DEL BANCO
No obstante a las deficiencias sefialadas debemos sefialar igualmente los aspectos
positivos que hemos constatado en la actuaci6n tanto del GOBIERNO, que por el BANCO
MUNDIAL\.
POR EL GOBIERNO
- A pesar de todas las enormes dificultades sefialadas, voluntad politica para conseguir
los objetivos programaticos\.
- Prudencia y mesura en el control de los fondos, evitando despilfarros, aunque esta
actitud ha sido en detrimento de una gesti6n mas eficaz y agil por parte del UEP\.
- Manifiesto esfuerzo en levantar todas las suscesivas suspenciones, aunque tal como
hemos indicado antes de una forina global para todos sus compromisos con el BANCO,
aunque ello ha sido en detrimento de atender los fondos de contrapartida especificos del
Proyecto PROMESSA\.
- Aprendizaje rapido de los procedimientos administrativos del BANCO, y esfuerzos
por mejorar la calidad del personal del Proyecto y conseguir su relanzamniento, infelizmente
no materializados por la obstrucci6n del propio Oficial del Proyecto, asi como la rigidez que
hemos senialado anteriormente, por parte del BANCO\.
POR EL BANCO
- Rigor y exactitud en el manejo de la contabilidad y de las cuentas
- Disciplina y extricta obsevancia de los procedimientos
- Perserverancia apesar de las dificultades
CONSECUENCIAS PELIGROSAS
En observaci6n de esta evaluaci6n el cancelar el Proyecto en las actuales
circunstancias, es decir:
- Sin implementar las ultimas decisiones urgentes adoptadas
- El Pais completamente desabastecido de medicamentos y sin comprar los
medicamentos esenciales previstos\.
- Sin imlementar las uiltimas reformas decididas por el Sr\. BOYA para los almacenes
de medicamentos de Malabo y Bata y la Escuela Nacional de Sanidad de Bata
- Sin ejecutar el programa de inauguraciones y operacionalizaci6n y mantenimiento de
de los centros de salud\.
- Sin comprar las dos ambulancias previstas en la Ayuda Memoria del 21/12/96
- Sin completar minimamente los cursos de formaci6n decididos de comuin acuerdo
con la OMS\.
Traeria como consecuencia, paradogicamente LA DESTRUCCION Y
DESMANTELAMIENTO de lo mejor que el BANCO MUNDIAL ha contribuido y realizado
para el sector de salud de Guinea Ecuatorial\.
APPENDIX B
49 Page 9 of 10
PRINCIPAL LECCION APRENDIDA DE LA E,JECUCION DE PROMESSA
A efectos de esta evaluaci6n, la ensefianza mas importante que hemos deducido de
toda la informaci6n y datos anteriores, es que:
1° no se puede llevar a cabo el mejoramiento de los servicios de salud y del propio
sector y ningun otro Proyecto, sin contar con un buen plantel de personas cualificadas\.
2° La Unidad de Ejecuci6n del Proyecto debe contar siempre con suficiente autonomia
y con participaci6n en la toma dedecisiones, asi como tener asegurada previamente su
operacionalidad\.
EVALUACION
Consideramos pues, y a pesar de los multiples problemas y deficiencias senialadas, y a
tenor de la situaci6n real en que se ha desenvuelto, que el Proyecto PROMESSA ha cumplido
razobalemente sus objetivos, que podemos concretar en una calificaci6n de REGULAR El
resultado no se puede calificar ni de satisfactorio ni de totalmente insatictactorio, sino
simplemente de RAZONABLE\.
Por otra parte senialar asi mismo que la no consecuci6n plena de los objetivos tal como
estaba previsto, encontraznos que es compartida al 50% por el GOBIERNO y al 50% por el
BANCO MUNDIAL\.
RECOMENDACIONES
Como consecuencia de todo lo anteriormente expuesto,\. esta evaluaci6n recomienda;
1\.- Que de los fodos remanentes se compre y se abastesca al Pais de medicamentos, y
se atienda las necesidades mas urgentes sefialadas\.
2\.- Que se concluya los cursos de formaci6n ya programados asi como otros que se
puedan programar, susceptibles todos ellos de ejecutarse en el interior del Pais y en
colaboraci6n con las instituciones afines existentes\.
3\.- Atender todos los gastos comprometidos y recogidos en los estados financieros al
31/12/98 y de acuerdo al Convenio de Credito\.
4\.- Teniendo en cuenta la trascendencia del Sector Salud, y lo que PROMESSA
representa para el mismo, planificar una segunda Fase del Proyecto, debiendo para ello afectar
una parte de los fondos remanentes y solicitar de la ayuda del BANCO para realizar una Mini
Conferencia Nacional de los profesionales del Sector Salud y otros Ministerios implicados
para determinar todas las necesidades del Sector Salud, y establecer el segundo Convenio de
manera que elimine y supere todas las deficiencias aprendidas con la experiencia del primer
Convenio\.
APPENDIX B
Page 10 of 10
50\.-
AGRADECIMIENTO
Expresamos nuestro mas profuindo agradecimiento al Excmo\. Sefnor Ministro de
Estado, Encargado de Sanidad y Bienestar Social, Dr\. Salomon NGUEMA OWONO por su
aporte y orientaci6n para la realizaci6n de este Informe de Evaluaci6n Final\. Asi como al
Iltmo\. Sefnor Secretario General y funcionarios del Ministerio de Sanidad por su
disponibilidad para con nuestro trabajo\.
TESTIMONIO
Manifestamos nuestra mas sincera admiraci6n y reconocimiento al GOBEERNO DE
LA NACION, por su manifiesta voluntad politica en la consecuci6n de los objetivos
prograrnaticos\.
A Su Excelencia OBIANG NGUIEMA MBASOGO, Presidente de la Republica, Jefe
de Estado y Presidente Fundador del Partido Democratico de Guinea Ecuatorial, por su
infinita comprensi6n y aliento, afan y firmne voluntad en pro del desarrollo del Sector Salud en
beneficio de todo el pueblo ecuatoguineano\.
Nuestro mas profundo y sincero agradecimiento al BANCO M1UNDIAL por sus
esfiuerzos, contribuci6n y asistencia al desarrollo del sector Salud de nuestro Pais\.
Malabo 17 de junio de 1\.999 (
Joint Venture
Gabriel AMUGU AKUMU Manu SUE ANGIJESOMO
Grro GORI MOMOLU
MAP SECTION
IBRD 22929
QUATORIAL GUINEA t
HEALTH IMPROVEMENT
-Z MALABO~~~~~~~t PROJECT
RAeyr X MAIABOBaCey PROJECT HEALTH CENTERS
+ / E ~~~~~~~~~~~~~~~~~~HOSPITALS
-a)eri iBEXISTING ASPHALT ROADS
G,\.r\.e_ EXISTING LATERITE ROADS
BatU < BIleIllPo PLANNED ROADS
J, oml B I OK O
BriconichoO I tRiobe N"N, RIVERS
S~~~~~~~~~~~~~~~~~~~~~~~~RVR
- __MoPORTS
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\ _ BRIDGES
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0 20 40 60 s0
i_____________________________ -KILOMETERS
------ MILES C A M E R O O N
0 1 0 20 30 40 50
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XFOR§X# ELOBt Y GRANOEtst M \.
Mmb\.N I MADY GABON
a J 0 ~~~~~~~~~~This map has been prepared by The World Bank's staff e\.cfusively for the
tJ l ~~~~~~~~~Bank Group\. The denominationsCufsesdeand fthe tbeoundaries usehofn The this
C t I ~~~~~~~~m0p do not imply, an the part of The World Bank Group, any l'udgment
ATLANsTtC OCEA aa; ) \ s n the legal status of any territory or any end-rement or acceptance of
such boundaries\.
DECEMBER 1991 | REVIEW |
P006378 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 20349
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
(LOAN 35470; 3547S; 35480)
ON TWO
LOANS
IN THE AMOUNT OF US$ 88\.0 MILLION
TO THE
STATES OF ALAGOAS AND SANTA CATARINA - BRAZIL
FOR A
STATE HIGHWAY MANAGEMENT PROJECT
April 28, 2000
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective July each year)
Currency Unit = Real R$
R$1\.0 = US$ 0\.56
US$ 1\.0 = R$ 1\.80
1994 US$ = R$ 0\.90
1995 US$ = R$ 0\.92
1996 US$ = R$ 1\.00
1997 US$ = R$ 1\.07
1998 US$=R$ 1\.15
1999 US$=R$ 1\.80
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
ADT Average Daily Traffic
CAI Core Accountability Implementation Completion Report
CAS Country Assistance Strategy
CD Country Director
DER Departamento Estadual de Estradas de Rodagem
DER-AL Departamento de Estradas de Rodagem do Estado de Alagoas
Highway Department of the State of Alagoas
DER-SC Departainento de Estradas de Rodagem do Estado de Santa Catarina
Highway Department of the State of Santa Catarina
DNER Departamento Nacional de Estradas de Rodagem
National Highway Department
IERR Internal Economic Rate of Return
ICR Implementation Completion Report
RI International Roughness Index
MTR Mid-term Review
NBF Not Bank Financed
NPV Net Present Value
PCD Project Concept Document
SAR Staff Appraisal Report
TL Team Leader
TT Task Team
Vice President: David de Ferranti
Country Manager/Director: Gobind T\. Nankani
Sector Manager/Director: Danny Leipziger
Task Team Leader/Task Manager: Jacques Cellier
FOR OMCIAL USE ONLY
BRAZIL
STATE HIGHWAY MANAGEMENT PROJECT
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 3
5\. Major Factors Affecting Implementation and Outcome 4
6\. Sustainability 5
7\. Bank and Borrower Performance 6
8\. Lessons Learned 7
9\. Partner Comments 7
10\. Additional Information 8
Annex 1\. Key Performance Indicators/Log Frame Matrix 9
Annex 2\. Project Costs and Financing 10
Annex 3\. Economic Costs and Benefits 11
Annex 4\. Bank Inputs 12
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 13
Annex 6\. Ratings of Bank and Borrower Performance 14
Annex 7\. List of Supporting Documents 15
IThis eoment has a restricted distibuton and ma be used by recipients only in the
perfoimance of their official duties\. Its contents may not otherwise be disclosed without
Wodld Bank authorizaton\.
Project ID: P006378 Project Name: STATE HWY MGMT
Team Leader: Jacques L\. Cellier TL Unit: LCSFT
ICR 7vpe: Core ICR Report Date: April 28, 2000
1\. Project Data
NVame: STATE HWY MGMT L,/CNumber: 35470; 3547S; 35480
Countrw/Department: BRAZEL Region: Latin America and
Caribbean Region
Sector/subsector: TH - Highways
KEY DATES
Original Revised/Actual
PCD: 04/01/88 Effective: 03/23/93 04/22/93
Appraisal: 12/02/91 MTR: 02/09/96
Approval: 12/22/92 Closing: 12/31/99 12/31/99
Borrower/lmplementingAgency: STATE GOVERNMENTS/STATE ROAD DEPTS
Other Partners:
STAFF Current At Appraisal
Vice President: David De Ferranti Shahid S\. Hussain
C,ountr,vMfanager: Gobind T\. Nankani Anneane Choksi
Sector Manager: Danny Leipziger Asif Faiz
T'eam Leader at ICR: Jacques Cellier Jacques Cellier
ICR Prinmary Author: Gerard Liautaud
2\. Principal Performance Ratings
(HS=Highly Satisfactoiy, S=Satisfactorv, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project al Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The project would help reduce the deterioration of the state road networks in Alagoas and Santa Catarina and
improve their condition by: (a) ensuring adequate priority and funding for rehabilitation and maintenance versus
new-construction in the state road programs; (b) designing and implementing appropriate highway rehabilitation
and maintenance strategies and programs; and (c) strengthening the State Highway Departments' (DERs)
maintenance capabilities through increased reliance on contracted, rather than force-account works, and through
improved maintenance management\. It would also help to: (d) develop and implement environmental guidelines
for state roads\. Although it would assist only two selected states, the project was expected to help establish an
institutional and technical framework for the improved rehabilitation and maintenance of state roads nationwide\.
The final objective was to contribute to the resumption of economic growth by reducing the cost of road transport
on the state highway networks\.
3\.2 Revised Objective:
The two loans were amended in February 1996, but the project objectives and description were not revised during
implementation\. The amendments to the loans were nade in order to reduce the need for project counterpart
funding after Brazil's stabilization plan substantially reduced the states' capabilities to invest\. The amendments
involved: (a) a reduction of the scope of the Alagoas subproject in line with the state's financial and
implementation capabilities, and the modification of the annual implementation targets for both subprojects; (b) an
increase of the disbursement percentages for civil works from 50% to 75% and for consultants and training from
50% to 100% of local expenditures; (c) the cancellation of an amount of US$18 million equivalent from the
Alagoas loan (originally US$38 million) and (d) action programs with specified benchmaiks and remedies to be
completed by the end of 1996\. The reduction in targets for civil works (rehabilitation) is described in para\.3\.4
3\.3 Original Components:
Originally, the project, which consisted of two similar subprojects in the borrower states included the following
components: (A) a policy and institutional development program to: (a) prepare and annually update the State's
pluriannual and annual road expenditure and funding programs, consistent with agreed criteria, priorities and
targets; (b) develop and implement a pavement management system (PMS) designed to help prepare and monitor
appropriate rehabilitation and maintenance strategies and programs; (c) strengthen the DER's contract and project
management systems; and (d) develop appropriate capability in the DER and the State Government to implement
and monitor environmental standards and guidelines for state roads; and (B) an investment and maintenance
program consisting of the pavement rehabilitation, resurfacing and routine maintenance components of the State's
1992-96 road program\. The two subprojects combined would have a total scope of 2,318 km for rehabilitation and
resurfacing works: 870 km in Alagoas and 1,448 km in Santa Catarina\.
The original total cost of the project was estimated at about US$224\.3 million equivalent, including US$167\.7
million for road rehabilitation and resurfacing, US$51\.2 million for routine maintenance, and US$5\.4 million
equivalent for technical assistance and staff training\. The costs of the individual subprojects were as follows:
Alagoas, US$88\.5 million; Santa Catarina US$135\.8 million\. The project was to be financed from the proposed
two Bank loans totaling US$88 million (or 39% of the project cost) and from the respective State's own resources
for US$136\.3 million (or 61% of the project cost)\. The two loans were to help finance the rehabilitation,
resurfacing, technical assistance and training programs\. Routine maintenance was to be fully funded from state
resources\.
3\.4 Revised Components:
In February 1996, the scope of the physical components of the two subprojects was revised, reducing the targets for
rehabilitation and resurfacing from 870 km to 291 km in Alagoas and from 1,448 km to 1,080 km in Santa
Catarina\. This decision was taken after it became clear that as a result of the "Plano Real" stabilization program,
the States of Alagoas and, to a lesser extent, Santa Catarina no longer had the financial capacity to carry out their
subprojects in accordance with the agreed implementation targets\. As a result, the total project cost was reduced
from US$224\.3 million to US$164\.7 million (US$126\.5 million in Santa Catarina, and US$38\.2 million in
Alagoas)\. The loan amount for Alagoas was reduced from US$38 million to US$20 million\. Accordingly, some
adjustments were made to the implementation indicators and targets\. The subproject implementation schedules
were extended, albeit without changing the closing dates, with revised completion dates of December 1998 and
December 1999 for the States of Santa Catarina and Alagoas respectively\.
- 2 -
3\.5 Quality at Fntry:
The satisfactory performance rating given for quality at entry is explained by the fact that the project objectives
were consistent with the government priority to carry out a broad administrative decentralization and to increase
the importance of the States in the management of the road network\. In line with the decentralization objective,
the project as designed helped prepare the states of Alagoas and Santa Catarina to implement the transfer of
operation and maintenance responsibilities of portion of the federal network, through assisting them in carrying
out their own road maintenance mandates and the rehabilitation of their highways, using appropriate policies and
planning methodologies\. Although the risk of insufficient provision of budgetary resources by the States was
identified at appraisal, it was only minimized during implementation when the Bank agreed to ease
the pressure on the state's finances by increasing its cost-sharing, while downsizing the scope of the project\.
4\. Achievement of Objective and Outputs
4\.1 Outcomel'achievement of objective:
The objective of the project was to reduce the deterioration of the states road networks and to improve their
condition\. In Santa Catarina, the project led to a drastic improvement of the condition of the network\. The
proportion of the network in critical to poor condition (i\.e\. with IRI>3\.5) was reduced from 31% at appraisal in
1991, to 12% in 1997, and to practically zero percent at project completion\. In Alagoas, because of the substantial
reduction in the scope of the rehabilitation component, the project essentially prevented the road network from
deteriorating fulther, and it improved its condition only marginally\. The proportion of the network in poor
condition (with IRI>5), which was about 30% at appraisal in 1991, was only reduced to 28% at the end of the
project\. But had the project not been implemented, the proportion of the network in poor condition would now
exceed 50%\. Because of the above achievements, the project outcome, overall, has been rated as satisfactory\.
4\.2 Outputs by comnponents:
a\. Rehabilitation components\. The appraisal estimate was to rehabilitate or resurface about 2,318 km of paved
roads: 1,448 km in Santa Catarina and 870 km in Alagoas\. These targets were revised in 1996 and reduced to
1,371 km: 1,080 km in Santa Catarina and 291 km in Alagoas\. At completion, about 1,361 km were rehabilitated
or resurfaced, i\.e\. almost 60% of the appraisal targets, but a satisfactory 99% of the revised targets: 1,058 km in
Santa Catarina, and 303 km in Alagoas\. The rehabilitation works performed in Santa Catarina encompassed nearly
30% of the total length of the state paved network\. In Alagos, the rehabilitation works were carried out over only
20% of the state paved network\.
b\. Institutional Development components\. The institutional development components have had the following
outputs:
* pavement management systems supported by a comprehensive database on traffic and network condition and
by the HDM model, have been established to develop optimized highway expenditures programs;
* environmental units have been set up in both agencies, albeit with greater success in Santa Catarina, to
implement environmental guidelines which have been prepared with technical assistance financed under the
project;
* routine maintenance has been contracted over the entire paved network in Santa Catarina, while Alagoas has
only finalized a plan for the same purpose;
* both states have downsized their highway agencies staff below the agreed targets: from 2,474 to 1,450 in
Santa Catarina, and from 1,200 to 530 in Alagoas;
* the training component in Santa Catarina has met the 2,400 trainee-week agreed target while in Alagoas the
outcome was less satisfactory;
* in both states, plans to reorganize the DERs have been prepared but they have not yet been implemented\.
- 3 -
4\.3 Net Present Value/Economic rate of retnrn:
The economic analysis carried out at appraisal, using the HDM 3 model, indicated that the highway rehabilitation
component which represented 55% of the total base cost of the project yielded an Internal Economic Rate of Return
(IERR) of about 60% and a Net Present Value (NPV) of US$67 million\. An ex-post evaluation performed on the
same sample of subprojects gave them even higher values of 90% and US$212 million for the IERR and NPV
respectively\.
4\.4 Financial rate of return:
Not applicable
4\.5 Institutional development impact\.
The establishment of pavement management systems, including the use of the HDM model for analysing
expenditure programs under budget constraints, and the joint reviews of the state highway expenditure programs,
have substantially strengthened the state highway agencies' capacity to prepare and monitor efficient programs on
the basis of technical and economic rather than political criteria, and to obtain improved funding for maintenance\.
In Santa Catarina, the project has directly contributed to contracting out the maintenance of the network, which
was previously carried out by force account\. Both state agencies are now implementing appropriate environmental
safeguards under their programs\. Overstaffing has been drastically reduced through incentives for voluntary
separation, and a very substantial staff training program has been completed in Santa Catarina\. For these reasons,
the institutional impact of the project has been rated as substantial\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control ofgovernment or implementing agency:
* The Tribunal de Contas of Santa Catarina interpreted the Brazilian procurement law enacted in 1993 as not
allowing DER-SC to follow the procedures set forth in the Bank's procurement and consultant guidelines in
cases of conflict between such procedures and those of the Brazilian law\. This caused intensive discussions
between DER-SC and the Tribunal, which adversely affected project implementation and disbursement
performance\. However, in the end the Tribunal de Contas accepted the view that the law authorizes
Borrowers to use the guidelines\.
* In 1994, the implementation of a new stabilization program under the Real Plan substantially affected the
States' finances, and in particular prevented state governments from continuing to enjoy the perverse benefits
of inflation through late payments of debts and wages without adjustments for inflation;
* In February 1996, in order to ease the pressure on the State's finances and reduce the needs for project
counterpart funding, the Bank agreed to revise the scope of the project and to amend the loan agreement\. The
revisions and amendments involved: (a) the reduction of the targets for rehabilitation and resurfacing,
bringing them from 870 km down to 291 km in Alagoas, and from 1,448 km to 1,080 km in Santa Catarina,
resulting in a reduction of total project cost from US$88 million to US$38 million in Alagoas, and from
US$136 million to US$126 million in Santa Catarina; (b) the cancellation of US$18 million from the original
loan amount of US$38 million in Alagoas; and (c) an increase in the Bank's percentage disbursement for civil
works from 50% to 75%/o, with 100% financing of both foreign and local expenditures for technical assistance
(previously, only 50% of local expenditures)\.
The performance of the Bank in that regard affected positively and substantially the project outcome\.
5\.2 Factors generally subject to government control:
-4 -
Throughout the implementation period of the project - albeit to a lesser degree since the 1996 project
restnucturing - the untimely provision of counterpart funds in sufficient amount has been a factor that substantially
affected project implementation performance, both in its civil works and technical assistance components\. Delays
in bidding, contracting and paying contractors and consultants occurred essentially as a result of not receiving
necessary counterpart funds in due time\.
5\.3 Factors generally subject to implementing agency control:
Project implementation has also been affected by the disappointing performance of some of the consulting firms
contracted to assist the states highway agencies, particularly in the development of a suitable pavement
management system and the elaboration of satisfactory pluriannual road expenditures programs\. The poor
performance of some of the firms was compounded by the limited capacities of the DERs to effectively monitor the
consultant's work and to discuss their products or recommendations\. On various occasions, the Bank had to
intervene to correct deficiencies especially in the preparation and design of the multi-year mnaintenance and
rehabilitation programs\.
5\.4 Costs andfinancing:
The actual total project cost at closing amounted to US$170\.1 million compared to the appraisal estimate of
US$224\.3 million and the revised estimate of US$164\.7 mnillion\. The reduction in the cost basically reflects the
reduction of the project scope\. The average unit costs of rehabilitation works, ranging from US$66,000/km in
Santa Catarina to US$78,000/km in Alagoas, were basically kept in line with appraisal estimates\. Overall, with an
actual average unit cost of US$72,000/km against an original estimate of US$70,000/kn, cost overruns amounted
to less than 3%\.
Original financing arrangements compare reasonable well with the actual outcome: Bank and govemment
contributions were both reduced by about 20-25% as compared to appraisal estimates (Annex 2c)\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The sustainability of this project is rated as likely, overall\. However, while it clearly is likely in Santa Catarina, it
seems somewhat uncertain in Alagoas\.
The critical determinants of project sustainability are:
* Maintenance is contracted out and funding is secured,
* Road expenditure programs are prepared and optimized on the basis of appropriate criteria and methodologies,
rather than on political considerations;
* Highway staff skills are maintained and developed through appropriate training and management practices\.
6\.2 Transition arrange,nent to regular operations:
Transition arrangements to regular operations are well in place in Santa Catarina with: (i) the
implementation of maintenance contracts covering the entire road network; (ii) the performance-based
rehabilitation and maintenance contracts carried out on a pilot basis; (iii) the availability of a
comprehensive multi-year road expenditure program, including appropriate technical manuals for final
engineering designs and works supervision and; (iv) adequately- trained staff\. It is however, essential that
sufficient and timely provision of funds for maintenance be ensured in the future and that the process of
- 5 -
institutional strengthening of DER-SC be maintained\.
Transition arrangements for the project's future operation in Alagoas are less clear\. Although the project
has established appropriate planning and contract maintenance management systems in the highway
agency, the institutional weaknesses across the entire administration and the fiscal difficulties of the state
tum the operation and maintenance of the highway network on the basis of the policies supported by the
project somewhat uncertain\.
The performance indicators shown in Annex 1 can be used to monitor and evaluate the project's future
operation\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
The Bank's performance during identification, preparation and appraisal was
satisfactory on the whole\. Its involvement in the project was consistent with the
goverunent's strategy on decentralization and supportive of the country objective to
resume economic growth, including the provision of efficient and reliable transport
services to targeted sectors of the economy as well as the pmmotion of the private sector
operations in transport\. The appraisal team had a good skill mix, with a highway
engineer, a transport economist, an environmental specialist and an organizational
consultant\. The project design was simple and consistent with the agencies'
implementation capacity overall, although the weaknesses of the DER in Alagoas have
been somewhat underestimated\. The risks were adequately recognized and performance
indicators appropriately defined\.
7\.2 Supervision:
The Bank's supervision performance was satisfactory, albeit with some shortcomings\.
On average, the project was supervised twice a year and implementation progress and
ratings adequately reported\. On realizing the state's financial difficulties in 1994-95,
the Bank approved the needed restructuring of the project and this was instrumental in
bringing about the successful achievement of project objectives\. However, field
supervision efforts have sometimes been insufficient to ensure an effective control of the
quality of the designs and works, particularly in Alagoas where the highway agency
needed technical support\.
7\.3 Overall Bank perjormance:
Overall, Bank performance was satisfactory\.
Borrower
7\.4 Preparation:
Fully committed to the project objectives, the Borrowers participated actively in the
preparation of the project\. Government staff prepared all technical and financial
aspects, while economic, environmental, and institutional aspects were discussed and
defined in close participation with the Bank\.
7\.5 Government implementation performance:
By and large, government implementation performance was satisfactory although to a
much higher degree in Santa Catarina\. Both states were committed to the project and
assigned experienced managers to coordinate its implementation\. Less satisfactory were
the timely and sufficient provision of counterpart funds, which adversely affected
- 6 -
Alagoas in the earlier years and Santa Catarina at the end of the Project\.
7\.6 ImplementingAgency:
The implementing agencies performance was satisfactory, with a special recognition of
DER-SC for its effective project monitoring and excellent reporting\. However, in both
states, the technical assistance could have had better results if more experienced
counterpart staff would have been assigned to work full-time with the consultants\.
7\.7 Overall Borrower performance:
The overall performance of the Borrowers was satisfactory\.
8\. Lessons Learned
1\. As shown in Santa Catarina, the implementation of an optimized network rehabilitation and maintenance
strategy can effectively bring an entire road network back into satisfactory condition over a period of a few
years and at a reasonable cost\.
2\. For networks or portions of networks with low traffic such as Alagoas, surface condition targets should be set
lower, i\.e\. with IRI targets above 5, possibly up to 6 or 7\.
3\. The results of the technical assistance components depend more on the technical experience and inter-personal
skills of the specialists assigned to the specific tasks than on the experience records of the contracted
consulting finns, which are increasingly deficient in controlling the quality of their services\.
4\. Proactive supervision and restmcturing of the project as soon as critical assumptions have changed (in this
case the funding capacities of the states following the establishment of the stabilization program) are essential
to achieve the development objective\.
5\. The increase of the Bank's cost-share for civil works from 50% to 75% drastically improved the attractiveness
of the loans\. The Bank could consider offering better cost-sharing arrangements, particularly in the poorest
states of Brazil\.
6\. The grouping of two or more similar subprojects under one "umbrella" project can lead to some savings at the
project processing stage\. But since there are few economies of scale in supervision, each subproject should be
adequately funded to allow for effective supervision, including field visits of the works\.
7\. Since the grouping of such subprojects into one project also renders the preparation of PSRs and ICRs difficult
and their average ratings somewhat meaningless, each subproject should preferably be treated as a separate
project\.
9\. Partner Comments
(a) Borrowerlimplementing agencv:
Comments from the the State of Santa Catarina
In general, we are in agreement with the ICR report\. We would like, however, to make several
suggestions and/or corrections\.
1\.) Regarding 4\.2 (the state of Network Conditions) The rehabilitation works carried out in Santa
Catarina encompassed approximately 30% of the paved road network, which has a total length of 3,135
km\.
2\.) With regard to the sustainability of the project, specifically the implementation of road
-7-
maintenance policies, the State is taking the following actions: i) implementation of a two year
maintenance contract pilot project for one district highway network; and ii) the implementation of a
two-year routne manintenance contract for 21 district networks, using fixed quantities and unit prices\. The
contracting of both of these services will cover the entire paved and unpaved State road network\.
A firn has already been contracted to execute the maintenance pilot project\. Consolidation of the
benefits from those actions could be reinforced by continued Bank participation and monitoring through a
second loan to the State\.
Following is the original Portuguese text\.
Acusamos o recebimento da minuta do "Implementation Completion Report" do
Programa PNMRE/SC-BIRD (Loan n° 3547 BR), enviado ao DER/SC via fax em 23
de margo uiltimo\.
Comentarios:
(1) Em termos gerais, estamos de acordo com os termos apresentados por voce
neste relat6rio;
(2) Sugerimos uma corregAo para o item 4\.4 Net Work Condition: Os servigos
de reabilitagao realizados em Santa Catarina melhoraram as condicoes de
trafegabilidade em cerca de 30% da extensAo total da rede pavimentada sob
jurisdigao do DER/SC (total igual a 3\.135 km); e,
(3) A sustentabilidade do Programa no Estado, especificamente no tocante A
implementagAo das politicas e ag6es que dizem respeito A manutengAo da
malha rodoviAria do Estado, esta sendo reforgada com a retomada das acoes
que dizem respeito: (i) a implementagAo de um contrato de conserva por
niveis de qualidade em um Distrito RodoviArio piloto para um periodo de 2
anos; e, (ii) A implementagAo de contratos para a execugao dos servigos de
manutengAo de rotina, por quantidades executadas e pregos unitArios, por
mais 2 anos, para os demais 21 Distritos RodoviArios do DER/SC\. A
terceirizagao desses servigos, nas duas modalidades, cobre a totalidade da
extensAo da malha rodoviaria pavimentada e nao pavimentada do Estado\.
No que se refere a execugao dos servicos de conserva por niveis de
qualidade, informamos que o DER/SC concluiu a contratagAo da empresa TEC
(Tecnica de Engenharia Ltda) para execugao destes servigos em 205 km de
rodovias pavimentadas e 44\. km nao-pavimentadas que estAo sob a jurisdigao
do Distrito de Videira\. Esses servigos serao pagos em cotas mensais em
fungao da extensAo efetivamente conservada, respeitando-se as exig6ncias
relativas aos niveis de qualidade impostos pelo Edital\. A consolidagAo dos
beneficios desta agAo poderA ser reforgada atraves do acompanhamento e
monitoramento desse Banco, na eventualidade de um segundo financiamento
para o Estado\.
No comments were received from the State of Alagoas\.
(b) Cofinanciers:
Not applicable\.
(c) Other partners (NGOs/private sector):
Not applicable\.
10\. Additional Information
None\.
-8 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Item Year _
1992 1993 1994 1995 1996 1997 1998 1999 Total
Ap R Ach Ap R Ach Ap R Ach Ap R Ach Ap R Ach Ap R Ach Ap R Ach Ap R Ach Ap R Ach\.
KenaD&
Resurf\.
Alagoas 44 127 220 187 53 292 85 32 128 36 78 137 45 870 291 303
Sta\. Catarina 103 50 362 177 438 315 370 269 175 83 122 42 1448 1080 1058
Sub-total 2318 1371 1361
K\.M\.expena\.
US$M
Alagoas 3\.5 3\.2 3 2\.3 1\.2 1\.6 3 2 3 0\.5 3 0\.4 3 0\.2 13\.6 12 4\.3
Sta\. Catarina 7\.3 7\.5 7\.4 7\.5 7\.5 7\.5 7\.7 7\.5 7\.9 7\.7 9\.6 11\.3 37\.8 37\.8 58\.6
Sub-total 51A 49\.8 62\.9
Unit Cost Reh\.
IOOOR/kmab
Alagoas 77 108 111 86 74 40 83 85 83 94 83 82 77 79 83 78
Sta\. Catarina 61 105 72 37 61 58 49 59 71 71 108 52 62 62 66
Average 70 72 72
R\.M\. % Length
Contracted
Alagoas 0 0 0 0 10 0 30 0 50 0 0 0 0 50 0
Sta\. Catarina 2\.5 0 5 0 11 0 18 0 25 57 58 58 25 58
NumDer 0T
Staff
Alagoas 1200 1200 650 530 1200 530
Sta\. Catarina 2474 1877 1817 1727 1639 1450 2474 1460
Sub-total
No\. trainee-
week
Alagos 100 150 150 100 18 9\.4 22\.8 4\.4 500 54\.6
Sta\. Catarina 600 53 600 198 600 334 600 421 799 532 2400 2337
Sub-total 2900 2391\.6
Pav\. Net\.
Condition
Ala\. %lRl:5 30 47 28 30 28
Sla\. %IRI>3\.5 31 30 21 15 12 0 31 0
Abbreviations: Ap = Appraisal, R = Revised, Ach = Achieved, RM = Routine raintenance
-9-_
Annex 2\. Project Costs and Financing
Annex 2a
Project Costs by Components (in USS million equivalent)
Appraisal Revised Actual/Latest
Project Component Estimate estimate Estimate % of Appraisal % of Revised
Rehab\.& Resurfacing 131\.9 97 93\.4 71% 96%
Routine Maintenance 51\.2 57\.5 62\.9 123% 109%
Tech\.Assist\.&Training 13 10\.2 13\.8 106% 135%
Contingencies 28\.1
Total 224\.2 164\.7 170\.1 76% 103%
Annex 2b
Project Costs by Procurement Arrangements (in USS million equivalent)
Expenditure Categories Procurement Method Procurement Method
Appraisal estimate Actual/Latest estimate
ICB NCB Other NBF Total ICB NCB Other NBF Total
1\. Works 94\.6 65 51\.2 210\.8 61\.2 32\.4 63 156\.6
2\. Goods 1\.3 1\.3 0\.61 1\.1 1\.71
3\. Services 12\.2 12\.2 10\.8 1 11\.8
4\. Misc\.
Total 94\.6 65 13\.5 51\.2 224\.3 72\.6 34\.5 0 63 170\.1
Annex 2c
Project Financing by Component (in USS Million equivalent)
Component Appraisal estimate Actual/Latest Estimate Percentage of Appraisal
Bank Govemment Co-financier Bank Govemment Co-financier , Bank Government Co-financier
Works 65\.8 85\.1 57\.2 36 87% 42%
Routine Maintenance 51\.2 63 123%
Goods 1\.3 1\.8 0\.1 138%
Services 6\.7 10\.8 1\.2 161%
Unallocated 14\.2
Total 88 136\.3 69\.8 100\.3 79% 74%
- 10-
Annex 3: Economic Costs and Benefits
Annex 3
Cost Benefit Analysis
Latest
Appraisal Estimate
Base year 1991 1994-98
Unit Cost/km 105,000 99,000
Total Costs US$M 28\.6 26\.4
IERR, % 60 90
NPV, US$M 67 212
- 11 -
Annex 4\. Bank Inputs
(a) Missions:
Sta f P c c o\. oPersonsa\.Speca1!t P\. rr C Ra
(e\.g\. 2Economists, I FMS, etc) Implemen1tat o 1-Do ent
0 40 00 Month/Ye ar 0-0a0;: Count 40-ilSpecialty0004-0000 j-0P gss- O bjectiv
Identification/Preparation Alone
App raisal/Negotiation
Dec\. 91 6 ECN, 2EGR, ENS,
PRO\.INST
Supervision
Nov\. 92 4 ECN, EGR, ENS, INST S S
May 93 3 ECN, EGR, INST S S
Jan 94 3 ECN, EGR, INST S S
Jul 94 3 ECN\. EGR, INST S S
Jan 95 4 ECN, 2EGR, INST S S
Jul 95 3 ECN, EGR, INST S S
Feb 96 4 ECN, 2EGR, INST S S
Nov 96 4 ECN, EGR, PRO, INST U U
May 97 4 ECN, EGR, PRO, INST U U
Oct 97 3 ECN, EGR, PRO U U
May 98 3 ECN, EGR, PRO S S
Mar 99 3 ECN, EGR, PRO S S
Nov 99 1 PRO S S
ICR
Feb 00 2 EGR, PRO
Abbreviations: ECN Economist, EGR Engineer, INST= Institutional Development Specialist, PRO = Project Officer
(b) Staff\.
[ Stagep of Project Ccle ActualestEstimate-
_________________0;;00 00tg0 0t t0t 40w No\. Staff weks US$ (,OO0)
Identification/Preparation 78\.4 188\.8
AppraisaVNegotiation 51\.8 186\.8
Supervision 145\.3 388\.6
ICR 7\.5 30\.0
Total 283\.0 794\.2
- 12 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Z Macro policies O H OSUOM ON * NA
0 Sector Policies O H O SU O M O N * NA
M Physical O H * SU O M O N O NA
M Financial O H *SUOM O N O NA
N Institutional Development 0 H * SU 0 M 0 N 0 NA
Z Environmental O H * SU O M O N O NA
Social
M Poverty Reduction O H O SU O M O N * NA
Gender O H OSUOM ON *NA
M Other (Please specify) OH OSUOM ON * NA
* Private sector development O H O SU O M O N * NA
* Public sector management 0 H O SU O M 0 N 0 NA
BOther (Please specify) O H O SU O M ON * NA
- 13 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactoiy, HU=Highly Unsatisfactory)
6\.1 Bankperformance Rating
Lending OHS OS OU OHU
Supervision OHS OS O U O HU
Z Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
E Preparation O HS * S C) U O HU
2 Government implementation performance 0 HS 0 S C) U 0 HU
Z Implementation agencyperformance 0 HS *S O U 0 HU
M Overall OHS OS O U O HU
- 14-
Annex 7\. List of Supporting Documents
Annex 7
List of Supporting Documents
1\. Staff Appraisal report\. Brazil\. State Highway Management\. Dec\.1,1992 Report No\. 10395-BR
2\. Memorandum and Recommendation of the President of the Intemational Bank for Reconstruction and Development
to the Executive Directors on two Proposed Loans in a total amount equivalent to US$88 million to the States of Alagoas and
Santa Catarina with the Guarantee of the Fedrative Republic of Brazil for a State Highway Management Project\. Dec\.1,1992
Report No\. P-5733-BR
3\. Loan Agreement (Alagoas State Highway management Project) between Intemational Bank for Reconstruction and Development
and State of Alagoas\. Loan Number 3548-BR, Jan\.21,1994
4\. Loan Agreement (Santa Catarna State Highway management Project) between Intemational Bank for Reconstruction and
and Development and State of Santa Catarina\. Loan Number 3548-BR, Jan\.21,1995
5\. State Highway Management Project, Supervision Reports (Forms 590), or Project Status reports from July 1993 to Nov\.1999\.
6\. Relatoro de Encerramento da lmplementacao do PNMRE/SC BIRD\. Estado de santa Catarina\. DERISC Junho 1999
- 15-
co | REVIEW |
P009887 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 16092
IMPLEMENTATION COMPLETION REPORT
INDIA
FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT
(CREDIT 1931-IN)
October 23, 1996
Population and Human Resource Operations Division
Country Department II
(Bhutan, India and Nepal)
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents
Currency unit = Indian Rupee
At appraisal: lJSS 1\.00 =Rupee 12\.9
At completion: lJS$1\.00 = Rupee 35\.54
Other Equivalents
I meter - 3\.28 feet
1 kilometer = 0\.62 miles
I crore - 10 million
I lakh - 100\.000
Government Fiscal Year
April I - March 31
Abbreviations
ANM Auxiliary Nurse-Midwife
CPR Contraceptive Prevalence Rate
DCA Development Credit Agreement
DHFW Directorate of Health and Family Welfare
FMPW Female Multi-Purpose Worker
FVHW Female Voluntarv Health Worker
GBMC Greater Bombay Municipal Corporation
GOI Government of India
HP Health Post
ICDS Integrated Child Development Services
ICR Implementation Completion Report
IDA International Developmenit Association
[EC Information\. Education and CommunLicationis
IPP India Population Project
MCH Maternal and Child Health
MIES Management Inforimiation and Evaluation System
MMC Madras Municipal Corporationi
NMMC Navi Mumbai Municipal Corporation
PHD Public Health Departilmenit
PM P Private Medical Practitionier
PPC Post-PartiLIm Center
PU Pediatric Unit
PVO Private Voluntary Organization
SAR Staff Appraisal Report
TNA Training Needs Assessmenit
URS Urbani Revamping Scheine
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
INDIA: FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT
(CR 1931-IN)
Contents
page
Preface \.
Evaluation Summary \. ii
PART I: Project Implementation Assessment
A\. Statement/Evaluation of Objectives \. I
B\. Achievement of Objectives \. 3
C\. Major Factors Affecting the Project \. 6
D\. Project Sustainability \. 7
E\. Bank Performance \. 8
F\. Borrower Performance \. 9
G\. Assessment of Outcome \. 9
H\. Future Operation \. 9
I\. Key Lessons Learned \. 10
PART II: Statistical Information
Table 1\. Summary of Assessments \.11
Table 2\. Related Bank Loans/Credits \.13
Table 3\. Project Timetable \.16
Table 4\. Credit Disbursements \.17
Table 5\. Key Indicators for Project Operation \.18
Table 6\. Studies Included in the Project \.19
Table 7A\. Project Costs by Component \. 20
Table 7B\. Project Costs by Category of Expenditure \. 20
Table 8\. Status of Legal Covenants \. 21
Table 9\. Bank Resources: Staff Inputs \. 25
Table 10\. Bank Resources: Missions \. 26
Appendices
A\. The ICR Mission's Aide-Memoire
B\. Borrower's Contribution to the ICR
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otheriise be disclosed without World Bank authorization\.
IMPLEMENTATION COMPLETION REPORT
INDIA: FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT
(CR 1931 -IN)
Preface
This is the Implementation Completion Report (ICR) for the Fifth India Population Project,
for which Credit No\. 1931-IN in the amount US$57 million was approved on June 21, 1988\. The
credit was closed on March 31, 1996, after a three-month extension of the closing date\. US$51\.17
million, or 90 percent of the credit, was disbursed\. The undisbursed balance was cancelled
effective August 26, 1996\.
Preparation of this ICR began during the Bank's implementation completion review mission
from November 27 to December 4, 1995\. It is based on material in the project files, field visits, and
interviews with beneficiaries, project staff, Government officials and Bank staff\. The Borrower
contributed to the preparation of the ICR by preparing its own evaluation of the project's
preparation and execution\. Comments were received from the Borrower on drafts of the report and
taken into account in the final version\.
The cooperation and assistance of the Government of India, the Governments of
Maharashtra and Tamil Nadu, and the Municipal Corporations of Madras, Mumbai and Navi
Mumbai are gratefully acknowledged\.
This report was prepared by Anthony R\. Measham (Task Manager) and Lessel H\. David
(Consultant), with technical assistance from R\. Sethuraman, Ann Hammond, and Mark Schlagel\.
Nira Singh and Mark Schlagel provided office technology assistance\. The report was reviewed by
Richard Skolnik, Division Chief, SA2PH, and Kazuko Uchimura, Project Adviser\.
- ii -
IMPLEMENTATION COMPLETION REPORT
INDIA: FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT
(CR 193 1 -IN)
Evaluation Summary
Introduction
1\. IDA has been involved in India's family welfare program since the early 1970s through a series
of India Population Projects (IPPs)\. Of the nine IPPs, five supported the program in backward and rural
districts of eight Indian states; two, including the Fifth India Population Project (IPP V), supported
urban programs, and two strengthened training in eight states\. IDA is also supporting the Child
Survival and Safe Motherhood Project across the country\.
Project Objectives
2\. The original objectives of IPP V were to: (a) expand family welfare services with emphasis on
maternal and child health, birth spacing, and increased use of temporary contraceptive methods; (b)
improve the quality of family welfare services; (c) strengthen the capacity of Greater Bombay, Madras
city and the Chingleput district in Tamil Nadu to plan, manage and implement family welfare programs
in urban areas; and (d) increase the participation of Private Voluntary Organizations (PVOs) and
private medical practitioners (PMPs) in urban family welfare programs\. To meet these objectives, the
Staff Appraisal Report (SAR) identified four components: (a) constructing, furnishing, equipping and
staffing Health Posts (HPs) and back-up units; (b) staff training; (c) reorganization of Health and
Family Welfare Bureaus, including additional manpower; and (d) assisting PVOs to operate HPs and
training PMPs in health and family welfare\.
3\. Initially, IPP V was limited to operate in the areas under the Greater Bombay Municipal
Corporation (GBMC) and the Madras Municipal Corporation (MMC) and its four adjoining
municipalities\. By late 1988, however, Bank and project authorities realized that significant cost
savings would accrue to the project, largely as a result of the depreciation of the Rupee against the
SDR which had been occurring since 1986\. These savings could be used to broaden the project's
scope (including added service delivery activities) and geographic coverage\. In response, the project
was restructured in 1990\.1 Subsequently, upon official GOI and IDA approval of expansion
proposals (1992-93), the Navi Mumbai Municipal Corporation (NMMC) adjacent to Greater Bombay
and all urban areas in Tamil Nadu with a population greater than 100,000 were added to the project,
increasing the geographic scope substantially and increasing the population coverage of the project by
approximately 25 percent\.
The Credit and Project Agreements were amended to increase coverage to all of the district of Chingleput and other
municipalities or urban areas of Maharashtra and Tamil Nadu\. Schedule 2 of the DCA was also revised to include Social
Marketing of Contraceptives, Compensation to Acceptors, and the construction of Family Welfare Centers\.
- 111 -
4\. The main goal throughout the project was to improve the service delivery and outreach systems
of family welfare services in urban slum areas\. While the establishment of HPs manned by suitably
qualified staff improved service delivery, the project also successfully improved the outreach system
through the use of Female Voluntary Health Workers (FVHWs) in the slum areas\.
5\. The project objectives were mutually supportive and, prima facie, within the Borrower's
capacity\. In a significant departure from previous IDA-financed India population projects, the project's
objectives were not expressed in terms of fertility reduction but in health services rendered to women
and children\. This change appears to have contributed importantly to the success of the project\.
6\. The project's financial objectives were largely fulfilled\. US$51\.17 million, or 90 percent of the
credit, was disbursed\. The undisbursed balance was cancelled effective August 26, 1996\.
Implementation Experience and Results
7\. Implementation worked well with respect to three of the project's four objectives\. Service
units were established, equipped, and staffed, and services provided were of improved quality\. In areas
where the project was operating from its inception, the service delivery results were closer to SAR
expectations than in those that were added later -- as expected\. The expansion of the service delivery
network is likely to continue, as are the measures to increase their outreach through inter-personal
contact\. Measures taken to strengthen program management, such as the reorganization of
implementing agencies and revised monitoring systems, were also successful and are likely to be
sustained\. The involvement of PVOs and PMPs fell short of expectations\.
8\. Three major factors contributed to the project's success\. First, both states -- Maharashtra and
Tamil Nadu -- had a demonstrated capacity to manage successfully donor-assisted projects, including
those in the social sectors\. Second, there was continuity of skilled program management; as the project
was in urban areas, personnel tumover was low\. Third, IPP V's objectives were client-focused:
individual clients saw services as being of direct and immediate benefit to them, resulting in their active
involvement and a strong sense of satisfaction among service providers\.
9\. While there was a year's delay in initiating project implementation, this was more than
compensated for by intelligent and enthusiastic commitment thereafter\. The Bank provided competent
and flexible support\.
10\. Service statistics indicate that the project has contributed significantly to lowered infant and
child mortality and reduced higher-order births\. Definitive results will be available upon completion of
the end-line surveys\.
Summary of Findings, Future Operations, and Key Lessons Learned
11\. The project's main objectives of establishing service outlets and initiating outreach activities
were well met\. The project's secondary objectives of involving PVOs, training PMPs, and
commissioning special studies in time to fine-tune implementation, were less well met\. Had all the
project-related studies been completed in a timely manner and made more immediate use of, the project
and its lessons would have been considerably enriched\.
- iv -
12\. The basic paradigm of service delivery, which builds on the Urban Revamping Scheme (URS),
is likely to be sustained\. While the sustainability of the partnerships with PVOs and PMPs is
questionable, this is unlikely to affect the overall sustainability of the project\. GOI has taken a number
of steps with IDA support to enhance the sustainability of the Family Welfare Program\. The ongoing
Sixth and Seventh Population Projects are strengthening training capacity in seven states and in the
overall program; the Eighth Population Project has expanded the IPP V approach to four more major
cities; and the Ninth Population Project is enhancing the MCH strategy in the states of Assam,
Karnataka, and Rajasthan\. On a national scale, the Child Survival and Safe Motherhood Project, which
ended on September 30, 1996, has provided further IDA support for the broader approach to MCH and
family planning\. And the proposed Reproductive and Child Health Project, scheduled for appraisal in
early 1997, will further expand the service paradigm pioneered in IPP V\. Finally, the GOI-Bank
collaboration on sector work, culminating in the June 1995 report (India's Family Welfare Program:
Toward a Reproductive and Child Health Approach - Report No\. 14644-IN), describes the paradigm
shift in the program's strategy\.
13\. The first lesson learned is that quality Maternal and Child Health (MCH) and family planning
services can be provided to urban slum populations in India, and the choice of implementing agency is
an important determinant of success\. The density of service outlets and outreach worker per unit of
population followed by URS and implemented in IPP V appears optimal\. The second lesson learned is
that a client-focused MCH project approach can work well in India\. The emphasis on delivering
services seen as of direct and immediate benefit both involved beneficiaries and gave providers
immense satisfaction\. The third lesson learned is that allotting a largely subordinate role to the private
sector can lead to disappointing results\. Ways to bring about a more equitable partnership between
official and non-official agencies need to be further explored\.
Assessment of Outcome
14\. Project outcome is rated "satisfactory", based on the successful achievement of key objectives\.
The project clearly made a strategic contribution toward the gradual shift of the Family Welfare
Program from a top-down, demographically-driven approach to a broader, reproductive and child
health care approach\.
IMPLEMENTATION COMPLETION REPORT
INDIA: FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT
(CR 1931-IN)
PART I: Project Implementation Assessment
1\. IDA has assisted India's family planning (later, family welfare) program since the early 1970s
through a series of India Population Projects (IPPs)\. The first four IPPs supported the Government of
India's (GOI) Model Plan: a paradigm of service outlets and field workers to strengthen health and
family welfare services in rural and backward districts\.
2\. The Fifth India Population Project (IPP V) was directed to two major cities and supported the
Urban Revamping Scheme (URS), launched in 1984 to strengthen urban health and family welfare
services\. While the cities were comparatively well-endowed with health facilities, these facilities were
located at random and neglected the slums that absorb most of the increasing number of rural migrants\.
URS sought to correct this imbalance and to provide outreach through field staff, a new activity for
urban service programs in India\.
A\. Statement/Evaluation of Objectives
3\. IPP V's operations were directed to India's second and fourth largest urban agglomerates:
Bombay (Maharashtra) and Madras (Tamil Nadu)\. Each of these urban agglomerates comprises a
major municipality coterminous with a metropolitan district and is ringed by smaller municipalities in
adjoining districts\. The project initially covered only the Greater Bombay Municipal Corporation
(GBMC) and the Madras Municipal Corporation (MMC) and four smaller municipalities in the
adjoining Chingleput district\. The amendment to the Credit Agreement carried out in 1990 enhanced
service delivery activities and added to the project's geographic coverage all of the district of
Chingleput and other municipalities or urban areas of Maharashtra and Tamil Nadu\. Expansion
activity in new areas did not, however, become visible until mid-1993, soon after expansion proposals
had been approved by GOI and IDA (1992-93)\. The approved expansion areas included, in Bombay,
the Navi Mumbai Municipal Corporation and, in Tamil Nadu, four additional municipal corporations
and 19 municipalities (Table 1)\. The final expansion increased the population coverage of the project
by about 25 percent\.
4\. Thus, in Maharashtra, two autonomous corporations in Bombay were supported, whereas, in
Tamil Nadu, 24 municipalities across the state, including in Madras, were included, most of which
were administered directly by the state government\. While the two municipal corporations were the
major players in the Bombay region, in Madras/Tamil Nadu, the state government had the dominant
role\. This difference, as discussed below (paras\. 24, 26), had implications for project implementation
and sustainability\.
-2 -
Table 1: Geographical Scope of IPP V
Region Original (SAR) Added
Bombay Greater Bombay Municipal Corporation Navi Mumbai Municipal Corporation
Madras/ Madras Municipal Corporation and four All urban areas in the state with populations
Tamil Nadu municipalities in Chengalpattu district of more than 100,000
Source: Project Reports
5\. Specific objectives: Within the overall framework of URS, four components were identified
for IPP V support:
(a) Service delivery expansion, by constructing, equipping, and staffing health posts (HPs) and
back-up maternal and child care facilities;
(b) Quality improvement, by establishing training cells to plan and coordinate training;
(c) Management improvement, by restructuring the administrative line organization, strengthening
administration by adding posts, instituting management information and evaluation systems
(MIES), establishing information, education and communications (IEC) cells, and
commissioning special studies; and
(d) Increased private sector involvement, by grants to Private Voluntary Organizations (PVOs) for
operating selected health posts and collaborating in the design of IEC materials, and by
enlisting the cooperation of private medical practitioners (PMPs), including training programs
for them\.
6\. The expected outcomes were expressed in terms of: (a) facilities to be created; and (b) services
to be delivered, as measured by increases in contraceptive prevalence, with emphasis on the use of
reversible methods, maternal care and immunization coverage\. In the case of (a) and (b) the
expected levels of performance were specified and met substantially\. The SAR did not specify any
measures of quality\.
7\. Three types of service facilities were specified in the SAR: health posts (HPs), post-partum
centers (PPCs) and pediatric units (PUs) for children and neonates\. In Madras, 25 zonal offices were
also to be created; though originally intended as administrative units, when operation theaters and
wards were added, they functioned as referral service centers\. The number of facilities to be established
increased as new areas were added following approval of expansion proposals (Table 2)\.
- 3 -
Table 2: Service Facilities to be Established, by Type
TYPE OF FACILITY SAR TARGET ADDED SUBSEQUENT ACTUAL
(PRE- (POST- SCALE DOWN ACHIEVED
EXPANSION) EXPANSION) TARGET
Greater Bombay
Health Posts 139 - 120 120
Post-partum Centers 11 14 - 25
Pediatric Units 10 - 10
Navi Mumbai
Health Posts - 1I II
MCH Units with 25 beds - 5 5
First Referral Unit - I I
Madras
Health Posts 152 - 140 140
Zonal Referral Units 25 - 15 15
Other Tamil Nadu Urban
Health Posts - 33 33
Pediatric Units - 21 21
Maternity Units - 9 9
Source: Project Documents
B\. Achievement of Objectives
8\. The project met fully its objectives of establishing facilities and providing services\. Service
delivery and demographic targets were met to a substantial degree, and service quality improved\. The
training and management improvement components were carried out as planned\. The monitoring and
evaluation\. special studies, and IEC components were carried out largely as planned, with varying
degrees of effectiveness\. The component concerning private sector and NGO involvement fell short of
expectations in both cities\.
9\. Physical Objectives\. The project achieved the physical objectives of service facilities
established, with some modifications reflecting actual needs\. In Bombay, against SAR estimates of 195
HPs, 176 are functioning (56 pre-existing and 120 added)\. The GBMC scaled down the number of HPs
as it felt that the projected population by the year 2000 would be 12, not 13, million\. Similarly, due to
"need-based reorganization", the SAR estimate of 152 HPs for Madras and suburbs was scaled down to
140, which included the construction of 95 new health posts and the conversion to health posts of 45
existing, poorly functioning Urban Family Welfare Centers\. In both Bombay and Madras, secondary-
level facilities exceeded SAR estimates since clients preferred better-equipped facilities\.
10\. Service outlets were staffed with clinical personnel without delay\. For outreach workers, there
was a delay of two years in Bombay as female multi-purpose health workers (FMPWs) were not
available and had to be recruited and undergo the mandatory two-year auxiliary nurse-midwife (ANM)
training\. At first, project authorities were unenthusiastic about using female voluntary health workers
(FVHWS), as advocated by the Bank and included in the project\. As such, no FVHWS were initially
introduced, either in Bombay or in Tamil Nadu\. When, and largely at the Bank's further insistence,
they were introduced in Bombay and their utility became evident, not only were they institutionalized
- 4 -
in Bombay, they were also extended to Madras\. In Bombay they were paid Rs\. 200 per month, later
raised to Rs\. 500\. In Madras, FVHWs are indeed voluntary and receive no payment for their services\.
11\. Project service delivery was met to a substantial degree; the notable exception was in growth
monitoring\. For Madras, the reported performance on this parameter is half that of SAR expectations;
GBMC did not collect these data\. Program administrators explained that the Integrated Child
Development Services (ICDS) program met this need in both cities but ICDS could not provide
detailed data\. The one demographic target, for birth order, was also met to a substantial degree\.
12\. The service delivery targets for Madras and Bombay were largely achieved, especially in the
case of Madras, as shown in Table 3\. Performance of the geographical areas that were added to the
project naturally lagged behind the performance of those areas included originally\. However, available
data suggest that their rate of progress was faster than in the original areas -- evidence, perhaps, of
learning from the earlier experience\.
Table 3: IPP V Key Indicators, SAR Targets and Achievements by
Geographical Area, 1995
Achievements
(as of December 31, 1995)
(per cent)
Indicators/ SAR Madras Tamil Nadu Bombay
Goals Targets Expansion
(per cent) MMC Suburbs Phase I Phase 11 GBMC NMMC'
CPR 60 71\.3 60\.7 50\.6 53\.5 59\.2 55\.0
Immunization 95 99\.7 99\.5 99\.6 90\.5 82\.6 92\.0
Ante-natal 95 97\.1 93\.2 91\.9 94\.4 77\.3 90\.0
Care l
Post-natal 95 87\.6 81\.9 82\.8 89\.0 88\.4 90\.0
Care l
Institutional 98 99\.3 97\.9 98\.3 95\.2 94\.6 83\.0
Deliveries
Growth 80 80\.3 41\.0 43\.6 67\.4 NA NA
Monitoring
Birth Order 3+ Reduction 25\.2 33\.5 to 20\.6 reduced to NA NA
to 12\.9 15\.6 to 18\.7 20\.1
Source: SAR and project reports
13\. Quality Improvement\. In the absence of any formal, independent evaluation, it is not possible
to judge definitively if the quality of services improved over the project period\. It would be facile to
assess quality solely from service delivery performance, nor do field visits provide a sufficient basis\.
Nevertheless, project officials, clients, and Bank staff are unanimous that service quality increased
substantially\.
14\. Training\. The training component was carried out as planned and appeared to contribute
importantly to the achievement of project objectives\. The SAR considered training as the key
intervention to improve quality, and training cells were established in GBMC, MMC, and the IPP V
directorate in Tamil Nadu\. A substantial amount of training involved basic studies for ANMs,
supplemented by three months of urban-based field training\. The training cells helped to focus on in-
service training, which otherwise would have been neglected\. They also did well to draw in training
associated with national programs, such as immunization, child survival and safe motherhood, which
usually reach rural but not urban areas\. Analysis of training reports shows that in-service training was
spread evenly across the trainee universe, and analysis of training content shows that it was sufficiently
hands-on for clinical skill development\.
15\. No definitive judgment is possible on the effectiveness of the training\. Though program
administrators paid considerable attention to training and were pleased with the results, an impartial
assessment is lacking\. Furthermore, a project of this size and duration, especially as it was breaking
new ground (urban areas) would have profited from an initial and rigorous training needs assessment
(TNA) and a longer-term strategy for in-service training\. While the SAR did specify training areas, a
TNA would have validated these from the trainees' perspective and helped in designing specific
programs\. In Madras, a TNA was done almost half-way through the project and limited to the areas
added then\. While a TNA for Bombay was done earlier on, its quality and relevance are doubtful\. The
supervision mission of April 1993 asked that it be repeated; it never was\.
16\. Management Improvement\. The project implementation organization in each city was
restructured as agreed during negotiations\. A unified command structure was introduced, spans of
control reduced, and staff and line functions separated\. In Bombay, the span of control of the executive
health officer was made much more manageable\. In Madras, MMC's Child Welfare Unit was merged
with that of family welfare giving the latter, inter alia, a more client-friendly identity\.
17\. The additional posts recommended in the SAR were created and filled, albeit with about a
year's delay in GBMC\. In Bombay, these were filled by medical officers of GBMC, whereas in Madras
the state Directorate of Health and Family Welfare's (DHFW) larger pool was tapped for management
information and evaluation systems (MIES), infornation, education and communications (IEC), and
training, giving it an edge over Bombay in terms of specialized manpower\.
18\. Monitoring and evaluation cells were created as planned in the Public Health Department of
GBMC and in the IPP V directorate in Tamil Nadu\. In Bombay, a consultant was appointed and an
MIES designed and introduced\. There was some difficulty in filling the posts of computer operators\. In
Madras, posts were filled without delay by deputations from the DHFW\. In both regions, extensive
training had been done, and the system functioned smoothly as far as the flow of instruments and their
analysis were concerned\. Although the data were used at the apex level for reordering priorities, there is
little evidence that they served the needs of middle-level management and field operatives for their
own micro-planning\. To this extent, the MIES tended to centralize planning and control at the cost of
localized outreach approaches\.
19\. Special Studies\. All of the planned studies were completed, as shown in Part II, Table 6\.
Baseline and community needs assessment studies were done\. However, with the exception of NMMC,
they were delayed to the point that they could not serve their intended purpose\. None of these studies
was repeated for the areas added in Tamil Nadu\. Mid-term evaluations were more timely\. Apart from
these and other mandatory studies, such as assessing training and IEC needs, only two other studies
were undertaken\. With few exceptions, the studies tended to be more descriptive than analytical\. It is
- 6 -
for this reason, as well as the fact that they were delayed, that evidence of the influence of studies on
implementation strategies is difficult to find\.
20\. Information, education and communications (IEC) activities were well supported by the IEC
cells and commendable for the volume of materials produced, the quality of their production, and the
energy with which they were disseminated\. Several innovations were introduced to disseminate IEC
materials\. In Madras, barber shops were used to reach males\. In Bombay, the use of street plays, a
newsletter to medical practitioners, and information counters at all offices of GBMC were introduced\.
However, as a senior administrator pointed out, most of the IEC content was based on the provider's
rather than the client's perception of needs\. As such, the messages were more exhortative than
educational and thus less likely to lead to sustained attitudinal and behavioral change\. Furthermore,
there was no systematic media planning\.
21\. Private Sector and PVO Involvement\. This component fell short of expectations in both cities\.
The operation of some HPs was handed over to PVOs but discussions with program administrators and
PVOs suggest that the involvement was more pro forma than out of conviction that PVOs would
contribute much\. No special accommodation was made to meet PVOs' needs\. Efforts to involve PMPs
did not yield significant results\. Their training needs were not assessed, nor was there much evidence of
involving local action groups\. On the other hand, the collaboration with one private industry in Bombay
to promote health and family welfare among its employees and to support IEC efforts was successful\.
22\. Financial Objectives\. In 1995, GOI increased the rupee amounts sanctioned for Bombay,
Madras and other Tamil Nadu cities, with Bank approval, in order to take advantage of exchange rate
savings\. GOI increased the sanction for Bombay from Rs\.48 crores to Rs\.71 crores, and for Madras
and other Tamil Nadu cities from Rs\.69 crores to Rs\.89 crores\. The project's financial objectives were
ultimately largely fulfilled: US$51\.17 million, or 90 percent of the credit, was disbursed\. The
undisbursed balance was cancelled effective August 26, 1996\.
23\. Disbursement Profile\. In October 1989, GOI requested that the third, fourth and fifth
population projects be restructured to include additional family welfare activities in the scope of the
projects\. The Development Credit Agreements (DCAs) for all three projects were amended accordingly
on February 9, 1990\. Subsequently, GOI submitted expenditure claims totaling US$29\.6 million under
IPP V\. This amount was disbursed\. However, in view of Bank concerns regarding the eligibility for
disbursement of some of this amount, a special audit was requested and carried out in 1992\. As a result,
US$15\.3 million of the US$29\.6 million was disallowed and refunded by GOI to the Bank in April
1994\. These expenditure claims and the subsequent refund account for the unusual disbursement profile
are seen in Part II Table 4\.
C\. Major Factors Affecting the Project
24\. The location of the project\. i\.e\., the states chosen and being confined to urban areas, was a
major advantage\. IPP V operated in Maharashtra and Tamil Nadu, two states notable for their good
record in implementing projects, including those in the social sectors\. Both states are socially well
developed compared to others in India, ranking among the first four in female literacy, low fertility, and
reach of health services\. Furthermore, in these two states, the rural total fertility rate is only ten per cent
higher than urban; in most others, it is 30 percent higher\. As the overwhelming majority of rural in-
migrants were from within the state, even in Bombay, where the beneficiary needs assessment showed
that 68\.9 percent of the migrants were from Maharashtra, the convergence of rural and urban fertility
was to IPP V's advantage\. Furthermore, IPP V being confined to cities, and largely the state capitals,
helped in two other ways: (a) the sheer logistics of civil works, performance monitoring, and
communications were less formidable than they would have been in rural areas and backward districts;
and (b) staff turnover was low, as those deployed in cities are less inclined to seek relocation than those
in rural areas\.
25\. The choice of project objectives for IPP V also contributed to its successful implementation:
they were contextually realistic and mutually supportive\. But even more importantly, they were mainly
oriented to service provision rather than demographic impact\. This boosted the morale of peripheral
service providers, who now felt that they were catering to client-determined priorities such as mother
and child care\. It is significant that there was no "target" for the single demographic objective --
reduction of higher-order births\. It was a welcome change from decades of "time-bound and target-
oriented" reduction of fertility\.
26\. Continuity of middle-level management and field staff was a third major advantage\. Those
involved with the project at its design stages largely stayed with it for most of its duration\. Thus,
lessons learned could be applied for mid-course corrections\. This is also part of the explanation for why
progress in those areas that came into the project's fold midway was faster than in earlier areas (para\. 12
above)\. Without detracting from the quality of administrative leadership or the Bank's accommodating
flexibility, the continuity in management also contributed to the learning ethos of the project\. For
example, the location of HPs was not strictly according to URS norms (population-based) but based on
distance and travel time of both clients and field staff\. This reduced the number of HPs without
adversely affecting accessibility\.
D\. Project Sustainability
27\. Issues of sustainability of the project fall into two categories: normative and financial\. The
normative perspective includes not only the administrative changes introduced formally, but also those
of perception and ethos that came about and were as responsible as anything else for the project's
achievements\.
28\. Normative Aspects\. First, cessation of implementation unit activities raises no concerns\. Since
there is not likely to be much new construction or initiation of major activities, the need for the
implementation unit will diminish\. In Bombay, inasmuch as MIES, IEC, and training have been
institutionalized within GBMC, these activities will continue, albeit at maintenance level\. To a lesser
extent, this will also apply to the changes in MMC\. In Tamil Nadu, most of the staff will revert to the
state government, carrying with them their IPP V experiences to the benefit of health and family
planning services across the state\.
29\. Second, the emphasis on MCH services, which represented a strategic move towards a more
client-focused approach emphasizing quality and meeting individual needs, is likely to be sustained\.
This large-scale project provided GOI with an important demonstration of this approach, which
undoubtedly contributed to the recent decisions to adopt a similar strategy nation-wide and to drop
method-specific contraceptive targets effective April 1996\.
- 8 -
30\. Third, the use of female voluntary health workers (FVHWs), generally considered to be a key
factor in extending outreach, is likely to continue in Madras and possibly be introduced in other
municipalities since they impose no fiscal burden\. It is not possible to be equally sanguine about their
continuance in Bombay\. At Rs\. 500 per month for each FVHW, an amount likely to increase, the
burden is substantial\. If the fate of community health volunteers in rural areas is any guide, in the event
of a resource crunch it is likely that FVHWs will be the first either to be retrenched or lost to attrition
and not replaced\. If this were to occur, it would weaken the program in Bombay\.
31\. Fourth, the involvement of PVOs, already under strain in both Bombay and Madras, is not
likely to be sustained in the long run\. In MMC, support to PVOs has been extended up to June 1997\.
In GBMC, no plans for continuing support to PVOs have yet been formulated\. The lack of unequivocal
support to PVOs is not primarily due to financial reasons; GOI has sufficient money to support them\.
Moreover, the expenditure on HPs operated by PVOs is not additional since the government would
have to spend this amount if it operated the HPs\. The more intractable problem is one of mutual
distrust\. However, this is a complicated matter since in both cities and states there are programs that
work extensively and successfully with PMPs and PVOs, and throughout India there are movements in
these directions\. Finally, if PVO involvement in the activities were not to be sustained, this in itself
would not undermine the overall sustainability of the project\.
32\. Fifth, GOI has taken a number of steps with IDA support to enhance the sustainability of the
Family Welfare Program\. The ongoing Sixth and Seventh Population Projects are strengthening
training capacity in seven states and in the overall program; the Eight Population Project has expanded
the IPP V approach to four more major cities; and the Ninth Population Project is enhancing the MCH
strategy in the states of Assam, Kamataka, and Rajasthan\. On a national scale, the Child Survival and
Safe Motherhood Project, which ended on September 30, 1996, has provided further IDA support for
the broader approach to MCH and family planning\. And the proposed Reproductive and Child Health
Project, scheduled for appraisal in early 1997, will further expand the service paradigm pioneered in
IPP V\. Finally, the GOI-Bank collaboration on sector work, culminating in the June 1995 report
(India's Family Welfare Program: Toward a Reproductive and Child Health Approach - Report No\.
14644-IN), describes the paradigm shift in the program's strategy\.
33\. Financial Aspects\. Ongoing activities are likely to be sustained financially\. The SAR estimated
recurrent cost implications on the order of Rs\. 221 million per year, about equally divided between
Bombay and Madras/Tamil Nadu\. At the end of the project, this estimate appears to hold\. Compared to
the total expenditure on health and family welfare, the amount is not formidable\. GBMC and NMMC
are confident that they can finance activities introduced under IPP V from their own revenues while
Madras/Tamil Nadu is seeking GOI support under URS\. Both approaches appear promising, though in
the event of GOI funding, the additional posts created outside the URS pattern are not likely to
continue\. Such an eventuality would not, however, have a major impact on the program now that it is
well established\. And although there remains some doubt about the future source of funding, especially
in Tamil Nadu, financial sustainability does not appear to be at risk\.
E\. Bank Performance
34\. Bank staff assisted the project areas in developing an innovative strategy in relatively uncharted
territory: providing MCH and family planning services to urban slum populations\. The SAR was a
comprehensive and practical document, fully subscribed to by the Borrower\. Supervision missions
-9-
were frequent enough and of appropriate composition\. The decline in the frequency of supervision
during the middle stages of the project, as seen in Part II, Table 10, did not adversely affect the project\.
Rapport between the Bank and Borrower was good\.
F\. Borrower Performance
35\. Bombay, Madras and the Government of India deserve great credit for pioneering a broad
approach to reproductive and child health, which was subsequently endorsed by the 1994 Cairo
Conference on Population and Development and has now been adopted nation-wide\.
36\. The project start was delayed by a year, and progress initially was slow\. Although the GOI and
IDA signed the credit agreement in September 1988, it did not become effective until nearly a year
later, as GBMC, MMC, and the Tamil Nadu Government delayed signing it due to bureaucratic delays\.
However, the pace of implementation picked up and more than compensated for earlier delays\. Once
the project was operational, the implementing authorities were unusually enthusiastic, particularly
about expanding the service delivery network, and disbursements picked up correspondingly\.
37\. Delays in commissioning and completing special studies were a problem; at the time of ICR
preparation, the end-line surveys have yet to be commissioned\. If studies had been done as scheduled
and their findings considered, the project would have been considerably enriched and its lessons
clearer\.
G\. Assessment of Outcome
38\. Based on the success of the project in achieving its key objectives (paras\. 8-23), project
outcome is rated "satisfactory\." Currently available data on fertility and infant mortality in the project
areas are based on service statistics rather than surveys, and to that extent of limited utility in judging
overall impact\. However, the service statistics show encouraging reductions in fertility and mortality; a
reliable estimate of impact will have to await the end-line surveys\.
39\. A rating of "satisfactory" is also warranted if the project's outcome is assessed in terms of its
impact on India's health and family welfare program\. Assuming that a shift from a predominantly
demographic orientation to one concerned with health, particularly of women and children, is desirable,
the question is: did IPP V contribute? It would be presumptuous to overplay IPP V's contribution, but
the demonstration value of a project that underplayed fertility reduction per se and gave priority to
broader health issues, not only in its design but consistently and successfully through its seven-year life,
cannot be minimized\. This view of the project's contribution gained ground over the life of the project,
and is now the predominant view in Ministry of Health and Family Welfare and the states\. If it is on
this canvas that IPP V's impact is to be assessed, then it is indeed seminal, particularly as an exemplar
for projects that might choose to interpret family welfare more broadly to include reproductive and
child health\.
H\. Future Operation
40\. The future operation of the services supported by the project seems assured in both major cities
and the other municipalities\. These services have been absorbed into the URS or other programs of the
state governments concerned and are likely to be sustained in the long terrn\.
- 10-
I\. Key Lessons Learned
41\. Not all the reasons for IPP V's unusually high levels of achievement are replicable but three
appear to show promise\. One pertains to urban projects in India and two have relevance to a wider
range of social sector projects in India and comparable settings\.
42\. Implementing Agency\. The choice of implementing agency is an important determinant of
success\. IPP V was implemented through municipal corporations in the Bombay region while in
Madras it was largely through the state government\. In both cases, it appears that the project was
implemented by the most appropriate entity\. In the Bombay region, municipal corporations,
particularly those of Greater Bombay, are autonomous and self-financing and have their own elected
bodies\. In Madras, they are creatures of the state govemment and, to a large extent, financially
dependent on it\.
43\. Relevance of project objectives\. Successful project objectives should ensure high staff morale
and active beneficiary participation\. The statement of IPP V objectives and its ensuing design
unequivocally took the needs of both staff and beneficiaries into account\. In evidence is the project's
nearly exclusive concern for services: only service targets were quantified and measured\. Almost all
project administrators and field personnel not only agreed with IPP V's approach but felt that
implementing it gave them considerable personal satisfaction\. It took more courage to ignore fertility
reduction per se in 1987 than it does now\.
44\. PVO and Private Sector Involvement\. Allotting a subordinate role to the private and voluntary
sector can lead to disappointing results\. The promotion of PVO and private sector involvement in the
project was the single comparatively unmet objective of IPP V\. The fact that it did not have much
negative impact on project performance is of little comfort\. There is increasing evidence that official
social sector projects succeed to the extent that they collaborate with non-official agencies and groups\.
In hindsight, it appears that IPP V saw the involvement of the private sector as an objective rather than
a means\. Furthermore, some middle-level managers saw PVOs as competitors\. They failed to see that
the private and PVO sectors could be an extra resource to meet the project's objectives\. This
perspective needs to be pursued more aggressively in future projects\. If the private sector is to be a
partner, it must also have a greater say in making decisions and have mechanisms to do so incorporated
at the design stage\.
- 11 -
PART II: Statistical Information
Table 1: Summary of Assessments
A\. Achievement of Objectives Substantial Partial Negligible Not
Applicable
Macro policies [ L L O
Sector Policies 3 Ex
Financial objectives Li Cl [
Institutional development E x I L
Physical objectives E Li ] L
Poverty reduction 3 i 0 L
Gender issues E L L L
Other social objectives i Li 0
Environmental objectives L L L 3
Public sector management [ Li IZ
Private sector management L L [ 0
- 12 -
Table 1: Summary of Assessments (continued)
B\. Project sustainability Likely Unlikely Uncertain
C\. Bank performance Highly Satisfactory Deficient
satisfactory
Identification E E ]
Preparation assistance E E [
Appraisal |E El
Supervision E E
D\. Borrower performance Highly Satisfactory Deficient
satisfactory
Preparation El L E
Implementation El
Covenant Compliance E E
Operation (if applicable) E E Z
E\. Assessment of outcome Highly Satisfactory Unsatisfactory Highly
satisfactory Unsatisfactory
El El El C:
- 13 -
Table 2: Related Bank Loans/Credits
Credit No\. 312-IN
Title : First Population Project
Year of Aprval 1972
Purpose : To support the family welfare program in five districts of Mysore (now
Karnataka) and six districts of Uttar Pradesh
Credit closed June 30, 1980
Comments: Project Completion Report (PCR) 6/81; PPAR 1/82
Credit No\. : 981-IN
Title Second Population Project
Year of Approval 1980
PuEpose : To support the family welfare program in six districts of Uttar Pradesh
and three districts of Andhra Pradesh
Status Credit Closed March 31, 1988
Comments PCR 1/90; PPAR 8/90
Credit No\. : 1003-IN
Title Tamil Nadu Integrated Nutrition Project I (TINP I)
Year of Approval 1980
Purpose : To improve the nutritional and health status of preschool children and
pregnant and nursing women
Credit closed March 31, 1989
Comments : PCR 1/91; Impact Evaluation Report 12/94
Credit No\. 1426-IN
Title Third Population Project
Year of Approval 1984
Purpose : To support the family welfare program in six districts of Karnataka and
four districts of Kerala
Status Credit Closed March 31, 1992
Comments: PCR 8/93
Credit No\. 1623-IN
Tite : Fourth Population Project
Year of Approval 1985
Purpose : To support the family welfare program in four districts of West Bengal
Status Credit Closed March 31, 1994
Comments : PCR 12/94
Credit No\. 2057-IN
Tile Sixth (First National Family Welfare Training and Systems Development)
Population Project
Year of Approval 1989
Purpose : To support the family welfare program in the states of Uttar Pradesh,
Andhra Pradesh and Madhya Pradesh
Status~ : Credit scheduled to close March 31, 1997
Commnen Focus on strengthening of training aspects of the program on a statewide
basis
- 14 -
Table 2: Related Bank Loans/Credits (continued)
Credit No\. 2158-IN
Titil Tamil Nadu Integrated Nutrition Project 11 (TINP II)
Year of Approval: 1990
pose To extend the successful TINP program to all of Tamil Nadu's 20,000
villages
Status : Credit scheduled to close December 31, 1997
Commnent: The project is addressing critical nutritional and maternal and child
health needs in rural Tamil Nadu
Credit No\.: 2173-lN
Title Integrated Child Development Services Project I (ICDS I)
Year of Approval 1990
Purpose : To improve the nutrition and health standards of pre-school children and
mothers in tribal, drought-prone and otherwise disadvantaged areas of
Andhra Pradesh and Orissa
Status : Credit scheduled to close December 31, 1997
Comments : The project supports India's on-going ICDS Program and comprises
service delivery, communications, community mobilization and project
management/evaluation components
Credit No\. : 2133-IN
itk : Population VII (training)
Year of A proval 1990
Puroose : To support lower-income women in the rural areas of Bihar, Gujarat,
Haryana, Jammu, Kashmir and Punjab, through the training of new and
existing health workers and non-Health Department personnel\.
Status \. Credit scheduled to close June 30, 1998
Comments : Focus on increasing the supply and quality of family welfare services\.
Credit No\. : 2394-IN
LITit : Family Welfare (Urban Slums) Project (Population VIII)
Year of Approval 1991
Purpose : To help the Government of India increase the supply of family welfare
services in the slum populations of Andhra Pradesh, Karnataka, West
Bengal and Delhi\.
Status : Project scheduled to close June 30, 2001
Comment: Focus on reduction of fertility and maternal and infant mortality rates
among slum populations by improving the outreach of family welfare
services, upgrading the quality of family welfare services through
extensive and ongoing personnel training, expanding the demand for
health services through expanded information, education and
communication activities and improving the administration and
management of health care agencies\.
- 15 -
Table 2: Related Bank Loans/Credits (continued)-
Credit No\. 2300-fN
Tilk Child Survival and Safe Motherhood Project
Year of Approval 1992
Purpose : To support the Government of India's Maternal and Child Health
Program\.
Status : Credit closed September 30, 1995
Comments Focus on child survival, safe motherhood (prevention of maternal
morbidity and morality) and effective service delivery\.
Credit No\. 2470-IN
Title Integrated Child Development Services Project II (ICDS II)
Year of Approval 1993
Purpose To improve the nutrition and health status of pre-school children and
their mothers by strengthening and increasing the outreach of the ICDS
program in Bihar and Madhya Pradesh
Status Credit scheduled to close September 30, 2000
Credit No\. 2630-IN
Title Family Welfare (Assam, Rajasthan and Karnataka) Project (Population
IX)
Year of Approval 1994
Purpose : To support the family welfare program in the states of Assam, Rajasthan
and Karnataka
Status Approved by the Board on June 16, 1994
Comments : Focus on reduction of fertility and maternal and childhood mortality by
strengthening service delivery including extension and upgrading of
infrastructure, strengthening demand generation activities through
improved information, education and communication planning and
activities, strengthening program management and implementation
capacity, and improving service quality including training, improvement
of program logistics, promotion of private sector involvement, and
funding for innovative schemes\.
- 16 -
Table 3: Project Timetable
Steps in Project Cycle Date
Identification/Preparation Mission February - March 1985
Appraisal Mission November 1987
Credit Negotiations May 3-9, 1988
Board Approval June 21, 1988
Credit Signing September 16, 1988
Credit Effectiveness December 23, 1988
Credit Closing Date March 31, 1996
- 17-
Table 4: Credit Disbursements: Cumulative, Estimated and Actual
(US$ millions)
FY 89 FY 90 FY 91 FY 92 FY 93 FY 94 FY 95 FY 96 FY 97
Appraisal 1\.66 6\.74 14\.93 25\.46 36\.10 45\.38 53\.40 57\.00
Estimate
Actual 2\.86 34\.31 35\.96 37\.33 38\.38 24\.47 37\.73 45\.65 51\.17
l Actual as % of 172 509 241 147 106 54 71 80 90
estimate
Final credit disbursement\. The undisbursed balance was cancelled effective August 26, 1996\.
- 18 -
Table 5: Key Indicators for Project Operation
Status of Key Indicators on December 1\. 1995 -- Bombay
Bombay New Bombay
Appraisal Target Actual Appraisal Target Actual
(%) Achievement to (%) Achievement to
Indicators/Goals Date (%) Date (%)
Contraceptive prevalence 60 59\.2 60 55
Immunization coverage 95 82\.6 95 92
Ante-natal care 95 77\.3 95 90
Post-natal care 95 88\.4 95 90
Institutional deliveries 98 94\.6 98 83
Growth monitoring 80 NA 80 NA
Birth order 3 plus Reduction NA Reduction NA
Status of Key Indicators on April 1\. 1996 -- Madras
Madras City Madras Suburbs
Appraisal Target Actual Appraisal Target Actual Achievement
(%) Achievement to (%) to Date (%)
Indicators/Goals Date (%) l
Contraceptive prevalence 60 71\.3 60 60\.7
Immunization coverage 95 99\.7 95 99\.5
Ante-natal care 95 97\.1 95 93\.2
Post-natal care 95 87\.6 95 81\.9
Institutional deliveries 98 99\.3 98 97\.9
Growth monitoring 80 80\.3 80 41\.0
Birth order 3 plus Reduction 25\.2 to 12\.9 Reduction 33\.5 to 15\.6
Expansion Program for other Cities in Tamil Nadu
Phase I Phase 11
Appraisal Target Actual Appraisal Target Actual Achievement
(%) Achievement to (%) to Date (%)
Indicators/Goals Date (%) l
Contraceptive prevalence 60 50\.6 60 53\.5
Immunization coverage 95 99\.6 95 90\.5
Ante-natal care 95 91\.9 95 94\.4
Post-natal care 95 82\.8 95 89\.0
Institutional deliveries 98 98\.3 98 95\.2
Growth monitoring 80 43\.6 80 67\.4
Birth order 3 plus Reduction 20\.6 to 18\.7 Reduction Reduced to 20\.1
- 19-
Table 6: Studies included in the Project
Title Purpose Status Impact
(as in SAR)
I Baseline Survey for IPP V, Demographic and Completed Used to measure
Bombay program data 1990 achievements
2 Community Needs Needs of slum Completed Used for planning
Assessment, Bombay population 4/91 services
3 Survey report of Demographic and Completed
demography, health, family program data 8/91
welfare among slum
population of Madras
Metropolitan Area
4 Mid-term impact analysis Mid-term Completed
performance review 11/92
5 Mid-term impact evaluation, Mid-term Completed Guided modifications
IPP V, Bombay performance review 11/93
6 Evaluation of IEC activities, Not specified Completed
Madras 4/94
7 Training Needs Assessment Not specified Completed Training strategy for
of IPP V expansion areas 8/94 new areas
8 Study to evaluate the Not specified Completed Stipend to voluntary
effectiveness of Community 10/94 workers raised
Health Workers in Greater
Bombay under IPP V
9 Mid-term external Not specified Completed FVHWs initiated in
evaluation report on IPP V 11/94 Madras
Bombay
10 A review of mid-term Not specified Completed/
evaluation of IPP V, Madras undated
11 Study of impact of IEC Not specified Completed
activities, IPP V, Madras 1/94
12 Baseline Survey for IPP V, Demographic and Completed Facility planning
Navi Mumbai program data 1/94
13 Survey of Health Posts of Not specified Completed Provided feedback on
PVOs and PHD of Bombay 1/95 PVO performance
Municipal Corporation
14 Reaching Out: A campaign Not specified Completed Role of voluntary
to take family welfare 7/95 health workers more
services to the slums of widely recognized
Bombay and Madras
- 20 -
Table 7A: Project Costs by Component
Appraisal estimate (US$m) l Actual/latest estimate (US$m)/lI
Component Local Foreign Total Local Foreign Total
Service Delivery Expansion 37\.70 2\.33 40\.03
Quality Improvement 2\.91 0\.34 3\.25
Management Improvement 10\.52 0\.56 11\.08
PVO and Private 5\.66 0\.35 6\.01
Practitioners
Base Costs 56\.79 3\.58 60\.37
Contingencies
- Physical 3\.90 0\.35 4\.25
- Price 13\.26 0\.33 13\.59
Sub-total 17\.16 0\.68 17\.84
Total Project Costs 73\.95 4\.26 78\.21
/I Data not available\. GOI maintained expenditure records by category but not by component\.
Table 7B: Project Financing by Category of Expenditure
Appraisal estimate (US$m) Actual Disbursement/2
Source IDA | GOI | Total IDA I GOI I Total
Civil Works and Fees 6\.28 1\.11 7\.39 7\.98 2\.04 10\.02
Equipment, Books, 6\.44 1\.14 7\.58 12\.90 3\.69 16\.59
Furniture,
Vehicles
Consultants, Fellowships 5\.64 0\.16 5\.8 1\.34 1\.74 3\.08
Salaries, Materials, 38\.6 18\.84 57\.44 28\.93 11\.77 40\.70
Operations and
Maintenance
Special Account 0\.02 0\.02
Total Disbursement 56\.96 21\.25 78\.21 51\.17 19\.24 70\.41
/2 GOI maintains records only in rupees; a blended rate of 22\.9 was used to convert
GOI/Total expenditures into US dollars\.
- 21 -
Table 8: Status of Covenants
Agreement Text Covenant Status Description of Covenant Comments
Reference Class(es)
Credit Art\. III, 4,5 C The Borrower to cause Tamil Nadu, Yes, Maharashtra
3\.01 (a) MMM, BMC, and Maharashtra to Government also
perform their obligations under the allocated funds to New
Project Agreement and the Bombay Municipal
Maharashtra Agreement, respectively, Corporation\.
and provide resources as necessary
for them to do so\.
3\.01 (b) 3 C The Borrower to make the Credit Yes\.
proceed available to Tamil Nadu for
such parts of the Project as are carried
out by Tamil Nadu and MMC and to
Maharashtra for such parts of the
Project as are carried out by BMC\.
Art\. IV, 1 C (b) The Borrower to: (i) have the Yes\.
4\.01 (b) financial records and accounts audited
each fiscal year; (ii) furnish IDA the
audit report; and (iii) furnish IDA
other related information\.
DCA 3\.01 (b) 3 The Borrower to make the Credit
proceeds available to Tamil Nadu for
such parts of the Project as are carried
out by Tamil Nadu and MMC and to
Maharashtra for such parts of the
Project as are carried out by BMC\.
Art\. III, 10 C Procurement to be governed by the Yes\.
3\.02 provisions of Schedule I to the
Project Agreement\.
Art\. III, 4 C Concerning obligations relating to Yes\.
3\.03 insurance, use of goods and services,
plans and schedules, records and
reports, maintenance and land
acquisition, Tamil Nadu to carry out
in respect of such parts of the Project
as are carried out in Chingleput,
MMC as are carried out in Madras
City and BMC as are carried out in
Greater Bombay\.
DCA Art\. IV, I C (a) The Borrower to maintain or cause Yes\.
4\.01 (a) to maintain adequate financial records
and accounts to enable IDA
representatives to examine such
records\.
PROJECT Art\. II, 3,5 C Tamil Nadu to carry out such parts of In addition, the project
Status: C - Complied with
CD - Compliance after delay
NC - Not complied with
SOON - Compliance expected in reasonably short time
CP - Complied with partially
NYD - Not yet due
- 22 -
Table 8 (continued)
Agreement Text Covenant Status Description of Covenant Comments
Reference Class (es)
2\.01 (a) the Project as are located in has been implemented in
Chingleput, MMC as are located in a number of municipal
Madras City and BMC as are located corporations and
in Greater Bombay, with due municipalities in the
diligence and efficiency and in state\.
conformity with appropriate practices
and provide promptly the resources
I_________ required for the Project\.
2\.01 (b) 5 C Tamil Nadu, MMC and BMC to each Yes\.
carry out the Project in accordance
with the agreed Implementation
Program set forth in Schedule 2 to the
PA\.
2\.02 10 C Procurement of goods, works and Yes\.
services in accordance with Schedule
I of the PA\.
2\.03 5,9 C Concerning obligations relating to Yes\.
insurance, use of good and services,
plans and schedules, records and
reports, maintenance, and land
acquisition, Tamil Nadu to carry out
in respect of such parts of the Project
as are carried out in Chingleput,
MMC as are carried out in Madras
City and BMC as are carried out in
Greater Bombay\.
2\.04 (a) 5 C Tamil Nadu, MMC and BMC to each Yes\. Visits by project
exchange views with IDA with regard officials in BMC and
to progress of the Project\. MMC were exchanged\.
2\.04 (b) 5 C Tamil Nadu, MMC and BMC to each Yes\.
promptly inform IDA of any
condition threatening or interfering
with the progress of the Project\.
2\.05 2 C Tamil Nadu to cause MMC to each Yes\.
perform its obligations under the PA
and provide resources as necessary\.
PROJECT 2\.06 3 C Tamil Nadu to make available to Yes\.
MMC the Credit given to it by the
Borrower\.
Art\. III, 1,9 C Tamil Nadu, MMC and BMC to each Yes\.
3\.01 (a) maintain adequate records and
accounts\.
3\.01 (b) 1 C Tamil Nadu, MMC and BMC shall Yes\.
(i) each cause records and accounts to be
Status: C - Complied with
CD - Compliance after delay
NC - Not complied with
SOON - Compliance expected in reasonably short time
CP - Complied with partially
NYD - Not yet due
- 23 -
Table 8 (continued)
Agreement Text Covenant Status Description of Covenant Comments
Reference Class (es)
_______ audited\.
3\.01 (b) I C Tamil Nadu, MMC and BMC shall Yes\.
(ii) each furnish IDA certified copies of
their audited records and accounts\.
3\.01 (b) 9 C Tamil Nadu, MMC and BMC shall Yes\.
(iii) each furnish IDA other related
information, as requested\.
Schedule 5 C Tamil Nadu, MMC and BMC to each Yes\.
2, 1 (a, b, prepare and each transmit to IDA: (a)
c, & d) annual construction programs
substantially; (b) training plans
substantially; (c) annual IEC plans
substantially; and (d) annual
monitoring and evaluation plans\.
2 (a & b) 2,5 C Tamil Nadu, MMC and BMC to each Yes\.
take the necessary steps to (a) ensure
that HPs are provided with adequate
suitably qualified staff and resources
and (b) improve the effectiveness of
the outreach program for the delivery
of family welfare services\.
3 5 C Tamil Nadu, MMC and BMC to each Yes\. Steering
take the necessary steps, including the Committees have been
appointment of an adequate number set up\.
of suitably qualified staff and the
establishment of supervisory
committees\.
4 (a) 9 C Tamil Nadu, MMC and BMC to take Yes\.
the necessary steps to strengthen
monitoring and evaluation of family
welfare services\.
PROJECT 4 (b) 9 C Tamil Nadu, MMC and BMC to each All necessary surveys
undertake: (i) baseline survey for including Baseline Study
project monitoring and evaluation; were undertaken\. End-
(ii) studies of needs and preferences line survey will now be
of slum dwellers and studies to assess undertaken\.
training needs and potential of PMPs;
and (iii) a series of smaller studies
and final surveys for Project
monitoring and evaluation\.
5 (a, b & 5, 9 C Tamil Nadu, MMC and BMC to Yes\.
c) each: (a) undertake a midterm review
of the progress of the Project; (b)
furnish IDA for its review, the
Status: C - Complied with
CD - Compliance after delay
NC - Not complied with
SOON - Compliance expected in reasonably short time
CP - Complied with partially
NYD - Not yet due
- 24 -
Table 8 (continued)
Agreement Text Covenant Status Description of Covenant Comments
Reference Class (es)
findings and recommendations of
such review, together with proposed
action plans to overcome problems;
and (c) take the necessary action to
implement such findings and
recommendations as agreed with
IDA\.
6 5 C Tamil Nadu to establish training; Yes\.
IEC, MIES and grants cell in its
Department of Family Welfare\.
7 5 C MMC shall establish training and Yes\.
MIES cells in District Family
Welfare Bureau\.
8 5 C BMC to establish training; IEC and Yes\.
MIES cells in its Central
Coordination Office with
responsibility for collaborating with
local training and other institutions
and for carrying out Project
Activities\.
Status: C - Complied with
CD - Compliance after delay
NC - Not complied with
SOON - Compliance expected in reasonably short time
CP - Complied with partially
NYD - Not yet due
Table 9: Bank Resources: Staff Inputs
(staff weeks)
FY Total 85 86 87 88 89 90 91 92 93 94 95 96 97
Lending \.30 1\.85 3\.70 1\.15 7\.0
Develop-
ment
Pre- 37\.17 54\.73 70\.43 48\.77 211\.10
Appraisal
Appraisal 28\.03 28\.03
Negotiation 10\.17 10\.17
Supervision 17\.03 16\.60 9\.16 12\.46 22\.95 32\.70 11\.83 6\.70 \.50 129\.93
ICR \.98 6\.55 7\.53
Procure- \.20 \.10 \.68 \.98
ment
TOTAL 37\.47 56\.58 74\.13 88\.12 17\.03 16\.60 9\.16 12\.46 22\.95 32\.90 11\.93 8\.36 7\.05 394\.74
- 26 -
Table 10: Bank Resources: Missions
Stage of Month/ Number of Days in Speciali- Performance rating Problems'
project cycle year persons field zation
represented' Imple-
mentation Dev\. Object\.
Identification/ 2-3/85
Preparation 3-4/86 5 C, PH, MG
10-11/86 _
Appraisal 11-12/87 6 E, PH, POP,
A, T, IEC, D
Supervision 1 11/88 5 7 1 1
Supervision 2 3/89 5 8 1
Supervision 3 10/89 4 13 E, A, M, IEC I I F
Supervision 4 6/90 5 E, A, M, D, P F, PR,
Supervision 5 11-12/90 4 9 E, A, P, AD 2 2 F
Supervision 6 9/91 4 POP, PH, T, I I F
IEC
Supervision 7 4/92 3 POP, PH I 1
Supervision 8 1-2/93 8 7 POP, A, P, I I M
(Review of IEC, MG, T,
mid-term E, PF
evaluations)
Supervision 9 5/93 7 5 POP, A, P, I I M
IEC, MG, T,
PF
Supervision 10 12/93 5 13 POP, A, IEC, I I
T, PF
Supervision I1 5/94 7 8 POP, A, P, I I M, PR
IEC, T, PF,
MIS
Supervision 12 9/94 1 3 PH HS HS
Supervision 13 12/94 4 4 PHN, PH, F, HS HS
PH
Implementation 11-12/95 3 12 PHN, F, CON HS HS
Completion
Mission
A = Architect; AD = Administrator; C = Communication Specialist; CON = Consultant PH Specialist; D = Demographer;
E = Economist; F = Finance; IEC = IEC Specialist; M = Medical Educator; MG = Management; MIS = Management Information
System Specialist; P = Physician; PF = Project Finance; PH = Public Health Specialist; PHN = Population, Health, Nutrition Advisor;
POP = Population; T = Training\.
2 = Satisfactory; HS = Highly Satisfactory; I = No Significant Problems; 2 = Moderate Problems (i\.e\., there are significant, but not
critical problems from appraisal expectations)\. Please note that HS/S ranking codes were first utilized with supervision mission 12\.
3Problem areas: F = Financial Performance; M = Project Management Performance; PR = Procurement Progress\. Problem areas
indicated are based upon a rating of 2 from the respective Form 590s; none of these areas rated 3 during the life of the project\.
Appendix A
Page 1 of 16
FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT (IPP V)
CREDIT NO\. 1931-IN
WORLD BANK IMPLEMENTATION COMPLETION MISSION:
NOVEMBERJDECEMBER 1995
AIDE-MEMOIRE
1\. A World Bank implementation completion mission visited Madras from November 25-28,
1995 and Bombay from December 4-6, 1995\. The mission consisted of Dr\. Anthony Measham
(PHN Adviser and mission leader), Mr\. R\. Sethuraman (Finance Specialist), and Dr\. Lessel David
(Consultant Public Health Specialist)\. This aide-memoire sets forth the main findings of the
mission\.
2\. The mission expresses its appreciation to the State of Tamil Nadu, and the Municipal
Corporations of Madras, Bombay, and New Bombay, for their full co-operation and excellent
hospitality\. The mission undertook field trips in Madras, Bombay, and New Bombay\. Wrap-up
meetings were chaired in Madras by the Secretary, Health and Family Welfare Department, and in
Bombay, by the Municipal Commissioner, Bombay Municipal Corporation\.
Mission Objectives and Overall Progress
3\. The objectives of the mission were as follows to undertake a final review of progress
before the project closing date of December 31, 1995:
(a) provide advice and support to the Borrower in the preparation of its contribution to
the Implementation Completion Report (ICR); and
(b) to record the views of the Borrower and the Bank on project implementation\.
Overall progress in implementation of the project since the May/June 1995 review mission was
judged to be very good in both Madras and Bombay\. In Madras, excellent further progress has been
made towards completion of the civil works prior to the project closing date\. In both Madras and
Bombay, the project will be fully implemented, performance against the key indicators appears to
be very good, and the prospect for project sustainability is promising\. The final (end-line) survey
should provide additional information regarding project impact\.
4\. Attachments 1 and 2 provide the mission's findings on financial progress in the project\.
Bombay has already expended the full amount of Rs\.48\.3 crores sanctioned for the project, while
Madras has expended Rs\.62 crores out of the Rs\.69\.13 crores sanctioned\. It is anticipated that the
total sanctioned amount will be fully disbursed\.
Appendix A
Page 2 of 16
Project Issues
5\. Project Extension\. The Government of India (GOI) requested on October 18 and again
on December 4, 1995 that the project be extended for three months beyond the closing date of
December 31, 1995\. The Bank responded to the first request by informing GOI that it was not
possible to extend the project, which was expected to be fully implemented, for the purpose of
using exchange rate savings, but that it would be possible to use those savings during the life of the
project\. After the May/June 1995 review mission, GOI began to prepare a submission to the
Expenditure and Finance (EFC) Committee, requesting that an additional Rs\.43\.43 crores be
sanctioned against the project\. At the time of writing this aide-memoire, EFC approval had not
been received\.
6\. In anticipation of EFC sanction of the additional amount, Madras and Bombay have gone
ahead with procurement of additional civil works and equipment If EFC clearance is provided
before the end of the project period, it will be possible for the Bank to disburse against
expenditures committed before the closing date, and claimed up to April 30, 1996\.
Implementation Completion Review
7\. The mission reviewed and commented on draft contributions to the ICR from the Madras
and Bombay project authorities\. The mission's main comment was that the drafts provided a good
description of the achievements of the project but had not offered a critical analysis regarding the
likely reasons for project success in various areas, or lack of same\. The mission requested that this
latter element be introduced into revised drafts, and that the contributions be not more than ten
pages in each case\.
8\. The mission engaged in extensive discussions with project staff and other experts regarding
the outcome of the project, and the factors responsible for success or lack of it\. In addition, Dr\.
Lessel David stayed for several days after the main mission's departure, in order to undertake field
trips and more extensive discussions\. Dr\. David will be responsible for drafting the Bank's
contribution to the ICR, with the assistance of the other members of the mission\. A draft of the
Bank's contribution will be sent in January 1996 to the Government of India, the Madras and
Bombay project authorities, and the concerned State Governments for review and comment, and
will be submitted to Bank headquarters by February 28, 1996\.
9\. Key Factors affecting Project Implementation and Impact\. There was substantial
agreement between the mission and the project authorities in both cities regarding the key factors
responsible for the outcome of the project\. In many cases, factors were common to both urban
areas\. The following is a brief summary of the main factors agreed upon\. The ICR itself will
provide a more detailed exposition of these factors, and will note differences between the two
cities, and in the views of the Bank and the implementing agencies, where they occur\.
10\. It was agreed that the project had achieved its main objectives in both Madras and Bombay\.
These were to:
Appendix A
Page 3 of 16
(a) expand family welfare services with the emphasis on maternal and child health
(MCH), birth spacing, and increased use of temporary contraceptive methods in
Greater Bombay, Madras City and Chingleput district in Tamil Nadu;
(b) improve the quality of family welfare services delivered in Bombay, Madras, and
Chingleput;
(c) strengthen the capacity of Tamil Nadu, Bombay, and Madras to plan, manage, and
implement family welfare programs in urban areas; and
(d) increase the participation of private voluntary organizations (PVOs) and private
medical practitioners (PMPs) in the family welfare program in urban areas\.
While it was agreed that the achievement of the first three of the above four objectives was key to
project impact, as measured by the performance indicators, this seemed less so in the case of the
involvement of PVOs and PMPs\. Involvement of PVOs and PMPs did increase, but the
performance was mixed, especially in the case of the PMPs\. In retrospect, it seems likely that the
project would have succeeded in the absence of this objective, although the increased involvement
of PVOs and PMPs was a positive factor in both cities\.
11\. The mission noted that, thanks to the vision of the project authorities in both cities, the
project actually accomplished much more than had been originally envisaged in the project design\.
In the case of Tamil Nadu, it was possible to extend the project to all cities of 100,000 population
in the state\. In the case of Bombay, funds were made available to the New Bombay Municipal
Corporation, which enabled it to provide family welfare services to over 400,000 inhabitants of that
new and rapidly growing municipality\. Several factors appear to explain how this expansion was
possible\. First, with the benefit of hindsight, the project seems to have been over-budgeted\.
Second, and importantly, the project authorities in both cities made savings where possible, for
example, by not adding facilities and staff when this was advisable, by achieving efficiencies in
project operation, and by being careful to limit the recurrent cost implications of the project
wherever possible\. Third, both project authorities demonstrated the commitment and flexibility to
take these actions\.
12\. Overall, it appears that four factors were key to project success:
* flexibility of project management;
* broadening the family welfare services to give more emphasis to maternal and child
health (MCH), to spacing, and to temporary contraceptive methods;
* increasing demand by use of community workers and innovative information,
education, and communication (IEC) techniques; and
* the high level of commitment of the authorities in Tamil Nadu, Madras, Bombay, and
New Bombay\.
Appendix A
Page 4 of 16
13\. Examples of the flexible approach to project management have been cited above, in the
expansion of project activities and the careful use of project funds\. These approaches may be
generalized by saying that the project authorities were flexible, opportunistic, and demonstrated the
attributes of "learning" organizations, which are important factors for project success in any
setting\.
14\. This project was in the vanguard of a more general shift in GOI strategy towards a
broadened MCH approach to family welfare, and this shift was partly reflected in the Urban
Revamping Scheme financed by GOI, and of which this project formed a part\. The project
therefore represented a demonstration of what could be accomplished through this strategy, and, by
adopting a broad set of key indicators, allowed a good test of the approach\. The project showed
that demand for services increased when the broader approach was taken, and also demonstrated
that the approach resulted in an equal, if not greater impact, on fertility and child mortality, than
the more demographically-oriented strategy that had been pursued hitherto\. The draft ICR will
provide details of the demographic trends in the project areas over the life of the project, while
Annex 4 gives the targets and achievements of the project\.
15\. A strong consensus suggests that the use of community workers - link workers in Madras
and community health workers in Bombay - plus innovative IEC techniques, such as street plays,
increased the demand for services and their quality\. These accomplishments are well documented
in the publication Reaching Out, just published in Bombay\. The workers in Madras are unpaid
volunteers, while those in Bombay (but not New Bombay) are paid (originally Rs\.200/month and
now Rs\.500/month)\. Both approaches appear to have been successful\.
16\. Finally, the strong commitment to the project in both cities, and the track record in
implementation of other projects, clearly was a key factor in the success of this project\. The
performance of the implementing agencies is rated as highly satisfactory\.
17\. Comments on the performance of the Bank will await the draft ICR\. It can be said,
however, that the project authorities considered Bank performance satisfactory, especially with
regard to the progress review missions\. However, the Bank was thought to have performed better in
the management and finance than in technical areas, in the latter stages of the project\.
18\. Finally, this project clearly influenced policy in the two cities, in the state of Tamil Nadu,
and in the GOI\. This influence mainly occurred as a result of the performance in meeting the key
indicators, within a broad set of MCH objectives\. This, in turn, influenced the Government of
Tamil Nadu to adopt this approach on a state-wide basis\. The experience also informed the family
welfare sector review (Report No\. 14644-IN: India's Family Welfare Program: Toward a
Reproductive and Child Health Approach), recently completed by GOI and the Bank\. The sector
report recommendations, in turn, may have had a bearing on GOI's decision to drop method-
specific contraceptive targets in at least one district in each state (and in all districts of Tamil Nadu
and Kerala)\. Some of the recommendations of the report are likely to be implemented in the
Reproductive and Child Health project being prepared for possible Bank financing\.
Aplendix A
Page 5 of 16
Next Steps
19\. The project authorities in each city are requested to proceed expeditiously with the final
(end-line) survey for the project and to revise and summarize their contributions to the ICR\. The
mission will prepare and present its ICR contribution for review and comment by GOI, the project
authorities, the State Governments, and Bank management\.
20\. The mission would like to commend the project authorities in Madras and Bombay for the
successful implementation of this project\.
Appendix A
Page 6 of 16
Attachment I
Fifth Population Project (IPP V) - MADRAS
(November 25 - 28, 1995)
IPP V Madras project has an approved project outlay of Rs\.69\.13 crores with a life span of
seven years closing on December 31, 1995\. The scope of the project was originally designed to cover
the urban slums of Madras city and the neighboring urban agglomeration of Chengalpattu district\.
The project was extended under Phase I expansion program from September 1992 to the
corporation areas of Madurai, Coimbatore, Salem and Tiruchirapalli and the municipal areas of
Nagercoil, Tuticorin, Erode and Tiruppur with an outlay of Rs 8\.78 crores; and under Phase 11
expansion program from April 1993 to 15 new municipal areas\. To cover the entire Chengalpattu
District, three left over municipal areas of the district were included during Phase III expansion with
an outlay of Rs\. 40\.22 lakhs\. Furthermore, under Phase IV expansion program, upgrading of
maternity, neonatal and paediatric facilities has been agreed to in all the district and taluk hospitals in
the State at an outlay of Rs\.7\.00 crores\.
Service Delivery Expansion
Under the project, 140 Urban Health Posts (one for 50,000 population) in Madras city and
suburban areas, 15 in Zonal centers were set up\. Under Phases I and II, additional Urban Health Posts,
Urban Family Welfare Centers, and PPCs were included\. Repairs and renovations for Maternity
Homes in the Phase I and II areas and the ICDS centers have also been completed under the project\.
Almost all the civil works have been completed and only finishing works are in progress, and
expected to be completed and handed over to the respective municipalities/corporations before end-
December 1995\.
To improve the quality of service delivery, additional equipment will be procured to
strengthen Maternal and Child Health Care Services in 134 Taluk Hospitals and 8 district hospitals\. In
this process Taluk hospitals and district hospitals perform the functions of First Referral Units
(FRUs)\.
Financial Status
Out of the total approved outlay of Rs\.69\.13 crores, the project has reportedly posted an
expenditure of Rs\.62\.03 crores as on October 31, 1995 leaving an unspent balance of Rs\.7\.1 crores\.
In view of the commitments already made, this balance amount is expected to be fully utilized before
December 31, 1995, the project closing date\. However, the project outlay is not sufficient to meet the
additional commitments made for strengthening the district and taluk hospitals\. The additional
commitments are estimated to cost Rs\. 20 crores\. The Ministry of Health and Family Welfare has,
based on the recommendations made by the state government, initiated steps to obtain the approval of
Expenditure Finance Committee (EFC) for allocation of additional amount of Rs\.20 crores to be
committed before the project closing date\. A statement showing componentwise details of estimated
Appendix A
Page 7 of 16
expenditure up to December 31, 1995 and the additional funds proposed for EFC approval is at
Attachment I\.
The additional amount of Rs\. 20 crores proposed to be spent after approval by GOI includes
the following components:
1\. Civil works 4\.09
2\. Equipment 8\.28
3\. Additional staff salaries 0\.88
4\. Equipment to taluk 6\.00
hospitals
The project authorities have cleared the bidding documents with the Bank and have also reportedly
received bids in response to the tenders quoted under LCB and referred to Bank for prior clearance\. It
would be possible to process and place formal supply order(s) on the identified supplier/manufacturer
firm(s) only after the EFC approval is obtained\. Even if EFC approval is secured before mid
December 1995, as expected, it is unclear whether it would at all be feasible for the suppliers to
supply the entire quantum indented for before December 31, 1995 All equipment proposed to be
procured under the project should be delivered to the project authorities on or before the project
closing date so that the expenditure incurred would be eligible for reimbursement\.
Sustainability of Project Activities
The additional recurring expenditure annually after the project closes is estimated to be as
follows:
Rs in crores
Commitments 1\.40
to Urban Family Welfare
Centers/Urban Health Posts
Commitments made 7\.30
under IPP V Project in Madras,
suburbs and Phase I
Phase II commitment 2\.16
Total 10\.86
The annual recurring cost to sustain the project activities after the project would be of the order of
Rs\. 10\.86 crores\. The Govemment of Tamil Nadu has taken the stand that all recurrent costs to be
incurred under the Family Welfare program should be met by GOI\. The state govemment is awaiting
the response of the MOHFW whom they have requested to fund the recurrent cost under the centrally
sponsored Urban Revamping Scheme\.
Appendix A
Page 8 of 16
Summing Up
Under this project there is a substantial increase in the level of civil works program
covering both expansion and renovation over and above the provision made in the
original project\. Another striking feature is that the civil works expansion program
covers 23 towns/municipalities spread throughout the state\. The civil works
expansion program which was taken up only two years ago has been completed in
record time\.
This project has also improved quality of service delivery by strengthening MCH
services in 134 Taluq Hospitals and 8 District Hospitals\. This project has thus
assisted the establishment of First Referral Units in almost all the districts at taluq
level\. These facilities, which had not been provided for under the project, have
resulted from timely utilization of exchange rate savings\.
At the time of closure of this project the annual recurring cost for sustaining the
project activities is estimated to be nearly Rs\. 11\.00 crores\. The Government of
Tamil Nadu has not made any commitment to meet this cost from the state budget\.
The state government has formally approached the MOHFW with a request to meet
the recurring cost of the project under the centrally sponsored Urban Revamping
Scheme\.
Approximately 20 Health Posts are run by Private Voluntary Organizations\. It is
necessary that the state government provide for their continued support from the state
budgetary resources after the expiry of the project period\.
The state government has succeeded in optimizing the utilization of the project funds
and extended the overall project to cover almost the entire state at taluq level\.
Appendix A
Page 9 of 16
Attachment I
Table I
INDIA POPULATION PROJECT V - MADRAS
PROBABLE EXPENDITURE UNDER IPP V FOR ON GOING PROGRAMMES FROM 1\.4\.95 TO 31\.12\.95
Pojected Expenditure from 4/95 to
12/95
S\.N Components Appro- Expendi- Within Expendi- Probable Additional Total
priation as ture up to Existing ture up to up to Funds
per SAR 31\.3\.95 Project 10/95 31\.12\.96 Proposed
Outlay
1\. Civil Works 927\.00 549\.00 0\.00 0\.00 0\.00 123\.00 123\.00
2\. Furniture 91\.00 45\.00 0\.00 0\.00 0\.00 0\.00 0\.00
3\. Equipment 558\.00 984\.00 204\.00 107\.32 96\.68 828\.00 1023\.00
4\. Vehicle 85\.00 61\.00 0\.00 0\.00 0\.00 26\.00 26\.00
5\. Local Adviser 260\.00 11\.00 4\.00 0\.34 3\.66 0\.00 4\.00
6\. Local Fellowship 44\.00 59\.00 10\.00 7\.75 2\.25 0\.00 10\.00
7\. Professional Fees 143\.00 28\.00 3\.00 0\.02 2\.98 0\.00 3\.00
8\. Foreign Fellowship 30\.00 16\.00 0\.00 0\.00 0\.00 0\.00 0\.00
9\. Books 0\.00 1\.00 0\.00 0\.00 0\.00 0\.00 0\.00
10\. Addi\. Staff Salaries 3356\.00 2106\.00 546\.00 319\.77 226\.23 88\.00 634\.00
II\. Consumable 1241\.00 755\.00 180\.00 27\.74 152\.26 0\.00 180\.00
Materials
12\. Operation & 70\.00 20\.00 4\.00 1\.29 2\.71 0\.00 4\.00
Maintenance of
Vehicles
13\. Other Operation & 108\.00 283\.00 21\.00 8\.05 12\.95 0\.00 21\.00
Maintenance
14\. PWI) IPP-V Div\. 0\.00 690\.00 333\.00 123\.66 209\.34 286\.00 619\.00
Construction
15\. ICDS, Centres 0\.00 0\.00 0\.00 0\.00 0\.00 49\.00 49\.00
Repairs
16\. Equipment to Taluk 0\.00 0\.00 0\.00 0\.00 0\.00 600\.00 600\.00
Hospitals I I\.I_I _ III
6913\.00 5608\.00 130500 1 59594 79\.06 200\.0 330
Appendix A
Page 10 of 16
Attachment 2
Fifth Population Project (IPP-V) BOMBAY
(December 4 - 5, 1995)
A\. Municipal Corporation of Greater Bombay (BMC)
IPP V Bombay project has a GOI approved outlay of Rs\. 48\.30 crores with a life span of
seven years, closing on December 31, 1995\. The project has reported an expenditure of Rs\. 53\.40
crores for the period ending 30th November, 1995\. The expenditure projected for December 1995 is
Rs\. 5\.10 crores\. Details of actual and projected expenditure are given in Annex I\.
The project was originally approved to cover the slum population in Greater Bombay\.
Subsequently the State Government, in association with BMC, agreed to extend the project activities
to New Bombay\. The MOHFW issued two financial sanctions diverting a sum of Rs\. 11\.04 crores -
one for Rs\. 6\.78 crores on July 19, 1993 and the other for Rs\. 4\.26 crores on July 26, 1993 for setting
up a 100-bedded FRU - out of the approved project outlay for expansion of IPP V activities to New
Bombay Municipal area\. Bombay and New Bombay Corporations were allocated Rs\.37\.26 crores and
Rs\.1 1\.04 crores respectively\.
Out of Rs\.5\. 10 crores to be incurred during December 1995 the following three components
accounting for major share of the projected expenditure:
Rs\. in crores
Civil Works 1\.20
Equipments 1\.26
Salaries 1\.04
Expenditure for staff salary is a committed and will be utilized\. In the wrap up meeting, it
was assured that orders for supply of equipment would be placed within a week\. However, in the case
of import of Ultrasound equipment costing Rs\.0\.85 crores delivery would take place only after the
project closing date\. The Municipal Commissioner urged that expenditure incurred for all the
equipment for which supply orders are placed before the project closing date be treated as committed
expenditure eligible for disbursement irrespective of the date of receipt of goods by the project
authorities\. The Municipal Commissioner agreed that a formal request would be made by the BMC to
the Bank on this account\. In civil works, it was reported that construction of all nine Post Partum
Centers and 47 Health Posts had been completed\. Four Mobile Vans would be procured before end-
December 1995 for commissioning mobile health posts\.
Appendix A
Page 11 of 16
B\. Navi Mumbai Municipal Corporation (NMMC)
Under this project all ten Urban Health Posts have been established in the Panchayat
buildings by making additions and alterations\. Five new MCH centers have been constructed and they
are operational\. One FRU Hospital (150 bedded) has already started functioning in the ESIC building\.
NMMC has reported an expenditure of Rs\. 1 0\.88 crores for the period ending November 1995\.
NMMC have sought allocation of additional sum of Rs\.1\.93 crores over and above the originally
sanctioned amount (Rs\. 11\.04 crores), to complete the project activities\. This forms part of the
additional allocation of funds awaiting EFC approval\. The total estimated expenditure by NMMC
during the project period would be of the order of Rs\. 12\.82 crores subject to approval by the EFC\. A
statement giving the break up of expenditure from June 1993 to December 1995 is at Table 2\.
Bombay and New Bombay
BMC and NMMC require Rs\.58\.50 Crores and Rs\.12\.82 crores, respectively, for completing
all the project activities before the closing of the project\. Therefore, EFC approval is being sought for
a total revised project outlay of Rs\. 71\.32 crores\. The annual recurring cost for BMC to sustain the
project activities after the project is over is estimated to be Rs\. 12 crores\. The Municipal
Commissioner of BMC has assured that this would be met out of their own budgetary resources\.
Likewise, Municipal Commissioner, NMMC has also certified that it would be possible to sustain the
project activities out of their own budgetary resources\.
Summing Up
Bombay Municipal Corporation
(1) IPP V project has brought about establishment of 176 Urban Health Posts in slum areas of
Greater Bombay\. The project has set up 30 Post Partum Centers, each serving as First
Referral Unit linked with 5-6 Urban Health Posts\. These MCH centers provide high quality
MCH services free of cost to poor people living in Bombay slums\.
(2) This project has promoted participation of Private Voluntary Organisations in the Family
Welfare and MCH Programs\.
(3) The project has also extended its activities to New Bombay which had no basic health
infrastructural facilities
(4) This project has promoted the functioning of Voluntary Women Health Workers amongst the
slum population of Bombay\.
New Mumbai Municipal Corporation
Extension of IPP V project to New Bombay has brought about establishment of basic
facilities in the form of 10 Urban Health Posts, 5 MCH Centers and one FRU Hospital with 150 beds\.
Appendix A
Page 12 of 16
Almost all the equipment and medicines required for operationalising these centers have been
procured\. A high quality health delivery system has been developed\.
The only area in which the NMMC is experiencing difficulty is in the recruitment of trained
medical and paramedical personnel\. Efforts are continuing to fill up all these vacant posts\.
Appendix A
Page 13 of 16
Attachment 2
Table I
Bombay Municipal Corporation
Break-up of Expenditure from 01 / 11/87 to 31/12/95
Rs\. In Crores
Description Expenditure Expenditure to be Total
incurred up to end- incurred in Dec\. 95
1\. Civil Works 3\.39 1\.20 5\.19
2\. Equipments 6\.07 1\.26 7\.33
3\. Furniture 0\.72 0\.50 1\.22
4\. Vehicles 0\.88 0\.12 1\.00
5\. Salaries 37\.04 1\.04 38\.08
6\. Expert Services 0\.59 0\.01 0\.60
7\. Fellowship 0\.16 0\.05 0\.21
8\. Books 0\.005 0\.01 0\.015
9\. Consumables 1\.57 0\.35 1\.92
10\. Operation & 2\.38 0\.56 2\.94
Maintenance
TOTAL 53\.405 5\.10 58\.50
Appendix A
Page 14 of 16
Attachment 2
Table 2
Navi Mumbai Municipal Corporation
Break-up of Expenditure from June 1993 to December 1995
Rs\. In Crores
Description Expenditure incurred Expenditure to be Total
up to end-Nov\. 1995 incurred in Dec 1995
1\. Civil Works 2\.9000 0\.2315 3\.1315
2\. Vehicle 0\.6740 0\.1250 0\.7990
3\. Medical Equipment 2\.5800 0\.6000 3\.1880
4\. Office Furniture 0\.6600 0\.1500 0\.8100
5\. Staff Salary 2\.5900 0\.1500 2\.7400
6\. Consumable 0\.5200 0\.5000 1\.0200
Medicines
7\. ESIS Hospital Rent 0\.1500 0\.1500
8\. Operation & 0\.3500 0\.1010 0\.4510
Maintenance
9\. Foreign Tour 0\.0260 0\.0400 0\.0660
10\. Advertisement 0\.0620 0\.0200 0\.0820
11\. I\.E\.C Training / 0\.0820 0\.0200 0\.1020
Activities
12\. Staff Training 0\.0570 0\.0570
13\. Consultancy 0\.0230 0\.0230
Services
14\. MIS Systems 0\.2100 0\.2100
TOTAL 10\.8840 1\.9375 12\.8215
Appendix A
Page 15 of 16
INDIA: FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT
(Credit 1931-IN)
Status of Key Project Indicators on December 1, 1995
BOMBAY NEW BOMBAY
Indicators/Goals Appraisal Actual Comments Appraisal Actual Comments
(Percent) Target Achievement t Target Achievemen
date t to date
Effective 60 59\.2 60 55\.0
contraceptive
nrevalence
Immunization 95 82\.6 95 92\.0
coverage
Ante-natal care 95 77\.3 95 90\.0
Post-natal care 95 88\.4 95 90\.0
Institutional Deliveries 98 94\.6 98 83\.0
Growth Monitoring 80 N\.A\. 80 N\.A\.
Birth order 3 Reduction N\.A\. Reduction N\.A\.
Appendix A
Page 16 of 16
INDIA: FIFTH (BOMBAY AND MADRAS) POPULATION PROJECT (Credit 1931-IN)
Status of Key Project Indicators on December 01, 1995
MADRAS CITY MADRAS SUBURBS
Indicators/Goals Appraisal Actual Comments Appraisal Actual Comments
(Percent) Target Achievement Target Achievement
to date to date
Effective contraceptive 60 67\.4 60 57\.9
prevalence l
Immunization coverage 95 99\.7 95 99\.6
Ante-natal care 95 96\.3 95 93\.2 l
Post-natal care 95 85\.4 95 81\.9
Institutional Deliveries 98 99\.2 98 97\.6
Growth Monitoring 80 79\.5 80 32\.8
Birth order 3 Reduction Decline Reduction Decline
from 25\.2% from 33\.5%
to 15\.4% to 16\.2%
EXPANSION PROGRAM FOR OTHER CITIES IN TAMIL NADU
PHASE I PHASE II
Indicators/Goals Appraisal Actual Comments Appraisal Actual Comments
(Percent) Target Achievement Target Achievement
to date to date
Effective contraceptive 60 48\.0 60 49\.5
prevalence
Immunization coverage 95 93\.5 95 85\.6 l
Ante-natal care 95 87\.4 95 87\.8
Post-natal care 95 81\.5 95 89\.6
Institutional Deliveries 98 98\.3 98 95\.0 l
Growth Monitoring 80 39\.3 \. 80 60\.9
Birth order 3 Reduction 20\.6% Reduction 20\.0%
Appendlx B
Page 1 of 13
INDIA POPULATION PROJECT V - MADRAS
Borrower's Contribution
Reasons for the Success of the IPP V Project
1\. Madras City is the Capital of Tamil Nadu State and the fourth largest Metropolitan City in the
Country in terms of population\. It had a population of 14\.16 lakhs in 1951 and it increased to 32\.7 lakhs
in 1981 and 38\.41 lakhs in 1991\. The slums in Madras City which were 1413 in December '86, increased
to 1847 by June '89 (i\.e\.) an increase of 30\.71 percent\. The reorganized National Family Welfare
Programme (FWP) was being implemented by the Corporation of Madras with one City Family Welfare
Bureau, 44 Urban Family Welfare Centres, 41 Child Welfare Centres rendering Family Welfare,
Maternal and Child Health (FW & MCH) services for the City population apart from the teaching
medical institutions, postpartum centres, private nursing homes and clinics functioning in the city\.
2\. The emphasis on the need to provide the FW&MCH services through the outreach programme
for the slum and congested population was recommended by the Krishnan Committee and accordingly
29 Urban Health Posts were functioning under the Urban Revamping Scheme (URS) with 100% GOI
financial assistance\. Under these circumstances the World Bank assisted IPP V was proposed for Madras
City with an outlay of 60\.71 Crores and the DCA (Credit No\. 1931) between India and IDA was signed
in September 1988 with a revised Project outlay of 69\.13 Crores\.
3\. As per the agreement, the entire Madras City and also the eight Municipal areas of Chengalpattu
MGR District adjoining Madras City were included for the coverage of Project activities\. The objective
of the Project was to provide the slum population with basic health facilities with a special emphasis on
MCH care and FW services\. The cost of the project is shared by GOI and government of Tamil Nadu in
the ratio of 90% and 10% respectively\.
4\. The nodal Department at the state level is the Health and Family Welfare Department of
Government of Tamil Nadu\. A separate Cell was established at the Secretariat to process the proposals
relating to IPP V and get approval of the Government\. A separate Project Directorate was formed at the
State level to monitor the implementation of Project activities\. Actual implementation at the field level
was entrusted to the Corporation and municipal authorities with necessary supporting staff\.
5\. A Steering Committee under the Chairmanship of the Chief Secretary to Government was
constituted to coordinate, monitor and clear the IPP V proposals and activities\. An Empowered
Committee was also formed to process and approve the proposals put forth by Project Director for
implementation\. A Tender Committee was also formed under the Chairmanship of Health Secretary to
clear the tender proposals with reference to Civil Works\. This administrative set up helped to clear
proposals fast\. It also avoided a lot of bureaucratic delay redtape\.
6\. As a first step, the integration of Maternity Centres and the Health Posts was done so as to ensure
comprehensive health delivery both in the institution and through outreach\. The entire Madras City area
was reorganized into 'D' Type Health Post pattern of the URS of GOI with due allocation of 50000
population to each Post Partum Centre area and 30000 population to each Health Post area\. Needbased
Appendix B
Page 2 of 13
reallocation was done without leaving any of the areas uncovered while this integration and
reorganization was done\. Those pucca buildings where the centres already existed were taken over as it is
and repairs needed were carried out whereas while taking up new constructions for the proposed new
Health Posts, the location was identified in a central place and as far as possible in the midst of the slums
to ensure easy accessibility of the MCH&FW services to mothers and children\.
7\. In order to identify suitable locations for construction and also to assess the fitness of sites,
consultants were utilized\. The construction works in the Corporation area were entrusted to the Building
Division of the Corporation of Madras and in respect of the Municipal areas the work was entrusted to
the Public Works Department\. Periodical reviews were undertaken both by Project Director and by the
Health Secretary to assess the progress and also to speed up the works and remove the bottlenecks if any
brought to the notice\.
8\. The Project Directorate played a crucial role in close monitoring of the implementation of field
level activities in the Corporation and Municipal areas, conducting periodical review meetings with all
the implementing officials and communicating regular feed back to each area on the progress made and
also on the action to be taken for improvement etc\. The leadership under an IAS Officer as Project
Director helped in coordinating the implementation of activities with other Directorates of Health and
Family Welfare Department\. Wherever shortfalls were noticed, those officers and field staff were given a
feed back so that no area lagged behind the expected level of achievements at any given point of time\.
9\. The main factor for the success is the service rendered through outreach at the doorsteps of the
slum dwellers and the Multipurpose Health Worker (F) (MPHW) plays an important role in this aspect\.
The initial step taken by the Project Directorate was to identify and select the field workers from among
the slum dwellers and send them for full fledged 18 months' training course to qualify, as MPHW(F)\.
Recognized government and Private Voluntary Organization (PVO) training institutions were involved
for this purpose and all the trained MPWs were posted for field work in their respective areas which
enabled quick rapport and recognition for them in the community to undertake the challenging task on
MCH&FW activities expected under the project\.
10\. To ensure proper documentation of the field activities carried out by the MPHWs, the
streamlined system of record maintenance and reporting was introduced under MIES\. The
comprehensive records introduced enabled the workers to concentrate more on outreach activities and
the time spent in writing work was reduced to the minimum\. Periodical field verifications were
undertaken to ensure accuracy of records and reports by officials of the Project Directorate and the
Corporation of Madras\.
11\. The baseline survey which was undertaken before the initiation of the Project helped in
identifying the priority issues and the findings of the survey were utilized during implementation to
ensure improvement\. In addition, certain need based surveys, Training Needs Assessments, IEC impact
assessments, etc\., were also undertaken from time to time to fulfill the project objectives\. The mid-term
impact analysis undertaken by the Project Directorate and also the external mid-term assessment
suggested by World Bank mutually undertaken both by Madras and Bombay IPP V areas helped in the
course corrections during implementation\.
12\. Quality of services of the field functionaries improved through periodical short term training
programmes undertaken by the training team of the Project Directorate\. The training needs for various
Appendix B
Page 3 of 13
levels of functionaries assessed by the TNA study were utilized for developing a curriculum for various
levels of officials and field workers\. Induction training, in-service training, refresher training,
supervisory skill development training, records maintenance training, IEC training, sonar training,
management development training, training on resuscitation of new born, trainers' training, anesthesia
training, theatre training, health education and other need based technical training programmes were the
activities carried out by the training team of the Project Directorate in coordination with the training
wing of the corporation of Madras and other training institutions like Health and Family Welfare
Training Centres, Egmore, Salem and Gandhigram and Institute of Public Health, Poonamallee\. The
programmes were participant oriented with practical suggestions\. In addition, seminars and workshops
were also organized for the supervisory officers to promote participation for achievement of project
goals\. Knowledge, skill and ability were the focus in the training programmes\.
13\. The district level hospitals as well as the taluk and non-taluk hospitals in the state were
strengthened with supply of equipments and furniture for improved service delivery under MCH\. The
First Referral Units (FRUs) were strengthened to ensure the availability of specialized services in easy
reach\. Ultrasound scanners were supplied to the FRUs an the Medical Officers from FRUs were given
15 days training in handling the equipment\.
14\. Innovative types of IEC activities were undertaken to educate and motivate the community and
to increase the levels of awareness of the FW&MCH Programmes\. Women link leaders were selected
among the slum dwellers at the rate of one worker for every 20 families to act as a liaison between the
health workers and the community for an effective health delivery system\. Their involvement in this task
as voluntary workers without any remuneration for their services created a great impact\. Timely referral
of complicated cases if any to the nearest FRU for medical attention was ensured through this network\.
15\. Though the GOI had been implementing the URS, the health posts did not have any provision for
drugs\. This was a major drawback of the URS\. IPP V ensured availability of drugs in all the areas under
the Project which led to a better utilization of the health services by the public\. Systematic supply of
drugs was ensured so that there was no Health Post without drugs at any given point of time\. The
Government of Tamil Nadu subsequently established a Medical Services Corporation which streamlined
the procedure for drug supply and distribution This uniform procedure has further helped all medical
institutions in the State including the Health Posts to have a regular supply of drugs\.
16\. The involvement of the PVOs was one of the project objectives and accordingly as many PVOs
as possible, including those already in existence, were involved\. Most of the PVOs evinced keen interest
and commitment\. However, there were instances where there was no improvement in the performance in
a few PVOs despite efforts to remedy the situation\. Such of those PVOs who were chronic defaulters in
rendering service had to be removed from the programme and those areas were re-allotted to other
Health Post areas of the Corporation for coverage of health delivery services\.
17\. In the year 1992-93, it was estimated by the Project Directorate that all the proposed activities
could be completed with a smaller rupee allocation of about Rs\. 45 crores by the end of the project
period and hence the balance funds from project outlay of Rs\. 69\.13 crores could be utilized for
expanding the project activities to other urban areas of Tamil Nadu\. The credit agreement was therefore
amended to include other urban areas also\.
AppedxB
Page 4 of 13
18\. With the concurrence of World Bank and Government of India, the Phase-I expansion was
undertaken with effect from September 1992 to include two more corporations and six Municipal areas
whose population was 2 lakhs and above\. The outlay was Rs\. 8\.78 crores\. Subsequently this issue was
discussed with the World Bank Review Missions and concurrence for a Phase II expansion with effect
from April 1993 with an outlay of Rs\. 14\.85 crores was again obtained from World Bank and GOI\. This
expansion covered 15 municipal areas having a population of one to two lakhs\. The Municipal
Commissioners and municipal Health Officers were the implementing officials of the project activities
and the Deputy Director of Health Services of the districts were the technical supervisory officials in
these areas\. Reviews, monitoring and feedback were all carried out in similar lines as undertaken for
original project area and the Project Directorate monitored the progress of service delivery at the State
level\.
19\. Repairs and renovation works to the Maternity Homes in the expansion areas were undertaken
utilizing the engineering staff of the respective Corporations and Municipalities\. The maintenance of the
ICDS Centres which function as units for service delivery under MCH and nutrition was felt to be
essential and hence funds were provided to these areas for repairs and maintenance which helped in
improving the delivery of MCH service\.
20\. In order to ensure complete coverage of Chengalpattu MGR District which was the original
Project area, three left out areas were included for coverage under Phase III expansion and civil works
for 10 bedded maternity ward were undertaken in these areas\. Minor civil works were undertaken in all
the FRU areas as Phase IV expansion in addition to supply of equipments so that the aims of the Project
were fulfilled in all the urban areas in delivering effective MCH services\.
21\. The World Bank supervisory mission were flexible and encouraged the Directorate to expand its
activities\.
22\. The IEC strategy focused on Project objectives and messages on social issues like age of
marriage, literacy and education of women and the quality of life that could be achieved by a small
family were all covered by different media\. The IEC programmes reached the targeted slum community
through the judicious combination of media mix and interpersonal and group strategies\. Emphasis was
given on interpersonal and group contacts by the grass root level workers\. This was supported by mass
communication programmes through film shows, video shows, TV, AIR and Press\. Vehicles with
paintings on MCH&FW messages were supplied to all the Corporations/Municipalities under the project
area which were utilized for field publicity\. IEC printed materials and manuals were supplied to all the
workers\. Competitions, auto stickers for propogating health and family welfare messages, etc\. helped in
increasing the awareness among the community\.
23\. A separate project directorate, continuity in tenure of project directors, availability of resources
and manpower, focused objectives and a flexible administrative set contributed in large measure to the
success of the project\.
Table 1: INDIA POPULATION PROJECT V
Expendituire Claims up to March 1996
SI\.no\. Coiiiponent Appropriation Total expdr\. Claim filed Expenditure Claim filed Total expdr\. Total clain Details of grants
as per SAR for from 1986 from 1988 for 4/95 to from 4/95 to from 1988 filed from received fron
the project to 3/95 to 3/95 31\.3\.1996 31\.3\.1996 to 31\.3\.96 1988 to 31\.3\.96 GOI
I\. Civil Works 20820000 129192679 106680847 50227685 45204917 179420364 151685764
2\. Funiture 4500000 4522847 7368788 0 0 4522847 7368788 Rs\. In lakhs
3\. Equipment 241200000 98438407 81984543 89867126 76387058 188305533 158371601 upto
4\. Vehicle 8700000 6095017 5420730 0 0 6095017 5420730 89-90 = 466\.00
5\. Local Adviser 8000000 1084875 1006013 155451 155451 1240326 1161464 90-91 = 300\.00
6\. Local Fellowship 1000000 5955010 6119224 723193 723193 6678203 6842417 91-92 = 900\.00
7\. Professional fees 3100000 2376384 2212214 367189 330470 2743573 2542684 92-93 = 837\.00
8\. Foreign Fellowship 1000000 1616919 1955322 0 0 1616919 1955322 93-94 = 2400\.00
9\. Books 100000 96353 81900 2264 1924 98617 83824 94-95 = 1558\.26
10\. Addl\. Staffsalaries 284400000 213105340 169984803 71969662 43181792 285075002 213166595 --------------
11\. Consumable material 93500000 75466408 56674957 22674862 13604916 98141270 70279873 Total 6461\.26
12\. Maintenance of vehicle 2400000 1977686 1575058 304064 182439 2281750 1757497 --------------
13\. Other Operation &
Maintenance 35200000 28786352 24496390 23392819 14035691 52179171 38532081 95-96 2016\.00
Total 891300000 568714277 465560789 259684315 193807851 828398592 659368640 847726
-Tolal expenditure from 1988 to 31\.3\.1996 828398592
For the month of April 1996 216000
For the month of May 1996 18966558
Total Expenditure 847581150
(IQ
e 3
Appendix B
Page 6 of 13
INDIA POPULATION PROJECT V
MUNICIPAL CORPORATION OF GREATER MUMBAI
PUBLIC HEALTH DEPARTMENT
Borrower's Contribution
Project Objectives and Activities
1\. India Population Project V has been implemented by the Public Health Department with the
financial assistance of Rs\. 48\.30 crores from the World Bank/Govt\. of India since October 1988\. Out of
this amount an amount of Rs\.37\.26 crores was allocated to Mumbai Municipal Corporation and the
amount of Rs\. 11\.04 crores was diverted to Navi Mumbai Municipal Corporation for development of
infrastructure\. The project was to get over by 31 st March 1995 initially but its period was extended up to
31st December 1995 and again up to 31st March 1996\. The Municipal Corporation Mumbai had
incurred an expenditure of Rs\.43\.49 up to 31\.3\.95 on the project\. The additional grant of Rs\. 15\.01
crores over and above Rs\.43\.49 crores was sanctioned by the World Bank/Government of India for the
project making the total outlay of Rs\.58\.50 crores\. The project period is over on 31st March 1996\.
2\. The Project in nutshell is the strengthening and expansion of preventive and promotive health
care services with special emphasis on Family Welfare and Maternal and Child Health with effective Out
Reach Services to the door steps of Urban Slums and shanties through scientific organizational systems\.
The Project aims at (i) bringing down the mortality rates amongst children and mothers; (ii) promotion of
Family Welfare Services to accelerate decline in fertility and restricting population and growth rate\.
3\. The goal is revamping the organization, service delivery and out reach systems for Family
Welfare in Urban slums and congested areas and the objectives are:
* Expansion of Family Welfare Services with emphasis on Maternal and Child Health through
various methods
* Improving the quality of services
* Strengthening the capacity to plan, manage and implement Family Welfare Programme in
Urban areas
* Increasing the participation of Private Voluntary Organizations and Private Medical
Practitioners in the programme
4\. This was to be achieved by establishing in all 180 Health Posts and 30 Post Partum Centres to
cater to the entire population of Greater Bombay\. Each of these health posts caters a specific area
covering about 65000 population in slums and 1,00,000 population in non-slum areas\. Until now, the
people had to come to our health centres, dispensaries, maternity homes and hospitals\. Under this
project, the health post staff goes to the doorsteps of our citizens to assess their needs and provides health
care either preventive, promotive or curative\. We have established 176 Health Posts out of which 8
Health Posts are run in collaboration with Private Voluntary Organizations\. We have also introduced
Appendix B
Page 7 of 13
Innovative Scheme with help of Private Voluntary Organizations known as Mobile Creches which render
health care services to migrant construction workers and their children\. 30 Post Partum Centres have
been established under the Project\.
5\. Out of 176 Health Posts, 50 Health Posts are in new constructions out of which 7 new
construction have been done and health posts have been established therein\. Besides this, there were 9
new constructions for Post Partum Centres which have been completed and the Post Partum Centres have
been started therein\. We have also procured 21 ambulances for Post Partum Centres\. Some
sophisticated items and equipments viz\. Semi Auto Analyzers, Colposcopes and Ultra Sonography
Machines have been procured for rendering specialized services in our Post Partum Centres\. At every
ward office and in every Municipal Hospital or Maternity Home a service-cum-information counter has
been put up\. This counter is attended by para medical staff of the centre by rotation\. The counter is
utilized to carry out I\.E\.C\. activities\. The application forms for birth certificates are given at this counter
so that community comes into contact with this counter\. This approach has improved the use of
contraceptive devices\. The condoms and oral pills are distributed free of charge at this counter\. the
community is given all the information about how to use it etc\. I\.E\.C\. material of different diseases like
Gastro, T\.B\., Malaria, AIDS is distributed from this counter\. These counters are found very useful in
building up good rapport with the community\.
6\. The novel features of the project are establishment and development of (a) Management,
Information and Evaluation Systems Cell; (b) Information, Education and Communication Cell; (c)
Training Cell and increased participation of Private Voluntary Organizations and Private Medical
Practitioners\.
7\. The Information, Education and Communication Cell is the mouthpiece of the project\. It deals
with the following:
* It creates awareness of the facilities and services, their benefits etc\. among the slum dwellers
through different Mass Media facilities, establish inter personal communications and provide
Mass Education in communication, behavioral and social sciences through group/community
meetings\. The cell is equipped with modern media machinery and equipments\.
* The training is an important feature of the project\. The pre-placement, inservice, technical,
managerial and up-grading training programme is arranged from top level officers to lower
workers (macro level to micro level) and periodic assessment of the trainees and training of
trainers is undertaken by this Cell with specific responsibility of collaborating with local
training institutions\. The Cell also prepares training manuals, schedules and materials for
the service delivery and various health programmes\. The Private Voluntary Organizations
and Private Medical practitioners are also involved in the implementation of the project\. the
Private Voluntary Organizations are involved in developing Health Posts under revised
grant-in-aid procedure with appropriate compliment of staff\. The Private Medical
Practitioners are also involved by undertaking their training in various methods of Family
Welfare to upgrade their skills, providing them with supplies of planning devices etc\. so as
to achieve maximum motivation and results\.
8\. The Management, Information and Evaluation System Cell is the monitor of the project in the
sense that it is responsible to develop and implement monitoring and evaluation programmes\. This is
Appendix B
Page 8 of 13
achieved through installation of computers to analyze the feedback from the health posts and provide
management tools to improve performance\. This cell has developed a system to provide various
statistical data of information bases and performance factors\. This cell also provides orientation and
traininig for staff about new procedures and technology for implementation of the Management,
Information and Evaluation System Plan\. The main functions of this cell are Monitoring, Evaluation and
Research\.
9\. The expenditure incurred on implementation of the project till 31\.3\.1996 is Rs\.59\.89 crores as
per details given in the accompanying table\.
Constraints
10\. Procedural delay in purchase of equipments and instruments\. Delay in purchase of ambulances,
vehicles for Mobile Health Posts for transport department\. Shortage of staff\. There are number of
vacancies in the category of Auxiliary Nurse Midwives but because of reservation for backward class,
we are not getting suitable candidates despite advertising the posts\. Besides there is no facility of hostel
for ANMs which also results in not getting candidates\.
Sustainability of the Project
I I\. The project period is over on 31st March, 1996\. Under the project a big infrastructure has been
developed and the entire area of Municipal Corporation of Greater Mumbai is covered and many other
programmes such as T\.B\. Control, Malaria Eradication, AIDS Control, PID Project, etc\. are undertaken
in this project\. The activities of the project are to be continued\. The infrastructure also provides a good
system to integrate all the health care services to the periphery\. The ultimate idea is to provide
Voluntary Women Health Workers to every slum family living in Mumbai and therefore this project has
to be sustained after 31st March 1996, for which sufficient budget provision for the year 1996-97 has
been made by the Corporation\.
Conclusions
12\. India Population Project-V has made an impact on total health delivery system giving new
insights to both project authorities and the beneficiaries\. The project although tackled one of the most
complicated area of social development has shown increasing results and has become a model in the field
of Family Welfare and Mother Child Health especially in respect of Training, I\.E\.C\. and M\.I\.S\., health
care service delivery and referral systems and collaboration with PVO's\.
Appendix B
Page 9 of 13
Table 1: INDIA Population Project V
Municipal Corporation of Greater Mumbai
Public Health Department
Training Cell
Cumulative Report Yearwise
Year Induction Inservice Subjects of Inservice Training PMP's Total
Training Training Training
1988 - - AIDS, Foetal Medicine - -
1989 766 147 Administrative Matters 138 1051
1990 1765 927 Street Theatre, Computer 66 2758
1991 1942 445 Software, Eye Care 232 2619
1992 3425 1574 Child to Child, National 258 5257
1993 483 4151 Health Programme 277 6966
1994 68 6671 Mental Health 227 6966
1995 70 7603 Breast feeding, Video Grafites and VCR, 187 7860
(Up to Oct)\. Package Environmental Sanitation, Medical
Nov\. 1995 997 Emergencies, Growth Monitoring, Cancer - 997
up to of
Mar-96 Female, Acute Respiratory Tract Infection,
Using Audio-Visual for Health Education,
Sonography Community Out reach,
Community Participation, Control of
Diarrhoeal Diseases and Preparation of
ORS,
Sonography, Oral Communication,
Puppetry
Show, Drug-Deaddiction, Colposcopy,
Child
Survival and Safe Motherhood, Diseas-:
Surveillance, Immunization and Cold Cihain
maintenance, Planning and implementation,
Cervical Cytology
Total 8519 22515 1385 34474
Table 2: Break-up of Expenditure from 01/11/87 to 31/3/96
Coll\.
Project Fatal Mcd\.
Dcscription Tot\. Anioutnt D\.M\.C\. CCD + Ward Ml\.IS\. I\.E\.C\. Trainiig Bureau 1I1P\. P\.P\.C\. Sion llosp\. Sioii llosp\. PPC & PBW P\.V D\.
Civil Works 45312536\.64 0\.00 160458\.38 0\.00 0\.00 0\.00 233748\.00 17468447\.82 26791226\.64 0\.00 185392\.65 473263\.15 0\.00
Equlipme,lts 72855810\.72 780\.00 1697178\.81 4153982\.80 1699195\.95 544662\.68 1128200\.00 3466661\.02 56970391\.29 287968\.00 2238071\.75 415332\.72 253385\.70
Furniture 7536889\.86 79191\.90 964165\.50 360151\.94 103183\.56 504565\.17 167004\.25 3442724\.12 1413466\.92 0\.00 75924\.00 169307\.05 257205\.45
Vehiclcs 9201840\.65 0\.00 372950\.00 0\.00 1288383\.60 1210839\.60 1067956\.50 0\.00 5261710\.95 0\.00 0\.00 0\.00 0\.00
Salaries 411243914\.76 1221883\.76 40636050\.10 8015715\.92 5240627\.03 5319590\.69 30013419\.33 266804713\.53 41737422\.61 0\.00 0\.00 0\.00 12251965\.90
Expert Services 6202294\.33 0\.00 843314\.65 730200\.00 847979\.16 3776423\.02 4377\.50 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Fellowship 1679795\.35 0\.00 999977\.85 105250\.00 6595\.65 546699\.85 16272\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Books 51219\.90 0\.00 7579\.65 165\.00 10966\.00 24676\.90 0\.00 0\.00 150\.00 0\.00 7682\.35 0\.00 0\.00
Consuimiiables 19392995\.62 11810\.20 3247238\.74 1564086\.52 3012888\.02 610374\.78 4638309\.16 545387\.93 3085351\.10 47284276 1945582\.91 0\.00 259115\.50
Operation &
Nlainltclladcc 25437921\.55 442835\.90 9979346\.07 1183282\.76 1633826\.92 765859\.20 1643793\.30 7783849\.99 1279674\.17 5000\.00 0\.00 377308 39 339983\.35
Total 598915219\.38 1756501\.76 58908259\.75 16112834\.94 13843645\.89 13303691\.89 38913080\.04 299511784\.41 136539393\.68 765810\.76 4452653\.66 1435211\.31 13361655\.90
\.~~~~~~~~~~~I
Appendix B
Page 11 of 13
Table 3: Municipal Corporation of Greater Mumbai
Public Health Department
India Population Project V
Sr\.No Category 1988 1989 1990 1991 1992 1993 1994 1995 1995
1\. Number of 218300 209325 218437 215466 211127 193408 202819
births
2\. Birth rate 21\.4 19\.9 20\.1 21\.7 20\.8 18\.7 19\.3
3\. Death Rate 7\.2 7\.0 6\.8 8\.0 8\.0 7\.3 7\.2
4\. IMR 53\.1 51\.6 48\.0 49\.2 47\.2 43\.4 41\.3
5\. MMR 0\.4 0\.6 0\.6 0\.5 0\.3 0\.1 0\.1
6\. BCG 88\.0 89\.0 93\.8 93\.3 94\.8 98\.8 97\.0
7\. DPT- III 79\.0 88\.0 85\.2 87\.4 89\.8 92\.1 94\.6
8\. OPV- III 79\.5 80\.0 85\.5 87\.9 90\.9 94\.1 94\.1
9\. Measles 38\.5 42\.0 59\.8 65\.0 75\.2 76\.9 85\.5
10\. CPR 20-30% 42\.6 42\.4 47\.3 52\.2 54\.2 56\.0
Appendix B
Page 12 of 13
Table 4: Program Implementation Performance - Central Office
Activities 1989 1990 1991 1992 1993 1994 1995 1996
(Jan-Dec) (Jan-Mar)
I\. Film Shows 694 336 201 570 636 520 512 95
2\. Beneficiaries 76529 20407 13382 41930 44467 219830 122855 7700
3\. Health Exhibitions 269 161 171 309 504 375 476 95
4\. Beneficiaries 47827 11644 12262 19338 35082 101571 107837 7725
5\. Health Talks 557 589 - - - 756 1078 236
6\. Special Program - 23 45 205 45 117 199 96
7\. Printing material 6774 8307 14927 90687 64971 553672 2746866 49301
distributed
Appendix B
Page 13 of 13
Table 5: Program Implementation Performance - Health Posts
Activities 1989 1990 1991 1992 1993 1994 1995 1996
(Jan-Dec) (Jan-Mar)
1\. Interpersonal - - - - 3638582 4511184 4294831 1098245
contacts
2\. Beneficiaries - - - - 3022036 4510614 4297063 1098245
3\. Health Talks - - 5117 11082 23937 14488 13385 3492
4\. Beneficiaries - - 227276 407847 597970 511022 453685 142778
5\. Exhibition - - 1265 2232 2822 3146 3619 942
6\. Beneficiaries - - 62501 141563 183094 185872 189816 62171
7\. Video Shows - - 273 255 353 227 28 -
8\. Beneficiaries - - 19319 38968 24794 16335 6407 -
9\. ANC/PNC - - 821 3843 3378 4777 5578 749/573
Activities
10\. Beneficiaries - - 33214 115451 95578 102522 112963 17428/
15976
11\. Special Program - - - 282 528 786 1404 455
12\. Beneficiaries - - - 160582 55282 237947 294090 34843
Post Partum Centers
1\. Video Shows 3367 4810 1865
2\. Beneficiaries 131998 190689 64141
3\. Health Talks 11261 14142 3961
4\. Beneficiaries 248801 361368 100380
D 7 : -di lA
- i- 9 ; ': I'i \. Ol'J,-Ii
1 I r: q ^ | REVIEW |
P163057 | Report No: ICR00004931
IMPLEMENTATION COMPLETION AND RESULTS REPORT
IDA-D1530, AND IDA-D2640
ON A
GRANT
IN THE AMOUNT OF SDR19\.0 MILLION AND SDR18\.6 MILLION
(US$ 26\.0 MILLION AND US$ 26\.0 MILLION EQUIVALENT)
TO THE
ISLAMIC REPUBLIC OF MAURITANIA
FOR THE FIRST AND SECOND
FISCAL CONSOLIDATION AND PRIVATE SECTOR SUPPORT
DEVELOPMENT POLICY OPERATIONS
December 16, 2019
Macroeconomics, Trade and Investment and Fiscal Management Global Practice
EA2M1 unit, Africa Region
The World Bank
First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 16, 2019)
Currency Unit = Mauritanian Ouguiya (MRU)
MRU 37\.30 = US$1
US$ 1\.38 = SDR 1
FISCAL YEAR
January 1 â December 31
Regional Vice President: Hafez Ghanem
Country Director: Nathan Belete
Country Manager: Laurent Msellati
Global Practice Director: Marcello Estevao
Regional Director: Elisabeth Huybens
Practice Manager: Lars Christian Moller
Task Team Leader(s): Samer Matta
ICR Primary Author: Richard J\. Carroll
ICR Main Contributor: Richard J\. Carroll
1
The World Bank
First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank LDP Letter of Development Policy MDGs
BCM Central Bank of Mauritania MDGs Millennium Development Goals
BoP Balance of Payments MEF Ministry of Economy and Finance
CA Contracting Authorities MOE Ministry of Education
CAD External Current Account Deficit MOF Ministry of Finance
Public Investment Analysis and Programming
CAPIP MOH Ministry of Health
Committee
CAS Country Assistance Strategy MRU Mauritanian Ouguiya
Code of Real Property Rights (Code des Droits
CDR MTEF Medium-Term Expenditure Framework
Reels)
CFAA Country Financial Accountability Assessment NPL Non-performing Loan
CPF Country Partnership Framework OIE World Organization of Animal Health
Directorate of Studies, Reforms, and
Monitoring and Evaluation (Direction Générale
DGERSE PEFA Public Expenditure and Financial Accountability
des Etudes, des Réformes, du Suivi et
d'Evaluation)
DPO Development Policy Financing PER Public Expenditure Review
DSA Debt Sustainability Analysis PFM Public Financial Management
Japan Policy and Human Resources Development
DTF General Directorate of Financial Oversight PHRD
Trust Fund
ECF Extended Credit Facility PIM Public Investment Management
Administrative Public Agencies (Etablissements
EPA PIP Public Investment Program
Publics à Caractère Administratif)
EU European Union PPP Public-Private Partnerships
FDI Foreign Direct Investment RACHAD Automated expenditure-chain system
FY Fiscal Year ROSC Report on the Observance of Standards and Codes
National Strategy for Accelerated Growth and
GDP Gross Domestic Product SCAPP
Shared Prosperity
Electronic Public Financial Management
GFMIS SDR Special Drawing Rights
Information System
National Mining Company (Société Nationale des
GNP Gross National Product SNIM
Industries Minière)
GoM Government of Mauritania SOE State Owned Enterprise
GRS Grievance Redress Service TA Technical Assistance
HIPC Heavily Indebted Poor Countries TBs Treasury Bills
International Bank for Reconstruction and
IBRD ToT Terms of Trade
Development
IDA International Development Association UNDP United Nations Development Program
IFC International Finance Corporation US$ United States Dollars
IMF International Monetary Fund VAT Value-added Tax
JSAN Joint Staff Advisory Note
2
The World Bank
First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
TABLE OF CONTENTS
DATA SHEET \.5
I\. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES \.8
A\. Context at Appraisal \. 8
Overall context \. 8
Structural/sectoral background \. 11
Bank Rationale for Involvement \. 12
Original Program Development Objective(s) (PDO) (as approved) \. 12
Original Policy Areas/Pillars Supported by the Program (as approved) \. 12
B\. Significant Changes During Implementation \. 13
Revised Program Development Objectives (PDOs) \. 13
Revised Policy Areas/Pillars supported by the Program \. 13
Other Changes \. 13
II\. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES\. 14
A\. Relevance of Prior Actions \. 14
B\. Achievement of Objectives (Efficacy) \. 21
Relevance and Measurability of RIs and Appropriateness of Targets \. 21
Efficacy of prior actions\. 24
Rating: Satisfactory \. 27
C\. Overall Outcome Rating and Justification \. 27
III\. OTHER OUTCOMES AND IMPACTS\. 28
A\. Poverty, Gender and Social Impacts \. 28
B\. Environmental, Forests and Natural Resource Effects \. 28
C\. Institutional Change/Strengthening \. 28
D\. Other Unintended Outcomes and Impacts\. 29
IV\. BANK PERFORMANCE \. 29
V\. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES \. 32
VI\. LESSONS AND NEXT PHASE \. 32
A\. Lessons Learned \. 32
B\. Next Phase \. 34
ANNEX 1\. RESULTS FRAMEWORK \. 35
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES \. 38
ANNEX 3\. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERSâ/STAKEHOLDERSâ
COMMENTS \. 40
ANNEX 4\. SECTORS AND THEMES \. 41
ANNEX 5\. SUPPORTING DOCUMENTS \. 43
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DATA SHEET
BASIC INFORMATION
Program Series
Project ID Short Name Full Name
Mauritania Fiscal and Private Sector Participation
P160592 Mauritania DPO
Reforms DPO
Mauritania Second Fiscal Consolidation and Private
P163057 Mauritania DPO 2
Sector Support DPO
Series Details (USD)
Project ID Approved Amount Disbursed Amount
P160592 26,000,000\.00 25,413,450\.00
P163057 26,000,000\.00 26,332,392\.14
Total 52,000,000\.00 51,745,842\.14
KEY_D PF_OPTI ONS_ TBL
P160592 P163057
Policy-Based Guarantees No No
Ln/Cr/TF IDA-D1530 IDA-D2640
Concept Review 10-Aug-2016 12-Apr-2017
Decision Review 02-Nov-2016 06-Nov-2017
Approval 15-Dec-2016 20-Dec-2017
Effectiveness 19-Dec-2016 21-Dec-2017
Original Closing 31-Dec-2017 31-Dec-2018
Actual Closing 31-Dec-2017 31-Dec-2018
Crisis or Post-Conflict No No
Regular Deferred Drawdown Option No No
Catastrophe Deferred Drawdown Option No No
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Sub-National Lending No No
Special Development Policy Lending No No
Organizations
Series Project Borrower Implementing Agency
P160592 Ministère de lâEconomie et des
Ministère de lâEconomie et des Finances
Finances
P163057
Program Development Objective (PDO)
Program Development Objective (PDO) (From last operation in the series)
Project Development Objective (Note: will be disclosed in the MOS) Support fiscal consolidation and private sector
participation in non-extractives sectors Board Schedule Comments
PROGRAM FINANCING DATA (USD)
World Bank Administered Financing
Approved Amount Actual Disbursed
P160592
26,000,000 25,413,450
IDA-D1530
P163057
26,000,000 26,332,392
IDA-D2640
Total 52,000,000 51,745,842
RATINGS SUMMARY
Program Performance
Overall Outcome Relevance of Prior Actions Achievement of Objectives (Efficacy)
Satisfactory Satisfactory Satisfactory
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
Bank Performance
Satisfactory
ACCOUNTABILITY AND DECISION MAKING
At ICR:
Regional Vice President Country Director Director
Hafez M\. H\. Ghanem Nathan M\. Belete Marcello De Moura Estevao Filho
Practice Manager Task Team Leader(s)
Lars Christian Moller Samer Naji Matta
At Approval:
P160592
Regional Vice President Country Director Director
Makhtar Diop Louise J\. Cord Carlos Felipe Jaramillo
Practice Manager Task Team Leader(s)
Lars Christian Moller Wael Mansour
P163057
Regional Vice President Country Director Director
Makhtar Diop Louise J\. Cord Carlos Felipe Jaramillo
Practice Manager Task Team Leader(s)
Lars Christian Moller Wael Mansour, El Hadramy Oubeid
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
I\. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES
1\. Mauritania is a sparsely populated country that is one of the least developed in the world\.
Geographically, Mauritania links the Arab Maghreb and western Sub-Saharan Africa (SSA)\. It is characterized
by a very low population density of 4\.3 people per square kilometers, which is significantly lower than the
44\.9 average in SSA\. While the poverty rate declined from 44\.5 percent in 2008 to 33 percent in 2014,
Mauritania remains one of the least developed countries in the world, ranking 159th out 189 countries on
the Human Development Index (HDI) index in 2017\.
2\. This Implementation and Completion and Results (ICR) report assesses the achievement of the
First and Second Fiscal Consolidation and Private Sector Reform Development Policy Operation (DPO)
operations (P160592 and P-163057) to Mauritania\.1 These operations were the first Bank-funded DPOs in
Mauritania\. The series consisted of two operations aimed at supporting the Government of Mauritania
(GoM) to implement structural fiscal reforms and private sector participation in non-extractive sectors\. The
first operation (DPO1), a grant financing of US$26 million (SDR19 million), was approved by the Board on
December 15, 2016\. The second operation (DPO2), a grant financing US$26 million (SDR 18\.6 million), was
approved by the Board on December 20, 2017\.
A\. Context at Appraisal
Overall context
3\. Historically, Mauritaniaâs development model suffered from a mis-management of natural
resources\. During 2000-2014, extractive industries represented an average of 25 percent of GDP, 82 percent
of exports and 23 percent of fiscal revenues\. During the 2009-2014 commodity boom, mining exports
doubled, pushing Mauritaniaâs average annual real GDP growth rate to 4\.2 percent, close to the SSA average
at that time\. High commodity prices prompted a surge in foreign direct investment (FDI) and revenue inflows,
which increased demand for non-tradeable services and drove the real exchange rate to appreciate\.
Substantial resource revenues and foreign aid were not used to invest in productive sectors\. Rather, they
contributed to a state-driven development model, which did not encourage economic diversification\.
4\. At the time of inception of this DPO series, Mauritania was struggling to cope with the terms of
trade (ToT) shock from the steep drop in the price of Mauritaniaâs commodity exports\. The end of the
commodity super-cycle in 2014 weighed heavily on the Mauritanian economy\. Growth plummeted from 6\.1
percent in 2013 to 0\.4 percent in 2015 (Table 1)\. The fiscal surplus of 4\.3 percent of GDP in 2013 turned to a
deficit of 3\.4 percent in 2015 as mining revenues declined and the wage bill and capital expenditures soared\.
Meanwhile, the inflexible exchange rate policy (the ouguiya was pegged to the U\.S\. dollar in a crawl-like
arrangement) and a lack of monetary policy tools limited the central bankâs (BCM) ability to respond to the
ToT shock\. This led to growing pressure on foreign-exchange reserves which dropped to only 2\.1 months of
imports by end-2014\. These pressures prompted BCM to adopt a more flexible exchange rate policy and
1 This Implementation Completion Report (ICR) is part of an Operations Policy and Country Services (OPCS) pilot that is testing a
revised template for development policy operations\. Pilot template guidelines are available upon request to help readers
understand the new format\.
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
contract a US$300 million non-concessional loan from Saudi Arabia in mid-2015\. These policies helped
alleviate pressure on reserves, but significantly increased the debt-to-GDP ratio, which rose from 70\.6
percent of GDP in 2013 to 96\.7 percent in 2015\. Against this deteriorating economic situation, Mauritania
asked the Bank for budget support\.
5\. By appraisal, the macroeconomic policy framework was deemed adequate to launch DPO1 given
an expected growth recovery, a fiscal consolidation path, and a more favorable external environment\. In
particular, this assessment was affirmed by: (i) favorable medium-term growth prospects underpinned by
continued strength in fishing and agricultural production; (ii) lower external pressures driven by improved
ToT and BCMâs policy to adopt a more flexible exchange rate policy; and (iii) the Governmentâs strong
commitment to fiscal consolidation\. Risks, while manageable, remained substantial, particularly in terms of
the macroeconomic environment, notably in the absence of an IMF-supported program\. The Bank and IMF
teams shared similar views about the overall macro-framework and coordination was very effective, but the
IMF only reached an agreement with GoM regarding a three-year ECF program in December 2017,2 because
it stressed the need to adhere to a zero level non-concessional borrowing policy\.3 In the Letter of
Development Policy of both DPO1 and DPO2 and in a separate letter that GoM sent to the president of the
World Bank as part of DPO1, the authorities committed to implement several reforms to strengthen the
monetary policy framework in line with the Bank and IMF recommendations\. Some of these reforms such as
strengthening banking supervision, fighting money laundering, and adopting a more flexible exchange rate,
were included and implemented later as part of the IMF program\.
Table 1: Key Macroeconomic Indicators
2 The Fundâs program has four pillars: (i) more flexible monetary and exchange rate policy; (ii) fiscal consolidation through tax
administration and PIM to keep the debt going downward; (iii) strengthen bank supervision and boost private sector credit; (iv) and
advance structural reforms to improve the business environment and accelerate diversification\. Pillars (ii) to (iv) overlap with the
DPO series reform areas\.
3 Two key priority infrastructure projects (the Boulenoir wind farm project and the Nouakchott fishing port project) were excluded
from that rule because they were identified in the SCAPP and did not have concessional financing\.
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2013 2014 2015 2016 2017 E2018 P2019 P2020
Real Economy annual change unless otherwise indicated
Real GDP growth 6\.1 5\.6 0\.4 1\.8 3\.1 3\.6 6\.4 5\.7
Per Capita GDP (current US$) 1,566\.7 1,435\.3 1,249\.4 1,175\.9 1,196\.7 1,240\.0 1,312\.0 1,322\.5
Extractives GDP growth 15\.1 4\.2 -5\.6 0\.7 -7\.1 -18\.7 16\.3 5\.3
Non-extractives GDP growth 4\.8 5\.8 1\.4 2\.0 4\.5 6\.4 5\.5 5\.7
Prices annual change unless otherwise indicated
GDP deflator 3\.0 -9\.2 -4\.2 3\.4 3\.4 2\.7 7\.2 3\.4
CPI Inflation 4\.1 3\.6 3\.3 1\.5 2\.3 3\.0 2\.2 2\.8
Iron Price ($/dmt) 135\.4 97\.0 55\.9 58\.4 71\.8 69\.8 96\.3 90\.4
Copper Prices ($/mt) 7,332\.1 6,863\.0 5,510\.0 4,868\.0 6,170\.0 6,530\.0 6,137\.0 6,316\.6
Gold Prices ($/ troy oz) 1,411\.5 1,266\.0 1,161\.0 1,249\.0 1,258\.0 1,269\.2 1,322\.0 1,372\.5
Oil Price (US$/bbl) 104\.1 96\.2 50\.8 42\.8 52\.8 68\.3 62\.6 63\.6
Fiscal Accounts Percent of GDP, unless otherwise indicated
Expenditures 25\.8 29\.5 32\.8 28\.5 28\.3 27\.2 26\.7 27\.1
Current Expenditure 15\.8 17\.7 18\.8 16\.8 17\.5 18\.2 17\.5 17\.5
Capital Expenditure 10\.0 11\.8 14\.1 11\.8 10\.8 9\.1 9\.2 9\.6
Revenues 30\.1 26\.1 29\.4 28\.0 28\.0 30\.2 27\.1 27\.5
Tax Revenues (excl\. extractives) 14\.6 16\.1 16\.8 16\.7 17\.6 18\.9 18\.6 18\.8
Non-tax revenues 9\.7 4\.4 9\.1 7\.8 7\.1 6\.6 5\.3 5\.4
Extractive Revenues 5\.2 5\.4 1\.7 1\.6 2\.3 4\.0 2\.5 2\.5
Grants 0\.7 0\.1 1\.8 1\.9 1\.0 0\.7 0\.7 0\.8
Primary Budget Balance 5\.2 -2\.4 -2\.3 0\.5 1\.2 4\.6 1\.8 1\.7
Budget Balance 4\.3 -3\.4 -3\.4 -0\.5 -0\.3 2\.9 0\.3 0\.4
Public Debt (including Kuwait debt) 70\.6 78\.6 96\.7 98\.9 95\.9 102\.2 95\.7 96\.0
Public Debt (excluding Kuwait Debt)* 53\.0 59\.4 75\.0 77\.3 75\.8 82\.7 77\.8 78\.8
Balance of Payment Percent of GDP, unless otherwise indicated
Current Account Balance -22\.3 -27\.3 -21\.6 -15\.1 -13\.9 -18\.7 -15\.0 -19\.4
Foreign Direct Investment 19\.9 9\.3 10\.4 5\.8 12\.0 12\.4 11\.6 17\.5
Gross Reserves (million US$, eop) 981\.8 620\.1 821\.3 824\.5 849\.0 919\.1 1,010\.7 1,199\.3
in months of goods imports 3\.9 2\.8 5\.1 5\.2 4\.9 4\.2 4\.5 5\.0
in months of imports (goods & services) 2\.9 2\.1 3\.8 3\.9 3\.6 3\.6 3\.8 4\.0
Exchange Rate (MRU/US$, avg) 30\.0 30\.2 32\.4 35\.2 35\.8 35\.7 \. \.
GDP (nominal, million US$) 5,724\.2 5,391\.6 4,828\.9 4,679\.3 4,905\.9 5,234\.9 5,704\.6 5,922\.3
Source: Ministry of Economy and Finance (MEF), National Statistics Office, Central Bank of Mauritania (BCM), IMF, United Nations (UN) Population,
World Bank Staff Calculation as of August 30, 2019\. * The Kuwait debt is a loan that was contracted in the 1970s from the Kuwait Investment Authority
and was not cancelled as part of the HIPIC initiative\. The loan is dormant as no interest or principal has ever been paid\. The Mauritanian authorities
are in discussions with Kuwait to cancel this debt, but no agreement has been reached yet\.
6\. In addition to the strong coordination with the IMF, the World Bank worked closely with other
development partners to define the scope of government reforms supported by this series\. In particular,
a budget-support operation from the African Development Bank (AfDB) was being developed in parallel to
the Bankâs DPO\. Given the very close collaboration between the two institutions, the AfDB anchored its two-
year operation to the private-sector-participation pillar of the Bankâs DPO series\. The first operation was
approved by the AfDB Board in November 2016 with a grant of US$ 4\.6 million and a credit of US$ 4\.8 million,
while the second operation was approved in November 2017 as a grant of US$ 5\.7 million\.4 Similar to the
Bank, these operations were the first AfDB DPOs in Mauritania\.
4 https://www\.afdb\.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/MAURITANIA_-
_Economic_Reforms_and_Diversification_PAREDE_II_EN\.pdf
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
Structural/sectoral background
7\. Mauritaniaâs tax system suffered from flaws that came to light following the ToT shock\. Despite a
series of major tax reforms launched in 2011, Mauritaniaâs tax system suffered from inefficient tax incentives
that were inaccurately targeted and commonly used by companies that did not comply with associated
obligations\. A 2014 World Bank survey of investors in Mauritania found that almost 80 percent of
respondents would have invested the same amount in the absence of tax incentives\. Mauritaniaâs income
tax was also affected by Base Erosion and Profit-Shifting (BEPS) activities due to an inadequate regulatory
framework and procedures to address the different sources (domestic and international) of BEPS\. This
included transfer mis-pricing by affiliates of multinational enterprises\.
8\. Public Investment Management (PIM) also suffered from structural weaknesses that limited the
contribution of the Public Investment Plan (PIP) to growth\. The critical deficiencies in Mauritaniaâs PIM
framework included (i) the lack of technical and financial criteria applied for project-selection, (ii) the
fragmented project-management system that did not include domestic and foreign-financed projects, and
(iii) inefficiencies in project execution and procurement systems that reduced transparency\.
9\. The parastatal sector was large and was a growing problem because of the high cost and poor
quality of services, as well as their fiscal cost through subsidies\. The parastatal sector comprised 50 State-
owned enterprises (SOEs) and more than 100 enterprises with administrative character (EPAs)\. There was
also weak oversight and limited financial information\. At appraisal, the fiscal burden of subsidies paid to the
parastatal sector amounted to 3\.5 percent of GDP and accounted for 19 percent of recurrent expenditures\.
In addition, their expenditures were off-budget, thus masking the fiscal risk they posed\.
10\. Mauritaniaâs weak infrastructure and low level of technological development could be traced, in
large part, to an underdeveloped private sector\. With uncertainties about commodity prices, fiscal revenues
alone were also unlikely to be sufficient to drive economic growth\. To remedy these constraints to
development, there was a growing interest in public-private partnerships (PPPs)\. This vehicle held out
promise for enhanced foreign direct investment (FDI) and, with it, improved technology transfer and
development of infrastructure beyond just the extractive industries\. However, the legal and regulatory
framework for PPPs needed to be established\.
11\. The legal framework for land rights was a significant obstacle to economic and social development
resulting in insecurity of property rights\. This obstacle discouraged investment in land improvements and
issuing credit that required collateral\. This credit constraint affected both households and businesses\. In
response, the Government launched a program to strengthen the framework for property rights and land
tenure\. Part of this program was to pilot innovative land-rights management systems in different contexts
in the country (both rural and urban)\.
12\. Livestock played a major role in the economic and social fabric of Mauritania, but animal diseases,
combined with severe climatic shocks prevented the sector from reaching its full production and export
potential\. Livestock accounted for an average of 19 percent of GDP in 2000-2015\. In addition to being one
of the few non-extractive sectors in which Mauritania has a comparative advantage, livestock provides
revenues to about one million people (25 percent of the population) and plays a key role in food security\.
13\. Against this backdrop, the Government approved its National Strategy for Accelerated Growth and
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
Shared Prosperity (SCAPP) for the period 2016-2030\. The long-term goal of the SCAPP is for Mauritania to
reach the status of a middle-income country by 2030\. The three strategic axes of the strategy are: (i)
promoting robust, sustainable and inclusive growth, though strengthening the private sector and unlocking
the potential of high-growth industries such as agribusiness, fisheries and livestock; (ii) developing human
capital and access to basic social services; and (iii) strengthening economic governance, with a particular
focus on improving fiscal management\. The DPO series was closely aligned with the SCAPPâs objectives to
support the emergence of new employment-generating sectors and private-sector, and improve fiscal
management\.
Bank Rationale for Involvement
14\. There was a strong rationale for World Bank involvement in the context of this DPO series\. In
Mauritania, the Bank had substantial experience in the priority areas that would best help the country
address the severe economic challenges it faced in 2015\. The Bank had already conducted a substantial
amount of relevant analytical work that could lead to a successful policy operation (see Section IV\. and Table
6 for details)\. The analytical work included a 2013 analysis of governance in State-Owned Enterprises (SOEs)
and a 2014 Public Expenditure and Financial Accountability (PEFA) report\. As a result, the Bank had
comparative advantages in tax administration, PIM, improving budgeting and transparency of SOEs, all of
which could lead to increased fiscal savings\. This was key not only to managing the crisis, but to use resources
more efficiently to preserve past gains in poverty reduction\. Thus, this DPO series was fully aligned with the
World Bankâs twin goals of ending extreme poverty and boosting shared prosperity\. The Bank was also able
to use the DPO to help leverage further lending from development partners, particularly the IMF and the
AfDB\.
Original Program Development Objective(s) (PDO) (as approved)
15\. The program development objective (PDO) was âto support fiscal consolidation and private sector
participation in non-extractives sectors\.â
Original Policy Areas/Pillars Supported by the Program (as approved)
16\. To support this PDO, the program was designed around two pillars:
Pillar A: Support fiscal consolidation by increasing domestic revenues, enhancing fiscal transparency and
increasing the efficiency of public spending\.
ï A\.1 Reducing tax expenditures and mitigating profit shifting and base erosion risks
ï A\.2 Public Investment Management
ï A\.3 The Parastatal Sector
This pillar supported the Governmentâs fiscal consolidation by increasing domestic revenues, controlling
and increasing transparency of expenditures related to parastatals, and improving the efficiency of public
spending\. The designed measures aimed to increase the flexibility and responsiveness of fiscal policy, as well
to mitigate systemic fiscal risks\. Specifically, pillar A included actions toward: (i) increasing non-extractives
revenues by rationalizing tax expenditures and expanding the tax base; (ii) streamlining the PIP and reducing
its impact on public debt; and (iii) addressing fiscal risks related to parastatals\. These measures assist
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
Mauritania in its fiscal consolidation efforts and help adapt its fiscal policy to a new external environment of
low commodity prices\.
Pillar B: Support private sector participation in the non-extractives sectors\.
ï B\.1 Public-Private Partnerships
ï B\.2 Property Rights
ï B\.3 The Livestock Sector
This pillar supported the diversification of economic activity in non-extractives through PPPs, establishing
land rights and measures to formalize the livestock sector\. Specifically, pillar B contained actions: (i)
introducing PPP arrangements to attract greater private sector participation and FDIs; (ii) reforming land
tenure and property rights law to alleviate access to credit constraints, and (iii) strengthening the regulatory
environment to promote increased productivity and exports in the livestock sector\. These measures
supported private sector participation in the non-extractives sectors\. By strengthening the regulatory
framework for PPPs, better defining property rights to improve the business climate and facilitate access to
credit, and bolstering livestock sector formalization and productivity, the program could fulfill the program
development objective of supporting private sector participation in the non-extractives sector\.
B\. Significant Changes During Implementation
Revised Program Development Objectives (PDOs)
17\. The PDO was not revised\. Changes to indicators are explained in Table 4 in Section II\.
Revised Policy Areas/Pillars supported by the Program
18\. The wording of pillars A and B was slightly revised from DPO1 to DPO2:
ï Changes in Pillar A: There was a revision with âenhancing fiscal transparencyâ in DPO1 replaced by
âcontrolling public enterprisesâ in DPO2\. The change in wording was intended to emphasize that the
fiscal consolidation under DPO2 had a stronger focus on the operations of public enterprises (particularly
through procurement reform and the RACHAD automated financial database)\.
ï Changes in Pillar B: There was a small revision with âprivate sector participationâ in DPO1 replaced by
âprivate sector-led diversificationâ in DPO2\. The change in wording was intended to better capture the
emphasis on diversification (through PPPs, property rights, and livestock sector reforms) and to reflect
this aspect as it was described in the SCAPP\.
Other Changes
19\. Because GoM responded well to the ToT shock and benefited from DPO1, reduced its deficit, and
achieved a primary surplus which helped support an IMF program, the DPO2 was launched in a more
favorable macroeconomic context\. In fact, GoM achieved a primary surplus for three straight years\. DPO1
set the stage for DPO2 by helping to achieve fiscal savings and increased revenues\. DPO1 also achieved
leverage as evidenced by the new IMF program and assistance from AfDB and the EU\. The participation of
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
these development partners meant additional financial and technical resources to strengthen the reform
program\.
II\. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES
A\. Relevance of Prior Actions
20\. The design of the PDO was consistent with the Country Partnership Framework (FY18-FY22) and
fully relevant to the development priorities of the Mauritania as outlined in the SCAPP (see section A)\.
Thus, the assessment of the prior actionsâ relevance to the PDO is also relevant to country priorities\. Table 2
below lists all the prior actions and triggers for DPOs 1 and 2\.
Pillar A â Support Fiscal Consolidation:
A\.1: Reducing tax expenditures and mitigating profit shifting and base erosion risks
21\. The elimination of inefficient tax expenditures was relevant to achieving fiscal consolidation
through increasing budget revenues\. Fiscal consolidation was promoted by measures to reduce poorly
targeted tax exemptions\. It was estimated that inefficient tax policies cost the GoM 4\.9 percent of GDP in
2013 or 30 percent of non-extractives tax revenues\.5 The authorities estimated that tax expenditures linked
to companies benefiting from the investment code accounted for around US$550 million for the relevant
audit period from 2014-2016\. It was reported that many companies that received preferential status in 2014
and 2015 were not in compliance with the investment and employee targets determining eligibility for their
tax breaks\. The audit that revealed this state of affairs was a critical measure under the program\.
22\. The focus on tax exemptions follows a series of tax reforms implemented in 2011-2014 to broaden
the tax base\. In 2012, GoM eliminated the global income tax and switched to a dual tax system, with a
proportional tax on capital income and progressive taxation of wages\. The authorities also removed the
Corporate Income Tax (CIT) exemption of the main gold company, contributing to a 1\.3 percentage points of
GDP increase in CIT (IMF, 2019)\. The VAT was also extended to cover the mining sector, and mining
companies receive reimbursement only if they can prove that their purchases have been acquired from
formal domestic suppliers\. This provided an incentive for local supplier to register and become formal,
resulting in an increase in the tax identification numbers from 1,789 in 2011 to 5,860 in 2013\.
23\. Transfer pricing regimes, with effective documentation rules, were relevant to reduce profit
shifting and collect additional revenue\. Country experiences6 indicated that the introduction of such
reforms help governments capture significant additional tax revenues\. The DPO series supported audits
targeting the largest companies operating in Mauritania, notably those in the extractive industries, where
collections from mining royalties based on sales had been too low due to transfer mis-pricing\. In 2013, the
10 most profitable companies accounted for 55 percent of income tax, with mining companies accounting
for around 28 percent of total income tax collected and telecommunication firms for 23 percent (IMF 2014)\.
Thus, if that could be corrected, there should be significant fiscal savings\. Experiences of other countries with
5
World Bank (2016)\. Due to data limitations, this assessment does not include all preferential tax regimes\.
6
See World Bank (2016) and Beer and Loeprick (2015)\. These studies find that on average estimated profit shifting
among MNE subsidiaries in a sample of more than 15,000 MNE affiliates is reduced by 52 percent 2 years after the
introduction of mandatory documentation requirements\.
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recently established transfer pricing regimes also provided insight into the potentially important revenues
at stake\.7 The audit supported under DPO-1 was an essential tool for the success of tax measures as well as
the requirement for companies to provide documentation of their operations\.
A\.2: Public Investment Management
24\. To remedy the structural weaknesses in PIM, there was a need to have a new institutional
framework that would base project selection on strategic and efficiency criteria\. The absence of a systemic
process for selection of investment projects, combined with fragmented procedures, allowed for off-budget
capital spending by public entities that led to rapid accumulation of debt in 2009-2014\. DPO-1 addressed
this issue by supporting the GoMâs elaboration of a legal framework for PIM, which aimed to reinforce
budgetary discipline and establish more rigorous project selection\. Included in the new framework were
procedures for project selection based on their social, economic, and environmental impact, and their
relevance to the SCAPP\. This reform is closely linked to fiscal consolidation as it increases the value for money
of investment spending\. Also critical were reforms to the budget classification, which resulted in preparing,
for the first time, a unified investment budget that encompassed both domestic and foreign-financed
projects in the 2017 budget law\.
25\. Procurement reforms were also important to the fiscal consolidation objective\. Recent
procurement reforms had included contradictions between implementation decrees and the objectives of
the Public Procurement law\. For example, the sectoral tender commissions exercised total control over the
procurement process, without any involvement by ministerial contracting authorities, a direct violation of of
the procurement law\.8 Capacity limitations and a lack of transparency caused delays and cost overruns\. DPO-
2 focused on reinforcing the supervisory role of the Public Procurement Regulatory Authority (Autorité de
Régulation des Marchés Publics, ARMP) and tightening administrative controls\.
A3: The Parastatal Sector
26\. Bringing all Administrative Public Agencies (EPAs) on-budget was important to fiscal consolidation\.
The rapid expansion of off-budget parastatal operations prior to the DPO series, increased fiscal risks due to
accumulated losses and debt, weak governance, and reliability on government transfers\. This series
addressed some of these risks by integrating all EPA budgets in the Automated Expenditure-Chain System
RACHAD, thus prohibiting extra-budgetary expenditures by EPAs\. The expected benefits of these actions
were to strengthen administrative controls and enhance transparency in the parastatal sector which was
critical to the effective management of fiscal risks, especially in a context of fiscal constraints\.
Pillar B â Private Sector Participation and Diversification
B\.1 Public-Private Partnerships
27\. The actions were relevant to the objective of private sector participation and diversification
because they updated the PPP framework and created a unit to assess PPPs\. The actions addressed key
governance constraints to the development of PPPs: (i) no clear national strategy regarding PPPs; (ii) lack of
legal and institutional framework to reassure private investors and give clear business environment signals;
(iii) capacity constraints and misconceptions about potential PPP operation and financial modeling; (iv) a
7
The Kenyan Revenue Authority, for instance, collected US$85m in additional tax revenues in 2013 from transfer
pricing\. (see World Bank 2016, p\.9-12)\.
8 Law # 2010â044 âCode des Marches Publiques\.â
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failed PPP attempt in the past that may influence the credibility of further PPP operations\.9 In addition to
their positive fiscal impact, the expected benefits of the PPP-related actions were to accelerate technology
transfer, develop the local private sector, and attract FDI to sectors beyond extractive industries\. This was
important to increase private sector participation and enhance diversification\.
B\.2 Property Rights
28\. Reforms in land titling aimed to address the weak regulatory framework for land that inhibited
private sector development through several channels\. First, it discouraged investment in fixed assets\.
Second, it limited access to finance as property that lacks an official title cannot be leveraged as collateral by
banks\. The actions were designed to alleviate some of these issues by promoting investment in land,
facilitating borrowing against equity, and shielding the poor from illegal infringement or expropriation\.
B\.3 The Livestock Sector
29\. Reforms requiring certification of livestock trade and for butchering were critical to remedy the
lack of sanitary standards and the high degree of informality in the sector\. These constituted major
constraints to the development of the livestock sector, which is one of the key sectors offering opportunities
for economic diversification and export potential\.
9The experience with contracting a private company for Waste Management in Nouakchott has not been successful\. Conflict
between the private operator and the government arose leading to bad services delivery and ending with breaking the contract in
2014\.
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Table 2: Policy Actions and Triggers for DPO 1 and 2
Prior Actions under DPO1 DPO2 Triggers Prior Actions under DPO2
Pillar A: Support fiscal consolidation by increasing domestic revenues, controlling public enterprises expenditures, and increasing the efficiency of public
spending
A\.1 Reducing tax expenditures and mitigating profit shifting and base erosion risks
Prior Action 1: The Minister of Finance has issued an (Indicative) Trigger # 1: Publish the tax Prior Action 1: The Ministry of Economy and Finance,
order introducing the benchmark tax model for tax expenditures estimations in an appendix of the based on a policy communique to the Council of
exemptions, and has published it in the official Budget Law 2018\. (Revised as p\.a\. 1) Ministers, has notified the companies in full breach of
gazette, and has compiled a tax exemption registry for their investment agreements that their tax and
firms benefiting from tax exemptions under the 1982 customs incentives, awarded under the 2012
Investment Code and the 1966 Free Zone Area law\. Investment Code, will be revoked, effective January 1,
2018\.
(Indicative) Trigger # 2: The Ministry of Prior Action 2: The Ministry of Economy and
Economy and Finance introduces the legal Finance has adopted the legal provisions for a
provisions for a comprehensive transfer pricing comprehensive transfer pricing documentation
documentation and disclosure requirements as and disclosure requirements as well as an effective
well as an effective anti-abuse, which limits an anti-abuse provisions, which limit an entityâs net
entityâs net interest deductions to a fixed interest deductions to a fixed percentage of its
percentage of its profit, measured using
profit, measured using earnings before interest,
earnings before interest, taxes, depreciation
taxes, depreciation and amortization (EBITDA)\.
and amortization (EBITDA)\. (Revised as p\.a\. 2)
A\.2 Public Investment Management
Prior Action 2: The Council of Ministers has issued a (Indicative) Trigger # 3: The Council of Prior Action 3: The Council of Ministers has
decree creating an institutional framework for the Ministers has adopted a new agreement model adopted a decree correcting deficiencies in the
evaluation, selection and execution of public and revised bidding documents that limits implementation of the Public Procurement Law,
investment projects, and has published it in the project award outside the Regulatory Authority including clarifying regulations governing the
official gazette\. for Procurement (ARMP) cycle, and that composition, organization, and operations of the
enhances the involvement of ministerial procurement commissions and designating
contracting authorities\. (Revised as p\.a\. 4) specific officials responsible for procurement in
each Contracting Authority, and has published it in
the official gazette\.
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Prior Action 3: The Council of Ministers has approved (Indicative) Trigger # 4: The executive decrees Prior Action 4: The Council of Ministers has
the budget law proposal for 2017 that includes an underpinning the Procurement Law are adopted the implementation decrees for Law 2005-
integrated public investment budget with combined reviewed and those that conflict with the lawâs 020 reorganizing the project award and project
domestic and foreign financed projects\. objectives, including decrees related to the management processes, and regulating the
sectoral procurement committees and the contracting arrangement between Government and
evaluations sub-committees are modified\. SOEs, and published it in the official gazette\.
(Revised as p\.a\. 3)
A\.3 The Parastatal sector
Prior Action 4: The Minister of Economy and Finance (Indicative) Trigger # 5: The Minister of Prior Action 5: The Minister of Economy and
has issued an executive circular requiring the Economy and Finance issues a decree Finance has issued a policy communique instructing
expansion of the automated expenditure-chain system mandating the expansion of the RACHAD the expansion of the treasury management system
(RACHAD) to include all eligible EPAs in Nouakchott system to encompass public agencies starting (RACHAD) to encompass the revenues and
beginning January 1, 2017\. on January 1st, 2018\. (Unchanged) expenditures of all eligible public agencies starting
January 1, 2018, as a means to reduce fiscal risks
and enable budgetary savings\.
(Indicative) Trigger # 6: The Council of
Prior Action 5: The Recipient has published the latest
Ministers approves a new institutional
audited financial statements for the five largest
framework for SOE oversight and reporting,
commercial enterprises in which its ownership stake
subsidy provision and contingent liability
exceeds 50 percent, on the website of its Treasury\.
management, and a schedule for SOE
restructuring\. (Dropped)
Pillar B: Support private sector participation in the non-extractives sectors
B\.1 Public-Private Partnerships
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Prior Action 6: The Council of Ministers has presented (Indicative) Trigger # 7: The Inter-ministerial Prior Action 6: The PPP law is made operational
to Parliament the draft law on public-private committee validates the updated PPP portfolio through i) the adoption and publication in the
partnerships (PPPs), and has approved two orders and officially decides to engage in PPP official gazette of the PPP executive decree by the
relating to the composition and operation of the inter- operations under the new framework\. Council of Ministers that defines the institutional,
ministerial and the technical committees for PPP (Revised as p\.a\. 6) procedural, and governance set-ups for PPP
respectively, and has published these in the official projects and ii) the adoption and publication in the
gazette\. official gazette of the order by the Minister of
Economy and Finance setting thresholds for
operation requiring inter-Ministerial approval\.
(Indicative) Trigger # 8: A new PPP Unit has
been created and is operational with staff
recruited and an operational budget allocated
in the budget law proposal 2018\. (Dropped,
included in the PPP law)
B\.2 Property Rights
Prior Action 7: The Minister of Economy and Finance (Indicative) Trigger # 9: The Council of Prior Action 7: The Recipient has enacted a new Law
has established the institutional framework for land Ministers has adopted a new Law for Property for Property Rights (Code des Droits Réels) that
reform by adopting an order creating a technical Rights âCode des Droits Reelsâ that modernizes, reconciles, and consolidates the current
committee for land reform, appointing its members modernizes, reconciles and consolidates the property rights regimes, and published it in the
and validating its terms of reference\. current regimes in application\. (no change) official gazette\.
(Indicative) Trigger # 10: The Council of Prior Action 8: The Minister of Interior and
Ministers adopts a new institutional Land Decentralization, the Minister of Housing, Urban
Policy Reform framework that fosters a more Development, and Land-Use Management, the
inclusive land-tenure system with a set agenda Minister of Budget, and the Minister of Economy
of execution\. (Replaced by p\.a\. 8) and Finance have issued and published it in the
official gazette a joint order laying down the new
simplified modalities for processing demands for
the final concession on property in urban areas,
with the objective of expediting the property title
granting process\.
B\.3 The Livestock Sector
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Prior Action 8: The Council of Ministers has made the (Indicative) Trigger #11: The Livestock Law is Prior Action 9: (i) The Council of Ministers has
Livestock Law operational through the adoption of two further operationalized as the Council of adopted decrees codifying professional standards
new executive decrees on livestock exports and Ministers and Minister of Livestock adopts the and qualifications for veterinarians and defining the
imports and on animal-feed quality, and through the remaining 5 executive decrees governing the applicable requirements and institutional
Minister of Livestock three new orders on poultry regional management of grazing lands and framework for the livestock sector, including for
production and veterinary inspections, all in transhumance corridors, the development of establishing livestock farms, vaccination parks,
accordance with OIE standards, and all published in the pastoral infrastructure and the livestock markets, and slaughterhouses; and these
official gazette\. professionalization of livestock production; all decrees are consistent with the World Organization
in accordance with the World Organization of of Animal Health (OIE) standards; (ii) the Minister of
Animal Health (OIE) standards and published in Livestock has issued three new orders defining
the official gazette\. (Unchanged, only wording conditions for meat utilization and transformation
added to reflect content of decrees) and describing the organization of the livestock
profession and sectoral information systems; and
(iii) these decrees and orders have been published
in the official gazette\.
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Rating: Satisfactory
30\. All prior actions of the program were relevant to the PDO, which, in turn was relevant to country
priorities\. The rating is satisfactory also because the actions were appropriate to stabilizing the fiscal
situation in the short-run\. The relevance of actions in the longer term is satisfactory given that the
designed actions aimed at increasing private sector participation and economic diversification\.
Table 3: DPO 1 and 2 Disbursements and Release Dates
Tranche # Amount-US$ Expected Release Date Actual Release Date Release
DPO1 (P160592) 25,413,450 Not applicable December 28, 2016 Regular
DPO2 (P163057) 26,332,392 Not applicable December 22, 2017 Regular
B\. Achievement of Objectives (Efficacy)
Relevance and Measurability of RIs and Appropriateness of Targets
31\. The results framework was generally relevant, but suffered a number of shortcomings in some
areas that affected either the link between the prior action and the indicator and/or the link between
the PDO and the indicator\. With respect to fiscal consolidation, the indicator of higher tax revenues as a
percentage of GDP did relate to more efficient tax administration, but was too broad as there are many
other factors that could affect tax revenues\. For example, a ToT shock could have adversely affected
economic activity and tax revenues, even though the measures related to removing inefficient tax
expenditures and improved transfer pricing were successful, thus, possibly leading to an erroneous
conclusion\. In other words, tax administration reforms may not fully account for the increase in tax
revenues as a percentage of GDP\. The ICR remedies this shortcoming with additional evidence more
directly related to the tax reforms, in particular the Ministry of Financeâs report (2019) on the decline in
fiscal exemptions as a percentage of GDP from 2017 to 2018\. This indicator more accurately measures the
benefit of reducing unqualified tax exemptions\. It might also have been advisable to continue to measure
certain DPO1 indicators as they continued to be relevant\. For example, the number of EPAs in the RACHAD
expenditure system and the share of budget transfers through RACHAD continued to be relevant in
measuring intermediate progress in enhancing fiscal savings\.
32\. One other improvement would have been to measure not only the percentages, but also the
actual numerator and denominator\. This would have increased the confidence in the indicator and the
number of reported relevant cases\. For instance, in the case of the livestock indicators, although the
percentages were reported, the actual number of total verified products to slaughterhouses was not, nor
was the number of formal livestock transactions, nor the total number of transactions\.
33\. The results indicators (RI) underwent a number of revisions between DPO1 and DPO2 to
improve their relevance (Table 4)\. In DPO2 the indicators relative to fiscal consolidation were changed
and, in some cases, better linked to the prior actions\. For example, the PPP indicator was changed from
the number of approved PPPs, over which the Bank and the series had no control, to a more relevant
indicator that measured the importance of the executive PPP unit\. This unit would conduct actual reviews
of planned PPPs\. Another example was the indicator for parastatals, which, under DPO1, measured the
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number of EPAs included in the RACHAD expenditure system, changed in DPO2 to an indicator that
measured actual reduction in extra-budgetary savings\. The latter was closer to the PDO of improved fiscal
savings\.
Table 4\. Original and Revised Results Indicators and Actual Achievements
Original Indicator from DPO 1 Change for DPO 2 Explanation Actual Achieved
Pillar A: Support fiscal consolidation by increasing domestic revenues, enhancing fiscal transparency and increasing
the efficiency of public spending
Number of Tax Exemptions Tax revenues increase by 1\.2 Replaced with a more Achieved:
categories eliminated under the percent of GDP\. Baseline outcome-oriented Increase by 1\.8
new benchmark model\. Baseline (2015): 17 percent of GDP; indicator, to be sufficiently percent of GDP
(2016): 0; Target (2018):2 Target: (2019): 18\.2 percent attributable\. between 2015
of GDP and 2019 vs\. 1\.2
percent of GDP
Share of public investment Share of public investment Slight change to make Exceeded: 100%
projects prepared and executed projects selected and more accurate, âpreparedâ vs\. >75% selected
based on new framework\. executed based on new changed to âselectedâ and executed
Baseline (2016):0; Target (2018) framework\. Baseline (2016): under new
>75%\. 0; Target (2018): >75%\. framework
Percentage of the total value Added at DPO 2 stage Mostly achieved:
of contracts awarded 28% vs\. 23\.5% of
without competition has contracts
been cut in half\. Baseline awarded without
(2016): 47 percent of total competition
procurement bids\. Target
(2018): 23\.5 percent of total
procurement bids\.
The number of eligible Decline in public enterprises A new RI 2 indicator was Exceeded: 133 vs\.
administrative public agencies and agencies extra- added to the original 81 (DPO 1)
(EPAs) and agencies included in budgetary spending and indicator to better
the automated expenditure-chain carry-forwards (in measure the impact of the Achieved: 0\.01%
system (RACHAD) increases\. percentage of GDP)\. Baseline reform\. However, both vs\. 0\.2% of GDP
Baseline (2016): 0; Target (2018): (2016): 1\.2 percent of GDP\. were measured and are for extra-
81\. Target (2018): 0\.2 percent of relevant to the PA and budgetary
GDP\. PDO\. spending (DPO 2)
The share of budget transfers to Indicator was not carried Exceeded: 100%
parastatals administered through over into DPO 2, but was vs\. 79%
RACHAD\. Baseline (2015): 0%; measured and is relevant
Target (2018): 79% to the PDO and p\.a\.
Pillar B: Support private sector participation in the non-extractives sectors
The number of public-private The executive PPP Unit has Original indicator was Exceeded: 100%
partnership (PPP) projects under reviewed and assessed PPP dropped in favor of a more vs\. 50% of PPP
implementation using the new projects according to the relevant indicator because proposed projects
framework increases\. Baseline new regulatory framework\. the series could not target are reviewed by
(2016): 0; Target (2018): 2 Baseline (2016): 0, Target a specific no\. of PPPs as it the PPP Unit
(2018): half of the PPP did not have any control
portfolio\. over that number\.
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Increase in formal properties Increase in the number of Indicator target increased Partially
titled\. Baseline (2015): 27168; formal properties titles\. because the original target Achieved: 29,742
Target (2018) : >28000 Baseline (2015): 27168; would likely have been vs\. >31,000
Target (2018): >31000 met even without the
reform given the current
rate of increase (about 500
annually)\.
The traceability of livestock- Improvements in the Wording change to make it Exceeded: 88%
product exports improves\. formalization of the livestock more accurate vs\. 8% of animals
Increase in the percentage of sector as highlighted by: slaughtered are
verified products in The increase in the verified
slaughterhousesâ total products\. percentage of verified
Baseline (2016): 0%; Target products in total products of
(2018): 8% slaughterhouses\. Baseline
(2016): 0%; Target (2018):
8%\.
Increase in the percentage of The Increase in the No change
formal livestock transactions (as percentage of formal Exceeded: 100%
per the new law) at the borders\. livestock transactions (as per vs\. 10% reported
Baseline (2016): 0%; Target the new law) at the borders\. by the Ministry of
(2018): 10%\. Baseline (2016): 0%; Target Rural
(2018): 10% Development
34\. Measurability of RIs: The indicators were feasible and measurable\. The definition, calculation and
data sources were reasonably clear for the RIs in most cases\. One exception were the livestock indicators,
as described above, even though these indicators were also used in the Regional Sahel Pastoralism
Support Project (PRAPS-P147674)\. The percentage improvement would have been better understood by
the counterpart if there had been clarity of both the denominator and the numerator of the percentage
of livestock transactions\. During the ICR mission, there were counterpart and Bank differences in
understanding of how the total (denominator-total number of livestock transactions) was supposed to be
measured\.
35\. Despite their measurability in most cases, the RIs were available only after concentrated efforts
by the ICR team to ensure government provision of the data\. Even though this was a relatively short
series (two vs\. three years, or more), the RIs should have been more regularly tracked so that they could
have served more as a management tool for implementation of the program\. There did not appear to be
any specific actions to establish or improve monitoring mechanisms during the series, in which case the
data would have been readily available to the ICR team\. This finding reflects the low capacity in Mauritania
and speaks to the need to redouble efforts to instill a Monitoring and Evaluation (M&E) culture in the
relevant ministries\.
36\. Appropriateness of targets: Targets were generally set at reasonable levels, though there were
several cases of targets that were overly cautious\. One example is the case of the number of property
titles, whose pre-reform trendline would have come close to achieving the target even without reforms\.
Formalization of livestock sector indicators were also set unusually low\. This is because the Government
preferred to be conservative in terms of targets as the livestock sector was highly informal and the
authorities were skeptical about the speed with which people would comply with the new rules\. Most of
the targets were, however, appropriate, particularly in light of the fact that it often takes several years to
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
see full implementation\. Notably, the targets related to reviewing PPPs and projects for public financing
(PIM) and bringing EPAs under RACHAD were set at well below (50-75 percent) full implementation levels,
which were reasonable targets\. All of these targets were exceeded, reaching 80-100 percent\. Baselines
were reported to allow for a proper comparison\.
Efficacy of prior actions
37\. Particularly as this was the first DPO series for Mauritania, it was a reasonable expectation that
much of the reform effort was to set up institutions and processes with the main outcomes realized
over a number of years\. Therefore, mostly intermediate indicators were measured with the idea that
these intermediate results indicated a program on track to produce the full, expected benefits in the
future\.
Objective 1: Support Fiscal ConsolidationâSatisfactory Achievement of Objective
38\. The program deserves credit for contributing to the major improvement in the overall fiscal
stance, which is important evidence of PDO achievement, and may strengthen resilience to future ToT
shocks\. As explained below, GoM implemented major reforms to improve the fiscal position\. The
commitment to DPO1 measures also laid the groundwork to secure a new IMF-ECF program which further
contributed to fiscal improvement as reflected by the improvement of the fiscal balance from -3\.4 percent
of GDP in 2015 to +1\.5 percent of GDP in 2018\.
RI1: Tax administration - Exemptions and Transfer Pricing
39\. The programsâ measures to eliminate tax exemptions that were not legitimate and to deal with
foreign firmsâ tax avoidance were implemented, leading to large fiscal savings\. In the case of tax
exemptions, a key step in the process of identifying firms that were compliant with their investment
agreement was an audit of companies\. If firms were found not to be compliant, they were notified as of
January 1, 2018, and their exemptions revoked\. The results of the audit were published and preliminary
results suggest that total fiscal exemptions dropped from 6\.4 percent of GDP in 2017 to 5\.9 percent of
GDP in 2018\. For foreign firms transfer pricing, the Bank and the IMF worked together\. There was a tax
reform TA (part of the Mauritania Public Sector Governance Project-P146804) that built capacity for
enforcing these measures\. The combined result of these tax administration measures was to be reflected
in terms of a 1\.2 percent of GDP increase in tax revenues between 2015 and 2019\. This target was
exceeded as tax revenues actually rose by 1\.8 percent of GDP over this period\.
RI2: Public Investment Management - Project Selection
40\. The series supported GoMâs efforts to develop a new legal framework for PIM that reinforced
budgetary discipline and established a more rigorous project selection process\. As per the DPO reforms,
public investment projects are now reviewed according to specified criteria set by the Comité dâanalyse
et de programmation de lâinvestissement public (CAPIP)\. The target of more than 75 percent of projects
reviewed by CAPIP was achieved with a reported 100 percent actual achievement\. The latest information
is that CAPIP continues to review 100 percent of projects which covers a total of 332 projects in the
pipeline for 2020\. Thus, the reviews are a significant undertaking\. Another important output was the
manual for the project selection process\. This manual details the PIPâs implementation, monitoring, and
evaluation mechanisms, including timeframes for undertaking key activities and the role of different
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stakeholders in the process\. The new process has resulted in cancellation of some low-return projects â
including the rejection of a large sugar factory which would have been an unviable investment â and a re-
prioritization of some sectors\. Thus, the improved selection process contributes to fiscal consolidation by
ensuring higher return projects receive funding\. The Government has also reformed its system of budget
classifications, and submitted a consolidated 2017 budget law to Parliament that, for the first time,
included a comprehensive investment budget encompassing both domestic and foreign-financed
projects\. This practice now appears to be institutionalized as it has been rolled over in the 2018 and 2019
budget laws\.
RI3: Procurement - Competitive procurement for SOEs
41\. The procurement measures were designed to correct implementation decrees that would lead
to more effective public procurement, competitive bidding and fiscal savings\. The target was to reduce
the percentage of total value of contracts that were not awarded through competition by half\. This target
was mostly achieved as the percentage of total value of non-competitively awarded contracts fell from 47
percent in 2016 to 28 percent in 2018 (Autorité de Regulation des Marchés Publics, 2019)\. Despite this
achievement, fiscal savings are unknown and some structural shortcomings persist\. One shortcoming was
that the underlying law itself needed some revision, not just the implementing decrees, but this would
have taken a longer time, beyond the time frame of the series\. GoM also decided to wait and see how the
procurement function performs before revising the law\. The other concern was that the recruitment of
staff for the procurement commission was not conducted on a merit basis\. While there was a competitive
process, the best candidates that scored the highest scores were not chosen\. This means that those who
were chosen had inadequate backgrounds in procurement that could not be fully remedied training in the
short-term\. Fortunately, this shortcoming had limited effects because the target of reducing the value of
non-competitively awarded contracts was mostly achieved\.
RI4,5: Parastatal Sector - RACHAD for EPAs
42\. Coverage by the RACHAD Expenditure Management System and Extra-Budgetary Expenditures
was a major success of the reform program\. All Administrative Public Agencies (EPAs) were integrated
into the budget\. Now, EPAs have to develop their own budgets and strictly adhere to them\. That is, they
cannot over-spend and cannot save underused budget from one year to the next\.10 By bringing all EPAs
under a unified, automated system of expenditures, GoM was able to eliminate extrabudgetary
expenditures by EPAs from 1\.2 percent of GDP in 2016 to near 0 percent in 2018, representing large fiscal
savings\.
Objective 2: Private Sector ParticipationâModerately Satisfactory Achievement of Objective
RI6: PPPs - Improved Framework
43\. The reform program supported drafting the PPP law for the Council of Ministers to present to
parliament (DPO1) and then making the new PPP law operational (DPO2)\. A major output of the series
was setting up the PPP Executive Unit\. This unit, after a protracted period for recruitment that delayed its
establishment by one year, is now staffed with all necessary competencies, except legal\.11 There is also an
inter-ministerial Committee to oversee and approve PPPs\. Under the related TA, the Nouadibou Eco-
10 Prior to that reform, the treasury had to pay losses\.
11 Additional information on the current work of the established PPP unit is available at www\.ppp\.gov\.mr\.
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Seafood Cluster project, US$ 2\.5 million were allocated in May 2019 to the PPP unit, out of which US$ 0\.5
million were to pay two-year salaries for the staff of the PPP unit and the rest for assistance to
operationalize the PPP agenda (studies, experts, training, etc\.)\.
44\. Several PPPs are in the pipeline including: a cold storage facility at the Nouadhibou port, a
parking lot near the Capital Market in Nouakchott with multiple uses, a water generation and transport
project in the North, a highway (Boutimilit) in the East (studies completed, but funding not yet secured)
and a new solid waste management PPP\. Documents for all of these PPPs are ready\. The related results
indicator for DPO1 (number of PPPs reviewed) had to be changed in DPO2 to âhalf the PPP portfolio to be
reviewed by the PPP Executive Unit\.â This target was exceeded with 100 percent (i\.e\. 10 out of 10) of
priority PPPs in the pipeline reviewed\. To date, only one PPP, which relates to the infrastructure project
in port of Nouakchott, has been formally approved (October 2018)\. However, the process for this PPP was
not fully transparent because there was not a competitive bidding process and the PPP executive unit
became fully operational only afterward in February 2019\.12
RI7: Property Rights
45\. The DPO series supported the new Code des Droits Reels, which was probably the most
important accomplishment in the area of property rights\. Streamlining property titling is expected to
promote the private sector through access to credit and to lead to asset markets\. As access to credit is
largely linked to the overall monetary policy which was beyond the control of the program, the results
indicator measured the increase in land titles\. The number of finalized land titles was 29,742 in 2018, an
increase of 2,574 from a 2015 baseline of 27,168\. This is actually below the target of 31,000 that was
increased from 28,000 during DPO2\. The trendline for land titles was about 500 new titles per year, so the
achievement is somewhat above that rate\. A possibly better intermediate indicator might have been the
time required to grant a land title, but that indictor has not been measured\. This component was
supported by broad participation from development partners\. For example, the AFD and AfDB,13 among
others, were very active in land reform and used the same policy matrix as the DPO series\. The Bank
concentrated on urban land titling, which was particularly relevant to access to credit and private sector
development\.
RI8,9: Livestock Sector
46\. The series achieved progress in formalizing the livestock sector with the help of TA to reach the
standards set by the International Organization for Livestock\. This progress contributes to private sector
participation in one of the most important sectors of the economy and helps ensure improved quality
(health) of livestock that could enhance exports\. The series supported the development of new
implementation regulations (texte dâapplication)\. All 10 regulations were defined to govern the livestock
sector\. This represented a major improvement in the sector so that livestock now has to be certified in
good health before entering the market\. The inputs included training of 20 veterinarian specialists over 2-
3 years in Dakar\. These specialists were needed to implement the texts to ensure health of the livestock
and to administer vaccinations\. The results indicator target for increased percentage of verified products
12 This US$ 310 million PPP project aims at building and operating a new container terminal to improve the capacity and
operations of the port of Nouakchott, under a 30-year concession agreement\. According to this partnership, the private operator
will design, build, finance and operate a new container terminal (initial capacity of 250,000 TEUs, with a possibility to expand to
600,000 TEUs at a later stage) able to accommodate 2 panama size vessels up to 50,000 DWT capacity\.
13 The AfDB supported the production of the Real Property Code which was adopted by the National Assembly in May 2017\.
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at the slaughter houses achieved a level of 88 percent compared to a target of only 8 percent\. The second
indicator, an increase in the percentage of formal livestock transactions (as per the new law) at the
borders, achieved 100 percent against a target of 10 percent\. These achievements indicate that the
practices have achieved near universal application well ahead of the expected timeframe\.
Rating: Satisfactory
47\. The program mostly met or exceeded seven of eight targets\. Eliminating tax abuses by
companies which were not complying with their investment agreements as well as the cases of transfer
mispricing were important achievements, with large fiscal benefits expected over time\. Systematic
measurement of these benefits is necessary to validate effective implementation (actual savings) of these
measures\. Bringing EPA budgets under RACHAD was an important success of the program and was
confirmed by results indicators\. Progress was made in PPP and procurement\. Evidence that the reviews
of PPPs and procurements will have concrete benefits will only be realized once the new PPPs are in
operation over the coming years\. The evidence for PIM benefits appears stronger with capacity built in
line ministries and alignment of projects with sectoral and national strategies\. The application of the
financial viability filter has shown some early results with the rejection of an unviable expensive project
and reprioritization of projects\. In the case of property rights, there was also some progress in laying the
ground work for the private sector, particularly in urban areas\. Going forward the GoM will need to more
systematically measure the benefits of the more streamlined process of land titling\. The livestock
indicators exceeded targets, although it will take time to measure potential increases in exports\. Table 5
summarizes the achievement of program targets\.
Table 5\. Summary of Results Target Achievement
Reform Area Exceeded Achieved Mostly Partially Not Total
Achieved Achieved Achieved
Pillar A: Fiscal Consolidation, Fiscal Transparency and Efficiency of Public Spending
Reducing tax expend\., mitigate 1 1
profit sharing and base erosion
PIM (incl\. procurement) 1 1 2
Parastatal sector 1 1
Pillar B: Support Private Sector Participation in the non-Extractives Sector
PPPs 1 1
Property rights 1 1
Livestock 2 2
Total 4 2 1 1 0 8
C\. Overall Outcome Rating and Justification
Rating: Satisfactory
48\. With the prior actions relevant at a satisfactory level, and efficacy also rated satisfactory, the
overall outcome rating is satisfactory, although progress in some reform areas will require additional
time for outcomes to be measurable\. The program launched a number of initiatives which could have a
profound impact over time if the reforms continue to be implemented and expanded on the ground\. The
relevance of the actions was satisfactory\. The actions and policy dialog contributed to restore fiscal
stability, which was a strong accomplishment\. The reforms also constituted initial steps toward a more
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
diversified economy\. There is optimism about the potential benefits/outcomes of the actions, but there
needs to be improvements by GoM in monitoring indicators and measuring efficacy\. Some of the
shortcomings in the results framework were compensated by additional evidence for PDO achievement\.
III\. OTHER OUTCOMES AND IMPACTS
A\. Poverty, Gender and Social Impacts
49\. The program is likely to have a positive impact on poverty reduction, but actual impacts are not
yet measured as the latest household survey was done in 2014\. The key areas to positively impact
poverty include improved efficiency of public investment and fiscal space to ensure more allocation
towards social and poverty programs in the future\. The focus on private sector participation should aid in
job creation in urban areas where most of the poor live\. Reforms that increase productivity in livestock, a
major economic sector in Mauritania should also help reduce poverty in a sector that provides a livelihood
for many of the countryâs poor\. The property-rights agenda targeted the business environment and covers
essentially those with existing titles or concessions\. It did not address property ownership and usage in
rural areas\.
50\. The program could also have some indirect effects from a gender perspective\. In particular, the
concept of co-ownership defined in the new CDR law (prior action 8) could allow women to potentially
access assets (buildings, houses, apartments, shops, etc\.) more frequently and more easily in legally
defined partnerships\.
B\. Environmental, Forests and Natural Resource Effects
51\. The program did not have any negative environmental impacts\. Two areas where it is expected
to have positive environmental impacts is in the areas of PPPs and procurement\. In the first area, PPPs
are being reviewed with consideration for environmental safeguards\. The program was supported by TA
that helped build capacity to apply these safeguards\. In the case of the procurement, there is now a legal
framework for stronger compliance with existing environmental regulations for public procurement\.
C\. Institutional Change/Strengthening
52\. The reform program focused on challenging reforms that contributed to institutional change\.
The components of the program, the first of its kind in the country, initiated a new way of thinking about
government operations and the approach to economic development in Mauritania\. For example, GoM
used its authority to examine the tax system and then correct abuses such as unwarranted tax exemptions
and transfer mis-pricing by companies, thus overcoming monied interests\. Another area, where fiscal
consolidation was promoted, were the reforms aimed at more competitive and transparent procurement\.
The idea of following procurement procedures, though it does not guarantee the elimination of
corruption, is a realization of the importance of following a process as laid out by the law\. Improvements
in PIM have introduced the idea of projects selected on merit and better links to the overall development
strategy (SCAPP)\. Similarly, PPP reforms show a change in attitude toward harnessing the private sector
to accomplish national goals\. The expansion of RACHAD demonstrates how GoM is increasingly
recognizing digitalization can help solve governance and fiscal issues\. Land reform, including the Code des
Droits Reels, could pave the way for increased private sector participation\.
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53\. A key factor in ensuring relevance and a completed value chain was the critical assistance from
the Bank-financed Governance project and other TAs (see Table 6 below)\. This support was essential in
ensuring that prior actions translated to actual implementation\.
D\. Other Unintended Outcomes and Impacts
None
IV\. BANK PERFORMANCE
Analytical Underpinnings
54\. Analytical underpinning was a strong feature of Bank performance\. Each policy area was
addressed with relevant analytical work and technical assistance as Table 6 shows\. During the ICR mission,
government stakeholders underscored the importance of both the analytical work and TA in the program\.
Analytical work was particularly important given that Mauritania was new to policy-based operations\. The
reforms needed to be carefully designed to instill new ways of thinking by the Government, for example,
in how it can employ the potential of the private sector in meeting national goals\.
Table 6\. Selected Analytical Work Underpinning the Program
Program Area Analytical Work Related WBG Projects
A\. Support fiscal consolidation by increasing domestic revenues, enhancing fiscal transparency and increasing the
efficiency of public spending
A\.1 Tax World Bank, 2016\. âTax Expenditure in Mauritania Public Sector Governance Project
Expenditures Mauritania\. Definitions and Estimates for (P146804)\. capacity building for the tax
2013 and 2014\.â Washington, D\.C\.: The authorities to implement the new transfer
World Bank Group pricing rules and undertake assistance linked
World Bank, 2016, Transfer Pricing in to taxation of the extractives sector\.
Developing Economies: A Handbook for
Policy Makers and Practitioners\.
A\.2 Public World Bank, 2016\. âIslamic Republic of Mauritania Public Sector Governance Project
Investment Mauritania: Public Expenditure Review\.â (P146804)\. Capacity building to various MEF
Management, incl\. World Bank, 2014\. âMauritania: Public directorates for the implementation of PIM
procurement Expenditure and Financial Accountability reforms and procurement reforms\.
Assessment\.â
World Bank, 2016\. âThe Independent
Evaluation of the Comparative Living
Standards Project, 2001-2015\.â
A\.3 Parastatal World Bank, 2013\. âGovernance of State- Mauritania Public Sector Governance Project
Sector Owned Enterprises and Public Agencies in (P146804)\. TA and investment in building a
the Islamic Republic of Mauritania\.â single treasury account\. The integration in
World Bank, 2016\. âIslamic Republic of RACHAD is one of the steps of this global
Mauritania: Public Expenditure Review\.â reform\.
B\. Support Private Sector in the Non-Extractives Sector
B\.1 Public Private World Bank, 2015\. âLegal and Institutional Nouadhibou Eco-Seafood Cluster Project
Partnerships Analysis of PPPs in Mauritania\.â World (P151058)\. TA on the formulation of the legal
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
Bank, 2015\. âNouadhibouâs Eco-Competitive infrastructure for PPP; capacity building for
Seafood Cluster\.â the new executive PPP unit within the MEF;
World Bank, 2016\. âIslamic Republic of and financing international expertise to assist
Mauritania Diagnostic Trade Integration during PPP deals\.
Study Update\.â
B\.2 Land Tenure World Bank, 2014\. « Cadre dâAnalyse de la Support to Mauritania Land Reform Policy
and Property Gouvernance Foncière en Mauritanie\. »\. ⢠(P161010)\. Support a nationwide policy dialog
Rights World Bank/IFC, 2015\. âEnterprise Surveys: on land; stock taking of the land sector; and
Mauritania Country Profileâ (iii) design pilot operations\.
World Bank, 2015\. âMauritania: Diagnostic The Mauritania Public Sector Governance
Trade Integration Study Update\.â Project (P146804) will be financing pilot tests
Heritage Foundation, 2016\. âIndex of for land reforms in both rural and urban areas
Economic Freedom: Property Rights Index\.â along with regional conferences on land
across Mauritania\.
B\.3 Livestock Annual Meetings Decisions of the OIE\. Regional Sahel Pastoralism Support Project
Sector (P147674) (PRAPS)\. TA to the ministry of
World Bank 2015\. « Projet Régional dâAppui livestock to formulate the legal infrastructure
Au Pastoralisme Au Sahel (PRAPS), Cadre De needed to operationalize the livestock law,
Gestion Environnemental Et Sociale\. » and capacity building and TA to prevent and
combat livestock related diseases and to
GoM 2015\. « Stratégie Nationale de Security implement sanitary standards\.
Alimentaire pour la Mauritanie aux horizons
2015 et visions 2030\. » Regional Disease Surveillance Systems
Enhancement Phase III (P161163) (REDISSE
3)\. Regional investment project to enhance
the capacity for animal disease surveillance in
Mauritania\.
Risk Assessment and Mitigation
55\. The Bank appropriately assessed the overall risk for DPO1 as high, although improvements
between DPO 1 and 2 might have warranted a substantial (rather than high) rating for DPO2\. There
were substantial or greater risks in a number of risk categories, which supported high overall risk ratings
(Table 7)\. Many of the risks were effectively mitigated\. The key risk mitigation was the support from
related TA projects which were to, and did, carry implementation forward\. The PD also cites the selection
of reforms where the Government had already initiated action and therefore was committed to seeing
the reforms through\. Macroeconomic risks in DPO2 were assessed again as high, which may have been
overstated, particularly because DPO1 had been successful in improving macroeconomic stability and
because the Government had agreed to a new program with the IMF\. The IMF program aimed to mitigate
risks through improved exchange rate and monetary policies, as well as avoidance of non-concessionary
borrowing\. Risks to DPO2 were also mitigated through the finalization of the SCAPP in the last quarter of
2017, and the MEFâs building of a multi-stakeholder coalition to support the reform agenda\.
Table 7: Risk Ratings Summary from the Program Documents
Risk Category DPO1 DPO2
1 Political and governance Substantial Substantial
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2 Macroeconomic High High
3 Sector strategies and policies Moderate Moderate
4 Technical design of project or program Moderate Moderate
5 Institutional capacity for implementation and sustainability High Substantial
6 Fiduciary Substantial Substantial
7 Environment and social Substantial Moderate
8 Stakeholder Moderate Moderate
Overall High High
56\. The institutional capacity risk was only partly mitigated, but was appropriately decreased to the
substantial level\. The areas of PIM, procurement, and PPP reform required strong collaboration across
line ministries and build-up of technical expertise\. The TA and capacity-building support provided through
ongoing World Bank projects in the areas of PFM, institutional development, PPP arrangements, land
reform, and the growth of the livestock sector did help mitigate risks, which otherwise would have been
appropriately rated as high\.
57\. Fiduciary risks were substantial, but were partially mitigated by the reform program itself,
especially by expanding RACHAD to EPAs\. The Government made progress in several key areas, including
(i) payment execution through the RACHAD system; (ii) the expansion of an electronic PFM information
system (GFMIS) to all ministries; and (iii) the completed review of past financial statements and their
submission to the Court of Accounts, as pointed out in the PD\. The public sector governance project
(P146804) launched in June 2016 helped mitigate fiduciary risks issues, including SOE oversight, GFMIS
implementation, public procurement reform, and accounting, auditing, and financial controls\.
58\. By Bank rules, ISRs were not required for the series\. The Mauritania Fiscal Consolidation and
Private Support DPO1 and DPO2 had Board dates exactly 12 months apart, and the second operation
closed 12 months after the approval\. Thus, there was no requirement for ISRs for these two operations\.
59\. The Bank made necessary adjustments to the program to maintain relevance and to adjust to
different rates of progress in different reform areas\. The adjustments, as reported in Table 2, show
triggers modified to improve specificity and likelihood of implementation given the low institutional
capacity and within the timeframe of the series\. These adjustments helped maintain program relevance
without sacrificing significant reform value\.
60\. The Bank conducted regular supervisions and sustained day-to-day support from the field
office\. Expertise for each area of the program resided in the field and was also supported by a substantial
TA, which was a key success factor for the program\. As part of regular supervision, the Bank also
coordinated well with development partners, especially the IMF and the AfDB\.
61\. One shortcoming in supervision is that the actual measurement of results in the end was weak\.
M&E was sporadic during the series and the results indicators should have been more regularly reported
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
to be more useful to program management\. The indicators themselves could have been stronger, but
were improved during DPO2\. M&E also faced the challenge of weak Government capacity\.
Rating: Satisfactory
V\. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES
62\. The program outcomes are likely to be sustained, but there are some risks\. Mauritania has
demonstrated its commitment to fiscal consolidation, and is on a better path towards fiscal sustainability
as GoM tries to improve tax administration and project selection and increase the role of the private
sector in non-extractives\. It has even achieved budget surpluses (2016-18) despite a large decrease in
extractive revenues, which fell from an average of 5\.9 percent of GDP in 2011-2014 to 2\.4 percent in 2015-
2018\. Maintaining this path of lower dependency on resource revenues will render the country less
vulnerable to ToT fluctuations\. The program is also supported by a continuing IMF program (see Next
Phase section below)\.
63\. Specific sustainability concerns exist in the areas of PPPs, procurement, and land reform\. For
PPPs, the experience of the most recent PPP regarding the expansion of the Nouakchott port was not in
line with a transparent process\. Thus, it will be critical that next PPPs in the pipeline fully comply with the
new regulatory and legal framework and to ensure the PPP Unit is independent and the Government
ensures transparent PPP processes (avoiding undue political influence on PPP process and the PPP Unit)\.
Other risks to PPP include the still weak capacity and understanding of the PPP concept by the public and
local private sector\. In procurement, while the law is an important step forward, the recruitment of the
review committee raised concerns about GoMâs commitment to a transparent procurement process\. In
land reform, there are concerns also about the pace of reform\. Currently, there is a substantial delay in
the operation of the technical committee\. Though it has an office, a car, and necessary equipment, it does
not have staff and is not properly functioning yet\. To get land reform moving, the Bank has supported
several pilots in different areas of the country (following the Madagascar experience), rather than try to
implement land reform in one big launch\. This will help to reduce risk by building success gradually in an
area (both rural and urban pilots) where there is significant political resistance\. Ongoing investment/TA
projects also help limit risks in the areas of PPP, procurement and land reform\.
VI\. LESSONS AND NEXT PHASE
A\. Lessons Learned
64\. The following key lessons emerged from this DPO series:
Lesson 1: A DPO can be used to help a country develop an adequate macroeconomic framework even
in the absence of an IMF program\. In the Mauritanian context, the challenge was to manage skepticism
and expectations within the Bank and the Government\. To meet this challenge, the first requirement was
to have a solid macroeconomic assessment based on detailed quantitative fiscal, external and monetary
data\. This assessment, in turn, required enlisting macroeconomists that understand fiscal, debt, and
external sector dynamics\. A second requirement was to build trust with government counterparts in the
ministry of finance and the central bank to have a clear view on the sustainability of the macro framework\.
Third, on the Bank side, early consultation with the GPs, CMU, OPCS and the credit risk department all
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
helped to ensure buy-in and strengthen discussions with authorities\. Fourth, it was important to regularly
consult and share information with the IMF\. Fifth, to demonstrate an appropriate fiscal framework there
was a need to agree on fiscal targets with the Government\. By DPF2, the Bank advised the Government
that an IMF program was necessary to go ahead, which the authorities eventually accepted\.
Lesson 2: The use of the DPO instrument was critical in moving reforms forward that otherwise might
have stalled\. The DPO series with its accompanying country dialog, coordination with the IMF and other
development partners was critical in moving the reforms forward\. ICR interviews confirmed that all
Government stakeholders felt a time pressure to complete the prior actions and to advance their
subsequent implementation\. One example was in the livestock sector where stakeholders reported that
the budget support was key not only to the underlying legal reform to formalize the sector, but also the
specific âtextes,â or implementing regulations, for livestock operators to follow\.
Lesson 3: A TA operation is an essential complement to a DPO to ensure follow through and, therefore,
ensure implementation of reforms on the ground level, especially in a low capacity country like
Mauritania\. It might even be reasonable to state that it would be pointless to attempt a reform program
without specific training and expertise guaranteed to operationalize the reforms\. This was a universal view
of Government stakeholders\. TA projects also are of longer duration and can provide adequate follow up
in reform areas even if subsequent DPOs do not\. Examples include the Governance project, REDISSE 1, 2
and 3\.
Lesson 4: To achieve greater and faster impact of reforms, it is advantageous to have an actual
activity/investment ready to go to put the reform into action\. In the case of PPP reforms, impact would
likely have been realized sooner, and the trigger would not have been downscaled if the Bank had been
able to commit sooner to support an actual PPP operation\. The PPP trigger had to be revised from actual
engagement in PPP operations under the new framework, to the more intermediate action of publishing
the procedures, setting-up the governance for PPP projects, and establishing thresholds for operation
requiring inter-Ministerial approval\. It was difficult to drive the PPP reform by emphasizing the need to
set-up a PPP unit without having a clear schedule to launch an actual PPP\. While there are a number of
PPPs in the pipeline, none were ready to be evaluated under the new framework\. Another issue is that
the team did not have funds to provide TA support after the legal and regulatory framework was set in
place (February 2017)\. There were two Public-Private Infrastructure Advisory Facility (PPIAF) funds in
place, but these closed immediately afterward, which prevented the team from providing follow-up TA in
the interim\.
Lesson 5: Economic and financial constraints during or after a ToT shock add pressure on Governments
to rapidly conduct reforms that otherwise would have taken longer to implement\. The context for this
series created an opportunity for GoM to rally around solutions to its mounting debt and undiversified
economy\. The design of the DPO series capitalized on that urgency and resulted in a reasonably successful
program\.
Lesson 6: Having strong ownership from the Government and a champion within GoM offered an
excellent opportunity to achieve structural reforms and shifts in attitude, particularly during a time of
high fiscal pressure\. Having a reform champion within the Government, combined with economy urgency,
provided a strong opportunity for reforms that was seized with a meaningful program of reforms\. It should
be noted, however, that having a reform champion from the Governmentâs side is not something that the
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
Bank can have control over as it cannot choose its counterpart\.
Lesson 7: Support to M&E is a long-term effort, particularly in a low capacity country\. The Bank needs
to make substantial efforts to help ingrain the practice of M&E, if the real benefits of M&E are to be
realized during a programmatic series\. The results framework for the program needed to be better
integrated into program management\. Counterparts tended to view the monitoring of results indicators
as an afterthought to meet a bureaucratic requirement rather than as a tool for program management or
performance measurement\. With a more concerted effort to incorporate results management into the
policy dialog, both the Bank and GoM can have a better understanding of what they are trying to
accomplish and their progress toward the objectives\.
B\. Next Phase
65\. After helping to restore macroeconomic stability, the DPO series laid the foundation for further
structural reforms and interventions in support of a private-sector led growth in Mauritania\. Building
on this foundation, the Bank is supporting a new DPO series of three operations (2019-2021) in March
2018\. This new series aims at supporting GoMâs efforts to improve the regulatory environment and skills
for boosting competition and inclusiveness of the Mauritanian private sector\. It is built on three pillars\.
The first pillar supports reforms to improve the business environment of Small and Medium Enterprises\.
The second pillar supports reforms of broadband digital infrastructure that remove barriers to investment
and competition in the internet broadband market\. Finally, the third pillar supports reforms in basic
education and vocational training to improve the quality of skills provided by the general education and
training systems\. The first operation, a grant financing of US$50 million (SDR 36\.1 million) was approved
by the board on July 24, 2019\. Discussions for the second operation started in September 2019\.14 The IMF
continues to support Mauritania under the ECF which runs through 2021\. The IMF program supports key
areas of the DPO series including sustaining the fiscal consolidation process by enhancing tax
administration and improving PIM and to improve the business environment and accelerate economic
diversification\.
14 First Competition and Skills Development Policy Financing\.
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
ANNEX 1\. RESULTS FRAMEWORK
RESULTS INDICATORS
Objective/Outcome: Support fiscal consolidation by increasing domestic revenues, enhancing fiscal transparency and increasing the efficiency of public
spending
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
Tax revenues increase by 1\.2 % of GDP 17% 18\.2% 18\.6%
percent of GDP
Date Achieved 2015 2019 2019
Comment Target achieved\. Though the improvement is only partially attributable, other evidence is presented to show PDO achievement\.
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
Share of public investment % of PIPs 0% >75% 100%
projects selected and
executed based on new
framework\.
Date Achieved 2015 2018 2018
Comment Target exceeded (by 33%, 100% compared to 75%)\. All public investment projects are selected under the new framework\.
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
Percentage of the total value % of total procurement 47\.0% 23\.5% 28%
of contracts awarded without bids
competition has been cut in
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
half\.
Date Achieved 2016 2018 2018
Comment Target mostly achieved (81%-improvement was 19% vs\. 23\.5% targeted)\.
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
Decline in public enterprises % of GDP 1\.2% 0\.2% 0\.01%
and agencies extra-budgetary
spending and carry-forwards
(in percentage of GDP)\.
Date Achieved 2016 2018 2018
Comments Target achieved\. Public enterprises are no longer allowed to make extra budgetary expenditures\.
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
The executive PPP Unit has % of PPP portfolio 0% 50% 100%
reviewed and assessed PPP
projects according to the new
regulatory framework\.
2016 2018 2019
Comments Target exceeded (by 50%)\. All PPP projects are reviewed by the PPP executive unit\.
Objective/Outcome: Support private sector participation in the non-extractives sectors
Indicator Name Unit of Measure Baseline Revised Target Actual Achieved at Completion
Increase in Increase in the Number 27,168 > 31,100 29,872
number of formal properties
titles\.
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First and Second Fiscal Consolidation and Private Sector Reform DPO (P160592 and P163057)
2015 2018 2018
Comments Target partially met (69% of expected increase)\. Note that original target was increased from 28,000 to 31,000 during DPO 2\.
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
The increase in the % of total 0% 8% 88%
percentage of verified
products in total products of
slaughterhouses\.
2016 2018 2018
Comments Target exceeded (by 80 percentage points)\.
Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion
The Increase in the % of total 0% 10% 100%
percentage of formal livestock
transactions (as per the new
law) at the borders\. Baseline
(2016): 0%; Target (2018):
10%
2016 2018 2018
Comments Target exceeded (by 90 percentage points)\. By law, all livestock transactions at the borders must be formalized\.
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ICR Template (P159389)
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES
A\. TASK TEAM MEMBERS
P-160592
The program document for this proposed DPO was prepared by Wael Mansour (Economist TTL, GMF08), El Hadrami
Oubeid (Public Sector Specialist, GGO27), Christine Richaud (Lead Economist, GMF09), Alain DâHoore (Consultant),
Pierre Mandon (Research Analyst, GMF01), Gregoire Rota Graziosi (consultant), Cedric Mousset (Lead Financial
Specialist, GFM01), Kjetil Hansen (Senior Public Sector Specialist, GG027) Yemdaogo Tougma (Research Analyst,
GMF07) Julien Emmanuel Galant (Consultant), Laurent Corthay (Senior Private Sector Specialist, GTC07) Andre
Teyssier (Senior Land Administration Specialist, GSULN), Brahim Sall (Senior Rural Development Specialist, GFA 01),
Ghada Elabed (Young Professional, GFA07), Fatou Fall Samba (Senior Financial Management Specialist, GG025),
Moustapha Ould El Bechir (Senior Procurement Specialist, GGO07) , Paolo Verme (Senior Poverty Economist, GPV07),
AbdelKrim Araar (Consultant), Siobhan Mclnerney-Lankford (Senior Counsel, LEGAM), Silvia Gulino (Operation
Analyst, GMF01), Maude Valembrum (Language Program Assistant, GMF08), and Fatima Cherif (Program Assistant,
AFMMR)\.
P-163057
The program document for this proposed DPO was prepared by Wael Mansour (Economist and TTL, GMF08), El
Hadramy Oubeid (Public Sector Specialist and co-TTL, GGO27), Jan Loeprick (Senior Economist, GGO28), Julien
Emmanuel Galant (Consultant, GTC13), Laurent Corthay (Senior Private Sector Specialist, GTC07), Brahim Hamed
(Senior Procurement Specialist, GGO05), Moustapha Ould El Bechir (Senior Procurement Specialist, GGO05), Brahim
Sall (Senior Rural Development Specialist, GFA01), Hugues Agossou (Senior Financial Management Specialist, GG025),
Cedric Mousset (Lead Financial Sector Specialist, GFM1A), Andre Teyssier (Senior Land Administration Specialist,
GSULN), Federica Marzo (Senior Poverty Economist, GPV07), AbdelKrim Araar (Consultant, GPV07), Sachiko Morita
(Senior Counsel, LEGAM), Faly Diallo (Finance Officer, WFALA), Richard J\. Carroll (Evaluation Specialist), Micky Ananth
(Operation Analyst, GMF08), Theresa Adobea Bampoe (Program Assistant, GMF08) and Aminetou Diallo (Program
Assistant, AFMMR)\.
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ICR Template (P159389)
B\. STAFF TIME AND COST
P160592
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY17 28\.5 234,557
Total 28\.5 234,557
Supervision/ICR
N\.A N\.A N\.A
Total 28\.5 234,557
P163057
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY18 56\.9 304,103
Total 56\.9 304,103
Supervision/ICR
FY20 2 42,000
Total 58\.9 346,103
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The World Bank
ICR Template (P159389)
ANNEX 3\. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT
PARTNERSâ/STAKEHOLDERSâ COMMENTS
Comments of Government of Mauritania:
We have reviewed the draft evaluation report of the DPO series (2016-2017) that was sent to us on
October 14, 2019 and have the following comments:
- In paragraph 36, we propose to add a reference to the 2018 ARMP report which shows the decrease in
the percentage of the total value of public contracts awarded without competition\.
- It would also be desirable that World Bank implements the report's recommendations, particularly
with regard to strengthening monitoring and evaluation (M&E)\.
(Note: The ICR concurs with the GoM comments)
Commentaires du Gouvernement mauritanien (French translation):
Nous avons examiné le projet de rapport dâévaluation de la série de DPO (2016-2017) qui nous a été
envoyé le 14 octobre 2019 et nous avons les commentaires suivants :
- Dans le paragraphe 36, nous proposons d'ajouter une référence au rapport de l'ARMP de 2018 qui
montre la baisse du pourcentage de la valeur totale des marchés publics attribués hors concours\.
- Il serait également souhaitable que la Banque Mondiale applique les recommandations du rapport,
notamment en ce qui concerne le renforcement du suivi et de l'évaluation (S&E)\.
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The World Bank
ICR Template (P159389)
ANNEX 4\. SECTORS AND THEMES
SECTORS AND THEMES
P160592
Sectors
Mitigation Co- Adaptation Co-
Major Sector/Sector (%)
benefits (%) benefits (%)
SECTOR_TBL
Agriculture, Fishing and Forestry 12 0\.00 0\.00
Livestock 12 0 0
SECTOR_TBL
Public Administration 50 0\.00 0\.00
Central Government (Central Agencies) 50 0 0
SECTOR_TBL
Financial Sector 25 0\.00 0\.00
Other Non-bank Financial Institutions 25 0 0
SECTOR_TBL
Industry, Trade and Services 13 0\.00 0\.00
Other Industry, Trade and Services 13 0 0
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Economic Policy 13
Fiscal Policy 13
Tax policy 13
Private Sector Development 13
Public Private Partnerships 13
Public Sector Management 38
Public Finance Management 38
Public Expenditure Management 38
Domestic Revenue Administration 13
Public Administration 25
Public Assets and Investment Management 25
Urban and Rural Development 25
Rural Development 25
Rural Markets 13
Land Policy and Tenure 13
P163057
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ICR Template (P159389)
Sectors
Mitigation Co- Adaptation Co-
Major Sector/Sector (%)
benefits (%) benefits (%)
SECTOR_TBL
Agriculture, Fishing and Forestry 10 0\.00 0\.00
Livestock 10 0 0
SECTOR_TBL
Public Administration 70 0\.00 0\.00
Central Government (Central Agencies) 60 0 0
Other Public Administration 10 0 0
SECTOR_TBL
Industry, Trade and Services 20 0\.00 0\.00
Public Administration - Industry, Trade and Services 20 0 0
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Private Sector Development 20
Public Private Partnerships 20
Public Sector Management 30
Public Finance Management 20
Domestic Revenue Administration 20
Public Administration 30
Public Assets and Investment Management 20
State-owned Enterprise Reform and Privatization 10
Urban and Rural Development 30
Rural Development 30
Rural Markets 10
Land Policy and Tenure 20
42
The World Bank
ICR Template (P159389)
ANNEX 5\. SUPPORTING DOCUMENTS
African Development Bank (2017), Mauritania Economic Reforms and Diversification Support Programme
â Phase II (PAREDE II)
Autorité de Régulation des Marchés Public, (2019), Audit Technique et Financier de la Passation et de
lâExecution des Marches Publics Au Titre de La Gestion Budgetaire 2018, Nouakchott
IMF, (2017), Islamic Republic of Mauritania: Request for a Three-Year Arrangement Under the Extended
Credit Facility, Washington D\.C\.
IMF, (2019), Case Studies in Tax Revenue Mobilization in Low-Income Countries, WP/19/104\. Washington
D\.C\.
Ministère de lâEconomie et des Finances, (2017), Stratégie Nationale de Croissance Accélérée et de
Prospérité Partagée SCAPP 2016-2030, Nouakchott\.
Ministère de lâEconomie et des Finances, (2017), Manuel dâapplication du décret N°2016-179 relatif à la
formulation, la sélection et la programmation de lâinvestissement public, Nouakchott\.
Ministère de lâEconomie et dâIndustrie, (2019), Indicateurs de résultats clés pour les DPO 2016 et 2017,
Nouakchott\.
Ministère des Finances, (2019), Rapport sur les Dépenses Fiscales en Mauritanie pour lâExercice 2018,
Nouakchott\.
Website of PPP unit: http://www\.ppp\.gov\.mr/
World Bank, 2013\. âGovernance of State-Owned Enterprises and Public Agencies in the Islamic Republic of
Mauritaniaâ, Washington D\.C\.
World Bank, 2014\. âMauritania: Public Expenditure and Financial Accountability Assessmentâ, Washington
D\.C\.
World Bank, (2015), Regional Sahel Pastoralism Support Project, Washington D\.C\.
World Bank, (2016a), Support Mauritania Land Reform Policy, Washington D\.C\.
World Bank, (2016b), Public Sector Governance Project, Washington D\.C\.
World Bank, (2016c), Nouadhibou Eco-Seafood Cluster Project, Washington D\.C\.
World Bank, (2016d), Islamic Republic of Mauritania: First Fiscal Consolidation and Private Sector Support
Development Policy Operation, Washington D\.C\.
World Bank, (2017), Islamic Republic of Mauritania: Second Fiscal Consolidation and Private Sector
Support Development Policy Financing, Washington D\.C\.
World Bank (2018a), Islamic Republic of Mauritania: Country Partnership Framework for the Period of
FY18-FY23, Washington D\.C\.
World Bank (2018b), 1er Rapport sur la Situation Economique en Mauritanie: Vers une consolidation
budgétaire qui améliore la gestion des investissements publics et fortifie les filets sociaux,
Washington D\.C\.
43
The World Bank
ICR Template (P159389)
World Bank (2019), 2nd Rapport sur la Situation Economique en Mauritanie: Améliorer le climat des
affaires pour favoriser le développement du secteur privé, Washington D\.C\.
44 | REVIEW |
P113456 | Document of
The World Bank
Report No: ICR00001447
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H4670)
ON A
GRANT
IN THE AMOUNT OF SDR 13\.6 MILLION
(US$ 20 MILLION EQUIVALENT)
TO THE
REPUBLIC OF TOGO
FOR A
SECOND ECONOMIC RECOVERY AND GOVERNANCE GRANT
June 30, 2010
Poverty Reduction and Economic Management 4
Country Department AFCF2
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of May 2010)
Currency Unit = FCFA
US$1\.00 = FCFA 499
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
AAA Analytical and Advisory Activities
AfDB African Development Bank
BCEAO Central Bank of West African States
BIA Banque Internationale pour l'Afrique (International Bank for Africa)
BOAD Banque Ouest Africaine de Développement (West African Development Bank)
BTCI Banque Togolaise pour le Commerce et l'Industrie (Commerce and Industry
Bank of Togo)
BTD Banque Togolaise de Développement (Togo Development Bank)
CC Cour de Comptes (State Audit Office)
CEB Communauté d'Électricité de Benin (Benin Electricity Community)
CEET Compagnie d'Energie Electrique du Togo (Togo Electric Energy Company)
CERPM Comité d'Etude et de Rédaction des Projets de Marchés (Procurement Review
and Contract Preparation committee)
CET Common External Tariff
CFAF Franc of the African Financial Community
CNCS Comité Nationale de Coordination et de Suivi de la réforme de passation des
marchés publics (National Committee for the Coordination and Monitoring of
Procurement)
CNM Commission Nationale des Marchés (National Tender Board)
CPAR Country Procurement Assessment Review
DAF Directeurs Administratifs et Financiers (Administrative and Financial Directors)
DGE Direction Générale de l'Economie (General Directorate of the Economy)
DNCMP Direction Nationale de Contrôle des Marchés Publics (National Directorate for
Procurement Oversight)
DPO Development Policy Operation
EC European Commission
ECOWAS Economic Community of West African States
EITI Extractive Industry Transparency Initiative
ERGG Economic Recovery and Governance Grant
ESW Economic and Sector Work
GDP Gross Domestic Product
HIPC Heavily Indebted Poor Countries
HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficient Syndrome
IBRD International Bank for Reconstruction and Development
IDA International Development Association
IFC International Finance Corporation
IGF Inspection Générale des Finances (General Finance Inspectorate)
IMF International Monetary Fund
ISN Interim Strategy Note
LDP Letter of Development Policy
LICUS Low-Income Country Under Stress
MDG Millennium Development Goal
MDRI Multilateral Debt Relief Initiative
MEF Ministry of Economy and Finance
NSCT Nouvelle Société Cotonnière du Togo (The New Togo Cotton Company)
SALT Société Aéroportuaire de Lomé (Lomé Airport Company)
PEMFAR Public Expenditure Management and Financial Accountability Review
PRGF Poverty Reduction and Growth Facility
PRSP Poverty Reduction Strategy Paper
PAL Port Autonome de Lomé (Lomé Autonomous Port )
SIAB Société Inter-Africaine de Banque (Inter-African Banking Company)
SIGFIP Système Intégré de Gestion des Finances Publiques (Integrated Public Finance
Management System)
SNI Société Nationale d'Investissement (National Investment Company)
SNPT Société Nouvelle des Phosphates de Togo (The New Phosphate Company of
Togo)
SOTOCO Société Togolaise de Coton (Togo Cotton Company)
TdE Togolaise des Eaux (Togo Water Company)
Tpa Metric tons per annum
Tpd Metric tons per day
UN United Nations
UTB Union Togolaise de Banques (Union of Togolese Banks)
VAT Value-Added Tax
WAEMU West African Economic and Monetary Union
WAMU West African Monetary Union
ZF Zone Franche (Free Trade Zone)
Vice President: Obiageli Katryn Ezekwesili
Country Director: Madani Tall
Sector Manager: Philip English (Acting)
Task Team Leader: Christina A\. Wood
ICR Team Leader Christina A\. Wood
TOGO
IMPLEMENTATION COMPLETION AND RESULTS REPORT ON
A SECOND ECONOMIC RECOVERY AND GOVERNANCE GRANT
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Program Performance in ISRs
H\. Restructuring
1\. Program Context, Development Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes\. 6
3\. Assessment of Outcomes \. 22
4\. Assessment of Risk to Development Outcome \. 27
5\. Assessment of Bank and Borrower Performance\. 28
6\. Lessons Learned\. 29
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 30
Annex 1: Bank Lending and Implementation Support/Supervision Processes \. 31
Annex 2: Beneficiary Survey Results\. 33
Annex 3: Stakeholder Workshop Report and Results \. 34
Annex 4: Summary of Borrower's ICR and/or Comments on Draft ICR\. 35
Annex 5: Comments of Cofinanciers and Other Partners/Stakeholders\. 36
Annex 6: List of Supporting Documents \. 37
MAP
A\. Basic Information
Togo: Economic
Country: Togo Program Name: Recovery and Gov\.
Grant 2
Program ID: P113456 L/C/TF Number(s): IDA-H4670
ICR Date: 06/30/2010 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: DPL Borrower:
TOGO
Original Total
XDR 13\.6M Disbursed Amount: XDR 13\.6M
Commitment:
Revised Amount: XDR 13\.6M
Implementing Agencies:
Ministry of Economy and Finance
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 02/05/2009 Effectiveness: 07/02/2009 07/02/2009
Appraisal: 03/12/2009 Restructuring(s):
Approval: 04/21/2009 Mid-term Review:
Closing: 12/31/2009 12/31/2009
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Substantial
Bank Performance: Moderately Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Not Applicable
Implementing
Quality of Supervision: Moderately Satisfactory Not Applicable
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA):
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: Satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Banking 10 10
Central government administration 50 50
Crops 20 20
Mining and other extractive 10 10
Power 10 10
Theme Code (as % of total Bank financing)
Infrastructure services for private sector development 10 10
Other public sector governance 10 10
Public expenditure, financial management and
50 50
procurement
Rural policies and institutions 20 20
State enterprise/bank restructuring and privatization 10 10
E\. Bank Staff
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Obiageli Katryn Ezekwesili
Country Director: Madani M\. Tall Madani M\. Tall
Sector Manager: E\. Philip English Antonella Bassani
Program Team Leader: Christina A\. Wood Christina A\. Wood
ICR Team Leader: Christina A\. Wood
ICR Primary Author: Michael J\. Wilson
ii
F\. Results Framework Analysis
Program Development Objectives (from Project Appraisal Document)
To support Government-owned reforms to improve public financial management and
restore performance of key public enterprises and banks\.
Revised Program Development Objectives (if any, as approved by original approving
authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
PEFA indicator PI-10 (the number of types of information, among 6, that the
Indicator 1 :
government makes available to the public)\.
2 (budget execution
Value reports, and
1-2 types of
(quantitative or 0 monthly publication
information
Qualitative) of all awarded
contracts)
Date achieved 12/31/2008 12/31/2009 12/01/2009
Comments
(incl\. % 100 % achieved\.
achievement)
Management of public funds is in compliance with regional good practice, with
Indicator 2 : clear separation of accounting, revenue and payment functions and
coordination by the Treasury Director\.
Value
Complete Complete
(quantitative or No separation\.
separation\. separation
Qualitative)
Date achieved 12/31/2008 12/31/2009 06/30/2009
Comments
(incl\. % 100% achieved\.
achievement)
Indicator 3 : Share of planned ex-post internal audits undertaken during the year\.
Value
50 percent (4 of 8
(quantitative or 0 percent\. 60 percent\.
activities)\.
Qualitative)
Date achieved 12/31/2008 12/31/2009 12/31/2009
Comments
Partially achieved\. The full 60 percent target is expected to be achieved by the
(incl\. %
end of the 2nd quarter 2010\.
achievement)
Share of contracts in three key ministries, seven major public companies and
Indicator 4 :
the Lomé Municipal Office, that are subject to prior review by the National
iii
Procurement Department\.
Value
At least 80
(quantitative or 0 percent\. 0 percent
percent\.
Qualitative)
Date achieved 12/31/2008 12/31/2009 12/31/2009
Target not achieved, due to delay in adopting the procurement law and
Comments
continuing procurement delays beyond the government's control through 2009\.
(incl\. %
50 percent of contracts in the last quarter of the year were subject to prior
achievement)
review\.
Indicator 5 : Frequency of publication of procurement contracts\.
Value
(quantitative or Twice a year Monthly\. Monthly\.
Qualitative)
Date achieved 12/31/2008 12/31/2009 12/31/2009
Comments
A summary of contracts is published monthly on the government's web site and
(incl\. %
also disseminated to the press\.
achievement)
Periodicity of record keeping and information management is established and
Indicator 6 :
adhered to in the cotton company\.
Record keeping
remains irregular
since the new
Regular record
Value Irregular record accounting system
keeping, billing
(quantitative or keeping, billing and is not yet in place
and payment
Qualitative) payment practices\. given the delay in
practices\.
procurement
process for the
consultant\.
Date achieved 12/31/2008 12/31/2009 12/31/2009
Comments
(incl\. % Not yet achieved\.
achievement)
Indicator 7 : Cotton producers' share of the international price for cotton\.
60\.5 percent if
production is
below 50,000 tons;
61\.5 percent if
Value
58\.6 percent (2008-09 production is 61 percent (2009-
(quantitative or
crop season) between 50,000 10 crop season)
Qualitative)
and 60,000 tons;
and 62\.5 percent
if production is
above 60,000 tons\.
Date achieved 03/31/2009 03/31/2010 12/31/2009
Comments
Target achieved 100%, since output was only 30,000 tons (i\.e\., below 50,000
(incl\. %
tons)\.
achievement)
Indicator 8 : Frequency of publication of phosphate revenues' reconciliation\.
Value 0 1 a year\. 1 a year\.
iv
(quantitative or
Qualitative)
Date achieved 12/31/2008 12/31/2009 12/31/2009
Comments
(incl\. % 100% achieved\.
achievement)
Indicator 9 : NPL of the three state-owned Banks (BTCI, UTB, BIA)
Value
(quantitative or > 5 percent\. < 5 percent\. <5%
Qualitative)
Date achieved 12/31/2007 12/31/2009 12/31/2009
Comments
Target achieved 100%\. Net NPLs were: 1\.25% for BTCI, 4\.59% for UTB, and
(incl\. %
0\.80% for BIA\.
achievement)
Indicator 10 : Share of losses in CEET's electricity grid\.
Value
(quantitative or 20 percent\. 19 percent\. 19\.8 percent
Qualitative)
Date achieved 12/31/2007 12/31/2009 12/31/2009
Comments
Partially achieved\. The reduction in losses during 2009 relative to 2008 was
(incl\. %
0\.2 of a percentage point instead of 1 percentage point\.
achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Indicator 1 : NA
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
G\. Ratings of Program Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 12/15/2009 Moderately Satisfactory Moderately Satisfactory 21\.34
v
H\. Restructuring (if any)
Not Applicable
vi
1\. Program Context, Development Objectives and Design
1\.1 Context at Appraisal
The Second Economic Recovery and Governance Grant (ERGG-2) was prepared
commencing late 2008 and approved in April 2009, in the context of Togo's continued
satisfactory implementation of reforms during the first year of its reengagement with IDA
and the international community\. The donors aimed to backstop the government reform
initiative, through a coordinated support strategy linking IDA, the IMF, the African
Development Bank (AfDB), the European Commission (EC) and bilateral donors
(notably France), building on the common experience of the immediate post-
reengagement period\. The Government's clear commitment to pursue and deepen
economic reforms presented a window of opportunity for resumption of IDA's program,
which had been suspended since 2002\.
The Bank's dialogue with the Government on the initial Economic Recovery and
Governance Grant (ERGG) was initiated in November 2007, following resumption of EC
cooperation subsequent to satisfactory management of Togo's legislative elections, the
final milestone set by the international community for reengagement with the country\.
IDA preparation of the ERGG paralleled, and was coordinated closely with, the IMF's
preparation of a Togo PRGF as well as the AfDB's arrears clearance dialogue with the
country\. In April 2008, the IMF Board approved the PRGF-supported program,
applicable from January 2008\. A bridge loan linked to the ERGG program enabled the
Government of Togo to clear its arrears to the Bank in May 2008, paving the way first for
regularization of IDA financing and second, together with PRGF approval, for
normalization of relations with the rest of the international community\. Togo
subsequently cleared its arrears with the AfDB in mid-2008\. In June 2008 Togo cleared
or reached agreement on the clearance of over 90 percent of its external arrears, with
IDA, the AfDB, the EC, the European Investment Bank (EIB), and the Paris Club\. Togo
reached its HIPC decision point in November 2008, after establishing a six month track
record of reform under the PRGF, completing its Interim Poverty Reduction Strategy
Program (I-PRSP), and reaching agreement with the Bank and Fund staffs on HIPC
completion point triggers\. A full PRSP was adopted in 2009\.
Significant progress in reforms was achieved under the ERGG\. Government moved
quickly to implement public finance management measures: the elimination of
unbudgeted payments, monthly monitoring of budget execution, allowing more time to
analyze fiscal data and permitting better and more timely decision-making\. A new
General Inspectorate of Finance (Inspection générale des finances) was established to
handle regular ex-post inspections of expenditures as well as specific investigative
assignments\. The Government also began to clear domestic arrears, with priority to
cotton producers and small and medium size enterprises (SME)\. Good progress was made
toward the preparation of a new procurement law and regulations in line with West
African Economic and Monetary Union (WAEMU) standards\. Achievements upon which
the ERGG-2 built included: (i) a new strategy for the cotton sector and completion of
financial audits, opening the way to further re-structuring of the cotton company beyond
1
that achieved during 2007-08; (ii) a new strategy for re-structuring and recapitalizing the
state banks and the largest bank placed under new management; (iii) new management at
the national electricity company, with updated company regulations aligned with
WAEMU business law; (iv) cessation of accumulation of non-performing loans by mid-
2008 and reaching the WAMU prudential norm of 8 percent in three public banks\.
The Government also engaged in prudent macroeconomic management including
response to exogenous shocks\. In 2007 and again in 2008 heavy flooding caused serious
damage to infrastructure and agricultural production\. By mid-2008, a third shock in the
form of global food crisis and high fuel prices, slowed growth and reduced living
standards only to be followed by the growing global recession which hit investment,
transit trade and remittances\. The Government moved to mitigate the impact of these
repeated shocks through targeted measures\. These included: clearing wage and pension
arrears, temporary wage supplements to public employees, increasing the minimum
wage, selling grain reserves, and introducing a fertilizer subsidy to increase domestic
food production\.
Despite the progress achieved, Togo continued to face daunting institutional and
economic challenges\. Its economic growth record was among the worst in the region,
reflecting a combination of factors including: (i) poor governance and low administrative
capacity, after the long period of sociopolitical conflict, mismanagement of public
resources, and lack of foreign assistance; (ii) excessive external public debt and domestic
arrears; (iii) undercapitalized state-owned banks, with the highest nonperforming loan
ratio in the WAMU area; (iv) a severe energy crisis resulting in frequent power outages;
(v) loss-making state-owned cotton and phosphate enterprises; (vi) a poor business
environment; and (vii) deteriorated social conditions\. Having reached its HIPC decision
point in November 2008, Togo had embarked on a clear path toward reducing its debt
burden and freeing up fiscal space over time\. The HIPC process, underpinned by
continued reforms, would enable Togo's external public debt to decline from 396 percent
of revenues in 2007 to 65 percent after the completion point\. The decision point also
opened the door to new multilateral and bilateral resources, critical to finance Togo's
poverty reduction strategy\. To revive the economy and reduce poverty, the Togolese
authorities were seeking to consolidate macroeconomic stability and advance priority
structural reforms, while securing stepped-up technical and financial assistance from
development partners\.
Rationale for Bank assistance
Given the complex governance and transparency issues facing the government, ERGG-2
was designed to give continuing momentum to Togo's economic and social recovery by
deepening reforms initiated under the initial ERGG with the objective of improving
governance, transparency and efficiency in public financial management as well as of
advancing structural reforms aimed at strengthening governance and transparency in the
key sectors of the economy (phosphates, cotton, energy and financial sectors)\. These
reforms were expected to enhance fiscal sustainability over time, and improve economic
governance through increased transparency in the management of public finances and
greater accountability in the state-owned banks and enterprises, all of which are critical
2
measures for the country's economic and social recovery\. The ERGG-2 was also deemed
necessary for providing financial support to the Government whose annual debt service to
IDA and other multilaterals was likely to remain high until the HIPC completion point
was reached\. ERGG-2 was an integral part of the Bank's interim assistance strategy for
Togo (FY08-10) approved in May 2008\. ERGG-2 also complemented assistance to
Government's reforms through the Financial Sector and Governance Project, the
Enhanced HIPC Initiative, the AfDB budget support operation and the IMF PRGF
program\.
1\.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)
Objectives
The ERGG-2 supported government reform to improve governance, transparency and
efficiency in public financial management, as well as helping advance structural reforms
aimed at strengthening governance and transparency in the key sectors of the economy
(phosphates, cotton, energy and financial sectors)\.
Outcomes and Indicators
Outcome 1: Improved public financial management, as measured by:
Budget formulation and monitoring: PEFA indicator PI-10 (access of the public to the
principle budget information) improved to C+ (end-2009)\. Baseline: D (2008),
meaning the Government made available to the public none of the six listed types of
information\.
Budget execution: Management of public funds is in compliance with regional good
practice, with clear separation of accounting, revenue and payment functions and
coordination by the Treasury Director\. Baseline: core treasury functions (accounting,
revenue and payment) were not separated functionally before 2009\.
Budget controls: Sixty percent of programmed ex-post internal audits undertaken
during 2009\. Baseline: no ex-post internal audits were undertaken prior to 2009\.
Public procurement: At least 80 percent of contracts during the last quarter of 2009 in
three key ministries (Public Works, Health and Primary Education), seven major
public companies (and the Lomé Municipal Office), to be subjected to prior review by
the Direction nationale de contrôle des marchés publics\. Baseline: 0 percent (2008)\.
Public reporting of contracts on a monthly basis through 2009\. Baseline: a summary
of contracts signed since January 1, 2008 was published twice (in 2008 and early
2009)\.
Outcome 2: Strengthened governance and efficiency in key sectors, as measured by:
Cotton: Regular record keeping and information management is established and
adhered to\. Baseline: The company has irregular record keeping, billing and payment
practices\.
Producers' share of the international price for the 2009-2010 crop season to be 60\.5
percent if production fell below 50,000 tons, 61\.5 percent if production was between
3
50,000 and 60,000 tons and 62\.5 percent if production was above 60,000 tons\.
Baseline: 58\.6 percent (2008-09 campaign)\.
Phosphates: Publication of the sector's financial contribution to public revenues at
least annually\. Baseline: No public information was available as of December 31,
2008\.
Finance: The three state-owned commercial banks (BTCI, UTB, BIA) have resumed
lending to creditworthy borrowers with non-performing loans (NPLs) kept under 5
percent in 2009\. Baseline: NPLs in the three banks were above 5 percent as of
December 31, 2007\.
Electricity: Losses in CEET's electricity grid reduced by 1 percentage point in 2009\.
Baseline: losses in CEET's electricity grid were 20 percent end-December 2007\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
Reasons/Justification
PDO and result indicators remained unchanged during program implementation\.
1\.4 Original Policy Areas Supported by the Program (as approved)
The ERGG-2 supported reforms in the following key areas:
Public financial management
The ERGG-2 supported three policy actions required for deepening public expenditure
management reform, with the goal of facilitating the normal budget cycle, improving
budget execution and strengthening audit and control functions\. First, making public the
2008 budget execution report, and submitting a draft 2009 budget in line with the I-PRSP
priorities to the National Assembly before the end of fiscal 2008 (the budget process had
broken down, with budgets appearing as late as mid-year, leaving no time for official
review or inputs from stakeholders)\. Second, finalization of Treasury re-organization in
line with the WAEMU Directive, through creation of a General Payment Office (Paierie
générale), a General Revenue Office (Recette générale) and a Treasury Central
Accounting Agency (TCAA) (these key functions had become intermingled, with
redundancy in personnel and procedures, leading to delays and imprecise information)\.
Third, creating and staffing the General Finance Inspectorate under the direct
responsibility of the Minister of Economy and Finance, with nomination of an Inspector
General (the Government lacked the capacity to carry evaluations of key processes and
major contracts, making it vulnerable to failures in governance)\.
The ERGG-2 also supported two policy actions critical to public procurement reform:
first, the transmittal to the National Assembly of the draft procurement law consistent
with the WAEMU Directives (procurement capacity had eroded due to personnel
changes, leading to lack of respect for procedures and irregularities); and second, the
publication of a summary of procurement contracts for 2008 in the bi-weekly journal
"L'Entrepreneur" published by the Chamber of Commerce and Industry (failure to
inform the public had worked to undermine its confidence in government) \.
4
Governance and efficiency in key economic sectors
ERGG-2 advanced reforms addressed by the first ERGG by implementing identified
follow-up actions, designed to address critical issues in the following sectors:
(i) Phosphate sector: The ERGG-2 supported improved transparency in the sector
through the publication of the results of a reconciliation of the 2007 revenues generated
from phosphate sales, with revenues received by the public Treasury that year\. Lack of
clarity over revenues and their disposition had undermined confidence in the responsible
public enterprise and worked against attracting private external investment\. The measure
enabled Togo to gain experience on a key EITI criteria in advance of formally initiating
the EITI accession process\.
(ii) Cotton sector: The ERGG-2 supported two policy actions judged to be critical for
advancing reforms in the cotton sector, namely measures to recover the over billed
amounts to SOTOCO which had been confirmed by the Billing Verification Task Force
(Mission de Verification) and the adoption of a new producer price mechanism that
reflected changes in international prices\. These actions addressed two critical issues:
public and private trust in this state enterprise, undermined by irregular practices; and the
need to attract and maintain the pool of cotton producers which had diminished in recent
years\.
(iii) Financial sector: the objective was to build confidence in the state banks through
re-capitalization and improved management systems, opening the way for renewed
lending to serve the formerly crowded-out private sector\. The ERGG-2 supported one
policy action judged critical for advancing reforms in the financial sector: raising the net
worth of the three banks under restructuring (BTCI, BIA and UTB) to the WAMU
prudential ratio (Cooke ratio of 8 percent) by exchanging the banks' non-performing
loans with government-issued bonds\. Improving the health of the key public banks was
essential to the restoration of prudent lending and attracting investment to the sector\.
(iv) Energy sector: Improve quality of service through enhanced management and
technical efficiency at the national distribution company\. The ERGG-2 supported one
policy action deemed critical for advancing the reforms: the development and adoption of
a 5 year performance contract between the State and CEET\. Service quality had
deteriorated seriously, with frequent load shedding, impacting negatively on the private
sector (increasingly obliged to resort to their own generators) and on the quality of family
life (no light for students to study by)\.
1\.5 Revised Policy Areas
The policy areas were not revised\.
1\.6 Other significant changes
There were no significant changes in design, scope and scale, implementation
arrangements and schedule, and funding allocations of this operation\.
5
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Program Performance
The ERGG-2 was a key component of the Bank's 2008-2010 Togo Interim Strategy
Note\. The ten prior actions required for grant approval reflect the priorities of the Interim
Poverty Reduction Strategy (PRS; 2008) and the full PRS adopted in 2009\. They
represent critical steps for the medium term implementation of the reform program,
directly supporting Pillar I of the full PRS (strengthening economic governance though
better management of public finances and procurement) and Pillar II (promoting
economic recovery and sustainable development, with measures to reform state-owned
enterprises and financial institutions, and improve the business environment)\.
Macroeconomic performance: Implementation of the reform program is proceeding in
the context of a challenging macroeconomic environment\. In this context, the authorities
are to be commended for having maintained a prudent fiscal stance so as to maintain
macroeconomic stability\. The third review of the IMF-supported PRGF program was
completed in November 2009 with all quantitative and structural performance criteria
met\. Implementation of the economic reform program was solid, including through
support of the Bank, especially considering the impact of the global economic slowdown,
the 2008 global price shocks, and severe flooding in the country that destroyed key
bridges on major transit arteries\. Consistent with macroeconomic stability under the
PRGF program, the Togolese authorities have increased investment expenditures to
respond to the impact of the global slowdown and shocks\. Table 1 gives selected
macroeconomic indicators for the period 2006-2010\.
Table 1: TOGO: Selected Macroeconomic Indicators
2006 2007 2008 2009 2010
Real GDP growth (%) 3\.9 1\.9 2\.2 3\.1 3\.3
Inflation CPI 2\.2 1\.0 8\.7 2\.0 2\.0
(%, yearly average)
Domestic primary - 1\.1 0\.2 0\.4 - 0\.4 -1\.4
balance excl\. grants
(in % of GDP)
Overall fiscal balance -3\.8 -1\.9 -0\.9 -2\.8 -4\.0
(payment order basis)
in % of GDP
External current -6\.6 -3\.9 -6\.4 -7\.0 -7\.2
account balance
(% of GDP)
Gross int'l reserves 3\.1 3\.0 3\.9 4\.4 4\.2
(months of imports)
Due to circumstances largely beyond the Government's control, the results obtained
under the implementation of the I-PRSP did not meet expectations\. The negative impact
of high oil and food prices compounded by the continuing financial and human costs of
2008's severe flooding was exacerbated by the effects of the growing global recession in
6
2009\. Togo's economy was negatively affected because of its high fuel imports due to its
role as a regional land and sea transport hub and to the high energy consumption required
for processing phosphates\. Foreign investment weakened further, with new Free Zone
projects deferred\. Remittances also fell\.
A return to stronger growth will be slow, with real GDP growth expected to reach 3\.3
percent in 2010 in part due to the lag in available bank credit as bank re-structuring
continues\. GDP growth per capita became positive in 2009 (0\.5 percent) and is expected
to increase modestly in 2010 (0\.7 percent)\. Falling food and energy prices led to lower
inflation, 2\.0 percent in 2009 compared to 8\.7 percent in 2008\. Inflation is expected to
remain stable in 2010 at around 2 percent\. However, the current account balance
remained high, at 7 percent, as exports continue to lag pending the implementation of
improvement in management and productivity in the state enterprises\. Cement and
clinker sectors have proved resilient\. Imports have remained high and are projected to
rise further in 2010 due principally to fiscal measures (revision of the price structure of
petroleum products)\. Fiscal performance in 2009 was sound, with the domestic primary
fiscal balance for 2009 estimated at -0\.4 percent of GDP, versus 0\.4 percent in the 2008\.
For both pro-cyclical and post crisis reasons, the Togolese authorities enhanced pro-
growth fiscal measures in the second half of 2009 and 2010\. A supplemental budget for
2009 was passed in June 2009, with the increased spending financed by over performance
on revenues, particularly tax revenues since the expected fees from renewal of
telecommunications licenses materialized only in January 2010, resulting in a modest
increase in the fiscal deficit for 2009 compared with the program target\. The 2010 budget
continues to support economic activity with increased public investment spending
(targeted especially on rural infrastructure), which is warranted in light of the somber
economic environment in Togo and lingering effects of the global crisis\.
External debt: Since the clearance of arrears to IDA and the AfDB, Government has
regularly met its debt service obligations to major multilateral creditors\. After reaching
the HIPC Decision Point in late 2008, Government was able to benefit from interim debt
relief under the HIPC Initiative's "fiscal window" pending attainment of the completion
point, leading to additional debt relief under the MDRI\. Togo is making progress in
implementing the HIPC triggers for the completion point, which could be reached toward
the end of 2010\.
Domestic arrears: To restore private sector confidence, a strategy for clearing domestic
arrears was adopted and a National Debt Clearance Commission established to supervise
its implementation\. The first phase (2008-2009) of clearance regarding claims up to
FCFA 100 million, about US$200,000 helped many small businesses survive the
approaching world recession\.
Progress on policy reform areas
ERGG-2 Board approval was subject to implementation of prior actions, presented in
Table 2\. Upon approval and effectiveness of the ERGG-2, the grant was fully disbursed
7
on July 2, 2009\. Since then, good progress has been achieved on public financial reforms
and in the key sector reform areas supported by the ERGG-2\.
8
Table 2: ERGG-2 Prior Actions, Rationale and Implementation Status at time of
ICR
Action Rationale Status at ERGG-2 approval and
at ICR
I\. Improving Public Financial Management
Public expenditure management
1\. The Recipient has published, in An important measure with Completed prior to ERGG-2
the Recipient's Government regard to greater transparency in approval\. The budget execution
Website for reforms, the 2008 public finance and a return to the report for 2008 was publicized\.
budget execution report, and normal budget cycle\. The draft 2009 budget was
submitted to the National Recommendation of the submitted to the Assembly in
Assembly the draft version of the PEMFAR October 2008 along with a note
2009 budget law before the end of that explains the link to the I-
the 2008 Fiscal Year and in line PRSP\.
with the I-PRSP priorities\.
2\. The Recipient has completed Compliance with UEMOA and Completed prior to ERGG-2
the process of re-organization and WAEMU legislation to which approval\. The three entities were
strengthening of the Recipient's Togo is party\. created and the respective
Treasury, in line with the directors were nominated on
WAEMU Directive No December 17, 2008\.
06/97/CM/UEMOA on General
Regulations on Public
The new units will enhance the
Accounting, including creation of
capacity and efficiency of these
a General Payments Office
key fiscal functions\.
(Paierie Générale), a General
Revenue Office (Recette
Générale) and a Treasury Central
Accounting Agency within the
Treasury\.
3\. The Recipient has created and Financial inspection is an Completed prior to ERGG-2
staffed an internal audit and important safeguard of public approval\. The IGF was created
inspection unit (Inspection monies and especially important on July 29, 2008 and key
Générale des Finances) under the for verifying receipt of funds by inspectors were nominated, have
Minister of Economy and targeted beneficiaries under received training by AFRITAC,
Finance, and nominated the poverty reduction measures and and have begun work\. The
Inspector General (Inspecteur as funds are allocated to the Inspector General was nominated
Général des Finances)\. delivery site level primary on August 29, 2008 and assumed
schools (school grant schemes) his responsibilities soon
and to primary health centers thereafter\.
funds for medicine, supplies and
operating costs\. PEMFAR
recommendation\.
Public Procurement
The Recipient has transmitted to Procurement was rated "high Completed prior to ERGG-2
the National Assembly the draft risk" by PEMFAR\. The new law approval\. The draft procurement
procurement law consistent with and its dissemination are a first law was adopted by the Cabinet
the WAEMU Directives No step toward building on January 2 1, 2009 and
04/2005/CM/UEMOA on procurement capacity eroded transmitted to the National
Procurement and Payment by the loss of human resources Assembly on February 4, 2009\.
Procedures under Public due to retirement over the period
Contracts and Concessions within of instability and the general lack
WAEMU, and No of experience in procuring other
9
05/2005/CM/UEMOA on Control than small volumes of goods and
and Regulatory Functions under services
Public Contracts and Concessions
within WAEMU\.
II\. Strengthening Governance and Efficiency in Key Sectors Cotton, Phosphates, Energy and Financial
Phosphate Sector: The Recipient An important measure for Completed prior to ERGG-2
has published the results of a promoting transparency and approval\. The final report was
reconciliation exercise between restoring public confidence in published on the government's
the Fiscal Year 2007 revenues this major export earner's website (www\.togoreforme\.tg)
generated from phosphate sales contributions to government and circulated to the press on
and revenues (royalties, corporate revenues\. A prerequisite for February 12, 2009 inclusive of
taxes and other taxes) received by initiating EITI membership and notification of posting on the
the Recipient's Treasury in Fiscal essential information for any website\.
Year 2007\. potential international investors\.
Cotton Sector: The Recipient has These measures send a strong Completed prior to ERGG-2
taken appropriate measures to message as to the consequences approval\. The Ministry of
recover amounts overbilled by of corrupt practices\. It is also an Finance forwarded the findings of
some suppliers to SOTOCO, as important step with regard to the Task Force on February 4,
confirmed by the Billing building the confidence of the 2008 to the Justice Ministry
Verification Task Force (Mission growers' association in the new requesting it take legal action
de Vérification)\. cotton company and public trust toward recovering the confirmed
in sector reform\. overbilled amounts\.
ii\. The Recipient has adopted a Essential to ensuring the trust of Completed prior to ERGG-2
new cotton producer price growers in the new company in approval\. The Proposed new
mechanism to cotton producers, which they own a 40 percent pricing mechanism was adopted
reflecting changes in international share\. A decision discussed, at a stakeholder workshop on
prices\. negotiated and agreed between January 28, 2009\. The procès
government (the majority verbal (minutes) of the workshop
shareholder) and the growers\. A was signed by representatives of
strong incentive for farmers who the cotton producers association,
had abandoned cotton, given the SOTOCO and the Government
failings of the old company, to
return to production\.
Financial Sector: The Recipient An essential first step in re- Completed prior to ERGG-2
has raised the net worth of the structuring, once the alternatives approval\. The government signed
three banks under restructuring of liquidation and "corralling" protocols with the three banks for
(BTCI, BIA Togo and UTB) to bad debt were deemed infeasible\. exchanging the NPLs with
the WAMU prudential ratio Restored bank liquidity and government bonds, and the bonds
(Cooke ratio of 8 percent) by prepared the way for renewed were transferred to the banks in
exchanging the banks' non- lending\. Helped re-build public December 2008\. The BCEAO
performing loans with trust in the sector\. authorized the tradability of the
government-issued bonds\. bonds\.
Energy Sector: The Recipient has The performance contract is an Completed prior to ERGG
entered into a 5 year performance important tool for re-focusing approval\. The contract, for 5
contract with CEET, designed to management on specific years (2009-2013), was signed on
improve CEET's management's objectives and linked program February 3, 2009, with a signed
efficiency, and strengthen its long budgets incorporating measures addendum on February 27, 2009\.
term financial sustainability\. to smooth out the impact of
exogenous shocks (drought and
volatile fuel prices), with
advance contracting for delivery
of power and fuel at agreed fixed
prices and by systematically
scheduling maintenance and the
timely provision of equipment
and parts, with positive impacts
10
on service delivery\.
Public expenditure management:
Public expenditure management has continued to improve in the period 2009-2010\.
Better financial controls were implemented, including: a monthly tableau de bord
(monitoring dash board) to track budget execution; a new functional budget classification
system was introduced with the 2009 budget, making it possible to track poverty
expenditures; and elimination of expenditures without prior authorization and
establishment of a line item budget for exceptional, emergency expenditures\. Now that
the procurement law has been adopted, the authorities are proceeding with creating and
strengthening the procurement institutional framework\. Finally, the Cour des Comptes
(Public Auditor) is being strengthened in terms of human resources and material means\.
Although the initial results of these reforms are encouraging, much remains to be done, as
recognized by the November 2009 JSAN on the PRSP\. Outstanding tasks include
improvements in the monitoring and predictability of budget execution, fiscal
consolidation, gradual introduction of Medium-Term Expenditure Frameworks (MTEFs)
together with program budgets, further improvement of internal and external controls,
continued capacity building in the new treasury units, a cash management system aimed
at paying invoices on time to avoid any new accumulation of domestic arrears, and
implementation of Phase II of the domestic arrears clearance strategy to address claims
above the initial US$200,000 mark\. A number of these have been completed as prior
actions for ERGG-3, approved by the Board on May 20, 2010\.
Procurement: Government moved expeditiously to implement measures designed to
bring Togo in line with international standards as recommended by the 2009 PEMFAR\.
Measures include: (i) establishment of creation of the National Committee for
Coordination and Monitoring of Procurement Reforms (CNCS), with representatives
from the private and the public sectors and civil society; (ii) adoption of the procurement
law (June 2009) and associated procurement code (November 2009); and (iii) drafting a
manual of procedures\. Government is using the manual to train staff in the relevant
ministerial departments, beginning with the key PRSP ministries\. Following its initiation
under the ERGG, summaries of procurement contracts have continued to be published in
the Chamber of Commerce's gazette and on the Ministry of Economy and Finance
website\.
Phosphates:
The importance of the prior action is best measured against the widespread belief among
citizens that revenues owed to government by the Société Nationale de Phosphates de
Togo (SNPT), are not fully accounted for and were perhaps being "siphoned off" to the
benefit of others rather than to the public good\. The prior action has built public
confidence, setting the stage for further governance reform since it is one of the criteria
for membership in the Extractive Industries Transparency Initiative (EITI)\.
11
Follow-up actions envisaged in the ERGG-2 with regard to EITI membership included:
first, making the publication of annual revenue reconciliations a routine annual exercise;
second, getting the institutional and regulatory framework required for initial, candidate
membership in place and adopted into law; and third, establishing implementation
arrangements, including creation of a national oversight commission with representation
of the industry, the government and civil society and appointment of a national
coordinator and the drawing up of an action plan and budget\.
Progress is being made in formulating a clear strategic vision for the sector\. In November
2009 a LICUS trust fund financed strategic audit was discussed with key donors and
stakeholders and a strategy was subsequently prepared and approved in March 2010\.
Implementing the strategy will depend in large measure on the Government's willingness
to attract a strong international investment partner\. Interest by potential investors will
likely be influenced significantly by SNPT's progress toward better management of
finances and operations, with greater transparency and accountability\. Short term needs
for technical assistance include: (i) establishing selection criteria for the selection of an
international partner; (ii) working up a model draft investment and production agreement;
(iii) reviewing and updating the mining code to reflect WAEMU and ECOWAS
dispositions and to protect national interest; and (iv) developing a short list of potential
partners and seeking expressions of interest\. Parallel measures to improve management
and governance include: development of operational manuals including personnel,
ensuring that purchasing respects international practice in procurement, implementing
better financial and inventory controls through an integrated management information
system\.
Cotton:
The policy reform program supported by the ERGG and ERGG-2 commenced the
process toward improved governance of the cotton sector and ultimately to increasing
public revenues while reducing poverty\. Following deliberations on what to do with the
bankrupt cotton ginning company, SOTOCO, the authorities decided to liquidate the
company and create a new one free of debt and with strengthened operational and
managerial features\. Thus, a new joint stock company la Nouvelle Société Cotonnière du
Togo NSCT (owned 60 percent by government; 40 percent by the growers'
associations) was created in 2009\. The new price mechanism was the result of
negotiations with the national federation of cotton growers (Fédération Nationale de
Groupements de Producteurs de Coton - FNGPC), continuing the process of stakeholder
consultation initiated prior to the ERGG\. However, the mechanism was not applied for
the 2009-10 season because of inadequate time to explain it to producers\. Fortunately, the
price adopted proved to be consistent with the pricing mechanism as the world price
improved\. The 2010-11 campaign will prove a practical test of the workability of the
mechanism\.
Procurement delays slowed implementation of the cotton company's management
information system (MIS) while government hesitation (given pending elections) about
right-sizing the company has worked to keep personnel costs high\. The MIS is urgently
needed, if past errors in financial management (e\.g\., invalid billing of inputs) are to be
avoided\. While management has been renewed, it still has to prove itself\. A status report
12
in December 2009 found that recently hired management staff lacked sector experience
and that the company's organizational chart seemed top-heavy in terms of senior posts\.
The report also asked how well the board of directors would function, in particular with
regard to the representation of the producers (40 percent of company shares), as capacity
building measures may be required for the growers' representatives to play their full role\.
The regulatory framework laying down the respective roles, obligations and
responsibilities of the two share holder groups and clarifying the conditions for an
eventual private partner had not yet been developed in 2009\. This was identified in the
ERGG-2 program as a follow up action, and has been retained as a prior action for the
ERGG-3\. Finally, it is important to ensure follow up by the Justice Ministry with regard
to the over-billing referred to the ministry, but on which there is no evidence of action to
date\.
Finance:
Government recognized that economic development depends on a healthy financial sector
and that restructuring would lead to more efficient resource allocation toward both
poverty reduction and economic growth\. Both the PRSP and the Bank's Interim Strategy
Note (ISN) underline the importance of seizing the window of opportunity presented by
the new climate for economic reform and the comparative advantage of the Bank in
providing advice and financial support\.
Under the ERGG-2, the Government committed to a complete financial and internal
restructuring of the state-owned banks\. Through the sale of government bonds, the
gearing ratios of three banks (BTCI, BIA and UTB) were to be brought in line with
WAMU's prudential norm of 8 percent by using government bonds to collateralize their
non-performing loans (NPLs)\. The securitization enabled the prudential ratio target to be
met for all three banks, but one bank subsequently fell below the 8 percent norm once
again\. NPLs (related to cotton and phosphates) at a private bank (BTD) were also
securitized\. Government bonds in the order FCFA 88\.1 billion were issued, bearing a
market rate of 6 percent so they could be resold per central bank guidelines\. The central
bank also agreed that the government bonds could be used to securitize loans at
commercial banks, broadening the "rescue" to the entire sector\. Consideration was given
to the alternative of outright closure of the banks and consolidation of the bad loans in a
single bank to facilitate the process of gradual retirement of NPLs\. However, given the
weak health of the sector, low public confidence and growing fears, the option chosen
was a progressively staged, absorbable restructuring\.
In order to channel technical expertise and financial resources into the re-structuring
effort and support the sector reform objectives highlighted in the ERGG-2, a Financial
Sector and Governance Project (FSGP) was prepared (and approved by the Board in
March 2009) whose objectives are: (i) to complete the financial and institutional
restructuring of BIA, BTCI and UTB; (ii) to improve the internal and external
supervision of microfinance institutions; (iii) to design and implement the strategy for
reducing pension deficits at the two social security institutions--the Caisse de la Retraite
13
Togolaise `(CRT) and the Caisse Nationale de Sécurité Sociale (CNSS); and (iv) to
enhance the government's capacity to manage overall sector reform\.
The ERGG-2 identified private participation in BTCI, BIA, UTB and BTD as an
important follow on action for the sector, and activities toward this end are underway\.
The reform is on track\. The privatization advisers for the 4 public banks (BTCI, UTB,
BIA and BTD) started working on November 15, 2009, and an Information Notice was
advertized on December 30, 2009, announcing the Government's intention to disengage
from 4 public banks\. The privatization advisers have been progressing with their required
due diligences\. An update of the legal framework for privatization is planned\. Due to the
Presidential elections in March 2010, some delay has been experienced in early 2010
regarding the implementation of key actions by the Government\. It is expected that
decisions will be taken quickly upon installation of the new Government, enabling the
privatization process to move forward\.
Energy: The ERGG-2 advanced corporate reform (initiated under ERGG) at CEET by
introducing performance contracting as a prior action, covering the period 2009-2013\.
Key objectives of the contract were the reduction of load losses and the improvement of
managerial and technical efficiency\. As the performance contract was only signed in
February 2009, there has not yet been much time to show progress, but technical losses
did fall by 0\.2% between 2008 and 2009\. A program to improve technical efficiency is
being supported under the Emergency Infrastructure and Energy Grant (2009), including
actions to: (i) reduce peak load by promoting the use of compact fluorescent lamps; (ii)
improve the quality of service in selected areas of Lomé; (iii) increase hours of service by
reducing load shedding and cuts due to lack of maintenance and equipment failure; and
(iv) build CEET's technical capacity by training staff in network operations and
maintenance\. The commissioning of an energy sector review financed by the LICUS
grant for Economic Recovery and International Re-engagement will lay the foundation
for the preparation of a strategy for the electricity sector\.
2\.2 Major Factors Affecting Implementation:
Factors outside the control of the Government\.
Climate and international market shocks: A worsening world economy, external price
shocks, and the effects of serious flood damage on infrastructure and cotton production
had a negative impact on economic growth during ERGG-2 implementation\. While
reforms went forward, senior officials were necessarily preoccupied by the continuing
emergency conditions while budget constraints limited the potential for fiscal stimulus\. In
the phosphate sector, international market conditions were favorable due to a temporary
sharp increase in phosphate price, beyond US$150 a ton (as compared with average
prices of between US$40-50 a ton over the last decade)\. The windfall cash flow brought
temporary financial relief to the phosphate company SNPT\. By late 2009 however, prices
had begun to fall\. Should this trend continue, the SNPT will not be competitive in the
absence of an overhaul of management and new investment in equipment\.
14
Soundness of the background analysis\. The work for the PEMFAR was invaluable in
identifying anomalies in public expenditures and bottlenecks in systems and procedures,
while identifying capacity needs\. With regard to the cotton sector, the Bank benefitted
from a set of multi-year comparative country studies which helped assess Togo's
performance in the light of its competitors\. The 2008 Development Policy Needs Review
identified critical issues in the cotton, phosphates, energy and banking sectors\.
Preparatory analysis for an Emergency infrastructure Rehabilitation and Energy Project
(2009) was also useful\. The 2006 Financial Sector Review highlighted the difficult
situation of the banking sector, identifying the prime candidates for restructuring and
recapitalization, with measures to improve internal controls and develop management
information, reduce operating costs, and to strengthen lending procedures\. Further
technical assistance was provided in the context of preparing the Financial Sector and
Governance Project\.
Procurement process delays\. Multiple delays experienced in the provision of technical
assistance for implementing the program were due to weak responsiveness of the market\.
In the first instance, recruitment of a procurement specialist for the LICUS trust fund
implementation unit was initially unsuccessful as no suitable candidates applied\. In the
second attempt, the best candidate eventually declined the employment offer after
considerable delay (5 months); and by that time the second candidate accepted the offer,
again with some delay, 18 months had elapsed\. At the request of the Government, the
Bank authorized the implementation unit to proceed with occasional help from the
procurement specialist working for another Bank project, which facilitated the launch of
the two most urgent studies (on phosphates and the public procurement code)\. These also
proved difficult to initiate: the first call for bids for the phosphates strategic audit elicited
no proposals, a second call generated only two offers, and a third had to be based on a
longer list of potential consulting firms constructed with the help of the Bank\. A contract
was finally signed for the phosphate study one year after implementation of the trust fund
commenced\. These problems absorbed much of the available capacity in the project unit
and delayed action on other project components, notably the cotton MIS study, for which
there was a huge financial discrepancy between the two bids judged acceptable from a
technical standpoint, causing the authorities to hesitate in awarding the contract to the
winning bid before confirming that the company was indeed capable of completing the
work\.
Factors generally subject to government control\.
Adequacy of government commitment: The Government's strong commitment to
maintain macroeconomic stability and advance structural reforms in key economic
sectors were positive factors and remained constant during the ERGG-2 implementation
period\. Growing public confidence subsequent to the Comprehensive Political Agreement
(Accord Politique Global), and the clearing of the country's arrears leading to the
renewed financial support of donors further strengthened the commitment of the
Government\. The reforms supported by this operation were part of the Government's
reform agenda first detailed in the Interim Poverty Reduction Strategy adopted in March
2008 and in the full Poverty Reduction Strategy of May 2009, resulting in strong
15
ownership of the reforms\. The participatory PRS consultation process, embracing all
stakeholders civil society, beneficiary groups such as women and youth, the private
sector and the administration helped ensure public support for reform\. This emphasis on
consultation and participation continued in the preparation of the ERGG-2, for example
in the Government's conversation with cotton growers in the context of their new
financial participation in the national cotton company\.
Assessment of the operation's design\.
Realism/degree of complexity: The operation comprised governance issues in the public
sector and in selected publicly-owned entities in key sectors of the economy\. In this
regard, the operation was thematically focused and limited the coverage of institutional
counterparts to a handful of actors\. Strong leadership of the Ministry of Finance in its role
of supervision and coordination of the reforms simplified the design of the program\. To
address weak capacity of public and parastatal agencies, the program incorporated
technical assistance in all sectors in coordination with other donor agencies\. The
resources provided by the LICUS trust fund facilitated preparation of key sector studies
and audits while the donors financed technical assistance to key government departments
(for example, African Development Bank funded the development and implementation of
the Système intégré de gestion des finances publiques (SIGFIP) in the Ministry of
Economy and Finance, and the IMF provided technical assistance to budget formulation,
execution and control functions)\.
Relevance of the risks identified\.
Risks were well identified and measures to mitigate them were appropriate (Table 3)\. The
Government also proved responsive in addressing unexpected exogenous shocks which
limited access to food and damaged infrastructure by introducing food subsidies and
other social protection measures\. This included increased spending during 2009 under a
supplemental budget adopted in June 2009, financed in part with over performance on tax
revenues, and higher investment spending under the 2010 budget\.
16
Table 3: ERGG-2: Anticipated Risks and Mitigating Factors
Risk Risk Mitigation
Political risk\. Efforts to improve governance of the i\. Frequent broad-based consultations with
public sector, public enterprises and banks could be stakeholders would help strengthen the case for the
slowed in the wake of possible political tensions in reforms and demonstrate Government's
Togo's still fragile socio-political environment\. commitment to the reforms\.
iv\. The process toward completing a full PRSP
would help foster a national consensus on the
medium term reform agenda\.
ii\. Measures underway to ensure greater
accountability and transparency in the phosphates,
energy, cotton and financial sectors would reduce
resistance to reform by vested interests\.
iii\. IDA's close coordination with the IMF, AfDB
and bilateral donors as well as intensified sector
dialogue, would help ensure that reform remained
central to the Government's agenda\.
Macroeconomic risks included vulnerability to i\. The Community Development Project (CDP)
exogenous shocks, notably terms of trade and would help mitigate impact of the food crisis, as
climate shocks, and a prolonged global slowdown would additional financing under the Global Food
caused by the financial crisis\. The continued Crisis Response Program to complement the CDP\.
fragility of the banking sector could also undermine
macroeconomic stability while continuing weakness ii\. Togo's main creditors had agreed to provide
of the key public enterprises could slow growth interim debt relief and to increase technical
further\. assistance as well as resource flows to Togo in line
with the fiscal framework of the PRGF\.
iii\. Continued IDA budget support through annual
development policy operations in support of
ongoing reforms; and implementation of the
Financial Sector and Governance Project would
provide ongoing technical assistance to
implementation of the sector reforms\.
iv\. The Paris Club agreement on a debt payment
moratorium (April 1, 2008 to March 31, 2011)
subject to continued satisfactory implementation of
the PRGF\.
v\. IDA assistance to strengthen debt management
through implementation of IDA's assessment,
together with that of other donors\.
17
Fiduciary risk arising from the failure of the i\. Improving fiduciary standards was a key objective
Government to avoid corruption or to make of the ERGG-2, with measures to improve public
effective and efficient use of the increased fiscal financial management, in particular through the
space made available by budget and debt relief adoption of a new procurement law consistent with
international norms and standards\.
ii\. Creation of a General Procurement Department
responsible for disseminating the new law and
fostering its application in key ministries (public
works, health and education) and in the state
enterprises would help limit this risk\.
iii\. Technical assistance aimed at implementing the
PEMFAR recommendations by IDA, the IMF and
other donors was expected to further improve
fiduciary standards\.
iv\. With regard to IDA budget support, proceeds
would be deposited in a dedicated account subject to
audit at IDA's request and in accord with terms of
reference acceptable to IDA
Implementation capacity risk\. The long period of (i) Technical assistance through IDA projects and
internal instability had disrupted government TF grants targeting ERGG-2 reform priorities has
operations including staff development, and donors helped mitigate this risk\. An ongoing LICUS grant
had withdrawn support, with many qualified staff for Economic Recovery and International
leaving government, which all worked to weaken Reengagement (FY 08) has provided support to
capacity\. reforms in public procurement and in the cotton,
coffee, cocoa, energy and port sectors\.
(ii) Analytical work was underway to identify
capacity building needs that could be supported in
the medium term by a future CAS\. Other donors
(AfDB, EC and France) also supported capacity
building efforts in various sectors\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:
M&E design\. The Ministry of Economy and Finance was entrusted with overall
responsibility for the monitoring and evaluation, with specific responsibility for M&E
vested in the Permanent Secretary, the Economy Director, the Budget Director, the
Treasury Director, and the Financial Controls Director, all members of the existing
Comité de Suivi des Programmes et Réformes, charged with monitoring the PRSP and
overall reform program\. This arrangement had the advantage of continuity and was well-
placed to conduct dialogue with both stakeholders and development partners\. The
committee was in turn advised by technical departments in Economy and Finance, the
Secretary of the CNCS with regard to procurement and the key line ministries,
Agriculture and Mines & Energy, with consultation of other ministries as required\. The
18
Ministry of Economy and Finance was supposed to provide quarterly progress reports,
including information on agreed performance indicators\.
M&E implementation and utilization\. Implementation went fairly smoothly\. All these
entities were closely involved in the preparation of the ERGG-2\. Regular Bank missions
reviewed progress with Government to ensure continued implementation of the program
within a sound macroeconomic policy framework\. Periodic Bank missions from the
relevant technical units of the Africa Region maintained a close dialogue with the reform
committee and the technical advisory departments\. Instead of formal quarterly reports,
the Togolese authorities provided periodic documentation to the Bank showing
implementation progress against the established timetables and highlighting any issues
requiring more attention\.
2\.4 Expected Next Phase/Follow-up Operation (if any):
ERGG-2 identified further actions to provide the underpinning of a subsequent DPO\. All
except one of these actions were retained as ERGG-3 prior actions, albeit with re-
phrasing for simplification and re-formulation to reflect identified implementation
constraints (Table 4)\. The call for bids for the three major banks was dropped since it is a
condition under the IMF program\. The implementation of the ERGG-3 prior actions is
complete, underlining Government's commitment as well as the strong linkage of
conditionality between successive ERGG operations\. This enabled approval of the
ERGG-3 in May 2010\.
19
Table 4: ERGG-2 Further Actions and ERGG-3 Prior Actions
ERGG-2 Further ERGG-3 Prior Actions Comments Implementation Status of
Actions Proposed ERGG-3 Prior
Actions
I\. IMPROVING PUBLIC FINANCIAL MANAGEMENT
Budget Formulation
1\. Publicize the quarterly Publish the 2009 quarterly No change\. Implemented\. The budget
2009 budget execution budget execution reports; execution reports for 2009 have
reports; and (ii) Submit a and submit to the been publicized\. The draft 2010
draft 2010 budget to the Parliament the draft 2010 budget was submitted to the
Parliament with a medium budget with a medium Assembly in November 2009
term expenditure term expenditure and approved on December 18,
framework (MTEF) for framework (MTEF) for together with the two sector
two priority ministries two priority ministries MTEFs (Health and Education)
(Education and Health)\. (Education and Health)
Budget Execution
2\. Make available 75 Make available at least 80 Rephrased\. No Implemented\. 80 percent of the
percent of the credit line percent of the allocations material change\. allocations for poverty reduction
for poverty reduction for poverty reduction activities were available by end
activities, upon activities, upon February and the remaining 20
authorization of authorization of percent were available by end
expenditures for the expenditures for the October\.
priority ministries of priority ministries by end
education, health, February, and the final 20
agriculture, water supply, percent by end October\.
infrastructure and public
works, 90 percent by mid-
year, and the final 10 No material change\.
percent by end year
subject to verification that Implemented The accounting
the budget is fully Install and make module is operational in the
financed\. operational the SIGFIP Treasury since January 2010\.
information system in the
3\. Extend implementation Treasury department\.
of the accounting phase of
the SIGFIP information
system to the Treasury
Department\.
Budget Controls
4\. Adopt and implement a Prepare and implement a No material change\. Implemented\. The procedures
procedures manual for the procedures manual for the The manual does not manual for the General Finance
General Finance General Finance require legal adoption\. Inspectorate was finalized in
Inspectorate; Inspectorate\. March 2009 and has been
implemented since then\.
Reformulated\. More
Adopt and implement a Establish and make time is required to Implemented\. The Court of
procedures manual for the operational the Court of prepare the manual\. Accounts is operational\. The
Court of Accounts\. Accounts as evidenced by implementation decree of the
(a) the issuance of the Organic Law that creates the
implementation decree of Court of Accounts was issued on
the Organic Law that April 2009 and the law that
creates the Court of defines the status of the Court of
20
ERGG-2 Further ERGG-3 Prior Actions Comments Implementation Status of
Actions Proposed ERGG-3 Prior
Actions
Accounts; (b) the Accounts was adopted in June
adoption of the law that 2009\. An adequate budget has
defines the statute of the been allocated\.
Court of Accounts; (c) the
provision of adequate
budget\.
Public Procurement
5\. (i) Establish a General Establish and make Change necessary to Implemented\. Decrees
Procurement Department operational the General highlight priority for establishing the General
and make it operational as Procurement Department; ex-ante controls rather Procurement Department have
evidenced by appointment and create commissions to than ex-post audits\. been issued\. Budget has been
of key staff and provision conduct ex-ante allocated and staff has been
of adequate budget; and procurement control identified\. The ex-ante
(ii) establish, staff and (Service de contrôle des procurement control
provide adequate budget marchés publics - SCMP) commissions have been created
for ex-post procurement in at least five priority in 5 ministries and the Lomé
audit departments ministries and the Lomé Municipal Office\.
(Service de contrôle des Municipal Office\.
marches publics - SCMP)
in at least five (5) priority
ministries and the Lomé
Municipal Office\.
II\. STRENGTHENING GOVERNANCE AND EFFICIENCY IN KEY SECTORS COTTON, PHOSPHATES AND ENERGY
Cotton Sector
6\. Establish a reliable Prepare an assessment Reformulated due to Implemented\. The report was
management information report on NSCT's delays in recruitment finalized in February 2010\.
and cost accounting management information of a consultant to
system in the new cotton and cost accounting design the system\.
company\. system that proposes the The assessment report
design for the new advances the work by
accounting system further developing Implemented\. The framework is
7\. Adopt a regulatory software\. system specifications\. finalized\. A workshop held
framework for the cotton January 26, 2010 validated the
sector that specifies the Main stakeholders adopt Reformulated for framework, which was
roles, responsibilities and the regulatory framework clarity and to reflect subsequently signed by the
obligations of sector document for the cotton lack of developments stakeholders\.
stakeholders in a new sector that specifies the in the privatization
environment potentially roles, responsibilities and process\.
comprising private obligations of sector
ginning companies\. stakeholders and the
mechanisms to make
effective the
representation of the
producers at the Board of
the NSCT\.
Phosphate Sector
21
ERGG-2 Further ERGG-3 Prior Actions Comments Implementation Status of
Actions Proposed ERGG-3 Prior
Actions
8\. Establish the Adopt the legal and Rephrased for Implemented\. A workshop was
institutional and legal institutional framework simplicity\. Action (c) held December 14, 2009 to
framework for actual EITI with the objective of requires more time for review the next steps for EITI
implementation with the becoming an EITI implementation\. candidature\. The required
view to seek Candidate candidate as evidenced by decrees have been approved\.
Status, as evidenced by the issuance of (a) a
(a) the creation of one or decree creating one or
more committees at the more committees for
national level having a including participants
balanced representation of from the civil society,
sector stakeholders government and
(Extractive Industry, extractive industry; (b) a
Government and Civil decree nominating a
Society) and (b) the national coordinator\.
designation of a national Implemented\. The report has
implementation been published on the
coordinator; and (c) adopt government's website
and publicize a detailed (www\.togoreforme\.tg)\.
action plan and budget for
EITI activities\. No change
9\. Publish the results of a
reconciliation of the 2008
revenues generated from
phosphate sales, with
revenues received by the
public Treasury\.
Financial Sector
10\. Launch the call for Dropped since the The financial sector reform is
bids for Government conditionality is supported by the Bank financed
shares in the four (4) already present in the Financial Sector and Governance
state-owned banks (BTCI, IMF program\. TA Project\.
BIA, UTB and BTD)\.
Energy Sector
11\. Adopt an automated Prepare a time-bound plan Changed\. More Implemented\. An arrears
tariff mechanism for the clearance of the analysis of a tariff clearance plan was prepared and
consistent with an energy public and para-public mechanism is required validated by the main
sector strategy to be arrears to CEET and due to the newly stakeholders\. All public sector
developed as part of the identification of measures signed power arrears have been cleared
sector strategic review\. to prevent accumulation purchasing agreement through securitization and
of arrears in the future,(ii) between CEET and an measures are in place to avoid
clear State arrears and independent power new arrears\.
obligations to CEET producer\. This
(either through payment agreement creates a
or securitization)\. new economic and
institutional
environment for CEET
operations\.
3\. Assessment of Outcomes
22
3\.1 Relevance of Objectives, Design and Implementation
ERGG-2 objectives, design and implementation were fully consistent with country
priorities as reflected in the interim PRSP and the ISN, specifically continued
implementation of measures to establish sound public finance management and
procurement and improved performance of the sectors essential to economic growth, with
measures to promote governance and restore public confidence\. The ERGG-2 has
enjoyed strong support from the development partners and is fully consistent with the
goals, actions and timetables of the PRGF\. The operation was backstopped by technical
assistance from bi-lateral and international donors and from the LICUS trust fund\.
Design of the ERGG-2 was based on the analytical findings of recent sector and project
preparation work, as well as by Bank operations in other WAEMU countries\. Its
objectives and design in terms of financial management, procurement and governance
were informed by the studies and surveys conducted preparatory to the 2009 PEMFAR
report\. In terms of the sector reforms, the financial sector was underpinned by the 2006
Financial Sector Review (its findings remained both relevant and contemporary) and by
analytical work already underway in the context of the preparation of the PRSP\. ERGG
prior actions (audits and reconciliation of revenues and expenditures) laid out a road map
for both the cotton and phosphates sectors which were also informed by recent Bank
experience in the sub-region, for example, by the performance of cotton companies in
Burkina Faso, Cameroon and Mali a thematic focus of Bank analytical work in recent
years and by the experience in implementation of the EITI (Ghana, Mauritania and
Niger)\. Finally, the prior and further actions in the energy sector drew upon the sector
and preparation work for the Emergency Infrastructure Rehabilitation and Energy
Project\. Team members with ongoing experience in the sector were part of the task team\.
Alignment with Good Practice Principles on Conditionality: The ERGG was aligned with
the Bank's five Good Practice Principles on Conditionality\.
(i) Reinforce Ownership: The ERGG-2 was fully aligned with the government's reform
program: improving public expenditure management and strengthening transparency
governance and in the key economic and financial sectors essential to growth
(phosphates, cotton, energy and finance)\. The ambitious breadth of the program was
justified by the strong commitment of Government to reform and the high quality of its
dialogue with the key development partners, the AfDB, the Bank and the IMF\. At the
center of this dialogue was the Ministry of Economy and Finance, the champion of
reform since the re-engagement process began\. The ministry team exercises strong
coordination with other key actors, notably the ministries of Agriculture and Mines &
Energy which provide technical advice in the cotton, energy and phosphates sectors\.
(ii) Agree up front with the Government and other financial partners on a coordinated
accountability framework: The program is the result of an intensive policy dialogue
conducted during 2007-08 and completed in early 2009\. That dialogue had the close
involvement and support of the development partners although there was no common
policy framework\. Donors participated in the PEMFAR, the Financial Sector Review, the
CPAR as well as the IMF Article IV Consultation and PRGF reviews\. The program was
closely aligned with the priorities of the PRSP\.
23
(iii) Customize the accountability framework and modalities of Bank support to country
circumstances: The policy matrix reflects country circumstances, notably the high degree
of commitment to reform, progress already achieved (ERGG) and an assessment of the
implementation and absorptive capacity for reform\.
(iv) Choose only actions critical for achieving results as conditions for disbursement:
The ten prior actions for Board presentation and disbursement were identified jointly with
the Government and in close consultation with other development partners, notably the
IMF\. Conditionality focused only on key actions which were critical for advancing the
Government's reform agenda\. The ERGG-2's conditionality was also coordinated with
and is complementary to the Government's reform program supported by the IMF PRGF\.
(v) Conduct transparent progress reviews conducive to predictable and performance-
based financial support: The Bank worked closely with the Government to help it meet
program requirements\. The reforms to be considered for the ERGG-2 were clearly
spelled out under the previous operation (ERGG) and broadly adhered to\. Similarly,
reforms to be supported by the ERGG-3 were clearly spelled out under the ERGG-2\.
Technical assistance was provided where necessary to meet some prior actions\. Where
progress on prior actions was moving too slowly due to the delays in external funding
(notably, cotton MIS measure), the prior action was deferred for consideration as a prior
action under the subsequent operation\.
3\.2 Achievement of Program Development Objectives
The ERGG-2 achieved its principal development objective of supporting and advancing
government-owned reforms to improve public financial management and restore
performance of key public enterprises and banks\. It contributed to the conditions for
increased private sector and farmer confidence through measures to improve governance
and transparency in the phosphate, cotton, financial and energy sectors\. Measures to
improve the management of selected public enterprises have set the scene for a reduced
fiscal burden in the sectors concerned\. The financial resources provided by the grant have
also increased the fiscal space for a still debt-constrained government to develop and
maintain basic social services essential for poverty reduction\. In that regard, progress
over time in the cotton sector could improve the living standards of almost half of Togo's
rural poor\.
In the area of public finance management, sustained good performance demonstrates the
Government's commitment and enhanced capability of the institutions charged with
oversight and conduct of the reform, notably the Ministry of Economy and Finance\. The
introduction of a functional budget classification with implementation of the 2009
budget, together with advances in the implementation of the SIGFIP, prepared the way
for better targeting of poverty expenditures and introduction of MTEFs for education and
health\. Better control of revenues and expenditures was achieved by organizing core
functional activities (revenue receipts, payments) in separate departmental units, and
through the creation of the Inspection general des finances to conduct regular reviews of
major spending entities and carry out on-demand investigations\. Additionally, the
24
procurement law was passed and disseminated though with a delay, and the procurement
services of key ministries and the Lomé Municipal Office received training\. These
measures have contributed to transparency and accountability in public finance
management\. These achievements enabled 3 of the 5 PFM results indicator targets to be
met and a fourth (internal audits) to almost be met\. However, no progress was made
toward meeting the fifth indicator target (ex-ante procurement audits) although this was
due to delays in the process for procuring technical assistance\.
With regard to key sector reforms, results are also favorable overall, with 3 of 5 results
indicators met and a fourth partially met (electricity efficiency gains)\. No progress was
achieved toward the fifth indicator target (regarding cotton sector MIS) though this was
due to delays in the process for procuring technical assistance\. In phosphates, public and
potential external investor confidence has been boosted by the publication of SNPT's
revenue, expenditures and transfers to the Treasury\. Good progress has been made toward
Togo's accession to EITI membership, and a development strategy for the short and
medium term has been articulated\. In the cotton sector, progress has been slower\. The
2008 audit of expenditures and revenues led to the referral of purchasing irregularities to
the Ministry of Justice, but no further action has yet been taken\. The new company began
operations, and some progress was made on the right-sizing of the work force\.
In the financial sector the state banks were re-capitalized, with the sale of government
bonds to cover the exposure of non-performing loans, bringing assets up to the WAMU
prudential norm of 8 percent\. Management was strengthened and better internal and
external controls were introduced\. There was a strengthening of management and
strategic planning in the energy sector, with a five-year performance contract between
government and the CEET setting the scene for the reduction of line losses and outages
through better and more timely maintenance and rationalization of energy purchasing to
offset climatic and price shocks\.
For the ERGG-2 program as a whole, six of the ten results targets were met, significant
progress was made on one (internal audits) and partial progress on another (electricity
losses)\. Due to procurement delays beyond the Government's control, two of the results
indicators could not be met\. These are summarized in Table 5 below\.
25
Table 5: Status of the Anticipated Results of ERGG-2
Anticipated Results Actual Outcomes
1\. Improved Public Financial Management
1\. PEFA indicator PI-10 (1-2 types of information, Two types of information were published -- the
among 6, that the government makes available to 2008 budget execution report and summaries of
the public)\. awarded public procurement contracts\. The target
was achieved\.
2\. Management of public funds is in compliance Complete separation of the three key Treasury
with regional good practice, with clear separation of functions has been achieved\. The target was
accounting, revenue and payment functions and achieved\.
coordination by the Treasury Director\.
3\. Share of planned ex-post internal audits 50 percent (4 of 8 activities) were completed as of
undertaken during the year reaches 60 percent\. December 31, 2009\. The target was partially
achieved\.
4\. Share of contracts in three key ministries, seven Zero, due to delay in adopting the procurement law
major public companies and the Lomé Municipal and continuing procurement delays beyond the
Office, that are subject to prior review by the government's control through 2009 that delayed
National Procurement Department, reaches 80 training of staff in key ministries\. The target was
percent\. not achieved, although 50 percent of contracts in the
last quarter of 2009 were subject to prior review\.
5\. Frequency of publication of procurement Published monthly on the government's web site
contracts Summaries of procurement contracts and also disseminated to the press\. The target was
published in the Chamber of Commerce and achieved\.
Industry's bi-weekly journal\.
2: Strengthened Governance and Efficiency in Key Sectors Cotton, Phosphate, Energy, Financial
Sectors
Cotton Sector
6\. Periodicity of record keeping and information Record keeping remains irregular since the new
management is established and adhered to in the accounting system is not yet in place given the
cotton company\. delay in the procurement process of the consultants\.
The target was not achieved\.
7\. Cotton producers' share of the international price The producers' price was 61 percent of the world
for cotton: 60\.5 percent if production is below price\. The target was achieved since production was
50,000 tons; 61\.5 percent if production is between around 30,000 tons\.
50,000 and 60,000 tons; and 62\.5 per cent if
production is above 60,000 tons\.
Phosphate Sector
8\. Annual publication of phosphate revenues' Annual publication since 2008\.
reconciliation\.
Financial Sector
9\. NPL (new loans) of the three state-owned Banks The NPL for UTB was 4\.6 percent, for BTCI 1\.25
(BTCI, UTB, BIA) less than 5 percent\. percent, and for BIA 0\.8 percent\. The target was
achieved\.
Energy Sector
10\. Share of losses in CEET's electricity grid The share of losses was 19\.4 percent in 2009, a
reduced by 1 percent per year\. reduction of 0\.6 percentage point relative to the
2007 target and a 2\.2 percentage point improvement
relative to the extent of losses in 2008\. Target
partially achieved\.
3\.3 Justification of Overall Outcome Rating
26
Rating: Moderately Satisfactory
The ERGG-2 advanced the Government's reform agenda through the implementation of
further actions identified under the initial ERGG and other actions supported by the
LICUS trust fund\. The operation also paved the way for preparation of complementary
sector operations highlighted in the Bank's Togo Interim Strategy Note, notably the
Financial Sector and Governance Project and the Emergency Infrastructure Rehabilitation
and Energy Project\. Continued reform on such a wide swath of the public sector is
noteworthy given the fragile state of Togo's public sector and its limited capacity\. Good
progress was achieved on public financial management and in the banking and
phosphates sectors, but there was little discernible impact from the cotton and energy
actions\. In the financial sector, while the result regarding non-performing loans was
achieved there was partially reversal on another result (included explicitly in the initial
ERGG results framework), namely a lowering of the net worth of the largest state bank
below the prudential norm of 8 percent\. The targets of six of the ten results indicators
were fully reached, while there was significant progress in meeting a seventh indicator
target and partial progress in meeting an eighth indicator target\. However, there was no
progress in meeting two of the indicator targets, although this was due to delays in the
procurement process\.
3\.4 Overarching Themes, Other Outcomes and Impacts
None are identified\.
4\. Assessment of Risk to Development Outcome
Rating: Substantial
Togo remains a fragile state which has made less progress on political liberalization than
some of its neighbors, while public sector capacity is still weak\.
Political risk: This risk is significant\. The political situation has been fragile in the last 15
years and the process of political liberalization is proceeding slowly\. Presidential
elections were held in March 2010 (delayed by a week because of disputed electoral lists)
and the outcome remained contested three months later, although observers reported only
limited irregularities\. Continuing disputes over the results could distract the attention of
key decision-makers from steady pursuit of reform\. Government was well aware of the
risks and worked over the last four years to curb resistance to reform by vested interests
which might have come into play\. In addition both civic and religious authorities have
been working to promote the climate of tolerance, reconciliation and stability heralded by
the 2006 AGP (Accord Global de Politique) which set the scene for a return to normalcy\.
Macroeconomic risk: Togo is likely to remain exposed to exogenous shocks in terms of
trade, volatile oil prices and climate\. Arrears clearance, renewed access to external
resources and, above all, prudent macroeconomic management worked to reduce risk\.
Togo's economy survived the price and climate shocks of 2007-2008 and the global
recession, emerging better prepared for managing future emergencies, especially with
27
regard to food security production and, increasingly, in terms of energy through better
planning of supply and the implementation of efficiency measures\.
Fiduciary risk: Implementation of the 2009 PEMFAR recommendations on public
finance management and procurement is working to reduce fiduciary risk\. Government is
making effective use of new financial resources to address priorities, with better spending
controls\. In the case of the ERGG-2, proceeds of the grant were deposited in a dedicated
account, with audits conducted in accordance with IDA's specifications\.
Implementation capacity risk: The risk remains high, despite offsetting through technical
assistance\. Togo's long period of internal instability disrupted government operations,
including staff development and staff retention which, combined with the withdrawal of
donor support, resulted in weakened capacity of the public sector\. This weakened
capacity is not fully compensated for by the technical assistance being provided currently
by donors in the period since re-engagement\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
Factors influencing quality at entry were: (a) continuity in the management of the
operation and task team members fully immersed in sector issues, with good relations
with government counterparts and colleagues in the partner agencies; (b) the positive
dialogue between government, the Bank and the other key development partners the
IMF and the EC in the context of the preparation of the poverty reduction strategy and
review of the PRGF\. This dialogue was informed by ongoing sector reform discussion
and the implementation of supporting operations, notably the Financial Sector and
Governance Project and the Emergency Infrastructure Rehabilitation and Energy Project
(2008); (c) existing, strong analytical work, notably PEMFAR (in terms of financial
management and procurement) and the Financial Sector Review, both of which were
updated in 2008; (d) a solid working partnership between the Bank, the IMF, the AfDB
and the EC, with the Bank taking the lead in public finance management, procurement
and in sector reform while the IMF led on macroeconomic work and the EC met the need
for flexible ad hoc advice and lines of credit such as STABEX\.
(b) Quality of Supervision
Rating:
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately satisfactory
As with all DPOs, supervision of the reform program occurred during preparation of the
proposed follow-on operation (ERGG-3)\. The quality of supervision was somewhat
affected by the extended temporary absence of the ERGG-2 TTL during 2009, since
28
program monitoring had to be covered by the lead economist for Togo whose
responsibilities included other countries\. Commencement of ERGG-3 preparatory work,
and hence supervision of Togo's economic reform program, was delayed until another
TTL was identified for the ERGG-3\.
5\.2 Borrower Performance
Rating: Satisfactory
Despite food and energy crises and the growing global recession, the Government
maintained fiscal discipline adjusting the budget to cover additional expenditures such as
food subsidies while maintaining overall prudent management of public finances\.
Government also worked hard to create public support for reform, with broad
participatory consultation of the stakeholders on the PRSP and on sector reforms\.
Continuity and growing experience in senior management was an important factor in
success\. The high level national committee for reform, led by the Ministry of Economy
and Finance and comprising other key ministries, has gained several years of experience,
but it has sometimes proven more difficult to get full cooperation from parastatal
enterprises\. The role of the National Assembly was important--the political parties
cooperated to review and pass legislation in a timely fashion, demonstrating the broad
political support for reform\. Finally, government was open and flexible to bringing in
outside technical assistance to backstop implementation capacity\. The Government fully
met six of ten results indicator targets and made significant progress in meeting a seventh
while an eighth target was partially met\. On the remaining two results indicators, minimal
progress was made toward achieving the targets; however, this was due to delays in the
procurement process that were partly outside the Government's control\.
6\. Lessons Learned
This operation shows that significant progress can be achieved in a fragile country with
emerging commitment and ready to take action to increase transparency and good
governance\. The specific lessons that can be learned from this operation include:
(i) The maintenance of analytical work provides a strong foundation for subsequent
operations, enabling the Bank to move quickly when a window of opportunity opens\. The
preparation of the PEMFAR; a multiyear series of cotton sector studies; the Financial
sector review, as well as analysis pertaining to the PRSP, all provided analytical
underpinning to ERGG-2
(ii) Close coordination with the development partners (notably, the AfDB, the IMF
and the EC) helps mitigate risks and share responsibilities on the basis of partners'
comparative advantage\.
(iii) It is important to identify a small number of strategic prior actions, implementable
within a reasonable time frame, which are difficult to reverse, driving reform forward (an
example is the publication of the contribution of phosphate revenues to the Treasury an
essential step toward candidate membership in the EITI, itself a major long term
29
commitment)\. However, the eleven further actions identified in ERGG and ERGG-2,
some with multiple components, were probably too many, given the weak capacity of the
government\.
(iv) Seeking synergies between prior actions and follow-up measures can help amplify
their effect, for example, the publication of phosphate revenues, together with the
recapitalization of the banks and the referral of irregularities in the cotton sector to the
Minister of Justice can be considered to have had a cumulative impact on the re-building
of public confidence in government, a major underlying goal of reforms to promote
transparency and better governance\.
(v) The importance of strong and stable leadership by a reform "champion" in this
case, the Ministry of Economy and Finance\.
(vi) The continuity of Bank staff is important as it helps create an institutional
memory\. Staff has been stable since 2005 in the case of financial sector reform, as well as
continuity and growing experience of key Government officials in both the MEF and
concerned line ministries\.
(vii) The importance of arrangements for ensuring responsive technical assistance to
fill knowledge gaps or fine tune reform measures the LICUS trust fund and ongoing
operations such as the financial sector and governance project are examples\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
The borrower notes that the ICRR assessment and ratings could give greater weight to the
significant efforts made by the Togolese authorities in implementing their political,
economic and financial reforms in a record period of time\. This point is well taken, and is
reflected in the satisfactory rating attributed to the borrower given the ICRR's required
focuses on outcomes and results\. Editorial comments received by the borrower are
reflected in the ICRR\.
30
Annex 1: Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Christina A\.Wood Senior Economist AFTP4 Team Leader
Madani M\. Tall Country Director AFCF2 Team guidance
Antonella Bassani Sector Manager AFTP4 Team guidance
Joseph Baah-Dwomoh Country Manager AFMBJ Team guidance
Board presentation
Philip English Lead Economist AFTP4
and supervision
Macroeconomic
Yvette Dan Houngbo Economist AFTP4
framework
AFTFM at
the time; Public expenditure
Emile Finateu Lead Financial Management Specialist
now ex- management
Bank staff
Financial Management AFTFM at Public expenditure
Hugues Agossou
Specialist the time management
Eric Yoboue Senior Procurement Specialist AFTPM Procurement
Itchi Ayindo Procurement Specialist AFTPM Procurement
AFTFS at
the time;
Andre C\. Ryba Financial Sector Specialist Financial sector
now
Consultant
Brigitte Bocoum Senior Mining Specialist COCPO Phosphates
Yves Duvivier Mining Specialist Consultant Phosphates
Nicolas Ahouissoussi Sr\. Agricultural Economist AFTSD Cotton sector
Ayi Klouvi Agriculture Economist AFTSD Cotton sector
Fanny Missfeldt-Ringius Senior Energy Specialist AFTEG Energy sector
Franklin
Energy Specialist AFTEG Energy sector
Gbedey
Daria Goldstein Senior Counsel LEGAF Lawyer
Senior
Wolfgang Chadab CTRFC Disbursement
Finance Officer
Elianne Tchapda AFTP4 Team Support, HQ
Chantal Tiko AFMTG Team Support, CO
Supervision
Marcelo R\. Andrade Sr Country Economist AFTP4
Itchi Gnon Ayindo Senior Procurement Specialist AFTPC
Charles Coste Sr Financial Management Specialist AFTFM
Yvette Dan-Houngbo Economist AFTP4
Maria Manuela Do Rosario
Sr Country Economist AFTP4
Francisco
E\. Philip English Lead Economist AFTP4
Franklin Koffi S\.W\. Gbedey Energy Spec\. AFTEG
Alain Hinkati Financial Management Specialis AFTFM
Guillemette Sidonie Jaffrin Sr Financial Sector Spec\. AFTFW
Ayi Adamah Klouvi Agric\. Economist AFTAR
31
F\. Alain Onibon Agric\. Economist AFTAR
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
Total: 37\.5 241,450\.10
Supervision/ICR
Total: 3\.8 25,678\.08
Grand Total: 41\.3 267,128\.18
32
Annex 2: Beneficiary Survey Results
Not applicable\.
33
Annex 3: Stakeholder Workshop Report and Results
Not applicable\.
34
Annex 4: Summary of Borrower's ICR and/or Comments on Draft ICR
The borrower noted that the ICRR assessment and ratings could have given greater
weight to the significant efforts made by the Togolese authorities in implementing their
political, economic and financial reforms in a record period of time\.
35
Annex 5: Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable\.
36
Annex 6: List of Supporting Documents
Back-to-Office Report November 2009, Togo: Identification of a Third Economic Recovery and
Governance Grant (ERGG III): Phosphate Sector Revitalization
Banque mondiale, Aide mémoire, novembre 2009, « Stratégie de relance et de développement du
secteur des phosphates du Togo et plan d'action »
Banque mondiale, Aide-mémoire : Mission de Revue du Programme de Reforme Economique,
septembre 2008
Banque mondiale, Aide-mémoire : Mission de Pre-évaluation Deuxième Don pour la Relance
économique et la Gouvernance, décembre 2008
Banque mondiale, Aide-mémoire de l'Evaluation :Evaluation du Deuxième Don pour la Relance
économique et la Gouvernance(DREG-2), 12 mars, 2009 Washington
Ballereau, A\. 2009, « Stratégie de Facilitation du Transport et du Commerce pour stimuler la
Croissance Economique », Rapport Technique de base préparé dans le cadre du Mémorandum
Economique du Pays (CEM), 2009
Gergely, N\. 2009, Mission d'appui à la réforme de la filière cotonnière au Togo\. Rapport
provisoire de mission sur la mise en place du cadre réglementaire et la clarification du rôle des
acteurs, Décembre 2009
Implementation Status and Results Report, (Togo, TG-P113456-ERGG-2 Credit No\. IDA
H4670), December 15, 2009
International Development Association (Report No\. 38146TG) 2006, TOGO: Financial Sector
Review Final Report, Africa Financial Sector Unit (AFRS), Africa Region
International Development Association ( Report No\. 47975-TG) 2009, Emergency Project
Appraisal Document for a proposed Grant in the amount of SDR16\.8 million (US$25million
equivalent) and a proposed GEF Grant in the amount of US$1\.8 to the Republic of Togo for an
Emergency Infrastructure Rehabilitation & Energy Project, May 13,2009, Africa Urban
Development Sector, Country Department AFCF2, Africa Region
International Development Association, Report No\. 47272-TG, Program document for a Second
Economic Recovery and Governance Grant in the amount of SDR13\.6 million (US$20 million
equivalent) to the Republic of Togo, March 24, 2009
International Development Association, Report No: ICR0000130, Implementation Completion
and Results Report (IDA-h3890) on a Grant in the amount of SDR 100\.9 million (US$164\.4
million equivalent) to the Republic of Togo for an Economic Recovery and Governance Grant,
December 16, 2009
International Development Association, Financing Agreement (Second Economic Recovery and
Governance Grant) between the Republic of Togo and the International Development Association
(Grant Number h467-tg), April 23, 2009
37
International Development Association and the International Monetary Fund, Report no\. 43222-
tg, Togo: Joint IDA-IMF Staff Advisory Note on the Interim Poverty Reduction Strategy Paper,
April 17, 2008, Poverty Reduction and Economic Management 4, Country Department AFCF2,
Africa Region
International Development Association and the International Monetary Fund, Report No\. 51175-
TG, Togo: Poverty Reduction Strategy Paper and Joint IDA-IMF Staff Advisory Note, November
4, 2009, Poverty Reduction and Economic Management 4, Country Department, AFCF2, Africa
Region
International Development Association ( Report No\. 43257-tg), Interim Strategy Note for the
Republic of Togo for the Period FY08-FY10, May 16,2008, Country Department for Togo,
AFCR 2, Africa Region
Minutes of the Decision Meeting on a Second Economic Recovery and Governance Grant,
February 26, 2009, Poverty Reduction and Economic Management 4, Country Department,
AFCF2, Africa Region
Minutes of the Concept Review Meeting on a Second Economic Recovery and Governance
Grant, February 9, 2009, Poverty Reduction and Economic Management 4, Country Department,
AFCF2, Africa Region
Projet de document, La Zone Franche : Principales Caractéristiques, Projet de document préparé
dans le cadre du Mémorandum Economique du Pays (CEM), juillet 2009
République Togolaise, Procès-verbal des négociations : Deuxième Don pour la Relance
Economique et la Gouvernance, 12 mars 2009
République Togolaise, Lettre de Politique de Développement (2009-2011), March 19, 2009
République Togolaise, Les Sources de Croissance et le Climat d'Investissement, Document du
travail pour la préparation du Document Stratégique pour la Réduction de la Pauvreté, Version
préliminaire, 17 novembre, 2008\.
World Bank, Republic of Togo: Development Policy Needs Review, April 2008\.
38 | REVIEW |
P039455 |  ICRR 10202
Report Number : ICRR10202
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID:
OEDID : C2768
Project ID : P039455
Project Name : Watershed and Environmental Management Project
Country : St\. Lucia
Sector : Other Non-sector Specific
L/C Number : C2768/L3925
Partners involved :
Prepared by : Charles Derek Poate, OEDST
Reviewed by : John C\. English
Group Manager : Roger H\. Slade
Date Posted : 08/18/1998
2\. Project Objectives, Financing, Costs and Components :
The Watershed and environmental management project was designed in response to the emergency
arising from Tropical Storm "Debbie"\. The objectives were to: (i) begin rehabilitation of the hydraulic
infrastructure of priority watersheds from the damage caused by the flooding and landslides; (ii) address
the medium and long-term requirements for sustainable watershed development by preparing a
Watershed Management Plan which would serve as the basis for more integrated development of key
watersheds; and, (iii) strengthen Government's capacities in environmental management and flood
preparedness\. Participation of local communities in implementation was emphasised \.
Total project costs amounted to US$7\.31 million of which the Bank contributed US$5\.3 million in equal
Loan and Credit amounts\. DFID contributed US$0\.79 million\. The project was completed 6 months behind
schedule on December 31 1997\.
3\. Achievement of Relevant Objectives :
Project objectives were achieved\. (i) Rehabilitation of the hydraulic infrastructure and consolidation of
flood prevention in endangered locations was highly satisfactory \. In addition clear environmental
guidelines were established; (ii) A draft Watershed Management Plan was prepared with a strong
emphasis on community participation\. The Plan did not identify candidate projects for further development
as proposed in the SAR; (iii) The project strengthened the capacity of the Ministry of Works,
Communications and Transport (MOWCT) in flood preparedness and civil works, and the capacity of the
Ministry of Agriculture, Lands, Forestry and Fisheries in watershed management \.
4\. Significant Achievements :
(i) the project was prepared and approved with only nine months elapsing from identification to Board
approval;
(ii) the effective implementation of flexible procurement procedures for a project which is an emergency
response to a natural disaster\.
5\. Significant Shortcomings :
(i) The absence of a designated project accountant caused delays in the processing of payments and
reconciliation of project accounts;
(ii) Failure to respond to Bank Supervision requests for an analysis of the cost effectiveness of civil works;
(iii) Poor communication between the two leading Ministries (MOWCT and MOALFF)\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Uncertain Uncertain
Bank Performance : Highly Satisfactory Highly Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
(i) The acceptance by the Bank of flexible procurement procedures, within the Guidelines, is of critical
importance to ensuring efficient operation of project which respond to emergency situations;
(ii) The infusion of local knowledge from national staff can be important in the design of emergency
operations;
(iii) The active participation of affected communities is important in achieving effective and sustainable
management of watershed areas and ensuring government accountability\.
8\. Audit Recommended? Yes No
9\. Comments on Quality of ICR :
While the ICR was satisfactory overall, there were some significant shortcomings \. There was no
contribution or comments from the Borrower or Co-financier, and the aide memoire for the Completion
Mission was not included\. Plans for future operation were minimal due to delays in developing the
Watershed Management Plan\. In all other respects the ICR was excellent\. | REVIEW |
P007713 |  ICRR 12342
Report Number : ICRR12342
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 03/17/2006
PROJ ID :P007713 Appraisal Actual
Project Name :Water Resources Project Costs 341\.9 221\.6
Management Project US$M )
(US$M)
Country :Mexico Loan/
Loan US$M )
/Credit (US$M) 186\.5 120\.8
Sector (s):Central
): government US$M )
Cofinancing (US$M)
administration; Water supply
L/C Number :L4050
FY )
Board Approval (FY) 96
Partners involved : World Meteorological Closing Date 06/30/2002 06/30/2005
Organization (WMO)
Evaluator : Panel Reviewer : Division Manager : Division :
Keith Robert A\. Kris Hallberg Alain A\. Barbu IEGSG
Oblitas
2\. Project Objectives and Components
a\. Objectives
1\. Promote conditions for environmentally sustainable, economically efficient and equitably allocated use of
water resources in Mexico; including:
(a) supporting groundwater conservation;
(b) promoting the restoration of surface water quality;
(c) improving water rights administration through registry of water rights users and improved fee collection; and
(d) improving allocation of water as an economic good \.
2\. Support the integrated comprehensive management of water resources; including
(a) improve water resources planning through development of hydrographic region plans with river basin council
participation; and
(b) promoting decentralization of water resources management through the establishment and strengthening of river
basin councils\.
3\. Increase the benefits and reduce the risk related to existing hydraulic infrastructure; including
(a) reducing flood damages downstream of reservoirs;
(b) improving dam safety; and
(c) improving meteorological services \.
b\. Components (or Key Conditions in the case of Adjustment Loans ):
A\. Institutional development, technological support and training (Planned project costs (at appraisal) US$37\.7
million; Actual project costs US$41\.6 million):
Strengthening and training for Mexico's national water agency, the Comision Nacional del Agua (CNA), also the
project implementing agency\.
B\. Water quantity and quality monitoring improvement and assessments (Planned costs US$150\.0 million; Actual
costs US$80\.7 million)
Establishing and operating networks for measuring, monitoring, analyzing and disseminating ground and surface
water hydrological and hydogeological quality and quantity data and meteorological data, and undertaking
assessments of water resources including of groundwater aquifers \.
C\. Reservoir operation, dam safety and aquifer management improvement (Planned costs US$41\.1 million; Actual
costs US$25\.7 million)
Improving operational management of existing hydraulic infrastructure to increase water availability, optimize the
multi-sectoral benefits from reservoir operations and reduce damage and risks from floods; flood forecasting;
technical and consultancy support for the first phase of the national dam safety program; aquifer management
improvement through supporting groundwater resources management activities, aquifer protection, stabilization of
overexploited aquifers, and implementing groundwater optimization models \.
D\. Water rights administration (Planned costs at appraisal US$ 41\.4 million; Actual costs US$18\.1 million)
Establishing and expanding a national water rights registry including its operation in collection and approval of land
registration, software and procedures for processing; decentralization of the system at river basin level; and diffusion
of information with ready access to the public; as well as developing a water fee and discharge fee collection and
control service including assessment of users and polluters, measurement technology and inspection \.
E\. Water resources planning and information systems (Planned costs US$ 71\.7 million; Actual costs US$ 55\.0
million)
Establishment and strengthening of river basin councils; participatory preparation by them of action programs for
improved water resources management including environmental management; development /improvement of regional
and a national water plan with participation of the river basin councils; and providing related telecommunications,
computerization and geographical information systems \.
F\. Aquifers conservation pilot (Added at mid-term review; Actual costs US$0\.5 million)
To pilot more advanced water resources planning in critically overexploited aquifers \.
c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
While project objectives were not changed, the project scope was reduced at mid -term review, together with a
cancellation of US$40 million of the Credit/Loan and an extension of the project period by two years \. The scaling
down of the project was because of slower than anticipated implementation due to a shortage of qualified project
personnel and inadequate budget allocations by government \. There were two subsequent cancellations and a further
year's extension resulting in an aggregate Credit /Loan cancellation of US$65\.7 million and, with the three year
extension of credit closure, a nine year project period overall \.
At mid-term review, the monitorable indicators were made more precise, numerical targets reduced, and some
indicators that had no supporting project components were removed \. A small aquifers conservation pilot project was
added (Component F above)\.
3\. Relevance of Objectives & Design :
The overall relevance of the project was Substantial, although project complexity created implementation difficulties \.
Objectives : The project's general objectives were highly relevant \. Mexico is a severely water constrained country
facing critical challenges in the management of its water resources \. Exploitation of surface water has nearly reached
its limit, many groundwater aquifers are being overexploited, and the location of population and expanding economic
activities tends not to be matched by the location of the water resources \. Improving the management of its water
resources was an essential need for Mexico, well recognized in both Mexican and Bank policy papers \. The project
provided direct support for much of the policy and resource management aspects of Mexico's National Water Plan,
1995-2000, and also supported implementation of the new legal framework and policies in the National Water Law \.
The 1995 and 2004 CASs' targeted water and environmental management as one of the program objectives for
Mexico\. The project was also consistent with the Bank's 1993 "Water Resources Management" policy paper\.
Design : The project's strength in its strategic objectives were not as well matched when it came to the project's
detailed design and practical implementation features \. The project was highly complex and demanding with multiple
components\. The objectives and components are all worthy and between them represent a strong and
comprehensive reform program\. But implementation, especially in the five year project period targeted at appraisal,
would inevitably be difficult\. Several design options might have been considered \. One is to unbundle the project into
separate projects; for instance, recognizing the complexity issue, the ICR suggested that the dam safety and the
meteorological services activities could have been separated out \. Another option might have been to formalize the
reform process as a longer term program with support through successive projects \. Notwithstanding, a remarkable
number of actions were achieved under the project (Section 4), though specific targeted actions were scaled down \.
4\. Achievement of Objectives (Efficacy) :
Overall efficacy was susbstantial, albeit with mixed performance in the implementation of the supporting project
components, and overall with scaled down targets that had to be introduced at mid -term review\. The substantial
rating is because progress was made in nearly all areas in the introduction of often new activities, setting up a good
initial base for further progress in water resources management \.
Objective 1\. Promote conditions for environmentally sustainable, economically efficient and equitably allocated
use of water resources in Mexico : Substantially achieved\.
The hydrological network including for surface and groundwater quality and quantity monitoring was substantially
improved including establishment of 2359 hydrometric stations, a geographic information system was established,
653 aquifers were classified and 144 prioritized for improved management due to water quality or groundwater
drawdown\. Over 400,000 water rights were issued providing a start to developing water fees and water markets \.
Allocation of water as an economic good would to some extent emerge from the basin plans and operations in the
second Objective\. The above various actions will have provided a useful stage for further development \.
Objective 2: Support the integrated comprehensive management of water resources : Substantially achieved\.
Thirteen regional hydrographic plans were developed \. 25 river basin councils were established and the participatory
process is reported in the ICR to be developing \. Training related to this was substantial (eight courses involving 1125
persons)\. The national water agency (CNA) was strengthened including support to a decentralization of CNA along
hydrological boundaries\.
Objective 3: Increase the benefits and reduce the risk related to existing hydraulic infrastructure : Partially
achieved\. A start was made for the National Dam Safety Program \. Hydrologic forecasting systems were established
for six critically flood prone basins \. A national dam registry was developed and over 2000 dam safety inspections
were carried out\. Over 5500 climatologic stations were established \. However, actual use of this information to
achieve the development objective above (eg\. dam safety improved, reservoir operations plans being implemented
and providing benefits) was limited\. Nevertheless, the achievements established a useful data base for
implementation\.
5\. Efficiency :
Efficiency was Modest\. Project progress was impaired by capacity limits of CNA staff \. Those qualified to implement a
technically complex project were in short supply \. The second major constraint was inadequate counterpart funding by
government\. Project scope was scaled down at mid -term review, and more focus was placed on achieving assessed
high priority aspects of the WRM program \. US$65\.7 million of the loan was cancelled\. The project needed a 3 year
extension\.
6\. M&E Design, Implementation, & Utilization:
Design : M&E was primarily through regular reporting of achievements for each project component \.
Implementation : The monitoring of the project was adequate to follow and report on progress \.
Utilization : Reported data was used as a management aid in monitoring project progress and taking remedial actions
as needed\.
(It might be noted that an important part of the project was to set in place a technical monitoring network including the
establishment of several thousand hydrologic and meteorologic measuring stations for relevant data on surface and
groundwater quantity and quality \. This will be an important base in following aquifer and river /lake management,
modelling, basin planning, optimal multisectoral use of water and dam safety and flood management \.)
7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):
8\. Ratings : ICR ICR Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Satisfactory (The four point scale for ICRs does not
have a moderately satisfactory rating )\.
The project made a good start to
improving water resources management,
but project progress was less than
targeted and project scope needed to be
scaled down at mid-term review\.
\.
Institutional Dev \.: Substantial Substantial Primarily because of the strengthening
and decentralization of CNA and the
establishment of a number of basin
councils
Sustainability : Likely Likely Because of the commitment of Mexico to
WRM and the paramount need in Mexico
to practice integrated water resources
management\. Government and CNA are
unlikely to abandon WRM\.
Bank Performance : Satisfactory Satisfactory An overambitious project (section 3), but
very strong technical support to CNA
during project implementation\.
Borrower Perf \.: Satisfactory Satisfactory CNA worked very hard to implement the
project, and, despite the need to scale
down the project, substantial new
technology was introduced together with
significant institutional change \. However,
inadequate government counterpart
funding was a problem\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating,
IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \.
9\. Lessons:
Introducing comprehensive Water Resources Management is highly complex : It may require more than one
project in parallel and /or a succession of projects :
Comprehensive WRM requires multivalent interrelated measures \. To an admirable degree in terms of
conceptualizing the WRM needs of Mexico, the project contained almost all of the elements required for
comprehensive WRM\. But, inevitably, this made the project complex and multi -component, thus difficult to
implement, especially as a number of project technologies and activities were new to CNA \. The project
implementation period assumed at appraisal was only five years \. Several options might have been considered :
Unbundling : As also noted in the ICR, the project might have been split into two or more parallel projects (for
instance, the ICR suggested that the dam safety and meteorological services activities could have been
separated)\.
A long -term program approach : Integrated WRM cannot be fully established in a single five or even eight year
project period\. The WRM reform process could be formalized as a longer -term program with a succession of
projects to implement this program\.
10\. Assessment Recommended? Yes No
Why?
As an example of needs and features for implementing comprehensive reform in water resources management \.
11\. Comments on Quality of ICR:
Strong in technical aspects and a candid review of project difficulties and achievements \. A problem that was also a
characteristic of the appraisal report is the substantial disconnects between the organization of major objectives,
detailed objectives and components \. In the end, this review has used the table annexed in the appraisal report \. A
clearer organization and log frame at appraisal might have helped better define the key needed activities for the
project, and reduced project complexity \. More text comparison of numerical achievements and targets would have
been helpful\. | REVIEW |
P060092 | Document of
The World Bank
Report No: 27447
IMPLEMENTATION COMPLETION REPORT
(IDA-33050)
ON A
CREDIT
IN THE AMOUNT OF US$20\.0 MILLION
TO THE
CENTRAL AFRICAN REPUBLIC
FOR A FISCAL CONSOLIDATION CREDIT
December 30, 2003
POVERTY REDUCTION AND ECONOMIC MANAGEMENT (AFTP3)
AFRICA REGION
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 15, 2003)
Currency Unit = CFAF
CFAF 1 = US$ 0\.001853
US$ 1 = 539\.6
FISCAL YEAR
January 1- December 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
BEAC Banque des Etats de l'Afrique Centrale (Central Bank)
CAR Central African Republic
CFAF CFA Franc
CTP-PAS Comité Technique Permanent de Suivi du Programme d'Ajustement Structurel
ENERCA Energie de Centrafrique (Power company)
EU European Union
FCC Fiscal Consolidation Credit
GDP Gross Domestic Product
IDA International Development Association
IMF International Monetary Fund
LICUS Low-Income Countries Under Stress
OED Operations Evaluations Department
MINURCA Mission des Nations Unies pour la République Centrafricaine
PETROCA Compagnie des Pétroles de Centrafrique
PSP Policy Support Project
PRGF Poverty Reduction and Growth Facility
QAG Quality Assurance Group
SDR Special Drawing Rights
SMP Staff Monitored Program
SOCATEL Société Centrafricaine de Télécommunications
SOCOCA Société de Coton de Centrafrique
SODECA Société de Distribution d'Eau de Centrafrique
TSSN Transitional Support Strategy Note
UN United Nations
UNDP United Nations Development Program
Vice President: Callisto E\. Madavo
Country Director: Ali M\. Khadr
Sector Manager: Cadman A\. Mills
Task Team Leader: Abdoulaye Seck
CENTRAL AFRICAN REPUBLIC
CAR - Fiscal Consolidation Credit
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 8
6\. Sustainability 11
7\. Bank and Borrower Performance 11
8\. Lessons Learned 12
9\. Partner Comments 13
10\. Additional Information 13
Annex 1\. Key Performance Indicators/Log Frame Matrix 15
Annex 2\. Project Costs and Financing 16
Annex 3\. Economic Costs and Benefits 17
Annex 4\. Bank Inputs 18
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 19
Annex 6\. Ratings of Bank and Borrower Performance 20
Annex 7\. List of Supporting Documents 21
Annex 8\. Government's Contribution 24
Annex 9\. QAG Report 36
Project ID: P060092 Project Name: CAR - Fiscal Consolidation Credit
Team Leader: Abdoulaye Seck TL Unit: AFTP3
ICR Type: Core ICR Report Date: December 29, 2003
1\. Project Data
Name: CAR - Fiscal Consolidation Credit L/C/TF Number: IDA-33050
Country/Department: CENTRAL AFRICAN REPUBLIC Region: Africa Regional Office
Sector/subsector: Central government administration (25%); Crops (25%); General
finance sector (25%); Roads and highways (13%); General industry
and trade sector (12%)
Theme: State enterprise/bank restructuring and privatization (P); Tax policy
and administration (S); Public expenditure, financial management
and procurement (S); Regulation and competition policy (S); Legal
institutions for a market economy (S)
KEY DATES Original Revised/Actual
PCD: 07/10/1998 Effective: 12/15/1998 01/28/2000
Appraisal: 10/14/1999 MTR:
Approval: 12/16/1999 Closing: 06/30/2001 06/30/2003
Borrower/Implementing Agency: GOVERNMENT OF THE CENTRAL AFRICAN REPUBLIC
Other Partners:
STAFF Current At Appraisal
Vice President: Callisto E\. Madavo Jean-Louis Sarbib
Country Director: Ali Khadr Serge Mikhailof
Sector Manager: Cadman A\. Mills Luca Barbone
Team Leader at ICR: Abdoulaye Seck Slaheddine Khenissi
ICR Primary Author: Abdoulaye Seck
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: U
Sustainability: UN
Institutional Development Impact: N
Bank Performance: U
Borrower Performance: U
QAG (if available) ICR
Quality at Entry: U U
Project at Risk at Any Time: Yes
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
3\.1\.1 The development objective of the Fiscal Consolidation Credit (FCC) was to help the State
carry out its basic functions in a post-conflict context, with an immediate objective of timely
payment of wages to government employees and the military\. The objective was consistent with
the Government's main development objective articulated in the May 1998 Policy Framework
Paper (PFP) which was to create the conditions for civil peace and sustainable development\.
Measures supported by the Credit aimed at fiscal consolidation and included: (i)
revenue-enhancing measures and reforms in public expenditure management for more efficient
and transparent spending; (ii) the privatization of five key banks and enterprises to improve their
fiscal impact through reduced losses and subsidies\.
3\.1\.2 The FCC in the amount of SDR14\.4 million (US$20 million equivalent) was approved by
the Executive Directors on December 16, 1999, with an initial closing date on June 30, 2001\.
The first of three tranches of the credit, amounting to SDR6\.5 million (US$9 million), was
released on January 28, 2000, upon effectiveness\. The second tranche of SDR3\.6 million (US$5
million) was released on December 22, 2000 after a partial waiver on one condition related to
financial transfers to the Road Fund\. In June 2001, the Bank agreed to the authorities' request to
extend the FCC by two years, to June 30, 2003\. In April 2002, the Executive Directors also
approved an amendment of the conditions for the release of the remaining floating tranche of
SDR4\.3 million (US$6 million), to take into account the adoption of a new institutional
framework to enhance the privatization prospects of the electricity and telecommunications
companies, and the impact of the deteriorating security conditions in the country\. In June 2003,
arrears to the Bank and lack of a satisfactory macroeconomic framework led to the closing of the
credit and the cancellation of the undisbursed balance of SDR4\.3 million\.
Context
3\.1\.3 The FCC was part of a multifaceted international effort to consolidate CAR's political and
security condition following four military mutinies in 1996-1997\. The mutinies had a severe and
lasting impact on the economy and the social situation\. International mediation led to the Bangui
Agreement of January 1997, which called for: (i) national reconciliation; (ii) the restructuring of
the military; and (iii) an economic and public finance program with the Bretton Woods
Institutions\. A National Reconciliation Conference took place in February/March 1998\. A
cease-fire arrangement was enforced until mid-April 1998 by an Inter-African Mission to Monitor
the Implementation of the Bangui Agreements (MISAB), and from mid-April 1998 to early 2000
by a United Nations Peacekeeping operation (MINURCA)\. A disarmament program, and
restructuring of the defense and security forces, was implemented with the support of UNDP\.
3\.1\.4 The economic reform program under the Bangui Agreements started in the spring of 1998
when CAR reached an agreement with the Bretton Wood institutions on a 1998-2000 Policy
Framework Paper (PFP)\. A donors' meeting organized by the Bank in June 1998 indicated
general support for the program under the PFP\. The Fund's Executive Board approved an
Extended Structural Adjustment Facility (ESAF) on July 20, 1998\. The Paris Club extended debt
relief on Naples terms on September 25, 1998\. It was in that context that the Bank started the
- 2 -
preparation of a Structural Adjustment Credit whose appraisal hinged on the implementation of
key economic reforms, especially the privatization of petroleum products imports and distribution\.
3\.2 Revised Objective:
The original development objective remained unchanged throughout project
implementation\. This was certainly a shortcoming in the credit supervision as it became
increasingly clear that the development objective would not be achieved and a retrofitting of the
operation was needed\. The Bank amended the conditions of the third tranche release - as
described below - but that came too late and was still ambitious\.
3\.3 Original Components:
The project had two components: (i) a public financial management component which
aimed at improving revenue collection, introducing more efficient and transparent spending
management, ensuring the regular payment of salaries, and gradually settling domestic and
external arrears; and (ii) a public enterprises reform component which aimed at reducing losses of
and subsidies to five public enterprises\.
3\.4 Revised Components:
3\.4\.1 Components were not modified during the implementation phase\. However, after a
reassessment of market conditions in the water, electricity and telecom sectors, tranche release
conditions pertaining to the public enterprises component were amended in April 2002\. The
purpose of the amendment was to increase the managerial and operational efficiency of the
utilities while their privatization was being completed\. The amendment sought also to merge the
water and electricity companies instead of working with a separate electricity company as
envisaged in the original credit to enhance the prospects for their privatization\.
Design
3\.4\.2 The FCC was designed as a multi-tranche structural adjustment credit to maintain Bank
leverage and the pressure for reform, and to respond to the constraints of the cash management
program agreed with the IMF under the ESAF\. It was also intended to strengthen the position of
reformers by signaling a sustained support by the Bank, thus reducing the risk of backtracking\.
While the choice of the lending instrument appears to have been appropriate, the policy content
was not commensurate with the appetite for reform and weak implementation capacity in the
Central African Republic (CAR)\. The Bank had recognized that past adjustment operations in the
CAR overestimated the Government's commitment to reform and its implementation capacity\. In
the preliminary stage of credit preparation, it sought to focus on a limited number of measures
aimed at fiscal consolidation, factoring in capacity constraints, and relying on critical up-front
actions demonstrating commitment to reform\.
3\.4\.3 However, during further project preparation, the policy content of the FCC expanded
rapidly as the Bank sought to balance the goal of a modest and doable reform program with the
- 3 -
need to address a dismal fiscal situation and assuring that there was a reasonable prospect for
lasting policy reform\. Members of the OC meeting held on June 3, 1998 emphasized their
concerns over the governance issue and urged IDA not begin to lend until there was some
demonstration that the issue was being addressed\. Following a pre-identification mission in
September 1998, the team leader wondered if, by itself, the privatization of petroleum distribution
was worth a first tranche of the proposed credit, and suggested considering actions in the
diamonds and forestry sector to strengthen the fiscal base\. As a result of these concerns, the ROC
package included thirteen conditions for the release of the second tranche of the proposed credit\.
The expansion in policy content also occurred in the form of significant cross-conditionalities:
several conditionalities for ESAF review were by and large the same as the upfront actions
required by the Bank for the appraisal of the FCC\.
3\.5 Quality at Entry:
The project was reviewed in QEA3 (1999) and received an overall satisfactory rating for
quality at entry\. Among the factors that may have justified that rating was the collaborative work
with the IMF and the UN to bolster the restoration of stability in the CAR, and the alignment with
country priorities as stated in the 1998 PFP\. However, a QAG supervision panel in 2002 rightly
felt that given the country's political and social instability and weak implementation capacity, the
overall design of the operation at entry had been overly ambitious\. The QAG panel also noted the
lack of a clearly defined macroeconomic framework and quantitative fiscal targets as the ESAF
was off-track with no clear indication of when an agreement could be reached with the IMF\. The
QAG panel felt these initial handicaps had not been overcome during implementation and had
hampered credit performance\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
In terms of achievement of the development objectives, the outcome of the credit is rated
as unsatisfactory\. The Government of CAR is still not adequately carrying out its basic functions\.
Notably, it has continued to accumulate salary arrears to government employees, the military and
external creditors\. CAR has also remained unstable throughout project implementation\. In the fall
of 2000, public workers went on strike to protest the accumulation of salary arrears\. There was
growing civil unrest, and in May 2001, an attempted coup was led by a former head of State,
General Andre Kolingba\. In November 2001, there was another coup attempt, this time led by
former Army Chief General Francois Bozize\. When the latter coup attempt was defeated with
the support of troops from Libya, General Bozize fled to Chad from where he launched
counterattacks\. After a first unsuccesful assault in October 2002, his troops entered Bangui on
March 15, 2003, and seized control from President Patasse\. General Bozize is now the new
self-proclaimed President of CAR\. To a large extent, CAR has come full circle its pre-FCC
situation, emerging from violent conflict, public finances in dire straits, and with a fragile stability
maintained with the support of an international peacekeeping force (CEMAC and France)\.
- 4 -
4\.2 Outputs by components:
4\.2\.1 Outputs will be assessed on the basis of compliance with key credit conditionalities
(underlined items in the sections below), including the maintenance of an appropriate
macroeconomic framework\.
Macroeconomic Framework
4\.2\.2 Overall, macroeconomic management was not satisfactory throughout credit preparation
and implementation\. The authorities often came short of their revenue targets under the programs
agreed with the IMF, and turned to costly bank financing and arrears accumulation to make up for
large fiscal deficits\. The IMF's Executive Board approved a three-year arrangement under the
ESAF in July 1998\. The mid-term review under the first annual ESAF arrangement was
completed only in June 1999, thus allowing the Bank to move forward with the appraisal of the
FCC\. However, in late 1999, discussions with IMF staff on a second arrangement under the
PRGF (which replaced the ESAF) were not concluded because of revenue shortfalls and delays in
implementing key prior action (privatization of PETROCA, and putting in place a new formula for
setting cotton producer prices)\. The shortfall in revenue reflected the persistent evasion of
customs duties as well as a large-scale fraud on the sales of tax-free petroleum products\. In
addition, the authorities did not raise the retail prices of petroleum products to account for the
sharp increase in oil import costs\.
4\.2\.3 With the risk that the Board presentation of the FCC could be delayed, the authorities
took significant measures, including changes in the management of the customs department,
increases in the retail prices of petroleum products, and the initiation of judicial proceedings
against those involved in the fraud of petroleum products\. On the basis of those measures, the
IMF provided a Memorandum in support of Board presentation of the FCC in December 2000\.
However, it took one year before the IMF Board approved the second-year arrangement under
the PRGF in January 2001\. In May 2001, the first review of the PRGF was not completed due to
revenue shortfalls\. After a coup attempt in late May 2001, the PRGF was cancelled\. Discussions
with the IMF resumed in October 2001 when the authorities agreed with IMF staff on a six-month
staff-monitored program (SMP)\. The successful completion of the SMP in June 2002 led to an
agreement with the IMF on a three-year program to be supported by a Poverty Reduction and
Growth Facility (PRGF)\. The presentation of the PRGF scheduled for November 2002 was
cancelled after a coup attempt in late October 2002\. Thereafter, plans to proceed with a
disbursing IMF program remained very tentative, with the focus by Fund staff being to conclude
the (by now long-overdue) Article IV consultation\. In March 2003, discussions with the CAR
authorities to conclude the Article IV discussions were again overtaken by a coup\.
Public Finances
4\.2\.4 Increased transparency and accountability in public financial management through the
extensive reform program supported by the Fund's ESAF\. Some measures were implemented on
fiscal management although the overall picture remains bleak\. On revenue management, all tax
and non-tax revenue were brought under the sole authority of the Ministry of Finance and Budget\.
In January 2001, the authorities replaced the turnover tax with a value added tax at a single rate
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of 18 percent, and introduced a single and comprehensive tax for small businesses\. The
authorities also introduced a single tax identification number to facilitate the monitoring of
taxpayers\. In October 2001, they completed an overhaul of the tax administration management
structure, including customs\. On public expenditure management, off-budget spending was
progressively phased out, and special commercial bank accounts of ministries were closed\. Any
deviation from the approved budget in the course of the year had to be approved by the National
Assembly\. The Treasury was tasked with preparing a monthly and a quarterly cash-flow
management plan to keep spending in line with the approved budget and available resources\.
4\.2\.5 Meet commitments to increase expenditure in education and health\. This conditionality
was not fulfilled\. Under the 2001 budget law, the authorities raised the budget allocations to the
health and education sectors by 25\.6 percent in nominal terms while keeping the allocation for
defense constant\. The latter measure was symbolically significant in view of the security situation
in the country\. However, it was not translated into an increase in actual expenditures\. A Bank
mission in March 2003 found that actual government spending on education had declined in
nominal terms by 30 percent since 2000, with a decline of 97 percent in capital expenditures and 5
percent in recurrent spending\.
4\.2\.6 No accumulation of additional salary arrears during the period between March 31, 1999
and March 31, 2000\. This specific condition was fulfilled, allowing the release of the second
tranche of the credit\. However, the government accumulated new salary arrears as early as June
2000 (before the release of the second tranche in December 2000)\. Overall, salary arrears remain
a major issue in CAR\.
4\.2\.7 Submission to IDA of an inventory of special tax exemptions granted to mining and
logging operations from January 1, 1995 to December 31, 1998, and refraining from granting new
special tax exemptions from the date of effectiveness\. The authorities provided an inventory which
showed that during that period, two logging companies and one mining company had been
granted special tax exemptions\. Since then, these exemptions have either expired or been
suspended\. No further special tax exemption has been granted since effectiveness and December
2000, at the time of the release of the second tranche of the FCC\. However, in 2003, an audit of
the forestry sectors revealed that compliance with tax law was still low among logging companies\.
Public Enterprises Reform
4\.2\.8 Settlements of the obligations of PETROCA (the parastatal in charge of the import,
storage and distribution of petroleum products) to the Road Fund, due in 1999\. The rationale
was to improve the performance of PETROCA and increase resources to the Road Fund, and
avoiding public transfers from the central budget for road maintenance\. The condition was not
met as only 85 % of the obligations were settled, largely due to factors over which the
Government had no control: about 30 thousands tons of petroleum product owned by CAR and
stored in Kinshasa (DRC) were reportedly stolen in June 2000\. The loss of these stocks
prevented the complete fulfillment of the condition\. With the privatization of PETROCA and the
regular transfers of resources from the private distributors to the Road Fund, a new issue is the
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recurrent withdrawals from the Road Fund by the government to finance other expenditures\.
4\.2\.9 Effective privatization of PETROCA and incorporation of SOGAL (the private company
which was to take over from PETROCA the functions of import and storage of petroleum
products)\. The import, storage and distribution of petroleum products are now completely
privatized, which is a major achievement towards a long-sought reform\. SOGAL was
incorporated on June 16, 1999, with a minority government equity participation of 10 percent\.
4\.2\.10 Privatization of two commercial Banks, BICA and UBAC\. These two banks were
privatized in 1999 but their situations remain difficult\. BICA had non-performing credits
accounting for 40% of its portfolio at end-June 2003\. Most of the non-performing portfolio was
built up after the privatization\. The difficult political and economic situation has contributed to
this situation, but poor management of the bank did play a role\. The 2002 COBAC (Banking
supervision commission) audit report stresses inadequate procedures for loan approval, lack of
internal control, and poor accounting procedures\. While the business community in Bangui has
observed that the management of UBAC (now CBCA) has improved after the privatization, it
also had significant non-performing credits, equivalent to 44% of its portfolio at end-June 2003\.
4\.2\.11Submission of a realistic cotton sector financing plan for the 1999-2000 campaign,
including appropriate producer prices and closing of one or more inefficient ginning plants,
without recourse to medium term credit from the banking sector\. In June 1998, the authorities
increased the producer price for 1998/1999 from CFAF155 to CFAF170/kg\. With the prevailing
world prices, SOCOCA, the cotton parastatal, would have lost CFAF3 billion, which it could only
finance with bank credits guaranteed by the Government\. This would have jeopardized the
restructuring of the banks, and the fiscal picture in 1999\. The authorities introduced a mechanism
for the determination of producer prices with a link to international prices, but they also made
provision for a guaranteed price based on producers' cost, thus making the new mechanism
ineffective in addressing a drop in international price\. The authorities also closed one ginning
plant but they reversed their decision in 2000\. In addition, the recourse to medium term credit has
not been discontinued, and it is a major burden on the commercial banks\.
4\.2\.12 Approval by the Government of the strategy for the electricity sector, submission of the
revised electricity code to Parliament, and bringing ENERCA to the point of lease\. In December
1999, the authorities selected an international advisor for the privatization of ENERCA, and in
2000, they pre-qualified four international firms\. In June 2000, they submitted to the Bank a draft
Electricity Code and a draft Letter of Development Policy for the Electricity Sector\. However,
changed circumstances and a new approach to the privatization of the electricity and water sector
now require that these documents be substantially revised\.
4\.2\.13 Preparation of a regulatory framework for the water and telecommunications sectors, and
creation of an autonomous regulatory body for the water, electricity and telecommunications
sectors\. There was some progress in the telecommunications sector\. The Government prepared a
Letter of Development Policy for the Telecommunications sector which the Bank found
satisfactory\. The sector has been also opened to competition with the granting of licenses to five
private cellular phone operators, two of which have started activities\. The autonomous regulatory
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body is not in place yet\.
4\.2\.14 In April 2002, an amendment of the floating tranche conditions was proposed, as the
Government had recognized that the completion of the public enterprise reforms would take time
and thus required that measures be put in place to protect the assets of the electricity and
telecommunications companies and increase their efficiency during the privatization process\. The
authorities agreed with the Bank on a new, pragmatic approach to privatization in light of the very
difficult country circumstances\.
4\.2\.15 The Government signed a management contract for SOCATEL (the telecommunications
company) to: (i) safeguard financial and physical assets of the company prior to its privatization;
(ii) strengthen billing and collection; (iii) improve technical efficiency and financial viability; and
(iv) set performance targets, as well as a monitoring and evaluation framework\. The effectiveness
of the management contract has been limited by the continuous arrears buildup from the State and
other public agencies/officials, as well as fraud\.
4\.2\.16 The authorities also took seven specific up-front measures relating to the energy sector: (i)
they approved a Letter of Development Policy for the electricity sector; (ii) they finalized terms of
reference and issued tender documents for the appointment of an Independent Monitoring Expert
for the independent and commercial operation of ENERCA; (iii) they selected the Consultant for
the establishment of a multisectoral regulatory body; (iv) they approved a power theft reduction
plan; (v) they approved ceilings on electricity benefits for the staff of ENERCA; (vi) they issued
tender documents for the management contract for ENERCA; and (vii) they approved the
proposal to merge the water and electricity companies\.
4\.3 Net Present Value/Economic rate of return:
Not applicable\.
4\.4 Financial rate of return:
Not applicable\.
4\.5 Institutional development impact:
The institutional development impact is uneven between sectors and is rated negligible
overall\. While there was some progress in public finance management with the introduction of a
quarterly cash-flow plan, the VAT, and more transparent public spending, the problem of salary
arrears resurfaced and political instablity negated all the achievements\. The private sector is now
involved in the telecommunications sectors and the distribution of petroleum products, although
for the latter there remains scope for greater liberalization\. There has been limited progress in
establishing an autonomous multisectoral regulatory body\.
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5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
5\.1\.1 Actual developments in the security, socio-political and macroeconomic environments
contrast sharply with the frameworks envisioned during the appraisal of the FCC in 1999 (see
Table 1 below)\. Since mid-2000, CAR has been buffeted by regional instability, domestic civil
unrest and military mutinies; and domestic and international oil crisis and other terms of trade
shocks\. As described in the section on the outcome of the credit, the security conditions proved
more difficult than foreseen\.
Table 1: Macroeconomic Environment: Projection and Outcome
1999 2000 2001 2002
FCC Actual FCC Actual FCC Actual FCC Actual
Terms of Trade 1\.6 -3 9\.3 -4\.8 1\.7 -10\.7 0 -2\.7
GDP Growth 5 3\.4 5\.2 2\.6 4 1\.5 4 1
Source: IMF draft Staff report for Actual figures and Report of the President for the FCC (P-7348-CA)
5\.1\.2 The seizure in DRC of about 30,000 tons of petroleum products imported by CAR and the
disruption of river transit due to the civil war in the Equator Province of DRC created a domestic
oil supply crisis\. The Government of the CAR (GOCAR) responded to this crisis by turning to
road transport from the Port of Douala (Cameroon) to import petroleum products, resulting in a
doubling of transport costs (see Table 2)\.
Table 2: Retail Prices of Kerosene (CFAF per liter)
Dec-99 Sep-00 Oct-00 1-May
Import cost at seaport 1/ 116\.5 241\.4 241\.4 165
Transportation costs 1/ 62\.2 125 125 140
Distribution costs and margin 2/ 36\.1 66 66 184
Costs in Bangui 214\.8 432\.4 432\.4 489
Tax and duties/equalization 45\.2 -172\.4 -82\.4 -139
Retail price in Bangui 260 260 350 350
Source: IMF, Staff Report EBS/00/289 and the Authorities, Privatization Committee\.
1/ Matadi (DRC) for December 1999, and Douala (Cameroon) from September 2000 onward\.
2/ The distribution of petroleum product is privatized since January 2001\.
5\.1\.3 The oil supply crisis in 2000 was compounded by the depreciation of the CFAF by 16
percent against the dollar and a 33 percent increase in the international oil prices\. The shortage
paralyzed economic activity and government's revenue collection suffered as a result of the
slowing economy as well as from the temporary freeze of domestic retail prices of petroleum
products below their cost price (see Table 2)\. The GOCAR initially resisted a pass-through of the
increased supply costs into domestic prices\. However, in the face of a continuing erosion of
petroleum revenues, the GOCAR raised the retail prices of petroleum products by 44 percent for
diesel fuel, and 35 percent for kerosene and gasoline in October 2000\. Poor households were
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severely hit by the increase in the price of kerosene the product they most commonly use for
cooking and lighting\.
5\.1\.4 In addition to an increase in international oil prices in 2000-2001, the prices of CAR's
main export products (diamonds, timber, cotton and coffee) substantially declined in 2000-2002\.
Terms of trade have deteriorated by a cumulative 25\.0 percent since the appraisal of the FCC,
against the initial program estimate of +14\.0 percent\. The cotton price has declined by about 30
percent since September 2000, aggravating the difficulties of the cotton sector in CAR, with
SOCOCA incurring large deficits\. The coffee price in December 2001 was half the level in
November 1999, the time of appraisal of the FCC, and currently is down by 44\.3 percent
compared to the 1999 level\.
5\.2 Factors generally subject to government control:
During the life of this project, government commitment to the privatization of petroleum
products distribution was often in doubt\. Following the severe shortage of petroleum products
after the loss of stocks in DRC in 1999, Libya promised an in-kind grant of 55,000 tons of
petroleum products\. On June 16, 1999, the Government passed a decree establishing a committee
to manage in-kind grants of petroleum products\. The measure threatened to reverse the
privatization process, as the committee would function in place of, or at least in parallel to, the
private operators that were preparing to replace PETROCA\. The decree also seemed to open the
door to dual prices of petroleum products, which would have been another blow to the
privatization of petroleum distribution\. In addition, retail prices for oil remained unchanged
during the summer, which entailed loss of revenue, unprofitable operations and further delays in
the privatization process\. Fortunately, the authorities did not renew the decree after it expired in
September 1999\. They secured a lasting arrangement with local businessmen to import petroleum
products via Cameroon, a more expensive but safer route than the river route\. In October 1999,
they also took the politically difficult decision to raise the retail prices of petroleum products\.
5\.3 Factors generally subject to implementing agency control:
Not applicable\.
5\.4 Costs and financing:
The aggregate financing of the three-year program discussed in the donors' meeting in
June 1998 was not enough to fully fund the program\. The financing for 1998 factored in
proceeds of the privatization of PETROCA and SOCATEL, and disbursement from multilateral
institutions, including the Bank and the African Development Bank (AfDB)\. The financing plan
implied tight sequence of domestic actions and budget support operations\. These proved to be
completely unrealistic\. The privatization of the two utilities could not be completed by December
1998\. AfDB financing became increasingly uncertain as a quick-disbursing operation hinged on
the clearance of AfDB arrears by mid-November 1998, which CAR could not do without the
resources it expected from the proposed IDA credit\. The tight financing situation and the related
issue of negative net transfers had led to the widespread perception that the IMF and the Bank
were primarily interested in repaying arrears to external creditors, and it had weakened the
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position of those supporting reforms\. The concept note stressed that risk but the issue remained
throughout program implementation\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The development objectives were not achieved, which explains the overall sustaibaility
rating of "unlikely"\. However, the sustainability of some achievements in petroleum product
distribution and telecommunications sectors is likely\. The privatization of the petroleum sector
distribution was a major factor to the good revenue performance in 2002\. Added to the expertise
brought by TOTAL, a global company, a reversal is unlikely\. Reforms in the cellular segment of
the telecommunications sectors are also likely to hold because of broad public support: the two
active private cellular phone operators are more efficient than the public operator and they were
able to supply unmet demand\. In the area of public finance management, the government has
further deepened the diagnosis of key issues in 2002 with the support of the EU, and a follow-up
institutional/capacity building operation is under preparation, again with EU financing\. France has
also stepped in with a technical assistance project to financial administrations\.
6\.2 Transition arrangement to regular operations:
Not applicable\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
7\.1\.1 Overall Bank performance in designing the credit was unsatisfactory\. On one hand, the
Bank rightly joined an international compact with the IMF and UN to help stabilize CAR which
was emerging from a series of military mutinies\. The Bank recognized that the difficult
environment should not deter assistance, and that failure to act would prove very costly in the
future\. This view has been confirmed recently with the findings of the LICUS task force\. The
development objectives under the credit were also consistent with the government's own
development priorities\. On the other hand, the design of the operation was overly ambitious for a
LICUS-type country with very weak implementation capacity and political and social instability\.
7\.1\.2 Bank support to Government in the preparation of the reforms, particularly in the energy
sector, was not timely\. The Government justified the delay in privatizing ENERCA by the slow
response of the Bank on specific technical questions, and the late availability of the PHRD grant
to the energy sector\. Credit preparation was constrained by limited knowledge and resources\. The
concept paper did however make a candid assessment, stressing the gaps in coverage of the
mining and forestry sectors, legal and regulatory reform, and management of public expenditure\.
Lastly, there was no staff continuity as the credit has had three different task team leaders\.
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7\.2 Supervision:
Bank performance during supervision was unsatisfactory\. In part due to continued
political instability, the task team was unable to conduct regular supervision missions in order to
maintain continuity in the policy dialogue\. The absence of specific macroeconomic targets has also
hindered the quality of supervision\. Adequacy of supervision inputs and processes, as well as
supervision of fiduciary/safeguard aspects were marginal\. Supervision mission sometimes did not
include enough expertise, reaching the point of one-man missions\. In addition, they lacked
coherence (e\.g\., different components of the program were supervised at different times)\. Advice
provided by Bank to the Government was not timely and did not recognize the complexities,
particularly with regard to the privatization component\.
7\.3 Overall Bank performance:
The Bank's overall performance is rated unsatisfactory\.
Borrower
7\.4 Preparation:
Government performance during preparation was unsatisfactory\. Progress in implementing
the conditions for appraisal and Board presentation were unduly slow, even after taking into
account capacity constraints\. Government ownership of some reforms, notably the distribution of
petroleum products, was also questionable\.
7\.5 Government implementation performance:
The overall performance of the Government during FCC implementation was
unsatisfactory\. Implementation was normally supervised by an Inter-ministerial Committee for the
Adjustment Program chaired by the Prime Minister, and managed by a Technical Committee in
which all ministries concerned with the implementation of the program were represented\. The
CTP-PAS, a monitoring unit in the ministry of finances assumed the role of secretariat of the
Technical Committee\. In practice, the Inter-ministerial Committee has not met frequently and the
CTP-PAS took the lead in monitoring project implementation\. At first, CTP-PAS issued a
monthly report on the execution of the fiscal program and a quarterly report on the
implementation of structural reforms, but it subsequently discontinued the reporting\. CTP-PAS's
own performance was affected by a high turnover of its management, as it has had four managers
since 1999\.
7\.6 Implementing Agency:
See Section 7\.5\.
7\.7 Overall Borrower performance:
Overall Borrower performance is rated unsatisfactory\.
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8\. Lessons Learned
8\.1 The credit had the potential to be an effective instrument in an emergency, post-conflict
situation, for improving the provision of government services, stimulating private sector
development, and generally enhancing the prospects for national reconciliation\. The economic,
political and social returns from such an investment in a post-conflict context are considerable\.
However to be effective, the design of the operation would have needed to be more sensitive to
the lack of capacity in such situation\. An operaton underpinned by more focused and less
ambitious reform program with adequate technical assistance for building implementation capacity
would have been more appropriate and made supervision more focused\. Some important lessons
learned include the following:
8\.1\.1 When faced with a strong political/reputational pressure to move in a difficult and poor
security environment, the Bank should also consider the effectiveness and sustainability of its
budgetary assistance, both factors bearing higher reputational risks in the medium to long term\.
The right approach is to state clearly that the Bank has endorsed the LICUS principles, and it is
committed to stay engaged even in most difficult circumstances\. However, for budgetary
support, four factors should be taken into account: (i) a sound macroeconomic framework should
be in place; (ii) there should be some prior investment in knowledge so as to design a relevant and
realistic reform program; (iii) Bank support should be part of a broader international assistance
package, with most donors endorsing a common platform; (iv) a candid assessment of the internal
process in place to address unrest, including the quality of the national dialogue and reconciliation
efforts, should be undertaken\. In addition, a comprehensive plan for security reform should be
implemented\.
8\.1\.2 For a country like CAR emerging from a devastating conflict, with disruptions in
administrative capacity and a distressed economy, the capacity to raise domestic revenue is most
likely limited in the short-term, and therefore balance of payments support is needed\. In
establishing the country macroeconomic framework, revenue should be realistically estimated and
there should be positive net transfers\.
8\.1\.3 Preparation of relevant and good quality Economic and Sector Work (ESW) and policy
notes is a critical prerequisite for a meaningful policy dialogue with the government and
preparation of loans/credits\.
8\.1\.4 Privatization of public enterprises and utilities involves complicated processes and requires
careful sequencing\. In designing an adjustment operation, much more thought needs to be given
to the country's economic and political conditions, and its ability to implement difficult and
complex reform measures\.
8\.1\.5 For LICUS-type countries such CAR, the focus of the Bank assistance should be on
building capacity in the government to implement reforms and improve delivery of services\.
9\. Partner Comments
(a) Borrower/implementing agency:
- 13 -
(b) Cofinanciers:
(c) Other partners (NGOs/private sector):
10\. Additional Information
- 14 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Area Objective Measures and Actions Status
Public Finance
Revenue Increase revenue in a Refrain from granting special tax exemptions to logging and mining operations\. Unmet
transparent and
efficient manner
Submit to IDA an inventory of special tax exemptions between January 1, 1995 and December Done (2000)
31, 1998 to logging and mining operations\.
Institute minimum turnover tax for diamond-purchasing bureaus Done
Replace turnover taxation with value added tax Done (2001)
Introduce broad-based licensing for small-scale taxpayers Done (2000)
Expenditure Improve prospects for No additional salary arrears during the 12 months preceding April 1, 2000 Done
civil peace
Improve road
maintenance
Reverse deterioration
in social indicators
Improve fiscal
transparency
Settlement of PETROCA's obligations to the Road Fund due in 1999 Unmet
1999 budget allocation for goods and services in education and health is 18\.6 % and 15 % higher, Done (1999)
respectively
Closure of unlawful bank accounts of ministries Done (1999)
Elimination of all off-budget spending Done (2000)
Cotton sector Reduce deficit of Lowering of producer prices Done
sector parastatal
(SOCOCA)
Closure of one ginning plant Done but
reversed
Adoption of flexible price setting mechanism Unmet
No financing of deficit by medium-term bank credit Unmet
Privatization of Reduce quasi-fiscal Privatize BICA (commercial bank) Done (1999)
Public losses of and subsidies
Enterprises to public enterprises\.
Improve their
transparency and
efficiency\.
Privatize UBAC (commercial bank) Done (1999)
Close all public enterprises that have ceased operations\. Done (1999)
Privatize petroleum products imports and distribution (liquidate PETROCA; settle rights of Done (1999)
employees affected by privatization; agree with three oil companies on transfer of PETROCA's
assets; creation of SOGAL, to take over the importation and storage of petroleum products\.)
Approve strategy for power sector and submit revised electricity code to Parliament\. Unmet
Prepare regulatory framework for the water and telecommunications sectors\. Unmet
Create an autonomous regulatory body for the water, electricity and telecommunications sectors\. Unmet
Bring ENERCA, the power utility, to the point of lease\. Unmet
Business Improve regulatory OHADA legislation enacted\. Done (1998)
Environment framework
Labor Code revised\. Unmet
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Annex 2\. Project Costs and Financing
(In SDRs million)
Bank Fiscal Year FY00 FY01 FY02 FY03
Appraisal Estimate 10\.1 4\.3 0 0
Cumulative 10\.1 14\.4 14\.4 14\.4
Actual 6\.5 3\.6 0 0
Cumulative 6\.5 10\.1 10\.1 10\.1
Actual as % of Estimate 64 70 70 70
Project Financing by Component (in US$ million equivalent)
Percentage of Appraisal
Component Appraisal Estimate Actual/Latest Estimate
Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\.
20\.00 0\.00 0\.00 14\.00 0\.00 0\.00 70\.0 0\.0 0\.0
- 16 -
Annex 3\. Economic Costs and Benefits
Not applicable\.
- 17 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
09/1998 9 (1) Country Director S S
(1) Country Manager
(1) Sector Manager
(1) Task Manager
(3) Sr\. Economists
(1) Sr\. Power Engineer
(1) Economist
Supervision
October 29, 2001 1 (1) Task Manager S S
May 30, 2001 2 (1) Task Manager S S
(1) Resident Economist
July 30, 2001 1 (1) Task Manager S S
February 24, 2002 2 (1) Task Manager S S
(1) Sector Manager (Energy)
ICR
1 (1) Team Leader
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 98 254
Supervision 39 100
ICR 3 11
Total 140 355
- 18 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 19 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 20 -
Annex 7\. List of Supporting Documents
1\. Minutes of the Operations Committee Meeting of June 3, 1998 on a Post-Conflict Transition
Strategy for the Central African Republic\.
2\. Office Memorandum\. Project Concept Review Meeting memorandum and Concept Paper\.
September 25, 1998\.
3\. Office Memorandum\. CAR Structural Adjustment Credit, Minutes of Concept Paper Review
Meeting (October 2, 1998)\. October 9, 1998\.
4\. Back-to-office report and Aide-Memoire, Mission to Bangui, September 13-17, 1998\. September
20, 1998\.
5\. Statement of Mission Objectives (October 16- November 2, 1998) for a Structural Adjustment
Credit for the Central African Republic\. October 7, 1998\.
6\. Project Information Document\. Central African Republic Structural Adjustment Credit\.
October 8, 1998\.
7\. CAR SAC Mission Status Report\. October 23, 1998\. (Email)\.
8\. CAR SAC Review of BTOR of October Mission\. November 10, 1998\.
9\. Back to Office Report: CAR Structural Adjustment Credit\. November 11, 1998\.
10\. Aide-mémoire de la mission de préparation d'une opération d'ajustement structurel et lettre de
transmission\. 20 novembre 1998\.
11\. Office Memorandum to Sven Sandstrom, Managing Director, on the mitigation of security risks
for the Structural Adjustment Operation in the Central African Republic\. December 1, 1998\.
12\. Office Memorandum on the Political, Security and Economic Context in the Central African
Republic, December 21, 1998\.
13\. Letter of President Wolfensohn to UN Secretary General Kofi Annan on the link between the
presence of peacekeeping troops and the preparation of an adjustment operation\. December 21,
1998\.
14\. Statement of Mission Objectives Mission to Chad and CAR January 30-March 2, 1999\.
January 25, 1999\.
15\. Project Information Document\. Central African Republic Structural Adjustment Credit\.
January 26, 1999\.
16\. Interim report of a Bank-IMF mission to Bangui (Email)\. February, 21, 1999\.
17\. Letter to the Prime Minister of the CAR on the preparation of the fourth Structural Adjustment
Credit (French, not signed)\. October 7, 1999\.
18\. Office Memorandum\. Central African Republic Post Conflict Budget Support Credit (Cr
60092-CF)\. ROC Package\. October 13, 1999\.
19\. Office Memorandum\. Central African Republic Minutes of the ROC Meeting on Post-Conflict
Budgetary Support Credit (Cr 60092- CF) Tuesday October 19, 1999\. October 28, 1999\.
20\. Letter of the Minister of Finance, Plan and International Cooperation to the Country Director
on the Preparation of a Post-Conflict Budgetary Support\. November 6, 1999\.
21\. République Centrafricaine\. Crédit a la Consolidation des Finances Publiques Procès Verbal
Des Négociations\. Novembre 17, 1999\.
22\. Report and Recommendation of the President of the International Development Association to
the Executive Directors on a Proposed Credit of SDR14\.4 million (US$20 million equivalent) to
the Central African Republic for A Fiscal Consolidation Credit, November 24, 1999\. Report No
P-7348-CA\.
23\. Information Note to the Board and Statement by IMF Staff outlining recent macroeconomic
developments in the Central African Republic\. IDA/R99-188/2\. December 14, 1999\.
24\. Central African Republic\. State of the discussions concerning the Extended Structural
- 21 -
Adjustment Facility (ESAF)\. December, 1999\.
25\. Statement to the Board for the Fiscal Consolidation Credit to the Central African Republic\.
December 16, 1999\.
26\. Development Credit Agreement for the Fiscal Consolidation Credit\. January 6, 2000\.
27\. Central African Republic Fiscal Consolidation Credit (Cr\. No 3305 CAR)\. Release of the
second tranche Partial Waiver of One Condition\. October 17, 2000\.
28\. Statement of Mission Objectives (May 13-June 3, 2001)\.
29\. CAR: Office Memorandum Fiscal Consolidation Credit\. Extension of closing date for the IDA
Credit (Cr\. No 3305-CAR)\. June 26, 2001\.
30\. Back to Office Report for an Energy sector Mission to CAR\. February 23, 2002\.
31\. Aide Mémoire de la mission Energie en RCA (mars 10-24, 2002)\.
32\. President's Memorandum: Central African Republic, Fiscal Consolidation Credit (Credit No\.
3305-CAR) Proposed Amendment to the Development Credit Agreement, March 20, 2002\.
IDA/R2002-0038\.
33\. CAR: Fiscal Consolidation Credit (ID: P060092) Final Quality of Supervision Assessment
(QSA5)\. November 20, 2002\.
34\. Archived Project Status Reports\.
- 22 -
Additional Annex 8\. Government's Contribution
MINISTERE DE L'ECONOMIE, DES FINANCES, REPUBLIQUE CENTRAFRICAINE
DU BUDGET, DU PLAN ET DE LA Unité Dignité Travail
COOPERATION INTERNATIONALE -=-=-=-=-=-=-
-=-=-=-=-=-=-=-=-=-=-=-
DEPARTEMENT DE L'ECONOMIE,
DES FINANCES ET DU BUDGET
-=-=-=-=-=-=-=-=-=-=-=-
C A B I N E T
-=-=-=-=-=-=-=-=-=-=-=-
COMITE TECHNIQUE PERMANENT DU SUIVI DES
PROGRAMMES D'AJUSTEMENT STRUCTUREL
-=-=-=-=-=-=-=-=-=-=-=-
PROJET DU RAPPORT D'ACHEVEMENT
DU CREDIT A LA CONSOLIDATION
DES FINANCES PUBLIQUES
- 23 -
Décembre 2003
SOMMAIRE
INTRODUCTION 3
I- OBJECTIF DU CREDIT ET CONDITIONS DE DECAISSEMENTS 3
II TRANCHES MOBILISEES 4
III MISE EN APPLICATION DES REFORMES 4
MACROECONOMIQUES ET STRUCTURELLES 4
IV EVALUATION DES RESULTATS DES REFORMES 5
V CONCLUSION 6
VI - ANNEXE\. 7
INTRODUCTION
Le présent rapport rend compte de l'exécution de l'Accord de Crédit de Développement N°
3305-002 relatif au Crédit à la Consolidation des Finances Publiques signé le 06 Janvier 2000\. Cet
accord a été conclu entre la Banque Mondiale représentée par Serge MICHAILOF,
Vice-Président Régional et le Gouvernement Centrafricain représenté par Henri KOBA,
Ambassadeur accrédité auprès des Etats Unis d'Amérique\. Il met en relief successivement
l'objectif du crédit, les performances des deux parties, les résultats, impacts et contraintes et les
- 24 -
arrangements futurs du crédit\.
I- OBJECTIF DU CREDIT ET CONDITIONS DE DECAISSEMENTS
Suite aux progrès accomplis dans la mise en oeuvre du programme conclu avec le FMI en
juillet 1998, la Banque Mondiale a accordé à la RCA un prêt budgétaire dont le montant s'élève à
14,4 millions de DTS (Droits de Tirage Spéciaux) soit 11,6 milliards de Francs CFA pour
consolider les finances publiques et stabiliser l'économie\.
Conformément à l'accord de crédit, les décaissements devraient se faire en trois tranches à
savoir :
- 1ère Tranche : 6,5 millions de DTS, soit 5,8 milliards FCFA
- 2e Tranche : 3,6 millions de DTS, soit 2,3 milliards FCFA
- 3e Tranche : 4,3 millions de DTS, soit 3,5 milliards FCFA
Il convient de rappeler que le premier décaissement était conditionné par la mise en place
d'un cadre macro-économique satisfaisant, par référence aux indicateurs économiques qui
satisfont les deux parties\.
Le deuxième décaissement était lié quant à lui :
1) à la non accumulation des arriérés des salaires à partir du 31 mars 2000 (paragraphe 8 de
la lettre de Politique de Développement );
2) à l'inventaire des exonérations fiscales accordées aux sociétés minières et forestières du
1er janvier 1995 au 31 décembre 1998 et à ne plus accorder de nouvelles exonérations à la date
d'entrée en vigueur de cet Accord (paragraphe 6 de la lettre de Politique de Développement ) ;
3) au règlement de toutes les obligations courantes de PETROCA dues au Fonds Routier
entre le 1er janvier et le 31 décembre 1999 (paragraphe 21 de la lettre de Politique de
Développement )\.
En ce qui concerne le troisième décaissement appelé « tranche flottante », les conditions à
son déblocage concernent :
1) l'affermage de l'ENERCA (paragraphe 14 de la lettre de Politique de Développement) ;
2) l'approbation de la stratégie pour le secteur de l'électricité et l'adoption par le parlement
du nouveau code de l'électricité jugé satisfaisant par la Banque Mondiale (paragraphes 14 et 17 de
la lettre de Politique de Développement) ;
3) l'établissement d'un cadre réglementaire pour les secteurs des télécommunications et de
l'eau (paragraphe 17 de la lettre de Politique de Développement ) ;
4) l'établissement d'un organe de régulation pour les secteurs de l'électricité, des
télécommunications et de l'eau ; il convient de rappeler que les fonctions et les termes de
référence ont été jugés satisfaisants par la Banque (paragraphe 17 de la lettre de Politique de
Développement )\.
II TRANCHES MOBILISEES
- 25 -
La RCA a obtenu successivement deux décaissements sur trois depuis la conclusion de cet
Accord de Crédit au Développement\. Il s'agit essentiellement de la première tranche (6,5 millions
de DTS, soit 5,8 milliards de FCFA) décaissée le 14 février 2000 et de la deuxième tranche (3,6
millions de DTS, soit 3,2 milliards de FCFA) mobilisée le 04 janvier 2001\.
III MISE EN APPLICATION DES REFORMES
MACROECONOMIQUES ET STRUCTURELLES
Ce crédit a été octroyé sous forme d'appui budgétaire dans un contexte où le
Gouvernement était engagé dans la mise en oeuvre des réformes sur le plan des finances publiques
et des réformes structurelles\.
En effet, depuis juillet 1998, les politiques économiques et financières de la RCA étaient conçues
dans le cadre d'un accord triennal appuyé par la Facilité d'Ajustement Structurel Renforcé
(FASR) et remplacé par la Facilité pour la Réduction de la Pauvreté et la Croissance (FRPC)\.
L'exécution de ce programme a rencontré d'énormes difficultés qui ont à la conclusion d'un
programme de référence en 2001, couvrant la période d'octobre 2001 à mars 2002\. Depuis lors,
aucun autre accord n'est signé avec les institutions de Bretton Woods, compte des crise
récurrentes\.
1\. Réformes macroéconomiques
De 2000 à 2002, les fondamentaux de l'économie révèlent :
- un ralentissement de la croissance, passant des taux positifs de 1,8% en 2000 et 1% en
2001 à 0,8% en 2002 ;
- de légères tensions inflationnistes obtenues en 2000 (3,2%) et en 2001 (3,8%) malgré un
recul en 2002 (2,3%)\. Cela est consécutif aux crises de carburant de 2000 et aux coups de force
manqués du 28 mai 2001 qui ont renchéri les coûts d'approvisionnement et de production ;
- une stabilité de la pression fiscale autour de 9% du PIB ;
- une stabilité du déficit du compte courant autour de 2% du PIB malgré une dégradation
de -4,9% enregistrée en 2001 ;
- une réduction de la masse monétaire qui passe d'un taux positif de 5,4% en 2000 à 4,3%
en 2002\.
Globalement, ces évolutions sont grandement liées aux chocs internes (événements
politico-militaires de mai et novembre 2001 et ceux d'octobre 2002, etc\.) et aux chocs externes
(crise de carburant en 2000, effondrement des cours des matières premières, etc\.)\.
Sur le plan pratique, les conditions de décaissement de la deuxième tranche citées plus haut
devraient se traduire par une augmentation des recettes de l'Etat, suite à la mise en application des
recommandations des rapports TRAHIN et FOSSAT (cf\. annexe)\. Cela s'est traduit, entre autres,
par l'introduction de la TVA en remplacement de la TCA dans la loi de Finance 2000\. Les progrès
enregistrés au cours de cette période ont donc permis d'obtenir le 2e décaissement du Crédit à la
- 26 -
consolidation des finances publiques\.
2\. Réformes structurelles
Au niveau des conditions liées au processus de réformes structurelles, le gouvernement a
adopté initialement une stratégie de réforme du sous-secteur de l `électricité basée sur l'affermage
de la production, du transport, de distribution et de la commercialisation\. Les principaux objectifs
fixés consistaient à augmenter l'accès de la population urbaine et rurale à l'électricité\.
Cependant, la réduction significative de SAUR International dans le capital social de
SODECA a amené le Gouvernement et les bailleurs de fonds (Banque Mondiale et AFD) à opter
pour le choix de la privatisation couplée de l'ENERCA et la SODECA ; car la situation financière
et l'état des équipements des deux sociétés ne permettent pas d'attirer un investisseur\. Cela
permettrait de réaliser les économies d'échelle et susciter le désir des investisseurs privés\.
A ce jour, le Gouvernement a pris deux arrêtés relatifs à l'adoption du principe de
privatisation groupée des secteurs de l'eau et de l'électricité (Arrêté n° 012\.02 du 20 février 2002)
et à la fusion de SODECA et ENERCA (Arrêté n° 014\.02 du 25 mars 2002)\. Et le processus suit
son cours\. Aussi, le code de l'électricité a-t-il été rédigé et transmis à la Banque Mondiale\.
Quant à la politique sectorielle et le cadre juridique et réglementaire des
télécommunications, le document a été rédigé, adopté par le Conseil des Ministres et transmis à la
Banque Mondiale\.
Concernant la mise en place de l'Agence de Régulation Multisectorielle, elle n'a pas
encore été faite suite au retard survenu dans l'examen des propositions et la signature du contrat
par le Cabinet Jones Day, Reavis & Pogue\.
IV EVALUATION DES RESULTATS DES REFORMES
La mise en oeuvre de cet Accord de crédit s'est heurtée au début de l'année 2000 à la crise
qui a frappé de plein fouet le secteur pétrolier\. En effet, cette crise s'explique par la réticence des
banquiers à financer la campagne 1999 2000 pour la simple raison que la société PETROCA
qui a le monopole de distribution et de vente de produits pétroliers est en pleine privatisation\.
Cette société procurait environ 700 millions à l'Etat par mois au titre des taxes\. Il convient de
souligner que ce manque à gagner a joué négativement sur les résultats de l'exercice 2000
concernant les repères quantitatifs tels que les recettes et les dépenses de l'Etat\.
Aussi, l'exécution à mi-parcours de ce crédit au cours de l'année 2001 a rencontré un
obstacle majeur à savoir le coup de force des mois de Mai et Novembre 2001\. Ces crises
politico-militaires récurrentes ont remis en cause tous les efforts entrepris au début de ce
programme et justifient en partie le niveau élevé des arriérés intérieurs\.
- 27 -
De plus, la procédure trop longue du décaissement des fonds par la Banque Mondiale a
défavorisé la RCA qui, par le biais des crédits relais de la BEAC, perd une bonne partie des fonds
alloués en payant les intérêts débiteurs exorbitants\. On peut noter, entre autres, le montant non
négligeable du règlement des arriérés sur les prêts antérieurs concédés à la RCA par la Banque
mondiale et qui s'élève à 388 millions de francs CFA lors du premier décaissement\.
Par ailleurs, l'absence de l'assistance technique au titre de la TVA a beaucoup pénalisé et
rallongé l'effet financier de cette nouvelle taxe sur les finances publiques en RCA\. La formation
sur le tas des contrôleurs en matière de la TVA n'a pas donné les effets escomptés en matière de
recouvrement\.
V CONCLUSION
Au total, les décaissements de ce crédit effectués par la Banque Mondiale au début des
années 2000 et 2001, se chiffrent à environ 9,1 milliards et ont permis d'exécuter les dépenses
énumérées ci-haut\. En outre, il convient de rappeler que ce crédit devrait jouer un rôle très
déterminant sur la mise en oeuvre de la politique économique n'eut été les crises et les difficultés
connues\.
En somme, le Gouvernement souhaite vivement renouer avec la Banque et attend son
appui pour la relance socio-économique\.
- 28 -
VI ANNEXE
A - REFORMES DOUANIERES
N° Recommandations Echéance Niveau d'exécution
A1 Nouvel organigramme de Janvier 2000 Fait\. Cf Décret 01\.282\. quelques
la Douane F\.M\.I\. anomalies constatées et signalées au
Cabinet pour corrections
A2 Mutation interne des Décembre 2000 Fait\. Cf Décret n° 03\.128 du 22\.06\.03
cadres des douanes\. F\.M\.I\. Arrêté n° 09/01 et Décision ministérielle
n° 047 et 048 du 07\.07\.03 et Note de
service n° 169/08/03\.
A3 Problème de l'affectation Janvier 2001 L'audit interne (Note n° 010 du
de stagiaires en Douane F\.M\.I\. 2\.02\.01) traite de l'intégration partielle
de certains stagiaires\. Partiellement
exécuté
A4 Intégration de la Douane Février 2001 Proposition de paiement échelonné des
au sein de l'O\.M\.D\. F\.M\.I\. arriérés de contributions de la RCA par
(Organisation Mondiale l'O\.M\.D\. Soumis au Ministère\.
des douanes) Paiement partiel des arriérés
indispensables pour obtenir actions de
formation de l'Organisation et que la
R\.C\.A redevienne membre actif\. Non
fait\.
B1 Assignation de résultats Juillet 2000 Fait, 2003
mensuels de perception F\.M\.I\.
de recettes et de
contentieux par service
B2 Renforcement de la Juillet 2000 Fin de contrat avec SGS, la Douane
collaboration Douane / Janvier 2001 est en pourparler avec la société
SGS F\.M\.I\. BIVAC Internationale pour la
signature d'un nouveau contrat\.
B3 Mise en oeuvre de la TVA Janvier 2001 Fait\. Une note de service est venue
F\.M\.I\. préciser les modalités de mise en
oeuvre de cette taxe (cf\. note n° 006
du 8\.1\.01\.) TVA appliquée aux
hydrocarbures dans LDF 2002\.
B4 Faire respecter la Novembre 2000 Suivi plus rigoureux des régimes
- 29 -
réglementation des F\.M\.I\. suspensifs et exonératoires,
franchises et exonérations notamment l'entrepôt de stockage
Interdire les magasins de vente hors
taxes\. Exceptés BAMAG et DIAS\.
B5 Utilisation optimale de Mars 2001 Projet de mise en place de SYDONIA
SYDONIA 2\.7 F\.M\.I\. ++ en attente\. Utiliser toutes les
fonctionnalités et l'apport de fonds
issu de la RIDT pour l'informatique
douanière\. Application étendue à
l'enregistrement des registres de gros
et des régimes suspensifs\. Non fait\.
B6 Réactiver les enquêtes et Novembre 2000 Nomination depuis octobre 2001 d'un
le service de la révision F\.M\.I\. directeur des enquêtes et des brigades\.
(contrôle a posteriori) Résultats contentieux améliorés\.
B7 Faire gérer le Décembre 2000 Appui Recette Principale à la gare
dédouanement des F\.M\.I\. routière pour le dédouanement\.
conteneurs par la Recette
Principale\.
B8 Apurement des registres Décembre 2000 Fait l'objet d'une mission spécifique,
de gros, et des titres de F\.M\.I afin de fixer une liste de redevables
transit D 15 récalcitrants et augmenter les recettes
et le contentieux\. En cours\.
B9 Création d'une brigade Décembre 2001 Dossier soumis au Ministère de
mixte de contrôle tutelle\. En instance\.
Douanes Impôts\.
B10 Protocole d'accord avec Février 2001 Application partielle\.
la douanes camerounaise
sur le problème du transit
C1 Problème de taxation aux Mars 2001 Aucunes explications fournies par le
droits de douane des F\.M\.I\. Cameroun suite diverses demandes de
hydrocarbures destinés à la Douane RCA\. Problème porté au
la RCA et en provenance niveau de la CEMAC\. Sans réponse\.
du Cameroun\.
C2 Réévaluer la politique de Janvier 2000 L'application des recommandations
taxation de la filière bois ? F\.M\.I\. des états généraux\.
C3 Revoir les procédures de Juillet 2001 Fait, nomination effective d'un
dédouanement et prévoir F\.M\.I\. responsable des archives et
un archivage des aménagement d'un local d'archives à
déclarations\. la R\.P\. Prévoir texte de simplification
sur les procédures de dédouanement\.
C4 Mettre à jour la Septembre 2001 Mise à jour du Code des douanes\.
documentation F\.M\.I\. Mais le nombre est insuffisant pour
professionnelle tout le service\.
C5 Projet de texte sur Fait\. Texte fixant les attributions de
l'antenne des douanes l'antenne des douanes de Douala et
- 30 -
centrafricaines de Douala Brazzaville déjà signé\. Mise en place
et Brazzaville\. des 2 antennes\.
C6 Plan de formation des Septembre 2001 Retenir les thèmes et faire module de
agents des douanes F\.M\.I\. formation\. Avis favorable de l'E\.I\.E\.D
pour formation et recyclage des agents
non formés ; en cours\.
C7 Demande de mise en Février Note n° 006 du 15 février 2001\. Note
oeuvre de dispositions 2001 à la signature du ministre délégué pour
particulières relatives à compléter le dispositif d'aide à la lutte
l'admission en franchise contre les maladies infectieuses\. En
des produits importés par exécution actuellement\.
la Croix Rouge et oeuvres
assimilées\.
D1 Sécuriser les enceintes Novembre 2000 Partiellement fait\. Achèvement mur
douanières\. F\.M\.I\. enceinte de la R\.P en cours et de la
direction générale à réaliser\.
Partiellement fait\.
D2 Utiliser la RIDT pour Juillet 2001 Mission expert CNUCED pour remise à
équiper les services en niveau SYDONIA 2\.7 et perspectives
informatique de gestion de migration à la version 3\. Non fait\.
D3 Projet du PK 26 Financé par le budget de l'Etat, travaux
stoppés
D4 Proposition de Septembre 2001 Les recommandations de la journée de
programme d'équipement F\.M\.I\. réflexion sur la Douane\.
pour la douane
N° Recommandations Echéance Niveau d'exécution
A1 Nouvel organigramme de Janvier 2000 Fait\. Cf Décret 01\.282\. quelques
la Douane F\.M\.I\. anomalies constatées et signalées au
Cabinet pour corrections
A2 Mutation interne des Décembre 2000 Fait\. Cf Décret n° 03\.128 du 22\.06\.03
cadres des douanes\. F\.M\.I\. Arrêté n° 09/01 et Décision ministérielle
n° 047 et 048 du 07\.07\.03 et Note de
service n° 169/08/03\.
B - REFORMES FISCALES
RECOMMANDATIONS DATE LIMITE DE NIVEAU D'EXECUTION
MISE EN OEUVRE
Création de la commission chargée de 30 avril 2001 Commission mise en place par
suivre la mise en oeuvre des note de service n° 155 du
- 31 -
recommandations 18/09/01
Maîtrise des exonérations
Application strictement la convention immédiat A gérer conjointement avec la
aux seuls besoins diplomatiques et Douane\. Une note de mise en
exclure l'ensemble du personnel du place de commission tripartite
bénéfice de la convention Affaires étrangères/ Finances/
Plan est envoyée aux différents
départements\.
N'accorder aucune exonération de Immédiat Déjà en pratique
TVA aux achats et aux importations
réalisées par les ONG et associations
Ne pas renouveler les conventions Dés leur date Suivi strict
d'exonération accordées à certaines d'expiration
entreprises
Immatriculation des contribuables
Fait, poursuite de la
Initier une campagne d'information 31 Décembre 2001 sensibilisation ; des anomalies
pour l'immatriculation des continuent d'être constatées, le
contribuables et attribuer le NIF à DGID vient de donner des
l'ensemble des entreprises recensées instructions pour repriser les
choses\.
Renforcer les sanctions en cas Prochaine loi de Pas fait\.
d'exercice d'une activité sans finances
immatriculation
Utilisation du NIF par la Douane et le Immédiat Fait pour la Douane et non pas
Trésor le Trésor\.
Procédure de recouvrement
Appliquer le seuil d'assujettissement à Prochaine loi de En dehors des cas d'exonération
la TVA à l'ensemble des activités finances et d'activité exclus du champ
d'application de la TVA, la TVA
s'applique à l'ensemble des
activités\.
Réviser les modalités de recouvrement Prochaine loi de Collectif 2001
des impôts : IMF ; IS etc\. finances
- 32 -
Procéder au contrôle du prélèvement
fait par les grossistes pour le compte Immédiat Exécuté mensuellement
des Impôts\.
Exiger de la Douane la transmission
mensuelle de la liste des importations Immédiat et chaque Non fait
pour lesquels elle a effectué le fin de mois
prélèvement
Développer le logiciel Systémique
pour y intégrer l'édition automatique Immédiat En cours
des bordereaux de transmission des
recettes et l'enregistrement des actes
de procédure
Mettre en réseau les services des
Régies Immédiat Travaux en cours de réalisation
En 2003
Contrôle fiscal
Renforcer le contrôle ponctuel de la
TVA Décembre 2001 Plus de 190 contrôles
Créer la brigade mixte de contrôle
impôts/douanes Immédiat Non fait
Action au recouvrement
Relancer l'utilisation de la fermeture
administrative des locaux Septembre 2001 Fait
professionnels pour cause de
défaillance
Renforcer les moyens des services de
recouvrement Septembre 2001 En cours
Porter l'effectif des services de
poursuite à 4/5 agents Septembre 2001 Subordonné à l'organigramme
en instance d'adoption
Attribuer un budget annuel de
fonctionnement aux services chargés Septembre 2001 Pas fait
du recouvrement, par affectation des
frais de poursuite\.
- 33 -
Ne plus confier le recouvrement de
certaines côtes aux services du Trésor\. Immédiat Fait
- 34 -
Additional Annex 9\. QAG Report
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
Summary Assessment Sheet
(November 20, 2002)
COUNTRY: CAR PROJECT Fiscal Consolidation
TITLE: Credit
A\. Overall assessment
The panel assessed the overall quality of supervision of CAR Fiscal Consolidation Credit (FCC) as Marginal\.
The panel is aware that this operation was developed, approved and supervised under a very difficult political
and social context that required extraordinary efforts from the task manager and the rest of the task team\.
However, the panel feels that Focus on Development Effectiveness, Adequacy of Supervision Inputs and
Processes, Supervision of Fiduciary/Safeguard Aspects and Realism of Performance Ratings were all
Marginal\. Although the project had been reviewed in QEA3 (1999) and received an overall satisfactory rating,
it was that panel's assessment that Technical and Economic Aspects and Bank Inputs and Processes were
Marginal\. That panel also indicated that insufficient recent ESW and the absence of a strong field presence
limited the Bank's ability to engage major stakeholders and may undermine sustainability of reforms supported
by the operation\. The current panel feels that given the country's political and social instability and weak
implementation capacity, the overall design of the operation at entry was overly ambitious and there was no
clearly defined macroeconomic framework or quantitative fiscal targets for the operation\. The Bank did not
succeed in overcoming these initial handicaps\. Based on the Bank's supervision effort so far, this panel has
serious reservations about the likelihood that the development objectives of the project can be achieved and
sustained\.
B\. Main problems encountered (when did they occur, and what were the main factors giving
rise to them)
The FCC of SDR 14\.4 million was approved in December 1999 to assist the government in carrying out its
main responsibilities more efficiently and effectively through timely payment of wages to government
employees, and by privatizing a few banks and the water, electricity and telecom enterprises to improve
efficiency and the government's fiscal position\. The first tranche of SDR 6\.5 million was released in January
2000 and the second tranche of SDR 3\.6 million was released in December 2000\.
An attempted coup in May 2001, caused significant delays in implementation of the remaining program\. The
country has been under suspension since January 2002 with arrears to the Bank exceeding $9 million and by
end-March 2002, there were significant shortfalls in the government's wage payment commitments\. In April
2002, following a reassessment of market conditions in the water, electricity and telecom sectors, the Bank
agreed to amend the conditions of the release of the floating tranche of SDR 4\.3 million\. The amended
conditions were aimed at increasing the managerial and operational efficiency of the utilities, with the
understanding that the merged water and electricity companies will be privatized by end-2002 (instead of 2000
- 35 -
as envisaged in the original credit)\.
The amendment to the operation, although necessary, appears to have set over-ambitious goals, particularly
regarding completion of the privatization component by end 2000\. Lack of adequate preparation, including
relevant policy notes/ESW, seems to have handicapped the task team in maintaining a meaningful policy
dialogue with the government\. Apparently mainly due to political instability, the task team was also unable to
conduct regular supervision missions to maintain continuity in the policy dialogue\. The last (and apparently the
only full) supervision mission took place in May 2001 which coincided with the attempted coup\. Moreover, the
supervision missions appear to have lacked coherence, i\.e\. different components of the program were
supervised at different times, TORs and aide memoires were inadequate, and the impact of these missions on
overall project implementation are unclear\.
C\. Appropriateness and adequacy of actions taken by the Bank to resolve existing/potential
problems
According to the documentation provided to the panel, the task team and the regional management concluded
that although some progress had been made in implementation of the reforms supported by the project, the pace
of implementation was too slow and a number of key conditions were not met\. Specifically, the key conditions
for release of the third and final tranche which had been expected to be met by August, 2000, remained unmet\.
The task team stepped up its efforts to assist the government in implementing the measures related to the
specific conditions: it assisted the authorities in the preparation of management contracts; the Bank, together
with the French Development Agency, helped the government in preparing an action plan for the reforms in the
electricity and water sectors; and efforts were made to monitor progress regarding the implementation of
reforms under the related Bank-funded "Policy Support" project\.
Moreover, as indicated above, Bank management proposed amendments of conditions for release of the floating
tranche\. Although the proposed new conditions, agreed upon in a meeting between the government and Bank
senior management, are expected to help increase the managerial and operational efficiency of the main utilities
-- and seem quite appropriate by the panel, they still anticipate completion of the privatization of the merged
water and electricity sectors by end-2002\. Given that political instability and accumulation of arrears in salary
payments as well as debt service to IFIs have continued and the macroeconomic framework remains off-track,
it is the panel's view that the privatization component in the revised third tranche condition is unlikely to be
completed within by end-2002\. It is also the panel's assessment that the changes/amendments to the project
should have been introduced much earlier\.
D\. Any Systemic Lessons
Privatization of public enterprises and utilities involve complicated processes and requires careful sequencing\.
In designing an adjustment operation, much more thought need to be given to country's economic and political
conditions, and its ability to implement difficult and complex reform measures\.
For LICUS-type countries, the focus of the Bank assistance should be on building capacity in the government
to implement reforms and improve delivery of services\.
Preparation of relevant and good quality ESW and policy notes is a critical prerequisite for a meaningful policy
dialogue with the government and preparation of loans/credits\.
Timely and focused management guidance for amending project design, policy dialogue and skill mix of the
supervision missions, particularly in the initial phase of project implementation, is critical to the success of a
- 36 -
project\.
E\. Suggestions to the Task Team (List two or three factors that will require particular
attention in the short/medium term to improve the prospects for achieving the project's
development objectives and long-term sustainability)\.
The following recommendations are made on the assumption of further delays in the Government's meeting the
third tranche release conditions:
(1) Strengthen the staffing of the supervision/technical missions to provide timely advice to the counterparts in
the government in dealing with the implementation issues and developing a medium-term strategy for reform
and service delivery\.
(2) Step up technical assistance (under the Policy Support project) to enhance the government's ability to
implement reform measures and monitor progress towards the specified development outcomes\.
(3) Prepare policy notes to help the policy makers better understand lessons learned from other similar
experiences in the region and provide background technical material on the fiscal/financial impact of the
various reform measures\.
(4) Revisit the appropriateness of the measures requiring privatization by end-December 2002\.
Rejoinder from the Region
- 37 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
Summary Assessment Sheet
COUNTRY: CAR PROJECT Fiscal Consolidation
TITLE: Credit
Recommended for Stage 2 Review
Major Issues Identified
Although some progress has been made under this operation, achievement of the identified development
objectives is highly uncertain\. Due to political instability, lack of adequate implementation capacity on the part
of the CAR government, inadequacy of resources, and ambitiousness of the program goals, the likelihood that
this operation's results will be sustainable is in serious doubt\. The fiscal framework for this adjustment
operation was unclear and there was no specific fiscal targets to be reached even though the operation was
labeled as "Fiscal Consolidation\." The amendment to the operation, approved by the Board in April 2002,
although necessary, appears to have set over-ambitious goals (particularly regarding completion of the
privatization component by end 2002)\. Lack of relevant ESW and other background technical work on CAR,
have seriously handicapped the task team in both preparation of the operation and maintenance of a meaningful
policy dialogue with the government\. Moreover, in part due to continued political instability, the task team was
unable to conduct regular supervision missions in order to maintain continuity in the policy dialogue\.
Supervision missions lacked coherence (i\.e\. different components of the program were supervised at different
times)\. The documentation (in terms of TORs, aide memoires and back- to- office reports) related to the
supervision missions is inadequate\. A more timely and focused management guidance would have been
beneficial to the task team\.
Recommendation for Panel Skills
Country director for LICUS-type country, PREM Sector manager/lead macro economist; lead privatization
specialist familiar with Africa; specialized panel members with post-conflict background\.
- 38 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
Development Objectives (Part A to be completed by the Task Team and parts
B and C by the Review Panel)
A\. Development objectives outlined in the project's documents or subsequent changes
(Importance of development objectives addressed by the project: (H = High, M =
Moderate, L = Low, N/A = Not Applicable)
(1) Development Objectives
i\. Poverty Reduction L
ii\. Structural and Sector Policy Reform M
iii\. Private Sector Development H
iv\. Institutional Development/Capacity Building H
v\. 1
Human Development NA
Comments:
vi\. Environmental Sustainability NA
vii\. Infrastructure Development L
viii\. Other (specify) NA
ix\. Macroeconomic Management H
Comments (Please explain any material changes in DOs since project start):
1
Specify which one of the five following: (i) Achieve Universal Primary Education; (ii) Reduce Child Mortality;
(iii) Improve Maternal Health; (iv) Combat HIV/AIDS, Malaria and other Diseases; (v) other Human
Development\.
- 39 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
(2) Outcomes
For each Development Objective identified above as High, describe the corresponding outcome that will
serve as the primary indicator that it has been attained, and an interim benchmark to evaluate progress
during implementation
i\. Poverty Reduction
Outcome:
Interim Benchmark:
ii\. Structural and Sector Policy Reform
Outcome:
Interim Benchmark:
iii\. Private Sector Development
Outcome: Private investment has increased in the petroleum distribution and power company and
services to households and firms are more efficient\.
Interim Benchmark: Settlement of PETROCA's obligations to the Road Fund\. Liquidation of
PETROCA\. Settlement of rights of employees affected by privatization\. Transfer of
PETROCA's assets to new private companies\. Incorporation of SOGAL to take over the
importation and distribution of petroleum products\. ENERCA is brought to the point of lease\.
iv\. Institutional Development/Capacity Building
Outcome: Enabling regulatory framework for private investors in the utilities sectors with no
barriers to entries and fair competition
Interim Benchmark: An autonomous regulatory body is established and the regulatory
framework for the utilities is revamped\.
v\. Human Development
Outcome:
Interim Benchmark:
vi\. Environmental Sustainability
Outcome:
Interim Benchmark:
vii\. Infrastructure Development
Outcome:
Interim Benchmark:
viii\. Other
Outcome:
- 40 -
Interim Benchmark:
ix\. Macroeconomic Management
Outcome: Fiscal Sustainability through increased revenue in a transparent and efficient manner;
transparency in expenditures
Interim Benchmark: No granting of special tax exemptions to logging and mining operations\.
IDA has received an inventory of special tax exemptions as of end-December 1998\. Introduction
of a minimum turnover tax for diamond-purchasing bureaus\. Consolidation of export turnover
taxes into a single tax\. Introduction of a Value Added Tax\. Introduction of a broad-based
licensing for small-scale tax payers\. No further accumulation of domestic and external arrears\.
Closure of unlawful bank accounts of ministries\. Elimination of all off-budget spending\. Primary
fiscal surplus which allows the State to face domestic and external obligations\.
- 41 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
B\. Likelihood of achieving the stated development objectives (Panelists to
assess the latest DOs using a scale of: (L = Likely; NL = Not Likely; UN =
Uncertain; or N/A = Not Applicable)
(1) Development Objectives
i\.Poverty Reduction UN
ii\.Structural and Sector Policy Reform UN
iii\.Private Sector Development UN
iv\.Institutional Development/Capacity Building UN
v\.Human 1
Development NA
Comments:
vi\.Environmental Sustainability NA
vii\.Infrastructure Development UN
viii\.Other (specify) NA
ix\.Macroeconomic Management UN
Comments:
C\. Sustainability:
(Panel's judgment of the likelihood that the operation's results will be sustainable in the longer- term)
Likely Unlikely Uncertain
Comments: It is the panel's assessment that the design of this operation (both original and amended) is overly
ambitious for a LICUS-type country with very weak implementation capacity and political and social
instability\. Also the implementation arrangements and risk mitigating measures are not well defined in the
documentation provide to the panel\. Based on these factors, it is the panel's view that achievement and
sustainability of selected development objectives as noted above is uncertain\.
1 Specify which one of the four following: (i) Achieve Universal Primary Education; (ii) Reduce Child Mortality;
(iii) Improve Maternal Health; (iv) Combat HIV/AIDS, Malaria and other Diseases; (v) other Human
Development\.
- 42 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
GUIDANCE QUESTIONNAIRE
Summary Assessment Sheet
Assessment Rating
1 = Highly Satisfactory
2 = Satisfactory
3 = Marginal
4 = Unsatisfactory
NA = Not Applicable
1\. Focus on Development Effectiveness 3
2\. Supervision of Fiduciary/Safeguard Aspects 3
3\. Adequacy of Supervision Inputs and Processes 3
4\. Realism of Project Performance Ratings 3
OVERALL ASSESSMENT 3
The overall assessment is not an average of the assessments of the constituent elements of
supervision\. Instead, the panel should use its judgment in weighing the relative importance of
each given the country and the project context\. In making the assessment, the panel should
consider the importance of each category, and within each category, the various questions, to
supervision quality\.
- 43 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
Context:
A\. With the experience of implementing and supervising the project
to-date:
(a) Was project design at entry sound? No
Comments: Given the country's political and social instability and
weak implementation capacity, the overall design of the operation
at entry was overly ambitious, particularly in regards to the
privatization component\. There was no clearly defined
macroeconomic framework or quantitative fiscal targets for the
operation\. Although the project had been reviewed in QEA3 (1999)
and received an overall satisfactory rating, it was that panel's
assessment that Technical and Economic Aspects and Bank Inputs
and Processes were Marginal\. That panel also indicated that
insufficient recent ESW and the absence of a strong field presence
limited the Bank's ability to engage major stakeholders, which may
have undermined sustainability of reforms supported by the
operation\.
(b) Was the project ready for implementation at approval? No
Comments: The overall progress towards the project's
development objectives was very slow from the beginning\. Two
specific conditions (settlement of PETROCA's obligations to the
Road Fund and incorporation of SOGAL) remained unmet for
nearly six months after their expected date of implementation\.
Also, government ownership of the program was in doubt:
according to the first PSR (6/26/2000), in response to an
unexpected situation, the government threatened to "halt or even
reverse the privatization process\."
(c) Was overall implementation performance satisfactory prior No
to FY01?
Comments: Implementation was unduly slow from the
beginning\. Due to political instability, lack of adequate
implementation capacity on the part of the CAR government,
inadequacy of resources, and ambitiousness of the program
goals, the implementation of the agreed program under this
operation was slow and uneven\. Lack of relevant ESW and
other background technical work on CAR, may have seriously
handicapped the task team in engaging the government in a
meaningful policy dialogue\. Moreover, in part due to continued
political instability, the task team was unable to conduct regular
- 44 -
supervision missions in order to maintain continuity in the policy
dialogue\. In addition, supervision missions lacked coherence
(i\.e\. different components of the program were supervised at
different times)\.
(d) Could the problems encountered during implementation Yes
have been identified at entry?
Comments: Weak implementation capacity, serious fiscal and financial
problems and difficult political and social conditions should have been
taken into account in designing and preparing the project\. A project
underpinned by more focused and less ambitious reform program with
adequate technical assistance for building implementation capacity
would have been more appropriate and made supervision more focused\.
(e) Any major changes prior to FY01 (through restructuring No
and/or MTR)?
Comments:
- 45 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
Context:
B\. Compliance with safeguard policies
(a) Please mark below the applicability of and compliance with safeguard
policies:
Policy Applicability Compliance
i\. Environmental Assessment (OP 4\.01) No NA
ii\. Natural Habitats (OP 4\.04) No NA
iii\. Forestry (OP 4\.36) No NA
iv\. Pest Management (OP 4\.09) No NA
v\. Cultural Property (OPN 11\.03) No NA
vi\. Indigenous Peoples (OD 4\.20) No NA
vii\. Involuntary Resettlement (OP 4\.30) No NA
viii\. Safety of Dams (OP 4\.37) No NA
ix\. Projects on International Waterways (OP No NA
7\.50)
x\. Projects in Disputed Areas (OP 7\.60) No NA
(b) In case of any compliance issues, including those NA
occurring prior to FY01, what were their nature and
extent?
Comments from Env:
Comments fromSD: NA
(c) Were appropriate measures taken to mitigate NA
safeguard aspects that could have had adverse
impacts?
Comments from ENV (explain briefly the adequacy of mitigating
measures and indicators/benchmarks used to monitor progress?):
Comments from SD (explain briefly the adequacy of mitigating
measures and indicators/benchmarks used to monitor progress?):
NA
C\. In light of answers to questions under A and B, what should have been
the supervision strategy/focus during FY01-02 ?
- 46 -
The Bank's strategy toward CAR should have been to modify the design of the
project as soon as the project began experiencing delays\. A more pro-active,
engaging supervision missions, with appropriate Management guidance, would have
led to modifications in the design of the project much earlier than it actually occurred\.
- 47 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
1\. Focus on Development Effectiveness 3
1\.1 Identification and Assessment of Problems 3
(a) Timely Identification of Implementation Problems 3
(b) Regard for Development Impact (including 3
policy/institutional reform aspects)
Comments: Although major issues (such as unduly slow
implementation) were encountered from the start (in January 2000), the
project was not amended until April 2002\.
1\.2 Focus on Sustainability 3
(a) Borrower and Stakeholder Ownership 2
(b) Technical Assistance, Training and Capacity Building 3
(c) Readiness for Operational Phase 3
Comments: The project lacked adequate and timely project
implementation arrangement and did not envisage adequate technical
assistance\.
1\.3 Actions Taken and Follow-Up 3
(a) Appropriateness of Advice and Proposed Solutions to the 3
Borrower (including Action Plan)
(b) Appropriateness and Speed of Bank follow-up action 3
(including e\.g\., cancellations, suspensions)
(c) Impact and Effectiveness of Bank actions (including risk 3
management)
(d) Quality of Mid-Term-Review (if undertaken during 3
FY01-FY02)
(e) Quality of Restructuring Plan (if undertaken during NA
FY01-02)
Comments: Advise provided by Bank to the Govt\. was not timely and
did not recognize the complexities concerning the privatization
component\. The quality of the policy dialogue was adversely affected
by political instability and Bank's inability to properly supervise the
project\.
1\.4 Effective use of CPPR (or other venues for portfolio review 2
with the borrower) to resolve problems affecting the
project?
Comments: In light of the delays in implementation of the project and
serious difficulties encountered by the government in proceeding with
the ambitious privatization program during a period of economic and
political instability, the regional management and Bank's senior
management (at the level of MD) visited CAR and reviewed, together
- 48 -
with the government, the progress made up to that point as well as the
factors that had caused delays in the implementation of program\.
These discussions were helpful and led to the amendments to the
project which were eventually approved by the Board in April 2002\.
- 49 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
2\. Supervision of Fiduciary/Safeguard Aspects 3
With the experience of supervising the project during
FY01-02, assess the adequacy of supervision of:
2\.1 Procurement e\.g\., Post reviews, quality and timeliness of NA
advice and follow-up action
Comments:
2\.2 Financial Management e\.g\., Accounting/auditing; 2
financial information (e\.g\., PMRs), Special Account
Reviews, SOE processes
Comments: This is an adjustment credit\. Financial management
fiduciary aspects were taken into consideration during project
preparation and appraisal\. Also, during project implementation,
financial management were considered properly\. Based on project
documents and TTL explanations, the risk associated with
financial management and proper use of funds had been low\.
2\.3 Legal Aspects e\.g\., Legal compliance; relevance of legal 2
covenants; clarity/timeliness of advice
Comments:
2\.4 Environmental Aspects e\.g\., Environmental impact, NA
safeguard compliance
Comments:
2\.5 Social Aspect e\.g\., Social impact, safeguard compliance 3
Comments: This operation is, at base, designed to provide support
for payment of regular salaries to civil servants and to support a
privatization process as a means of promoting fiscal consolidation
and improving governance\. Though the operation may not appear
to have explicit social development objectives, in fact the
successful payment of salaries to civil servants clearly has
implications for the delivery of services to the population, and,
more fundamentally, the operation is consciously attempting to
establish the basis for important social outcomes, notably poverty
reduction, and this is clearly recognized by the TT and Bank\. For
this reason, it is important that the operation, or a related
operation, achieve the goals established, particularly as an i-PRSP
has already been discussed at board, and a PRSP is now under
preparation\. The key issue is that the strategies envisioned in the
- 50 -
PRSP are unlikely to be successful unless the enabling conditions
which were to be established under this operation become
institutionalized\. Although there were clearly extenuating
circumstances, the Bank has not been able to adequately supervise
the project, and it has been intermittent in its relationships with
key stakeholders\. The Bank needs to work harder to frankly
assess the current situation and determine what is realistic in
terms of medium term reform, and to help government to adjust its
poverty reduction strategy in the light of those findings\. More
work needs to be done to build ownership within the country of
the proposed reforms, and to build a constituency of support for
reform among key counterparts and key elements of CAR society\.
There is a danger that the Bank and other stakeholders may
attempt to move too fast on the specific strategies aimed at
poverty reduction before they have addressed the overall
environment in which those strategies must be implemented\.
2\.6 Performance and Progress Monitoring e\.g\., Use of key 3
indicators, progress reporting, attention to results
Comments: This credit is an "adjustment credit" provided to CAR
based on a commitment outlined in a Letter of Development
Policy (LDP)\. The M&E system established (at entry) is a
"Program Policy Matrix" which outlines specific measures and
actions and a timetable that the CAR has agreed to carry these out
in line with its LDP\. Because the CAR has been under suspension
of disbursements due to arrears accumulation, it has not been
possible to address the weak implementation capacity of the
borrower\. A companion technical assistance credit (Policy
Support Project) supports the strengthening of the borrower's
implementation capacity\. Notwithstanding the problems faced by
CAR, it appears that significant achievements have taken place
and that CAR has implemented some of the measures outlined in
the policy matrix\. Supervision reports and aide memoires,
highlight progress that has been made and keep track of the
actions taken and to be taken\. Hence, from a strict M&E point of
view, the use of the policy matrix for this adjustment credit, and
reporting of progress made by itself monitors and measures
performance\. The PSR should provide a summary of the policy
measures that were agreed (refer to Annex B of the Presidents
Report) and indicate whether the "targets" have been achieved in
lieu of key performance indicators\.
- 51 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5)
3\. Adequacy of Supervision Inputs and Processes 3
With the experience of supervising the project during FY01-02,
assess the quality of Bank inputs and processes:
3\.1 Staffing 3
(a) Staff Continuity 2
(b) Supervision Skill Mix 3
(c) Degree of Country Office Involvement and Contribution NA
Comments: The task team manager was changed right after the project
became effective\. There were only a few supervision missions, some of
which lacked the necessary skill mix\.
3\.2 Supervision Activities 3
(a) Mission Preparation/TORs, Frequency and Time Spent in 3
the Field
(b) Quality of Interaction with Borrower outside of formal 2
Missions?
Comments: There is no evidence of adequate supervision mission
preparation\. Based on the documentation provided to the mission, there
is only one TOR for supervision mission\. No TORs for the specialized
supervision missions (e\.g\. telecom, energy) were supplied to the panel\.
The documentation (in terms of TORs, aide memoires and back- to-
office reports) related to the supervision missions was inadequate\. The
missions were infrequent, though the regional Bank staff and the task
team held policy discussions with their counterparts in the government
on a number of occasions\.
3\.3 Quality of Supervision Documentation and Follow-up 3
(a) Aide-Memoire and Follow-Up Letters (well organized, 3
focused on key issues and solutions, readable?)
(b) Quality of supervision documentation received by the 3
panel
Comments: In general, the documentation (in terms of TORs, aide
memoires, back- to- office reports, follow-up management letters) related
to the supervision missions was inadequate and lacked coherence\. There
is no supervision report on the fiscal situation even though the
adjustment loan supported "fiscal consolidation\."
3\.4 Relationships 2
(a) Relations with the Borrower (i\.e\., are they effective?) 2
(b) Relations with Donors and other stakeholders (i\.e\., are 2
- 52 -
they effective?)
Comments:
3\.5 Management Inputs 2
(a) Adequacy and Speed of Management Attention and 2
Actions
i) Mission's strategic focus and problem solving 2
ii) Missions debriefing NA
iii) PSR and post-mission follow-up? 3
Comments:
(b) Adequacy of supervision budget
Too Little Too Much About Enough
Comments:
(c) Effectiveness of Budget Use 3
Comments: There was only one supervision mission led by the task
manager; and there were only a few sectoral supervision missions\.
While a significant portion of the supervision budget appears to have
been used for amending the project, more resources should have been
utilized to provide advice to government counterparts in dealing with
implementation issues and developing medium term strategies for
reform\.
- 53 -
QUALITY OF SUPERVISION ASSESSMENT (QSA5) - GUIDANCE
QUESTIONS
4\. Realism and Quality of Project Performance Reporting 3
(FY01-02)
4\.1 Accuracy, Timeliness and Consistency with subsidiary ratings 2
in PSR
Comments:
4\.2 Appropriateness of risk ratings in PSR 3
Comments: The critical risks were rated as "substantial" in FYs 00-01
and were downgraded to "moderate" in FY02\. They should have been
rated as "High" in all years, considering the political instability and weak
implementation capacity of the government\.
4\.3 Adequate Justification for any change of ratings 3
Comments: Rating changes were not adequately justified\. The rating for
M&E changed from NA in FY00 to S in FY01 and then to U in FY02
without giving any rationale\. For procurement, it was not rated in FY00,
rated "S" in FY01 and "U" in FY02\. No explanations provided\.
4\.4 Adequate Explanation of DO and IP ratings 3
Comments: There was inadequate explanation for improving the rating
for IP in FY01 and then changing it back to "U" again in FY02\.
4\.5Appropriate Use of Golden Flags, if applicable NA
Comments:
- 54 -
- 55 - | REVIEW |
P072503 |  ICRR 13080
Report Number : ICRR13080
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 05/06/2009
PROJ ID : P072503 Appraisal Actual
Project Name : Cotton Sector Reform Project Costs (US$M):
US$M ): 24\.2 32\.3
Project
Country : Benin Loan/
Loan /Credit (US$M ):
US$M): 18\.0 21\.37
Sector Board : ARD US$M ):
Cofinancing (US$M):
Sector (s): Agricultural marketing
and trade (43%)
Crops (25%)
Agricultural extension
and research (20%)
Agro-industry (10%)
Central government
administration (2%)
Theme (s): Rural markets (25% -
P)
Rural policies and
institutions (25% - P)
Regulation and
competition policy
(24% - P)
Rural services and
infrastructure (13% -
S)
State enterprise/bank
restructuring and
privatization (13% - S)
L/C Number : C3598
Board Approval Date : 01/22/2002
Partners involved : Closing Date : 06/30/2006 06/30/2008
Evaluator : Panel Reviewer : Group Manager : Group :
John C\. English John R\. Heath Monika Huppi IEGSG
2\. Project Objectives and Components:
a\. Objectives:
The project development objective as stated in the PAD was "Increased cotton sector productivity and efficiency
through successful transition to a more competitive system of production and trading "\. As stated in the Credit
Agreement the objective was " To assist the Borrower in increasing the productivity and efficiency of its cotton sector
by moving from a monopolistic, centrally administered production system to a system based on competition "
The ICR chose to use the objective as stated in the Credit Agreement because it is a more precise statement of what
the project attempted to achieve, and this review concurs \.
The major stated element in this transition was to be the privatization of the ginning operations of SONAPRA,
(the Societe National pour la Promotion Agricole (the National Company for Agricultural Promotion )) the main
parastatal involved in supporting agricultural production, marketing and processing \.
The key outcome indicators were :
(i) AIC (the Association Interprofessionelle du Coton ) has set up adequate mechanisms to successfully
provide technical support services to farmers and ginners; and
(ii) producers and ginners have acquired the capacity to make pricing and marketing decisions through
independent contracts by the end of the 4th year\.
It was expected that the actions in the sector would lead to;
(a) an increase in average cotton yields by 10 and 15 percent respectively in the 2nd and 4th year of the
project;
(b) an increase in farmers' incomes from cotton production by at least 30 percent by the end of the project;
and (c) an increase in the farmers' share in the cotton export price by 10 and 20 percent respectively in the 2nd
and 4th years\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project was to be implemented over a period of four years and its focus was to be on :
(a) the provision of technical and financial assistance to the two institutions primarily responsible for carrying
out the transition process, namely, the Association Interprofessionelle du Coton (AIC) and the Centrale de
Securisation des Paiements et du Recouvrement (CSPR); and
(b) building the institutional and technical capacities of the Producers Organizations (PO)\.
The above range of support was to be provided through five identified components :
(1) Support to the AIC and to Project Managem ent (Appraisal estimate, US$4\.8 million or 20 percent of
project costs; final cost US$8\.11 million)
(2) Support to CSPR : (Appraisal estimate, US$3\.5 million or 14\.5 percent of costs; final cost US$ 3\.47 million)
(3) Support to the Federations des Unions de Producteurs FUPRO ) and its member organizations: (
(FUPRO)
Appraisal estimate, US$6\.2 million or 25\.6 percent of costs; final cost US$ 6\.31 million)\. In 2006 producer
organizations in Benin were restructured and the FUPRO was replaced by the Conseil National de Producteurs de
Coton (CNPC) and the support was subsequently granted to the CNPC and its regional and communal branches \.
(4) STSP ): (Appraisal
Support for the implementation of a Sector -wide Technical Services Program (STSP):
estimate US$8\.0 million or 33 percent of costs; final cost US$ 12\.65 million)
(5) Support for the privatization of the ginning operations of SONAPRA : (Appraisal estimate, US$1\.7 million
or 7 percent of costs; final cost US$ 1\.2 million)
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The project closing date was extended once by two years to June 30, 2008, following the mid-term review when it
was apparent that the privatization of SONAPRA would be delayed \.
Overall project cost increased from US$ 24\.2 million to US$32\.29 million\. The amount spent from the IDA credit
increased from US$18 million to US$ 21\.37 million as a result of the change in the relative value of the SDR during
implementation\. (At appraisal the exchange rate was US$ 1\.0 = CFAF 700\. During the project the average rate was
US$1 = CFAF512)\. As a consequence of the overall cost increase, the contributions of the Government and the
Beneficiaries increased from US$6\.2 million to US$10\.97 million\.
3\. Relevance of Objectives & Design:
Objectives\. Cotton production has long been, and remains, the principal commercial agricultural activity in Benin
and is, therefore, central to any effort to increase agricultural incomes and reduce poverty \. In consequence
developing an efficient and well -performing cotton sector has been a basic element in the Bank's overall country
assistance strategy\. Opening up the agricultural commodity production systems to greater competition in the former
French colonies in West Africa has been difficult and Benin is no exception \. The cotton sector has long been under
the control of a state-owned company (SONAPRA) and has operated under a system of regulated prices at the
different stages of the marketing system \. The tightly controlled system has been plagued by inefficiencies, a lack of
transparency and has created many opportunities for rent -seeking and mismanagement, effectively at the cost of
farmers by reducing the price paid at the farm level \. An objective of opening up the production system was thus
highly relevant to efforts to move to a competitive system that would improve returns to farmers \.
Design\. The program supported by the project was by no means designed to lead to a fully market -oriented
system\. In fact it supported the establishment of a new entity, the CSPR, to manage the flows of funds related to
production-related credit for inputs\. Thus, the new system is still largely administered, based on negotiation between
relevant parties rather than competition \. But, the government has a more indirect rather than direct role in it \. As
discussed in Section 7 (Rationale for Risk to Development Outcome Rating ), a result has been a more active role for
farmers and other stakeholders and this may lead to greater pressure for further moves to open up the system \. The
major group involved, the AIC, has become more active as the project has proceeded \. The relevance of the design
for the overall objectives is rated as modest\.
4\. Achievement of Objectives (Efficacy):
There were two elements to the DO\. The first was to increase the productivity and efficiency of the cotton sector \.
This was only partially achieved \. In relation to the relevant indicators, the first, the setting up by AIC of adequate
mechanisms to provide technical support services to farmers and ginners through STSP and the FUPRO, was largely
achieved\. Surveys indicated that 88% of the farmers, 60% of ginners and 50% of input suppliers were satisfied with
the technical services provided by STSP, and more than 90% of farmers were satisfied with the quality and quantity
of inputs available\. But, the specific sector indicators related to production and incomes were partially achieved \.
Cotton yields were relatively stagnant during the project period, perhaps because of a decline of about 15% in the
producer price during that time\. M&E data show that average income per cotton farmer increased by about 23
percent between 2003 and 2008\.
The second element of the DO was to move to a production system based on competition \. This was only
partially achieved as SONAPRA was not privatized during the life of the project, although that process was
completed four months after the closure of the project \. However, there was significant institutional movement within
the sector, culminating in agreements that were reached in the months after project closure, that are summarized in
section 7 (Rationale for Risk to Development Outcome rating )\. This resulted in an effective strengthening of the role
of the producers organizations, particularly the AIC, and a reduction of the direct role of Government \. How this plays
out in further movement toward a more open and competitive system remains to be seen, for reasons outlined in
section 7\. The relevant indicator - "producers and ginners acquiring the capacity to make pricing and marketing
decisions through independent contracts " - was not met since the ginning had not been privatized and no
independent contracts were being signed \.
Thus, the efficacy of the achievement of the development objectives was modest\.
5\. Efficiency (not applicable to DPLs):
No economic analysis was carried out at appraisal or for the ICR \. The project was designed to increase efficiency
by switching responsibility for operations related to cotton production from SONAPRA to private entities \. That for
ginning to private operators, for provision of technical services to contractors paid through producer groups, and for
the provision of credit to an organization reporting to, and funded by producer, supplier and processor groups \. It was
assumed that, as they assumed greater responsibility for covering relevant costs, these groups would have a greater
interest than SONAPRA in achieving efficiencies and reducing costs \. However, it is not possible to assess whether
this occurred\. The ICR does note that costs for these services are in line with those in other countries (Mali and
Burkina Faso) that have already made such changes \. Efficiency is rated as modest\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
There were significant shortcomings in the operation's achievement of its objectives \. The primary objective was
only partially achieved as SONAPRA was not privatized during the project period, although that was carried out
shortly after the project closed \. As a result, the evolution of the marketing system towards operating through
independent contracts between producers and ginners has been limited \. Decisions on pricing and marketing of seed
cotton, once taken by the government alone, are now made within the AIC and approved by the government \. The
system is also still based on the administrative allocation of seed cotton to farmers, central procurement of inputs and
the use of a central agency to manage cash flows between growers, ginners and the input importer \. This review
rates the projects relevance as substantial , efficacy as modest and efficiency as modest, in arriving at an overall
rating of moderately unsatisfactory \.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
There are significant risks to the development outcome for government ownership, financial, and stakeholder
ownership reasons\.
Government - There were two governments during the life of the project \. The first committed to a process and
pace of reform that was not maintained during the course of implementation \. In 2005 it agreed an Accord-Cadre
(AC) (legal framework) for the role of the different agencies and organizations operating within the sector \. This was
to be reviewed in 2007\. The second government was elected in 2006 and, after some time in power, took the policy
framework in a new direction that was not consistent with the institutions that the project was designed to support \. It
balked at renewing the AC and tried to impose its own ideas on the other stakeholders \. They, and particularly the
AIC, resisted this move and a stalemate ensued \. Ad hoc arrangements for the 2007/8 season were agreed to allow
production to be supported with inputs,etc \. During 2008 the Ministry of Agriculture put forward proposals for revision
of the AC and new institutional arrangements which did not receive support from AIC and late in the year (after the
project had closed) the Government backed off and a new agreement was signed in December 2008 on a joint
program to strengthen the cotton sector \. This was costed and agreement was reached on funding arrangements
until a new AC can be agreed\.
Stakeholders - The marketing system has not evolved towards the establishment of independent contracts
between producers and ginners \. Decisions on pricing and marketing of seed cotton, once taken by the government
alone, are now taken at the interprofessional level and approved by the government \. The system is still based on the
administrative allocation of seed cotton to ginners \. Thus, although SONAPRA's ginning operations have been
privatized it is not clear how competitive the system will be \. This strongly suggests that many of the stakeholders
prefer the previous administrative system and are not committed to the adoption of a real competitive, private
enterprise one\.
Financial - a project covenant required the establishment of an independent rural development fund charged
with mobilizing funds for the purpose of providing technical services to farmers after the project period \. However, the
covenant requiring this action by the end of 2002 was never fulfilled\. Also, the AIC, and the FOs, were to be self
sustaining, but whether their members will be able or willing to do this is uncertain \. However, the new cotton strategy
adopted by Government in December 2008 (after closing) includes a provision that allows AIC to seek additional
support from cooperating partners and government, if needed \.
Thus, although considerable changes have occurred in the relationship between the Government and the other
stakeholders, there remains considerable uncertainty whether an effectively competitive system will evolve \.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
Bank staff engaged in a very participatory preparation process ensuring inputs from all the major stakeholders \.
Many of the problems that surfaced during implementation, in particular the position of major stakeholders that
resulted in government actions that hindered implementation, must have been apparent as risks at appraisal \.
However, there is little recognition of this in the PAD or related documentation, and the stated project objectives
and indicators were vague and difficult to assess \.
However, the implementation difficulties were recognized during implementation and progress was rated as
'unsatisfactory' or 'moderately unsatisfactory' in more than half of the ISRs without restructuring the project or
cancelling nonperformance components \. During implementation the Bank followed up continually on these
implementation issues and utilized leverage provided by budget support operations to press the issue of
privatization, first in PRSC 3 and again in PRSC5 in 2008, when it was finally achieved\. The fact that despite this
constant pressure, SONAPRA was not privatized until after closing, and many other issues remained
outstanding, suggests that, without the Bank efforts, even that limited institutional progress would not have been
achieved\.
at -Entry :Moderately Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government performance during implementation was unsatisfactory \. The first government during
implementation committed to a process and pace of reform that was not maintained during the course of
implementation\. In particular it undermined and cancelled the process towards the privatization of SONAPRA's
ginning plants and both governments several times cancelled the bids for inputs that had been held under the
agreed arrangement led by the AIC, resulting in late delivery of inputs to farmers \. The second government, after
some time in power took the policy framework in a new direction that was not consistent with the institutions that
the project was put in place to support \. In 2006 it reduced the levy used to fund major activities in the sector to a
level that was clearly inadequate for this purpose and it moved cotton research and extension activities back
under the ministry without providing adequate funding \. In 2007 it cancelled the regulatory framework and
replaced it by a transitional Cotton Committee in which Government representatives were dominant \. Input
licenses were granted to distributors who were not among those selected under the agreed arrangement
(including SONAPRA being allowed to bid in 2007 despite an agreement to withdraw from this activity )\. Lengthy
negotiations with other stakeholders, particularly AIC, resulted in an agreement after the project closed on a joint
program for the sector (as noted above)\.
Despite the problems created by these government actions the main implementation body, AIC, carried out its
responsibilities in a moderately satisfactory manner, and has become an effective advocate for the sector in
policy dialogue\. It consolidated the input supply system designed under the reform program, working together
with the FOs, the CSPR and SONAPRA to ensure the effective functioning of the cotton farmer credit system
evolved under the project\. It also established an annual program for support services (primarily extension)
financed through the project and an export levy on cotton, and contracted its implementation to relevant public
services\. In 2007 government stepped in to take direct responsibility for extension within the Ministry of
Agriculture\. AIC was concerned that the quality of extension would decline and, in the negotiations noted earlier,
it was agreed that AIC would employ cotton subject matter specialists who would provide training to field
extension agents\. This arrangement is now being implemented \. AIC also operated the M&E unit for the project
and continues to do so\.
a\. Government Performance :Unsatisfactory
b\. Implementing Agency Performance :Moderately Satisfactory
c\. Overall Borrower Performance :Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
As regards design, the ICR reports that the M&E system proved fully satisfactory for project management and as a
general resource for monitoring the performance of the cotton sector \. At mid-term review the system was reviewed
and a few modifications made\.
Implementation was managed by AIC\. A data base has been created that allows them to follow the performance
of the sector (area cultivated, inputs purchased, credit granted, yields, production of seed cotton, export of lint cotton,
pest, disease and other production issues ) which gives AIC the tools for an efficient follow up on performance and
which is widely disseminated among the stakeholders \. Field data is obtained from farmer surveys, based on a one
percent sample\. An AIC website was created and has been regularly updated, including with M&E generated
information on the sector\.
a\. M&E Quality Rating : Substantial
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Project preparation highlighted a number of issues related to the operation of SONAPRA's ginning plants,
primarily related to wastewater discharges and the handling of hazardous materials \. Appropriate mitigation
measures were proposed\. However, the project made no financial provision for this and the laws of Benin do not
require the ginneries to adopt such measures \. The project was unable to exert sufficient pressure or incentive to
induce them to do so\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Unsatisfactory Unsatisfactory
Risk to Development Significant Significant
Outcome :
Bank Performance : Moderately Moderately "Where one dimension of the
Satisfactory Satisfactory assessment of Bank performance is in
the satisfactory range and one is
unsatisfactory, if the project outcome is
unsatisfactory the overall Bank
performance should be rated as
moderately unsatisfactory,except when
Bank performance did not significantly
affect the outcome"\. In this case Bank
supervision performance had a positive
impact on project performance, even
though the final outcome was still not
satisfactory and, therefore, a
moderately satisfactory rating appears
appropriate\.
Borrower Performance : Moderately Moderately
Unsatisfactory Unsatisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The ICR posits two lessons from this project's experience :
Using investment lending in tandem with budget support to implement difficult reforms may be more effective
than each instrument alone\. In cases such as this, when there is a change of government during project
implementation, the use of macro-policy related instruments, in this case budgetary support, may be valuable in
bringing significant sector issues to government attention \. In this case it facilitated dialogue between government
and other cotton sector stakeholders when the new government attempted to make unilateral changes in sector
policies and institutional structures \.
Institutional development and structural reforms should be outward looking and keep an eye on evolving
global developments\. In this case more progress might have been made if the project had taken steps to make
stakeholders in Benin more aware of how similar cotton sector problems were being tackled in other countries,
perhaps arranging field visits,etc \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
While generally covering the main elements adequately and, on balance, being satisfactory, there were some
weaknesses\. In part these stem from weaknesses in the PAD \. The project objective was vague and, therefore, not
easy to evaluate and, although the goal was to transition to a more competitive system, no specific interventions
were specified to effectuate that transition, or benchmarks for progress \. The ICR, therefore found it difficult to
assess progress towards the ultimate goal, when that had not been reached by completion
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P104687 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CO Mainstreaming Sust\. Cattle Ranching (P104687)
Report Number: ICRR0022456
1\. Project Data
Project ID Project Name
P104687 CO Mainstreaming Sust\. Cattle Ranching
Country Practice Area(Lead)
Colombia Agriculture and Food
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
TF-17041,TF-96465 31-Jan-2018 27,527,186\.06
Bank Approval Date Closing Date (Actual)
16-Mar-2010 31-Jan-2020
IBRD/IDA (USD) Grants (USD)
Original Commitment 27,700,000\.00 27,700,000\.00
Revised Commitment 27,527,186\.06 27,527,186\.06
Actual 27,527,186\.06 27,527,186\.06
Prepared by Reviewed by ICR Review Coordinator Group
Richard Anson John R\. Eriksson Christopher David Nelson IEGSD (Unit 4)
2\. Project Objectives and Components
DEVOBJ_TBL
a\. Objectives
The Project Development Objective, as stated in both the PAD and the Grant Agreement, is âto promote the
adoption of environment-friendly Silvo-pastoral Production Systems (SPS) for cattle ranching in Colombia's
Project areas, to improve natural resource management, to enhance the provision of environmental services
(biodiversity, land, carbon, and water), and to raise the productivity in participating farmsâ\. For purposes of
assessing the extent which the PDO was achieved in Section 4, this review will parse the PDO into 4 specific
objectives, namely: Objective 1: to promote the adoption of environment-friendly Silvo-pastoral Production
Systems (SPS) for cattle ranching in Colombia's Project areas; Objective 2: to improve natural resource
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management; Objective 3: to enhance the provision of environmental services (biodiversity, land, carbon, and
water); and Objective 4: to raise the productivity in participating farms\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Will a split evaluation be undertaken?
No
d\. Components
(i) Component 1: Improving productivity in participating cattle ranching/CR farms in Project areas,
through SPS (Original Allocation: US$ 30\.9 M, of which $1\.7 M from GEF and $29\.2 M counterpart
contributions; Actual Allocation: US$ 37\.8 M, of which US$3\.3M from GEF, US$9\.1M from UK/BEIS, and
US$25\.4M from counterpart contributions: note: all figures from ICR)\. In line with its component objectives,
component 1 financed: (a) SPS training to national, regional, and local technical assistance (TA) providers;
(b) selection of beneficiaries and baseline farm assessments; (c) TA to farmers for implementing SPS; (d)
assistance to farmers in accessing financial resources to adopt SPS; (e) assessment/adaptation of SPS
technologies applied in each project area;
(ii) Component 2: Increasing connectivity and reducing land degradation through differentiated PES
schemes (Original allocation: US$6\.4M, of which US$3\.8M from GEF and US$2\.6M counterpart
contributions; Actual Allocation: US$9\.5M, of which US$1\.9M from GEF, US$6\.6M UK/BEIS and US$1M
counterpart contributions)\. In line with its component objectives, Component 2 financed: (a) adjustment and
implementation of a short-term payment for environmental services (PES) mechanism (Biodiversity
Scheme), to reward producers who adopted SPS and conserved forest-enhancing biodiversity and
landscape connectivity; and, (b) design/implementation of long-term, local PES mechanismsâ financed by
the users of environmental services (ES)âthat would pay producers over the long term for adopting SPS
that were financially unattractive to adopt, but important for providing ES;
(iii) Component 3: Strengthening of subsector institutions, and dissemination and M&E efforts
contributing to the broader adoption of environment-friendly SPS in Colombian cattle ranching
(Original Allocation: US$1\.4M, of which US$0\.8M from GEF and US$0\.6 counterpart contributions; Actual
Allocation: US$4\.8M, of which US$1\.1M from GEF, US$2\.9M UK/BEIS and US$0\.8 counterpart
contributions)\. In line with its component objectives, it financed: (a) monitoring and evaluation (M&E) of
project activities, and applied research on SPS contributions to ES, including for climate change adaptation
and mitigation; (b) broad dissemination of results, including the internalization of SPS in national plans and
programs; and (c) strengthening and capacity-building of producer organizations;
(iv) Component 4: Project management (Initial financing: US$3\.0M, of which US$0\.7M GEF and US$2\.3
counterpart contributions; Actual Allocation: US$3\.7M, of which US$0\.6M from GEF, US$1\.8M UK/BEIS
and US$1\.3 counterpart contributions)\. This component financed improved intra- and inter-institutional
capacity and coordination to develop, execute, and manage the project, and M&E of the projectâs
administrative activities\.
While the components and their main objectives and activities as summarized above remained the same,
there were some revisions during implementation, which reflected increased funding and expanded
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CO Mainstreaming Sust\. Cattle Ranching (P104687)
activities\. The main changes by the end of the project were as follows (for details, see ICR, Section B): (a)
Component 1 costs increased 22 percent, reflecting project information dissemination, awareness-building
and TA costs for an expanded number of farmers; (b) Component 2 costs increased 50 percent, due to the
AFâs (Additional Financingâs) inclusion of demonstration farms, plant and seed multiplication as well as the
piloting of a new PES scheme; (c) Component 3 costs increased 225 percent, as a result of a stronger
focus on monitoring of results and support for broad SPS and results dissemination efforts; and (d)
Component 4 project management costs increased 21 percent, to cover an added two-year implementation
period\.
Table 1 summarizes the key changes made to the Project during implementation, comprising 5 scenarios:
the original GEF grant; at AF (in 2014); Restructuring 1 (2017); Restructuring 2 (2018); Restructuring 3
(2019) (see ICR, paras\. 17 and 18, and Table 2)\. These revisions are self-explanatory\.
Table 1: CMSCR Project â Summary of Key Changes and Timeline
Original GEF Additional Financing Level 2 Level 2 Level 2
Item Grant (2010) (2014) (US$20\.7 M) Restructuring Restructuring Restructuring (
(US$7\.0 M) (UK) (March 2017) (January 2018) May 2019)
Focus As specified in Carbon sequestration PES schemes RF adjusted Reallocation of
the PAD, 2010 and poverty reduction adjusted funds among
Reallocation of expenditure
New PES Deforestation funds among categories
scheme (PES-2) hotspots increased expenditure
piloted to 4 categories
2 deforestation hotspots RF adjusted Closing date
added extended to end-
Reallocation of January, 2020
RF adjusted funds among
expenditure
Reallocation of funds categories
among expenditure
categories
Closing date
extended to March 23,
2017
Original as per No change to No change to
PDO No change to PDO No change to PDO
PAD PDO PDO
7 PDO indicators: 2 6 PDO
7 PDO
PDO new, 3 revised, 2 6 PDO indicators: 1 indicators: 1 6 PDO indicators:
indicators, per
Indicators downgraded to revised dropped; and 1 no change
PAD
intermediate level revised
Changes to 4 PDO
Original indicator end- Increases to 2
Project Increases to all six PDO No changes in
targets, per targets: increased PDO indicator
Targets indicator end-targets PDO end-targets
PAD for 1, decreased for end-targets
3
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e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
(i) Project Costs: The total project costs at approval (2010) was US$41\.9 million\. There was additional
financing/AF from the UK (US$20\.7 million), which also was accompanied by a reduction of counterpart
funding, resulting in a revised project cost of US$43\.06\. The actual cost at project closing was US$56\.08
million, which also reflected an increase in counterpart funding for component 1\. For details on project costs
and sources of financing, see ICR, Annex 3\. The figures shown in Section 1 cover only WB/GEF/UK
funding\.
(ii) Financing: Financing was provided by three sources (amounts at project closing): Global Environment
Fund Grant/GEF (and executed by the World Bank), for US$7\.0 million, from the outset; the United
Kingdomâs Department for Business, Energy and Industry Strategy (UK/BEIS), for US$20\.5 million; and the
Colombian Cattle Ranching Association (FEDEGAN), the project implementing partners (TNC, CIPAV
Fondo Accion), and local producers, totaling US$28\.6 million\.
(iii) Borrower/Recipient Contribution: From FEDEGAN, the project implementing partners (TNC, CIPAV,
Fondo Accion), and local producers, totaling US$28\.6 million\.
(iv) Dates: The project was approved on March 16, 2010, became effective on July 2, 2010\. On August 4,
2014, Additional Financing/AF was mobilized and approved August 4, 2014, funded from GEF, as a Trust
Fund, for US$20\.7 million\. The original closing date was January 31, 2018, with the actual closing date of
January 31, 2020, for an extension of two years\.
(v) Restructurings: There were 3 restructurings/R: R1 in March 2017; R2 in January, 2018, and R3 in May
2019\. Table 1 above highlights the key changes for each restructuring\.
3\. Relevance of Objectives
Rationale
The project objectives were âto promote the adoption of environment-friendly Silvo-pastoral Production
Systems (SPS) for cattle ranching in Colombia's Project areas, to improve natural resource management, to
enhance the provision of environmental services (biodiversity, land, carbon, and water), and to raise the
productivity in participating farmsâ\. The primary target beneficiaries were 2,000 small and medium cattle
ranches, based on a social assessment, rural legislation, selection criteria/screening procedures, and
located in five regions selected for their high biodiversity and proximity to strategic ecosystems and
protected areas (ICR, para\. 11)\. The four sub-objectives were complementary, and their four supporting
components and activities (and subsequent adjustments during the three restructurings) demonstrated high
relevance to the priority needs of the target beneficiaries and areas, by also addressing key elements of the
Governmentâs national and sectoral policies/strategies\. These objectives also supported and were strongly
aligned with the Bankâs Country Partnership Strategy (CPS, 2008 â 2011), and with the strategic objectives
of the GEF; the restructured project also was consistent with the Bankâs new CPS for Colombia\.
The relevance of the Projectâs objectives/components/activities throughout its implementation is evidenced
in several key Government, Bank and GEF documents, including (PAD: 2010; ICR, paras\. 4 â 6):
a) Government of Colombiaâs National Development Plan (NDP) (2006 â 2010) outlined six pillars,
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CO Mainstreaming Sust\. Cattle Ranching (P104687)
supported by various strategic programs, including high and sustainable growth and environmental
stability; b) the Governmentâs follow-up NDPs emphasized strategic support for scaling up SPS adoption by
farmers: (i) the NDP of 2014 â 2018 addresses the adverse impacts of cattle ranchers on natural
ecosystems (e\.g\., deterioration of watersheds, forest land, soil quality, biodiversity) and expansion of the
agricultural frontier; (ii) the NDP for 2018 â 2022 incorporated CMSCR results and lessons in strategies to
promote sustainable, climate-resilient production, includes a strong role for SPS, including Presidential
support; c) Bankâs CPS (2008 â 2011) responded directly to the NDP, by defining âareas of concentration
and collaborationâ, through contributing directly to key aspects of four of the six CPS strategic areas: Area I:
Sustained Equitable Growth; Area II: Poverty Alleviation and Equity of Opportunity; Area III: Environment
and Natural Resource Management; and Area IV: Peace\. The Bankâs CPS for FY16 â 21 provides
continued strong support for the PDOs of the CMSCR\. See the respective CPS documents for further
details\. d) GEFâs strategic objectives (in 2010) included Biodiversity Strategic Program #5 (Fostering
Markets for Biodiversity Goods and Services) and Land Degradation Strategic Program #1 (Supporting
Sustainable Agriculture and Rangeland Management)\. The Project also provided data for three indicators
applied by the GEF Biodiversity Program: (i) coverage in hectares of production systems that contribute to
biodiversity conservation or the sustainable use of its components; (ii) integration of biodiversity aspects
into sector policies and plans at a national level; and (iii) improved livelihoods\.
Within the context of these higher-level strategic objectives, the rationale for World Bank/GEF support to
scale up SPS in Colombia was compelling\. The CMSCR Project stemmed directly from the GoCâs
commitment to improve the Cattle Ranching (CR) subsector, and to build on and scale-up the successes of
the Bank-financed Regional Integrated Silvo-pastoral Approaches to Ecosystem Management Pilot Project
(RSPS)\. The CMSCR Project aimed to leverage the successes of the small RSPS, across more diverse
regions of Colombia, and adapted by larger numbers and types of cattle ranchers\. The project would rely
on the combined knowledge and expertise of the World Bank, local players and GoC in forming alliances
with partners/stakeholders, especially FEDEGAN, to validate and scale-up a mix of incentives to induce
farmers to convert their production systems - including land-use strategies - to SPS, thus linking and
integrating productive investments with environmental benefits\.
The innovative nature of the project, the projectâs AF and three restructurings further enhanced the strategic
relevance and results of project interventions\. Also, the level of total resources for the project was
commensurate for achieving the objectives\. Accordingly, the projectâs overall relevance of objectives was
rated âHighâ\.
Rating Relevance TBL
Rating
High
4\. Achievement of Objectives (Efficacy)
EFFICACY_TBL
OBJECTIVE 1
Objective
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To promote the adoption of environment-friendly Silvo-pastoral Production Systems (SPS) for cattle ranching
in Colombia's Project areas\.
Rationale
Theory of Change (ToC): While the project's design included a results framework (RF), the PAD did not
develop a ToC because it was not required at the time the PAD was written\. The ICR reconstructed a ToC
that was consistent with the PAD, the AF and the 3 restructurings (para\. 7, and illustrated in Figure 1), which
explained how the four inter-related objectives of adoption of SPS, enhanced Natural Resources
Management (NRM) and environmental services, and increased productivity of milk production would be
achieved\. This ToC, which is illustrated in the ICR (refer to the figure at the top of p\. 13), integrated these 4
objectives, to show cause-effect linkages to achieve the objectives\.
The ToC for achieving objective 1 of expanded adoption of SPS included the following logic and linkages
between the four components: (a) removal of on-farm barriers to the adoption of sustainable CR practices; (b)
support/implementation of appropriate incentive schemes, including relevant technical assistance, to reward
cattle farmer actions toward sustainable land use; and (c) actions to stimulate increased milk productivity\.
Critical assumptions in the ToC (ICR, figure on p\.13) with respect to objective 1 were sound, and generally
held for the life of the project (as well as for the other objectives below), and included : cattle farmers are able
to overcome financial constraints to access existing SPS instruments; payment for environmental services
(PES) supported by the project improves the financial attractiveness of SPS, leading farmers to voluntarily
adopt them; productivity increases in milk production induced by project actions were sufficient to promote
adoption of SPS practices\. An implied assumption which was not explicit in the ICR, was the appropriateness
of the SPS technologies/practices, suited to the various agro-ecological zones The responses from the
Bankâs project team provided explicit clarification on the specific ways the project strengthened innovative
SPS-based research activities and strong linkages with the extension delivery systems to support cattle
ranchers (see IEG Guide Questions and Team responses: 5/10/21)\.
Key Indicators and Supporting Evidence: Based on the results chain delineated in the ToC, the key indicators
and supporting results/evidence which are linked to objective 1, are summarized below (see ICR, Annex 1):
(a) Outputs: With respect to component 1 (improving productivity): (1) Number of municipalities where CR
beneficiaries are located: No target / Result: 87; (2) Number of project professionals/technicians trained in
SPS technologies: No target / Result: 377; (3) Number of external professionals/technicians trained in SPS
technologies: No target / Result: 314; (4) Number of beneficiaries from the training and dissemination plan:
No target / Result: 12,204; (5) Number of training and dissemination events: No target / Result: 457 events;
(6) Number of participants in events: No target / Result: 12,204; (7) Number of small cattle ranchers not part
of the project sensitized through âtechnology brigadesâ for the use of sustainable cattle ranching technologies
and tools: Target: 3000 / Result: 2,807; 93\.5% of the target; (8) Number of trainings in access to credit for
professionals of banks and other actors: No target / Actual: 6; (9) Number of events on access to credit for
cattle rancher beneficiaries of the project: No target /Actual: 38; (10) Number of cattle ranchers participating in
events related to access to credit: No target / Actual: 588; (11) Number of beneficiaries sensitized on land
use: No target / Actual: 408\.
With respect to component 2 (increasing connectivity and reducing land degradation via PES schemes): (12)
Number of demonstration farms installed/strengthened (until project closing): No target / Actual: 43; (13)
Number of focal plants species identified and monitored in project areas: No target / Actual: 1,269; (14)
Number of focal plants species produced/delivered (Mimosa tranae; Albizia saman; Erythrina spp; Escallonia
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paniculate; Crescentia cujete): No target / Actual: 0\.8 million; (15) Number of hectares of natural forest
enriched: No target / Actual: 3,466;
With respect to component 3: (strengthening subsector institutions and M&E systems): (16) Number of
courses for technicians via the National Services for Learning â SENA: No target / Actual: 3; (17) Number of
knowledge transfer events with SENA to strengthen ranching capabilities: No target/ Actual:3; (18) Number of
instructors participated with SENA to strengthen ranching capabilities: No target/Actual: 100; (19)
Development of a project website (as target): Actual: completed; 100% of target; (20) Number of testimonials
of the project for the audiovisual library (images/videos): No target / Actual: 50; (21) Number of publications\.
No target / Actual: 30\.
(b) Intermediate Results (outputs and outcomes): With respect to Component 1 (Improving productivity
through SPS): (1) Area converted to intensive SPS in participating farms\. Target: 4,500 / Actual: 4,640
(103%); (2) Number of cattle ranching farmers sensitized and trained in SPS and sustainable cattle ranching
production systems\. Target: 18,500 / Actual: 24,416 (132%); (3) Number of professionals/technicians trained
in SPS technologies\. Target: 550/Actual: 691 (126%)\.
With respect to Component 2 (Increasing connectivity through differentiated PES schemes): (4) Number of
focal plant species used/conserved in cattle ranching farms\. Target 50 / Actual: 50 (100%)\.
With respect to Component 3 (Strengthening subsector institutions and M&E systems): (5) Number of
strategic alliances established with key public/private, national/regional entities for the promotion of SPS in
Colombia\. Target: 10 / Actual: 11; 110% of target; (6) M&E system established and providing timely/relevant
information on projectâs direct/indirect impacts in aid of decision-making processes\. Target: Yes / Actual: Yes;
100%; (7) Communication strategy implemented for different target audiences (policymakers and farmers)\.
Target: Yes / Actual: Yes; 100% of target; (8) Information system in place for reporting farms adopting SPS,
including those not directly participating in the project\. Target: Yes / Actual: Yes; 100% of target\.
(c) Outcome Indicators: 1) Area under environment-friendly cattle ranching production systems implemented
in project areas: Target: 84,000 /Actual: 100,522; 120% of target; (2) Land area where sustainable land
management practices have been adopted as a result of the project: Target: 35,000 / Actual: 38,390; 108% of
target\.
In summary, while many of the output indicators were not assigned targets, [as can be seen from the above
performance indicators, and taking into account the AF and 3 restructurings], at the outcome and intermediate
levels, the project achieved all, and in many cases exceeded, the original and revised targets\. Accordingly,
the rating for progress toward objective 1 is rated âHigh\.â
Rating
High
OBJECTIVE 2
Objective
To improve natural resource management\.
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Rationale
Theory of Change: The projectâs integrated ToC (ICR, p\.13) as discussed for objective 1 is also applicable for
objective 2\. More specifically, the ToC shows the provision of: appropriate technical assistance and training;
adequate incentives (e\.g\., PES, co-financing of SPS), also resulting in reduced soil erosion; appropriate NRM
technologies suited for the diverse Areas\. Also, the key assumptions for achieving objective 2 are generally
sound, while also noting the need to make more explicit the strengthening of the research system to ensure a
sustainable flow of appropriate technologies for improving NRM, over the diverse project areas\.
Key Indicators and Supporting Evidence: Based on the results chain and the ToC, the key indicators and
supporting evidence of the results are summarized below: (see ICR, Annex 1, Table A1\.B\.1; there are some
indicators which are common for both objectives 2 and 3):
(a) Outputs: With respect to component 2 (increasing connectivity and reducing land degradation in
participating cattle ranching farms through differentiated PES schemes): 1) Number of contracts signed under
PES1 scheme\. No target / Actual: 1,595; (2) Design of local PES mechanisms financed by users with long-
term payment\. No target / Actual: Yes; (3) Number of contracts signed for exp-post payment under PES2
scheme\. No target / Actual: 274; (4) Number of trees and forage produced and delivered to cattle ranchers\.
No target / Actual: 3\.1 million; (5) Number of hectares under SPS using plant material\. No target / Actual:
33,750; (6) Number of trees planted using light machinery\. No target / Actual: 408,000; (7) Areas with
implemented strategies of natural regeneration\. No target / Actual: 18,603; (8) Land use M&E\. No target /
Actual: 127,308 hectares; (9) Socio-economic M&E\. No target / Actual: Yes; (10) M&E of Biodiversity in
farms\. No target / Actual: Yes; (11) Number of bird species identified and monitored\. No target / Actual: 522;
(12) Number of beetle species identified and monitored\. No target / Actual: 230; (13) Increase of natural
variety of species identified by monitoring\. No target / Actual: 30%; (14) Design and development of a web
application for biodiversity and carbon\. No target / Actual: Yes; (15) Design and development of a web
platform for modeling, and publication of geographic services INFOTNC\. No target / Actual: Yes; (16)
Design/implementation of a long-term PES scheme pilot (Cuenca Water Fund)\. No target /Actual: Yes; (17)
Creation of a green market dialogue\. No target / Actual: Yes; (18) Design of 12 criteria for sustainable cattle
ranching\. No target / Actual: Yes; (19) Number of participating farms where an analysis/evaluation of the
sustainable cattle ranching criteria was performed\. No target / Actual: 10; (20) MOU with ASOBRANGUS to
elaborate a business case for the implementation of good practices on sustainable cattle ranching: No target;
Actual: 1 MOU;
(b) Intermediate Result Indicators: With respect to Component 2: (increasing connectivity and reducing land
degradation in participating cattle ranching farms through differentiated PES schemes): (1) Area under PES1
(biodiversity) scheme in project areas\. Target 49,000 / Actual: 60,158; 123% of target; (2) Area under PES2
(carbon) scheme in project areas\. Target 4,000 / Actual: 4,240; 106% of target; (3) Number of cattle ranching
farms benefitting from a PES1 (biodiversity) scheme\. Target: 1,700 / Actual: 1,866; 110% of target; (4)
Number of cattle ranching farms benefitting from a PES2 (carbon) scheme in project areas\. Target: 1,255 /
Actual: 1,341; 107% of target; (5) Number of market-based /consumer initiatives designed (including PES
mechanism) supporting broader adoption of SPS by end-project\. Target: 2/Actual: 2; 100%; (6) Number of
focal plant species used/conserved in cattle ranching farms (25 of which are globally important species)\.
Target: 50 / Actual: 50; 100% of target\.
(c) Outcome Indicators: (1) Improved presence of globally important biodiversity in project areas, measured
by an increase in the ESI resulting from the adoption of environment friendly SPS in participating farms, over
baseline\. Target: 1\.5 million / Actual: 1\.4; 93% of target; and (2) Reduction of GHG emissions from avoided
deforestation and forest degradation and increase in carbon sequestration at the farm level through the
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adoption of environment- friendly SPS in participating farms\. Target: 1,600,000 / Actual: 1,565,026 ; 98% of
target\.
As can be seen from the above performance indicators, and taking into account the AF and 3 restructurings,
the project achieved most (90%+) targets, and in some cases exceeded, the original and revised targets for
objective 2\. Many of the output indicators were not assigned targets\. Accordingly, the rating toward objective
2 is âSubstantialâ\.
Rating
Substantial
OBJECTIVE 3
Objective
To enhance the provision of environmental services (biodiversity, land, carbon, and water)\.
Rationale
Theory of Change: The projectâs integrated ToC (ICR, Figure 1) as discussed for objectives 1 and especially
2, is also applicable for objective 3, based on a results chain which also shows the relevant activities, and
resulting outputs and outcomes, which together enhanced the provision of environmental services (in terms of
biodiversity, land, carbon and water) to participating/beneficiary cattle ranchers\.
Also, the key assumptions for achieving objective 3 are generally sound, while also noting the need to ensure
the appropriate mix and type of environmental services to be provided to the different types of cattle ranchers
and agro-ecological livestock zones\.
Key Indicators and Supporting Evidence: Based on the results chain and the ToC, the key indicators and
supporting results/evidence which are linked to objective 3 (and also contributing to objective 2, per above),
outputs, intermediate outcomes and outcomes, and according to each of the projectâs components and
targets, include (see ICR, Annex 1, Table A1\.B\.1):
a\. Outputs: With respect to component 2 (increasing connectivity and reducing land degradation in
participating cattle ranching farms through differentiated PES schemes): (1) Number of contracts signed
under PES1 scheme\. No target / Actual: 1,595; (2) Design of local PES mechanisms financed by users with
long-term payment\. No target / Actual: Yes; (3) Number of contracts signed for ex-post payment under PES2
scheme\. No target / Actual: 274\. Land use M&E\. No target / Actual: 127,308 hectares; (4) Socio-economic
M&E\. No target / Actual: Yes; (5) M&E of Biodiversity in farms\. No target / Actual: Yes; (6) Design and
development of a web platform for modeling, and publication of geographic services INFOTNC\. No target /
Actual: Yes; (7) Design and implementation of a long-term PES scheme pilot (the Agua Vivo Cuenca Water
Fund)\. No target / Actual: Yes; and (8) Creation of a green market dialogue\. No target / Actual: Yes\.
b\. Intermediate Result Indicators: With respect to Component 2: (increasing connectivity and reducing land
degradation in participating cattle ranching farms through differentiated PES schemes): (1) Area under PES1
(biodiversity) scheme in project areas\. Target 49,000 / Actual: 60,158 (123%); (2) Area under PES2 (carbon)
scheme in project areas\. Target 4,000 / Actual: 4,240 (106%); (3) Number of cattle ranching farms benefitting
from a PES1 scheme\. Target: 1,700 / Actual: 1,866 (110%); (4) Number of cattle ranching farms benefitting
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from a PES2 scheme\. Target: 1,255 / Actual: 1,341 (107%); (5) Number of market-based/consumer initiatives
designed (including PES mechanism) supporting broader adoption of SPS by end of the project\. Target: 2 /
Actual: 2 (100%)\.
c\. Outcome Result Indicators: (1) Improved presence of globally important biodiversity in project areas,
measured by an increase in the ESI resulting from the adoption of environment friendly SPS in participating
farms, over baseline: Target: 1\.5 million ESI; Actual: 1\.4 million; 93% of target; (2) Reduction of GHG
emissions from avoided deforestation and forest degradation and increase in carbon sequestration at the
farm level through the adoption of environment- friendly SPS in participating farms\. Target: 1\.6 million GHG
emissions; Actual: 1\.6 million GHG emissions; 98% of target\.
As can be seen from the above performance indicators, and taking into account the AF and 3 restructurings,
the project achieved most (90%+), and in some cases exceeded, the original and revised targets for objective
3\. Many of the output indicators were not assigned targets\. Accordingly, the rating for progress toward
objective 3 is âSubstantialâ\.
Rating
Substantial
OBJECTIVE 4
Objective
To raise the milk productivity in participating farms\.
Rationale
Theory of Change: The projectâs integrated ToC (ICR, Figure 1) shows a results chain which together will
contribute to increased milk productivity by the participating/beneficiary cattle ranchers\. More specifically, the
ToC shows the provision of: appropriate SPS training and technical assistance; appropriate production
technologies/practices for different regions; market-based instruments to get access to finance adequate
incentives\. Accordingly, these activities combined to generate increased milk productivity\.
Also, the key assumptions for achieving objective 3 are generally sound, while also noting the need to make
more explicit the strengthening of the research system to ensure a sustainable flow of appropriate
technologies for ensuring sustainable milk productivity increases, involving diverse farmers and agro-
ecological zones\.
Key Indicators and Supporting Evidence: Based on the results chain and the ToC, the key indicators and
supporting results/evidence which are linked to objective 4, are summarized below (see ICR, Annex 1, Tables
A1\.B\.1):
a\. Outputs: With respect to component 1: (Improving productivity in participating cattle ranching farms in
project areas through SPS): (1) Number of producers trained in sustainable mgt\. of their cattle ranching
company in production of milk and/or beef, including registry mgt\.: No target / Actual: 4,100; (2) Percentage
increase in milk production in SPS farms\. Target 10%; Actual: 32\.6%; 326% of target; (3) Percentage
increase of animal load production in SPS farms\. Target 10% per hectare / Actual: 24%; 244% of target; (4)
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Increase of milk productivity in liters\. No target / Actual: 1,708\.5 per hectare; (5) Percentage increase in milk
quality\. No target / Actual: 3%; (6) Percentage increase in forage supply: No target; Actual: 24\.8%\.
b\. Intermediate Result Indicators: With respect to component 1: Improving productivity in participating cattle
ranching farms in project areas through SPS): (1) Increase in stocking rate (LU/ha) in intervened
areas/participating farms: Target: 10 / Actual: 15; 150% of target\.
c\. Outcome Indicators: (1) Increase in the production of milk per intervened hectare in participating farms:
Target: 10% / Actual: 17%; 170% of target; (2) Number of cattle ranching farms benefitting from project
instruments (technical assistance, PES or support for the establishment of on-farm nurseries): Target: 4,000 /
Actual: 4,100; 103% of target\.
In summary, the above performance indicators show that the project achieved all of its targets, and in some
cases exceeded, the original and revised targets for objective 4\. Also, many of the output indicators were not
assigned targets, while showing positive results\. Accordingly, the rating for progress toward objective 4 is
âHighâ\.
Rating
High
OVERALL EFF TBL
OBJ_TBL
OVERALL EFFICACY
Rationale
Overall efficacy is rated Substantial, since the project achieved most of its objectives, as follows:
1\. Two of the four objectives are rated âHighâ, and the other two objectives are rated âSubstantialâ;
2\. Most of performance indicators have a strong output orientation, with limited measurable outcomes;
3\. There are many specific output objectives for which there were no assigned targets, thereby making it
difficult to assess the extent of project performance; and
4\. Some of the output, intermediate and outcome targets were nearly 100% achieved\.
Overall Efficacy Rating
Substantial
5\. Efficiency
Overall, the project performance and results, and accompanying analyses, demonstrated an efficiency rating of
substantial, based on the various evidenced-based tools applied and presented in the ICR (paras\. 54 - 61, and
Annex 4, also informed by the projectâs impact evaluation study and Governmentâs final technical report, 2020)\.
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Although the indicative economic and financial analyses (EFA) in the CMSCR PAD (2010) and AF Project Paper
concluded that the adoption of SPS and Intensive Silvo-pastoral Systems (iSPS) would be profitable and
sustainable, they provided no specific data on estimated/expected economic or financial returns which could be
compared to the results of the ex-post analyses presented in the ICR\. The final EFA presented in the ICR
comprises four elements: economic, financial, climate variability resilience, and project leverage\.
(a) Economic Analyses: The economic analyses presented in the ICR demonstrates that the project was an
efficient investment that âsimultaneously created monetary and social valueâ (ICR, para\. 55)\. Detailed estimates
of cash flows over ten years in nine of the most representative cattle ranching archetypes in Colombia, were
extrapolated to the entire area where the project drove changes in land use\. These cash flows were estimated
with/without the project, using an incremental analysis methodology\. A social price of carbon of US$40/t CO2
was used to calculate the value of carbon captured by the SPS\. Results were calculated for three scenarios\.
Based on those results, the CMSCR Project created sizable economic value, with an economic internal rate of
return (EIRR) ranging from 24\.5 - 30\.1 percent (with a discount rate of 9%), depending on the scenario, and net
present value (NPV) ranging from US$1,650/ha to US$1,935/ha\. At the project level, total economic value
(Project NPV) was estimated to range from US$63 million (M) to US$74M, depending on the scenario\. Also,
these results were calculated with and without the carbon price to estimate the global environmental value
created by the project\. Total value from carbon capture driven by the project is an estimated US$66M (para\. 55)\.
(b) Financial Analyses: These analyses evaluate the financial return offered by SPS investments to farmers and
finds that SPS technology has âstrong potential to reach scale and deepen impact based on market forcesâ
(ICR, para\. 56)\. Cash flows and key financial indicators were estimated for nine representative production
archetypes in nominal terms, discounted at 14\.6 % (the cost of equity of investments in Colombia), and
extrapolated to the entire area where project SPS interventions were implemented\. The financial internal rate of
return (FIRR) and NPV were estimated for all nine archetypes under two scenarios: (i) with the project, to reflect
the financial return to SPS investments; and (ii) with the project, and taking the environmental impact of SPS
into account, using the carbon price in Colombiaâs emerging carbon market\.
Estimates for the two scenarios were based on the incremental cash flows generated, compared to the cash
flows under conventional ranching\. The results show that financial returns to investments in SPS (Scenarios 1
and 2) far outstrip cash flows to conventional ranching\. At the same time, the analyses yield a sizable
environmental impact, which will contribute to the sustainability of the CR subsector in the long term (Annex 4)\.
(c) Other Efficiency Analyses: (i) Variability Analyses: This analysis indicates that the greater environmental
resilience of SPS compared to traditional systems creates economic value to strengthen the long-term
sustainability of cattle ranching\. The analysis compares milk and cattle production losses incurred under
conventional CR with losses incurred on ranches adopting SPS, based on the risk and duration of climate
variability\. The improvements in productivity resulting from SPS serve to shield producers from the worst
impacts of that variability\. Producers adopting SPS would avoid losses in milk production valued at US$1\.5M
and losses in cattle production valued at US$483K\. These are the revenues that CRs are most likely to protect
as climate variability grows\. However, the ICR recognizes that iSPS - are highly vulnerable to droughts and
floods during the first year of establishment\. (ii) Project âLeveragingâ Results: The EFA analyses presented in
the ICR also show that the CMSCR Project leveraged and created significant economic and environmental
value, including: (a) increased private capital in the form of investments by CRs; (b) increased economic and
environmental value\. The resulting estimate of the multiple of invested capital (MIC) indicates that the project
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leveraged/created US$3\.6 for every US$1 provided by funding agencies (GEF, BEIS) and partners (see Annex
4 for further details)\.
Sensitivity analysis: A sensitivity analysis looked at the effects of changes of plus/minus 15 percent in milk
prices, cattle prices, production volumes, labor costs, and total costs, as well as the social price of carbon\.
Returns generally remained positive across numerous scenarios, although a decline of more than 15 percent in
production volumes and total costs drove returns similar to the social discount rate (of 9%)\.
(iii) Implementation Efficiency Analyses: Implementation efficiency was substantial, based on these results: (a)
The PDO Indicators, and most Intermediate Outcome Indicators, were substantially met or surpassed, and
execution of Grant funds reached 99 percent\. (b) Even though project momentum was curbed initially by
complex methodologies for verifying land use, inter-agency coordination issues, and credit constraints,
implementation under the AF accelerated, due to the demonstration farms and tree/seed production strategies,
and the flexible design/implementation of pilot PES1 and PES2 schemes\. While project implementation
exceeded by two years the planned AF closing date, this enabled a complex and important project to
demonstrate a high level of achievement on its PDO Indicators (partially attributed to the use of exchange rate
gains/Colombian devaluation, to expand project activities)\.
Based on the above efficiency analyses, including a sensitivity analyses on various key parameters, overall
efficiency of the CMSCR Project is rated âSubstantialâ\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal 0
ï¨ Not Applicable
0
ICR Estimate ï¼ 24\.50
ï¨ Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Given adjustments in some target values at PDO and Intermediate Outcome levels, the ICR Team assessed the
need for a split assessment of the overall outcome rating\. Taking into account adjustments made by the AF
(2014) and the 2017 Restructuring, and final project outcomes, the consensus of the ICR team and reviewers
was that the case for a split assessment was not compelling, for the following reasons: (a) The CMSCR was an
experimental operation requiring adaptive management, based on frequent assessment of progress and
relevant adjustments, in line with project objectives; (b) Experience from Year 1 showed that SPS uptake was
affected by dynamic contextual circumstances requiring periodic adjustments, consistent with project objectives;
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(c) Targets revised by the AF were generally higher than appraisal for most indicators; (d) The 2017
Restructuring reduced some targets in response to monitored field outcomes and key issues; (e)The
aggregated target value for hectares under environmental-friendly, improved land management practices was
increased at the PDO level; (f) The aggregated target value for hectares under environmental-friendly, improved
land management practices was increased at the PDO level; (g) All PDO level indicators either exceeded or
substantially achieved target values\.
Overall Outcome rating is Satisfactory, based on the following assessment of relevant evidence: (a) High
ongoing relevance of the PDO: There were no shortcomings in current relevance of the PDO to the Bank's CPF
objectives (FY2016-21)\. As described in Section 3, the PDO at closing was well-aligned with GOC objectives;
high-level GoC commitments on SPS; and continuing relevant assistance by project and other development
partners; (b) Substantial rating for Efficacy: The project achieved its objectives\. Achievement under PDO
Outcome targets was strong: four of the six PDO Outcome targets were exceeded, one achieved 98 percent
and the other 93 percent\. Most Intermediate Outcome targets were achieved or exceeded\. (c) Substantial
rating for Efficiency: The CMSCR pilot proved to be an efficient investment, which simultaneously created
monetary and social value, and generated impressive environmental impacts, thereby suggesting the potential
for long-term sustainability of the project investments\.
a\. Outcome Rating
Satisfactory
7\. Risk to Development Outcome
There is moderate risk to sustaining the projectâs outcomes and contribution to the projectâs expected
impacts\. The ICR provides sound evidence and rationale for this conclusion, while also highlighting various
mitigation measures promoted by the project during implementation\. The main risks and corresponding
mitigation measures include (ICR, para\. 86): (a) There is the risk that the SPS adoption measures will not be
sustained by the target beneficiaries ex-post, particularly given the cessation of project monitoring and
TA\. However, this potential environmental âreboundâ effect is expected to be mitigated by stakeholdersâ
greater capacity, skills and awareness, as well as GoC commitment to SPS; (b) The business case for SPS
is not financially attractive and viable at farm level: This assertion is countered by the strong evidence
generated by the project, which demonstrated that SPS is indeed financially viable at the farm level, and
therefore, scalable, with the right type of support; and (c) The lack of alignment and harmonization by other
project partners to ensure continuity\. The ICRR shows that Project partners are actively engaged in
initiatives to ensure the continuity of the project framework in their own regions and beyond, involving: (i)
New programs; (ii) Strategic alliances, including about 30 alliances between project institutions and outside
partners, which are yielding strategic results; (iii) relevant policy and planning activities, supported by
various development partners; (iv) Financing of similar type of investments\.
8\. Assessment of Bank Performance
a\. Quality-at-Entry
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Overall, quality of entry was Moderately Satisfactory, based on the following evidence (ICR, para\. 8):
(i) The Bank had developed extensive knowledge experience through the predecessor pilot project and
the non-lending technical studies, which both provided valuable inputs to the projectâs design\. (ii) The
PDO was well-aligned with WB and GoC strategies and was designed to demonstrate proof of concept
across critical, intersecting environmental and productive themes; (iii) RF indicators captured operational
objectives and the multi-themed PDO\. These were adjusted/enhanced during the AF and restructurings,
and supported by a comprehensive and well-conceived, albeit an ambitious M&E plan (see Section 9(a)
below); (iv) Beneficiary targeting and selection were appropriate, although a bit complex and
cumbersome (e\.g\., extensive up-front documentation requirements, which contributed to processing
delays); (v) Readiness to implement was satisfactory, while noting some shortcomings in the analytics of
project design and also accommodating some adjustments during implementation as part of the projectâs
learning-by-doing approach; (vi) Various design assumptions were flawed and overly optimistic,
especially regarding access to credit (for iSPS), technical capacities, scope for scaling-up geographically,
underestimation of planting materials for establishing SPS; (vii) Targets for land conversion were overly
optimistic, based on overly optimistic assumptions of the numbers of beneficiaries and the conversion
rate of beneficiary-to-area adopting SPS, and the constraints to meeting up-front costs, especially for
iSPS; (viii) Project risk identification was sound, with rational mitigation measures, but in retrospect, some
unanticipated gaps emerged, especially with respect to the challenges in farmer adoption of the
innovative SPS and iSPS technologies and access to credit\.
Quality-at-Entry Rating
Moderately Satisfactory
b\. Quality of supervision
Overall, the Bankâs quality of supervision was Satisfactory, based on the following evidence, involving
specific initiatives taken by the Bank team with respect to factors inside its direct control, and also taking
positive steps to influence factors within and outside the direct control of implementing entities (ICR,
III)\.
With respect to factors within the Bankâs direct control: (i) The Bank team acted decisively, especially in
response to the results of the mid-term review, pivoting to resolve implementation issues\. For example, the
Bank team took appropriate and timely initiatives during the AF and three restructurings, with positive
results regarding: challenges in implementing the Payments for Environmental Services scheme payments;
and addressing critical operational, technical and financial issues arising during implementation (ICR,
Section I and Annex 1(C))\. (ii) The Bank played a catalytic role in preserving a stable implementation
environment and arrangements for the project in the face of political pressure\. Early in 2016, the Ministry of
Agriculture and Rural Development (MADR) requested that project implementation responsibilities be
transferred from FEDEGAN to MADR, which could have impacted the private-driven, innovative nature of
this intervention and further delayed implementation of the project\. The Bank team acted decisively, to
retain the fundamental role of FEDEGAN; (iii) The Bankâs project team reflected continuity and technical
competence of the various Task Team Leaders/TTLs and team members, coupled with the confidence they
engendered with counterparts; and (iv) The Bank team helped ensure compliance with the projectâs
fiduciary and safeguard requirements\.
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With respect to factors within and outside the direct control of Government/implementing entities, the Bank
provided sound and timely technical support to work out: (i) effective solutions to facilitate the selection of
beneficiaries, provide TA over a wide geographical area, and induce land conversion\. (ii) a sound approach
and adjustments to the PES2 Carbon scheme, which was piloted with AF funds, and proved the
importance of mainstreaming climate-finance schemes, which supported the up-front costs of the
establishment of SPS, especially iSPS, and further supported by expanding beneficiary access to credit;
(iii) improvements in PES implementation logistics, through adopting a streamlined method for validating
land-use changes, arising from the results of a comprehensive mid-term review, with an active Bank role;
(iv) successful approach to PES, which achieved proof of concept through adaptation actions, based on
rigorously monitored field outcomes; and (v) appropriate strengthening actions to enhance climate
resilience and the knowledge and application of water management practices\. (e\.g\., through the project-
supported activities in research and extension)\.
Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. M&E Design, Implementation, & Utilization
a\. M&E Design
Overall, the M&E design was substantial, for the following reasons (ICR, para\. 73): (i) The Theory of
Change was complex, but the results chain was coherent\. Complexity resulted from the intersection of
three distinct streams of activity to achieve an ambitious PDO, and the projectâs high technical content\. The
RF indicators adequately captured land transformation and its associated productivity and environmental
benefits, but the level of detail on assessing land conversionâs benefits added complexity\. (ii) The PAD
provided specific guidance for measuring the impact of introducing SPS on the provision of Environmental
Services (ES)\. The ES to be measured included biodiversity conservation, land restoration, carbon
sequestration and water quality\. Guidance was also included to formally evaluate the impact of SPS on
farm productivity, and the contribution of specific land uses to sedimentation and run-off on selected farms\.
In practice, the ambitious M&E framework outlined was treated as advisory, not prescriptive\. (iii) M&E
features and arrangements were technically sophisticated and sound, and included the following features:
(a) a geo-referencing methodology to measure changes in land use at baseline, end-line, and annually,
supported by training of extension workers to manage/use these tools; (b) a two-pronged approach to
measure milk productivity improvements arising from the SPS measures; (c) an improved environmental
services index to monitor biodiversity, and actual biodiversity monitoring on the ground, to capture the
effects of different project interventions and practices; and, (d) properly defined M&E roles/responsibilities
and a clear set of M&E deliverables\.
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b\. M&E Implementation
M&E implementation proceeded smoothly, and was Substantial, as follows (see ICR, para\. 74): (i) The
system evolved responsively, incorporating new approaches and enhancing capacities to assess impacts
of SPS, and providing lessons to improve implementation; (ii) Notwithstanding the challenges in the
design of the results framework, M&E data were collected and analyzed in a methodologically sound
manner, generally consistent with the PADâs M&E design; and (iii) Changes were required to simplify the
RF, increase its operational, rather than research, focus, and facilitate measurement: the AF and project
restructurings introduced important improvements in the RF and M&E system (ICR, Annex 1 (C); (iv)
Environmental Services were monitored/measured effectively and regularly; for specific examples, see
ICR, para\. 74; (v) Robust methodologies were piloted and validated to measure climate benefits:
Reductions in GHG emissions were calculated based on estimates of CO2 sequestered as a result of
project activities, including forest conservation; (vi) Impact evaluation succeeded in attributing changes in
productivity and environmental variables to project activities: A quasi-experimental exercise assessed, in
depth, the productivity results of different SPS approaches\. For details, see ICR, para\. 74; (vii) Integrated
monitoring of SPSâ production and environmental outcomes supported the business case, regarding the
socioeconomic and environmental benefits associated with the different land uses promoted by the
project, and thereby paving the way for scaling up; (viii) The costly full geo-referencing methodology for
monitoring PES-related land use was substituted by a more cost- effective, self-reporting methodology
(ICR, Annex 7); (ix) Critical research initiatives/studies were conducted, complemented by activities to
create awareness and provide SPS training (ICR, see Annex 6\.6 and Annex 8)\.
c\. M&E Utilization
The Projectâs M&E system generated information/findings that were utilized effectively, especially given
the projectâs pilot nature, based on the following evidence (ICR, para\. 75, and Annexes 7 and 9): (i) M&E
data were used extensively to generate accessible knowledge products\. Beneficiaries and extension
workers consulted these sources to implement project strategies which supported SPS technology
adoption\. M&E data findings were disseminated widely through a sound communications strategy to
expand SPS awareness and adoption, and were the catalyst/evidence for adjustments to project
mechanisms and approaches; (ii) Data generated by the M&E system were used to inform policy and
programming\. Dissemination of early project results strengthened the case for converting land to SPS,
which translated into the inclusion of SPS targets in the NDP 2018â23 and the national PES policy and
influenced other livestock policies and strategies\.
M&E Quality Rating
Substantial
10\. Other Issues
a\. Safeguards
The CMSCR Project was classified as Category B (partial assessment) because potentially negative
impacts were expected to be local and limited\. The project triggered the following safeguards:
Environmental Assessment (OP/BP 4\.01), Natural Habitats (OP/BP 4\.04), Forests (OP/BP 4\.36), and Pest
Management (OP 4\.09)\. (i) Environmental Assessment (ICR, para\. 78): Overall environmental
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safeguards compliance (ref\. the above cited Ops/BPs) was satisfactory, based on the following actions and
results: (a) an environmental assessment was prepared at design stage; (b) appropriate measures were
taken to mitigate negative environmental effects and were mainstreamed throughout the project; (c) the
project strengthened the capacity of partners to implement environmental safeguards, which also reinforced
local approaches to sustainable natural resource management; (d) the project generated positive impacts
on the protection, maintenance, and restoration of natural habitats, increased landscape connectivity and
functionality, and improved the provision of ecosystem services; (e) the projectâs integrated approach to
agricultural extension improved local capacity for enhancing soil and water management and for helping to
diversify production systems to protect against losses from climate variability; (f) the project strengthened
biodiversity monitoring systems, which were tailored to each intervention area, and also expanded
knowledge of the socio-economic impacts of SPS, iSPS and PES; (g) the projectâs extension and TA
activities built local capacity to: track good pest management practices in cattle ranching and reduce the
use of chemical inputs\. (ii) Social Assessment (ICR, para\. 79): Compliance with social safeguards was
satisfactory, based on the following evidence: (a) Social risks defined at appraisal included: limited
participation by small-scale producers lacking funds to adopt SPS; farmer participation involving coercion or
projects in contested lands; and potential conflicts with municipalities not selected for project interventions;
(b) The project presented no social risks associated with respect to: (i) promotion of extensive cattle
ranching (CR) or conflicts with peasants and small- scale producers; or (ii) indigenous peoples and
community lands (project areas did not overlap with indigenous or Afro Colombian territories and project
interventions had no indirect impacts on these groups); (c) No involuntary resettlement, land acquisition, or
infrastructure development occurred\. Municipalities with low levels of internal displacement were selected to
curb risks associated with local participation and land tenure; (d) Prospective beneficiaries had to comply
with legal requirements (e\.g\., access to land); (e) To encourage participation, a communication campaign
informed producers about project benefits; (f) Project incentives reduced the constraints on SPS adoption,
including financial; and (g) SPS adoption increased local incomes and livelihoods by reducing on-farm
production costs, and by increasing productivity and the demand for local labor\.
b\. Fiduciary Compliance
(i) Financial Management (FM) (ICR, para\. 81): The Bankâs Implementation Summary Reports (ISRs) rated
Project FM performance as âModerately Satisfactoryâ or âSatisfactoryâ throughout the projectâs lifetime, with
a final rating of Satisfactory at closing\. The main performance features of FM include: (a) the GEF funds
and DECC/BEIS funds were 100 percent and 99\.1 percent disbursed, executed and reported, respectively;
(b) the project complied with the Bankâs financial covenants; (c) Project interim unaudited financial reports
were generally submitted to the Bank on time and deemed acceptable; (d) the projectâs FM arrangements
related to staffing, accounting, budgeting, funds flow and auditing were adequate; (e) internal controls and
procedures were effectively implemented, and potential fiduciary risk associated with achieving project
outcomes was limited; (f) Project funds were transferred to project partners (FEDEGAN, CIPAV and Fondo
Acción), as detailed in the subsidiary agreements, with proper justification of expenditures; (g) the audit
report covering 2018 was submitted to the Bank on time with unqualified opinions and approved; and (h)
On June 25th, 2020, the Bank approved an extension for submission of the final audit report from June 30,
2020 to December 31, 2020\.
(ii) Procurement (ICR, para\. 82): The Bankâs regular ISRs rated Project procurement performance as
âModerately Satisfactoryâ throughout project implementation\. Key performance aspects included:(a) The
Bank provided procurement mentoring and training to FEDEGAN and project partners; (b) Procurement
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was conducted within the Bankâs procurement regulations and Bank oversight was continuous and
comprehensive; and (c) Challenges facing the procurement function were associated primarily with high
transaction costs of local procurement, high turnover of qualified procurement staff, and delays in updating
procurement plans\.
c\. Unintended impacts (Positive or Negative)
Not Applicable\.
d\. Other
The ICR highlighted 6 other positive and strategic result areas arising from the project\. While recognizing
some project attribution challenges, the substantive nature/scope of these other project-induced benefits
are summarized below, based on evidence presented in the ICR, paras\. 64 â 72, and also reflected in the
Bankâs project teamâs response to the IEG guide questions\.
(i) Women and Youth (ICR, para\. 64): The project made tangible progress during implementation to include
more female participants and service providers, and to reach younger people\. It is noteworthy that the
projectâs initial design did not consider gender, but womenâs and youth participation were increasingly
pursued in an intentional manner and monitored during the projectâs lifetime (for examples, see para\. 64); at
the same time, the Project's final results framework (ICR) showed limited number of gender indicators;
(ii) Institutional Strengthening (ICR, para\. 65): The project made good progress in carrying out various
strategic activities which contributed to SPS-related institutional strengthening, including:
- SPS planning and financial tools for beneficiary producers and entities/FINAGRO;
- Systematic SPS training at the local and national levels;
- Strengthened global knowledge on SPS in cattle ranching, based on generating several quality technical
and scientific publications disseminated through various international conferences:
- Inclusive and productive dialogue on sustainable livestock, which are still functional, post-project;
- Showcasing SPSâs national agenda, fostering about 30 strategic alliances with outside partners\.
(iii) Mobilizing Private Sector Financing (ICR, paras\. 66 â 67), with tangible results, including:
- Substantial funding was mobilized from private sources: At closing, beneficiary producer contributions to
sustainable land-use changes were US$21\.85 M; this is equivalent to about 50 percent of the costs of
establishing those systems, and almost four-fold the contribution expected at appraisal (US$6\.0 M)\. It is
estimated that the project leveraged/created US$3\.6 for every US$1 provided by the funding agencies and
project partners\.
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- Role of private companies in scaling-up sustainable approaches to cattle ranching: The project supported
public-private dialogue on Green Markets, reaching agreement on key practices of sustainable livestock, a
more efficient value chain, and better environmental outcomes;
(iv) Poverty Reduction and Shared Prosperity (ICR, para\. 68), including six aspects:
- The project monitored the contribution of SPS adoption to poverty reduction through various
socioeconomic surveys, at baseline and end-line, with various positive results;
- At baseline, 47\.2 percent of the prospective beneficiaries were living below the poverty line;
- The full income benefit of project activities has likely not yet impacted on poverty reduction, as many SPS
areas at project closing were still in their establishment/growing phase;
- Based on the projectâs impact studies, there are 2 notable conclusions: participating households improved
productivity and natural resources at the farm level and improved their asset base for cattle ranching; and
longer term, project-induced changes are expected to help reduce poverty;
- Beneficiaries reported (based on a survey of 345 beneficiaries) strong agreement on the landscape-level
and environmental impacts of the land-use transformation promoted by the project;
- Beneficiary selection was rigorous and complex, based on sound criteria (ICR, para\. 70)\.
(v) Contribution to National Policies (ICR, para\. 71): Project actions contributed to the preparation of policy
guidelines for sustainable CR, making âsocial, economic, and environmental sustainabilityâ a national
priority for the livestock sector, and informed efforts undertaken by the Rural Planning Unit on strategic
planning for the dairy and beef sectors\. The current National Development Plan (NDP 2018â22) includes a
strong role for SPS and pledges to increase, importantly\. Also, the project supported the formulation of the
Bovine Strategy, and the strategic framework for GHG emission reduction for the livestock subsector\.
(vi) Contribution to Climate Resilience (ICR, para\. 72): Results of a World Bank study (2019) suggest that
well-established SPS, and especially iSPS, could help reduce vulnerability to climate shocks\. Also, the
project evaluation report shows that during periods of climate variability, farms with well-established SPS
reduced significantly their milk productivity losses (e\.g\., 0\.4 â 5\.5% vs\. 19% for farms without SPS
coverage)\. At the same time, the ICR notes that SPS, especially iSPS, are vulnerable to climate shocks
during the planting/establishment stage, hence these risks aspects need to be managed\.
11\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory
Bank Performance Satisfactory Moderately Satisfactory Quality at-entry was rated MS\.
Quality of M&E Substantial Substantial
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Quality of ICR --- Substantial
12\. Lessons
The ICR presents ten lessons which are based on project implementation experience and
supporting evidence, considering both positive and âmixedâ performance (ICR, para\. 87)\. While the
content is relevant, this ICRR consolidates and highlights the most relevant four lessons which also
have broader application beyond this project\. These four lessons are summarized below\.
(1) Approaches to Promoting Farmer Adoption of SPS Technologies: Scaling-up SPS/iSPS farmer
adoption depends on implementing effective approaches to convincing cattle producers of
the financial returns of such investments\. Cattle rancherâs (CRs) were persuaded through a
delivery model that focused on 7 complementary elements, which are relevant for other countries:
(a) screening beneficiaries to help maximize economic benefits; (b) sound knowledge-sharing to
influence behavioral adoption changes of cattle farmers; (c) adequate and replicable financial
incentives for beneficiary farmers to invest in SPS/iSPS, including the role of appropriate Payment
for Environmental Service (PES) schemes; (d) appropriate upfront support, in the form of inputs and
sound technical advice; (e) careful consideration on the timing and likely weather conditions when
farmers establish SPS/iSPS; (f) selecting appropriate SPS demonstration sites; and (g) ensuring the
component parts are well-organized, well timed and reliably available, and key public/private
institutions work closely together;
(2) Importance of Effective Partnerships and Key Elements for Scaling-Up: Successful adoption
and scaling-up of SPS/iSPS technologies among wide range of cattle farmers requires
effective partnerships between private sector and farmer-driven organizations, which
represent the interests of the farmers, and the public sector, which provide important âpublic
goodsâ, in the form of targeted subsidies and technical advice to participating beneficiaries;
(3) A combination of on-farm SPS and ISPS technologies is likely to deliver the best productive and
conservation benefits and enhance beneficiary profitability\. Higher environmental and productive
benefits â and profitability â can be achieved by planting a combination of SPS and iSPS
technologies\. While non-intensive SPS such as dispersed trees can deliver important carbon
sequestration benefits once established, their impacts on farm productivity are more limited\.
Intensive SPS, however, tends to deliver higher productivity benefits and contribute to diversity; and
(4) Realistic design and cost-effectiveness are key considerations when designing monitoring SPS
systems for land use changes at farm level\. An integrated approach to monitoring SPS system
was fundamental for providing sound information to structure a clear business case for CRs
and other private and public actors, on the socioeconomic and environmental benefits associated
with the different land uses promoted by SPS systems\. Sound M&E also enhances the national
visibility of SPS technologies, and therefore, its scalability\. Accordingly, it is important to work out
appropriate and cost-effective approaches for monitoring on-farm land use changes\. Also, good
practice integrated monitoring systems of SPSâ production and environmental improvements build
confidence in generating strong outcomes and scaling-up SPS technologies\.
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13\. Assessment Recommended?
No
14\. Comments on Quality of ICR
Overall, the ICR is well written, consistent with Bank ICR guidelines, analytical, and candid with respect to the
projectâs modest shortcomings, especially given the complex nature of the project\. It was an expanded pilot
project regarding the testing and scaling-up of innovative SPS/iSPS technologies for wider adoption by cattle
ranchers, located in diverse agro-ecological zones\. The ICR reconstructs a generally sound ToC, which also
reflected important adjustments of the project during implementation, including using AF and three
restructurings to make important adjustments\. While the project RF had an output orientation, there were efforts
to increase relevant outcomes, consistent with the pilot nature of the project\. The ICR underpinned many of its
analytical results on various evaluation studies, which were used in a complementary manner to support with
relevant evidence important conclusions and lessons\. The ICR was not clear on the relevant role of supporting
enhanced agricultural research systems and research-extension linkages to further strengthen the SPS
technology options, and therefore, prospects for further scaling up farmer adoption and sustainability\. Written
and interview responses from the Bank project team provided credible evidence of the projectâs support to
relevant research activities and their linkages to extension systems\. Also, the ICR is not clear on the Bankâs
approach or plans for a follow-up operation, to further support the scaling-up of the innovative and strategic
SPS/iSPS technologies promoted by this project, building on relevant lessons and the unfinished agenda\.
The project team clarified that the Bank is using relevant on-going activities and technical dialogue to support
the Governmentâs intentions to scale-up the results and lessons, while also considering the current fiscal crisis
faced by the Government\.
The Bank's Project team also emphasized that the sustainability of the project outcomes, and concludes that
the eventual scaling-up of the innovative technologies promoted by the project will not depend on a Bank-
funded follow-up operation\. The sustainability of the project outcomes will be ensured by the work that CIPAV,
FEDEGAN, other project allies, and many other relevant institutions are continuing to do individually and
through alliances\. While the Bank is continuing to promote sustainable transformations in the cattle ranching
subsector through the on-going work in the Orinoquia region and through dialogue with the Government,
donors and other relevant stakeholders, the most important result of this project has been to make enhanced
sustainability in the cattle ranching subsector a high priority for the Government, for NGOs, for donors, and for
value-chain actors\.
a\. Quality of ICR Rating
Substantial
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Page 23 of 23 | REVIEW |
P071012 |  ICRR 12256
Report Number : ICRR12256
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 09/13/2005
PROJ ID :P071012 Appraisal Actual
Project Name :Primary Education Project Costs 200\.00 215\.30
Development Program US$M )
(US$M)
Country :Tanzania Loan/ US$M )
Loan /Credit (US$M) 150\.00 165\.36
Sector (s):Adult
): literacy/non-formal US$M )
Cofinancing (US$M) 50\.00 49\.97
education; Primary
education
L/C Number :C3570
FY )
Board Approval (FY) 02
Partners involved : Netherlands Closing Date 10/31/2004 10/31/2004
Evaluator : Panel Reviewer : Group Manager : Group :
Manisha J\. Modi Denise A\. Vaillancourt Alain A\. Barbu OEDSG
2\. Project Objectives and Components
a\. Objectives
The project development objectives were to support the Government of Tanzania in reforming its primary education
system through the Primary Education Development Program (PEDP)\. The objectives of the PEDP were to :
improve education quality,
expand school access, and
increase school retention at the primary level \.
These objectives would be achieved through measures to :
increase resource availability, and improve their allocation and utilization, and
strengthen institutional arrangements for effective primary education delivery \.
b\. Components (or Key Conditions in the case of Adjustment Loans ):
Tranche releases were conditional on progress in 6 areas of reform outlined in a policy matrix agreed to with the
government:
General education: general progress on PEDP performance indicators;
Expanding primary enrollment: abolishing fees and introducing double -shifting;
Improving the quality of teaching and learning processes by revising teacher training programs, curriculum,
exams, and teacher incentive structures;
Building capacity in the education system and other public and private sectors involved in primary education
delivery;
Strengthening institutional arrangements that support planning and delivery of primary education services; and
Financing the PEDP\.
Note: The PEDP was designed to disburse in 3 tranches, each one to be released upon Government fulfillment of a
set of policy decisions and actions in accordance with a policy matrix, discussed and agreed with Government \. Cost
by component is, therefore, not available \.
c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
IDA disbursed the full amount of the credit in three equal tranches, the first at effectiveness (1/2/2002), and the
subsequent two after fulfillment of conditions in the policy matrix (in June 2003 and November 2004, respectively)\. In
addition, IDA acted as Administrator of a $US 50 million grant from the Netherlands\. Disbursements of the Dutch
grant were also structured in three tranches corresponding to the IDA tranche releases : US$10 million in the first
tranche and US$20 million in each of the two subsequent tranches \.
3\. Relevance of Objectives & Design :
The PEDP is consistent with the government's sector policy and poverty reduction strategy, as well as the Bank's
most recent Country Assistance Strategy, all of which place high priority on improving and expanding Tanzania's
primary education sector\. Moreover, the importance of strategies and measures implemented by the PEDP has
been validated by recent economic and sector work (produced in consultation with a cross -section of country
stakeholders)\.
The project design/lending instrument was appropriate in that it was fully supportive of Tanzania's agenda to carry
out sector reform affecting all levels of the system \. It was also supportive of needed capacity strengthening,
providing both inputs and opportunities to managers and staff at all levels of the system to manage (a) service
delivery and (b) the reform process, itself\.
4\. Achievement of Objectives (Efficacy) :
Improving education quality (Substantial):
Project targets included decreasing the average pupil /textbook ratio and improving classroom learning\. The
pupil/textbook ratio dropped from 1:7 at the start of the project, to 1:4, by 2004, and Primary School Leaving Exam
(PSLE) pass rates went from 22% in 2000 to 48% in 2004\. While this shows great progress, there obviously remains
much room for improvement\. In addition, although increased awareness of HIV /AIDS and improved health status of
school-aged children were stated objectives in the Tanzania PEDP Workplan, there was no mention of these
objectives in the ICR\.
Expanding primary school access (High):
Specific targets were to attain enrollment capacity for all 7-year olds in Grade 1 by 2003\. The percentage of 7-year
olds enrolled went from 18% in 2000 to 84% in 2004\. (At the outset of the project, most children started primary
schooling later than the official age of 7, so the initial enrollment rate somewhat understates the percentage of
children who eventually enrolled in primary school \.) The gross enrollment rate went from 78% in 2000 to 106% in
2004 and the net enrollment rate went from 59% in 2000 to 91% in 2004\. These rates should be monitored in the
next few years to evaluate whether gains are sustained \.
Improving retention at primary level (High):
The target was to reduce dropout rate between grades 4 and 5 from 13% to 10% by 2003\. The dropout rate was
reduced to 5% by 2004\.
Resource availability, allocation, and utilization (Substantial); ; Targets included:
allocating at least 20% of the primary education budget to nonsalary expenditures \. The proportion of the budget
allocated to non-salary expenditure increased from a baseline of 4% in 2002 to 27% in 2004, allowing schools to
spend more on teaching materials \.
allocating and disbursing capitation grants equivalent to US$ 10 per student for all primary school students by
fiscal year 2002/03\. This target was met\.
introducing a decentralized primary school funding and financial management mechanism, under which funds
for primary education are allocated and released from the Ministry of Finance to the primary school accounts
through the education accounts of local authorities \. Eighty percent of primary schools were expected to be
managing capitation and development grants using school /community bank accounts, by project end \. This
target was exceeded; all schools have opened and fully operated Capitation and Development Grant Bank
Accounts\.
Better institutional arrangements (Modest); ;
The PEDP was to educate all local government authorities (LGAs), including regional secretariat offices,
councils and wards, on their roles in primary education delivery, and to strengthen the capacity of school
committees in the management of PEDP by September, 2002\. This goal was met; all LGAs were instructed on
how to manage the PEDP\. School committees received guidelines on PEDP, and procedures were introduced
by March, 2002 including sensitization seminars to build capacity \.
An Education Management Information System was to have been established to provide education managers
and planners with accurate and timely information; however, progress on this component is behind schedule \.
5\. Efficiency :
According to the ICR, budget support in a SWAp for a sub -education sector was effective in enabling the
Government to develop and take charge of the consultative process for ongoing policy making, system reform,
planning, and budgeting in the education sector \. It also helped to ensure that external assistance was channeled to
priorities within a coherent strategy for the sector and within the MTEF to ensure Aid effectiveness \.
6\. M&E Design, Implementation, & Utilization:
An Education Management Information System (EMIS) was to have been established to monitor key indicators,
including enrollment, attendance, and dropout rates, student -teacher ratios, and PSLE scores \. Unfortunately, this
system is not yet up and running, and most data on key indicators seem to come from periodic monitoring reports
such as the National Monitoring Report on Implementation or Annual Performance Reports \.
7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):
Using local contractors for classroom construction improved accountability (timeliness, better construction ),
increased local ownership of schools, and had provided income in poor communities \.
Successful implementation of PEDP has put pressure on the government to provide more access to secondary
education\.
8\. Ratings : ICR IEG Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Highly Likely Likely Although institutional arrangements have
been strengthened, and the Government
has committed a higher share of the GDP
to education spending, foreign funding still
comprises most of the development
budget\. Government's long term ability to
sustain recurrent expenditures in the
education sector is unclear \. Challenges
also remain to improve the coherence of
sector reforms with ongoing changes in
local government\.
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Highly Satisfactory Satisfactory Although the borrower showed a high
level of commitment to the program, there
were delays and irregularities in
disbursing funds from the center to LGAs \.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating,
IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \.
9\. Lessons:
Some especially salient lessons from the ICR include the following :
1\. Financing and disbursement procedures in SWAPs should be harmonized among donors and government, to
avoid implementation delays\. Tranche releases should be aligned to Government âs fiscal year\. Inappropriate
timing of disbursements can, otherwise, cause inconvenience in Government's allocation of funds and
consequent delays in plan implementation, particularly at the school level \.
2\. A phased-out approach in expanding primary enrollment can mitigate risks of over loading capacity and
declining quality\. An effective design feature of the PEDP was to manage the anticipated enrollment surge
resulting from implementation of the PEDP by phasing in the enrollment expansion \. 7-10 year olds were
enrolled between 2002 and 2006, helping to eliminate the backlog of 8-10 year olds, through double-shifting and
other strategies\. Meanwhile, the government built classrooms and recruited teachers to build the capacity to
admit all 7-year olds in Grade 1 from 2006 onwards\.
10\. Assessment Recommended? Yes No
11\. Comments on Quality of ICR:
The ICR is well-written and well-documented\. It provided data on performance indicators laid out in the President's
Report against which outcomes could be evaluated \. | REVIEW |
P001391 |  ICRR 10345
Report Number : ICRR10345
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID:
OEDID : C2195
Project ID : P001391
Project Name : Lesotho Industrial and Agro-Industries Development Project
Country : Lesotho
Sector : Other Industry
L/C Number : C2195
Partners involved : Lesotho National Development Corporation, Government, Project sponsors, Banks
Prepared by : Michael R\. Lav
Reviewed by : John Johnson
Group Manager : Ruben Lamdany
Date Posted : 07/07/1999
2\. Project Objectives, Financing, Costs and Components :
Objectives : (1) to encourage foreign and indigenous investment in the industrial and agro -industies sectors with a
focus on diversifying investment into higher value added industries (particularly in agro-industry), (2) deepening
linkages between the formal sector and SMEs, and supporting indigenous investors' ability to take advantage of
opportunities created by the Lesotho Water Highlands Project; (3) to support policy changes to improve the
environment of private investment \. Financing : IDA (US$21\.0 million), Project sponsors (US$1\.4 million), Lesotho
National Development Corporation (US$1\.1million), Participating Banking Institutions (US$1\.5 million), and the
Government (US$0\.3million) for a total of US$25\.3 million\. Components : investment credit (US$7\.1 million), equity
financing (US$2\.5 million), foreign investment promotion (US$1\.3 million), indigenous investment promotion (US$0\.5
million), skill training and trade testing (US$0\.5 million), agro-industrial development (mostly management contracts,
training, and privatization costs ) (US$4\.6 million), technical assistance and training (US$4\.1 million), beneficiary
assessments and studies (US$0\.2 million), and industrial infrastructure (US$3\.0 million), and contingencies (US$1\.5
million)\.
3\. Achievement of Relevant Objectives :
The project did attract foreign investors, but government subsidies were essential for this \. There is no indication
that, once the subsidies are phased out, these activities will continue \. The project was not successful in
encouraging indigenous investment, nor in diversifying investments into higher value added activities \. A number of
investment policy reforms were implemented, including removal of the T -Bill tax exemption and replacing the costly
tax holiday with a general 15 percent corporate tax\.
4\. Significant Achievements :
The project did assist in creating 8,110 jobs, substantially in excess of the appraisal estimate of 3,500 new jobs\. It
also boosted exports by about 40 % per year from 1991 to 1994, though starting from a very small base \.
5\. Significant Shortcomings :
The project failed to promote indigenous investment \. It did not significantly upgrade the technical /financial expertise
of the financial intermediaries/agro-industrial enterprises\. Cost recovery was poor\. Linkages to the Lesotho Water
Highlands Project were not established \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory
Institutional Dev \.: Partial Negligible
Sustainability : Uncertain Unlikely
Bank Performance : Deficient Highly Unsatisfactory The ICR does not give an overall or
summary rating for Bank performance \.
Therefore, the "Deficient" rating given in
this summary is a composite, derived as
follows\. The ICR rates Bank performance
on identification and appraisal as
satisfactory, and on appraisal and
supervision as deficient\. However, the
ICR also notes that the focus of the
project was misplaced (it should have
looked more at microenterprise
development, and at policy support and
private sector participation in
infrastructure, rather than development
banking type activities dependent on
subsidies)\. Therefore, identification and
appraisal are rated less than satisfactory \.
Concerning implementation efficiency,
planned staff inputs are not available (see
Table 12 in the ICR) so that it is not clear
to what extent there were cost overruns \.
However, the 9 supervision missions and
the postponement of completion suggest
that overruns could have been significant \.
Borrower Perf \.: Deficient Unsatisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
This unsatisfactory project confirms the Bank's move away from this kind of industrial credit /development bank type
of project to projects which promote investment by supporting a policy environment favorable to investment along
with health and education projects to improve human capital \. The project also underscored the need for ownership
by the project and national authorities \.
8\. Audit Recommended? Yes No
9\. Comments on Quality of ICR :
The ICR is generally satisfactory \. It identifies the project's serious shortcomings \. while noting that the project is not
easy to rate because of its different components \. The projects achievements in generating employment and exports
are noted and are relevant to the projects objectives of promoting investment, although the ICR notes the important
role by subsidies in this achievement \. | REVIEW |
P005742 |  Economic and financial reforms support loan
Report No: ; Type: Report/Evaluation Memorandum ; Country: Tunisia; Region: Middle East And North Africa; Sector: Macro/Non-Trade; Major
Sector: Economic Policy; ProjectID: P005742
December 29, 1995
Tunisia: Economic and Financial Reforms Support Loan (Loan 3424-TUN)
The Implementation Completion Report (ICR) for Tunisia Economic and Financial Reforms Support Loan (EFRSL)
(Loan 3424-TUN approved in FY92 in the amount of US$250 million, disbursed in three tranches) was prepared by
the Middle East and North Africa Regional Office\. The Borrower did not comment on the ICR\.
The objectives of the EFRSL as stated in the Memorandum of the President (MOP) were: (i) the virtual completion
of the liberalization of external trade and prices; (ii) reforms to promote financial markets and to bring bank
regulation gradually up to international standards; (iii) reform of investment incentives to make them more
economically efficient and less costly to the budget; (iv) reform of the social security system to enlarge its coverage
and make it more financially viable, and reduce obstacles to labor mobility; and (v) the establishment of an external
debt management system\.
The macroeconomic framework remained satisfactory during loan implementation\. The structural reforms moved
forward and were achieved in substance, but some reforms were not completely finished\. Trade liberalization did
not go as far as anticipated in the MOP\. Through a waiver of the conditionality, the Bank accepted the Government
of Tunisia's argument that certain products included in a negative list subject to quantitative restrictions would be
liberalized later in the context of the GATT Agreement and the free trade agreement with the European Union\.
Financial reforms were successfully implemented, and included the revision of the banking law with an improved
regulatory and supervisory framework\. The revised investment code, however, fell short of the original objective of
simplification and substantial reduction of fiscal incentives\. The reform of the social security system was also
planned under the loan, but at the time of final tranche release, the Government and the Bank agreed instead on a
statement of the principles for its future reform\. The ICR does not discuss whether or not the introduction of a
system of external debt management was accomplished\.
The ICR rates the overall outcome of the operation as satisfactory, sustainability of the reforms as likely, and
institutional development impact as not applicable\. The Operations Evaluation Department (OED) agrees with the
first two ratings and, given the presence of institutional development objectives in the financial sector and in social
security, rates institutional development as moderate\. OED rates Bank performance as satisfactory\.
The lessons drawn by the ICR include: (a) that complex reform programs can be prepared in a short period of time
when Bank staff is familiar with the country and there is strong government ownership of the program; and (b) that
components of the program which are not well prepared and discussed are likely to cause implementation delays\.
The ICR is good\. However, the absence of an aide memoire and of any Borrower comments suggests limited
involvement, if any, by the Borrower\. Also, the ICR could have discussed more thoroughly the implementation
issues that resulted in slowdown of reforms\. An audit is planned\. | REVIEW |
P073526 |  ICRR 13449
Report Number : ICRR13449
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 03/15/2011
PROJ ID : P073526 Appraisal Actual
Project Name : Py - Education US$M ):
Project Costs (US$M): 26\.50 27\.11
Reform Project
Country : Paraguay Loan/ US$M ):
Loan /Credit (US$M): 24\.00 22\.80
Sector Board : ED US$M):
Cofinancing (US$M ):
Sector (s): Secondary education
(60%)
Central government
administration (20%)
Sub-national
government
administration (10%)
Other social services
(5%)
Tertiary education
(5%)
Theme (s): Education for the
knowledge economy
(29% - P)
Education for all (29%
- P)
Participation and civic
engagement (14% - S)
Access to urban
services and housing
(14% - S)
Rural services and
infrastructure (14% -
S)
L/C Number : L7190
Board Approval Date : 07/31/2003
Partners involved : Closing Date : 06/30/2007 12/30/2009
Evaluator : Panel Reviewer : Group Manager : Group :
Reehana Rifat Raza John R\. Eriksson IEG ICR Review 1 IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
The project was the first phase in a two -phase Education Reform Program, supported by two proposed Adaptable
Program Loans (APL)\. The PAD (page 3) describes the objectives of the Program as twofold : first, â[to] assist the
Government of Paraguay in its efforts to achieve necessary efficiency gains across the [education] system;â? and
second, â[to] introduce initiatives to enhance quality and expand equitable access at the secondary level \.â?
The PAD (page 3) describes the development objectives (PDO) of the project (Paraguay Education Reform Program
Phase I, or PERP-1) as the improvement of â(a) management and efficiency of the education system and (b)
educational outcomes and equity in opportunity at the secondary education level \.â? This statement of objectives is
consistent with that in the Loan Agreement \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Component A -Improved Tools for Planning and Management of the Education System (Appraisal : US$ 8\.86
million Actual : US$ 8\.52 million ):
Sub-component A-1\. Improvement of system management capacity by (i) building structures and organizational
tools to generate macro and micro planning management and supervision capacity; (ii) establishing the accreditation
and (iii) the certification systems; (iv) supporting student performance evaluation; and (v) promoting social awareness
and ownership of the education reform program \.
Sub-component A-2\. Human resource development: upgrading leadership and teaching capacity by : (i) designing a
continuous teacher training program conceptually embracing both the initial and in -service teacher training
segments, and training secondary school teachers; and (ii) implementing a graduate program tailored to upgrade the
skills of a select body of education professionals and leaders \. In addition the Loan Agreement (LA) included the
following activities: (iii) the provision of specialized training to Ministry of Education and Culture's (MEC) educational
professionals (p\.18)\.
Component B -Secondary School Improvements US$ 8\.40 million : Actual : US$ 7\.57 million )
(Appraisal : US$8
Sub-component B-1\. Quality Inputs - Provision of didactic materials, equipment and teacher training to secondary
schools by supporting (i) newly designed textbooks (ii) learning resource centers (CRAs); (iii) science and
technology laboratories; and (iv) training for teachers in the adequate use of the three aforementioned
teaching/learning materials and modes\.
Sub-component B-2\. Community-Associated Management by redesigning the institutional model for planning and
management through introduction of school development plans (PEls) and social community projects (PSPs) with
wider parent participation The sub-components include : (i) the introduction of PEls in select schools; (ii) the
introduction of the PSPs to select schools focused on education and the learning process; and (iii) the enhancement
of PEls, PSPs and other aspects of school life informed by participation of parent associations (ACEs) at the
secondary level, who would be offered training to strengthen capacity \.
Component C - Mechanisms to Provide more Equitable Access to Secondary Education US$ 7\.80
(Appraisal :US$7
US$6\.82 million )
million Actual :US$6
Sub-component C-1 Sustainable scholarship program for extremely poor students in six states to improve efficiency
rates\.
Sub-component C-2 Alternative secondary school programs for rural and working children offered in five states \. This
program focused on rural areas, give working youth the opportunity to study outside the formal institutional structure \.
Sub-component C-3 \.Construction of three prototype schools in marginal urban areas to showcase the new
curriculum, use of materials and equipment, and teaching methods \.
Component D - Project Management ( Appraisal : US$ 1\.20 Actual :US$1 US$ 1\.09 million This component was to cover
the costs of (i) the management of the project by the Project Coordination Unit (PCU) and (ii) project monitoring,
including a number of impact evaluations \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost and Financing : The project was appraised at US$ 26\.50 million, but at project closing, costs equaled
US$27\.11 million -- an overrun of US$0\.61 million\. There was a reallocation among the four components, with under
spending in components A, B, and D, and overspending in component C, compared to appraisal estimates \. The
under spending in components A and B is explained by delays in procurement for consultants for component A, the
reallocation of loan proceeds from component A for the construction of two prototype schools in Component C, and
the decision not to acquire one science lab under component B \. The overspending in Component C is explained by
increased costs of civil works and overspending on project management \. The appreciation of the local currency
vis-Ã -vis the US dollar also played a role \.
Significant delays occurred in disbursement and it took 33 months after Board approval before all project activities
were underway\. Between the mid-term review (MTR) in March 2006 and the end of 2007, implementation speeded
up with 67% (US$16 million) of the total amount being disbursed during this period \. Prior delays were caused by (i)
the delay in Congressional approval required for loan effectiveness; (ii) the lack of project readiness for
implementation at time of loan approval; (iii) delay in the establishment of the PCU; and (iv) delays in implementation
during in August 2008-to March 2009 when a new Administration took office after the elections in mid -2008,
Borrower Contribution : The planned Borrower contribution was US$ 4\.3 million, compared to an appraisal estimate
of US$2\.5 million\.
Dates : Due to delays in the 2003-2005 period, the GOP requested three extensions to the closing date to the project
which were agreed by the Bank \. The initial closing date was 06/30/2007 but the project finally closed on December
30 2009\.
3\. Relevance of Objectives & Design:
high \. The PDOs were well attuned to Paraguay âs 2002 Poverty Reduction
Relevance of Objectives is rated high\.
Strategy, which highlighted the important relationship between greater equality in education opportunities and
poverty reduction, and to its MDG of increasing literacy rates among 15-24 year-olds\. They were also consistent with
the Bankâs1997-2003 Country Assistance Strategy (CAS) which specifically included the aims of increasing coverage
and quality of secondary education to enhance the supply of qualified labor, strengthening the Ministry of Education âs
capacity for information-based decision making, and promoting decentralized participation in sector decisions \. The
PDOs remain relevant for the current Country Partnership Strategy which includes, inter alia, the following goals: (i)
strengthened state institutions to improve policy making, public service provision, and the rule of law; (ii) improved
investments in the social sectors, focusing public spending on the extreme poor; and (iii) growth with a focus on
employment generation and on improving income distribution, without destabilizing the country âs macroeconomic
framework or the environment (pp\.16-17)\.
Relevance of Design is rated modest \. The strategic relevance and approach were based on sector studies and
lessons learned, both from the Bank âs Secondary Education Improvement Project (ongoing during preparation of this
operation) and from Inter-American Development Bank-financed education projects \. Experts from countries such as
Argentina and Chile, which were undergoing education reforms, also gave advice \. The choice of an APL instrument
was appropriate in view of the Government âs desire for a gradually achieved, medium -term vision of education sector
reform\. This choice was not obviated by the decision of the new Government, which took office in mid -2008 (less
than eighteen months before closure ), not to proceed with the second phase of the APL \. There were, nonetheless, a
number of important design weaknesses \. The time horizon of the APL was too short, and the limited financial
resources and geographic scope afforded to Phase 1 constrained the projectâs contribution to the reform process \.
Design was overly complex and ambitious, covering too many areas (seventeen key activities grouped in seven
sub-components and four components )\. The causal links in the results framework were not well thought out \. In
particular, the connection between some key outcome indicators -- national aggregate enrolment, drop out and
repetition rates, and average class sizes, for example -- and the PDOs was not clear\. These indicators could be
influenced by many factors beyond the relatively narrow geographic and financial scope of APL 1\.
4\. Achievement of Objectives (Efficacy):
(i) Improve the management and efficiency of the education system \. Modest \.
Outputs
Enhancement of macro and micro planning - a competency based screening and selection for new teachers was
established and has been institutionalized in the MEC since 2004; the statistical management information
system(MIS) and a school mapping system has been strengthened at the MEC and Department (state)
Statistical Units( UDE )and now MEC can produce annual timely and reliable data \.
Management re-engineering-Designed and validated a new management tool to be used in the education
sector for better management linking personal, financial resources, and student certification MIS country wide \.
The system has been adapted in two areas of Central MEC but not in the supervisory coordination units in the
districts\.
Construction of State (Department) Education Councils (CDEs)-Five CDEs has been supported under this
project, all, with the exception of one are complete \.
Design and approval by MEC of an accreditation system for pre -service and in-service teacher training Institutes
and a certification system for MEC professionals, administrative staff and teachers -Two models of accreditation
and certification have been developed and approved by the MEC, one for teacher -training institutes and second
for professional educators \. The later model had been implemented at 20 teacher-training institutes and the
latter model is being applied to teachers of basic and secondary education \.
Pre and in-service teacher training -both models of pre and in-service teaching training have been designed and
approved by MEC\. The Pre-service training has been implemented in 20 institutions and 1,730 teachers have
undergoing in-service training\.
Leadership Program-98 of the proposed 100 professionals of MEC has been through a leadership program and
many of these are in key decision making positions within the MEC \.
Outcome :
Despite achievement of many of the intermediate outputs, little progress was made between 2001 and 2008, towards
attainment of the project objectives using the indicators presented in the PAD :
No increase in class size, at any level, has been achieved, and at the secondary level, average class size
actually fell from 25 to 21\.
Gross completion rates at the secondary level, rather than rising, fell from 76% to 69%\.
Drop-out rates did fall slightly from 11% to 10\.7%, but they were still above the target level of 9% for the end of
APL1\.
Repetition rates fell from 1% to 0\.6%, thereby exceeding the target of 0\.9% for the end of the program\.
As noted in Section 3 above, the PAD indicators are, for the most part, national aggregates that are influenced
by factors beyond the control of the project \. However, neither the PAD nor the ICR mention other, alternative
indicators which might present a different view of the degree of achievement of this project objective \.
(ii) Improve educational outcomes \. Modest \.
Outputs :
Quality learning inputs for secondary education -textbook -In this project, 547,000 textbooks and 45,000 teaching
guides across a number of subject areas (except science)were handed out across 1,757 public secondary
schools at all three grade levels of secondary schooling \.
Quality-learning inputs for secondary education - Prototype Learning Resource Centers (CRAs) were
established as were the 20 in teacher training institutes\. The project also rehabilitated 74 spaces, four more than
the original design\. New learning resources for each CRA were acquired \. Approximately 220 teachers
(facilitators) were trained to use these new resources \.
Quality-Learning inputs for secondary education -Science laboratories-Twenty-four science laboratories were
built and 1,000 operational manual for using these laboratories were prepared and distributed to selected
schools\.
Management community-based strategies -The project financed the development and implementation of 100
PEIs, 100 PSPs, and 600 ACEs\. Institutional Management Team (EGIs) were also established in 100 schools\.
Outcome :
It is not possible to gauge achievement of this objective, since the only outcome indicator â results of the National
Student Assessment System (SNEPE) in Spanish Literature and Language and Mathematics â was dropped during
implementation following a change in methodology \. 2006 SNEPE results were to be the new baseline, measured
against achievements in 2010 and 2014\. The application of the 2010 assessment has been postponed until 2011\.
(iii) Greater equity of opportunity in secondary education \. Substantial \.
Outputs :
Scholarships - The project financed 4,500 secondary education scholarships per year for poor students and
those coming from lower-income families\.
Prototype schools - Two prototype schools were completed out of an original three \.
20 alternative secondary school programs for rural and working children were offered in five states \. This
program focused on rural areas, give working youth the opportunity to study outside the formal institutional
structure\.
Outcome :
Two indicators were used to assess achievement of this objective : changes in the net enrolment rate and incremental
growth in the number of secondary school students from poor and lower income families \.
Net enrolment increased from 33% to 42% between 2001 and 2008, thus achieving the target for APL 1\.
Targeting and transparency of scholarship allocation ensured that only poor students and those in the lower
income groups received the benefit \. The project also financed capacity building within the MEC to manage and
monitor the scholarship scheme \. Beyond 2006, the GOP has subsequently gone on to finance, from its own
resources, 4,518 scholarships in 2007, 3000 in 2008 and 10,060 in 2009\. Bank sector work indicates that the
scholarship program remains cost effective \.
By contrast, the prototype school and alternative secondary school programs were not cost -effective (see Section 5)\.
5\. Efficiency (not applicable to DPLs):
Efficiency is rated as modest \. At appraisal, it was estimated that the NPV of APL 1would be US$3\.8 million with an
ERR of 15% for a ten year scenario\. The ICR re-estimated the NPV and the ERR at the closure of APL 1 using actual
values of the program and the same assumptions \. These re-calculations resulted in an EER of 8%, below the
estimated opportunity cost of capital (OCC) in Paraguay of 10%\. Even if the time horizon were extended to 20 years,
the ERR would still only be 11%, barely above the estimated OCC\. There are two other indications of modest
efficiency\. First, the prototype schools were considerably scaled up (from 3,700 to 6,600 square meters) without
undertaking a prior cost-benefit analysis\. The resulting cost overruns meant that one of the three schools had to be
dropped\. Second, the alternative secondary education programs have turned out to be cost -ineffective\. Only 172 of
the 600 students who started participating in 2006 have remained in 17 sites (three of the original 20 sites have
dropped out of the program)\. Of these 172, only 76 had graduated at the end of the 2009-2010 school year,
signifying that it took them more than three -and-a-half years to complete their secondary education, some six months
longer than in a regular school \. Those of the remaining 96 to graduate in 2010-2011 will have taken more than four
years\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 15% 100%
ICR estimate Yes 8% 100%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Modest progress had been achieved by the end of APL 1 in enhancing management and efficiency of the
education system, while it was not possible to gauge whether or not there had been any improvements in educational
outcomes\. On the other hand, the scholarship program targeted to students from poor and lower income families has
been successful; although other activities meant to increase equity of opportunity (prototype schools and the
alternative secondary education program ) were not cost effective\. Efficiency is modest\. Although relevance of
objectives is substantial, that of design is modest \. Outcome is assessed as moderately unsatisfactory \.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
The following present moderate risks to the development outcome :
The Government is making progress in the implementation of the management re -engineering component of the
project\. The HR, financial and management system has been designed and validated, and is being used by the
MEC\. The Government expects that by December 2011 the system will be fully operational at the central and
departmental level\.
Several components of the National Student Achievement Assessment System SNEPE to measure learning
outcomes are in place\. At the end of 2010, the Paraguayan Congress approved several laws to provide
resources for secondary education \. As a result, preschool and upper secondary education are both free of
charge and mandatory; and all public schools receive additional finances based on the number of student
enrollment to pay for non-salary recurrent and capital expenditures \. The Government has also taken steps under
the Budget law for 2011 to finance textbooks introduced under the Project \.
There is political commitment to sustaining the scholarship program which is positive for achieving the equity in
opportunity component of the second objective \.
The Government is committed to the Project's goals and has requested a follow -up operation to improve
outcomes and efficiency in education through better trained teachers and adequate learning environments \.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
at -Entry : Quality of Entry is rated as moderately unsatisfactory \. A number of factors under
a\. Ensuring Quality -at-
the remit of the Bank undermined the project :\.
Design was over-ambitious and covered too many areas \.
The project was not ready for implementation at the time of Board approval, and a number of components,
particularly pilot programs, still lacked technical and operational details at effectiveness \.
There was no cost-benefit analysis for the three proposed prototype schools as originally designed \.
The links between the different (and numerous) activities of the project and the PDOs were poorly
articulated\.
Insufficient thought was given in the design of the results framework to the links between inputs, outputs,
outcomes and chosen target outcome indicators \. This subsequently undermined the quality of supervision \.
b\. Quality of Supervision : Quality of Supervision is rated as moderately unsatisfactory \. Although supervision
was regular and a number of key issues were flagged and adjusted during and following missions, two key
actions were not taken\. First, there was no attempt to address the poor results framework, although this
weakness was recognized in various Implementation Status Reports \. Second, there was no adequate justification
or cost benefit analysis undertaken prior to the decision to increase the size of the prototype schools from 3,700
to 6,600 square meters \.
at -Entry :Moderately Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Unsatisfactory
c\. Overall Bank Performance :Moderately Unsatisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance : Government performance is rated moderately unsatisfactory \. During preparation,
the Borrower was supportive of the project, but during implementation, there were problems \. The project
benefited from political stability until August 15, 2008\. The change in Administration at that time, combined with
Congressional non-approval of the 2008 and 2009 Budget Laws, led to the withdrawal of financing for key inputs
under Component B\. Outstanding payments by the GOP on another Bank project also led to delays in
disbursements\. Although the Bank team benefited from interaction with a highly qualified technical counterpart
team at the MEC\. one aspect of the Ministryâs management that proved detrimental to the project was the lack of
coordination between the various teams within the MEC /UCP responsible for various components of the project \.
b\. Implementing Agency Performance :
Implementing Agency performance is rated moderately satisfactory \. The performance of the PCU can be divided
into three phases\. First, during 2004-2006, the Unit was ineffective in implementing required procurement
procedures due to lack of preparedness at loan effectiveness \. Second, between March 2006-and the end of
2007, the PCUâs improved performance contributed to the disbursement of 67% of the loan\. Third, after the new
Government assumed office in August 2008, the pace of activities slowed again, because of personnel changes
made by the new Administration and because the project was running out of funds \. An effective relationship
between the MEC and the PCU existed (except in the area of infrastructure ) until August 2008\.
a\. Government Performance :Moderately Unsatisfactory
b\. Implementing Agency Performance :Moderately Satisfactory
c\. Overall Borrower Performance :Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
M&E Design : There were a number of significant shortcomings in M&E design :
It was too complex and there were too many indicators
There were significant discrepancies between the indicators presented in the text of the PAD and
those in Annex 1\.
The causal links between, inputs, outputs outcomes and indicators were not well thought out (see
Section 3 above)\.
Some indicators of the achievement of the first project objective (improved management and
efficiency of the education system) -- such as class size and completion rates â are national
aggregates that would have been influenced by factors beyond the control of the project \.
There was a lack of indicators to measure several of the intended managerial improvements \.
Monitoring the impact of several activities, including the outcomes of the pilots financed by the
project, was to rely on a series of evaluation studies, for which insufficient funding was provided \.
M& E Implementation : Of the six outcome indicators agreed upon at Negotiations, only two were regularly
reported on in the ISR for Phase I -- net enrolment and gross completion\. Key APL II triggers were
monitored, though in the end were moot\. The key learning outcome indicator â SNEPE results in language
and mathematics -- was dropped due to methodology changes\. Impact evaluations of the pilot activities,
except for the scholarship program, were not implemented\. Although, M&E design weaknesses were
recognized by the TTLs in various ISRs, no attempt was made to address them during supervision \.
M&E Utilization : The PCU regularly provided information to all stake -holders\. However, a number of
indicators were not systematically collected, and there is little evidence that monitoring informed strategic
redirection of the project or resource allocation \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards : The ICR reports that environmental and resettlement assessments were carried out for
the two prototype schools built under the project in accordance with the Bank âs safeguards policies\.
Although similar exercises were not carried out for five CDCs, a retroactive assessment was undertaken
by the Bank and no environmental issues surfaced\. No Indigenous Peoples Plan was prepared to take
account of the requirements of the indigenous children enrolled in some project schools \. However, the
ICR reports that the effect of this preparation stage oversight was mitigated by the government policy of
mandating the teaching of the Guarani indigenous language in all primary and secondary schools \.
Fiduciary compliance : According to the ICR, the financial management and procurement process
complied with the Bank's stipulations \. The PCU was efficient in providing the Bank with quarterly financial
management reports and unqualified annual audit reports in a timely manner \.
Unintended (positive and negative ) consequences : On the positive side, the PCU for this project was the
winner of the Ministry of Financeâs prize for good governance and transparency for implementing the
nationwide system of integrated acquisition management procedure \. This is a digital back-up of all
acquisitions of goods, services, and works undertaken during the lifetime of the project \. The interests of
indigenous peoples were safeguarded through the Government national bilingual education policy which
mandates the production of textbooks and learning material in the indigenous language (Guarani)\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Unsatisfactory Unsatisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Unsatisfactory Unsatisfactory
Borrower Performance : Moderately Moderately The ICR's ratings of Government
Satisfactory Unsatisfactory performance (moderately satisfactory)
and Implementing Agency performance
(moderately unsatisfactory) are the
same as IEG's According to the
harmonization criteria, the overall
Borrower performance rating in such a
case should be guided by outcome and
is therefore moderately unsatisfactory \.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Political support and ownership is a key condition and a good predictor for success \. The stability existing
within the MEC authorities throughout the entire lending and implementation cycles (up up to August 15, 2008)
created the required conducive environment by limiting shifts in education policy and implementation strategy
and of changes in key implementation players \. On the other hand, the revision and appropriation of the
ongoing project by the new education authorities resulted in a delay of project activities \.
Appropriate results framework is needed to inform the Borrower and Bank management about progress
towards achieving the expected project development objective \. Clear plausible articulation of the results
chain linking the PDO with inputs, outputs and outcome indicators is critical for successful Bank and Borrower
management and for successful achievement of objectives \. Further the number of outcome and output
indicators need to be minimized to facilitate timely updating and to reduce cost and data processing \. Also all
attempts should be made to make appropriate attributions to protect changes in outcomes from actions
outside the scope of the project \.
Cost-
Cost -benefit analysis is useful at the preparation stage of a project to avoid the inclusion of cost -ineffective
interventions and to facilitate the choice between design options \.
The choice of targeting approach is relevant for equity, transparency, program ownership and
effectiveness \. The scholarship scheme was a good example of (a) a targeted intervention that was directed
to poor secondary education students; (b) transparent selection criteria and accountability; (c) cost-effective
investment as indicated by an impact evaluation; and (d) sustainability, demonstrated by the GOP âs decision
to make this a regular program within MECâs annual budget\.
14\. Assessment Recommended? Yes No
Why? To verify the ratings and address knowledge gaps concerning the projectâs outcomes\.
15\. Comments on Quality of ICR:
The ICR was satisfactory with some shortcomings\. The document is thorough and makes a convincing argument for
the ratings given\. However, although the ICR recognizes the weaknesses of the results framework, no alternative
means of assessing the achievement of certain project objectives are provided \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P044485 | Document of
The World Bank
Report No: ICR108
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-41970)
ON A
LOAN
IN THE AMOUNT OF US$372\.6 MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR A
WAIGAOQIAO THERMAL POWER PROJECT
June 25, 2007
Transport, Energy and Mining Sector Unit
Sustainable Development Department
East Asia and Pacific Region
CURRENCY EQUIVALENTS
(Exchange rate effective December 31, 2006)
Renminbi (RMB) = currency
Currency Unit = yuan
Y 1\.00 = US$0\.125
Y 0\.01 = 1 fen
US$1\.00 = Y 8\.0
FISCAL YEAR
[January 1 December 31]
ACRONYMS AND ABBREVIATIONS
A/FM Accounting and financial management O&M Operation and maintenance
CAS Country Assistance Strategy PA Project Agreement
EMP Environmental Management Plan PDO Project Development Objective
ERP Enterprise Resource Planning (system) PPF Project Preparation Facility
FGD Flue gas desulfurization QAG Quality Assessment Group
FRR Financial rate of return QSA Quality of Supervision Assessment
g Gram RAP Resettlement Action Plan
gce Grams of coal equivalent SAR Staff Appraisal Report
GDP Gross domestic product SDK Shidongkou Thermal Power Plant
GWh Gigawatt-hour SEPA State Environmental Protection Administration
I&C Instrumentation and control SMEPC Shanghai Municipal Electric Power Company
ICR Implementation Completion and Results Report SO2 Sulfur dioxide
IERR Internal economic rate of return SP State Power Corporation of China
ISR Implementation Status Report T&D Transport and Distribution
JBIC Japan Bank for International Cooperation TA Technical assistance
km Kilometer T/G Turbine generator
kV Kilovolt VAT Value added tax
kW Kilowatt WB World Bank
kWh Kilowatt-hour WGQ Waigaoqiao Power Generation Plant
M&E Monitoring and evaluation WGQ I Waigaoqiao Power Generation Plant Phase I
MOF Ministry of Finance WGQ II Waigaoqiao Power Generation Plant Phase II
MW Megawatt WPGC Waigaoqiao Power Generation Company
NDRC National Development and Reform Commission Y/tce Yuan/ton of coal equivalent
NOx Nitrogen oxide
Vice President: James Adams
Country Director: David R\. Dollar
Sector Manager: Junhui Wu
Project Team Leader: Ranjit Lamech
ICR Team Leader: Noureddine Berrah
CHINA
WAIGAOQIAO THERMAL POWER PROJECT
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Profile
1\. Project Context, Development Objectives, and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes\. 4
3\. Assessment of Outcomes \. 7
4\. Assessment of Risk to Development Outcome\. 12
5\. Assessment of Bank and Borrower Performance \. 12
6\. Lessons Learned\. 15
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 16
Annex 1\. Project Costs and Financing\. 17
Annex 2\. Outputs by Component\. 18
Annex 3\. Economic and Financial Analysis\. 21
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 27
Annex 5\. Beneficiary Survey Results \. 29
Annex 6\. Stakeholder Workshop Report and Results\. 30
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 31
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 34
Annex 9\. List of Supporting Documents \. 35
MAP: IBRD Map No\. 28487
A\. Basic Information
SHANGHAI
Country: China Project Name:
WAIGAOQIAO
Project ID: P044485 L/C/TF Number(s): IBRD-41970
ICR Date: 06/25/2007 ICR Type: Core ICR
Lending Instrument: SIL Borrower:
Original Total
USD 400\.0M Disbursed Amount: USD 372\.6M
Commitment:
Environmental Category: A
Implementing Agencies:
Shanghai Municipal Electric Power Corporation
Waigaoqiao No\.2 Power Generation Company
Cofinanciers and Other External Partners:
B\. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 05/24/1996 Effectiveness: 02/04/1999 02/04/1999
Appraisal: 03/14/1997 Restructuring(s):
Approval: 06/24/1997 Mid-term Review:
Closing: 01/31/2006 12/31/2006
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Low or Negligible
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Moderately Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Highly Satisfactory
Overall Bank Overall Borrower
Performance: Satisfactory Performance: Satisfactory
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Performance Indicators (if any) Rating
Potential Problem Project No Quality at Entry None
i
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No Highly Satisfactory
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Power 100 100
Theme Code (Primary/Secondary)
Climate change Primary Primary
Decentralization Secondary Secondary
Other financial and private sector development Primary Primary
Pollution management and environmental health Primary Primary
Regulation and competition policy Primary Primary
E\. Bank Staff
Positions At ICR At Approval
Vice President: James W\. Adams Jean-Michel Severino
Country Director: David R\. Dollar Nicholas C\. Hope
Sector Manager: Junhui Wu Richard G\. Scurfield
Project Team Leader: Noureddine Berrah Hsiao-Yun Elaine Sun
ICR Team Leader: Ranjit J\. Lamech
ICR Primary Author: Noureddine Berrah
Ivy H\. Cheng
Weigong Cao
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The original objectives were to: (a) increase electricity supply to reduce the acute power
shortages in Shanghai through construction of the first two 900 MW coal-fired
supercritical thermal units in China; (b) develop a program to apply for the first time in
China the "bubble concept" for cost effective air quality management within the
Shanghai Municipality; (c) support the ongoing reform by restructuring the Shanghai
Municipal Electric Power Company (SMEPC) in line with the power sector reform
strategy; increasing private sector involvement through listing of the generating
ii
company; and adjusting the tariff level to accommodate the stricter sulfur dioxide
emission standards; and (d) promote an innovative and diversified financing model for
large infrastructure projects and improve the access of power entities to international
financial markets\.
Revised Project Development Objectives (as approved by original approving authority)
PDO not revised\.
(a) PDO Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Revised Achieved at
approval Target Completion or
documents) Values Target Years
Indicator 1 : Load shedding (planned and unplanned) in MW/Total demand (recorded peak
load plus load shedding) in MW
Value
quantitative or 14\.5% (1000/6916) 9\.3% N/A 1\.3% (260/19,800)
Qualitative)
Date achieved 12/31/1995 12/31/2006 12/31/2006 12/31/2006
Comments
(incl\. % Target surpassed substantially (13\.2% actual reduction vs\. 5\.2% targeted
achievement) reduction)
Indicator 2 : Availability of Waigaoqiao II Units
Value
quantitative or Benchmark for both units 85% for both units N/A Unit 1: 90\.7%
Qualitative) 85% Unit 2: 83\.9%
Date achieved 12/31/1995 12/31/2006 12/31/2006 12/31/2006
Comments
(incl\. % Unit 1: surpass target by 6\.7%; Unit 2: close to target with small shortfall (1\.3%)
achievement) due to major planned maintenance\.
Indicator 3 : Fuel efficiency (Coal consumption gce/kWh)
Value 348 gce/kWh (SMEPC 295 gce/kWh
quantitative or (Waigaoqiao II N/A 296\.2 gce/kWh
Qualitative) average) both units)
Date achieved 12/31/1995 12/31/2006 12/31/2006 12/31/2006
Comments
(incl\. % Nearly equal to target achievement
achievement)
Indicator 4 : Average power price/LRMC in percent
Target date
revised to the
Value date of
quantitative or 83\.4% 100% effective 116%
Qualitative) separation of
generation
assets
Date achieved 12/31/1995 12/31/2006 12/31/2005 12/31/2005
iii
Comments
(incl\. % Surpassed target
achievement)
Indicator 5 : SO2 Emission Reduction
Value 48,000-49,000 tons of 46,075 tons\. A net
quantitative or SO2 emission removed Positive value \. reduction of 9,275
Qualitative) from Shidongkou tons
Date achieved 12/31/1995 12/31/2006 12/31/2006 12/31/2006
Comments
(incl\. % The bubble concept was effective in reducing sulfur dioxide emission\.
achievement)
Indicator 6 : Rate of Return on Equity of SMEPC
Value Indicator
quantitative or 15% (benchmark) 15% dropped due to N/A
Qualitative) reorganization
Date achieved 12/31/1995 12/31/2006 12/31/2006 12/31/2006
Comments
(incl\. % The associated financial covenant was no longer relevant and dropped as part of
achievement) the legal amendment\.
Indicator 7 : Training Provided (staff months)
Value
quantitative or 807\.5 (benchmark) 807\.5 n\.a\. 1,008
Qualitative) (benchmark)
Date achieved 12/31/1995 12/31/1996 12/31/2006 12/31/2006
Comments
(incl\. % Surpassed target; 125% achieved
achievement)
Indicator 8 : TA for Restructuring and Financial Management
Value
quantitative or TA provided Completed TA N/A TA completed
Qualitative)
Date achieved 12/31/1995 12/31/2001 12/31/2003 12/31/2003
Comments
(incl\. % Objective met though content modified to respond to changing needs\. Target
achievement) date postponed due to ongoing restructuring and expansion of TA scope\.
(b) Intermediate Outcome Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : SO2 Emissions Reduction
Value
(quantitative 48,000 tons of SO2 None defined at Positive values
or Qualitative) appraisal
Date achieved 12/31/1995 12/31/1995 12/31/2005
Comments None defined at appraisal\.
iv
(incl\. %
achievement)
Indicator 2 : TA for Restructuring and Financial Management
Restructuring
completed\.
Financial
Value management
(quantitative Not applicable upgraded to Completed
or Qualitative) ERP\.
Implementatio
n well
advanced\.
Date achieved 12/31/1995 12/31/2002 12/31/2004
Comments
(incl\. % None defined at appraisal
achievement)
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 08/29/1997 Satisfactory Satisfactory 0\.00
2 05/07/1998 Satisfactory Satisfactory 0\.00
3 11/17/1998 Satisfactory Satisfactory 0\.00
4 06/13/1999 Satisfactory Satisfactory 38\.16
5 12/24/1999 Satisfactory Satisfactory 38\.78
6 06/15/2000 Satisfactory Satisfactory 39\.85
7 12/28/2000 Satisfactory Satisfactory 44\.55
8 06/26/2001 Satisfactory Satisfactory 59\.39
9 12/17/2001 Satisfactory Satisfactory 121\.32
10 05/23/2002 Satisfactory Satisfactory 167\.09
11 12/12/2002 Satisfactory Satisfactory 240\.07
12 04/10/2003 Satisfactory Satisfactory 277\.54
13 05/27/2003 Satisfactory Satisfactory 283\.20
14 12/17/2003 Satisfactory Satisfactory 303\.66
15 06/11/2004 Satisfactory Satisfactory 326\.89
16 11/18/2004 Satisfactory Satisfactory 331\.82
17 05/10/2005 Satisfactory Satisfactory 343\.43
18 12/02/2005 Satisfactory Satisfactory 351\.30
19 04/18/2006 Satisfactory Satisfactory 353\.87
20 10/25/2006 Satisfactory Satisfactory 364\.74
H\. Restructuring (if any)
Not Applicable
v
I\. Disbursement Profile
vi
1\. Project Context, Development Objectives, and Design
1\.1 Context at Appraisal
At appraisal, the power sector in China was emerging from a period of acute shortages\. It was
facing inadequate financing of infrastructure, transmission bottlenecks, inadequate wholesale
electricity and transmission pricing systems, and unclear corporate relationships among power
sector entities\. At the same time, the sector was adjusting to a new legal and regulatory
framework stemming from the enactment of the Corporate Law in 1993 and the first
Electricity Law in 1996\.
In this context, power companies were struggling to meet fast-growing demand, especially in
Shanghai, China's industrial, commercial, and financial center\. Provincial and municipal
power companies did not have access to financial markets and relied mainly on domestic
commercial banks to meet their financing needs\. Private investments were being piloted, but
their contribution remained limited\. Environmental awareness was increasing, and the
Shanghai Municipality adopted higher standards than the national ones\.
The Bank supported the project for four main reasons: (a) demonstration effect--the
introduction of the first two large supercritical units in Shanghai would lead to the diffusion of
advanced and more environmentally friendly technologies; (b) advancing reform--the
Shanghai Municipality was very receptive to policy changes to advance the reform agenda;
(c) testing the "bubble concept"1--this innovative approach would lead to better or optimal
use of resources to mitigate environmental impacts; and (d) feasibility of accessing
commercial financing\.
As detailed below, the project was successful in these endeavors\.
1\.2 Original Project Development Objectives and Key Indicators
The original Project Development Objectives (PDOs) were to (a) increase electricity supply to
reduce the acute power shortages in Shanghai through construction of the first two 900 MW
coal-fired supercritical thermal units in China; (b) develop a program to apply the bubble
concept for the first time in China for cost-effective air quality management within the
Shanghai Municipality; (c) support the ongoing reform by restructuring the Shanghai
Municipal Electric Power Company (SMEPC) in line with the power sector reform strategy,
increasing private sector involvement through listing of generating company, and adjusting
the tariff level to accommodate the stricter sulfur dioxide (SO2) emission standards; and (d)
promote an innovative and diversified financing model for large infrastructure projects and
improve the access of power entities to international financial markets\.
1 The bubble concept is an approach to reduce an area's overall SO2 emission most cost effectively\. When a
new thermal power generation plant is constructed, instead of necessarily including flue gas desulfurization
(FGD) facilities at the site, the approach calls for potential FGD installation at an alternative (existing)
thermal power plant where the cost of per unit SO2 removal is lower\. Main criteria for location selection are:
(a) estimated SO2 reduction at the chosen site would at least offset the anticipated emission from the new
plant; and (b) it is a lower cost alternative\.
1
The key indicators for monitoring the project outcome and impacts consisted of a reduction in
load shedding, the availability of the Waigaoqiao Power Generation Plant Phase II (WGQ II)
units, improved fuel efficiency, adequacy of average consumer tariff, net reduction of SO2
emissions, a declining share of state holding in Shanghai's power sector, the SMEPC's rate of
return on equity, training completed, and technical assistance (TA) accomplished for
restructuring and financial management\.
1\.3 Revised PDOs and Key Indicators (as approved by original approving authority),
and Reasons/Justification
The PDOs were not revised\. However, performance indicators were adapted after the project
ownership was transferred from the SMEPC to the Waigaoqiao Power Generation Company
(WPGC)\.2 The main changes are (a) average system-wide power tariff was no longer tracked
after 2005 as the SMEPC, the system operator, was no longer involved in the project, and the
average tariff in the Shanghai Municipality was already higher than long-term marginal cost
and the government issued regulations to increase the tariff by 2 fens/kWh (0\.02 RMB/kWh)
to compensate the companies for stricter SO2 emissions standards; and (b) financial
monitoring focused on the WPGC after the legal agreements were amended (Section 3\.3)\.
1\.4 Main Beneficiaries
The SMEPC was identified as the direct beneficiary in the Staff Appraisal Report (SAR)\. It is
clear that the implementing agencies benefited greatly from the various TA and training
programs and systems acquired to improve their operational and management systems and
provide more reliable services to sustain growth and benefit consumers\. In retrospect, the
electricity consumers of Shanghai Municipality who had long suffered from an inadequate
supply and deteriorating air quality should have also been identified as ultimate beneficiaries
of the project\.
1\.5 Original Components
The project included the following components: (a) construction of two 900 MW coal-fired
supercritical thermal units in Pudong (WGQ II); (b) installation of flue gas desulfurization
2 The WPGC was established as a separate company in 2000\. SMEPC, as controlling shareholder of the
company, continued to function as owner of the project, and led the implementation effort\. As sector
restructuring progressed, SMEPC became a subsidiary of the State Power Corporation of China (SP)\. By
2002, the WPGC was spun off and incorporated as independent power generation company\. In this process,
all SMEPC's shares in the WPGC were also transferred to other national and provincial power energy
investment companies\. Project ownership, obligations and implementation responsibilities henceforth were
handed over to the WPGC\. The three shareholders of the WPGC are partially listed on international and/or
local financial markets\.
2
(FGD) facilities at Shidongkou Thermal Power Plant (SDK)3; (c) construction of two 500 kV
transmission lines (2 circuits x 50 km) with associated substation; (d) construction
management and engineering services; (e) TA for implementation of modern accounting and
financial management (A/FM) systems; (f) TA for implementation of the sector restructuring;
and (g) management development and training program\.
1\.6 Revised Components
Because of changes in the overall operating environment, minor changes were required in
components (b) and (e) without impact on the PDOs\.
Component (b): Flue Gas Desulfurization (FGD) facilities at Shidongkou Thermal Power
Plant (SDK)\. With the opening of the coal market, SDK was allowed to purchase coal with
lower sulfur content\. Consequently, FGD at SDK was no longer the most cost-effective under
the bubble concept\. A study carried out by the SMEPC concluded that installation of FGD at
Waigaoqiao Power Generation Plant Phase I (WGQ I), combined with the use of low-sulfur
coal at SDK, would provide approximately the same overall environmental benefits\.4 The
Bank and the Japan Bank for International Cooperation (JBIC), financier of the component,
concurred, and so this revised course was followed\.
Component (e): TA for Accounting/Financial Management (A/FM) Systems\. The original
component included systems studies and implementation of recommended organizational
improvements and A/FM systems\. In response to the company's evolving restructuring, the
scope of the TA was extended to cover implementation of an integrated Enterprise Resource
Planning system (ERP)\. The expanded scope of TA was funded by the SMEPC (Annex 2(e))\.
1\.7 Other Significant Changes
Project Ownership: Project ownership and implementation responsibilities were transferred
from the SMEPC to the WPGC (refer to footnote 2 under Section 1\.3)\. Although the change
was significant from the legal, financial, and personnel standpoints, the transition had limited
impact on project execution\.
Implementation Schedule and Loan Closing: Project completion was delayed for about a year
and a half\. This was mainly a result of the government's late approval of the feasibility study
because of a moratorium on new thermal power plant construction (Section 2\.2c) after the
East Asia financial crisis\. During commissioning, unforeseen system interface problems
related to the instrumentation and control also necessitated additional supplier coordination
3 SO2 emissions from WGQ II (36,800 ton/year) were well within Chinese National Standards and World
Bank guidelines so no FGD equipment was required\. However, Shanghai Municipality environmental
regulations specified that FGD units be installed at all new thermal power plants\. By applying the bubble
concept, it was determined that FGD at SDK would afford the greatest net SO2 reductions (9,910 tons/year)
at the least cost (about a third of the cost of installing FGD at WGQ II)\. The mayor of Shanghai supported
this approach and a waiver was provided\.
4 SO2 reduction at WGQ I was estimated to be about 29 percent of the envisioned reduction at SDK\. Actual
cost was about 67 percent of the original estimated base cost\. Total net SO2 reduction, including low sulfur
coal usage at SDK, was about 9,275 tons/year (or about 94 percent of the original scheme)\.
3
and performance testing (Section 5\.2b)\. As a result, loan closing was extended by 11 months
to December 31, 2006\.
Project Cost: The final project cost amounted to US$1,274\.8 million, about 13 percent higher
than the baseline cost, plus taxes at appraisal of US$1,438\.0 million (Annex 1(a))\. The
equipment cost was about 15 percent lower than estimated at appraisal\.5 The cost of land
acquisition for the power plant and access roads was about half the estimate of appraisal
because of improved layout in detailed design (Section 2\.4)\. However, this was partly offset
by higher civil work expenditures that were about 90 percent higher than estimated at
appraisal\. The lower equipment cost was mainly attributable to lower equipment prices
(caused by a decline in worldwide demand after the East Asia financial crisis), a larger
proportion of local content than initially envisioned, and efficient construction management\.
The civil work increase was a result of price escalation and, more importantly, more difficult
than envisaged foundation layout\. Therefore, the contingencies were not used, and the
financing needs were adjusted during implementation\.
Project Financing: Actual financing needs amounted to US$1,345\.3 million, about 29
percent lower than envisaged at appraisal\. Because of the lower than expected boiler and
turbine prices, the Bank loan was used to cover more equipment than envisaged, including the
instrumentation and control (I&C) and ash handling packages\. The undisbursed balance of
about US$27\.4 million of the original US$400\.0 million Bank loan was cancelled upon
closure\. The modified FGD component also resulted in a reduced need for parallel financing
(footnote 4 and Annex 1(b))\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design, and Quality at Entry
The PDOs were in line with two themes of the 1997 Country Assistance Strategy (CAS)--
infrastructure development and environmental protection\. Project components were designed
to directly address the main sector issues identified\. Findings and recommendations of the
sector study, Strategic Options in Power Sector Reform in China (1993), and the sector report,
China Power Sector Reform: Towards Competition and Improved Performance (1994), were
taken into consideration\. The lessons learned from earlier operations were incorporated into
the project design through a better focus on project management, improved environment and
resettlement studies during project preparation, stronger engagement of the borrower to
ensure commitment to reform, and particular attention to the specification of coal quality in
boiler design\.
The project included several innovative elements that were piloted for the first time in China:
(a) introduction of large supercritical coal-fired thermal generation units to improve coal use
and fuel efficiency, reduce investment cost through economies of scale, and reduce
environmental impacts; (b) piloting of the bubble concept for cost effective environmental
protection; and (c) securing loans from diverse sources to finance large infrastructure projects\.
5 If contingencies are considered, the total project cost would be about 23 percent lower than estimated at
appraisal\.
4
Funding from an existing Technical Cooperation Credit was used to hire international
consultants to carry out a comprehensive feasibility study according to best international and
industry practice to ensure the technical soundness of the project in 1996\. Prior to the loan
approval, international engineering consultants were also engaged to assist with design
finalization, procurement, engineering, and design interface coordination\. Government
commitment and the sense of ownership on the part of implementing agencies were very high\.
The Bank's safeguard policies on Involuntary Resettlement and Environmental Assessment
were appropriately applied\. At appraisal, four major categories of risk (electricity demand,
pricing, costs, and operational performance) were identified and assessed\. Overall risk was
considered modest and manageable\. Assumptions and risk mitigation measures were clearly
spelled out in the SAR\.
Quality at entry is considered satisfactory\. Two Quality Assessment Group (QAG) reviews of
supervision quality in 1998 and 2006 rated the quality at entry as highly satisfactory\.
2\.2 Implementation
The 199798 East Asian financial crisis affected the project in several ways: (a) equipment
prices were lower due to a worldwide decline in demand; (b) deterioration in market
conditions made it more difficult to list power generation companies on stock exchanges
(Section 3\.2c); and (c) the government reacted to a temporary slowdown in electricity demand
in 1999/2000 with a moratorium on new thermal power construction\. The latter stalled the
procurement of equipment and caused major difficulties in contract management\. This
delayed government approvals and the effectiveness of the project\.
The SMEPC and WPGC were proactive in minimizing the impact of the delay on the project
implementation\. They took the following actions: (a) delegations visited the Bank to clarify
and resolve approval and procurement issues expeditiously prior to project effectiveness; (b)
with support from the Shanghai Municipal government, the agency took risks and started
construction preparation and civil works to the extent permissible prior to securing all
government approvals; and (c) once construction resumed, the project team was reinforced
with special focus on contract management, construction scheduling and cost control\. As a
result of these efforts, the two-year delay was reduced by about six months\.
In the two QAG reviews of supervision (2001 and 2006) mentioned earlier, quality of
supervision was twice assessed as highly satisfactory (Section 5\.1b)\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
The project was prepared in 1997 before the introduction of the log-frame approach or the
results framework\. Nevertheless, achievement of the PDOs and project performance were
monitored according to quantifiable performance indicators developed during project
preparation, and confirmed after the introduction of the Logical Framework approach in
August 1997\. These indicators were regularly monitored and evaluated against the baseline
and target values\. As the operating environment evolved, some indicators were modified
5
(Sections 1\.21\.3) with continued focus on PDO achievement\. In addition, implementation of
the Environmental Management Plan (EMP) was regularly monitored by the implementing
agencies and an independent environmental institute\. Periodic reports were reviewed,
evaluated, and followed up on by the Bank during supervision missions\. The financial
performance of the SMEPC and WPGC and their compliance with the financial covenants and
reporting requirements were also regularly monitored (Section 3\.3)\.
M&E considerations were also incorporated in the design of all management, financial, and
operation systems developed by the implementing agencies, such as the Enterprise Resources
Planning (ERP) system in the SMEPC and the operation control and continuous
environmental monitoring in the WPGC\. Indicators are regularly used to monitor all
operational, environmental and efficiency aspects of the power sector in the Shanghai
Municipality\.
2\.4 Safeguard and Fiduciary Compliance
Resettlement: Resettlement activities were implemented in a highly satisfactory manner and
in accordance with the approved Resettlement Action Plan (RAP) and Shanghai Municipality
regulations\. For the WGQ II site, resettlement involved relocation of 327 households totaling
about 1,000 people, 16 work units, and 16 enterprises\. One substation involved displacement
of 11 households and economic rehabilitation of 94 farmers\. Final land acquisition was 34
percent below the RAP because of the reduced need for construction area\. Follow-up surveys
conducted by an external monitoring team confirmed that land acquisition and resettlement
had followed relevant national laws and municipal regulations, and were consistent with Bank
policy\. At project completion, all affected people and entities had been able to restore or
improve upon their previous living and economic conditions\.
Environment: The WPGC carried out the EMP in a satisfactory manner\. The specified
mitigating requirements were fully implemented\. All fly ash and slag from WGQ II were
being used for cement manufacture or building materials\. Performance of both the dust
collection system and the low NOx burners exceeded the requirements set forth in the EMP\.
The FGD at WGQ I was operating at or above the design efficiency of 90 percent\. All
gypsum byproduct was sold\. All in all, the bubble concept proved to be beneficial from both
the environmental and economic points of view\. However, the WPGC did not install and
operate its own air quality monitoring equipment as planned\. Instead, in 2002 the firm
arranged for the Shanghai Municipality Environmental Monitoring Center to provide data
semiannually from three existing monitoring stations\. Data from 2003 through 2005 indicate
little change in air quality that can be attributed to the operation of WGQ II\. While not
optimal, this approach serves the environmental monitoring purpose sought by the Bank\.
Procurement: At project inception, a procurement management group was established within
the SMEPC to facilitate preparatory activities\. Procurement was effectively organized and
carried out in compliance with Bank guidelines\. The implementing agencies were effective in
overcoming contract management difficulties during the moratorium and interfacing issues at
commissioning (Sections 2\.2 and 5\.1b)\. The Bank's oversight and close involvement in all
phases, including two procurement-focused missions, helped in ensuring the transparency of
6
the process and contributed to the owner's ability to procure state-of-the-art technology at
very competitive prices\.
Financial Management: The SMEPC and WPGC maintained dedicated accounts for the
project, and prepared project and corporate financial statements semiannually\. Annual audit
reports were submitted to the Bank on time\. Minor discrepancies because of a time lag in
recording were diligently followed up on and promptly reconciled\. Thorough ex post review
of project accounts and audits confirmed that financial management of the project funds was
sound and adequate\.
2\.5 Post-Completion Operation/Next Phase
At project completion, WGQ II had been in commercial operation for more than a year\. The
company's technical, managerial, and financial performance during the first year (refer to the
indicators and financial statement summary in Annex 3B) is indicative of the sound and
efficient operation of the power plant: the company met or exceeded all technical and
financial indicators (except for one, as explained in Annex 2)\. Transition arrangements to
commercial operation were sound and comprehensive, covering operation and maintenance
and fuel purchase\. All operational manuals and maintenance procedures were in place, and
they were consistent with international best practice and manufacturers' recommendations\.
Training and career development of management and technical staff were given special
attention to improve the company's competitive edge in the emerging East china Power
Market\. The WPGC intends to maintain the project M&E system that has been in use since
2005\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design, and Implementation
Rating of Relevance: High
Despite a different global context including the East Asian financial crisis and its aftermath,
shifting government priorities, and a restructured power sector, the PDOs remain highly
relevant at completion\. The project is directly linked to three of the five themes stated in the
2006 Country Partnership Strategy: (a) managing resource scarcity and environmental
challenges; (b) financing sustained and efficient growth; and (c) improving public and market
institutions\. It is also compliant with the Bank's social and environmental safeguard policies
and fiduciary requirements prevailing at the time of project completion\. As climate change
concerns grow, investment in efficient coal power plant has become even more important in
the current global context\.
3\.2 Achievement of Project Development Objectives
Rating: Satisfactory
7
The project substantially met all PDOs\. It succeeded in building efficient and
environmentally friendly facilities to help meet soaring demand, and introduced a new
conceptual framework--the "bubble concept"--for efficiently building new capacity while
minimizing environmental impact\. While serving as a pilot for restructuring and expanding
the power sector, the project also succeeded in implementing an innovative financing model\.
Specific accomplishments included the following:
(a) Reductions in Acute Power Shortages in Shanghai: Two 900 MW coal-fired
supercritical thermal units and associated 500 kV transmission lines and substation
were successfully constructed\. All facilities have been functioning satisfactorily since
commissioning in 2004\. During the summers of 200406, WGQ II's share of
electricity generated in the Shanghai area was 15\.2 percent, 13\.5 percent, and 12\.2
percent, respectively\. In 2006, electricity generated by WGQII represented 9\.5
percent of the peak load of the Shanghai grid, significantly reducing load shedding
from the baseline 14\.5 percent in 1995 to 1\.3 percent in 2006\. Units 1 and 2 achieved
2006 availability rates of 90\.7 percent and 83\.9 percent respectively, in the first case
exceeding the 85 percent benchmark set as an end-of-project target, and in the second
case nearly matching the target\. The average coal consumption in 2006 was 296\.2
gce/kWh, almost meeting the benchmark of 295\. (More detail on the achievement of
all PDOs is found in Annex 2\.)
(b) A Demonstration of the Bubble Concept in Shanghai: The bubble concept to reduce
SO2 emissions in the most cost-effective manner (footnote 1) was successfully piloted
through the installation of FGD facilities at WGQ I and use of lower sulfur content
coal in SDK\. Two wet limestone FGD units were installed at WGQ I, with both now
in successful commercial operation\. By utilizing coal with lower sulfur content in
Shidongkou, and by installation of FGDs in WGQ I, the project achieved a combined
reduction of sulfur dioxide emissions of about 46,075 tons per year, which more than
offset the annual sulfur dioxide emissions released from WGQ II\.
(c) Support for a Restructuring of the SMEPC, an Increase in Private Sector Investment
through Public Listing, and a Tariff Adjustment to Accommodate Stricter SO2
Emission Standards: The SMEPC was successfully restructured in line with the
national power sector reform strategy\. By project completion, the company had
transferred its government functions and divested its generation assets to become a
business oriented municipal power company focused on transmission, distribution, and
dispatch in the Shanghai area\. Moreover, the WPGC was established as an
independent power generation company operating on a commercial basis\. The
project's TA facilitated the reforms and helped both companies build their institutional
capacity and be prepared to operate in the commercial and gradually increasing
competitive environment (Section 3\.5b)\. The role of TA provided under the project in
facilitating sector restructuring is described in Annex 2f\.
Deteriorating international market conditions resulting from the East Asian financial
crisis affected the project in several ways: (a) during project preparation, it was
assumed that a more open market and improved institutional environment would spur
8
private involvement in the sector\. Although the institutional environment improved
significantly and Shanghai has sizeable private sector involvement, private investment
did not increase as expected because of the reduced involvement of the private sector
in power on a global scale; and (b) the envisioned direct listing of several divested
generation companies on foreign stock markets was postponed and ultimately
cancelled as China moved toward listing larger and financially stronger companies
instead of individual power plants\. In the case of the WPGC, this objective was
indirectly achieved through partial listing of its three shareholding companies\.
(d) Promotion of an Innovative and Diversified Financing Model for Large Infrastructure
Projects and Improved Access on the Part of Power Entities to International Financial
Markets: The project successfully piloted an innovative financing model for a large
infrastructure investment in China's power sector\. In contrast to previous Bank
projects, international private commercial parallel financing was secured without Bank
or government guarantee, giving the utility access to financial markets on the strength
of its balance sheet\. Parallel financing included an export credit of US$131 million
from ABN Amro for the turbine generator contract; and a loan of about US$34 million
from JBIC for the WGQ I FGD units\.
(e) Fulfillment of Performance Indicators: With regard to key performance indicators,
the project performed in an excellent manner\. As shown in the Results Framework
Analysis in the project datasheet, the seven performance targets (after one indicator
was formally dropped) were met\. The higher coal consumption by 0\.4 percent and the
lower availability of the second unit by 1\.3 percent are not significant and well within
acceptable measurement discrepancies:
The project exceeded the target in two cases;
The project met the target in an additional three cases;
The project achieved 99\.6 percent of the target in one case; and
In the final case, Waigaoqiao Unit 1 achieved 100 percent of the target, and
Unit 2 achieved 98\.7 percent\.
3\.3 Efficiency
Rating: Satisfactory
Economic Analysis\. A least-cost expansion study covering the period 19972028 identified
the project as the first investment of an optimal development program\. A cost-benefit
analysis was done to complement the cost-effectiveness approach, with assumptions on tariffs
based on prevailing power generation pricing policies\. The calculation yielded an internal
economic rate of return (IERR) of 19\.3 percent (or 18\.2 percent with FGD at SDK)\. Using a
similar methodology, a re-estimation at project completion yielded an IERR of 25\.9 percent
(or 20\.7 percent with FGD at WGQ I)\. The main reasons for the increase were higher than
projected average electricity price in the municipality and expected longer hours of operation
(Annex 3: Part A)\.
9
Cost Comparisons: Unit cost for WGQ II (including costs of connection to the power grid
and FGD at WGQ I) was estimated to be US$747/kW installed\. It compares favorably with
data provided by the suppliers for other countries: US$1,400/kW in Germany and
US$1,060/kW in the United States for a similar coal-fired unit with FGD\.
Financial Analysis: The financial rate of return (FRR) for the project was not estimated at
appraisal\. Instead, financial assessment focused on the viability of the SMEPC (and later the
WPGC) and the companies' compliance with the financial covenants\. Performance of the
implementing agencies is summarized below and detailed in Annex 3(B)\.
The SMEPC: Financial covenants included (a) debt service coverage ratio of no less than 1\.5
at all times; (b) rate of return on equity of no less than 8 percent for 1998 and 1999, 10
percent for 2000 and 2001, 12 percent for 2002 and 2003, and 15 percent for 2004 and
thereafter; (c) submission of annual audit reports; and (d) annual submission of rolling eight-
year financial projections\. All covenants were substantially met with the exception of (b)\.
Anomalies in sector accounting practices, such as understatement of revenue and a short
amortization period, compared to the economic or technical life of most equipment distorted
the rate of return on equity\. After the 2002 unbundling, the impact became more significant,
since the generally more profitable generation assets were divested\. The covenanted returns
on equity became too high compared to returns generally adopted for grid utilities\. When the
SMEPC decided to transfer the entire loan to the WPGC, the covenant was no longer relevant
and the Bank agreed to drop it\. However, the Project Agreement was not amended until the
restructuring of the sector was completed in 2005\.
The WPGC: The first full year of operation of WGQ II was 2005\. This coincided with the
time frame of the financial covenants agreed under the new PA: (a) debt service coverage
ratio of 1\.1 for 2005, 1\.3 for 2006, and 1\.5 for 2007 and thereafter; (b) annual submission of
audit reports; and (b) annual submission of eight-year rolling financial projections\. At project
completion, the provisional power sale price to the grid was adequate\. For 2005 and 2006,
operation revenue covered the full cost of operation, maintenance, depreciation, and financing
charges; and generated net income of about US$91 million and US$67 million, respectively\.
According to the latest projections for 200613, the WPGC is expected to remain financially
viable\. All covenants had been met in full during the first two years and are expected to be
met in the foreseeable future\. With a high depreciation rate of 7\.7 percent, the average FRR
on equity was estimated to be 11\.3 percent over the projection period\.
3\.4 Justification of Overall Outcome Rating
Rating: Satisfactory
Rating is based on (a) high relevance of original PDOs and design at the time of the ICR; (b)
substantial achievement of PDOs; and (c) generally high efficiency, as stated above and
detailed in Annex 3B\.
10
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
The project did not have an explicit poverty reduction theme\. However, its contribution to
continued high economic growth in Shanghai is believed to have contributed to decreased
poverty and increased government revenue for social programs\. The extensive construction
activities also provided job opportunities for laborers\. The Shanghai Municipality GDP more
than doubled during 19952005\. The government social programs to ease the impacts of
price increases on the poor grew substantially between 1995 and 2005\. According to the 2006
Shanghai Statistics Year Book, during the period 19952005, the social benefit program was
expanded and coverage increased from about 30,000 to about 500,000\.
(b) Institutional Change/Strengthening
Through TA, training, and interaction with high-caliber consultants at the preparation stage
and with top international equipment suppliers at the construction stage, the implementing
agencies' capacity to coordinate and manage very complex operations was considerably
enhanced\. The project's success also appeared to have stimulated strong interest in
replication\. At project completion, about a dozen similar generation units, including a
subsequent phase of development at the WGQ site, were under various stages of preparation
and construction\.
With the restructuring of the sector and the separation of generation from grid ownership, the
reform process achieved momentum and Shanghai is now part of the East China regional
competitive power market\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
Through active participation in various aspects of project preparation, implementation, and
operation, SMEPC and WPGC staff acquired extensive knowledge and also gained practical
experience and problem-solving skills\. By means of various internal and external
reassignments and promotions, the knowledge gained was effectively disseminated\. Over
time, the project, along with several other Bank-assisted power projects at around the same
time, was seen as an "incubator" for a new generation of leaders in the sector\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
Not applicable\.
11
4\. Assessment of Risk to Development Outcome
Rating: Negligible to Low
At project completion, WGQ II had been successfully operated by competent staff for more
than a year\. The new technology proved to be reliable, efficient, and environmentally sound\.
Electricity demand in the ShanghaiEast China region continued to grow rapidly\. The
provisionally agreed tariff was sufficient to cover operating and maintenance costs, provide
for depreciation and debt service, and generate sizable profits for the WPGC (Annex 3\.b\.)\.
The SMEPC considered the results of the ERP system satisfactory and supportive of its
strategic goals\. At the macro level, economic, government, and power sector commitment to
reform remained strong\. Hence, overall risk to the development outcomes was considered
very low\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry (i\.e\., performance through lending
phase)
Rating: Satisfactory
The project was consistent with the CAS objectives and the government's development
strategy and sector priority\. It was responsive to the soaring demand for electricity in the
Shanghai area\. During preparation, the project team assisted the borrower in designing the
project to meet the Bank's technical, financial, economic, and fiduciary standards\. It also
helped design a TA and training program to strengthen the institutional capacity of the
implementing agencies\. Implementation arrangements and M&E were discussed in detail and
agreed\. The risk assessment was sound and the proposed mitigating measures adequate\. The
project's reform aspects benefited from the Bank's extensive work in China's power sector
according to the so-called dual-track approach using lending projects to further
implementation of sector reforms and institutional changes within a framework developed
through policy dialogue\. A competent appraisal team was assembled to cover all aspects of
project preparation including economics, energy, engineering, finance, legal, power sector
restructuring, resettlement, and environment\. Working relationships with implementing
agencies were based on mutual respect and constructive dialogue\. As stated in Section 2\.1,
Bank performance in ensuring quality at entry was satisfactory (rated as highly satisfactory by
the QAG in Quality of Supervision Assessment 2 (QSA2) and QSA7)\.
12
(b) Quality of Supervision
Rating: Satisfactory
Early supervision focused on procurement, particularly with regard to the complex two-stage
bidding for major equipment\. Subsequently the supervision team monitored technical issues
related to construction, testing, and commissioning, and kept close tabs on remedial actions
taken by suppliers and contractors to address interface problems\. Implementation of the EMP
and RAP were regularly monitored\. In addition, the team closely followed a wide range of
policy and institutional issues related to sector unbundling, tariff reforms, sourcing and
pricing of coal, and air quality monitoring\. The team also closely monitored financial
performance of the SMEPC and WPGC, and reviewed the appropriateness of financial
covenants in light of a changing operating environment and prevailing accounting practices\.
As circumstances changed, the Bank showed flexibility with regard to reallocation of loan
proceeds, modification of financial covenants, and adoption of alternative approach to
implementation of the FGD and TA components\. The working relationship with the
Borrower and implementing agencies was harmonious, and assistance was provided in a
timely manner\.
The quality of supervision was twice reviewed by the QAG and both times rated highly
satisfactory\. In the August 2006 review, Focus on Development Effectiveness and
Supervision Inputs and Processes were rated highly satisfactory, while Fiduciary Safeguards
and Candor and Quality of ISR were rated satisfactory\. The review panel found supervision
to be pragmatic, well focused, and solutions-oriented, and relations with the borrower were
highly effective, given that China no longer needed Bank financing\. While the supervision
team had consistently rated project implementation satisfactory, the QAG panel felt the
reports might have at times understated the successes made, and recommended that some
ratings be upgraded\.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
Quality at entry and quality of supervision were both satisfactory, so Bank performance
overall is also rated satisfactory\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
Central Government: The Ministry of Finance (MOF) and the State Development and
Planning Commission (currently the National Development and Reform Commission)
supported the project design, and showed strong commitment by attending critical preparation
13
missions\. The MOF also supported the SMEPC in securing private sector financing, and was
effective in coordinating activities of the various financial institutions\. By contrast, the
government's delay in clearing the project's feasibility study, and the moratorium on
construction thereafter, caused delays of about two years (Sections 2\.2 and 3\.4)\. Because of
this shortcoming, central government performance is considered moderately satisfactory\.
Shanghai Municipal and Local Governments: The Shanghai Municipal government was very
supportive of the project, particularly in resolving issues related to the moratorium\. The
government's pragmatism and openness to new ideas and its flexibility in accommodating the
site selection for FGD installation contributed to the successful piloting of the bubble concept\.
Local authorities actively participated in the formulation of the RAP and EMP, and were
diligent and cooperative during implementation\. Government performance at this level is
rated satisfactory\.
(b) Implementing Agency or Agencies Performance
Rating: Highly Satisfactory
The SMEPC and WPGC were highly committed to achieving the PDOs, as evidenced by the
establishment of a strong steering committee to coordinate project preparation\. In addition,
the transfer of project ownership and implementation responsibilities was carried out without
disruption\. The SMEPC and WPGC were proactive in dealing with the startup delays and the
associated complex procurement issues (Section 2\.2)\. During construction, their close
attention to all aspects of the project enabled them to identify and resolve issues promptly\.
Most notably, the WPGC was very effective in resolving an interface issue\. Their efforts
resulted in a design modification to strengthen the boiler structure and agreement with the
supplier to implement them\. Further during plant commissioning, the WPGC successfully
coordinated and oversaw the discussions and actions of the suppliers to overcome complex
I&C interfacing issues\. As a result, the project was able to make up for some time lost and
stay well within budget and experience gained was effectively applied during construction of
the second unit\. Other project components were also implemented competently, and all
fiduciary safeguards were complied with and nearly all financial covenants were met (Section
2\.22\.3)\. Transition arrangements for regular operation were completed more than a year
prior to loan closing\. M&E arrangements were comprehensive and operational and financial
performance has been excellent--a level that is expected to be maintained through the plant's
lifetime\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
Implementation was excellent except for the delays in project startup, and project
completion\.6 Given the rating of central government performance as moderately satisfactory,
the performance of municipal and local governments was rated satisfactory, and the
6 The government's prudent approach for not approving new coal-fired projects in the aftermath of the Asia
financial crisis is understandable, given the impact of the crisis on neighboring countries\.
14
performance of the implementing agencies highly satisfactory, overall borrower performance
is rated satisfactory\.
6\. Lessons Learned
(a) Specific to the Power Sector in China
Physical Implementation: Key factors contributing to the successful implementation of a very
complex project are (i) strong borrower commitment; (ii) comprehensive planning for
engineering, equipment supply, installation, and commissioning; and (iii) close field
supervision by a competent owner that identified and rectified problems in a timely manner
(Section 5\.2b)\. These essentials should be given special attention in future projects\.
Construction Management: The implementing agencies' in-house specialists managed
construction efficiently, with only limited assistance from international consultants\. Using
external support on an as-needed basis proved to be cost-effective for the owner (as compared
to the original plan of using international consultants for the entire task)\. This project and
other recently completed power projects in China show that construction management was
successfully performed by the implementing agencies\. Any future Bank project should give
technically strong and experienced implementing agencies appropriate consideration and
more responsibilities in the design of engineering and construction management TA\.
Investment Planning: Lead time for construction of very large thermal power generation
projects requires a long planning horizon\. Short-term power demand fluctuations (such as the
one that prompted the government moratorium) should not be allowed to influence the long-
term development plan\.
(b) Of General Application
A Pilot Project Can Be a Successful Means of Furthering Reform: The project was explicitly
designed to pilot new approaches to meet environmental requirements at minimum cost,
restructuring the power sector, and utilizing private sector finance\. Piloting has been the
feature characteristic of Chinese reforms\. It could also be extended to countries where
commitment to reform is strong, but where governments are wary about disruption\.
Project Supervision: Several positive, systemic lessons for Bank supervision were identified
in the QAG review: (a) an experienced, knowledgeable, and cohesive team is beneficial to
project implementation; (b) continuity is important in ensuring effective supervision and
establishing good rapport with counterparts; and (c) supervision of multiple projects in the
same country or sector by the same team is cost-effective\. The China energy team should
continue to apply such principles in more recent projects\. The approach could also be
extended for supervision of energy projects on a regional basis\.
Procurement: For very large and complex projects, separate packaging of goods can foster
competition and contribute to lower bid prices and a lower final cost\. However, this approach
demands major effort and time from the implementing agencies, particularly in resolving
15
inevitable conflicts and problems with interface (Section 5b), and is only possible if there is
strong in-house capacity\. In procurement packaging, a proper balance between potential price
advantages and risk is critical\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
The SMEPC and WPGC agree with the content of this ICR\. They did not raise any
substantive issues\. A summary of the agencies' input is included in Annex 7\.
(b) Cofinanciers
The Japan Bank of International Cooperation, which financed the FGD component, in parallel
to the Bank loan, did not provide comments\.
(c) Other partners and stakeholders
Not applicable
16
Annex 1: Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
(Total rows and percentage column will be calculated by the system)
Appraisal Estimate
Components (USD M) Actual/Latest Estimate Percentage of Appraisal
(US$ million) (USD M)1/
Preparatory Works 1\.9 18\.4 9672/
Land Acquisition and Compensation 58\.2 29\.0 50
Civil Works 149\.4 282\.2 189
Traffic Works 49\.9 18\.1 36
Construction Management 65\.8 38\.9 59
Plant Equipment and Materials 761\.7 649\.2 85
Transmission Line 65\.2 158\.4 2433/
FGD and Environmental Protection
Equipment 77\.3 51\.9 67
Engineering Services 2\.5 20\.7 8304/
Environmental Protection 0\.04 0\.04 102
Technical Assistance 5\.0 5\.6 111
Training 2\.8 2\.5 89
Total Baseline Cost 1,239\.9 1,274\.8 103
Physical Contingencies 83\.6
Price Contingencies 135\.0
Taxes and Duties 198\.1
Total Project Costs 1,656\.6 1274\.8 77
Project Preparation Facility (PPF)
Front-end fee IBRD
Interest During Construction 241\.4 70\.5 29
Total Financing Required 1,898\.0 1,345\.3 71
Note:
1/ Component cost includes contingencies, taxes and duties\.
2/ Scope increased as some preparatory works were previously categorized under civil works\. Local labor and
material costs increased\.
3/ Appraisal estimate includes only costs of imported materials and equipment, actual cost includes goods,
works and services that were entirely financed from the SMEPC's internal sources\.
4/ Includes fees for design not included in appraisal estimates\.
(b) Financing
Appraisal Actual/Latest
Source of Funds Type of Percentage of
Cofinancing Estimate Estimate
(US$ million) (US$ million) Appraisal
SMEPC and WPGC Local loan 998\.0 807\.37 81
IBRD 400\.0 372\.6 93
Parallel financing Export Credit 130\.96
Bilateral Loan 500\.0 34\.37 33
1,898\.0 1345\.3 71
17
Annex 2: Outputs by Component
(a) Construction of China's first two 900 MW Coal-fired Supercritical Thermal Units
Two 900 MW coal-fired supercritical thermal power units were installed in WGQ II\. The
first unit was commissioned in April 2004, and the second unit commissioned in September
2004\. Units 1 and 2 reached commercial operation in November 2004 and May 2005,
respectively\. Although the project experienced a one-and-a-half-year delay with
implementation, the construction and commissioning of the WGQ II were highly successful
and its final cost low by international standards\. The quality of construction and installation
works was excellent\. Start-up problems, associated with the very sophisticated supercritical
boilers and turbine units and their instrumentation and control, were encountered during the
test period\. They were resolved in a satisfactory and timely manner\. Both turbines/generators
and boilers reached all technical performance and guarantee indices\. Both units are
performing well\. Since commissioning, cumulative generation of the two units has reached
26,364 GWh, of which 10,800 GWh were generated in 2006\. For the year of 2006, Units 1
and 2 achieved availability rates of 90\.7 percent and 83\.9 percent, respectively\. Availability
rate Unit 1 exceeded the benchmark of 85 percent set for end-of-project target, and
availability rate of Unit 2 was close to the benchmark\. The small shortfall was a result of a
major planned maintenance in 2006, the first one since commissioning and which is within
accepted measurement discrepancies\. The forced outage rate was only 0\.045 percent for Unit
1, and 0 percent for Unit 2, indicating that the operational management is adequate and the
unit condition is highly satisfactory\. The plant load factor in 2006 of WGQ II was 78 percent
mainly a result of system constraints; consequently, the average plant coal consumption in
2006 was 296\.2 gce/kWh, which is slightly higher than the benchmark target of 295 (but
within accepted measurement discrepancies)\. There is potential for improvement of the plant
load factor and the average coal consumption if the system dispatching is improved\.
(b) Installation of two Flue Gas Desulphurization (FGD) Units at Waigaoqiao Phase I
power plant
Two wet limestone FGD units were installed at WGQ I, which provided part of the reduction
of sulfur dioxide emissions under the bubble concept\. Both units are now in successful
commercial operation\. The use of lower sulfur content coal in Shidongkou and the
installation of the FGDs in WGQ I resulted in a combined reduction of sulfur dioxide
emissions of about 46,075 tons per year, which more than offset the annual sulfur dioxide
emissions released from WGQ II\.
(c) Construction of two 500 kV transmission lines (2 circuits x 50 km) with Associated
Substation
The transmission component, including the 500 kV Gulu substation (2x1000MVA) and the
500 kV double circuits YanhangWaigaoqiaoYanggao line (55 km), was put into
commercial operation in March 2004\. The goal to complete the transmission component
ahead of commissioning of the WGQ II units was achieved\. The transmission lines and
associated substation have since performed normally and were capable of evacuating the full
18
power from the WGQ II\. In addition, the added transmission lines completed the double-
circuit ring connection in the Shanghai area and significantly improved the reliability of
power supply\.
(d) Construction Management and Engineering Services
Consulting services for engineering and construction management were provided jointly by
local and international consultants\. The services contributed significantly to the sound design
of the project and to adequately resolving all construction and startup problems during early
stages of operation in a timely manner\. Since the project was the first one with a design for
very large coal-fired supercritical thermal units in China, the consultants' participation
contributed considerably in the project preparation stage to the detailed design, finalization of
technical specifications, and procurement activities for the main plant equipment, and in the
construction stage to the interfacing management, construction scheduling, quality control,
and information documentation\. The expert services of the major plant equipment suppliers
also provided valuable TA on installation supervision of major plant equipment and on timely
resolving startup problems during commissioning and initial operation\. As a result, the
completed power plant met very high quality standards\.
(e) Technical Assistance for Implementation of Modern Accounting and Financial
Management System
According to the original TA component, the SMEPC was to carry out accounting and
financial management (A/FM) systems studies and implement the recommended
organizational improvements and systems\. Following the company's restructuring, the scope
of the TA was modified and expanded to cover the implementation of an integrated Enterprise
Resource Planning (ERP) system\. The company's decision to develop its financial
management information system as an integral part of an ERP system was a carefully
considered and well-justified one\. The process and phased implementation took longer than
envisaged because (a) it has been scheduled to meet the government reform agenda and (b)
the ERP system was far more complex to design and implement\. The SMEPC indicated that
the systematic approach of the ERP has enhanced budget preparation and control, centralized
billing and reconciliation, and construction management\. It also helped eliminate delays and
duplications and strengthened internal control and information flow\. The resulting centralized
real-time database also made record-keeping, data retrieval, statistical analysis, and reporting
internally consistent, traceable, and timely\. The system that went beyond the objectives
sought during project preparation was considered instrumental in ascertaining the company's
operational efficiency and enabling it to utilize its human and financial resources better\. After
more than one full year of operation, the SMEPC considered the results satisfactory and
supportive of its strategic development goals\. The sustainability of these development results
is highly likely\.
(f) Technical Assistance for Implementation of the Sector Restructuring
TA was provided to the SMEPC\. The SMEPC was successfully restructured to meet the
national power sector reform program promulgated by the government in 2002, focusing on
19
separation of generation from transmission and distribution\. The SMEPC has been
restructured into a municipal power company engaged in transmission, distribution, and
dispatch in the Shanghai area\. A competitive power market has been developed for the East
China Region, including Shanghai Municipality\. The SMEPC is now moving toward a fully
market-oriented commercial entity\. Most of the generation assets of the SMEPC were
transferred to already-listed generation companies, and some were divested and partly listed
on the Shanghai stock market\. WGQII was transferred to the newly established the WPGC\.
All assets financed under the project, along with all project-related obligations, have been
transferred from the SMEPC to the WPGC\. During project preparation, it was assumed that a
more open market and adequate institutional environment would spur private sector
involvement in the sector\. Although the institutional environment improved significantly and
Shanghai is one of China's regions with sizable private sector involvement, private
investment did not increase as expected because of the reduced involvement of the private
sector in the power sector on a global scale for reasons beyond the scope of this project\.
(g) Management Development and Training
The management development and training program under the project was designed to
enhance the SMEPC's and WPGC's managerial, legal, technical, and financial capabilities in
order to support WGQ II construction and restructuring of the SMEPC and WPGC in line
with the power sector reform strategy\. From the first half of 2000 to early 2005, the SMEPC
has carried out a series of overseas and domestic training for management and staff (including
power market planning and reform, utility executive training, financial management, and
human resource management), and project-related training for technical personnel\. As of the
end of August 2005, a total of 1,008 staff-months of training were provided for management
and staff, which enabled the SMEPC and WPGC to keep pace with its rapidly expanding
requirement for highly skilled human resources\. The successful implementation of the
program achieved the objectives to (a) strengthen the capability of specialized staff in the
SMEPC and WPGC at the professional and operational levels for the newly founded
transmission company; (b) build up sufficient high-quality, in-house technical staff to cover
the needs of construction and operation of China's first 900 MW coal-fired supercritical
thermal units; (c) develop commercial arrangement for market operation in Shanghai area;
and (d) improve financial management and corporate restructuring of the SMEPC and WPGC\.
The implementation of the comprehensive manpower development program contributed
significantly not only to meet the needs of the SMEPC's and WPGC's new structure and new
responsibilities, but also made both entities attractive for the best professionals, thus keeping
the quality of staff at a high level\.
20
Annex 3: Economic and Financial Analysis
A\. Economic Analysis
The economic analysis of Waigaoqiao Thermal Power Project was conducted at appraisal to
justify its economic viability\. Two steps were followed\. First, a least-cost generation
expansion study was carried out using an optimization model that determines the optimal
capacity and generation mix to meet the demand at the minimum cost\. Second, a cost-benefit
analysis was carried out to complement the cost-effectiveness approach\. The calculation
yielded an IERR of 19\.3 percent when environmental benefits were not incorporated, or 18\.2
percent when environmental benefits were incorporated\. Using the same methodology, the
IERR were recalculated at the time of ICR and were found to be higher than estimated during
project preparation, even if the coal price increased from Y 372/tce to Y 490/tce at
completion: 25\.9 percent without incorporation of environmental benefits, or 20\.7 percent
with incorporation of environmental benefits\. The increase is mainly caused by (a) a higher
average electricity price in the Shanghai Municipality: Y 0\.501/kWh (defined as the sales
tariff minus the transmission tariff) compared with Y 0\.47/kWh used at appraisal; and (b)
better utilization of generation capacity at 7,000 annual utilization hours, compared with
5,570 hours at appraisal because Chinese power systems are making progress towards
economic dispatch\.
Table A3\.1\. IERR Calculation of Waigaoqiao Thermal Power Project (ICR)
Year Generation Project Cost Benefits Net Benefits
Capital Cost Operation Cost Total Cost
O&M Fuel
GWh ---------------------------------------million yuan-------------------------------------
1996 0 5\.80 0 5\.80 0 -5\.80
1997 0 14\.65 0 14\.65 0 -14\.65
1998 0 40\.82 0 40\.82 0 -40\.82
1999 0 320\.01 0 320\.01 0 -320\.01
2000 0 586\.86 0 586\.86 0 -586\.86
2001 0 795\.02 0 795\.02 0 -795\.02
2002 0 2,502\.78 0 2,502\.78 0 -2,502\.78
2003 0 2,849\.36 0 2,849\.36 0 -2,849\.36
2004 4,632\.8 3,048\.30 506\.37 637\.68 4,192\.35 2,321\.01 -1,871\.34
2005 10,593\.5 236\.21 345\.08 1,622\.03 2,203\.32 5,307\.32 3,104\.00
2006 10,439\.4 215\.29 675\.93 1,519\.52 2,410\.74 5,230\.12 2,819\.38
2007 10,800\.0 318\.45 1,566\.43 1,884\.88 5,410\.80 3,525\.92
2008 12,600\.0 318\.45 1,827\.50 2,145\.96 6,312\.60 4,166\.64
2009-
2028 12,600\.0 318\.45 1,827\.50 2,145\.96 6,312\.60 4,166\.64
Total 299,355\.6 10,615\.09 43,475\.23 62,623\.67 149,977\.14 87,353\.47
NPV 2006 15,671\.55 17,682\.60 37,486\.21 60,878\.35 23,392\.13
Internal Economic Rate of Return (IERR) = 25\.9%
21
Main assumptions:
Annual Utilization Hours 7000 after 2010
Willingness to Pay (Y/kWh) 0\.501 (VAT excluded)
O&M Cost 3\.0% of capital cost
Coal Price 490\.0 Y/tce
Coal Consumption Rate 296\.0 gce/kWh
Discount Rate 0\.12
The sensitivity and risk analysis were conducted at ICR to test the robustness of the project's
economic rationality, following the same methodology adopted at appraisal\.
Sensitivity Analysis
For the base case which the environmental benefits (negative in this project) were not
incorporated, the IERR would decrease to the test discount rate of 12 percent, in the case of
one of the following occurrences: (a) the coal price increases by 170 percent, at Y 1,320/tce;
(b) the electricity sales price decreases by 38 percent, at Y 0\.378/kWh (VAT included,
compared with current sales price of Y 0\.610/kWh); and (c) the power plant operation is
reduced to about 2,100 hours\.
For the case with the environmental benefits, similar sensitivity analyses show that the IERR
of the project incorporating environmental benefits would decrease to 12 percent in the case
of one of the following occurrences: (a) the coal price increases by 100 percent, to Y 980/tce;
(b) the electricity sales price decreases by 22 percent, to Y 0\.476/kWh (VAT included,
compared with current sales price of 0\.610 Y/kWh); and (c) the power plant operation is
reduced to about 3,360 hours\.
Risk Analysis
The risk analysis was also preformed for the base case using a probabilistic method to assess
the impact of the perceived risk factors, including coal price, annual generation/utilization
hours, willingness-to-pay, and the project's operation and maintenance (O&M) cost\. The
same methodology was adopted at appraisal\. Table A3\.2 presents the assumed value ranges
and the probability distribution used in the ICR\.
22
Table A3\.2\. Selected Risk Variables and Assumed Probability Distributions
No\. Variable Probability Probability
Distribution
1 Coal Price discrete Decrease by 20% 10%
Decrease by 10% 10%
Assumed value * 60%
Increased by 10% 10%
Increased by 10% 10%
2 Generation discrete Decreased by 20% 20%
Decreased by 10% 20%
Assumed value * 50%
Increased by 10% 10%
3 Willingness-to-pay discrete Decreased by 20% 20%
Decreased by 10% 20%
Assumed value * 50%
Increased by 10% 10%
4 O&M cost discrete 2% of investment 25%
3% of investment 50%
3\.5% of investment 25%
* Assumed values refer to those adopted in the deterministic economic analysis\.
The results, based on 1,000 Monte Carlo simulations, are summarized in Table A3\.3 and
Figure A3\.1\.
Table A3\.3 Expected IERR and Variance
Expected IERR 23\.5%
Standard deviation 3\.2%
Minimum 15\.3%
Maximum 31\.0%
Coefficient of variation 0\.137
Probability of negative outcome 0\.0%
23
Figure A3\.1\. Project Risks
Probability Distribution of IERR
0\.18
0\.16
0\.14
0\.12
lity
0\.1
0\.08
obabi 0\.06
pr
0\.04
0\.02
0
\.0% \.8% \.6% 4% \.2% 0% \.8% \.6% 4% 2% \.0%
14 15 17 19\. 21 23\. 24 26 28\. 30\. 32
Cumulative Probability of IERR
100%
80%
60%
ility
obab 40%
pr
20%
0%
0\.0% 5\.0% 10\.0% 15\.0% 20\.0% 25\.0% 30\.0% 35\.0%
Both the sensitivity analysis and risk analysis show high robustness of the project's economic
rationality and low risk\.
24
B\. Financial Analysis
1\. At appraisal, the finances of the SMEPC, the implementing agency, were reviewed and
analyzed\. The company's financial performance was found to be satisfactory historically\.
Although the rate of return on equity was modest at the time (about 6 percent for 1995 and
1996), the level was higher than the national average for the power sector\. Its capital
structure was considered to be rather conservative, with debt under 45 percent of total debt
and equity\. Based on a set of assumptions made during project preparation, the financial
projections demonstrated that the SMEPC was financially viable, and was expected to
maintain and further strengthen its financial position, with all key indicators improving over
the projection period 19972005\.
2\. To promote continued prudent financial management and adequate tariff levels, four
financial covenants were agreed under the project: (a) debt service coverage ratio of no less
than 1\.5 at all times; (b) a rate of return on equity of no less than 8 percent for 1998 and 1999,
10 percent for 2000 and 2001, 12 percent for 2002 and 2003, and 15 percent for 2004 and
thereafter; (c) submission of annual audit reports; and (d) annual submission of rolling eight-
year financial projections\. The project also included a TA and training component to help
develop and improve the accounting and financial management systems of the SMEPC (refer
to the main report and Annex 2)\.
3\. During project implementation, all covenants had substantially been met with the
exception of (b)\. Even though the SMEPC remained financially viable at all times, its rates of
return never reached the agreed levels\. Anomalies in sector accounting practices, such as
understatement of revenue (consumer contributions not reflected as income) and
overstatement of expenses (depreciation as high as 78 percent per year for assets with useful
lives of 30 years or longer), made the SMEPC's financial situation look weaker\. After the
2002 sector unbundling, it became apparent as the former SMEPC divested its generally more
profitable generation assets to become a transmission and distribution (T&D) company, that
the converted rates on equity were too high\. At the same time, the SMEPC indicated its
intention to transfer the loan and its implementing responsibilities to the WPGC, which
required amendment of the Project Agreement\. At the request of the Borrower, the Bank
agreed to drop this covenant\. The Project Agreement amendment was eventually processed
when the restructuring of the sector was completed in 2005\.
4\. After transfer of the project assets and liabilities to the WPGC, a new PA between the
Bank and WPGC was signed\. A set of financial covenants similar to those with the SMEPC
was agreed\. It included minimum debt service coverage ratios, and annual submission of
audit reports and eight-year rolling financial projections\. Because the new company's initial
cash flow was tight, it was agreed that the debt service coverage ratio covenant would
progressively increase from 1\.1 in 2005 to 1\.3 2006 and to reach 1\.5 times by 2007\.
5\. The first full year of operation of WGQ II was 2005\. This coincided with the time
frame of the financial covenants agreed under the new PA\. As summarized in Table A3\.4, for
2005 and 2006, revenue levels were adequate to cover the full costs of operation,
maintenance, depreciation, and financing charges, and generate profits for the company in
25
both years\. The covenants have been met in full\. The latest set of financial projections
available at the time of project completion was for the eight-year period 200613\. Key
financial indicators for the forecast period and main assumptions used for the forecast are also
summarized in the table\.
Table A3\.4: The WPGC's Key Financial Indicators and Main Assumptions Used
for the Eight-Year Financial Projections, 200613
Projected
Indicators Actual Actual Average
2005 2006 200713
Operating Revenue (RMB Y million) 4,064 4,141 3,871
Operating ratio (operating cost/op\. revenue) 77% 78% 81%
Average tariff fen/kWh (includes VAT and FGD 38\.4 40\.3 40\.5
cost at 1\.5 fen/kWh)
Net income (RMB Y million) 728 541 404
Rate of return on net fixed assets 8\.7% 6\.9% 7\.3%
Debt as % of debt and equity 58% 55% 44%
Debt service coverage ratio (times) 2\.2 1\.6 2\.8
Main Assumptions Used for the Projections
Power generation (both units of WGQ II) p\.a\. 10,075 GWh
Inflation rate 2\.0% p\.a\.
Exchange rate yuan per U\.S\. dollar 8\.07
Interest rates and financing charges per loan agreements
Fuel coal Y 465/ton
Oil Y 5,400/ton
Depreciation 7\.7% p\.a\.
Income tax and other taxes per government policies
Accounts receivable 1 month
Accounts payable 1% of inventory plus 5% of fuel
Distribution of retained earnings () 100%, payable the year after
6\. The main assumptions that were used are considered reasonable and realistic\.
According to the projections prepared, the WPGC is expected to remain financially viable\.
All financial covenants are expected to be met in full in the foreseeable future\.
26
Annex 4: Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Hsiao-Yun Elaine Sun Task Manager EA2IN Task Team Leader
Noureddine Berrah Principal Energy Specialist EA2IN Energy Specialist
Shigeru Kataoka Consultant (Power Engineer) EA2IN Power Engineer
Junhui Wu Power Engineer EA2IN Power Engineer
Bernard Baratz Principal Environmental Specialist EMTEN Environment
Ranjit Lamech Restructuring Specialist IENPD Restructuring
Clifford Garstang Legal Counsel LEGEA Legal
Tomoko Matsukawa Cofinancing Officer CAPPF Financial
Patricia Brereton-Miller Operations Officer EA2DR
Tosun Arincanli Consultant (Resettlement Specialist) EA2IN Resettlement
Jianping Zhao Energy Specialist RMC
Norma Leon Team Assistant EA2IN
Supervision/ICR
Bernard Baratz Consultant EASTE Environment
Noureddine Berrah Lead Energy Specialist EASTE Task Team Leader
(Supervision)
Weigong Cao Consultant EASTE Power Engineer
Ivy H\. Cheng Consultant EASTE Financial Analyst
Nina Eijima Lawyer EASTE Legal
Clifford Garstang Lawyer EASTE Legal
Mohammad Farhandi Acting Sector Director EASTE
Ranjit Lamech Sector Leader EASTE Task Team Leader (ICR)
Haixia Li Financial Management Specialist EAPCO Financial
Chau-ching Shen Financial Management Specialist LOAG2 Financial
K\. Sheorey Consultant EASTE Procurement/Technical
Hsiao-Yun Elaine Sun Operations Manager EACCF Task Team Leader
Masaki Takahashi Power Engineer ETWEN Technical
Junhui Wu Sector Manager EASTE
Zhu Youxuan Consultant EASTE Resettlement
Jianping Zhao Senior Energy Specialist EASTE
Cristina Hernandez Program Assistant EASTE
27
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY96 n\.a 125\.04
FY97 n\.a\. 264\.80
Total: 389\.84
Supervision/ICR
FY97 n\.a\. 5\.50
FY98 n\.a\. 29\.87
FY99 n\.a\. 71\.97
FY00 6 82\.87
FY01 4 49\.31
FY02 5 162\.76
FY03 4 102\.41
FY04 3 57\.51
FY05 3 69\.41
FY06 1 55\.20
FY07 2 62\.64
Total: 28 749\.45
Note:
n\.a Not available
28
Annex 5: Beneficiary Survey Results
(if any)
None\.
29
Annex 6: Stakeholder Workshop Report and Results
(if any)
None\.
30
Annex 7: Summary of Borrower's ICR and/or Comments on Draft ICR
Project Preparation
Internal Project Approval\. With support from the Chinese government and under the
leadership of the SMEPC, the project began exploring options for main power plant
equipment (unit type and size) and the use of foreign capital in 1992\. In 1995, with
agreement from the National Development and Reform Commission (NDRC), the project was
proposed to be included in the World Bank lending program\. Final project proposal was
approved by NDRC in May 1997\.
Project Preparation, Appraisal and Approval\. From early 1996, the SMEPC, sponsored by
MOF, utilized a World Bank (WB) Technology Cooperation Credit to prepare the project's
feasibility study, and organized visits to the United States, Japan, and Europe to gather
information about large-capacity, coal-fired units\. After thorough technical investigations, the
SMEPC selected the fairly new technology of 900 MW tandem compound generation unit\.
This was the first of its kind in China\.
In March 1996, a WB mission visited Shanghai to discuss various aspects of the project and
the SMEPC's reform plan, and proposed specific requirements and tentative processing time
schedule for the loan\. In June 1996, the WB delegation visited Shanghai again and highly
valued the progress made\. The project was preappraised in November 1996 and appraised in
March 1997\. The loan was approved in July 1997\. During the oneand-a-half-year
preparation period, all conditions were successfully met\. This showcased a good example of
how a large-scale, WB loanassisted project could be prepared in China\. It also proved that
the cooperation between the SMEPC and the World Bank was effective and efficient\.
Project Execution and Achievements
In February of 1999, NDRC approved the feasibility study report\. The main contracts for
boiler and turbine islands went into effect the same month\. The SMEPC was instrumental in
convincing the central government and Shanghai Municipal Government to proceed with the
project, despite the uncertainties of the ongoing sector reform\. After separation of the
Waigaoqiao power plant from the SMEPC power grid management in 2002, the WPGC
became the new owner of the project\. However, both companies continued to be responsible
for project construction, and together they overcame many difficulties to bring the project to
successful conclusion\.
The main achievements of the power generation plant are the following:
(a) The timetable for completion was basically consistent with the appraisal schedule;
(b) Project quality has won various industry prizes in China (for example, in
engineering for the large units and main building);
31
(c) Compared to similar units in the world, the power plant had a lower construction
cost (less than US$750/kW); and
(d) By end-2006, cumulative electricity generated reached 28,700 GWh\.
The plant was named "Superior Unit during Summer Peak" by both the East China and
Shanghai Power Grids in successive years for the role it played in alleviating power shortages
in Shanghai\.
As part of the project, the SMEPC built two 500 kV circuits (YanghangWaigaoqiaoGulu)
and the Gulu transformer substation\. This ensured the successful transmission of electricity
generated from the power plant\. The 500 kV two-circuit grid also greatly strengthens the
safety and stability of the power grid in Shanghai\.
On land acquisition and resettlement, the project fully complied with the relevant regulations
and principles stipulated by the Shanghai Municipal Government and the World Bank\. The
involved residents and enterprises have restored or restructured their livelihoods, and the
resulting standards of living and production have been maintained and, in most cases,
improved\. The project component achieved its goals, and the effect under the land acquisition
is positive and favorable\.
On system reform, the SMEPC invited foreign consulting experts to carry out its company
reform study based on the national power system reform requirements\. During early stages of
the reform some generation plants became joint ventures that are independent companies with
legal status, and were earmarked to be listed at home or abroad\. According to the central
government's directive, the SMEPC was separated from all generation plants in 2002\. After
the reform, the SMEPC has been operating as a commercial enterprise, with improved
transparency and standardization\.
During execution of the financial management information system TA component, the
SMEPC decided to use the loan funds to help develop an ERP system for the entire company\.
A world-renowned international consulting company was selected to implement a pilot\. The
full ERP system was completed and put into operation in 2005\. This enhanced the SMEPC's
efficiency greatly, and the results are satisfactory\.
Besides supporting the power sector reform and contributing to the economic development
and social stability in Shanghai, the project also produced the following benefits:
(a) Standardization of tendering--the project followed the WB's Procurement
Guidelines, and strictly adhered to international practices\. This ensured quality
and reduced cost;
(b) Innovative contract management--well-managed progress tracking and payments
kept construction on schedule and cost well within budget;
(c) Attention to environment protection--all related performance indicators passed
national inspection and complied with WB requirements;
32
(d) High performance units--the Waigaoqiao II power plant reached 100 percent
automation and the designed coal consumption of 283 g/kWh for power generating
is exceptional for China;
(e) Efficient staff training that is appropriate for the companies' needs--with the
completion of the project; many talents have been nurtured to take part in the
1,000 MW-scale power projects now under construction in China;
(f) Upgrade in the capacity of domestic industry for the manufacture of power
equipment; and
(g) Good management after project completion, and establishment of a model for
future large power plants\.
After persistent efforts of three to five years, the WPGC aspires to become a first-rate thermal
power company in the world\.
Project Evaluation
The SMEPC and WPGC cooperated with the WB project team over a 10-year period\. All the
WB project officials brought us great help and support, particularly during the appraisal and
supervision stages\. The cooperation is fruitful, we are highly satisfied with the project's
execution and the benefits achieved, we are also highly satisfied with the work and efforts
made by the WB\. In conclusion, we aim to continue to contribute towards the stable and
sustainable economic development of Shanghai by achieving excellence in all aspects of
operation\.
33
Annex 8: Comments of Cofinanciers and Other Partners/Stakeholders
None
34
Annex 9: List of Supporting Documents
The SMEPC's and WPGC's Project Summary Report\.
The SMEPC's and WPGC's Summary Report on Implementation of the Resettlement
Action Plan of the Waigaoqiao Thermal Power Project\.
The SMEPC's and WPGC's Summary report on Implementation of the Environmental
Protection Plan of Waigaoqiao Thermal Power Project\.
Project progress reports\.
Project files, containing full records of project preparation and supervision aide-
memoires and reports\.
WGQ II future operation plan (200510)\.
35
117° 118° Linyi 119° 120° 121° 122°
35° 35°
S H A N D O N G Y e l l o w CHINA
WAIGAOQIAO THERMAL
|
| Ganyu
| S e a
POWER PROJECT
|
Pei Xian
|
| Lianyungang
To |
Yang EAST CHINA POWER GRID
| Lianyungangshi
| | | | | | |
| | Donghai
|
cheng | |
| UNDER
| EXISTING CONST\. PLANNED PROJECT
| |
| | | | | |
| RENGZHUANG | 500kV POWER LINES
|
| | | | | Xinyi
| |
| | Guanyun
|
Xuzhou Pizhou
|
Tongshan THERMAL POWER PLANTS
| XinyiHe
| Luoma Xiangshui
SHANBAO | Hu HYDRO POWER PLANT
| Guannan
| Shuyang He
| | NUCLEAR POWER PLANT
34° | Suqian tang Binhai
| Beiliu He
| SUBSTATIONS
Suining |
| | Zonqu
| |
| | Funing Sheyang Sheyang
| Lianshui DC-AC CONVERSION
|
|Siyang
| Tongyu STATIONS
| Huaiyan
Suzhou |
Chengzi Guangai
| Huaiyin
| | | | | |
Sixian Huai'an Yu
|
HUAIYIN Jianhu
|
Sihong nhe
FUDONG Hu Subei |
Yunhe|
Da SELECTED CITIES AND TOWNS
Yancheng
|
Longze |
Guzhen YANCHENG PROVINCE CAPITALS
|
Hongze Hu
|
| Baoying RIVERS AND CANALS
San He |
| Dafeng
Wuhe | J I A N G S U | | | GRAND CANAL
Jinhu |
|
33° Bengbu Xuyi
| Xinghua PROVINCE BOUNDARIES 33°
Gaoyou| He Dongtai
| INTERNATIONAL BOUNDARIES
PINGYU Jiashan Hu
| Dongtai
LUOHE Gaoyou| (INSET)
Tianchang |
|
|
|
Xintongyang Yunhe Hai'an
Jiangdu Taizhou Jiangyan East China
BUCHU Yangzhou | JIANGDU Rugao
Luhe
YANGZHOU | Rudong
|
Yizheng Yangzhong YANGDONG Sea
Jiang Zhenjiang | Taixing
| Nantong
Jiangpu NANJING |
JINLING |
32° HEFEI Danyang NANTONG 32°
Jiangning | Jingjiang Nantong
|
|
|
Chang LONGTAN Jurong | Jiangyin
Zhangjiagang
Da |
| Haimen
|
A N H U I Changzhou| LIGANG
|
Ma'anshan DONGSHANQIAO Jintan | Qidong
|
WUNAN Yunhe| | Chang
| DOUSHAN
Lishui |
|
| CHANGSHU
FEIXI | Changshu
Jiang |
Wuxi | Jiang
| Taicang
|
MAANSHAN | Kunshan SHIDONGKOU
|
Wuhu Liyang SHIPAI
|
| SHANGHAI
Chang Gaochun Yixing
Suzhou YANGHANG
|
Tai Hu SHENGPU| |
WAIGAOQIAO
Wujiang | HUANGDU
YANGGAO
To |
Three SIJING
31° Gorges FANCHANG Fanchang |
| GULU 31°
Changxing |
To Gezhouba | SHANGHAI
| NANQIAO
|
| Jiaxing
|
|
| HANGZHOU BAY
JIAXING
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KILOMETERS Zhuji BEILUNGANG
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2007 South
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PEOPLE'S
THAILAND DEM\. HAINAN China Sea
REP\. PHILIPPINES 119° 120° 121° 122° | REVIEW |
P081269 |  ICRR 13187
Report Number : ICRR13187
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 02/04/2010
PROJ ID : P081269 Appraisal Actual
Project Name : Second Education US$M ):
Project Costs (US$M): US$27\.2 M US$34\.34 M
Sector Development
Project (phase 2)
Country : Lesotho Loan/ US$M):
Loan /Credit (US$M): US$21\.0 M US$22\.7 M
Sector Board : ED Cofinancing (US$M):
US$M ):
Sector (s): Primary education
(52%)
Secondary education
(20%)
Central government
administration (20%)
Vocational training
(5%)
Tertiary education
(3%)
Theme (s): Education for all (40%
- P)
Administrative and civil
service reform (20% -
S)
HIV/AIDS (20% - S)
Education for the
knowledge economy
(20% - S)
L/C Number : C3813
Board Approval Date : 07/17/2003
Partners involved : n/a Closing Date : 12/31/2007 12/31/2008
Evaluator : Panel Reviewer : Group Manager : Group :
Victoria Monchuk Ridley Nelson IEGSE ICR Reviews IEGSE
2\. Project Objectives and Components:
a\. Objectives:
The Project Appraisal Document (PAD) defined the PDO to be âto further improve the access, equity, and quality of
primary and secondary education, promote lifelong learning through building capacity in early childhood, technical
and vocational, higher and non -formal education, and strengthening the institutional capacity of the Ministry of
Education and Trainingâ? \. The wording of the objective is slightly different in the credit agreement but the objectives
are the same\. The project was the second phase of an Adaptable Program Loan (APL)\. The overall objective of the
APL was to produce more and better educated Basothos and enabling them to participate in local and regional labor
markets\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Component Description (from PAD) Costs at Actual
appraisal, costs,US$M
US$M (IDA (IDA finance)
finance)
Primary education Primary classroom construction; targeted equity based program 14\.18 (11\.47) 15\.01 (9\.76)
(bursaries for orphans and disadvantaged children);
procurement and distribution of teaching and learning materials;
training of primary teachers, inspectors and advisers and school
management staff including refresher courses and distance
teacher education; and basic education curriculum development
and implementation of standardized examinations\.
Secondary education Secondary classroom construction; targeted equity based 5\.95 (4\.18) 10\.28 (8\.09)
program (bursaries for orphans and disadvantaged children);
develop textbook rental scheme and revolving fund; and
continuous training of secondary teachers, inspectors and
advisers and school management staff\.
Lifelong learning in Establish Early Childhood Care and Development (ECCD) 2\.16 (1\.83) 1\.53 (1\.05)
early childhood care home-based centers and support ECCD unitâs role for
and development, providers; continue phase I Technical and Vocations Education
technical and and Training (TVET) activities including reorienting the sector to
vocational training, be demand-driven and implement the TVET policy; transform
higher and non-formal higher education to be more cost-efficient and responsive to
education development goals while maintaining quality; and continue to
support the phase I Learner Post non-formal education (NFE)
pilots\.
Ministry of Education Strengthen district management and MoETâs capacity in policy 3\.60 (2\.46) 3\.39 (1\.75)
and Training (MoET) development, planning, monitoring and evaluation; provide
institutional MoET staff development and training; and strengthen the MoET
strengthening to deal with the urgent challenges of HIV/AIDS\.
Project Project support and coordination unit, salaries and benefits, 1\.31 (1\.06) 4\.14 (1\.29)
implementation technical assistance, training and procurement\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The projectâs total financing increased by over US$ 7 million from the appraisal estimate due to favorable exchange
rates\. At the request of the government and approved by the Bank there was a reallocation of US$ 4 million in IDA
finance from primary (school construction) to secondary education (textbooks) in 2005 and a further reallocation of
over US$1 million to training of staff in 2007\. Moreover, the unplanned expansion of the temporary Project Support
and Coordination Unit (PSCU) increased the operating costs almost fourfold, financed through government
counterpart funds\. The project closing was extended for one year to December 31, 2008 to allow for the completion of
some activities\. Otherwise progress on project activities and disbursement were generally according to schedule \.
Total IDA financing was estimated at 77 percent of project costs at appraisal and stood at 66 percent at closing\. The
Government of Lesotho financed the remaining parts \. The project (phase II of the three-phased 1999-2011 Second
Education Sector Development Project APL ) comprised 31 percent of overall estimated program IDA funding \.
3\. Relevance of Objectives & Design:
Relevance of objectives : Government commitment to education is strong in Lesotho \. Advances in the education
sector, especially technical skills development, are one of the government âs means of achieving increased
employment and growth (CAS, 2006, most current)\. The main sectoral issues in basic education are stagnant
primary and low secondary enrollment, low completion rates, large socio -economic disparities, and poor school
facilities\. Large groups of unschooled children (e\.g\. orphans, herd boys) have accumulated\. Moreover, secondary
level school fees and higher education costs are high, the TVET program needs to be more demand driven to cater
to the labor market, and Non-Formal Education (NFE) needs to be refocused away from catering to youth drop outs
towards building skills of illiterate adults \. The governmentâs strategy is identical to the project development
objectives\. The focus on equitable access and quality of primary and secondary education is consistent with the
countryâs needs and the sectoral priorities \. Against this background the relevance of objectives of the project were
Substantial \.
Relevance of design : The two first components were designed to meet the project objectives in primary and
secondary education\. The design was adequate but with some weaknesses \. At the primary and secondary levels
the focus on inputs such as school construction, textbook provision, teacher and supervisor training, and targeting
disadvantaged children was consistent with efforts to promote both equitable access and quality improvements \. The
selection of poor localities for school construction and providing bursaries to disadvantaged children agreed with the
focus on reducing inequalities \. However, the quality indicator at the primary level (test scores) was unreliable and
there were no indicators for measuring quality at the secondary level so achievement was measured in terms of
outputs produced\. No real measures of how to evaluate equity improvements in access to primary and secondary
schooling were set\. The third component was designed to address the project's objectives in life -long learning in
ECCD, TVET, higher education and NFE\. Building the skills of the work force and linking training to labor market
needs is a priority in Lesotho but the resources provided in this project were not sufficient for advancing capacity in
life-long learning\. Only 8 percent of total project costs were allocated to activities to support ECCD, TVET, higher
education and NFE\. There were also important weaknesses in the results framework for measuring capacity building
in the four areas\. The fourth component aimed at building MoET's capacity and had similar weaknesses in the results
framework\. No indicators for measuring achievement of objectives related to the third component were established \.
In sum, the design and results framework supporting the primary and secondary education objectives --the primary
focus of the project--was adequate albeit not strong \. The designs of components 3 and 4 were much weaker\.
Therefore, relevance of design was rated Modest\.
4\. Achievement of Objectives (Efficacy):
Objective 1: Further improve the access, equity, and quality of primary and secondary education \. Rating:
Substantial
Access (substantial)
Outcomes: During the project timeframe, primary enrollment dropped (from 85 to 82%) but completion rates
increased significantly (from 77% to 90%)\. Secondary enrollment increased beyond targets (43% to 53%)\. At the
same time, the staggered Free Primary Education (FPE) policy moved up in Standards (grades) and may have
contributed to the increase in secondary enrollment, especially in poor areas, but also to the overall drop in primary
enrollment\. The parallel effects of the FPE make it difficult to separate out the contributions of the project to changes
in enrollment rates\.
Outputs:The anticipated new schools were constructed to good standard and were targeted in areas otherwise
under-served by education services and where demand was high \.
Equity (substantial)
Outcomes: There are no data on the number and gender of enrolled children from disadvantaged backgrounds but
Bank missions verified that enrollment and attendance of the scholarship children were strictly enforced by project
district officers\. It is likely that access by the poor and disadvantaged in both primary and secondary improved as a
result of the project\.
Outputs: Bursaries reached over 20,000 primary and 20,000 secondary children beyond targets (15,000 in each
level)\.
Quality (modest)
Outcomes: Primary achievement rates were mixed but it should be noted that test scores were highly unreliable and
problematic\. Given that outcomes take a few years to materialize it is difficult to judge to what extent the project
increased quality\.
Outputs: Text books were printed and provided, one per child, in primary education \. In secondary education it is still
unclear if the revolving text book fund that was established is functioning well as it takes a few years for the rental
scheme to circulate through\. The intention was that costs would be reduced by renting out books \. Over time, parents
would pay one fifth of the books per student \. Refresher and distance training to teachers and staff was largely
achieved although there was only limited training to inspectors \. Distance training was given to teachers in remote
areas while teaching\. Curriculum development and strengthening of assessment was largely completed \.
Objective 2: Promote lifelong learning through building capacity in ECCD, TVET, higher education and NFE \.
Rating: Negligible
The two indicators to monitor progress outside of primary and secondary education were linked only to two of the four
sub-sectors (ECCD and TVET) under this objective\. Furthermore, the indicators did not reflect capacity building \.The
ECCD coverage improved but did not reach targets (from 31% to 36%, target 40%)\. A draft TVET strategy bill was
prepared but not presented as anticipated during the project \. The anticipated TVET financial management system,
monitoring system, and innovation fund were not completed but the hostel for TVET students was constructed as
planned\. TVET reform continues to be difficult in Lesotho with low capacity and no experience of reform in this
sector\. Although no project performance indicators were established for higher education the expected outputs were
not achieved\. The NFE work was not evaluated in the project and performance was unclear \. In sum, despite
progress the indicator targets were not met and the majority of the planned outputs we re not achieved\.
Objective 3: Strengthen the institutional capacity of the Ministry of Education and Training \. Rating: Modest
The project reports on the share of sub -sectoral budget allocation for primary and secondary education which is not a
useful indicator for measuring achievement of the objective of building institutional capacity of the MoET \. The target
of allocating 65 percent of the budget to primary and secondary education was most likely not achieved \. In 2007 the
allocation had only increased to 61 percent\. To strengthen the MoETâs capacity the project planned to train and
organize study tours for district level staff; provide new equipment for 10 District Resource Centers (DRCs); review
the Education Sector Strategic Plan; improve donor coordination; strengthen the Planning Unit; and train MoET staff \.
At completion the project had provided equipment to DRCs and trained 3 staff in the Planning Unit and other MoET
staff\. An HIV/AIDS coordinator was put in place in the MoET but only to leave after project closing \. Only some of the
planned activities mapped to the objective of improving the MoET's capacity were achieved \. The ICR states that
MoET has been strengthened in human resources and in coordination between the PSCU and the MoE T\. Progress
was made on the elaboration of the Lesotho Education Sector Strategy and establishment of Joint Technical Review
meetings for discussing reform\. However, MoET capacity continues to be weak and the objective ha s only partly
been achieved\.
5\. Efficiency (not applicable to DPLs):
The ICR does not estimate cost -effectiveness or unit costs per student \. This is a weakness of the project as many
outputs, especially in components 1 and 2 could have been costed and economic benefits could have been
calculated\. The project could have compared costs and expected benefits to other project activities in comparable
countries\. According to the project task team costs in the education sector in Lesotho are generally high \. Text books
and school buildings were expensive and project management staff were very highly paid \. Therefore, efficiency was
rated Modest\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The shortcomings discussed in sections 3, 4, and 5 above amount to significant shortcomings \.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
Progress on primary and secondary education outcomes is being made in Lesotho \. The key primary and
secondary components of the project were in operation by the MoET after project closing and the risk to development
outcomes in primary and secondary education are therefore low \. Nevertheless, efforts need to be made to
understand the drop in primary enrollment and any changes in education quality and test scores \. Moreover, the work
on examinations that started in phase II needs to be significantly strengthened to monitor outcomes \. On the contrary,
progress is slow on capacity building and in reforming and implementing operations in ECCD, TVET, higher
education and NFE\. Capacity in the districts and the MoET remains weak \. The recent attention to strengthening
TVET is promising but unless the reform objectives can move ahead quickly based on the outputs produced in phase
II there is a high risk that Lesotho will not be able to meet its objectives in equipping its population with skills for
competing on the labor market\. Politically the project objectives have strong support but capacity to plan, monitor and
financially manage developments in the education sector in Lesotho remains weak \. Overall, risk to development
outcomes is Moderate\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
Quality at Entry \. Quality at entry was Moderately Satisfactory \. This phase II of the APL was designed very soon
after the end of the first phase even though only 3 of the 6 triggers for moving from phase I to phase II were
achieved\. The Bankâs knowledge of the conditions in the sector was substantial given the prior phase and
lessons were incorporated\. There were two key weaknesses of the design of the second phase \. These were poor
attention to the sub-sectors outside of primary and secondary education and a mismatch between the project
objectives and the indicators \. With limited capacity in the MoET and lower than expected progress in phase I, the
Bank could have aimed for a less ambitious plan \.
Supervision \. Quality of Supervision was Satisfactory \. Throughout the project the Bank worked closely and
proactively with the MoET, provided advice and drew on technical experts for guidance \. However, the team did
not alter the performance indicators during implementation even though they were not well matched with the
development goals and did not attempt to focus on cost efficiency although costs were seen to be high \.
On balance and given the Moderately Unsatisfactory project outcome, Bank performance is rated Moderately
Satisfactory \.
at-Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government Performance \. Government performance is rated Moderately Satisfactory \. Government and the
MoET showed strong commitment to education for improving the technical skills of the country âs labor force\. But
attention to TVET, higher education and NFE was lacking despite pressure from the Bank \. Poor M&E design and
performance indicators also factor into the government performance rating \. Policy development and institutional
building did not take place to the extent planned and the low prioritization of meeting the second and third
development sub-objectives contributed to poor project outcomes \.
Implementing Agency \. Implementing agency (MoET) performance is rated, on balance, Satisfactory \.
Implementation of the primary and secondary education components was largely achieved although not without
weaknesses\.
Overall Borrower Performance was Moderately Satisfactory \.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
M&E design was poor\. The 7 indicators established were not aligned with the objectives but linked to performance
in the sector as a whole\. Important indicators of equity and secondary quality were missing \. Outside of primary and
secondary, indicators were established for measuring progress only in ECCD and TVET \. For higher education and
NFE, the project expected to increase capacity but without indicating how this would be measured and evaluated \. No
indicators for measuring achievement of building capacity in the MoET were established \. Without comprehensive,
clear and time-bound output indicators (and establishing links to outcomes ) it is unclear how the objectives would be
achieved\. Moreover, many output targets were poorly defined and difficult to measure \. âCapacity buildingâ? was
difficult to measure based on the outputs \. M&E design was heavy on monitoring but lacked a rigorous evaluation
system for outcomes\. Instead it relied on national assessment data of student learning which were new and
unreliable\. M&E implementation progressed well in the early stage but the attrition of skilled staff from the PSCU in
the end limited data collection and processing \. Some data from 2007/08 are still not available\. Utilization of the data
helped the team to monitor progress and suggest when special studies were needed \. Mainly because of the poor
design of the performance indicators that were detrimental to project ratings, M&E quality is rated Modest\.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
There were no particular issues with safeguards or fiduciary performance \. The project achieved two unintended
impacts\. As a result of the weak progress on strengthening TVET new Bank AAA resources have been dedicated to
issues of building technical and vocational skills \. Also, the Lesotho Education Sector Strategy 2005-2015 has been
elaborated\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately The shortcomings discussed in
Satisfactory Unsatisfactory sections 3, 4, 5 above amount to
significant shortcomings\.
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Satisfactory Moderately Quality at Entry is rated Moderately
Satisfactory Satisfactory as there were moderate
shortcomings in design (please see
section 8)\.
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Unsatisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
A broad project scope can put the outcomes of secondary objectives and small components at risk since they
may not be provided sufficient funding and government attention\. In this case, the strong focus on procuring goods
and structures for primary and secondary education left the reforms envisioned in the other components without
resources or needed attention \.
Institutional capacity building should be viewed as an investment that can be sustained for the future \. Training
courses will only increase institutional capacity if staff remain in the workplace and if the institutional incentives are
conducive\. In this case, high staff turn over and the temporary PSCU solution for managing the project did not help
build the capacity in the ministry \.
Objectives-based performance assessment needs to build on indicators that are strongly linked to project
objectives and with measurable outputs and outcomes \. In designing indicators, where possible, it is important to
be able to distinguish results produced by the project and results generated by related government reforms \.
14\. Assessment Recommended? Yes No
Why? To better assess outcomes and verify ratings, given the absence of adequate evidence in the ICR \.
15\. Comments on Quality of ICR:
As acknowledged in the ICR, the ICR was handicapped due to poor data availability and a weak results framework of
the project\. However, despite data limitations, there were substantial weaknesses in the ICR \. The ICR did not
evaluate project performance against the same objectives as listed in the PAD and the DCA \. Instead, the ICR
reduced the objectives in primary and secondary education to enrollment, completion and primary learning
achievement\. Equity and secondary education quality, which are part of the development objective, were not well
assessed\. For instance, there are no data on gender and socioeconomic status of bursary recipients to know
whether disadvantaged children attended school to a greater extent as a result of the project \. The ICR also did not
attempt to clearly measure achievement on strengthening higher education and NFE which was part of the
development objective\. The ICR focused on outputs instead of outcomes and did not discuss the results chain
through which inputs and outputs have /have not lead to outcomes\. The ICR also did not adequately assess
efficiency\.
a\.Quality of ICR Rating : Unsatisfactory | REVIEW |
P063913 | IEG
Report Number: ICRR14788
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 08/21/2015
Country: Indonesia
Project ID: P063913 Appraisal Actual
Project Name: Java-bali Power Project Costs (US$M): 196\.67 206\.89
Sector Restructuring
And Strengthening
Project
L/C Number: L4712; L7758 Loan/Credit (US$M): 141\.00 150\.77
Sector Board: Energy and Mining Cofinancing (US$M):
Cofinanciers: None Board Approval Date : 06/26/2003
Closing Date: 12/31/2008 12/31/2013
Sector(s): Power (80%); Central government administration (20%)
Theme(s): Infrastructure services for private sector development (50% - P); Other public sector
governance (50% - P)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Mamundi G\. Sri-Ram John R\. Eriksson Christopher David IEGPS1
Aiyer Nelson
2\. Project Objectives and Components:
a\. Objectives:
Original
"To assist the Borrower in improving the provision of electricity and gas to consumers in the Borrower's Project
Provinces"\. (2003 Loan Agreement (LA 2003) Schedule 2 p\. 16)
Revised
"To improve the reliability and efficiency of the power system in Java-Bali and strengthen PLN (Perusahaan Listrik
Negara; State Power Company) PGN's (Perusahaan Gas Negara; State Oil and Gas Company) management
capabilities" (2010 Loan Agreement (LA 2010) Schedule 1 p\. 6)\.
As per normal IEG/OPCS evaluation procedures, the present review is based upon the assessment of the
achievement of the original and revised objectives as recorded in the legal documents of the project, the LAs in this
case\.
The Project development objective in the PAD (page 2) is "to improve the performance of the power sector in
Java-Bali\.â\.
The revised development objective of the restructured project (June 2008) is to improve the reliability and efficiency of
the power system in Java-Bali and strengthen PLN and PGNâs management capabilities, as reflected in the
amendment to the original Loan Agreement\.
The Project Paper, April 2, 2010, and p\.1 Loan Agreement of June 23, 2010 for Additional Financing (AF) have the
same objective as the original Loan Agreement\. (The AF was provided to expand the ERP program across PLNâs
operations in other locations, specifically Sumatra and Sulawesi\.)
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives/key associated outcome targets?
Yes
Date of Board Approval: 06/19/2008
c\. Components:
The original components as approved in June 2003 were:
Part A
1\. Power System Strengthening (500kV Transmission System ) -- Cost estimate at appraisal US$ 61\.25 million;
actual cost at completion US$ 82\.39 million)\. PLN planned to achieve greater utilization of existing generation
capacity in Java-Bali, improve security of supply to the cities of Cirebon and Surabaya, and de-bottleneck local
inter-connections between bulk transmission and sub-transmission levels by: (i) expanding existing 500kV
substations; and (ii) installing new 500kV circuit breakers\.
2\. Power System Strengthening (150kV Sub-transmission System ) -- Cost estimate at appraisal US$ 78\.65 million;
actual cost at completion US$ 68\.04 million\. PLN planned to provide a level of security commensurate with the
existing and potential PLN and IPP geothermal capacity evacuated through the West Java 150kV sub-transmission
network near Bandung, improve security of supply to Surabaya, and relieve multiple localized overloading and voltage
problems at sub-transmission level via PLN's 150/70kV and 150/20kV transformer replacement and substation
expansion program by: (i) uprating existing 150kV sub-transmission lines; (ii) expanding existing 150kV substations;
and (iii) installing circuit breakers\.
3\. PLN Enterprise Resource Planning (ERP) System -- Cost estimate at appraisal US$ 26\.00 million; AF cost
US$30\.0 million; actual cost at completion US$ 52\.3 million\. Begin a pilot roll out of the company's Enterprise
Resource Planning (ERP) information system, focusing on core financials, materials management, human resource
management and asset management, based on Bank funded TA under an earlier project, which, in turn was to help
implement PLN's corporate and financial restructuring, envisaged under the earlier project\.
4\. PLN Restructuring and Institutional Strengthening (Technical Assistance ) -- Cost estimate at appraisal US$ 4\.50
million; actual cost at completion US$ 1\.75 million\. Institutional strengthening through technical assistance for: (i)
finalizing an action plan for the business reorganization and corporate restructuring of PLN; (ii) facilitating
implementation of that Plan; and (iii) strengthening PLN's core capacity for environmental and social management\.
Part B
5\. PGN Restructuring and Institutional Strengthening (Technical Assistance ) -- Cost estimate at appraisal US$ 6\.00
million; actual cost at completion US$ 2\.43 million\. Restructuring and institutional strengthening through technical
assistance for: (i) gas utilization and pricing; (ii) corporate restructuring, including preparation of an information
systems framework; (iii) gas distribution IPO; (iv) gas transmission strategic partner; and (v) capacity building and
training\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost:
At restructuring in June 2008, the project objective was to be achieved by financing of priority investments and
technical assistance for PLN (Part A) and technical assistance for PGN (Part B)\. The changes were intended to:
a\. Focus the project on the important investments related to improving the electricity system and strengthening the
transmission network (Components 1 & 2)\.
b\. Expand the implementation of the successful pilot Enterprise Resource Planning (ERP) System, to further
strengthen PLN's information systems and management capabilities (Component 3)\.
c\. Remove the major corporate financial and restructuring activities that are beyond the capacity of PLN and the
project given the present legal and policy environment in the power sector in Indonesia (sub-component of
Component 4)\.
d\. Component 5 (Technical Assistance to PGN) was to remain unchanged\.
Bank Financing: Additional Financing (AF) of $30 million was approved in June 2010 to expand the ERP program
across PLN operations in other locations (Sumatra and Sulawesi), consistent with the 2009-2012 CPS, Core
Engagement 2, âto support the development of infrastructure by helping strengthen the capacity and accountability of
institutions to deliver better outcomesâ\. The final Bank loan financing for the project, $ 150\.77 million, included the
Front-end fee of $ 1\.41 million, leaving $ 149\.36 million of net financing for project expenditures\.
An amount of $ 3\.57 million of the original loan, and $ 11\.3 million of the $ 30 million Additional Financing Loan
(approved on June 23, 2010) were cancelled, because of delays of 3 to 4 years in completion of some of the power
generation plants whose power was to be transmitted on the new lines\.
Borrower Contribution : At appraisal the borrower contribution was expected to be $ 70\.64 million equivalent, while the
estimate at completion was 30% higher, at $ 91\.55 million equivalent\. This includes interest during construction of
$28\.5 million and commitment charges of $4\.60 million paid to the Bank\.
Dates: The loan was approved on June 26, 2003, but only became effective a year later on July 7, 2004\. The project
was restructured (with a revised PDO) on 06/19/2008, and the closing date was extended to 12/31/2009\. A second
restructuring took place on 12/22/2009 to permit completion of two of the transmission lines whose execution was
delayed, with an extension in the closing date by two years to end December 2011\. The final closing date was
12/31/2013\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Original Objective s: Substantial
The objectives (per the Loan Agreement) to improve the provision of electricity in the provinces of Java and Bali were
consistent with Government and Bank strategy\. The project was consistent with the new Indonesian government's
power sector reforms underpinned by the September 23, 2002 Electricity Law which paved the way for a competitive
power market in the Java Bali region over the medium term\. The project objectives were also consistent with the goal
stated in the July 25, 2002 CAS Progress Report, on the 2001-2003 CAS, of sustaining economic recovery and broad
based growth by addressing infrastructure bottlenecks in power, and restructuring sector entities\.
Revised Objective: Substantial
The revised objectives were âto improve the reliability and efficiency of the power system in Java-Bali and strengthen
PLN and PGNâs management capabilities\.â
The simplified objectives retained the two central elements of system performance and reliability, and institutional
capacity\. The revisions were responsive to then prevailing government development strategy and priorities\.
The PDO and indicators continue to remain relevant to the country's needs and priorities at exit in 2013, as evidenced
by the first and second Power Transmission Development Projects approved in July 2010, and July 2013
respectively\.
b\. Relevance of Design:
Original Objectives: Modest
The planned activities and institutional strengthening focus were consistent with the stated objectives\. The original
objectives were to be achieved through financing of priority investments and technical assistance to PLN, along with
technical assistance to PGN\. Strengthening of the system by the increase in dispatch capacity in 500kv lines and 150
kv transmission lines would enable an increased amount of generated power to be evacuated for delivery to
customers, thereby increasing provision of electricity to the provinces\. Assistance to PGN to restructure its operations
was expected to prepare the basis for a new private strategic partner to be mobilized\. The results framework linking
the 500 kv and 150 KV lines to operations, and outcomes of improved power sector performance and reliability were
logically linked\. However, a factor that was not identified at preparation is the difficulty of âupratingâ (i\.e\., adding
catenary or cable) existing live lines because this required advanced technology\. That eventually rendered this
element of the design impractical, and led to the need for installation of new parallel cables to achieve the intended
increase in capacity\. The resulting delay cascaded throughout project implementation\.
Revised Objective: High
When the objectives were revised and simplified in 2008, the focus was sharpened further\. The emphasis was on
components related to: (i) improving the electricity system and strengthening the transmission system; and (ii)
expansion of the ERP to strengthen PLNâs information systems and management capability, and thereby, the
transparency of its financial situation and its accountability\. The PGN component was left unchanged\. The outcome
indicators which reflected the improvement in the Java-Bali power network were retained since work was to continue
on the physical components to strengthen the network\. However, some indicators were refined to suit the revised
objectives\. The measures set for achievement of outcomes were made more clear, namely: dispatch capability of
generation units in East Java, substation loadings in the 500kv and 150 kv systems aimed at increasing reliability;
voltages recorded, which would indicate higher capacity utilization; and PLNâs rate of return, These outcomes had
baselines recorded earlier in 2002\. These indicators were appropriate for measuring achievement of outcomes\. The
causal chain between funded items and outcomes were clear\. Also, when the Additional Financing was approved in
2010, the main change was removal of the corporate restructuring component and related indicators, as requested
earlier by the Government\. Taken together these changes made the design more compatible with the revised
objectives\.
4\. Achievement of Objectives (Efficacy):
Original Objectives : Modest
The PDO was âto assist the Borrower in improving the provision of electricity and gas to consumers in the Borrowerâs
Project Provincesâ\.
Outputs at completion
ï¬ Implementation progress targets leading to commissioning of 500kV substation expansion--originally targeted for
completion by 12/31/2008 were actually completed by 12/31/2013\. The cause of the delay was the improper
choice of âupratingâ (i\.e\., adding of catenary or cables) to existing live transmission cables which proved
impossible without shutting down the lines\. That, in turn, would have deprived electric supply to many end users,
resulting in a loss of revenues to PLN\. So, it was decided to install new parallel lines for the additional capacity,
for which new land had to be acquired, resulting in this five year delay\. (This problem cascaded through the rest
of the implementation period\.)
ï¬ Implementation progress targets leading to commissioning of 150kV substation expansion and uprated
lines--originally targeted for 12/31/2008\. Two of the seven lines were commissioned by 12/31/2013, while five
lines were delayed due to delays in agreeing on compensation for land acquisition under a new law\. The new
land was required because of the reason explained in the earlier bullet on 500kV substations\.
ï¬ ERP roll-out throughout the Java-Bali electric power network after initial pilot roll-out--the ERP pilot in Java-Bali
was completed by October 2008, and the ERP system-wide roll-out was completed by January 2009âtarget
dates were not specified\. This completion is confirmed in the ISRs of 4/15/2009, and 8/8/2009\. The ERP also led
to unanticipated savings as it led to financial information being transparent and up to date, and minimized
âaccounting errorsâ\.
ï¬ Progress on PLN TA and institutional strengthening to be completed by 12/31/2008--the TA (comprising PLNâs
corporate and financial restructuring including unbundling PLNâs functions, environmental capacity building, and
a feasibility study of a pumped storage plant in Upper Cisokan) was completed in June 2007\.
ï¬ Progress on PGN TA and study for PGN for completion by 12/31/2008--the Gas Pricing study and the TA to
prepare PGN for restructuring, and for an IPO to select a strategic partner were completed on 11/14/2008\.
ï¬ PLN to issue reconciled financial statements for Java-Bali, Sumatra and Sulawesi systems within 45 days upon
completion of the fiscal year\. They were ready within 90 days when performed manually, by 06/19/2008, and
within 45 days by 12/31/2008 since the ERP was fully deployed in the Java-Bali system--this meant much
increased revenue collection for PLN, thereby improving its ability to provide services required of the company in
a reliable manner, i\.e\., without power outages\.
Outcomes at completion
The first one, restructuring of PLN, was rendered illegal by the annulment of the 2002 Electricity Law as explained in
Section 3 (a) above, leading to the need to restructure the project\. The second outcome was to lay the groundwork for
restructuring of PGN and selection of a strategic partner\.
ï¬ Increased dispatch capability of generation units in East Java, whereby an additional 2000MW of dispatch
capability was to be achieved by 12/31/ 2008--happened five years later, for reasons explained above\. In 2013,
2322 MW were recorded as power sold; at appraisal long-term demand growth was projected to grow at 5% after
2009, whereas by 2013 it was projected at 8% (ICR, p\. 55)\. In any event, there was an increase in the provision
of electricity to meet increased demand\.
ï¬ Reduced substation loadings at key Java-Bali 500kV and 150kV substations\. They were to have loadings at 50%
to 60% of capacity by 12/31/2008--the ICR says these reductions took five years longer to achieve\. (according to
the ISRs they were achieved by 2010)\. The closer the loadings are to 100%, the greater the likelihood of an
overload and power outage, which would risk service reliability\.
ï¬ Improved capacity utilization in terms of voltages at key 150kV substations in southeastern Java\. Six of the seven
150kV substations were operating at 90% of capacity or at 135kV in 2002, and were to have reached 100% of
capacity by 12/31/2008--the target was reached five years later in 2013\.
Revised Objective: Substantial
Improve the reliability and efficiency of the power system in Java-Bali and strengthen PLN and PGN's management
capabilitiesâ\.
The revised output indicators and their achievement are shown below\.
ï¬ Implementation progress targets towards commissioning of 500kV substation expansion--targeted for completion
by 12/31/2013\. All substations were completed and commissioned by the target date,
thus contributing to improving the reliability and efficiency of the power network\.
ï¬ Implementation progress targets towards commissioning of expanded 150kV substations and uprated lines--
targeted for 12/31/2013\. Two of the seven lines were commissioned by 12/31/2013, while five lines were delayed
due to discussions on land acquisition under a new law on land acquisition\. (The law permits claims of up to 10%
of tax value of conservation land, but at the demand of some civil society elements, claims exceeded this level\.
ICR, pp\. 10, 28-29, 32\.) These were still ongoing at the closing date of 12/31/2013\. In effect, this delay means a
delay in improving the reliability and efficiency of the network by a few years\. (PLN confirmed to the Bank in 2013
that they have budgeted adequate funds in 2014 and 2015 and plan to complete the five lines within 12 months of
the resolution of the outstanding issues with their own funds\. A new law enacted in 2012 on land settlement
issues, along with a Ministerial regulation should help address the issues\. Although not required to do so, PLN
management agreed to continue to submit quarterly progress reports to the Bank on the progress towards
completion of the lines\. The Bank also will continue to monitor progress during supervision of other ongoing
projects in the sector\.)
ï¬ Following the ERP roll-out in the entire Java-Bali system the extended deployment of the ERP system in Sumatra
and Sulawesi was to follow\. The ERP for Java-Bali was completed in October 2008, as noted in the ISRs of
4/15/2009\. The ERP for the expanded system including Sumatra and Sulawesi was completed on time and below
budget by 12/31/2013\. As explained earlier, the ERP enabled financial information to be obtained across PLN in
a timely manner and with transparency, both of which have led to improved revenue collection\.
ï¬ Supplemental Study on Upper Cisokan Pumped Storage Project to increase peak power generation capacity\.
After the TA was completed it became a critical input in the preparation of the Upper Cisokan PSP project
approved May 26, 2011 and now under implementation\. By increasing peak power generation capacity, the
power system would contain some extra power available to meet peak loads, and thereby avoid load shedding or
power outages in some parts of the network\. This would contribute to improving reliability\.
ï¬ PLN to issue reconciled financial statements for the Java-Bali, Sumatra and Sulawesi systems within 45 days of
completion of the fiscal year\. Statements were issued within 45 days of the end of PLN's fiscal year\. Furthermore,
financial data was transparent in the institution as a result of the IT systems being used\.
The key performance or outcome indicators of the restructured project were retained from the original, i\.e\., as in the
bullets above, confirming that the design was more consistent with the revised objectives than with the original ones\.
ï¬ Increased dispatch capability of generation units in East Java\. An additional 2322 MW of dispatch capability was
to be reached by 12/31/2013\. The target of 2000 MW by 12/31/2013 was exceeded, and the dispatch capability
for generation units in East Java was increased\. The additional power was all sold\.
ï¬ Reduced substation loadings at key Java-Bali 500kV and 150kV substations\. The target was for the majority of
substations to have an average loading of capacity of 50% to 60% by 12/31/2013\. Due to demand growth being
higher than originally anticipated, substation loadings were on average 68\.5%, or larger than the original target
value\. But according to information verified during the ICR mission of September/October 2013 the Java-Bali
system retained appropriate reliability levels\.
ï¬ Improved voltages at key 150kV substations in southeastern Java\. Compared with a baseline of 90% of capacity
in 2002, the target was for the majority to be operating at 100% capacity by 12/31/2013\. This target was
reached\.
ï¬ The last indicator was "Improvements in PLN's rate of return"\. The government had decided--for social and other
reasons--that it could not charge the full cost of electricity to consumers\. It was required by Law to supplement
tariff revenues through the Public Service Obligation (PSO) subsidy\. Therefore the government, PLN and the
World Bank agreed to use the debt service coverage ratio as a proxy for measuring liquidity\. As a step towards
achieving a gradually improving debt service coverage ratio each year, an estimated 10% tariff increase took full
effect in 2011, and a further gradual increase of 3% per quarter from January 2013 was put in place for five
years, i\.e\., until it would reach 15%\. This would gradually also reduce the subsidies required\.
ï¬ As an unanticipated benefit, the computerization implemented under ERP significantly improved the efficiency of
PLN's operations leading to an annual operating cost savings of over $9 million\.
5\. Efficiency:
Substantial
Implementation began more slowly than anticipated at approval\. The original economic analysis assumed an
East-West transfer gain of $27\.3 million in avoided costs in 2005 and 2006, after which the 500kV backbone to the
south would be operational and the East-West transfer would stop\. However, since the project only became effective
in July 2004, these benefits accrued more slowly\. The PAD estimate of the EIRR, 14\.6%,was based on
over-optimistic assumptions on completion time and start of benefits\.
The original project was based on âupratingâ of cables (i\.e\., adding new cable or catenary to existing live cables),
which was not possible, it was decided to install new parallel lines \. The bidding process for these parallel cables was
highly competitive, with more bidders than expected, leading to lower costs than the estimates for âupratingâ\. Whereas
the original project was based on peak demand growth of 9% in 2009, and dropping to 5% over the longer term, long
term demand growth which was forecast at 8% in 2008 turned out to be even higher\. (This led to the need for a new
10,000 MW generation âcrash programâ)\.
The EIRR of the 500kV and 150kV transmission lines, which account for 73% of total project costs was estimated at
11\.88% while the EIRR of the ERP system, which accounts for 24\.3% of project costs, is estimated at 14\.95%\. Thus
on a cost-weighted basis the EIRR for the project is estimated at 12\.42% as compared with an assumed opportunity
cost of capital of 10%\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 14\.6% 100%
ICR estimate Yes 12\.42% 97\.3%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The relevance of the original objective is rated Substantial, the relevance of the original design is rated Modest, the
efficacy of the original objective is rated Modest and efficiency is rated Substantial\. Thus, Outcome under the original
objective is rated Moderately Unsatisfactory\. The relevance of the revised objective is rated Substantial, the relevance
of the revised design is rated Substantial, the efficacy of the revised objective is rated Substantial and efficiency is
rated Substantial\. Thus, Outcome under the revised objective is rated Satisfactory\. As of June 2008 when the
objectives were revised the disbursed amount was some $42 million, or 22\.6% of the $185\.7 million finally disbursed\.
The two outcome ratings are combined using the respective disbursement shares as weights (0\.226x3 plus 0\.774x5 =
4\.54), which results in a combined Outcome rating of 5 or Satisfactory\.
a\. Outcome Rating: Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Government Ownership/Commitment: As mentioned earlier, five of the seven transmission lines were at different
stages of completion due to right of way issues whereby claims made by conservation land owners far exceeded the
maximum permitted under lawâattributed to the influence of some civil society groups\. As of the closing date PLN had
agreed to continue to provide the Bank with quarterly progress reports on these lines, and that the Bank could
continue to review progress through supervision missions for other projects in Indonesia\. The TTL confirmed that the
last quarterly progress report received by the Bank was for September 2014, and that the transmission lines were
70-90% complete up to the edge of the forest-protected lands\. Discussions between relevant departments were
underway on optimal paths for the rest of the length to limit damage to protected lands, and according to the TTL
these were expected to be decided by end 2014\.
Institutional Support: A related risk is that PLN will not continue to supervise and maintain the ERP system\. This is
mitigated by the understanding reached that the project management for the ERP system will be strengthened and
additional training provided through a train the trainers program being funded by PLN\. According to consultants
Accenture, whom Bank staff met in September 2014, this was underway\.
Thus, the risk to the development outcome rating is considered Moderate\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The task team was highly experienced and comprised very senior staff, including the Acting Sector Director as
TTL, and a number of specialists covering all relevant areas\. The PAD is thorough--the strategic and sector
context and project rationale were sound at the outset, with rigorous economic and financial analyses\. Institutional
issues were carefully considered\.
The original project design called for âupratingâ of existing transmission lines (i\.e\., adding catenary or cables to live
lines), but around 2005 it was found that uprating would require having to shut the line down for a protracted
period leaving communities they served without power, besides leading to a sizeable loss of revenue for PLN of
some $60 million equivalent\. Eventually parallel lines were decided upon, causing delays and requiring three
closing date extensions\. The rationale for the original decision is not clear, but it appears to have been due to the
pressure to have the operation approved before end June 2003, as there had been no Bank lending to Indonesia
for some three years\. Also, there were several changes underway at the management and staff levels during
preparation, which could have affected decisions\. The timetable called for the entire physical project to be
procured, launched, constructed, installed, and tested in 18 months from approval on June 26, 2003\. In fact,
effectiveness took until July 7, 2004; the PAD projected cumulative disbursements of $77\.55 million by FY 2005
(i\.e\., June 30, 2005), while actual disbursements were 41\.75 million by May 2008\.
The quality of preparation is satisfactory in other respects-- technical, financial and economic, institutional,
environmental, social, and safeguard aspects\. This was attributed to experienced team leadership\.
Quality-at-Entry Rating: Moderately Satisfactory
b\. Quality of supervision:
Implementation progress was well monitored with diligent pursuit of actions under the control of the Bank and
counterpart teams\. Project supervision was effective with Bank staff working closely and responsively with the
client\. Besides ensuring fiduciary and financial management integrity the team quickly identified problems as they
arose; recommended and worked with the borrower to explore and process changes in project concept and design
as circumstances changed\. Thus, for example, the team worked with PLN on the decision to install parallel lines
when the âupratingâ proved no longer feasible\. It also recommended a wider bidding process for the parallel lines,
which led to their completion at a lower cost than estimated for âupratingâ\. Also, when the 2002 Law was annulled
in 2004, and the Government decided to drop affected portions in 2006, the Bank team worked proactively to
proceed with simplified objectives better suited to the design, and helped refine the outcome measures consistent
with the design\. , In this manner the Bank teams identified key emerging risks to sustainability and recommended
risk mitigation and management approaches to the borrower\. On sustainability, for example, at project completion,
since some of the transmission lines were still under construction, the Bank team obtained an assurance from
PLN that it had budgeted adequate funds in 2014 and 2015 for this work to continue, and to submit quarterly
progress reports to the Bank on progress\. The Bank in turn, agreed to supervise the construction progress as part
of supervision of other projects in the sector\. In recognition of the delay, the PDO and IP were rated Moderately
Satisfactory in the ISRs of March 2012, and October 2013, while PDO is rated Moderately Satisfactory and IP is
rated Moderately Unsatisfactory in the March 2013 ISR\.
The Bank team prepared 18 supervision reports every year during ten years, to account for the use of Bank
resources, report on M&E findings, and draw lessons to improve future project design, sector and country strategy
and policies\. They are a useful source of information including on completion of project outputs\.
Besides procurement training at the early stages of the project, the Bank team helped arrange for several training
sessions over the duration of the project to help familiarize PLN staff with Bank procedures\. Most of the original
PLN staff that had worked on earlier Bank financed projects were disbanded as part of the decentralization in
2003, leaving PLN with few staff that had managed Bank financed procurement\. Therefore, the Bank also had to
provide enhanced implementation support at each stage of the procurement process\.
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Directorate General of Electricity and Energy Utilization (DGEEU), representing the Government was
cooperative and supportive throughout project implementation and allocated more adequate counterpart funds,
eventually amounting to $91\.55 million, or 30% above the $70 million proposed at appraisal\. But it was reluctant to
exert administrative and legal authority on two key issues that delayed the completion of the transmission lines\.
One was the inordinately high compensation claims by the landowners far in excess of those permitted under the
prior law, due to pressure from certain civil society elements\. (In earlier times when compensation in excess of the
law was paid, the officials were sanctioned by the legal authorities, hence the approach to go by the books\.) The
other was the delays in the lack of issuance of permits for traversing conservation forests\. Although both of these
issues were largely under government control, there was a lack of urgency in addressing them\. Due to impending
elections, the Government did not wish to pursue the same top down approaches adopted by the earlier
administration (under President Suharto)\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
On the whole PLN was cooperative, responsive and responsible during the implementation period\. In
December 2004, the 2002 Electricity Law which was the legal basis for undertaking corporate restructuring of PLN
was annulled by a Constitutional Court in response to PLN's labor unions\. After exploring alternative options at the
suggestion of the Bank with the help of international consultants, PLN asked the Bank in November 2006 for a
moratorium on restructuring activities\. The lack of continuity due to staff transfers and rotations during the 2003
decentralization led to unfamiliarity with Bank procurement systems seen in the initial international competitive
bidding activities\. Delays in procurement were highlighted in a few supervision reports, resulting from staff failing
to publish a procurement notice in the United Nations Development Business as required, and not seeking the
Bank's No Objection to an amendment to a contract that was originally to be Bank financed\. The contractor had
demobilized its staff, and then had to remobilize after the No Objection was issued\. This led to an increase in the
contract price by more than 15%\. The excess charge was paid by PLN\.
The Project Implementation Unit (PIU) and Project Management Unit (PMU) performed well in conducting the
contracting processes, particularly in expanding the number of bidders for the parallel transmission lines (at the
Bankâs suggestion) which, in turn, led to costs below appraisal estimates for âuprating\.â The location of the PIU in
the operations group instead of the construction group where they rightly belonged, affected some contracts which
experienced delays of up to two years due to weaknesses in contract management\. This was corrected only when
the delay persisted\. Also, there were several payment delays in processing contractor invoices\.
PLN indicated to the ICR mission an awareness of the need for a diagnostic exercise in the near future to identify
the areas of weakness and of bottlenecks in procurement and contract management\.
Implementing Agency Performance Rating : Moderately Unsatisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The original objectives were clearly specified, as were the objectives as revised in 2008\. The key performance
indicators at both stages reflected these objectives\. The indicators were measurable in terms of numbers, timing and
location\. The proposed data collection methods and analyses followed well known practice in the power sector, with a
baseline set for 2002, the year prior to project approval\. As for institutional roles, the main tasks associated with
monitoring and reporting during implementation were to be carried out by PLN, while responsibility for coordination
among the parties was with the PIU, which was to prepare a Master Implementation Schedule\. This Schedule would
comprise several modules ranging from site preparation to testing and commissioning\. PLN was to prepare detailed
schedules for site survey and preparation, and to agree with each contractor/supplier on a schedule for their
activities/responsibilities\. These arrangements would provide a continual assessment of predicted completion dates
for outputs, and of areas of slippage to enable remedial action needed\. Outcome/impact indicators were reflected in
the PAD along with outputs\.
It might have been useful to have had an additional outcome indicator which would have compared power outages in
the baseline year of 2002, and tracked annually to the project completion period, in terms of number of times power
had to be cut or delivery voltages dropped, and number of customers affected\. This would have been an explicit
quantitative indicator of reliability and quality of service delivery\.
b\. M&E Implementation:
The planned baseline data for 2002 were measured and recorded\. The indicators enumerated in the PAD, e\.g\.,
increased dispatch capability of generation units, reduced substation loadings at 500kV and 150kV substations,
improved voltages at 150kV substations, were regularly measured and reported upon in Quarterly Progress Reports
(QPR) with all details\. In 2008, when the objectives were revised and simplified, some indicators were refined to make
the design more suited to the revised objectives\. Bank supervision missions worked with PLN and PIU to ensure that
data was of reliable quality\. The PIU and PLN continued to monitor data and send them to the Bank on a quarterly
basis\.
c\. M&E Utilization:
The M&E arrangements measured both outputs and outcomes\. The QPRs served not only as a
monitoring tool but also to assist PLN in its own evaluation of progress\. A further verification of the
monitoring tools was the ISRs prepared each year, which also evaluated the effectiveness of the M&E
arrangements\. The slow pace of implementation and the inability to use the original design of âupratingâ of
cables led to the revision in objectives and refinement of some indicators\. The ISR ratings between March
2005 and November 2008 for PDO and IP reflected this\. M&E was used to assess progress at output
level in detail and for implementation decisions, besides outcomes\.
M&E Quality Rating: Substantial
11\. Other Issues
a\. Safeguards:
Environment and Social\.
At entry the project was rated Category B\. An Environmental and Social Assessment and Management Plan (EMP)
was prepared by PLN in which the World Bank Group's safeguards policies on social and environmental issues were
fully addressed according to the ICR\. The draft EMP was discussed at stakeholder consultation meetings in
accordance with the assigned Environmental Category: B (Partial Assessment)\.
OP/BP 4\.01 Environmental Assessment and OP/BP 4\.12 Involuntary Settlement were triggered by the project\.
However, as no other new transmission lines were included in the original plan, the EMP indicated that the adverse
environmental and social impacts of the planned physical sub components would be minor and easily manageableâ
this issue was discussed and agreed upon with the environment team at the Bankâs Jakarta office\. (Only one
component, the 5 km long Perak-Ujung line, involved new transmission towers which, however, would be on existing
rights of way (ROW))\. The EMP approved of Indonesia's environmental impact assessment documentation\. It also
approved of the institutional responsibilities for monitoring and enforcing implementation of their recommendations,
the requirements for training programs and other arrangements for institutional strengthening\.
Specific policies and procedures applicable to land acquisition and compensation were also recorded in a Land
Acquisition and Resettlement Policy Framework (LARPF)\. Prior to appraisal, the EMP and LARPF were publicly
disclosed at PLN's Head Office in Jakarta and at the Bank InfoShop\. The PLN policy addresses public participation,
land acquisition, compensation and rehabilitation of property, and mitigation measures\. The policy was reviewed and
approved by the World Bank before it was issued as a law by the government in 2012\.
Since OP/BP 4\.01 and 4\.12 were already triggered, the decision to change to parallel lines in 2005 did not result in
any new triggers\. The Bank team discussed with PLN about how to resolve the safeguards issues and prepared the
instruments needed through workshops, leading to the preparation of Environmental Management Monitoring
Procedures that were completed in April 2008, after the contracts for construction of the transmission lines were
signed in March 2006\.
A Project Environmental Team constituted by PLN was also set up to work within with the PIU\.
b\. Fiduciary Compliance:
Procurement\.
Since the PGN portion is small, the procurement capacity assessment focused largely on PLN, although a brief
assessment of PGN is also included in the Procurement Capacity Assessment Report, carried out in line with the
Bank's requirements\.
As part of a decentralization of PLN in 2000, the central procurement unit that had been responsible for procurement
under Bank financed projects was abolished and most of the experienced staff transferred to other positions\. The
decentralized Project Units were familiar with Indonesia's procurement regulations, but at the start of the project there
was a lack of direct experience with international competitive bidding (ICB)\. However, with a number of projects under
construction, most branch offices acquired substantial procurement experience\. Nonetheless, to mitigate risks
associated with inexperience in project implementation, several actions were taken: (a) a project management unit
(PMU) was set up at PLN's head office, a Project Office was established, and PIUs were created at project locations;
(b) a Procurement Committee was set up with 9-11 members from the Project Unit and PLN's Head Office, including
three with prior experience with ICB, and one with extensive experience with Bank financed procurement; (c) a
procurement training program was delivered in April 2003 prior to loan approval, and subsequent training sessions
were held thereafter\.
Procurement of all goods and consultant services were completed within the allocated resources, and in compliance
with Bank and project specific requirements and policies\.
Financial Management\.
The project's financial management system-- budgeting, internal controls,, financial reporting and auditing--was
acceptable to the Bank\. All audit reports were submitted--with unqualified opinions-- to the Bank on a timely basis, and
were published on PLN's website\. Improvements in the accounting of loan transactions occurred in the final year, with
no prolonged delays encountered during project implementation\. The factors that contributed to the prior delays in
payments included delays in the Subsidiary Loan Agreement budget approval; incomplete documentation by vendors;
delays in submission from the project office to PLN headquarters; delays in completion of documentation to meet
Government requirements; and delays in document verification at the Ministry of Finance\. These delays were
systemic in PLN and were partly due to extra care to ensure that all documents were complete in every respect, given
prior political history\.
c\. Unintended Impacts (positive or negative):
The ERP component has started to yield savings of over $ 9 million pa to PLN from improved efficiencies and other
savings\.
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Moderately Satisfactory
Satisfactory
Risk to Development Moderate Moderate
Outcome:
Bank Performance: Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The following lessons are selected from the ICR:
i\. Ensuring quality at entry is far more important than speedy commitment , because inadequate preparation
ultimately delays project benefits \. When a project is processed at great speed for approval (for whatever reason,
such as lack of Bank lending for several years), this may lead to technical choices (such as âupratingâ of cables in a
power transmission project), which eventually turn out to be not feasible, thus delaying the project by years\.
ii\. The safeguards issues for power transmission projects need close attention during preparation \. This is
particularly true for land acquisition\. If this issue is not addressed during preparation, significant delays are likely at
a later stage\.
iii\. The success of the Enterprise Resource Planning (ERP) system, as implemented in the Java -Bali Power
Sector Restructuring Project in Indonesia , led to significant cost savings and offers important lessons for sector
practitioners \. The factors that contributed to installation of the ERP system within the deadline and cost envisaged
at the outset, are worth replicating\. These include transparency of financial and management information systems,
particularly significant in countries where public sector governance is an issue\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
This ICR is a sound analytical document\. Using factual evidence and logic, it draws lessons based on the written
documents and reported events\. The ICR is results driven and consistent both with OPCS guidelines and within itself\.
The written presentation is of good quality\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P007123 |  ICRR 10613
Report Number : ICRR10613
ICR Review
Operations Evaluation Department
1\. Project Data : Date Posted : 05/22/2000
PROJ ID : P007123 OEDID:
OEDID : L3285 Appraisal Actual
Project Name : First municipal US$M )
Project Costs (US$M) 300\.0 274\.6
development project
Country : Ecuador Loan /Credit (US$M)
Loan/ US$M ) 104\.0 84\.0
Sector, Major Sect \.: Urban Management , US$M )
Cofinancing (US$M) 108\.0 102\.2
Urban Development
L/C Number : L3285
FY )
Board Approval (FY) 91
Partners involved : GTZ, IDB Closing Date 06/30/1997 06/30/1999
Prepared by : Reviewed by : Group Manager : Group :
Ronald S\. Parker Alain A\. Barbu Gregory K\. Ingram OEDST
2\. Project Objectives and Components
a\. Objectives
The project was focused on making the national/local revenue-sharing system more effective in order to
increase the fiscal autonomy of local governments (and their capacity to deliver services)\. Objectives
included: reducing discretionary fiscal transfers to municipal governments; expanding municipal
own-source revenues; increasing the capacity of municipalities to plan and execute projects and maintain
physical assets; enhancing the targeting of benefits (so more services would reach the lower income
population); and training/institutional strengthening\. The Development Bank of Ecuador (BEDE) was to be
made more capable of sustainably financing local governments\.
b\. Components
Components included physical investments such as sewerage, water systems and urban paving (89%),
training and technical assistance for BEDE and the municipalities(10%) and El Niòo assistance (1%)\.
c\. Comments on Project Cost, Financing and Dates
The loan (approved December 20, 1990) was in the amount of US$104\.0 million\. It closed on June 30,
1999, following two one-year extensions of the closing date and two cancelations (US$14\.9 million and
US$5\.1 million)\. Actual project cost was US$274\.6 million (appraised cost US$300\.0 million)\. IDB and
GTZ cofinanced US$98\.2 million and US$4\.0 million respectively\.
3\. Achievement of Relevant Objectives :
National/local revenue-sharing was made more transparent, equitable, predictable and effective\. The
Local Government Development Fund (FODESEC) now provides a limited system for revenue sharing
(2% of the national budget)\. Subsequently, decentralization legislation substantially increased the flow: it
began with a 9% transfer but it will ultimately allocate 15% (of the national budget) to sub-national
revenue sharing\. BEDE has reduced its staff from 550 to 300 by privatizing many functions\. It has
updated manuals and procedures, recruited qualified staff for key positions, and begun recapitalizing\. It
has developed a database of transfers, and it plans to create a municipal performance-indicator database
to facilitate inter-municipal comparisons of efficiency and operation\. About 489 infrastructure subprojects
were completed\. The project provided a subsidy for sanitation services, and about 54% of the
investments financed under the project were targeted to areas with a high percentage of urban poor\.
Other indicators that the objectives were achieved include: increased willingness of beneficiaries to pay
for improved service; the passage of a Constitutional Amendment making it illegal to provide discretionary
funds to sub-national governments; a sample of municipalities showed that own-source revenue
increased 50% (from 30-45%); and 128 municipalities benefited from the technical assistance program\.
4\. Significant Outcomes /Impacts :
The Decentralization Law clarifies the roles of various national and sub-national entities and grants
greater autonomy to sub-national entities\. In a random sample of 99 municipalities, 24% of the
municipalities surveyed recently completed staff-reduction programs aimed at lowering their operating
costs and facilitating efforts to privatize services; 53% of them had undertaken administrative reform
programs; and, in general, they more than doubled revenues in real terms\. IDB and GTZ are currently
preparing a follow-up project to help the GOE consolidate the gains of the first project--the Bank is
contributing to this effort with a grant for studies\.
5\. Significant Shortcomings (including non -compliance with safeguard policies ):
The GOE is in arrears with transfer payments putting all project achievements at risk\. A decade of
discussions with the multilaterals has not led to the resolution of major procurement issues (the
precedence of Bank Guidelines over local practice, automatic appeals by losing bidders, etc\.)\. Frequent
management changes in key positions within the project entities, and appointment of staff without
appropriate skills and experience to senior positions constrained institutional development and the
attainment of project objectives\. Progress in the creation of sustainable financing for municipalities without
access to private sources of credit is diluted by GOEâs practice of approving the creation of new
municipalities (52 in the last decade) without considering viability issues\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Partial Modest These ratings are largely equivalent \.
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
(i) Successful municipal projects invariably result in substantial changes in the political and economic
power centers of a country\. It is essential that lenders identify all of the affected groups early on, and work
with them to so that success may be maximized\.
(ii) Few sub-national entities, irrespective of their location in developed or developing economies, can
totally survive on their own resources\. It may be that only the largest 5-10% of sub-national entities will
ultimately attain access to commercial credit\. The rest may have to unify forces and find creative ways of
sharing resources\. (Since the combined efforts of the GOE and multilaterals have not yet surmounted this
obstacle, the Bank and the IDB should have argued more forcefully against the continued creation of new
municipalities)\.
(iii) Traditional project launches tend to create information overload and, more often than not, the truly
important messages do not reach key counterpart staff\. Programming several strategic on-site
"mini-launchesâ? helps to ensure that critical messages reach the staff that need to receive them\.
(iv) Project preparation and appraisal benefited enormously from the combined forces of the Bank, IDB
and GTZ\. However, their operating structures did not allow for a common set of project administration,
approval and related contracting procedures, which contributed to startup and procurement delays\.
(v) Sub-projects which only focus on the investments to be financed are usually of limited value--when
project entities agree to conduct economic and other analyses only for those investments financed by
project funds, they ignore those funded from other sources\. Maintaining only Bank-financed investments
to a higher standard than that provided by the usual maintenance system makes little sense\.
(vi) Appropriately-constituted missions should be provided with adequate resources, especially for
complex projects and in cases where TMs have to address thorny project and country issues\. Bank
recognition of, and resource provision for supervision are often inadequate\.
8\. Audit Recommended? Yes No
Why? The positive trends (inter alia, the Decentralization Law, in FODESEC and BEDE ) reported in the
ICR are likely to lead to more significant impacts with the passage of time and the payment of GOE arrears \. This
progress should be documented
9\. Comments on Quality of ICR :
The quality of the ICR is good\. The discussion and analysis of broadly applicable lessons (based on the project
experience) is excellent\. | REVIEW |
P001550 |  ICRR 10592
Report Number : ICRR10592
ICR Review
Operations Evaluation Department
1\. Project Data : Date Posted : 05/10/2000
PROJ ID : P001550 OEDID:
OEDID : C2497 Appraisal Actual
Project Name : Financial Institutions US$M )
Project Costs (US$M) 10\.4 7\.1
Development
Technical Assistance
Project
Country : Madagascar Loan/ US$M )
Loan /Credit (US$M) 6\.3 5\.5
Sector, Major Sect \.: Financial Sector US$M )
Cofinancing (US$M) 4\.1 1\.6
Development ,
Finance
L/C Number : C2497
FY )
Board Approval (FY) 93
Partners involved : USAID, Gov't of Closing Date 09/30/1998 09/30/1999
Switzerland, BITS
(Sweden)
Prepared by : Reviewed by : Group Manager : Group :
Elliott Hurwitz M\. Gautam Ruben Lamdany OEDCR
2\. Project Objectives and Components
a\. Objectives
The project's objective was to facilitate investment and growth in the productive sectors by improving the functioning
of the financial system\. This would occur through strengthening of key financial institutions and markets, including
privatization of the two remaining state banks, thereby enhancing public trust in financial institutions and enabling
them to mobilize savings and meet private sector financing needs \.
b\. Components
1\. Strengthen and restructure the Central Bank , including subcomponents to (a) strengthen research; (b) improve
open market and foreign exchange operations; (c) bolster accounting and IT systems; (d) improve auditing; (e)
strengthen human resources utilization;
2\. Strengthen Financial Supervisory Commission; 3\. Improve accounting and audit environment ; 4\. Support
privatization of remaining two state banks \.
c\. Comments on Project Cost, Financing and Dates
Component 1, strengthening of the Central Bank, accounted for 86% of total project costs\. No progress was made
on Component 3--improve the audit environment--and it was terminated, with funds reallocated to other components \.
Component 4, state bank privatization, turned out to be more complex and costly than envisioned, and
implementation was moved to another project \. The project disbursed around US$ 3\.3 million less than envisioned,
most of which consisted of shortfalls in contributions from co -financiers (shortfalls included IDA, $0\.8 million; USAID
$1\.2 million; Swiss $0\.6 million; and BITS [Sweden] $0\.5 million)\. Project close, originally set for 9/98, was delayed
until 9/99 to permit completion of several tasks \.
3\. Achievement of Relevant Objectives :
The strengthening of the Central Bank was substantially achieved : the bank was reorganized; a new IT system was
put into place, the bank shifted to indirect methods of monetary control, directed credits were eliminated, and other
regulatory reforms were implemented\. For component 2, strengthening of financial supervision, the capabilities of
the Banking Supervision Agency were strengthened, additional authority was conveyed under a new banking law,
and some new regulations were approved \.
4\. Significant Outcomes /Impacts :
The Central Bank significantly improved its capacity, and succeeded in stabilizing the national currency and reducing
inflation; the Central Bank also created an Internal Audit Division, under the control of the Governor; and the Banking
Supervision Agency considerably improved the supervision of commercial banks \.
5\. Significant Shortcomings (including non -compliance with safeguard policies ):
On-site bank supervision capabilities remain inadequate; due to the unwillingness of the country's auditing and
accounting specialists to open the field to competition (as urged by the Bank), much less progress was made than
envisioned, and auditing and accounting standards remain deficient; the Central Bank and the Ministry of Finance
were unable to agree on a program to improve the management of public debt \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
The project focused on a few key issues identified in a broad financial sector report, and was successful in
addressing these\.
8\. Audit Recommended? Yes No
9\. Comments on Quality of ICR :
The ICR presents sufficient information to evaluate the project, but in a difficult-to-follow manner\. It would have
been desirable to provide data on investment and growth--the overarching objectives as stated in the SAR\. Also,
inadequate information is provided on human resource development in the Central Bank, the projectâs achievements
in bolstering the Central Bankâs research capabilities, and the magnitude and consequences of funding shortfalls by
the 3 other co-financiers\. Bank privatization--one of the 4 original components--is rated by the ICR as Highly
Satisfactory even though this activity was transferred to and completed under another project, and will be accounted
for in the ICR for that project\. This ICR digests and summarizes the comments of co-financiers\. Even though not
required by the ICR guidelines, it might have been more valuable to append them, unedited\. | REVIEW |
P050738 | Document of
The World Bank
Report No:ICR0000190
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-34960)
ON A
CREDIT
IN THE AMOUNT OF SDR 3\.9 MILLION
(US$ 5\.0 MILLION EQUIVALENT)
TO THE
GOVERNMENT OF SRI LANKA
FOR A
LAND TITLING AND RELATED SERVICES PROJECT
March 22, 2007
Sustainable Development Unit
South Asia Region
CURRENCY EQUIVALENTS
December 19, 2006
Currency Unit = Sri Lankan Rupees (Rs\.)
1\.00 = US$ 0\.0092
US$ 1\.00 = Rs 109\.15
Fiscal Year
January 1 December 31
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
CROLL Comprehensive Review of Lessons Learned
CTS Commissioner of Title Settlement
DO Development Objective
ICR Implementation Completion Report
IP Implementation Performance
ISR Implementation Status and Results Report
LDO Land Development Ordinance
LGSPA Land Grant Special Provisions Act
LIL Learning and Innovation Loan
LSD Land Settlement Department
MALLI Ministry of Agriculture, Livestock, Land and Irrigation
MTR Mid-Term Review
M&E Monitoring and Evaluation
PAD Project Appraisal Document
PCU Project Coordination Unit
PDO Project Development Objective
PHRD Policy and Human Development Grant
PSR Project Supervision Report
QAG Quality Assurance Group of the World Bank
RTA Registration of Title Act
SD Survey Department
SDR Special Drawing Rights
USD United States Dollars
Vice President: Praful C\. Patel
Country Director: Naoko Ishii
Sector Manager: Gajanand Pathmanathan
Project Team Leader: Edward C\. Cook
2
Sri Lanka
Land Titling And Related Services Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design\. 5
2\. Key Factors Affecting Implementation and Outcomes \. 7
3\. Assessment of Outcomes\.13
4\. Assessment of Risk to Development Outcome\.16
5\. Assessment of Bank and Borrower Performance \. 17
6\. Lessons Learned \. 20
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 21
Annex 1\. Project Costs and Financing\. 22
Annex 2\. Outputs by Component \. 24
Annex 3\. Economic and Financial Analysis\. 26
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 27
Annex 5\. Beneficiary Survey Results\. 30
Annex 6\. Stakeholder Workshop Report and Results\. 31
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 32
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 33
Annex 9\. List of Supporting Documents \. 34
MAP No\. IBRD 31217 \. 35
3
A\. Basic Information
Land Titling and
Country: Sri Lanka Project Name:
Related Services
Project ID: P050738 L/C/TF Number(s): IDA-34960
ICR Date: 03/30/2007 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: LIL Borrower:
SRI LANKA
Original Total
XDR 3\.9M Disbursed Amount: XDR 3\.2M
Commitment:
Environmental Category: C
Implementing Agencies:
Ministry of Agriculture, Livestock, Land and Irrigation
Cofinanciers and Other External Partners:
B\. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 09/30/1998 Effectiveness: 07/13/2001 07/13/2001
Appraisal: 09/05/2000 Restructuring(s):
Approval: 03/22/2001 Mid-term Review: 09/22/2003
Closing: 12/31/2004 09/30/2006
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Unsatisfactory
Risk to Development Outcome: High
Bank Performance: Moderately Satisfactory
Borrower Performance: Unsatisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Unsatisfactory
Quality of Supervision: Moderately Satisfactory Implementing Moderately
Agency/Agencies: Unsatisfactory
Overall Bank Overall Borrower
Performance: Moderately Satisfactory Performance: Unsatisfactory
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Performance Indicators (if any) Rating
Potential Problem Project No Quality at Entry None
i
at any time (Yes/No): (QEA):
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: Satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 96 96
Law and justice 4 4
Theme Code (Primary/Secondary)
Land administration and management Primary Primary
Law reform Secondary Secondary
Rural markets Secondary Secondary
E\. Bank Staff
Positions At ICR At Approval
Vice President: Praful C\. Patel Mieko Nishimizu
Country Director: Naoko Ishii Mariana Todorova
Sector Manager: Gajanand Pathmanathan Ridwan Ali
Project Team Leader: Edward C\. Cook Jessica Mott
ICR Team Leader: Edward C\. Cook
ICR Primary Author: Edward C\. Cook
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The Project Development Objective was to assess and build the methods, framework and
capacity for making sustainable and comprehensive improvements in the land
administration system (parcel-based cadastre, land titling and title registration)\. Its
operational outputs comprised: * Operational testing and aplication of models to improve
systematic titling and title registries, and * development of institutional framework
(including legal, policy, communications, organizational, management and planning
aspects),and capacity\.
The key performance indicators of this development objective were:
ii
(a) well functioning small-scale titling and title registry operations that provide
increased tenure security, efficiency in titling and land transactions, land market choices,
and fairness;
(b) confidence and knowledge to expand shared by the voting public, local leaders,
implementing partners, and concerned professionals;
(c) a plan for a larger scale project that would be judged ready for appraisal according
to the Bank's quality at entry standards or equivalent, and which provide an acceptable
basis for commitments to finance this follow-on project
Revised Project Development Objectives (as approved by original approving authority)
The PDO was not revised, but the key indicators were modified between the No\. 10 PSR
(June 24, 2004) and the No\. 11 PSR (December 21, 2004) as follows:
(a) Functioning of titling and title registratry operations in a number of Districts with
procedures to handle transactions within specified time limits and quality standards
(b) Viable institutional framework, including cohesive organizational structure and plan
for staffing and human resource development
(c) Feeback, lessons and knowledge gathered from the field reflected in improved
methods and adoption of new methodology\.
(d) Plan for a larger scale Title Registration Program\.
(a) PDO Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Revised Achieved at
approval Target Completion or
documents) Values Target Years
Functioning of titling and title registry operations in a number of Districts with
Indicator 1 : procedures to handle transactions within specified time limits and quality
standards\.
Value No functioning title 3 Districts, full
quantitative or registries\. 0 Districts, noprocedures of high 6 Districts with full
Qualitative) procedures\. quality and timely procedures
delivery\.
Date achieved 03/31/2001 12/31/2005 09/30/2006
Comments
(incl\. % Quality of registry operation has not been verified\.
achievement)
Indicator 2 : Viable institutional framework including cohesive organizational structure and
plan for staffing and human resource development
Value Elaboration of Organizational plan
quantitative or Organizational viable institutional put forward does
Qualitative) framework not viable framework, not address key
iii
including staffing lessons learned\.
of key positions\.
Date achieved 03/31/2001 09/01/2006 09/30/2006
Comments
(incl\. % The plan provided to the September 2006 supervision mission maintains most of
achievement) the shortcomings that were evidenced during implementation\.
Feedback, lessons gathered from the field reflected on improved methods and
Indicator 3 : adoption of new methodology\. Commensurate amendments made in the
Registration of Titles Act and supporting regulations\.
1\. The
Comprehensive
Review of Lessons
Learned (CROLL)
completed and CROLL has been
field manuals completed\.
reflect improved Lessons have been
methodology incorporated in
Value based on lessons terms of
quantitative or No feedback mechanism learned\. simplification of
Qualitative) available\. 2\. Improved field methods\.
methods Working relations
succesfully among agencies
adopted by remain
agencies\. cumbersome and
3\. Draft RTA delays are frequent\.
amendments
referred to
Attorney General\.
Date achieved 03/31/2001 09/30/2006 09/30/2006
Comments
(incl\. % Truly addressing weaknesses in methods and methodology will require adoption
achievement) of amendments to the RTA, which remains pending\.
Indicator 4 : Plan for a larger scale Title Registration Program
Basic plan for a
Value Preliminary draft national program
quantitative or No realistic plan of a National Title has been prepared,
Qualitative) Registration focusing primarily
Program\. on field survey
work\.
Date achieved 03/31/2001 09/30/2006 10/30/2006
Comments The plan is built around a simple calculation of number of field survey teams and
(incl\. % number of parcels covered per team\. It does not address the key bottlenecks
achievement) identified during the LIL\.
iv
(b) Intermediate Outcome Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : New land policy framework established
1\.New policy
Value framework Discussion of land
(quantitative not applicable approved and policy remains
or Qualitative) adopted by
MALLI\. diffuse\.
Date achieved 03/31/2001 09/30/2006 09/30/2006
Comments
(incl\. % For all practical purposes, this issue was beyond the ability of the LIL to deal
achievement) with\.
Indicator 2 : Decision made on lifting market restrictions under the Land Development
Ordinance and LGSPA\.
Government has
mandated
Amendments amendments
Value allowing lifting of
(quantitative not applicable prepared and restrictions on
or Qualitative) approved by
Cabinet\. village expansion
land\. Amendments
remain in draft
preparation\.
Date achieved 03/31/2001 09/01/2005 09/30/2006
Comments
(incl\. % This issue is well beyond the scope of the LIL to handle\.
achievement)
Indicator 3 : Number of land parcels registered\.
5,228 title
Value certificates issued
(quantitative 0 22,000 22,637 parcels
or Qualitative) 'registered', of
which 14,676 State
land parcels\.
Date achieved 03/31/2001 06/30/2006 09/30/2006
Comments
(incl\. % Original target refered to title certificates issued for private (non-State) land\.
achievement)
Indicator 4 : Average time period for completing titling in specific area
PCU claims 7
Value months, delays
(quantitative two years 7 months from inaction by
or Qualitative) the CTS indicate
that the actual
v
figure is higher\.
Date achieved 03/31/2001 12/31/2005 09/30/2006
Comments The figures above apply only to those parcels for which title certificates are
(incl\. % issued\. These represent only a minor share of the parcels in a specific land
achievement) titling area\. In effect, titling has not been completed in any of the project areas\.
Indicator 5 : Average time period for completing titling in specific area
PCU claims 7
Value months, delays
(quantitative two years 7 months from inacation by
or Qualitative) the CTS indicate
that the actual
figure is higher\.
Date achieved 03/31/2001 12/31/2005 09/30/2006
Comments The figures above apply only to those parcels for which title certificates are
(incl\. % issued\. These represent only a minor share of the parcels in a specific land
achievement) titling area\.
Indicator 6 : Systematic titling cost per parcel reduced with improved methods\.
Value
(quantitative $US 110 under $US 40
or Qualitative)
Date achieved 03/31/2001 12/31/2005
Comments
(incl\. %
achievement)
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 05/07/2001 Satisfactory Satisfactory 0\.00
2 08/09/2001 Satisfactory Satisfactory 0\.00
3 11/30/2001 Satisfactory Unsatisfactory 0\.00
4 03/14/2002 Satisfactory Satisfactory 0\.16
5 09/10/2002 Satisfactory Satisfactory 0\.79
6 10/21/2002 Satisfactory Satisfactory 0\.79
7 03/13/2003 Satisfactory Satisfactory 0\.79
8 06/26/2003 Satisfactory Satisfactory 1\.17
9 12/22/2003 Satisfactory Satisfactory 2\.01
10 06/24/2004 Satisfactory Satisfactory 2\.54
11 12/21/2004 Satisfactory Satisfactory 3\.45
12 06/10/2005 Moderately Satisfactory Moderately
Unsatisfactory 3\.96
13 12/15/2005 Moderately Satisfactory Moderately Satisfactory 4\.25
14 06/08/2006 Moderately Satisfactory Moderately Satisfactory 4\.62
15 11/10/2006 Moderately Moderately
Unsatisfactory Unsatisfactory 4\.64
vi
H\. Restructuring (if any)
Not Applicable
I\. Disbursement Profile
vii
1\. Project Context, Development Objectives and Design
(this section is descriptive, taken from other documents, e\.g\., PAD/ISR, not evaluative)
1\.1 Context at Appraisal
(brief summary of country macroeconomic and structural/sector background, rationale
for Bank assistance)
The Project was linked to two elements in the CAS: (i) to promote sustainable private
sector led growth and (ii) to improve fiscal discipline\. It was seen that introduction of the
land titling system, in combination with appropriate land policy changes, would enhance
tenure security for farmers and other landholders, support improved land productivity and
overall economic efficiency, leading to higher incomes\.
The major share of land, including agricultural land, has traditionally been owned by the
State\. Under a series of programs, beginning with the Land Development Ordinance
(LDO) of 1935, State-owned land, predominantly in rural areas, has been made available
to private users, mainly for smallholder agriculture and settlement, with a number of
restrictions on economic transactions\. These included restrictions on leasing,
mortgaging, sale, and inheritance\. (This last restriction is in part tied to officially adopted
minimum land parcel sizes\.) The restrictions were put in place to protect against
potential loss of land by beneficiaries and to ensure that land holdings did not become
excessively fragmented\. However over time, these limitations were seen
as retarding agricultural growth by limiting: (i) access to land; (ii) the ability to leverage
land as collateral for investment purposes; and (iii) incentives to invest in the land due to
insecure land tenure\. A PHRD-financed Land Markets Study during project preparation
confirmed these views and showed that the value of LDO land was as much as 50 percent
lower than comparable privately owned land\.
For privately owned land, including most urban land, there were economic efficiency
issues associated with insecure tenure and high transactions costs\. Sri Lanka has had a
deeds registration system which records transactions and serves as evidence of rights, but
provides no guarantee of rights\. For example, there could be multiple deeds in existence
for a given property, or unregistered transactions\. Further, there is not a clear linkage
between the information in the registered document and the actual situation on the
ground\. This has contributed to a large number of land disputes, which often take years
to resolve in the courts\. It places a burden on the buyer to carry out a full investigation of
the existing rights\.
Putting in place a title registration system involves carrying out a comprehensive review
of existing rights through a process of adjudication that includes an analysis of available
documents and evidence gathered from the field\. The information 'key' for a title
registration system is the land parcel, and a reliable description of each land parcel must
be provided\. On this basis, a definitive decision is taken on rights for a given property,
4
which in turn is supported by a State guarantee of title\.
International experience shows that a well-functioning land title registration system can
support broader improvements in land administration through introduction of an
appropriate schedule of fees for service and upgrading, or establishing, a land cadastre
data base\. It was expected at appraisal that the project would build the foundation for a
long term program that would lead to an improved land administration system in the
country\.
The Government of Sri Lanka had initiated its own land titling pilot project in 1996 and
begun a dialogue with the donor community on this subject\. By March 1998 a primary
piece of legislation, the Registration of Title Act (RTA) was adopted\. Review of both the
RTA and the experience with the initial piloting effort indicated that there were serious
weaknesses that needed addressing\. Given its established international experience with
land administration projects, the World Bank was a natural partner to turn to for this
assistance\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
The Project Development Objective was to assess and build the methods, framework and
capacity for making sustainable and comprehensive improvements in the land
administration system (parcel-based cadastre, land titling and title registration)\. Its
operational outputs comprised: (i) Operational testing and application of models to
improve systematic titling and title registries; and (ii) development of institutional
framework (including legal, policy, communications, organizational, management and
planning aspects), and capacity\.
The key performance indicators of this development objective were:
(a) well functioning small-scale titling and title registry operations that provide increased
tenure security, efficiency in titling and land transactions, land market choices, and
fairness;
(b) confidence and knowledge to expand titling activity shared by the voting public, local
leaders, implementing partners, and concerned professionals;
(c) a plan for a larger scale project that would be judged ready for appraisal according to
the Bank's quality at entry standards or equivalent, and which would provide an
acceptable basis for commitments to finance this follow-on project\.
5
1\.3 Revised PDO and Key Indicators (as approved by original approving authority), and
reasons/justification
The PDO was not revised, but the key indicators were modified between the No\. 10 PSR
(June 24, 2004) and the No\. 11 PSR (December 21, 2004) as follows:
(a) Functioning of titling and title registry operations in a number of Districts with
procedures to handle transactions within specified time limits and quality standards\.
(b) Viable institutional framework, including cohesive organizational structure and plan
for staffing and human resource development\.
(c) Feedback, lessons and knowledge gathered from the field reflected in improved
methods and adoption of new methodology\.
(d) Plan for a larger scale Title Registration Program\.
1\.4 Main Beneficiaries, original and revised
(briefly describe the "primary target group" identified in the PAD and as captured in the
PDO, as well as any other individuals and organizations expected to benefit from the
project)
N/A
1\.5 Original Components (as approved)
The Project included the following components and sub-components:
1\. Improvement of field operation methods
(a) Titling methods
(b) Title registries
(c) Land records maintenance
2\. Development of institutional framework and capacity
(a) Legal framework
(b) Policy formulation and project-wide learning
6
(c) Organizational development, project management, and program planning\.
Component one focused on titling and registry operations in the field, and the testing of
technologies, procedures, and processes\. It was to include testing of a variety of
implementation arrangements, including the use of private contractors, and focus on
building capacity\. The component was to allow for demonstrating improved efficiencies
in the field with respect to time and cost of registration, reducing the number of parcels
with unresolved issues that prevent titling, minimize legal challenges on titles issued, and
increase public confidence in the titling activities\.
Component two focused on the key legal, policy, and institutional framework for the
project and provided the foundation for the operation of the first component\. It was in
this component that improvements in existing legislation and regulations were to be
made, including revisions to the LDO and the RTA, and that institutional arrangements
would be tested and a viable long-term organizational arrangement identified\. This
component also included policy formulation, stakeholder communications, human
resource development, monitoring and evaluation, and development of an information
management strategy\.
1\.6 Revised Components
N/A
1\.7 Other significant changes
(in design, scope and scale, implementation arrangements and schedule, and funding
allocations)
The only significant change after Appraisal was the granting of two closing date
extensions, totaling 21 months, reflecting accumulated delays in project implementation\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
(including whether lessons of earlier operations were taken into account, risks and their
mitigations identified, and adequacy of participatory processes, as applicable)
The Bank task team did a good deal of work in the preparation phase of the Project on
analysis of the issues bearing on project design\. This included the PHRD-financed Land
Markets Study, analysis of the institutional framework, and careful review of the
Registration of Title Act (1998)\. The Bank missions during the project preparation were
well rounded, with a good range of skill mixes\.
The critical decision made during preparation was to go with a Learning and Innovation
7
Loan (LIL)\. This was based on the fact that the Government had already begun piloting
title registration work which had turned up the need for new approaches, but which also
indicated that Sri Lanka was far from ready for a full-scale land titling program\. In the
Bank's view, the use of a LIL was more appropriate for the risks involved and would
allow time for the outstanding issues to be addressed and resolved\. The hope was that
the potential of future financing support for a larger scale project would constructively
engage key implementers and stakeholders, and help to leverage the necessary political
will and actions required for successful implementation of the LIL\.
The LIL was set up on the basis of the ongoing government program, incorporating the
same three geographical locations\. Because these locations were not fully representative
of the range of operating conditions, half way through project implementation, two
additional locations were included, which were believed to provide a broader sample of
the land issues that the LIL was aiming to address\.
The preconditions for moving forward with the LIL were kept to a minimum and
grounded in a careful consideration of project alternatives\. The Bank team concluded
that this would offer the best opportunity to address the demonstrated weaknesses on the
legal and institutional fronts that would need to be resolved before consideration could be
given to a full land administration project\. The RTA was weak as a legal basis for title
registration and would need to be amended substantially\. The institutional arrangement
for large-scale titling was not clear and a reliable solution would need to be proven\.
At the design stage, full responsibility for project implementation was given to the Land
Settlement Department of the Ministry of Agriculture, which was leading the
Government program at that time\. There were inherent problems with this arrangement,
as the Land Settlement Department (LSD) took the position that the title registration
system would be a completely new and separate institution, with no links to the Deeds
Registry at all\. To be successful, the program had to incorporate a wider range of
institutional players, which began early in the implementation stage\. At appraisal, the
lead position of the LSD was confirmed\. Subsequently, the decision was made to
establish the Project Coordinating Unit (PCU) in the Ministry of Agriculture, but it de
facto came under the control of the Survey Department, while the influence of the LSD
on project coordination was greatly reduced\.
The Project Development Objective was ambitious, but consistent with the underlying
rationale for the Project\. The basic component design was likewise consistent with
achievement of this PDO design, straightforward, and in keeping with good practice for
land administration\. However, the sub-components (particularly for component 2) were
built to take on a broad set of activities that pushed the envelop quite hard in comparison
with the demonstrated weaknesses of the existing titling program and the
operational concerns mentioned above\. This included taking on the issue of reforming
the LDO program and the broader land policy framework, pushing private sector
8
development, and putting in place a strong program of stakeholder outreach and
communication\. These activities were added at the behest of the Bank\. While this
package fit together as a coherent whole, it placed a great deal of weight on a relatively
modest operational vehicle\.
A preparation process involving a core team of key implementing agency heads appeared
to cultivate inter-agency collaboration at the conceptual level, and what appeared to be
good ownership at the technical level of the project design\. However, unspoken tensions
involving differences in social status, inter-agency conflicts of interest, and ambitions of
various Government professions were not explicitly addressed\. Furthermore, it may not
have been appreciated at this time how sensitive project implementation would be to
changes in the persons occupying these core team positions\. Poor inter-ministerial
collaboration and poor commitment of the ministries outside the Ministry of Land were
major factors that affected the success of implementation\. While this risk was
recognized at appraisal, its central importance to overall project risks was not fully
appreciated\.
While there was strong collaboration between the Bank team and some officials that
existed at the technocratic level, interaction with high levels of Government was limited,
including on the important land policy issues\. This may have been due to the fact that
the lending instrument was a LIL and the total amount of the credit was relatively
modest\. Constant ministerial restructuring during this period also inhibited the
establishment of high-level dialogue\. In this context, there may have been limited
options available for getting firm understandings on the key land policy issues\. One
option that could have been pursued would have been a national level public consultation
process, particularly in relation to LDO lands\. The inability to engage at high levels of
Government, combined with the minimal up-front requirements to resolve the legal and
institutional issues, meant that the Project went forward with little demonstrated
commitment from Government beyond that which existed with the members of the core
team, as well as the fact that a pilot land titling effort was underway and the Registration
of Title Act (1998) had been passed\.
2\.2 Implementation
(including any project changes/restructuring, mid-term review, Project at Risk status, and
actions taken, as applicable)
The project was affected by delays in implementation early on resulting from a change in
the Minister of Agriculture and an erosion of political support for land titling\. The
Project Launch Workshop was held nearly one year after effectiveness, and was made
possible following a change in Government and appointment of a new Minister with
strong commitment to the Project\. It was during this period that de facto control of the
9
Project was shifted from the Land Settlement Department to the Survey Department\.
The Project was never able to make up for this slow start, and over time wound up falling
further behind the original implementation schedule\. For the initial delays in project
implementation, the IP rating of the Project was lowered to 'unsatisfactory'\.
Once implementation got underway in earnest, this rating was raised to 'satisfactory',
where it remained\.
During project implementation, counterpart ownership wavered depending not only on
shifts at the Minister level, but on shifts in persons occupying lead positions in the
implementing agencies\. Over time, ownership was revealed to be stronger for
component one -- focusing on the field work, record keeping, and operation of the titling
offices, than for component two -- focusing on the policy, legal and institutional
framework for titling\. Progress was being made in testing and improving the field
procedures, and eventually in reducing the number of steps involved in the titling process
from eleven to seven\. But even within component one, true ownership was evident only
for the parcel survey activities, rather than for the adjudication and titling functions\.
For the key issues of amending the RTA, identifying and resolving weaknesses in the
institutional arrangement for implementation, and taking on the broader land policy
framework, progress was very slow\. In particular, issues that had been identified with
the RTA as early as 1998 were still under discussion in 2004\. These implementation
problems were due to a combination of the complexity of the vested interests involved
and a lack of commitment of Government including the implementing agency to deal
with these head on or on a priority basis\. In particular, there were no champions in the
high level political and policy making arenas to spearhead solving of the outstanding
project issues\.
The decision for the Survey Department to play a dominant role in the operation of the
PCU contributed to the fact that the parcel survey aspects of the Project were handled
well and did not represent a constraint on achievement of the project's development
objectives\. But it was the Land Settlement Department and the Commissioner of Title
Settlement (CTS) that were central to achievement of the PDO, and by not having the
important functions of these agencies more mainstreamed in implementation, the Project
suffered much more than it gained through subordination to the SD\. Bottlenecks at the
CTS in taking timely action on prepared title certificates were particularly telling on
project performance\. Beyond this though was the fact that without a basis for getting
full cooperation from all involved agencies, any of the possible implementation options
would have come up short\.
Cases with any sort of question about the status of land rights were not dealt with, but
rather left unaddressed where the only recourse was the existing court procedures that
were usually costly and time consuming\. While on the one hand the Project was
handicapped by the existing RTA in how it could deal with some of the problem cases,
10
the Project shied away from pro-actively helping people in the field work out their
problems, and saw problem parcels as obstacles to reaching targets\. In a number of
cases, particularly those involving state or LDO land, resolution of problems would have
required working closely with Divisional Secretaries and Provincial Land
Commissioners, who hold the power to regularize encroachments or formalize informal
transactions\. The Project simply never developed an effective collaboration with these
actors, despite repeated discussion of this issue\.
The Mid-Term Review (MTR) identified various impediments to project implementation
and to achievement of the PDO\. While implementation generally improved in the second
half of the Project, these gains were not significant enough to result in achievement of the
PDO\. The Project would have benefited from focus on solving the pressing issue of a
reliable institutional framework\. The frequent lack of coordination among agencies, and
the ultimate lack of institutional accountability was the central factor in the failure of the
Project to achieve its objectives\.
It was in the second half of implementation that most progress was made in preparing
amendments to the RTA, as both the implementing agency and the Bank focused
increased attention on this and on the need to get the process under the control of
professional legal expertise rather than technical survey interests\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
The Monitoring and Evaluation was designed in a way that made it difficult to track
incremental progress on achieving the PDO during project implementation\. The PDO
indicators were qualitative and sufficiently general that gauging their attainment or lack
of attainment could not be done until the Project was drawing to a close\. This
contributed to a situation where the PDO rating remained 'satisfactory' until very late in
the process\.
The output indicators were well designed, but probably too numerous\. The PAD had 17
output indicators\. At the time of conversion from the PSR to the ISR reporting
framework, the output indicators were transformed into ten 'intermediate outcome'
indicators with generally good continuity of the content of the original output indicators\.
In addition to the project indicators, there were a number of socio-economic monitoring
studies and surveys that were to be undertaken that would contribute to the learning
element of the LIL\. These included baseline and follow up social and economic
assessments detailed in the Borrower's Project Implementation Plan\.
The record of M&E implementation was mixed\. Quarterly project monitoring reports
were maintained throughout implementation, structured in accordance with the PDO and
output indicators agreed at appraisal\. There was a good deal of information contained in
11
these reports, but the quality of the information was impacted by a number of factors\.
First, those responsible for supplying data from the field were under the authority of the
various line departments\. The PCU had limited control over their work\. Second, the
qualitative assessments of progress were from time to time excessively optimistic or open
to misinterpretation, for example, the reporting of progress toward getting the RTA
amendments finalized\.
The large number of indicators meant that the monitoring reports were lengthy\. Without
a mechanism for focusing on key developments, such as an executive summary,
important information could get lost in the mass of detail\.
Monitoring of the number of parcels making their way through the titling process was
done well\. However, there were differences in how these data were related to the output
indicators\. One indicator that was added after the MTR was the number of parcels being
titled\. The text of the PAD had referred to a target of 22,000 parcels registered\. While it
was clear that this was the number of private land parcels titled, the project counterparts
took this to mean preparation of a parcel for issuing a title certificate for both private and
public lands, which allowed for a much higher number to be reported\.
Following the MTR, the M&E capacity of the PCU was enhanced through establishment
of a unit dedicated to this work and through bringing on board the requisite skills\.
However, little of the planned monitoring studies and surveys was carried out\. Some
initial impact study and socio economic studies were done, but there were not of high
quality and added little value to the project M&E and implementation\.
The Project Steering Committee was the key organization responsible for acting on the
information that was being provided and on setting priorities\. It was ineffective in
carrying out this responsibility, either by agreeing to take action directly and following
up, or by emphasizing key problems to higher levels of Government for resolution\. The
PCU for its part made efforts to address issues identified through the M&E system,
particularly in the latter stages of project implementation, but had limited authority to
deal with these by itself\.
2\.4 Safeguard and Fiduciary Compliance
(focusing on issues and their resolution, as applicable)
N/A
2\.5 Post-completion Operation/Next Phase
(including transition arrangement to post-completion operation of investments financed by
present operation, Operation & Maintenance arrangements, sustaining reforms and institutional
capacity, and next phase/follow-up operation, if applicable)
At the time that the second project extension was being considered in December 2005,
12
the Bank laid out what it considered to be a necessary foundation for beginning work on
a national roll-out of the land titling effort\. This reiterated points that the Bank had made
in the PAD and throughout project implementation, focusing on the need for establishing
a legal and institutional basis\. The Bank continues to adhere to this position\.
At closing, the final implementation support mission found that this framework is still
not in place\. The Bank has formally communicated this position to Government\. The
Bank also expressed its interest in remaining engaged with Government on the
outstanding issues\.
Government has provided bridge financing to keep the PCU functioning and field work
underway\. It will be up to Government to decide how it would like to proceed with the
land titling effort beyond this timeframe\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
(to current country and global priorities, and Bank assistance strategy)
The PDO has remained relevant to the Bank's strategy of assisting Sri
Lanka\. Achievement of the PDO for the LIL would lead to establishing a system
for clarification of rights in land, strengthening security of tenure, and facilitating the
operation of markets in land\. Government priority for the PDO, at least on paper, was
evident both at the time of preparation and at the present\. Government ownership of the
PDO, as demonstrated by actual practice, however, has wavered over time, and in
general has been too weak to support achievement of the development objective\.
3\.2 Achievement of Project Development Objectives
(including brief discussion of causal linkages between outputs and outcomes, with details on
outputs in Annex 4)
While there have been positive results from the Project, the PDO has not been
achieved\. This has to do with the inability to define and put in place the legal,
regulatory, and institutional framework consistent with a large-scale land titling program
and the efficient operation of a land administration system\. On the institutional
side, critical lessons learned during the Project have not led to revising the
existing complicated and counterproductive implementation roles and arrangements,
most likely due to the opposition of vested interests to institutional change\. In
comparison with the lack of real movement on the institutional side, there was definite
progress on the legislative side\. Toward the end of the Project, amendments to the RTA
that would address serious weaknesses in the existing legislation finally began to take
definite shape, which was made possible by the two extensions of the closing date\. If
and when adopted, the proposed amendments to the RTA would substantially meet this
aspect of the Project's DO\. However, at Project closing the legal drafting process was
not yet completed, and the finalized draft had not been circulated for comment nor
13
approved by Cabinet and submitted to Parliament\. The necessary capacity building to
support a broad national program of titling has also not taken place\.
The Project failed to deal with titling of land parcels where there was uncertainty about
existing rights\. The land parcels for which land titles were issued were almost
entirely those for which clarity of rights and security of tenure were already high under
the existing system of registration of deeds\. The value added of titling these parcels is
limited and does not support the investment expense required to undertake a program of
systematic title registration\. Under this Project, only a small percentage of land parcels
that were included in a systematic titling area were actually titled\. This is inconsistent
with good practice and points to failure if attempts were made to roll this out on a
broader scale\.
It appears that the central importance of adjudication of rights to a systematic titling
program is still not understood or appreciated\. Rather, undue focus has been put on the
survey of land parcels\. The orientation to survey was reinforced by the composition of
the international Technical Assistance (TA) team\. For a successful titling program,
emphasis will need to be placed on full registration of parcels, including resolution of
existing uncertainties in rights rather than merely on the number of parcels for which a
boundary survey has been completed\.
Within the confines of the existing legal and institutional framework, there has been
significant learning and assessment with respect to the organization and management of
the field teams and testing and revising of field procedures\. However the objective
expressed at appraisal of combining the survey and adjudication teams, which is a
standard international good practice, was never attempted, which left possible efficiency
gains in field work\. There has been important learning with respect to the program of
interaction with stakeholders at the local level\. Communication with professional
groups, especially lawyers, has improved\.
The international TA team composition was aimed primarily at Component 1, which
reinforced inherent biases in this direction\. There were no systematic arrangements to
acquire and transfer skills from the international TA to the related implementing
agencies\.
3\.3 Efficiency
(Net Present Value/Economic Rate of Return, cost effectiveness, e\.g\., unit rate norms, least cost,
and comparisons; and Financial Rate of Return)
N/A
3\.4 Justification of Overall Outcome Rating
14
(combining relevance, achievement of PDOs, and efficiency)
Rating: Moderately Unsatisfactory
While the Project failed to achieve its development objective, some
important learning has taken place, as noted above\. There is a good chance that the legal
basis for title registration will eventually be improved with adoption of the proposed
amendments to the RTA, though this cannot be said for certain at present\. The Project
was successful in linking title registration with deeds registration through the Registrar
General's office\. This is a key institutional step that will facilitate the coordination of the
two systems and the possible eventual move to a title based system\. Despite its failings,
the LIL has served to raise a number of very relevant questions for Sri Lanka on how it
wishes to proceed with land administration, and has initiated a number of critical steps
which if followed through on would improve the foundation for a large scale title
registration program\. In this sense, the LIL resulted in some learning and innovation,
though not enough to allow for successful scaling up of the titling program without
further developments on both the legislative and institutional fronts\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(if any, where not previously covered or to amplify discussion above)
(a) Poverty Impacts, Gender Aspects, and Social Development
The draft RTA amendments will make it easier to recognize and formalize rights of those
who have weak documentary claims to their land, which are disproportionately the poor\.
Field procedures used by the adjudication teams have emphasized equal representation of
spouses in the verification of rights and their reflection in the registry\.
(b) Institutional Change/Strengthening
(particularly with reference to impacts on longer-term capacity and institutional development)
Institutional change and strengthening was a key element of the Project\. As noted above,
the determination of a sound institutional arrangement for implementation of a titling
program was not achieved\. In addition, the institutional capacity building foreseen in the
PAD also went largely unmet, due in part to the neglect of the planned training program\.
(c) Other Unintended Outcomes and Impacts (positive or negative, if any)
N/A
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
(optional for Core ICR, required for ILI, details in annexes)
15
Work on impact and social assessment of the project results, as outlined in the PAD, was
greatly scaled back in practice\. One study was commissioned toward the end of the
Project which analyzed the early effects of the utilization of land title certificates\. It
confirmed that titles were being issued almost entirely to those parcels that were free of
uncertainties or disputes in land rights\. Titles were being utilized about as frequently
as registered deeds for obtaining mortgage credit, but the time required for obtaining
credit was less in the cases where titles were available\. The use of titles also reduced the
time required for completing sales transactions\.
The study did not find any significant increase in investment in the land as a result of
receiving title\. The study concluded that greater investment in the land as a result of
titling could be expected if the titles were provided to those land parcels for which
current rights were unclear or in dispute\.
4\. Assessment of Risk to Development Outcome
Rating: High
The assumption at the time of appraisal was that a large scale land titling program could
be designed, which would make economic sense for Sri Lanka in that the costs and
necessary steps to implement and maintain such a system could be justified by the
economic benefits accruing\. What the Project has shown is that given the socio-cultural,
policy and institutional framework, this assumption may not be justified\. This is an issue
which the Government will need to consider further\. There is a risk that consideration of
this question will be allowed to lapse\.
There is the option of a gradual conversion of deeds to title on a demand-driven basis\.
Under this approach, transactions trigger the conversion of the deed to a title, with the
land rights holders bearing the costs of such conversion according to a schedule of fees
as determined by Government\. This is the approach that has been applied in most land
titling programs in Western countries\. A disadvantage is that because it is implemented
on a piecemeal basis, the per parcel costs are usually higher, which makes registration
less accessible to the poor\. Since there is not the same attention given to information
campaigns, high-profile public consultations and the like, there is a greater danger that
influential people can exploit their superior knowledge of the process to their own
advantage\. The `sporadic' approach would require a program of opening title registry
windows or title offices in conjunction with the existing deeds registry offices\. It is not
clear whether there is sufficient ownership in the Registry Department or the
Government in general to pursue this option\.
16
5\. Assessment of Bank and Borrower Performance
(relating to design, implementation and outcome issues)
5\.1 Bank
(a) Bank Performance in Ensuring Quality at Entry
(i\.e\., performance through lending phase)
Rating: Satisfactory
The Bank was very active in the preparation of the Project\. Preparation teams were well
staffed and covered key questions of project design well\. The Bank engaged with a core
group of counterparts heads of the five key agencies involved in developing and
elaborating the Project design\. The Bank team pushed the envelop fairly hard with
respect to social aspects, needed land policy change, and the breadth and depth of testing
of approaches and feedback\. This was a conceptually coherent package with potentially
significant developmental implications\. Fiduciary aspects, as well as the plan for
monitoring and evaluation were well prepared\.
There was a period of roughly a year following pre-appraisal before the Bank team
concluded that conditions were ready to conduct appraisal\. During this period, the Bank
team was seriously considering halting further work on the Project\. While the
team identified the key risks in the PAD, it did not reflect their predominance in the
project's overall risk assessment, which was rated as `moderate'\. In hindsight, the overall
risk context for the Project was substantial to high\.
There were a number of things that the Task Team could have done to improve the
quality at entry, given the difficulty engaging high levels of Government\. One possibility
could have been to more actively engage non-government stakeholders on key issues of
land titling, and the controversial land reform measures that were included in the overall
project package\. The other would have been to scale back the range of project activities\.
Bank management, however, was in favor of going forward with the full package\.
(b) Quality of Supervision
(including of fiduciary and safeguards policies)
Rating: Moderately Satisfactory
Supervision teams were likewise well staffed and provided needed inputs for the work at
hand\. A crisis was faced early in project implementation when Government support for
land titling took a significant downturn, which delayed the project launch mission by one
year\. Subsequently, the Bank teams continued to draw attention to key issues bearing on
project implementation\. Fiduciary aspects were well managed\. Supervision reports were
detailed and broad in coverage, and strong on substance\.
In retrospect, the Bank erred on the side of optimism in both the IP and DO ratings\. The
IP rating was `unsatisfactory' in the hiatus between effectiveness and project launch, but
17
was then raised to `satisfactory', where it remained\. The DO rating was `satisfactory'
until very late in project implementation\. While assessment of issues by the Bank team
was done well, the critical impediments to achievement of the development objectives
were not faced directly enough in dialogue with Government (though it must be admitted
that part of the difficulty in engaging Government was the lack of ownership of the
project at high levels)\. The Bank also did not make full use of opportunities to provide
honest criticism of the implementing agency in its dialogue with Government, though it
was aware that there were serious problems in performance\.
The PCU eventually started paying attention to problem parcels after a great deal of
persuasion on this, and produced some reports that tried to categorize them and explore
solutions (including where necessary, going back to "root" causes), and there was even
some unsystematic and under-substantiated testing of solutions\. This, however, came late
in the day and was always viewed as secondary to the main mission of the PCU of
learning to do the easy parcels as fast as possible\. As a result, the project missed out on
an opportunity to learn lessons about solving problems, lessons that could have been
learned even in the current legal and institutional setting and would have continued to be
relevant even with a vastly improved legal framework\.
With respect to the RTA amendments, real activity got started after the MTR consistent
with the principle that the amendments should incorporate learning from the LIL\. While
the steps involved in getting the agreements drafted and submitted to Parliament were
understood, there could have been more careful consideration of a realistic timeframe to
carry these steps out and agreement reached with the counterpart on following through
that would then have been a key focal point for supervision\.
While lessons were being accumulated about the shortcomings of the existing
institutional roles for project implementation, there seemed to have been continued
uncertainty on the Bank's side about what sort of institutional schemes would allow for
successful roll out of the LIL and some reluctance to take the lead in proposing solutions\.
Bank experience has consistently shown the correlation between simplicity of
institutional arrangements and the success of implementation of land titling and
registration projects, with the best practice being a single-agency model where cadastral
and registration functions are handled in one organization, and pragmatic procedures for
adjudication are in place (see Lessons Learned, below)\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
While overall, the technical input and guidance provided by the Bank was sound, the
Bank could have done better in picking up warning signs during preparation of the threats
18
to successful project implementation\. Given the demonstrated lack of ownership, the
Bank pushed too hard on the social and policy reform elements\. The Bank should also
have been more frank concerning the Project ratings, which were too often `satisfactory',
when in fact both the IP and DO were moderately or fully unsatisfactory
5\.2 Borrower
(a) Government Performance
Rating: Unsatisfactory
There was little evidence of Government commitment to meeting the development
objectives of the Project\. Although the Government agreed to go ahead with the Project,
it was not viewed as being a sufficiently high priority to devote sufficient time or
attention to resolve problems in performance\. There was inadequate intervention from
the high levels of the Government to streamline the project implementation, when it was
affected from time to time by the changes in the policy leadership and changes of the
Government\. The commitment and attention of the high levels of the Government to the
policy, institutional and legal framework of the Project was poor\. Virtually all issues of
importance were left to the Project Steering Committee to deal with\. The Project Steering
Committee was composed of representatives of agencies involved in implementation\.
Because of the rather complicated institutional arrangements, the Committee had a
relatively long list of members and difficulty in resolving problems in cases where
unanimity of views among the members did not exist\. As a result, many problems did
not get resolved\. In cases where the needs of the Project were in opposition to vested
bureaucratic interests, the former suffered\. The implementing agencies never worked as
one team to achieve the project implementation targets and to complete the actions that
were agreed as part of the implementation review missions\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately Unsatisfactory
Implementing
Performance
Agency
There was a natural affinity within the implementing agency for
component one, much less so for component two\. Over the life of the
Project a good deal of effort and energy went into project
Ministry of implementation, concentrated in the PCU, but evidenced also in the
Agriculture, activities of the involved line departments\. Ultimately, though, the
Livestock, Land implementing agency saw the project as primarily a technical activity
and Irrigation centered on the field survey work, and accepted this as sufficient
justification for the project investment\. There was less appreciation for
whether in fact there were economic returns being generated by this
19
work, the importance of resolving disputes for land owners, and the
need for systematic and objective feedback from project beneficiaries
themselves\. The political leadership of the Ministry changed hands
several times during project implementation\. There was no consistent
political support for the Project\. These changes created tensions and
affected working relationships within the PCU and other implementing
agency staff\. These changing environments created implementation
bottlenecks, undermined the decision making authority of the PCU on
operational matters and consequently affected the project
implementation seriously at times\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Unsatisfactory
In sum, the Borrower failed to make use of opportunities provided by the Project to
establish the foundation for an expanded land titling program\. Due to lack of clear
priority from high levels of Government, the fate of the Project was subject to changes in
leadership of the involved agencies\. Identified problems too frequently went unaddressed
or were not tackled head on, especially when they required taking controversial decisions
or decisions that threatened vested interests\.
6\. Lessons Learned
(both project-specific and of wide general application)
The major lesson to be drawn from the Project is that in this case a LIL proved to be an
inappropriate vehicle for taking on important and contested legal, policy,
and institutional issues, particularly in light of the lack of project ownership at
sufficiently high levels of Government\. It is generally recognized that the legal and
institutional framework for a titling and registration system needs to be resolved in the
project preparation stage\. The hope with this Project was that a LIL would provide more
latitude to work out these issues in an admittedly difficult environment\. The results
indicate that if there are serious issues precluding movement to a full land titling and
registration project, a LIL cannot get around the lack of Government ownership\.
Looking forward, the Government should make a careful assessment of where a title-
based registration system fits within its broader land administration and land policy
framework\. In that context, it needs to be clearly aware of the relatively large costs of
carrying out a systematic land titling program on a broad scale\. The experience from this
Project with respect to a roll-out of the title registration effort points to the following key
lessons:
20
recognize the central importance of pragmatic adjudication of rights through the
systematic titling program if the investment is to bring desired economic benefits
recognize the need for full coverage of land parcels in a given territorial area
where the systematic titling is being carried out
pay more attention to the long-term operation of the title registry relative to the
initial land titling program
focus on ways to further reduce the per parcel costs of land titling
put clear focus on the outputs and development objectives rather than inputs and
processes
ensure that there is regular and reliable feedback from intended beneficiaries and
other stakeholders to verify that the objectives are in fact being achieved\.
The amendments to the Registration of Title Act prepared under the Project and now in
their final stage of drafting, will help in addressing some of these lessons, and will
provide a very good overall legal basis for land titling and operation of the title registry
to move forward\.
A realistic institutional arrangement, consistent with the lessons learned, would need to
be put in place\. Good practice shows that this should be a unified agency for the land
title registry\. Further, this would be a closed agency of career professionals not subject
to regular political and administrative rotations\. The Bank is prepared to provide more
information on institutional solutions for land registration internationally that have
worked well, as well as those that have not\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
none
(b) Cofinanciers
N/A
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
none
21
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Estimate Actual/Latest
Components Percentage of
(USD millions) Estimate (USD
millions) Appraisal
1A\. TITLING METHODS 3\.30 3\.78 115
1B\. TITLE REGISTRIES 0\.11 0\.09 82
1C\. LAND RECORDS
MAINTENANCE 0\.17 0\.13 76
2A\. LEGAL FRAMEWORK 0\.03 0\.01 33
2B\. POLICY FORMULATION
AND PROJECT-WIDE 0\.21 0\.01 5
LEARNING
2C\. ORGANIZATIONAL
DEVELOPMENT, PROJECT
MANAGEMENT, AND 2\.00 2\.39 119
PROGRAM PLANNING
Total Baseline Cost 5\.82 6\.41 110
Physical Contingencies 0\.45 0\.00 0\.00
Price Contingencies 0\.52 0\.00 0\.00
Total Project Costs 6\.78 6\.41
Project Preparation Fund 0\.00 0\.00 \.00
Front-end fee IBRD 0\.00 0\.00 \.00
Total Financing Required 6\.78 6\.41 95
(b) Financing
Appraisal Actual/Latest
Source of Funds Type of Estimate Estimate Percentage of
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower 1\.78 2\.00 112
International Development
Association (IDA) 5\.00 4\.85 97
22
(c) Disbursement Profile
23
Annex 2\. Outputs by Component
Component 1\. The output from this component was in part constrained by problems
with implementation of component 2, for example with improvements in the field
methods and the number of parcels titled\. Within these constraints, this component
performed reasonably well\. Some simplifications were introduced in the field procedures
which allowed for the cost per parcel titled to come down\. It was also reported that the
time required to complete the titling process was reduced, though problems with the
operation of the office of the Commissioner of Title Settlements could well have
counteracted this, particularly in the last year of project implementation\. The Project
made little progress in testing and improving methods of adjudication and dispute
resolution (tied at least in part to failure to amend the RTA), which meant that critical
testing of problematic cases never took place\. The project also failed to deliver intended
outputs for the land records maintenance activity, which was geared to the operation of
the existing deeds registry archive under the Registrar General's Department\.
In other respects the component largely delivered what was intended\. This included the
program of stakeholder communication, records searching, and operation of the title
registry offices\. This component also allowed for rectification of the Government's pre-
Project titling efforts, and most likely helped the Government to avoid legal challenges
stemming from the initial quality of that program\. The project met expectations in
designing methods for urban areas, dry irrigated tracts, and other situations\.
Component 2\. This component suffered a major shortfall in the delivery of intended
outputs\. On the legal framework, draft amendments to the RTA are close to completion,
but there is no telling if and when these amendments will be adopted, or what detrimental
changes may be introduced\. There was little movement on the intended changes in the
policy framework, and on carrying out underlying studies to inform the policy making
process\. While initial short-term project activities related to communications,
information technology development, and impact assessment appeared consistent with
the project design, follow-through was weak\. Communications with national level
stakeholders appears to have been weak, though relations definitely improved between
the PCU and the Bar Association\. The intended work in the area of organizational and
human development was weak\. Domestic training programs were carried largely as
scheduled, though the Government chose not to carry out the international training that
was planned\. The M&E work focused on tracking inputs and processes and was not well
focused on impact and participatory social assessments\. The M&E program was not able
to provide what was needed for designing a national roll-out program (cost-benefit
analysis, establishment of baselines, etc\.)\.
The early decision to locate the title registries within the Registrar General's Office
represents a very positive step, but further actions are required to address constraints in
staffing, facilities, and inter-agency relationships that affect title registries\. The project
24
management was subject to leadership problems and other issues, but was strong for the
final period of implementation\.
25
Annex 3\. Economic and Financial Analysis (including assumptions in the
analysis)
N/A
26
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/Specialty
Lending
Supervision/ICR
Sr Land
Gavin P\. Adlington ECSSD
Administration Special
Sr Land
Edward C\. Cook SASAR
Administration Special
Deepal Fernando Sr Procurement Spec\. SARPS
Senior Rural
Nihal Fernando SASAR
Development Speci
Isabelle Girardot-Berg Consultant MNSIF
Anthony John Lamb Consultant ECSSD
Isabel G\. Lavadenz Senior Land Policy
SASAR
Paccieri Specialist
Jonathan Mills Lindsay Sr Counsel LEGEN
Seenithamby Rural Development
SASAR
Manoharan Specialist
Sr Natural Resources
Jessica Mott ECSSD
Econ\.
Lead Environmental
Sumith Pilapitiya SASES
Specialist
Senior Rural
Barbara Verardo SASAR
Development Speci
Jiwanka B\. Financial Management
SARFM
Wickramasinghe Specialis
Harini Wijesundara Team Assistant SACSL
Miriam Witana Operations Officer SACSL
Johannes Woelcke Economist AFTS2
(b) Ratings of Project Performance in ISRs
No\. Date ISR Actual Disbursements
Archived DO IP (USD M)
1 05/07/2001 Satisfactory Satisfactory 0\.00
2 08/09/2001 Satisfactory Satisfactory 0\.00
3 11/30/2001 Satisfactory Unsatisfactory 0\.00
27
4 03/14/2002 Satisfactory Satisfactory 0\.16
5 09/10/2002 Satisfactory Satisfactory 0\.79
6 10/21/2002 Satisfactory Satisfactory 0\.79
7 03/13/2003 Satisfactory Satisfactory 0\.79
8 06/26/2003 Satisfactory Satisfactory 1\.17
9 12/22/2003 Satisfactory Satisfactory 2\.01
10 06/24/2004 Satisfactory Satisfactory 2\.54
11 12/21/2004 Satisfactory Satisfactory 3\.45
Moderately Moderately
12 06/10/2005 3\.96
Satisfactory Unsatisfactory
Moderately Moderately
13 12/15/2005 4\.25
Satisfactory Satisfactory
Moderately Moderately
14 06/08/2006 4\.62
Satisfactory Satisfactory
Moderately Moderately
15 11/10/2006 4\.64
Unsatisfactory Unsatisfactory
(c) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands
No\. of staff weeks (including travel and
consultant costs)
Lending
FY97 29\.95
FY98 78\.42
FY99 203\.12
FY00 16 96\.17
FY01 29 60\.26
FY02 1 0\.11
FY03 0\.00
FY04 0\.00
FY05 0\.00
Total: 46 468\.03
Supervision/ICR
FY97 0\.00
FY98 0\.00
FY99 0\.00
FY00 0\.00
FY01 0\.00
28
FY02 16 65\.40
FY03 22 97\.68
FY04 23 87\.80
FY05 35 199\.67
Total: 96 450\.55
29
Annex 5\. Beneficiary Survey Results (if any)
30
Annex 6\. Stakeholder Workshop Report and Results (if any)
31
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
32
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
33
Annex 9\. List of Supporting Documents
1\. Project Appraisal Document, Sri Lanka Land Titling and Related Services
Project, World Bank, Report No\. 22020 CE, March 22, 2001\.
2\. Development Credit Agreement, Sri Lanka Land Titling and Related
Services Project, Credit No\. 3496 CE, April 18, 2001\.
3\. Land Titling and Related Services Project, Review of Lessons Learned,
Project Coordination Unit, July 26, 2005\.
4\. Comprehensive Review of Lessons Learned, Project Coordination Unit,
March 31, 2006\.
5\. Study on the Early Effects of the Utilization of Land Title Certificates,
W\.G\. Jayasena, D\. Gamage, G\.M\. Henegedara, J\.K\.M\.D\. Chandrasiri;
Hector Kobbekaduwa Agrarian Research and Training Institute,
December 2005 (commissioned project study)
6\. Sri Lanka Land Titling and Related Services Project Addendum Report to
the Mid-Term Review, Project Coordination Unit, October 15, 2003
7\. Sri Lanka Land Titling and Related Services Project Mid-Term Review
Mission Report, October 2003\.
8\. Establishing a Land Registry under the Registration of Title Act 1998,
Tony Lamb, FAO, January 2001\.
9\. Registration of Titles: Final Recommendations Report for the Legislative
Framework, DOLA, Government of W\. Australia, AusAID, November
1998\.
10\. Preparation and Implementation Support Aide Memoires of the World
Bank\.
11\. Quarterly Project Performance and Evaluation Reports of the Project
Coordination Unit\.
12\. Draft amendments to the Registration of Title Act 1998, various versions
34
80° 81° 82°
SRI LANKA
LAND TITLING AND RELATED
JAFFNA
JAFFNA SERVICES PROJECT
JaffnaJaffna
PROJECT AREAS
MAIN TOWNS
DISTRICT CAPITALS
Killinochchi
Killinochchi
KILLINOCHCHI
KILLINOCHCHI PROVINCE CAPITALS
NATIONAL CAPITAL
Akkarayan
Kulam Iranamadu Mullaitivu
Mullaitivu MAIN ROADS
N O RT H E R N RAILROADS
MULLAITIVU
MULLAITIVU
P R O V I N C E RIVERS
RESERVOIRS
Parangi Vavuni DISTRICT BOUNDARIES
Kulam
Kanagorayan
9° Aru
Mannar
Mannar PROVINCE BOUNDARIES 9°
Pali Aru
Aru
Kiul Oya Oya
Ma
Giant's Porangi
Oya
MANNAR
MANNAR Aru VAVUNIYA
VAVUNIYA
Padowiya n
Ya
Maiwatu Kitulgala 0 10 20 30 40 50
Oya Vavuniya
Vavuniya Yan
Mukunuwewa Oya KILOMETERS
Gulf of Pavat
Kulam
Wahalkada
Mannar
TRINCOMALEE
TRINCOMALEE
Morawewa
Madaragam ANURADHAPURA
ANURADHAPURA Trincomalee
Trincomalee
Malwatu
Aru Oya Kapirigama
N O RT H
Mahukandarawa INDIAN
AnuradhapuraAnuradhapura C E N T R A L Kantalai
P R O V I N C E OCEAN
Kata NochchiyagamaNochchiyagama Nachchaduwa
Oya Talawa
Talawa
Tambuttegama
Tambuttegama Hurulu
Eppawala
Eppawala Wewa
Rajanganc
Puttalam
Puttalam TambuttegamaTambuttegama Galnewa
Galnewa
D\.S\. Division
D\.S\. Division P O L O N N A R U W A
8° Minneriya Sidhdhapura
Sidhdhapura 8°
Mi Kolo Palonnaruwa
Palonnaruwa Weikanda
Weikanda
Oya Wewe Parak-
Galkiriyagama
Galkiriyagama
N O RT H rama
Sumuara
Manampitiya
Manampitiya
Amban Ganga
Randiyanuwara
Randiyanuwara
W E S T E R N Bakamuna
Bakamuna Aralaganwila
Aralaganwila
Deduru Ganga
Oya Dehiatte-
Dehiatte- BATTICALOA
BATTICALOA BatticaloaBatticaloa
P U T T A L A M Kandya
Kandya Pimburettewa
P R O V I N C E E A S T E R N
Bowatenna
Maduru
Moragaha- eli
Oya
kanda Kalu A
Ganga Mahaw Ratkinda P RMO V I N C E
KurunegalaKurunegala C E N T R A L Ulhitiya
INDIAN Matale
Matale Girandurukotte
Girandurukotte P
P R O V I N C E
OCEAN A
Maha Oya KandyKandy
Victoria Mahlyangane
Mahlyangane Ampara
Ampara a
Kegalle
Kegalle Senanayake Gai Oy
DivulapitiyaDivulapitiya Samudra R
D\.S\. Division
D\.S\. Division Minipe Anicut
Divulapitiya
Divulapitiya Udapalatha
Udapalatha
(Gampola)
(Gampola)
UdapalathaUdapalatha Randenigala A
Gampaha
Gampaha D\.S\. Division
D\.S\. Division Ran Joyanthi
Wewe
tembe
Kotmale
7° BadullaBadulla
Kelani
Ganga M O N E R A G A L A 7°
Nuwara Eliya
Nuwara Eliya
COLOMBOCOLOMBO U VA
Moneragala
Moneragala
HomagamaHomagama WESTERNWESTERN
D\.S\. Division
D\.S\. Division P R O V I N C E
PROVINCEPROVINCE
Kalu Ganga RatnapuraRatnapura Balangoda
Balangoda
SABARAGAMUWASABARAGAMUW Kumbukkan Oya
Kalutara
Kalutara BalangodaBalangoda
PROVINCEPROVINCE D\.S\. Division
D\.S\. Division Menik
Walawe
Ganga
W
Gin Ganga alawe Kirindi
Embilipitiya
Embilipitiya
Ganga Oya INDIAN
Ridiyagama OCEAN
Ni S O U T H E R N P R O V I N C E
wlala Hambantota
Hambantota
GalleGalle Ganga This map was produced by the Map Design Unit of The World Bank\. IBRD
MARCH The boundaries, colors, denominations and any other information shown
6° on this map do not imply, on the part of The World Bank Group, any 6° 31217R
judgment on the legal status of any territory, or any endorsement or
2007 Matara
Matara acceptance of such boundaries\.
80° 81° 82° | REVIEW |
P041566 |  ICRR 12632
Report Number : ICRR12632
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 06/25/2007
PROJ ID : P041566 Appraisal Actual
Project Name : Social Development US$M ):
Project Costs (US$M): 46\.52 34\.96
Fund Project [NO
ELECTRONIC COPY]
Country : Senegal Loan/ US$M):
Loan /Credit (US$M): 30 30
Sector Board : SP Cofinancing (US$M ):
US$M): 12\.9 2\.0
Sector (s): Other social services
(43%)
Micro- and SME
finance (15%)
Primary education
(14%)
Health (14%)
General water
sanitation and flood
protection sector
(14%)
Theme (s): Participation and civic
engagement (20% - P)
Gender (20% - P)
Improving labor
markets (20% - P)
Rural services and
infrastructure (20% -
P)
Access to urban
services and housing
(20% - P)
L/C Number : C3446
Board Approval Date : 12/20/2000
Partners involved : Japan Closing Date : 12/31/2004 06/30/2006
Evaluator : Panel Reviewer : Group Manager : Group :
Soniya Carvalho Kris Hallberg Alain A\. Barbu IEGSG
2\. Project Objectives and Components:
a\. Objectives:
This project was a ten-year Adjustable Program Loan (APL), including 3 phases the first two spanning 3 years each
and the third spanning 4 years\. This ICR is for the first phase which is the only one that has closed (the other two
phases did not become operational --they have been merged with another Bank project in the country )\.
The (first phase) project objective was to achieve the effective use of social funds in priority development areas by
the poorest test communities in the poorest regions of Senegal, with participation of vulnerable groups and women
(PAD, page 3)\.
The program was to support four main strategic objectives of the government : (i) increasing access to basic social
services; (ii) increasing access of poorer groups of the population to micro -finance products and services; (iii)
capacity building of community-based organizations; and (iv) capacity building of Government for poverty strategy
management, monitoring and evaluation (PAD, page 3)\.
The DCA only provides the program objective \. Hence, the PAD's statement of the (first phase) project objective is
used here as the benchmark for evaluation, although reference is made to the program objective \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
1\. Basic Social Services and Social Investment and Community Infrastructure Funds (estimated cost US$ 12\.35
million, actual cost US$14\.51 million)\.
2\. Access to Micro-Finance (estimated cost US$19\.79 million, actual cost US$4\.24 million): Increase access to
micro-finance services and financing, Income -Generating Activities\.
3\. Vulnerable Groups and CBOs Capacity Building (estimated cost US$3\.54 million, actual cost US$3\.54 million)
-- Institutional Development
-- Capacity Building
4\. Social Fund Management including poverty monitoring (estimated cost US$9\.8 million, actual cost US$11\.62
million)
-- Poverty strategy and monitoring
-- Project Implementation Unit
5\. PPF (estimated cost US$1\.05 million, actual cost US$1\.05 million)
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The actual project cost was lower by over 10 million compared with that at appraisal\. This was because of a lower
government contribution and lesser co -financing (only $2 million versus the estimated $12\.9 million) than
expected--the ICR does not explain the reasons \. The actual Bank credit amount was the same as at appraisal \. Two
amendments were made to the Credit Agreement \. In 2003, the 70/30 ratio between social service and infrastructure
microprojects was eliminated in order to not distort the community prioritization process and in 2004, the procurement
prior review thresholds were raised \. Closing was delayed by 18 months to complete the community investments as
well as the Poverty Monitoring Survey and other evaluations \. The delays were caused (according to the ICR) by the
time needed to set up the project institution, finalization of manuals and capacity building investments (all largely
avoidable according to the ICR Review )\. The poverty monitoring component was delayed for one year due to
debates on the institutional location of the PRSP Monitoring Unit \.
3\. Relevance of Objectives & Design:
The project objective is assessed by this ICR Review as substantially relevant \. Poverty reduction has been the
objective of successive Bank CASs for Senegal --the project objective was consistent with the Goovernment's
Poverty Reduction Program (PLP) which apprears to be a precursor to the PRSP \. The relevance of design is,
however, assesssed as modest since the project could have paid greater attention to broader institutional questions
(now being done in the follow-up to the project), including linkages with other CDD-type programs ongoing in the
country as well as a more realistic appreciation of what was achievable in the short -term for developing a national
poverty-monitoring information system (ICR, page 22)\. More attention should also have been given upfront to
determining if the APL was the right choice of instrument \.
4\. Achievement of Objectives (Efficacy):
The achievement of the (first phase) project objective is assessed as modest by this ICR Review \. This is for the
following reasons:
1\. The ICR does not provide evidence on the extent to which the "poorest test communities in the poorest regions
of Senegal " used the social funds (italics added)\. The ICR states that "communities were to be targeted based
on data provided by poverty monitoring " (ICR, page 28)\. But given delays in poverty monitoring, it is not clear as
to what data was used for targeting communities \.
2\. According to the ICR, the Social Development Fund allocated 93% of its resources to the poorest quintile rural
districts\. A Beneficiary Assessment confirmed the villages as the poorest in those districts \. Poverty rates
declined in the rural districts where the Social Development Fund was active as measured by the composite
index of access to basic services used by the National Statistics Department (ICR, page 13)\. The soundness of
the methodology used in arriving at these results cannot be verified as it is not provided in the ICR, making
attribution difficult\.
3\. With respect to the participation of vulnerable groups and women, data are scant \. Eg\. the Performance indicator
relating to the "most vulnerable groups" (Indicator 3, Annex I) was "not measured explicitly for vulnerable
groups" (ICR, page 29)\. The ICR, however, states that community facilitation processes included focus group
discussions with vulnerable groups to help mitigate exclusion and elite capture, that 75% of the treasurer
positions in the Income Generating Activities projects were acquired by women, and that youth were prime
beneficiaries of Income Generating Activities projects (ICR, page 18)\.
4\. The performance indicator "At least 75% of microprojects and subprojects funded by the Social Fund achieve
their intended results" (Indicator 1, Annex I) was also "not explicitly measured" and the only data provided is that
97% of all funded projects were completed, with 3% cancelled (ICR, page 29)\.
5\. Performance indicators noted in the text of the PAD (which differ from those in the Key Performance Indicators
table in the PAD) were not all measured\. For example, with respect to the outcome indicator "75% of the 300
test communities making development decisions based on participatory development plans responsive to the
needs of the poorest" mentioned on page 3 of the PAD, no data is provided in the ICR on the extent of the
project's "responsiveness to the needs of the poorest "\.
The ICR (page 13) provides some evidence that there was some progress on the broader program objectives, e \.g\.,
increasing access to basic social services and microfinance -- although not necessarily to the poorest \. Attribution,
however, remains an issue here too \.
5\. Efficiency (not applicable to DPLs):
This ICR Review assesses efficiency as modest overall mainly because of the lack of sufficient evidence to justify a
substantial rating\. No economic rates of return were calculated (they should have been at least for a sample of
subprojects, especially inf rastructure projects)\. In fact, the PAD stated that cost -benefit analysis was required as a
condition for approval of income -generating activities, so that it should have been possible to re -calculate actual
ERRs for a sample of completed subprojects of this type \. The PAD also stated that cost -effectiveness analysis was
required for basic social services and community infrastructure, as well as capacity building, so again it should have
been feasible to do ex-post calculations for a sample \. Unit costs were calculated for school construction and water
supply and found to be lower than through alternative implementation arrangements \. According to the ICR, the expert
analysis of profitability for Income Generating Activities varied widely across activities \. The administrative cost of the
Social Development Fund was stated to be within regional norms at about 12% by the ICR (ICR, page 17) although it
is not possible to verify the comparability of the data since no detail is provided in the ICR on the methodology used
in calculating the administrative costs \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Based on sections 3, 4, and 5, Outcome is rated moderately satisfactory \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Risk to DO is assessed by this ICR Review as Significant \. This assessment is based on the following observations
in the ICR:
The borrower's contribution to the ICR notes that "the transition/evolution of the community-based organizations
from those which "implement" and "monitor" the completion of civil works to those which would "operate and
maintain" the infrastructure has not been consistently achieved \.Furthermore, the relationship and sharing of
responsibilities between the parent ministries or government agencies which are to provide support and
financing to these infrastructure and community -based organizations are not completely clear \. Hence, these
observations suggest that the sustainability of results to date is not 100% secured in all instances" (ICR, page
47)\.
The ICR notes that the decision to place the follow -on program as a PIU under the Prime Minister's office may
provide a higher political profile, but risks the longer -term institutional mainstreaming (ICR, page 24)\.
For income generating activities, sustainability is uncertain and varies by area of activities (ICR, page 20)\.
The sustainability of the community -based organizations created under the project is not fully assured given the
limited time for which they have been in existence so far and the need to consolidate the gains and gain greater
depth of experience (ICR, page 21)\.
The impact on the further operation and maintenance of project investments of the merger of the Social
Development Fund (SDF) with the rural infrastructure project (PNIR) is not fully known yet and needs to be
watched (ICR, page 11)\.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
Bank Performance is rated moderately satisfactory for the following reasons :
Borrower contribution to the ICR noted that "the results attained could have been better if the allocation of
resources at the local level was conducted more systematically and the project had supported the local
development planning process as a whole \. In effect, it was not possible to have an overview of the total
resources available and the needs at the macro level rather than just village level, which probably resulted in
an oversupply of some infrastructure in certain sectors in certain "communautes rurales" (ICR, page 46)\.
Most of the factors that caused delays in project closure were avoidable and should have been prevented \.
The performance indicators of the text of the PAD (PAD, page 3) do not match those in the back of the PAD
(PAD, page 39)\.
The project was supposed to monitor social development indicators (PAD page 32), but it is unclear whether
this was done\.
The Bank did not collect data on a number of the PAD indicators, stating "not measured explicitly" for them\.
On the positive side, many project targets were met \. The ICR notes that the PRSP Monitoring Unit
fundamentally changed the way poverty reduction strategies are developed, implemented, and monitored,
including better integration with national budget processes \. Coordination has improved, including consensus
among all stakeholders on the PRSP monitoring indicators \. The second PRSP was developed in a more
institutionalized framework with greater attention to gender and vulnerable groups thanks to project support
(ICR, page 16)\.
at-Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
While implementing agency performance was mostly satisfactory, government performance is rated moderately
satisfactory because of delays in political decisions about the institutional anchorage of the national poverty
alleviation programs and the PRSP unit which resulted in implementation delays \. In addition, frequent changes of
ministers and several institutional reorganizations in the Ministry of Social Development created an unsustainable
institutional environment\. The borrower must also bear some responsibility for the poor design of the poverty
monitoring component, although the Bank must be held equally, if not more, responsible in this regard \.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
The design, implementation, and utilization of M&E are assessed as negligible \. The design of the Social
Development Fund's MIS focused more on outputs and less on outcomes \. Data on several key performance data
was not collected -- this is reflected in Annex I of the ICR where the ICR notes "not measured explicitly" for several
PAD performance indicators (ICR, page 29)\. There was a lack of indicators of institutional performance --
performance of microfinance intermediaries, community -based organizations, and district councils and authorities \.
Given that complementary evaluations to fix gaps in the project's monitoring and evaluation system were only
undertaken towards the end of the project, monitoring and evaluation utilization can be expected to have been limited
and the long-term institutionalization of monitoring and evaluation capacity also suffered \.
a\. M&E Quality Rating : Negligible
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
The bulk of the microprojects were in health, education, and rural water supply \. To the extent these microprojects
financed infrastructure, safeguard issues should have been monitored \. The ICR does not contain evidence of such
monitoring\. The ICR mentions unintended positive impacts from the Income Generating Activities projects \. The
Income Generating Activities Groups were required to open a bank account in a local microfinance intermediary \. The
ICR states that expert evaluations found that this had a positive effect on local financial services since the client base
of microfinance intermediaries expanded --however, this may not necessarily suggest any qualitative improvements in
local financial services since the increase in the client base may have simply been the result of the requirement that
Income Generating Activities Groups open a bank account in a local microfinance intermediary \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Moderately The relevance of project design,
Satisfactory achievement of objectives, and
efficiency were modest\. See sections 3,
4, 5\.
Risk to Development Moderate Significant The borrower's contribution to the ICR
Outcome : notes that "the transition/evolution of
the community-based organizations
from those which "implement" and
"monitor" the completion of civil works
to those which would "operate and
maintain" the infrastructure has not
been consistently achieved \.
Furthermore, the relationship and
sharing of responsibilities between the
parent ministries or government
agencies which are to provide support
and financing to these infrastructure
and community-based organizations
are not completely clear\. For income
generating activities, sustainability is
uncertain and varies by area of
activities\. See section 7\.
Bank Performance : Satisfactory Moderately There were issues with choice of
Satisfactory project approach and instrument
choice, the uncoordinated local
development activities, weak M&E, and
avoidable delays\. See section 8\.
Borrower Performance : Satisfactory Moderately Government performance was affected
Satisfactory by delays in political decisions about
the institutional anchorage of the
national poverty alleviation programs
and the PRSP unit, frequent changes
of ministers and several institutional
reorganizations in the Ministry of Social
Development which created an
unsustainable institutional environment \.
See section 9\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The ICR has a useful discussion of lessons -- see ICR page 25-26\. This ICR Review emphasizes an important
ICR lesson that institutional issues need to be dealt with early on and explicitly \. There are dangers to pitting local
governments versus country -based approaches against each other -- a blended approach that is inclusive of both
and that taps their respective comparative advantage is the most appropriate approach \.
14\. Assessment Recommended? Yes No
Why? To verify the ratings\.
15\. Comments on Quality of ICR:
The ICR is satisfactory overall \. albeit marginally so\. It would have benefitted from a more systematic presentation of
data on the achievement of the project objective and has the following shortcomings :
The statement of the project objective in the ICR does not match that in the PAD \.
The ICR does not note the discrepancy between the performance indicators noted on page 3 of the PAD and the
key performance indicators on page 34 of the PAD\.
Important observations from the borrower's contribution to the ICR did not make it into the main text of the ICR \.
The ICR states that social capital was built (ICR page 14, 18) and capacity building achieved in a best practice
way (ICR page 15, 17, but does not discuss the exact findings of the assessments on which these conclusions
are based\. The ICR states that adjustments were made in the project's community facilitation and capacity
building approach at mid-term (ICR, page 17) but not discussing the exact nature of these adjustments reduces
the "learning"
value of the ICR\.
The ICR does not explain the reasons for the difference between the appraisal and actual government
contribution and between appraisal and actual co -financing (only $2 million versus the estimated $12\.9 million)\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P037006 |  ICRR 10636
Report Number : ICRR10636
ICR Review
Operations Evaluation Department
1\. Project Data : Date Posted : 06/21/2000
PROJ ID : P037006 OEDID:OEDID : L3784 Appraisal Actual
Project Name : Water sector US$M )
Project Costs (US$M) 33\.1 36\.2
institutional
strengthening project
Country : Trinidad & Tobago Loan /Credit (US$M)
Loan/ US$M ) 25 24\.1
Sector, Major Sect \.: Water Supply & US$M )
Cofinancing (US$M) \.1 \.1
Sanitation Adjustment
, Water Supply &
Sanitation
L/C Number : L3784
FY )
Board Approval (FY) 94
Partners involved : PHRD (Japan) Closing Date 06/30/1998 06/30/1999
Prepared by : Reviewed by : Group Manager : Group :
Robert C\. Varley George T\. K\. Pitman Ridley Nelson OEDST
2\. Project Objectives and Components
a\. Objectives
Provide essential supplies to the Water and Sanitation Agency (WASA) to prevent imminent operational collapse;
1\. Prepare and implement a 2-stage approach to private sector participation in WASA;
2\. Prepare and implement an integrated water resources management strategy;
3\. Design the physical rehabilitation of water supply, drainage and waste facilities;
b\. Components
Private Sector Participation in Water Services $ 27\.7 million of which Emergency Operation Fund for Parts and
Repair $19\.4 million ($10 million in materials and $ 9\.4 million management contract);
1\. Strategic Plan and Advisory Assistance to WASA $ 1\.9 million; WASA Rehabilitation Project $ 6\.4 m;
2\. Drainage and Flood Control Institutional Support and Project Preparation $ 3\.9 million;
3\. Reorganization of Water Resources Management $ 4\.3 million;
4\. Unallocated $ \.3 million\.
c\. Comments on Project Cost, Financing and Dates
IBRD funding was $24\.1 million of the total expenditure of $ 36\.2 million\. The loan was extended by one year and
$0\.93 million canceled\.
3\. Achievement of Relevant Objectives :
1\. Operational collapse was prevented;
2\. 30% increase in water production, 60% increase in collections, reduction of personnel by 32% and a near
break-even working ratio of \.97 ([annual costs - depreciation debt service]/ total revenues);
3\. The percentage of customers with access to more than 12 hours supply per day increased from 26% to 42%;
4\. Unaccounted for Water decreased from 50% to 35%;
5\. The design of a flood control and drainage project was partially completed;
6\. An Integrated Water Resources Management Strategy was completed and institutional capacity created \.
4\. Significant Outcomes /Impacts :
1\. The utility has been operated by a private management team for 5 years and commercial skills acquired by
local staff;
2\. Government has reiterated its commitment to long -term private participation in the sector;
3\. The WRM strategy adopted a best practices â? approach and reform is late but on track \.
5\. Significant Shortcomings (including non -compliance with safeguard policies ):
1\. The Operational Agreement (approved by both Bank and Borrower ) was badly designed and failed to provide
performance incentives to the management contractor and also made it impossible for WASA to comply with
the financial covenants;
2\. Bank supervision was inconsistent and there was a high turnover of staff;
3\. The Bank did not give the Borrower good financial and legal advice about the privatization contract ;
4\. The WASA Board did not distinguish between its governance responsibilities and day to day management,
making it difficult for the contractor to manage;
5\. The second long-term agreement for private participation was not completed not least because WASA has
reverted to public sector management;
6\. Requisite legal and regulatory changes for privatization have not been completed;
7\. Withdrawal of promised Bank finance for a drainage and flood control project has incurred costs to bidders and
Government;
8\. Only 1 of 5 performance targets agreed at negotiations was achieved; and
9\. The recommendations of the WRM study have not yet been implemented \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Unsatisfactory Marginally Some major objectives were achieved,
Unsatisfactory including prevention of collapse and there
is still a commitment to privatization
Institutional Dev \.: Partial Modest Same
Sustainability : Unlikely Unlikely
Bank Performance : Deficient Unsatisfactory
Borrower Perf \.: Deficient Unsatisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
1\. The Bank should include legal and privatization specialists early in the process of privatization contract
preparation to ensure the contract is clear and enforceable;
2\. When the main objectives of a project are institutional reform and policy implementation an adjustable program
loan may be more effective for managing conditionalities;
3\. The Bankâs procurement rules need to evolve to deal with successive privatization contracts (for instance
determining the eligibility of the incumbent winner of an Interim Operational Agreement to bid on a subsequent
Long Term Agreement);
4\. Financial audits should include monitoring of compliance with specific covenants;
5\. When projects are linked (in this case a Flood Control and Drainage Project was promised ) this should be
formalized to avoid misunderstanding;
6\. Water Resources Management and Water Supply Sector Reform should be more closely coordinated yet the
sectoral specializations of most task teams has meant these are followed independently of each other, with
limited interaction\.
8\. Audit Recommended? Yes No
Why? Audit is highly recommended in view of the rich lessons learned from the wide range of mistakes
made by both Borrower and Bank\. Privatization of all water utilities is now almost the official Bank policy, but the
requisite managerial, technical and legal skills are often unavailable or not recognized during preparation \. This would
be an opportune time for a cautionary tale about privatization at all costs \.
9\. Comments on Quality of ICR :
The ICR is admirably open, identifies issues of agreement and disagreement and provides an excellent foundation
for a more objective and in-depth PPAR\. The cost data is inconsistent and categorized differently in the ICR main
text, annex tables and Borrower âs Comments\. | REVIEW |
P096332 |  Document of
The World Bank
Report No: ICR2273
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-42570 TF-92459)
ON A
CREDIT
IN THE AMOUNT OF SDR 20\.00 MILLION
(US$30\.00 MILLION EQUIVALENT)
TO THE
REPUBLIC OF MOZAMBIQUE
FOR THE
PROMAPUTO: THE MAPUTO MUNICIPAL DEVELOPMENT PROGRAM
February 28, 2012
Urban and Water Unit
Country Department AFCS2
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective February 28, 2012)
Currency Unit = New Mozambique Metical (MZN)
US$1\.00 = MZN 27\.55
US$1\.00 = SDR1\.553
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
APL Adaptable Program Loan
CCM City Council of Maputo
ESMF Environmental and social management framework
GIZ German Society for International Cooperation (Deutsche Gesellschaft für
Internationale Zusammenarbeit)
IDA International Development Association
IFMIS Integrated financial management information system
IO Intermediate outcome
M&E Monitoring and evaluation
MMDP I and II Maputo Municipal Development Program, phases 1 and 2
PAD Project Appraisal Document
PDO Project Development Objective
PPIAF Public Private Infrastructure Advisory Facility
PPP Public Private Partnerships
RPF Resettlement policy framework
Vice President: Obiageli K\. Ezekwesili
Country Director: Laurence Clarke
Acting Sector Manager: Alexander E\. Bakalian
Project Team Leader: Uri Raich
ICR Team Leader: Uri Raich
REPUBLIC OF MOZAMBIQUE
PROMAPUTO: THE MAPUTO MUNICIPAL DEVELOPMENT PROGRAM
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Program Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Â Project Context, Development Objectives and Design \. 2Â
2\. Key Factors Affecting Implementation and Outcomes \. 6Â
3\. Assessment of Outcomes\. 11Â
4\. Assessment of Risk to Development Outcome \. 19Â
5\. Assessment of Bank and Borrower Performance \. 20Â
6\. Lessons Learned (both project-specific and of wide general application) \. 24Â
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 26Â
Annexes
Annex 1: Project Costs and Financing \. 27
Annex 2: Outputs by Component \. 28
Annex 3: Economic and Financial Analysis \. 33
Annex 4: Bank Lending and Implementation Support/Supervision Processes \. 36
Annex 5: Citizens Report Cards \. 38
Annex 6: Summary of Borrowerâs ICR and/or Comments on Draft ICR\. 41
Annex 7: List of Supporting Documents \. 49Â
Map of Mozambique \. 50Â
Data Sheet
A\. Basic Information
ProMaputo, Maputo
Country: Mozambique Project Name: Municipal Development
Program
Project ID: P096332 L/C/TF Number(s): IDA-42570,TF-92459
ICR Date: 02/28/2012 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: APL Borrower:
MOZAMBIQUE
Original Total
USD 30\.00M Disbursed Amount: USD 29\.42 M
Commitment:
Revised Amount: USD 30\.00M
Environmental Category: B
Implementing Agencies:
Maputo City Council (CCM)
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 01/17/2006 Effectiveness: 04/25/2007 04/25/2007
Appraisal: 11/13/2006 Restructuring(s):
Approval: 01/25/2007 Mid-term Review: 03/01/2009 04/20/2009
Closing: 08/31/2010 08/31/2011
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Low or Negligible
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Highly Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments (if
Indicators Rating
Performance any)
Potential Problem Project at
Yes Quality at Entry (QEA): None
any time (Yes/No):
Problem Project at any time Quality of Supervision
No None
(Yes/No): (QSA):
DO rating before
Moderately Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General industry and trade sector 4 4
Other social services 4 4
Roads and highways 20 20
Solid waste management 12 12
Sub-national government administration 60 60
Theme Code (as % of total Bank financing)
Municipal finance 22 22
Municipal governance and institution building 23 23
Other urban development 22 22
Participation and civic engagement 11 11
Urban services and housing for the poor 22 22
E\. Bank Staff
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Hartwig Schafer
Country Director: Laurence C\. Clarke Michael Baxter
Sector Manager: Alexander E\. Bakalian Jaime M\. Biderman
Project Team Leader: Uri Raich Kate Kuper
ICR Team Leader: Uri Raich
ICR Primary Author: Wendy Schreiber Ayres
ii
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
APL Phase 1: Strengthen the Maputo City Council's institutional and financial capacity to support
achievement of long term service delivery goals, and to implement selected priority investments\.
Revised Project Development Objectives (as approved by original approving authority)
The Project Development Objective for Adaptable Program Loan Phase 1 was not revised\.
(a) PDO Indicator(s)
Original Target
Formally Actual Value Achieved
Values (from
Indicator Baseline Value Revised Target at Completion or
approval
Values Target Years
documents)
Indicator 1 : Nominal increase in Maputo City Council's own revenue over baseline\.
Value
US$7\.7 million US$9\.8 million (180%
quantitative or US$3\.5 million
(120% over baseline) over baseline)
Qualitative)
Date achieved 12/31/2006 12/31/2009 12/31/2010
Comments
The actual value exceeded the original target value due to increases in solid waste fees and
(incl\. %
improved collection of property and vehicle taxes\.
achievement)
Indicator 2 : Urban solid waste collected and deposited in the dump (tons per day)
Value
quantitative or 253 tons per day 600 tons per day 650 tons per day
Qualitative)
Date achieved 10/31/2006 12/31/2009 12/31/2010
Comments The actual value exceeded the target value because the solid waste services provided in the
(incl\. % suburban areas of the city has increased services above those originally planned (from 110 to
achievement) more than 120 lifts per day) to collect increased waste quantities of primary waste\.
Indicator 3 : Integrated financial management system in use and fully functional as designed\.
Integrated financial
Complete databases of
Value management system
employees, providers,
quantitative or None in use and fully
and assets and payroll
Qualitative) functional as
functionality in place\.
designed\.
Date achieved 10/31/2006 08/31/2010 08/31/2011
Comments
Activity was not completed during phase 1 of the program, implementation will continue
(incl\. %
during the phase 2\.
achievement)
iii
(b) Intermediate Outcome Indicator(s)
Original Target
Formally Actual Value Achieved
Values (from
Indicator Baseline Value Revised Target at Completion or
approval
Values Target Years
documents)
Organizational units with the new staffing table defined and existing personnel deployed
Indicator 1 :
(percent)
The phase I
reorganization has been
Value
100% of completed\. All 29
(quantitative None
organizational units organizational units have
or Qualitative)
been covered by the
exercise (100%)
Date achieved 10/31/2006 08/31/2010 08/31/2010
Comments
(incl\. %
achievement)
Indicator 2 : Report card conducted and resulted disseminated annually\.
Three completed, with
Value
2009/10 report card
(quantitative Not done Done annually
completed and
or Qualitative)
disseminated\.
Date achieved 10/31/2006 10/31/2010 12/31/2010
Comments Except for 2009, an election year, the report card has been administered and its results
(incl\. % disseminated every year since 2007\. In 2010, the report card survey covered two years 2009
achievement) and 2010\. Its results have been disseminated\.
Indicator 3 : Investment budget spent (percent)\.
Value
(quantitative 60% 80% 90%
or Qualitative)
Date achieved 12/31/2005 12/31/2009 12/31/2010
Comments
Excluding funding under ProMaputo, 95% of the investment budget was spent\. When the
(incl\. %
program was designed and the target identified, investments were off budget\.
achievement)
Indicator 4 : Roads rehabilitated under the project, non-rural (kilometers)\.
Value
(quantitative 0 kilometers 20 kilometers 85 kilometers
or Qualitative)
Date achieved 10/31/2006 08/31/2010 12/31/2009
Comments
This indicator substitutes for the original indicator to report on the core indicator for the
(incl\. %
World Bank\. The target was surpassed due to communities' preferences\.
achievement)
iv
G\. Ratings of Project Performance in ISRs
Date ISR Actual Disbursements
No\. DO IP
Archived (USD millions)
1 07/17/2007 Satisfactory Satisfactory 3\.21
2 10/17/2007 Satisfactory Satisfactory 3\.42
3 01/14/2008 Moderately Satisfactory Moderately Unsatisfactory 3\.79
4 04/08/2008 Moderately Satisfactory Moderately Satisfactory 6\.48
5 07/10/2008 Moderately Satisfactory Satisfactory 6\.96
6 12/12/2008 Moderately Satisfactory Satisfactory 13\.96
7 05/28/2009 Moderately Satisfactory Satisfactory 17\.32
8 11/24/2009 Moderately Satisfactory Moderately Satisfactory 19\.83
9 02/11/2010 Moderately Satisfactory Moderately Satisfactory 20\.76
10 07/29/2010 Satisfactory Satisfactory 23\.53
11 03/13/2011 Satisfactory Satisfactory 27\.12
12 08/29/2011 Moderately Satisfactory Satisfactory 28\.53
H\. Restructuring (if any)
Not Applicable
I\. Disbursement Profile
v
Highlights of Implementation Experience
Taking innovative approaches to address challenges\. The project included a number of
innovative approaches that contributed to its success\. These included:
ï Introduction of annual citizen report cards to solicit feedback from the public on the quality
of services\.
ï Recruiting recent university graduates under Bank-finance to work at the City Council of
Maputo for a trial period, with successful candidates made permanent staff of the council\.
ï Offering bonuses to high-performing council staff\.
ï Fostering creation of microenterprises to collect solid waste in poor neighborhoods\.
ï Implementing a communications program to engage citizens in service delivery through a
variety of approaches, including organizing public forums at the neighborhood and district
levels\.
Creating a strong partnership with government counterparts\. The Bank team worked in close
collaboration with the mayor and his team at the city council to design, prepare, and implement
the project\. The design of the ProMaputo Program became the manifesto of the mayor\.
Mainstreaming project implementation within the structures of the city council\. The project was
one of only two in the Bankâs portfolio in Mozambique in 2006 that was drawing on government
structures, rather than on a professional project implementation unit, to implement a project\.
While this created challenges for implementation, particularly in the early years, it has also
helped to ensure that staff of the city council obtain the skills they need to in the future
effectively fulfill their service delivery mandates\.
Promoting inclusiveness by delivering services outside the city core, where about 90 percent of
the population live, most of whom are poor\. Prior to the project, only the city core enjoyed
regular solid waste services\. The project put into place services in the suburban areas of the city,
which had never before benefited from solid waste collection\. Recipients of services are
gradually paying increasing tariffs to cover the costs of the services\.
Working in close collaboration with other development partners to ensure maximum
development impact\. The Bank team worked closely with the German Society for International
Cooperation (GIZ) in designing and implementing the solid waste collection system, with GIZ
providing technical assistance for the design of the system and the Bank financing its
implementation\.
The need to tailor a financial management system in line with the capacity of the implementing
agency\. The one significant shortcoming of MMDP I was the inability to implement the
integrated financial management information system as designed\. The design proved too
complex for the city council to manage\. The city council under MMDP II is now designing a
financial management information system that is in line with its needs and its capacity\.
1
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal (brief summary of country and sector background, rationale for
Bank assistance)
1\. Country and sector background\. Mozambique, like most African countries, is rapidly
urbanizing and urbanization is projected to continue at a rapid pace\. In the mid-2000s, over 30
percent of Mozambicans were residing in urban areas\. With cities growing at about 3 percent a
year, it is estimated that by 2030 the urban population will double to about 12 million people\.
2\. Maputo is Mozambiqueâs largest and most economically important city, accounting for
about 30 percent of the countryâs gross domestic product\. In 2010 Maputo was home to about
1\.1 million people, more than twice as many as lived in Matola, the countryâs second largest city,
and part of the Maputo metropolitan area\. The population o Maputo swells during the day, as
commuters come from the surrounding areas to work in the city\. Maputo is also a city of
extreme and growing inequality with approximately 70 percent of Maputoâs residents living in
informal settlements and 49 percent living below the poverty line\. Little investment has been
made in the cityâs infrastructure since independence, due in part to Mozambiqueâs long civil war
which ended in 1992\. As a result, most residents lack access to basic infrastructure services,
including water and sanitation services, serviced and affordable land, roads, drainage, and
electricity\.
3\. A lack of human and financial capacity has limited the ability of the City Council of
Maputo (CCM) to deliver the services for which it is responsible: solid waste management, basic
water and sanitation services, basic environmental quality, urban roads and drainage, urban
planning, licensing of construction, municipal policing, and others\. In 2005, only 1\.5 percent of
the CCMâs 2,500 staff had attended university, and only 7 percent had benefited from technical
training\. Even in key units, such as municipal finance, just 54 of 102 staff positions were filled\.
Of the 54 staff, only 18 had the required qualifications\. Moreover, 11 of these occupied
managerial positions, leaving just seven to staff to handle the technical work\. Some 26 of the
remaining 36 staff had only primary education\. Yet, the financial directorate was better staffed
than the others in the CCM\.
4\. In 2005 the total budget of the CCM amounted to US$6 per capita\. The CCM faced
substantial constraints in both own-source revenue generation and in budget planning and
control\. Only 5 percent of total properties in the city paid taxes each year\. The city lacked an
up-to-date property cadastre and other tools to assess and collect property taxes\. It also lacked
the means to levy and collect other municipal taxes and fees\. On the expenditure side, the CCM
was not able to effective plan, execute, and control expenditures\. Without strengthening the
capacity of the CCM, urban services and infrastructure would continue to worsen, threatening
Maputoâs ability to serve as the engine of economic growth for the country\.
5\. Recognizing the crisis that lay ahead, the CCM, led by the Maputoâs second elected
mayor, embarked on developing a 10-year municipal development program, called ProMaputo\.
Its goal is to raise the quality of life of municipal residents and create an environment conducive
for investment and job creation\. It would do this through improved delivery of services and
2
through mobilization of citizens and coordinated action between diverse actors\. ProMaputo
served as the basis for the Bank-financed ProMaputo: Maputo Municipal Development Program
(MMDP), an eight-year program carried out two phases\. The first phase of the MMDP is the
subject of this Implementation Completion and Results Report\.
6\. Rationale for World Bank involvement\. The World Bankâs involvement in the
program was valuable for several reasons\. First, the Bank is uniquely positioned to make the
long-term commitment required for urban development, focusing first on institutional reform and
building capacity for city administration and then on large-scale investment in infrastructure and
services once the foundation is laid\. Second, the Bank has developed considerable knowledge of
what works and what does not in urban development through its support for urban and local
government programs in Africa (including Senegal, Tanzania, Uganda, and Ethiopia) and in
other regions, which it could draw on in designing support for Maputo\. Third, it had experience
working in Mozambique in supporting development of local government administrations under
the Decentralized Planning and Finance Project, which closed in March 2009, and the Municipal
Development Program that closed in 2006\. Finally, the Bank is able to bring considerable
human and financial resources to the effort, which has the potential of making a big difference in
the delivery of infrastructure and services in Maputo\. Recognizing these strengths, the
government invited the Bank to take the lead in supporting a municipal development program for
Maputo\.
7\. Contribution to higher-level objectives\. The project was a central element of the
Bankâs Country Partnership Strategy (CPS) for Mozambique for fiscal 2008â11, discussed by
the World Bankâs Board of Directors on May 30, 2007\. This is based on three pillars: (a)
accountability and public voice, (b) equitable access to key services, and (c) broad-based
economic growth\. These pillars are aligned with the three pillars of with the governmentâs
second poverty reduction strategy, Programa da Acção da Redução da Pobreza Absoluta II\. The
Maputo Municipal Development Program phase 1 (MMDP I) contributed to each of these pillars\.
It contributed to the accountability pillar by supporting a variety of initiatives aimed at involving
citizens in planning, budgeting, and monitoring and providing feedback on government
performance\. Support for district participatory budgeting and the annual citizen report card are
one such initiative\. It contributed to the services and economic growth pillars by supporting
improved city administration and investment in urban services and infrastructure\. The project
complemented others in the portfolio aimed at increasing the effectiveness of the public
administration, including the Public Sector Reform Project, and the National Decentralized
Planning and Finance Program, a multi-donor operation that scaled up to all districts the earlier
Bank-financed Decentralized Planning and Finance Project\. Finally, the MMDP I was fully
consistent with the objectives of the Bankâs 2011 regional strategy for Africa, âAfricaâs Future
and the World Bankâs Support to It,â? which are to increase Africaâs competitiveness and
employment, to reduce its vulnerability to climatic and other shocks, and to improve governance
and public sector capacity\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators
8\. The project development objective for phase 1 of the MMDP was to strengthen the
Maputo City Councilâs institutional and financial capacity to support achievement of long-term
3
service delivery goals, and to implement selected priority investments\. Phase 1 was intended to
create the foundation for large-scale investments in infrastructure and services to be financed
under phase 2\.
9\. The project appraisal document specified three key performance indicators\. These were:
ï Nominal increase in Maputo City Councilâs own revenue over baseline\.
ï Amount of solid waste deposited in the waste dump\.
ï An integrated financial management system in use and fully functional as
designed\.
10\. A table in annex 3 of the project appraisal document provides further information on the
projectâs monitoring framework, including intermediate outcome indicators, baseline and target
values, and sources of information to track progress with the indicators\.
1\.1 Revised PDO and Key Indicators, and reasons/justification:
11\. Neither the projectâs development objectives nor key performance indicators were
formally revised\.
1\.2 Main Beneficiaries
12\. The primary target beneficiaries were the inhabitants of Maputo city and its suburbs,
estimated in 2010 to be about 1\.1 million people, who were expected to gain from improved
urban services and infrastructure\. Inhabitants of poor neighborhoods were especially expected to
benefit from improved solid waste collection and from improved access roads\. Staff of the CCM
were expected to be assisted from opportunities to upgrade skills, from working in a much more
professional environment, and from improved relations with the public\. Finally, businesses were
expected to benefit from an improved investment climate linked to enhanced urban infrastructure
and services\.
1\.5 Original Components (as approved):
13\. The project comprised three components: (a) institutional reform and municipal
governance, (b) municipal finance, and (c) planning and service delivery improvements\.
14\. Component A: Institutional reform and municipal governance (US$8\.0 million, of
which US$6\.2 million IDA)\. This component comprised two subcomponents: (i) institutional
reform and strengthening, and (ii) improved municipal governance\. The first subcomponent was
to finance (a) preparation and implementation of a restructuring plan for the CCM, (b)
strengthening of human resources management, (c) simplification of administrative procedures,
(d) creation of capacity of district-level authorities to plan and manage small-scale infrastructure
and urban services, and (e) basic operating costs for the CCM\. The second subcomponent was to
support (a) citizen awareness campaigns, (b) training of municipal assembly members on their
4
roles and responsibilities, (c) workshops and other activities to facilitate communication among
government agencies involved in delivering services in Maputo, and (d) development of public-
private partnerships\.
15\. Component 2: Municipal finance (US$4\.7 million, all IDA)\. This component
comprised two subcomponents: (i) improved revenue collection, and (ii) improved expenditure
management\. The first subcomponent financed (a) a contract with a private firm to distribute
bills for property taxes and measures to involve district administrations in revenue collection, (b)
design and implementation of a single consolidated database and new systems for generating and
distributing bills and for collecting taxes and fees, (c) improvements in the capacity of municipal
service providers to collect fees, and (d) reform of tax legislation, and (e) training and capacity
building to enhance the municipal revenue system\. The second subcomponent financed training
and capacity building in (a) budget preparation, (b) procurement and asset management, and (c)
budget execution and control, including audits\.
16\. Component 3: Planning and service delivery improvements (US$26\.3 million, of
which IDA 15\.1 million)\. This component comprised three subcomponents: (i) planning and
management of urban space, (ii) infrastructure and service delivery improvements, and (iii) solid
waste management services\. The first subcomponent supported (a) preparation of spatial and
sector plans and implementation of a municipal information management system, (b) creation of
capacity in the CCM for strategic, spatial, and sector planning, and (c) improvements in the
systems for land management\. The second subcomponent financed (a) rehabilitation of existing
roads and drainage, (b) construction of a new cemetery, (c) installation of street lights and traffic
lights, and (d) construction of markets\. The third subcomponent supported improvements in solid
waste management\.
1\.6 Revised Components:
17\. The components were not revised\.
1\.7 Other significant changes (in design, scope and scale, implementation arrangements and
schedule, and funding allocations):
18\. The projectâs design, scope and scale, implementation arrangements, and activities were
not changed significantly during project execution\. However, funds were reallocated to account
for changes in activities and underestimates in the costs of some services, particularly the costs
of providing solid waste management services\.
19\. The project closing date was extended for one year from August 31, 2010 to August 31,
2011\. The extension was granted to allow the development and implementation of the integrated
financial management information system (IFMIS) to be completed\. This was important because
having the IFMIS in use and fully functional as designed was a trigger for phase 2 of the
program\. If this trigger were not met, the project team would have to seek a waiver from Bank
management to proceed with processing MMDP II\. The extension was also needed to permit the
project to continue to finance contracts for solid waste management services until the contract-
end dates\.
5
20\. The Financing Agreement was amended twice\. The first amendment of March 31, 2009
allowed IDA to continue to finance 65 percent of the cost of solid waste contracts during the
final years of the project, instead of 50 percent as envisaged in the original Financing
Agreement\. The change was needed because costs of supplying the services rose steeply in
2009, leaving the CCM short of funds\. The second amendment of December 11, 2009 increased
the procurement prior review thresholds for the project\. The amendment permitted the Bank to
identify the contracts that would be subject to prior review as part of its normal review of the
procurement plan, rather than being bound by the thresholds specified in the Financing
Agreement\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design, and Quality at Entry (including whether lessons of earlier
operations were taken into account, risks and their mitigation identified, and adequacy of
participatory processes, as applicable):
QAGâNo QAG at entry\.
21\. Several factors of project preparation and design positively affected implementation\. The
design of the ProMaputo Program was based on extensive consultations with stakeholders to
develop the vision, mission, and development program for Maputo\. The stakeholders included
the private sector, civil society organizations, national government officials, and members of
Maputoâs municipal assembly (legislative branch) and city council (executive branch)\. The
design also benefited from regular and open dialogue between the Bankâs task team and key staff
of the CCM\. The design of ProMaputo was also informed by the findings of municipal citizen
report cards, and various studies on the province of Maputo\. The design further drew on the
findings of several studies, including the âAnalysis of Current Human Resources in Maputo City
Council (2005), studies of Maputo city revenues (2005), and of Maputoâs revenue potential
(2006), a functional analysis of the CCM, and a public-private partnerships framework study
(2006) financed under the Public Private Infrastructure Advisory Facility\. These provided a
comprehensive understanding of the situation of the CCM at the time of project preparation, and
recommended measures for strengthening its operations and ability to deliver urban services\.
The project included activities focusing on each of these areas\.
22\. Project preparation and design also benefited from the personal commitment to the city of
Maputoâs dynamic second elected mayor\. The mayor brought substantial managerial and
technical expertise to his position, reflecting his former positions as governor of the central bank
and minister of finance\. The mayor also enjoyed good personal relations with the national
authorities, whose support would be needed to provide the CCM with the resources and
autonomy it would need to be effective\. The ProMaputo Program became the manifesto of the
mayor\.
23\. The project appraisal document noted alternative approaches, the trade-offs between
them, and the rationale for the final decisions\. The document generally foresaw the risks the
project would face and identified adequate mitigation measures, although it underestimated the
risk regarding lack of qualified staff in the procurement department of the CCM, which it
6
regarded as moderate\. It accurately noted as substantial the risk that the IFMIS would not be put
into place by the time of project closing\.
24\. A thorough appraisal of procurement and financial management arrangements helped to
ensure that resources were used as intended\. The project was classified appropriately as
environmental assessment category B (partial assessment), because the planned urban
infrastructure and services were not expected to result in environmental damage or significant
resettlement\. All infrastructure investments for which sites would be identified during
implementation were subject to review under the projectâs environmental and social management
framework (ESMF) and resettlement policy framework (RPF), which specified in detail
procedures to be followed during the planning, design, construction, and operation phases of
subprojects to identify and to mitigate potential adverse impacts\. The ESMF and RPF report
prepared for the project was publicly disclosed on October 21, 2006 in-country and on October
24, 2006 through the Bankâs InfoShop\. The monitoring and evaluation framework was adequate,
with well-specified project PDO outcome and intermediate outcome indicators and baseline and
target values\. The CCM and the Bank worked together to develop the results framework, which
ensured that it reflected outcomes that both partners were committed to achieving\. By the time
of Board presentation the project implementation plan had been appraised and found to be
realistic and of satisfactory quality, engineering designs and procurement documents for the first
yearâs activities were complete and ready for the start of project implementation\.
25\. Although the project appraisal document specified a large number of effectiveness
conditions, these were appropriate in ensuring that the CCM had required management capacity
prior to the start of implementation\.1 The CCM quickly met the conditions, and the project
became effective about two months after the Board date, as planned\. In addition to the standard
financial covenants, the Financing Agreement included covenants intended to ensure that the
project met its objectives\. These included covenants requiring preparation and submission to
IDA a strategy to retain qualified and trained staff, entry into an agreement with the Electricity
Company of Mozambique to allow the CCM to collect solid waste management fees, and
agreement with IDA on bidding documents for the selection and employment of contractors to
implement urban infrastructure and services\.
26\. In summary, the design was appropriate to meet the projectâs objectives\.
1
Conditions of effectiveness were: (a) CCM will have established an adequate financial management system
capable of producing financial monitoring reports in form and substance satisfactory to the Association, (b) The
CCM will have adopted the (i) a financial management manual, (ii) a procurement manual, and (iii) a project
implementation manual, all in form and substance satisfactory to the Association, (c) the CCMâs 2005 audited
financial statements will have been submitted in a manner satisfactory to the Association, (d) the CCM will have
issued a request for proposals for selection of independent auditors for the audit of its 2006 financial statements, in
form and substance satisfactory to the Association, (e) the CCM will have established the office of strategic and
institutional development and appointed its head, (f) the CCM will have hired an institutional development advisor,
with terms of reference satisfactory to the Association, (g) the CCM will have established a procurement department
duly staffed by a qualified department head supported by a senior procurement officer, with terms of reference
satisfactory to the Association, and (h) the CCM will have executed a Subsidiary Agreement with the Recipient\.
7
2\.2 Implementation (including any project changes/restructuring, mid-term review, Project
at Risk status, and actions taken, as applicable):
27\. Several factors affected implementation\. The most important was the decision to
mainstream implementation of the project within the administration of the CCM\. In the mid-
2000s, this was one of only two projects in the Bankâs portfolio in Mozambique not using a
professional project implementation unit for management\. This decision led to implementation
delays due to challenges with procurement, financial management, and contract management\.
None-the-less, mainstreaming implementation is critical for building lasting administrative
capacity in the CCM\. The CCM over time bolstered its capacity for project implementation by
contracting advisors to provide assistance and training in the fields of project management,
institutional development, strategic planning, infrastructure, revenue generation, expenditure
management, social accountability, procurement, human resources management, engineering,
IFMIS, information technology, and solid waste management\. The CCM also enhanced its
capacity by making special efforts to recruit recent university graduates to work in the
administration and by offering bonuses to high-performing staff\. These measures helped the
CCM improve its performance over time\.
28\. Another critical factor affecting implementation was the intensive support provided by
the Bankâs task team\. The Bank team responded to start-up challenges with intensive
supervision, and downgraded the projectâs ratings for progress towards the development
objective (to moderately satisfactory) and for implementation progress (to moderately
unsatisfactory) in January 2008, nine months following effectiveness\. The downgrades reflected
slow progress with undertaking activities to expand the cadastre and in specifying the design of
the proposed IFMIS\. Both were critical activities required to improve Maputoâs revenues and
financial management\. The downgrades also took account of delays in activities related to the
city information management system, in the development of the urban plans by the Department
of Urban Planning, and in finalizing contracts with solid waste firms\. The downgrades were
intended to focus the attention of the CCM on finding solutions to key issues delaying
implementation\. The Bank team worked with the CCM to develop an action plan to overcome
the obstacles\. Recognizing that many of the factors required for the project to meet its objectives
were outside the control of the CCM, the Bank team consistently encouraged the CCM to
strengthen its linkages to key national ministries and departments and to utilities\. Proactive
supervision led to improved implementation performance and an upgrade in April 2006 to
moderately satisfactory and in July 2006 to satisfactory in the rating for implementation progress
(progress towards the development objective remained moderately satisfactory during this
period, due to slow progress with designing and implementing IFMIS)\.
29\. A third factor supporting implementation was an effective communications program that
enabled the CCM to engage citizens in improving service delivery in Maputo\. The CCM
organized regular public forums at the neighborhood and district levels to discuss the findings of
the annual citizenâs report cards and to hear specific ideas of how the CCM could improve its
services to residents\. Such forums were also used to learn citizensâ priorities for investments and
budgets for the coming financial years\. More recently, it has carried out public awareness
campaigns through newspapers, television, radio, and the internet to encourage people to pay
8
their property and business services taxes\. The CCM also conducted public awareness
campaigns intended to address HIV/AIDS\. These measures have increased the profile of the
CCM\. They also encouraged residents to get involved in improving the quality of life in
Maputo\.
30\. The midterm review provided a comprehensive assessment of progress towards
development objectives and implementation performance\. The midterm review confirmed the
overall relevance of the project, its objectives and key performance indicators, design, and
implementation arrangements\. It also identified implementation challenges and recommended
extending the projectâs closing date by one year to allow sufficient time to complete key
activities and achieve its objectives\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:
31\. Design\. The project appraisal document included a results framework with well-
specified PDO outcome and intermediate outcome indicators, and with baseline and target values
for all indicators\. All three outcome indicators served as triggers for phase 2 of the APL, in
addition to two of the four intermediate outcome indicators\. The three PDO outcome indicators
address aspects of the project development objective\. Specifically, increases in own-source
revenues and implementation of the IFMIS reflect the CCMâs strengthened institutional and
financial capacity\. Increases in tons solid waste collected and deposited in a dumpsite is an
indication of the CCMâs ability to implement priority investments\. Consistent with good
practice, all the indicators were measurable and the targets were generally realistic\. Due to their
efficacy, many of the indicators have been retained to monitor progress under phase 2 of the
program\.
32\. Implementation\. The monitoring and evaluation (M&E) system was integrated with
other systems of administration, with line managers of each directorate assigned responsibility
for collecting data in their areas of purview and providing them to the CCMâs Office of Strategic
and Institutional Development, which is responsible for the overall program coordination and
monitoring\. Not surprisingly, the implementation of the M&E system took longer than expected,
due to the CCMâs lack of experience with M&E\. To address this weakness, the head of the
Office of Strategic and Institutional Development prepared monitoring reports using the traffic
light approach that makes clear who is complying with his or her responsibility to provide data
and who is not\. The reports formed the basis for weekly staff discussions on implementation
progress and for periodic presentations to the mayor, the municipalityâs consultative council, the
municipal assembly, and other stakeholders\. Using such graphic reports proved effective in
focusing attention on the issues; data collection and reporting improved markedly once in place\.
The Bank team reported on the functioning of the projectâs M&E system in each aide memoire,
noting steady progress in implementation during the projectâs life\. The project also financed
three municipal citizen report cards to measure trends in citizensâ views of the quality of services
being delivered by the CCM\.
33\. Utilization\. The CCM and Bank teams used the monitoring information as the basis of
their discussions during each implementation support mission\. Specifically, they used the
information to identify areas of particular challenge and to identify measures to address them\.
9
For example, the teams observed slow procurement of several major contracts (human resources
management, IFMIS, CCM restructuring) and agreed on actions (such as hiring more
procurement officers under Bank-finance) to speed up the process\. The CCM used the
monitoring reports to report on implementation progress to the mayor, the municipalityâs
consultative council, the municipal assembly, and other stakeholders\. This helped to motivate
CCM staff to contribute to the project\. It also helped further the dialogue with national
authorities on issues such as the need to mobilize own-source revenues to effectively deliver
urban services and infrastructure\. The findings of the annual citizen report cards were widely
disseminated and played an important role in focusing the attention of the CCM staff on their
responsibilities to deliver services to residents\. Public forums led by the president and the
councilors to discuss the findings with city officials proved instrumental in strengthening
accountability of the CCM to citizens\.
2\.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as
applicable):
34\. The CCM struggled to comply with the Bankâs fiduciary policies in the early years of
implementation\. Quarterly financial monitoring reports were often late, and many contained
errors\. Several annual audit reports were not submitted on time\. Early audit reports revealed
accountability issues at the CCM\. Financial management was rated moderately satisfactory
during most of the project implementation period, including at closing\. It was rated moderately
unsatisfactory in two Implementation Status Reports (November 24, 2009 and February 11,
2010)\. This rating arose from late submission of the 2008 audit report (which was due in
February 2009, but was received only in November 2009), and to its qualified opinion on the
CCMâs financial statements, for reasons including the inability of the auditors to verify assets,
and some issues related to the projectâs system of internal controls and accountability\.
35\. The CCM had difficulty complying with the Bankâs procurement procedures, particularly
in the early years of implementation, which led to delays in project execution\. The challenges
were due in part to the decision to use the CCM structures to implement the project, rather than a
specialized project implementation unit\. In accordance with Bank advice, the CCM sent four
staff for training on the Bankâs procurement procedures\. It also contracted advisors to bolster
capacity of the municipal procurement department\. However, turnover of procurement staff was
very high (as is true with many donor-financed projects), necessitating continuous recruitment
and training of new procurement specialists\. Some weaknesses remained at project closing in
the procurement filing system and in contract management\.
36\. The project complied fully with the Bankâs Environmental and Social Safeguard Policies\.
Several missions included Bank safeguard specialists, who visited project sites, interviewed
project affected people, and held discussions with district and municipal staff and with officials
from the Ministry of Environmental Coordination\. They found that resettlement associated with
road upgrading was carried in full compliance with the projectâs RPF, prior to the
commencement of the works\. They also noted that the solid waste firms and microenterprises
were generally providing workers with protective clothing and with training aimed at
encouraging its use\. Several activities with potential environmental and social impacts that were
10
initially programmed for phase 1 were shifted to phase 2\. These included closure of a waste
dump\.
2\.5 Post-completion Operation/Next Phase (including transition arrangement to post-
completion operation of investments financed by present operation, Operation & Maintenance
arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation,
if applicable):
37\. The MMDP I was conceived as the first phase of an eight-year program\. Although the
closing date for phase 1 was extended by one year, phase 2 was approved on September 30, 2010
and became effective on January 21, 2011, less than six months later than originally planned\.
The project development objective of phase 2 is to improve the delivery and sustainability of
priority municipal services in Maputo municipality\. Phase 2 thus builds on the institutional
foundation laid under phase 1, as planned\. Phase 2 is also supporting reforms and capacity
building left incomplete under phase 1\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation (to current country and global
priorities, and Bank assistance strategy):
Overall rating: Highly Satisfactory
38\. Objectives\. The overall objectives of MMDP I were and remain highly relevant\. They
reflect the importance of strengthen the institutional and financial capacity of the CCM to
effectively deliver services and infrastructure\. As mentioned in section 1\.1, the projectâs
objectives are consistent with the objectives of the CCMâs ProMaputo Program and with
Mozambiqueâs second poverty reduction strategy, covering 2006â09\. The projectâs objectives
are in conformity with the objectives of the Bankâs Country Partnership Strategy for fiscal 2008â
11, which explicitly names accountability and public voice, equitable access to key services, and
broad-based economic growth as critical goals\.
39\. Design\. The design was and remains highly relevant\. The overall design was
appropriate to support the substantial institutional reforms and capacity building required to
enable the CCM to effectively deliver services and infrastructure for which it was responsible\.
The design was based on extensive consultations with stakeholders, and on analytical work
covering all aspects of the CCMâs functions and institutional setup\. The consultations and
analytical work highlighted the weaknesses in CCMâs organizational structure, management
systems, accountability arrangements, and financing, among others, and recommended
approaches for addressing them\. The work formed the basis of the CCMâs 10-year ProMaputo
Program and the Bank-financed MMDP, which is continuing under phase 2\.
40\. Implementation\. Implementation arrangements were and remain highly relevant\. The
Bank team appropriately mainstreamed implementation of the MMDP I within the CCM
organizational structure\. This was aimed at both facilitating the transfer of knowledge and
promoting sustainability of capacity built\. The MMDP I supported advisors in the fields of
11
project management, institutional development, strategic planning, infrastructure, revenue
generation, expenditure management, social accountability, procurement, human resources
management, engineering, IFMIS, information technology, and solid waste management, and
others as needed\. The advisors ensured that implementation stayed on track, and helped build
capacity of CCM staff through on-the-job training\. The project also financed the contracts of
young university graduates for a fixed period, as a means of rapidly enhancing staff capacity at
the CCM\. At the end of the trial period, the successful young people were offered staff contracts
at the CCM under CCM financing\. The projectâs M&E arrangements were highly relevant, with
detailed monitoring reports highlighting achievements and implementation challenges\. These
reports formed the basis of discussions with both staff and high-level decision makers, which
helped to focus attention of project implementers on finding solutions to obstacles\.
3\.2 Achievement of Project Development Objectives
41\. MMDP phase 1 largely achieved its objectives to strengthen the Maputo City Councilâs
institutional and financial capacity to support achievement of long-term service delivery goals,
and to implement selected priority investments\. Through introduction of reforms and
strengthening of capacity, the CCM is now much more capable of delivering on its mandate and
contributing to an improving quality of life in Maputo than it was prior to the start of the project\.
All but one of the PDO outcome targets were achieved\. All of the intermediate outcome
indicators were achieved and most of the component-level targets were met\. Specifically:
ï Maputo City Councilâs own revenue rose\. Revenues rose from US$3\.5 million in 2006
to US$9\.8 million (annualized) by March 2010\. This is a gain of 180 percent over
baseline, and significantly higher than the 120 percent original target value\. Revenues
rose due primarily to increases in solid waste fees and improved collection of property
and vehicle taxes\.
ï The quantity of urban solid waste collected and deposited in the dump rose\.
Quantities rose from 253 tons per day in 2006 to 650 tons per day by August 2011\.
Improvements in solid waste management was one of the significant achievements of the
MMDP I\. The project financed two solid waste collection contracts, with one firm
covering the urban core and the other focusing on the suburbs\. This provided for the first
time services outside the city core, where about 90 percent of residents live and are poor\.
The number of people served with regular solid waste collection services thus rose from
about 100,000 in 2006 to 1 million in 2011\. The firms deposited large collection
containers at regular intervals and emptied them at least once a day\. The project also
supported the creation of microenterprises to collect refuse in densely populated poor
neighborhoods, which are best served with handcarts manned by two operators on foot\.
The handcart operators empty their bins into the large containers, which are situated on
the major roads\. The large firms and the microenterprises, along with municipal
employees, thus form part of an integrated system of solid waste management\. Solid
waste collection fees have been gradually increased to cover the costs of solid waste
collection, and the CCM will progressively take responsibility for paying for the services\.
See box 1 for more information on the role of the microenterprises in the overall system\.
12
Box 1: Microenterprises collect waste and create jobs for neighborhood residents
One of the major challenges for waste collection is the access to the densely populated
suburban neighborhoods where about 90 percent of Maputoâs residents reside\. CCM
introduced a solution that is based on a two-step waste collection system\. The first step,
primary waste collection, is operated by locally-based microenterprises that provide a simple
door-to-door waste collection service twice a week with locally available handcarts\. The
handcart collectors deposit the waste in large dumpsters that are placed at regular intervals
along the main thoroughfares\. A large firm under contract with the municipality empties the
dumpsters once a day and transfers the waste to the municipal waste disposal site\.
In 2011, the CCM extended this service to all 43 suburban neighborhoods, providing services
for the first time to about 900,000 residents\. Each microenterprise employs 8â30 workers,
and collects waste from 2,000â8,000 households\. The employees are all recruited from the
same neighborhoods served by the microenterprises, which promotes trust, and thus the
sustainability of the services\. Some 35 microenterprises selected through a competitive
process are now employing about 590 workers\. They collect an average of 400 tons of waste
per day\.
The microenterprises have a formal service contract with CCM, based on the population and
settlement characteristics of each neighborhood\. The total costs of the services in 2011 were
US$104,000, or roughly US$0\.65 per household per month\. The service is fully covered
through the waste fee, collected through the electricity billing system\.
42\. Although progress was made, one outcome target has been more difficult to meet than
expected\. This is:
ï Integrated financial management system in use and fully functional as designed\.
Early during project implementation, a World Bank IFMIS specialist advised the CCM
on general design issues and assisted with drafting terms of reference and bidding
documents for procurement of an IFMIS firm\. After significant delays, a contract was
signed in December 2008 with a firm to design and implement an IFMIS\. The CCM
enhanced its capacity to oversee the work by recruiting an IFMIS advisor to be part of its
team\. The Bank also supported the activity by providing advice through its own IFMIS
expert\. However, designing and implementing the IFMIS proved more difficult than
expected\. One issue is a very comprehensive public financial management law in
Mozambique that requires government entities to adhere to standards set by the Ministry
of Finance before they can introduce an IFMIS\. The Ministry of Finance was slow in
providing agreeing on the proposed design, delaying the start of the work\. The proposed
design then proved to be too complex to implement in a context of low capacity in the
CCM\. The firm was also unable to meet either the agreed standards or the timetable for
the work\. By January 2010, it was clear that this activity would not be completed by
August 31, 2010, the closing date of the MMDP I\. The Bank approved an extension of
the closing date for one year to August 31, 2011 to allow the activities that were
underway to be completed\. The Bank team sought a waiver for the trigger that could not
be met on the grounds that the project had otherwise been implemented satisfactorily, that
13
the work on the IFMIS would continue under the MMDP II, and that the lack of an
IFMIS would not jeopardize implementation of the second phase\. The Board approved
the MMDP II on September 30, 2012\.
At the close of the MMDP I, the CCM had in place only a complete database of
employees, providers, and assets, and payroll functionality in place\. Under MMDP II,
the CCM is preparing a paper laying out the alternatives to a full IFMIS for its financial
management\. In consultation with the Bank team and with support of the MMDP II, it
will design and implement the most appropriate system for its needs and capacity\.
Specifically, CCM has asked the Ministry of Finance to lead the design work to ensure
that the system conforms to the national standards\. An institute under the auspices of the
Ministry of Finance, the Centro de Desenvolvimento de Sistemas de Informação de
Finanças (Center for Development of Public Finance Information Systems), is overseeing
the design and implementation of the IFMIS at the CCM\.
43\. All four intermediate outcomes were achieved\. Specifically:
ï Organizational units with the new staffing table were defined and existing personnel
deployed\. Following significant delays, related in part to changes in the mayor and key
personnel at the CCM following the elections of October 2009, a new staffing table had
been prepared for all 29 organizational units of the CCM and staff had been deployed in
line with the staffing table\. Those staff found to lack the necessary qualifications to fill
the new positions, were offered training to acquire the skills or positions in other parts of
the government\. The rationalization of the human resources of the CCM is a major step
forward in increasing its capacity to perform\.
ï Report cards were conducted and their results disseminated annually\. Three report
cards were completed under the MMDP I, covering 2007, 2008, and 2009/10 to account
for the election year\. The report cards have proved to be very valuable tools in furthering
the dialogue between the CCM and the residents of Maputo and its suburbs\. While
citizens previously expected little from the CCM, the report cards have focused attention
on the mandates of the CCM and have led to a significant increase in demand from
citizens for services\. Staff of the CCM are required to participate in forums with citizens
to discuss the findings of the report cards\. Staff at the CCM report that this interaction is
motivating them to improve delivery of services and thus the scores in the next citizen
report card\.
ï The proportion of the investment budget spent rose\. The proportion of the CCMâs
capital budget spent (including ProMaputo) rose from 60 percent in 2010 to 90 percent in
2010\. Excluding ProMaputo, 95 percent of the CCMâs capital budget was spent in 2010\.
ï Roads rehabilitated under the project, non-rural, reached 85 kilometers by end
2009\. This is significantly higher than the original target of 20 kilometers for MMDP I\.
The target was surpassed because people living in the periphery of Maputo identified
improved access roads as a priority for them\. The CCM responded by focusing attention
on improving access roads in the later years of the project\.
14
3\.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e\.g\., unit rate
norms, least cost, and comparisons; and Financial Rate of Return):
44\. Efficiency and cost effectiveness of the roads investments were satisfactory\. The project
appraisal document provided estimates of the economic rate of return and net present value of
upgrading various roads in the Maputo area, including oneâthe Avenida Sebastião Marcos
Maboteâthat the project ultimately supported\. The main benefits were due to reductions in
vehicle operating costs due to improvements in the quality of the road\. Traffic was assumed to
grow by 4\.1 percent per year\. In actuality, traffic grew by 5\.5 percent per year, and vehicle
operating costs fell by more than projected\. The current estimate of the net present value and of
the economic rate of return are presented in the table below\.
Table 1: Cost benefit analysis for the Avenida Sebastião Marcos Mabote: Current
calculations compared with appraisal estimates
Current estimates Appraisal estimate
Avenida Sebastião Net present value (US$) 3\.6 million 3\.2 million
Marcos Mabote Economic rate of return 103 percent 100 percent
45\. The original economic analysis referred to a number of nonquantifiable economic
benefits, such as savings in travel time, increases in values of properties that become more
accessible, and reduced costs of repairing roads, structures, and property arising from improved
drainage\. The actual nonquantified benefits are likely to be significant\. The Avenida Sebastião
Marcos Mabote connects the expansion areas of the city to the downtown\. These areas are in the
suburbs of the city, and are being developed to accommodate people resettled from the core city
to make way for infrastructure and to house the increasing numbers of rural to urban migrants\.
The extension of the Avenida Sebastião Marcos Mabote has led to much reduced travel times
between the core city and the suburbs, allowing residents to get to their jobs and access services\.
It has also led to rising property values, as land is converted from agricultural uses for housing
and business use\. Inclusion of drainage systems has reduced stormwater damage to the road and
to nearby structures\. Creation of walkways has led to improved traffic flow and greater comfort
for pedestrians\. The story is similar for Avenida Nelson Mandela\. This major thoroughfare
connects the core city to outlying areas\. Both roads also connect to the highway that connects
Maputo to the northern parts of the country\.
Cost effectiveness
46\. The MMDP I supported three roads projects in addition to the rehabilitation of Avenida
Sebastião Marcos Mabote\. Table 2 shows the details of all the road projects supported under the
MMDP I\.
15
Table 2: Details of roads projects supported under MMDP I
Street Traffic Length Lanes Width Total cost Cost per Nature of work
count (kilometers) sidewalks (US$) meter
(annual (m) lane/kilometer
average
daily
traffic)
Avenida 26,235 5\.6 4 3 $4,748,961 $212,007 Rehabilitation and
Sebastião extension (paved),
Marcos including addition
Mabote of drainage systems
and sidewalks
Avenida 13,202 5\.4 3 4 $3,939,351 $243,170 Rehabilitation and
Nelson extension (paved),
Mandela including addition
of drainage systems
and sidewalks
Unpaved 40 2 0 $654,793 $8,185 Excavation,
roads in regraveling, addition
municipal of drainage ditches,
districts 2, signaling,
3, and 5 landscaping\.
Unpaved 34 2 0 $665,621 $9,789 Excavation,
roads in regraveling, addition
municipal of drainage ditches,
districts signaling,
Catembe landscaping\.
Total 85 $10,008,726
47\. The unit costs of rehabilitating and regraveling roads under the MMDP I were well below
the average for African countries, according to a background paper prepared for the World
Bankâs 2008 Africa Infrastructure Country Diagnostic\. These costs are presented in table 3\. The
unit costs of rehabilitating the Avenida Sebastião Marcos Mabote were below the average of the
lowest quartile and the rehabilitation of Avenida Nelson Mandela was only slightly higher than
the average\. Notably, the unit costs of regraveling were substantially lower than the average of
the lowest quartile for this type of work\.
Table 3: Unit costs of road construction and maintenance in Africa, 2008
Type Unit Lower quartile Median quartile Upper quartile
Rehabilitation US$/lane/km $220,186 $352,613 $505,323
(paved) less than 50
kilometers
Regraveling US$/lane/km $12,835 $15,625 $19,490
Source: World Bank, 2008\. âUnit Costs of Infrastructure Projects in Sub-Saharan Africa,â? Africa
Infrastructure Country Diagnostic, background paper 11, June\.
16
Solid Waste Management
Cost effectiveness
48\. Cost effectiveness of the investments in solid waste services was satisfactory\. A cost
benefit analysis for the investments in solid waste management was carried for the appraisal of
the MMDP I\. This calculated the internal rate of return to be 20 percent and the net present
value of the cash flow at a discount rate of 12 percent to be US$650,000\. Unfortunately, data are
not available to permit an update of the estimates from the original economic analysis\.
49\. However, a comparison of the costs of delivering solid waste services in Maputo with
those in other medium-size cities in developing indicates that costs in Maputo are well within the
norms\. See table 4 for details\.
Table 4: Average per capita and per ton costs of solid waste services in Maputo compared
with medium size cities in developing countries (US$m)
Cost per capita per year (US$) Cost per ton (US$)
Maputo 2010 3\.67 20
Medium-size cities 2006* 3\.33â4\.00 17\.78â26\.67
Source: Shantha R\. Parthan, Mark W\. Milke, David C\. Wilson and John H\. Cocks\. 2011\. âCost Function
Analysis for Solid Waste Management: A Developing Country Experience\.â? In Waste Management and
Research, November 10, 2011\.
3\.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs,
and efficiency):
Rating: Satisfactory
50\. Achievement of the objectives of the MDP I is rated satisfactory\. The operation
objectives, design, and implementation arrangements were and remain highly relevant\. The
operation achieved nearly all of its intended outcomes\. The CCMâs institutional and financial
capacity to support achievement of long-term service delivery goals and to implement selected
priority investments has been significantly strengthened\. Efficiency and cost effectiveness of
investments in roads were satisfactory\. The roads projects supported under the MMDP I
generated an economic rate of return of 103 percent and a net present value of US$3\.6 million\.
Unit costs of all roads projects were lower than average for roads projects in Sub-Saharan Africa\.
Solid waste services were delivered cost effectively\. The projectâs one shortcoming was the
failure to put into place a functioning IFMIS prior to the closing of the project\. However,
MMDP II is supporting implementation of a computerized financial management system, so its
absence under MMDP I does not pose a risk to the sustainability of the development outcome of
the project\. High relevance and satisfactory achievement of objectives justifies an overall
outcome rating of satisfactory for the operation\.
17
3\.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered
or to amplify discussion above):
(a) Poverty Impacts, Gender Aspects, and Social Development
51\. The MMDP I did not have a specific poverty, gender, or social development focus\.
However, the expansion of solid waste services to poor suburban neighborhoods has been a
major benefit for the poor who no longer have to live with unsightly and often unhealthy
informal garbage dumps\. The creation of the solid waste microenterprises has also generated
hundreds of jobs for local residents, many of whom are women\. The project also supported the
construction of a facility where waste pickers can sort through trash in safe working conditions
and has promoted the use of protective clothing by trash collectors\. Upgrading of access roads
that link suburban areas with downtown Maputo is also disproportionately benefiting the poor,
who can now access jobs and services more quickly and at lower cost than previously\. As noted
above, the undertaking annually of the municipal score card survey has shifted the dynamic
between the CCM as a provider of services and Maputo residents, who now much more vocally
demand services to which they are entitled\. Over time, this is expected to lead to greater
transparency and accountability of the CCM to citizens, and to promote social development more
broadly\. The MMDP I supported the definition and implementation of an HIV/AIDS strategy, a
workplace policy, and an action plan, aimed at reducing the risk of transmitting HIV/AIDS and
of mitigating the impact of those affected\. Specific activities included awareness campaigns,
voluntary testing and counseling services, workplace advocacy, and provision of nutritional
support to family members living with HIV/AIDS, among others\. Support for such activities
will continue under MMDP II\.
(b) Institutional Change/Strengthening (particularly with reference to impacts on longer-
term capacity and institutional development):
52\. The project helped to bring about key institutional reforms intended to increase the
capacity of the CCM to effectively and efficiently deliver services\. Specifically, it supported the
restructuring of the CCM to align its organizational structure with its functions, strengthening of
human resources management, adoption of modern information management systems,
improvements in budgeting, revenue mobilization, and accounting\. These far-reaching reforms
are already resulting in improved services for Maputo households and businesses\.
53\. The project also supported significant reorganization in the way solid waste services are
delivered\. It encouraged the CCM to focus on the core functions of policy development and
planning of solid waste services, while contracting out to private firms and microenterprises the
job of collecting and disposing of garbage\. The firms and microenterprises are paid on the basis
of performance, so have a strong incentive to deliver the services\. Residents have noticed that
services have improved and are now paying increasing amounts to sustain them\. The project
facilitated the creation of some 25 public private partnerships\. Private enterprises are now
managing and maintaining municipal parks and gardens, parking lots, and public sanitary
facilities under public-private partnership arrangements\. See box 2 for more on public private
partnerships\.
18
Box 2: Public private partnerships have enhanced the capacity of the CCM to deliver a
variety of services
The CCMâs program of public private partnerships (PPPs) began in 2005 during the formulation
phase of MMDP I\. Through the World Bank, the CCM made preliminary contacts with the Public
Private Infrastructure Advisory Facility (PPIAF), whose staff expressed strong interest in
supporting a PPP program at the municipal level\. The resulting grant from the PPIAF funded an
initial two-year program of support comprising strategic assessments, legal analyses, definition of
procedures and guidelines for project development, training for CCM personnel, and direct
technical assistance for the preparation of the municipalityâs first PPP projects\. In addition to an
emerging PPP portfolio, under MMDP I a PPP department was established in the municipal
directorate of economic activities and staffed with university graduates in key specializations of
law, economics and engineering\.
With further short term assistance funded by PPIAF, the municipality developed a portfolio of over
25 PPPs, ranging from private management of public parks to the development of municipal
parking lots, transport terminals, and commercial facilities in high traffic public transit areas\. More
recently the CCM contracted a private operator to establish paid hourly parking in the central
commercial and business district, mobilized private investors to rehabilitate degraded municipal
buildings, and ceded municipal land tied to private investments in a multistory parking structure\.
In addition, with credit support the CCM has prepared a municipal bylaw to adapt new national
PPP legislation to the specific legal and institutional situation of a municipality\.
While these initial experiences have been broadly positiveâand private capital and management
has been mobilized to improve the coverage and quality of municipal facilitiesâthe CCM
continues to face both operational capacity constraints in the identification, appraisal, negotiation,
and supervision of PPP projects as well as in clarifying the strategic potential of PPPs in developing
municipal facilities and services\. As a result, before the end of MMDP I CCM contracted an
assessment of the PPP program to assist in the further development of both its internal capacities to
formulate and manage PPPs and to assist the municipality in refining its strategies and criteria for
the identification of suitable potential PPPs\. The analysis and recommendations of this PPP
assessment consultancy provided guidance for plans for consolidating and gradually enhancing the
scope and quality of CCMâs PPP program, with support from the MMDP II\.
(c) Other Unintended Outcomes and Impacts (positive and negative):
54\. The project did not result in any significant unintended consequences\.
4\. Assessment of Risk to Development Outcome
Rating: Negligible to low
55\. The risk to development outcome is rated low or negligible\. The CCM has demonstrated
its commitment to improving its functioning since it developed the ProMaputo Program\. With
some delays, due primarily to weaknesses in capacity, it has consistently implemented the
program as designed\. In addition, the new mayor reiterated his commitment to the program
shortly after taking office\. The Bankâs continuing engagement with the CCM under the MMDP
19
II will help ensure that the CCM continues to strengthen its capacity to effectively deliver on its
mandates\.
56\. The benefits of the capacity building support of the project are likely to be sustainedâthe
major objective of mainstreaming implementation of the MMDP within the CCMâs structureâ
although challenges remain\. The majority of staff trained and mentored under the project in
financial management, procurement, contract management, urban and strategic planning, human
resources management, communications, and information management remain in the CCM\.
Many of the young university graduates recruited to enhance staff capacity also remain in place\.
The CCM has instituted a policy of rewarding high performing staff with bonuses that can
effectively double their salaries\. This has proven to be a strong incentive for the best qualified
staff to remain at the CCM\.
57\. Sustainability of the infrastructure and services financed under the MMDP I is likely\.
The CCM has already developed a plan to increase fees for solid waste services to full cost
recovery levels by 2017, assuming it is operating a new more expensive landfill by then\.
Maintenance of roads is likely due to the CCMâs current practice of establishing annual budgets
and work plans for maintenance of roads, started under the MMDP I\. In addition, the CCM has
strengthened its capacity for managing routine maintenance contracts\. District administrations
have also been trained to undertake spot repairs to unpaved roads after each rainy season\.
Support to further improve operations and maintenance will be continued under the MMDP II\.
58\. Sustainability of the operations of the CCM will also depend on its ability to mobilize
increasing amounts of own-source revenue\. Several activities under the MMDP II are aimed at
helping the CCM do this\. For example, it is supporting (a) the expansion and updating of
properties information in the municipal cadastre, (b) improved practices for property
assessments, (c) enhanced municipal billing and collection systems, including through private
sector participation, (d) public information campaigns to encourage and inform citizens of their
tax obligations, and (e) updating of municipal tax regulations and procedures\. The project is also
supporting overall improvements in public financial management, including through
implementation of an IFMIS and strengthening of procurement and internal controls\. These
measures are intended to improve value for money spent\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank
(a) Bank Performance in Ensuring Quality at Entry (i\.e\., performance through lending
phase):
Rating: Satisfactory
59\. The Bankâs overall performance in ensuring quality at entry was satisfactory\. The
Bankâs performance in identification was satisfactory\. The Bank maintained a continuous and
close dialogue with the mayor of Maputo and his management team at the CCM soon after he
was elected\. The Bank supported a number of important pieces of analytical work that brought
into stark relief the weaknesses in the CCMâincluding organizational setup, and financial and
20
human resourcesâthat limited its ability to deliver on its mandates\. The Bank also provided
assistance to facilitate the CCMâs consultative workshops that informed the ProMaputo Program\.
Acknowledging the strong relationship that the Bank had established with the government in the
area of local government and its ability to make a long-term commitment to urban development,
the government asked the Bank to support the ProMaputo Program\. The Bank responded
appropriately, preparing an eight-year adaptable program loan, and providing extensive advice
with design and safeguard issues\. The projectâs design reflected lessons learned from the Bank-
financed Mozambique Decentralized Planning and Finance Project, the Municipal Development
Program, and from experiences in other countries with urban development\.
60\. The Bankâs performance in preparation and appraisal was satisfactory\. The project
implementation plan had been appraised and found to be realistic and of satisfactory quality\.
Procedures for environmental screening of small infrastructure projects had been agreed\.
Processes for procurement and fiduciary management had been assessed and steps agreed to
ensure that funds were used as intended\. A well-designed results framework had been prepared,
with well-specified indicators and baseline and target values\. Arrangements for monitoring and
reporting had been agreed\. Appraisal of implementation arrangements was satisfactory with
agreements reached on the roles and responsibilities of the various directorates of the CCM in
implementation\. A capacity building plan had been prepared\. Engineering designs and
procurement documents for the first yearâs activities were complete and ready for the start of
project implementation\.
(b) Quality of Supervision (including of fiduciary and safeguards policies):
Rating: Highly Satisfactory
61\. Bank performance in supervision was highly satisfactory\. Supervision was intense
throughout the period of MMDP I implementation\. Although the project has had two task team
leadersâone from identification until mid-2008, and the other from mid-2008 until the project
closedâthe transition was seamless, because the second team leader had served as a team
member from the beginning\. He subsequently moved to Maputo to provide daily support to the
CCM\. The Bankâs management team has actively overseen project implementation to help
ensure that the project remained on track to meet its objectives\. The senior operations officer in
her comments on implementation support noted that the project was one of the best performing
in the Bankâs Mozambique portfolio\.
62\. The Bank fielded some 11 implementation missions during the projectâs four and 1/2
years of implementation\. Missions took place at least two times a year, with smaller missions
(often in combination with implementation support for other projects) taking place in between
the formal missions\. Missions lasted one to two weeks each and typically comprised ten or more
members, including foreign and local consultants with expertise in urban development, local
government administration, IFMIS, environmental and social safeguards, monitoring and
evaluation, procurement, and financial management\. To ensure very regular contact with the
project implementers, the Bank team held video and audio conferences with the CCM between
missions on key issues arising during implementation\.
21
63\. Aide memoires were of exceptionally high quality, with frank analysis of key issues and
practical recommendations of how to address obstacles\. Implementation support routinely
reported on progress with activities under each component, performance of the CCM and its
individual departments in implementing the project, progress towards the PDO outcome targets,
financial management, procurement, and compliance with safeguards and with legal covenants\.
64\. The team responded proactively to challenges as soon as they arose and tried to find
effective solutions to them\. For example, when issues arose in designing the IFMIS, the task
team brought a Bank IFMIS specialist to Maputo to assess the situation and advise the CCM on
options for such a financial management information system\. It also advised the government to
recruit an IFMIS under MMDP I finance to oversee the work at the CCM\. In addition, the task
team also sought guidance from Bank management, procurement, financial management, and
legal departments\.
65\. The Bank team consistently rated project performance indicators realistically\. It rated
implementation performance moderately unsatisfactory nine months after effectiveness\. It
carefully reviewed both progress towards development and implementation performance during
each mission, and generally provided a justification for the ratings in the aide memoires\.
66\. The Bank team also played a key role in ensuring that development partnersâ
contributions to the development of Maputo supported the broad ProMaputo Program\. For
example, it partnered with the German Society for International Cooperation (GIZ) in designing
the solid waste management system, with GIZ supporting the development of the 10-year
strategic plan for solid waste management (2008â2017), assisting with creation of the solid waste
collection microenterprises and providing equipment, and the Bank financing the large solid
waste services contracts\. The Bank is continuing to play an important role in coordinating
development partnersâ contributions to Maputoâs development through its leadership of the
Decentralization Working Group, which comprises all the major partners contributing to
development of urban and local governments\.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
67\. The Bankâs overall performance was satisfactory\. In lending, the Bank assisted the CCM
with analytical work and facilitation support to develop the ProMaputo Program\. It responded to
governmentâs request to finance a Maputo urban development program by preparing the eight-
year MMDP, based on lessons learned from working in Mozambique and in other countries\.
Quality at entry was satisfactory\.
68\. In implementation support, the Bank played a critical role in helping the CCM overcome
significant capacity constraints and proceed with implementation\. Bank implementation support
was instrumental in keeping implementation on track; the project closed with only a one-year
delay and all funds were utilized\. Implementation support missions regularly reviewed
compliance with fiduciary, environmental, and social safeguards\. The Bank maintained a close
dialogue with CCM policy makers and technical staff, and with GIZ throughout implementation\.
22
The Bank responded proactively and effectively to find solutions to challenges\. A rating of
satisfactory for ensuring quality at entry and a rating of highly satisfactory for supervision justify
an overall rating of satisfactory for Bank performance\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
69\. The governmentâs performance in implementation was satisfactory\. The central
government, particularly the Ministry of Finance, The Ministry of Planning and Development,
the Ministry of State Administration, and the Ministry of Environmental Coordination played
important roles in helping to create the capacity of the CCM for municipal service delivery\. For
example, the ministry of finance consistently provided its counterpart funds for the MMDP on
time, facilitating smooth implementation\. The Ministry of Environmental Coordination quickly
responded to requests its review of potential environmental impacts of infrastructure subprojects\.
And the Council of Ministers on December 27, 2010 approved a decree allowing revaluation of
urban properties, which substantially increases the revenue potential for the CCM\.
(b) Implementing Agency or Agencies Performance:
Rating: Satisfactory
70\. The performance of the CCM was satisfactory\. The CCM quickly complied with all the
conditions of effective presented in the project appraisal document for the MMDP I\. It
established a strong team in its Office of Strategic and Institutional Development to coordinate
overall project implementation, and appointed as its head a highly-qualified person with
experience in managing diverse teams\. It also established a procurement department staffed with
qualified specialists and a financial management system capable of producing satisfactory
financial monitoring reports\. It encouraged staff of the entire CCM to participate in all aspects
of project implementation, including the capacity building activities\. It participated fully in
designing and implementing the CCM restructuring plan and the improvements in human
resources management\. It ensured that the project complied fully with environmental and social
safeguards\. It consistently provided in counterpart funds on time and in the agreed amounts\.
And it complied with all the legal covenants, although with some delays in the early years\.
Finally, it adopted a scheme to pay bonuses to high-performing staff, thereby overcoming a key
factor discouraging people from working for government institutions, low salaries\. However, the
CCM did not manage to retain qualified procurement staff, leading to delays at various times
during implementation\. Financial management remained a weakness throughout, in part because
of the inability of the CCM to advance with implementation of the IFMIS\.
71\. The Office of Strategic and Institutional Development, which led project implementation,
performed capably throughout implementation\. It responded to weaknesses in staff capacity at
the CCM by recruiting advisors with expertise in a large range of areas\. The Office of Strategic
and Institutional Development prepared quarterly project progress reports on time, which
23
consistently reported on implementation of activities progress towards outcomes\. It used them
effectively to motivate staff and to focus attention of policy makers on key issues\.
(c) Justification of Rating for Overall Borrower Performance:
Rating: Satisfactory
72\. The overall performance of the borrower was satisfactory\. The Ministry of Finance
consistently provided its agreed counterpart funds\. Other ministries and government entities
played supportive roles\.
73\. The CCM performed adequately\. The Office of Strategic and Institutional Development
effectively provided overall leadership in project management, and ensured that the project
remained on track to meet its objectives, with only minor delays\. Ratings of satisfactory for both
borrower and for implementing agency performance justify a rating of satisfactory for overall
borrower performance\.
6\. Lessons Learned (both project-specific and of wide general application)
ï Basing the design of the project on strong analytical work and on consultation with
stakeholders will help ensure that the design addresses the key issues\. Prior to
preparing the MMDP, the Bank supported studies on all areas of the functioning of the
CCM\. These included studies on functions and human resources, revenues and revenue
potential, public private partnerships, information and communications technology, and
anti-corruption measures, and others\. The findings and recommendations of the studies
provided a strong evidence base to guide the project design\. Consultations with a wide
range of stakeholders on key issues and solution provided further input to the design and
helped to create ownership for the significant institutional changes to come\.
ï Combining institutional strengthening with improved delivery of services\. While the
CCM was undergoing a restructuring to align staff with functions, improving its
governance, and strengthening fiduciary management, it was also addressing service
delivery constraints, primarily in the areas of solid waste management, urban planning,
and roads\. Combining institutional reforms with service delivery helps in building the
capacity of the implementing agency to carry out its mandate through learning by doing\.
It also helps to facilitate engagement with the citizens who are benefiting from the
improved services\.
ï Building effective institutions requires a long-term commitment\. Organizational
change is a slow and difficult process that often stalls due to resistance of those who fear
they may be made worse off due to the changes or due simply to inertia\. Convincing
people that change is in their interests requires solid analysis, considerable consultation
and willingness to address concerns, investments to upgrade skills of existing staff to give
them a place in the new organization, and determined leadership\. Reflecting this lesson,
the MMDP is providing long-term support for institutional change through the eight-year
adaptable program loan\.
24
ï Mainstreaming project management helps to build and sustain capacity of
government entities\. Although relying on a weak government entity with no previous
experience in executing a Bank-financed project can be risky, it also powerfully assists in
building sustainable capacity of the entity through learning by doing\. By drawing on the
CCMâs departments responsible for human resources management, financial
management, engineering, strategic and urban planning, and others, each of which was
bolstered by one or more external experts and specialized training, the project helped to
develop key skills of the CCM staff\. The MMDP II is now benefiting from CCMâs much
stronger capacity as it scales up support for infrastructure and service delivery\.
Mainstreaming project implementation within government structures is considered good
practice in development\.
ï Skilled external experts who support the government entity with advice speeds the
process of capacity building and help to smooth implementation\. The CCM benefited
from the assistance of at least 10 advisors during project implementation, each with skills
in different areas\. They facilitated learning in the organization by offering advice and on-
the-job assistance\. They also maintained a focus on implementation, helping to resolve
issues that threatened to block forward movement\.
ï Design of financial management information systems must be appropriate for the
institutional context to succeed\. Both governments and external advisors often propose
the most modern system for managing financial and other information\. However, such
systems often do not function where organizational, technical, and human capacity is
weak\. Implementation of such systems also sometimes encounters resistance from
people who benefit from the traditional way of doing things\. Experience suggests that
simplified phased outputs and a longer implementation timeline may help in
implementing a computerized financial management information system\. Leadership at
the highest levels of government is also essential\.
ï Innovative approaches help in providing solid waste management services in poor
neighborhoods\. Many poor neighborhoods in cities around the world are marred by
uncollected trash\. Private trash services concentrate on rich neighborhoods whose
residents are willing to pay, while municipal services often serve only the city core, if
they work at all\. Following the severe flooding in Mozambique in 2000, a French
nongovernmental organization helped to mobilize poor neighborhoods to collect trash\.
The approach involved organizing microenterprises for trash collection that would hire
staff from the same neighborhoods in which they would work\. The municipal
government would initially pay for the services to demonstrate their value to residents,
but would phase in user charges over time\. The MMDP I scaled up this successful
approach and will expand services further under the MMDP II\.
ï The process of carrying out citizen report cards generates benefits beyond the data
they collect\. Report cards are often seen as an unreliable source of information on
quality of services, because they ask people their opinion of services rather than report on
objective measures of service delivery\. Thus, people may say services are declining
25
when they are actually improving, because their expectations have risen\. In Maputo,
regardless of their findings, the report card surveys have proven to be a valuable tool in
furthering the dialogue between service providers and citizens\. Each year, staff of the
CCM meet with Maputo residents in public forums and must address questions raised by
participants\. This has proven critical in motivating CCM staff to focus on service
delivery, and appears to be changing the balance of power between citizens and
municipal government\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies:
See annex 6\.
(b) Cofinanciers: None\.
(c) Other partners and stakeholders: None\.
26
Annex 1: Project Costs and Financing
(a) Project Cost by Component (in US$ million equivalent)
Appraisal Estimate Actual /Latest Estimate Percentage of Appraisal
Components
(US$ million) (US$ million)
A: Institutional development 8\.0 10\.8 135%
B: Municipal finance 4\.7 5\.3 113%
C: Improved service delivery 26\.3 25\.0 95%
Total Baseline Cost
Physical Contingencies 1\.4
Price Contingencies 1\.4
Total Project Costs
Project Preparation Facility
1\.2
(PPF)
Front-end fee (IBRD only)
Total Financing Required 43 41\.1 96%
(b) Financing
Appraisal Actual/Latest
Percentage of
Source of Funds Type of Financing Estimate Estimate
Appraisal
(US$ million) (US$ million)
Government 13 11\.68 90%
IDA 30 29\.42 98%
PPIAF grant World Bank- 0\.29 0\.08 28%
administered trust
fund
27
Annex 2: Outputs by Component
Component A: Institutional reform and municipal governance
Subcomponent 1: Institutional reform and strengthening
ï A restructuring plan for all organizational units was defined and implemented (modeling
processes, job description manual, staff table, competencies profile assessment, and
redeployment plan defined and implemented)\. All 27 organizational units of the CCM
were restructured and staffed with people with the appropriate skills\. Key departments
that were restructured included the departments of finance, human resources
management, and procurement\.
ï A strategic and operational planning methodology was defined and implemented\.
ï A human resources management plan (recruitment of new qualified technicians and
integrated in organizational units) was developed and implementation started\.
Implementation is continuing under MMDP II\.
ï An integrated human resources management system was defined (strategy, global, and
specific policies were defined and a manual of procedures was prepared)\.
ï A study on simplification of process processes was completed, and implementation of its
recommendations commenced\.
ï District-level authorities received capacity building support to plan and manage small-
scale infrastructure and urban services\.
ï An HIV/AIDS strategy, a workplace policy, and an action plan were developed\.
Implementation of activities has been continuous\.
ï Annual training courses were offered in leadership, project management, and various
other areas of municipal relevance\.
ï A strategic plan for information systems was defined and implementation started\.
Subcomponent 2: Improved municipal governance
ï A draft communication strategy was prepared\. However, it requires more practical
recommendations before it can be fully implemented (planned for MMDP II)\.
ï An anticorruption strategy was prepared and many of its recommendations implemented\.
ï A deconcentration plan for municipal districts was defined and implemented\.
28
ï A public private partnership strategy was prepared\. Its recommendations provide for the
installation for the first time of a public private partnership unit in the municipality, and
for the legal framework and model for public private partnership that has already
produced 25 such partnerships\.
ï Three citizen report card surveys were undertaken and their results widely disseminated
through newspapers, television, radio, public forums, the internet, and other media\.
Component B: Municipal finance
Subcomponent 1: Improved revenue collection
ï Improvements in the distribution of property taxes bills and fees for economic activities
were made\. In a first step, a private firm was contracted to distribute property tax bills,
focusing on the urbanized and richest areas of the city\. In a second phase, municipal
capacity was built to take on the permanent distribution of bills\. This required the
reorganization of the department, creation of field brigades, and investment in training
and acquisition of goods and equipment (maps of routes, uniforms, vehicles, and the
like)\.
ï The existing property cadastre more than doubled its number of registries (from 6,000 to
13,000) by merging a series of databases\. At the same time, the cadastre team under the
supervision of the revenue department completed a field survey, adding 15,000 new
registries\. The process of data cleaning and cadastre expansion will continue during
MMDP II, which has a strong focus on property tax collection\.
ï A very important property tax regulation (decree 61/2010) was approved by the Council
of Ministers to allow for the reassessment of properties, with reference to market values\.
This regulation is of national scope so will bring big benefits to all the 43 municipalities
in the country\.
ï Regulations for fees on economic activity were prepared and approved by the Municipal
Assembly, allowing for more efficient fee calculation and collection\.
ï Measures to increase revenues from marketsâincluding launching of a market vendor
cadastre and approval of new regulations by the municipal assemblyâwere put into
place\.
ï Advertising campaigns on fiscal education were carried out in journals, radio, and
television\.
ï Extensive training for managers and technicians in municipal revenue management took
place\. A training program was organized and delivered a few times during the
implementation of the MMDP I\. The training included lectures on national legislation, as
well as practical classes in which the revenue department team elaborated and discussed
proposals of regulations for municipal taxes and fees\.
29
Subcomponent 2: Improved expenditure management
ï Design of the IFMIS and implementation of some modules commenced\. However, the
design proved too complex for the CCM\. The selected firm did not complete the work
within the agreed timeline\. Options for an alternative system are being assessed under
MMDP II\. The Ministry of Finance is taking the lead in design and implementing the
system for the CCM\.
ï A planning and budgeting methodology was revised and approved by the CCM\.
ï Audits of municipal financial statements were completed for 2008, 2009, and 2010\.
ï A study proposing approaches to revaluing properties in Maputo was completed\.
ï An evaluation of municipal assets was conducted\.
ï A medium-term expenditure framework was developed, which is regularly updated to
reflect the fiscal position of the municipality\.
Component C: Planning and service delivery improvements
Subcomponent 1: Planning and management of urban space
ï Urbanization plans for Zimpeto, Magoanine (A, B, and C), Laulane, Ferroviário, 3 de
Fevereiro, Mahotas, Costa do Sol, and Albazine were completed\. Implementation
commenced, and will continue under MMDP II\. The urbanization plans will form the
basis for the issuing of land use rights to users\.
ï The urban structure plan was completed\. Implementation started and will continue under
the MMDP II\.
ï The municipal geographic information system (including aerial photography) and
associated cadastres were developed\. Implementationâincluding provision of technical
assistance, training, equipment, and data collection and processing servicesâ
commenced\. Implementation will continue under MMDP II\.
ï Environmental impact assessments have been prepared for the proposed Michafutene/
Marracuene cemetery and for the rehabilitation of the Julius Nyerere Avenue\.
Subcomponent 2: Infrastructure and service delivery improvements
ï The rehabilitation and extension of Avenues Sebastião Marcos Mabote (5\.6 kilometers)
and Nelson Mandela (5\.4 kilometers) were completed\. These connected the central
business district of Maputo to expansion areas on the outskirts of the city, which are
home to poor people resettled from the urban core and to new migrants\.
30
ï Street lights were installed along Avenues Sebastião Marcos Mabote and Nelson
Mandela\.
ï Unpaved roads were regraveled (74 kilometers), improving connectivity in the suburban
districts of the city\.
ï Designs for two cemeteries were completed\. Construction completed at one\. The other
will be completed under MMDP II\.
Subcomponent 3: Solid waste management services
ï Solid waste services in the central city and the suburbs improved visibly\. Collection
increased from 250 tons per day to over 650 tons per day\. A specific focus was given to
improving and extending the services in the previously severely under-serviced suburban
areas\. The total number of containers in these areas increased from 35 to 110 by the end
of MMDP I\.
ï Primary waste collection was initiated in 25 suburban neighborhoods, using
microenterprises to provide collection services\. This was the first regular municipal
service provided in these settlements\. At least 590 jobs have been created for local
residents\.
ï The municipal disposal site was improved\. Specifically, the entrance was rehabilitated, a
weighbridge was installed, and specialized heavy equipment was put into operation\.
ï Studies were completed to improve the organizational setup and financial sustainability
of future solid waste services\.
ï Collection of the waste fee rose from US$900,000 in 2006 to US$3\.3 million in 2011\.
31
The table below presents the indicators and outputs by component, as presented in the
results framework of the Project Appraisal Document\.2
Table 1: Results framework, component level outputs
Baseline Original Target Actual Value
2006 Values Achieved at
Completion
August 2010
Project outputs from each component
Component A: Institutional reform and municipal governance
Average time to process a new request for a 8 months 3 months 28 days
construction license
Number of districts to which decentralization of 0 7 7
agreed functions has occurred
Staff reached by HIV/AIDS awareness programs 0 percent 80 percent 80 percent
under the project
Component 2: Municipal finance
Number of additional taxpayers registered in the 13,000 18,000 28,000
universe of property tax payers
Own revenues/current expenditures 0\.8 At least 1 1\.13
Audit finalized within six months of the end of the Not done Annual Done for 2008,
financial year and findings made publicly available 2009, 2010
Component C: Planning and service delivery improvements
Sebastiao Marcos Mabote Avenue rehabilitated Not done Completed Completed
under the project\.
Number of new cemeteries built under the project 0 1 1
Financial contribution of CCM to solid waste US$700,000 US$1\.8 million US$2\.4 million
management
2
For indicators not already reported on in the data sheet\.
32
Annex 3: Economic Analysis
Economic Analysis (including assumptions in the analysis)
Efficiency (net present value/economic rate of return, cost effectiveness, e\.g\., unit rate norms,
least cost, and comparisons):
ROADS INVESTMENTS
Efficiency
1\. Efficiency and cost effectiveness of the roads investments were satisfactory\. A cost
benefit analysis for the rehabilitation and extension of the Avenida Sebastião Marcos Mabote to
be supported under the MMDP I was carried out as part of project appraisal\. This was based on
the assumptions that the investment cost would be US$4\.7 million, that 83 percent of traffic
comprised light vehicles and 17 percent was made up of heavy trucks, and that traffic would
grow by 4\.1 percent a year\. The road was assumed to have an economic life of 15 years and to
require periodic maintenance every seven years\. The discount rate was assumed to be 12
percent\.
2\. The main benefits of the rehabilitation of the road and associated drainage were due to
reductions in vehicle operating and benefits from generated and diverted traffic\. The analysis
showed that under the base case, the investment would generate an economic rate of return of
100 and net present value of US$3\.2 million\. The actual cost of rehabilitating Avenida Sebastião
Marcos Mabote was very close to that projected in the Project Appraisal Document (PAD) (see
table 1)\. However, the average number of vehicles using the road each day has grown by about
5\.5 percent per year, which is considerably higher than the 4\.1 percent per year projected in the
PAD (table 1)\.
Table 1: Assumptions of the economic analysis
Actual Appraisal estimate
Avenida Sebastião Traffic count (annual average 26,235 19,084
Marcos Mabote daily traffic)
Length (kilometers) 5\.6 5\.6
Total investment cost (US$) $4,748,961 $4,704,000
3\. The larger traffic volume than estimated at appraisal has resulted in higher savings in
vehicle operating costs\. Thus, the economic rate of return and present value are higher than
estimated at appraisal\. Details are presented in table 2\.
Table 2: Cost benefit analysis: Current calculations compared with appraisal estimates
Current estimates Appraisal estimate
Avenida Sebastião Net present value (US$) 3\.6 million 3\.2 million
Marcos Mabote Economic rate of return 103 percent 100 percent
4\. The original economic analysis referred to a number of nonquantifiable economic
benefits, such as savings in travel time, increases in values of properties that become more
33
accessible, and reduced costs of repairing roads, structures, and property arising from improved
drainage\. The actual nonquantified benefits are likely to be significant\. The Avenida Sebastião
Marcos Mabote connects the expansion areas of the city to the downtown\. These areas are in the
suburbs of the city, and are being developed to accommodate people resettled from the core city
to make way for infrastructure and to house the increasing numbers of rural to urban migrants\.
The extension of the Avenida Sebastião Marcos Mabote has led to much reduced travel times
between the core city and the suburbs, allowing residents to get to their jobs and access services\.
It has also led to rising property values, as land is converted from agricultural uses to housing
and businesses\. Inclusion of drainage systems has reduced stormwater damage to the road and to
nearby structures\. Creation of walkways has led to improved traffic flow and greater comfort for
pedestrians\. The story is similar for Avenida Nelson Mandela\. This major thoroughfare
connects the core city to outlying areas\. Both roads also connect to the highway that connects
Maputo to the northern parts of the country\.
Cost effectiveness
5\. The MMDP I supported three roads projects in addition to the rehabilitation of Avenida
Sebastião Marcos Mabote\. Table 3 shows the details of all the road projects supported under the
MMDP I\.
Table 3: Details of roads projects supported under MMDP I
Street Traffic Length Lanes Width Total cost Cost per Nature of work
count (kilometers) sidewalks (US$) meter
(annual (m) lane/kilometer
average
daily
traffic)
Avenida 26,235 5\.6 4 3 $4,748,961 $212,007 Rehabilitation and
Sebastião extension (paved),
Marcos including addition
Mabote of drainage systems
and sidewalks
Avenida 13,202 5\.4 3 4 $3,939,351 $243,170 Rehabilitation and
Nelson extension (paved),
Mandela including addition
of drainage systems
and sidewalks
Unpaved 40 2 0 $654,793 $8,185 Excavation,
roads in regraveling,
municipal addition of
districts drainage ditches,
2, 3, and signaling,
5 landscaping\.
Unpaved 34 2 0 $665,621 $9,789 Excavation,
roads in regraveling,
municipal addition of
districts drainage ditches,
Catembe signaling,
landscaping\.
Total 85 $10,008,726
34
6\. The unit costs of rehabilitating and regraveling roads under the MMDP I were well below
the average for African countries, according to a background paper prepared for the World
Bankâs 2008 Africa Infrastructure Country Diagnostic\. These costs are presented in table 4\. The
unit costs of rehabilitating the Avenida Sebastião Marcos Mabote were below the average of the
lowest quartile and the rehabilitation of Avenida Nelson Mandela was only slightly higher than
the average\. Notably, the unit costs of regraveling were substantially lower than the average of
the lowest quartile for this type of work\.
Table 4: Unit costs of road construction and maintenance in Africa, 2008
Type Unit Lower quartile Median quartile Upper quartile
Rehabilitation (paved) US$/lane/km $220,186 $352,613 $505,323
less than 50 kilometers
Regraveling US$/lane/km $12,835 $15,625 $19,490
Source: World Bank, 2008\. âUnit Costs of Infrastructure Projects in Sub-Saharan Africa,â? Africa Infrastructure
Country Diagnostic, background paper 11, June\.
Solid Waste Management
Cost effectiveness
7\. A cost benefit analysis for the investments in solid waste management was carried for the
appraisal of the MMDP I\. This calculated the internal rate of return to be 20 percent and the net
present value of the cash flow at a discount rate of 12 percent to be US$650,000\. Unfortunately,
data are not available to permit an update of the estimates from the original economic analysis\.
8\. However, a comparison of the costs of delivering solid waste services in Maputo with
those in other medium-size cities in developing indicates that costs in Maputo are well within the
norms\. See table 5 for details\.
Table 5: Average per capita and per ton costs of solid waste services in Maputo compared
with medium size cities in developing countries (US$m)
Cost per capita per year (US$) Cost per ton (US$)
Maputo 2010 3\.67 20
Medium-size cities 2006* 3\.33â4\.00 17\.78â26\.67
Source: Shantha R\. Parthan, Mark W\. Milke, David C\. Wilson, and John H\. Cocks\. 2011\. âCost Function Analysis
for Solid Waste Management: A Developing Country Experience\.â? In Waste Management and Research, November
10, 2011\.
35
Annex 4: Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/ Specialty
Lending
Kate Kuper Senior Urban Specialist AFTUW TTL
Natalino Nascimento Engineer/Technical Consultant AFTUW Engineering
Louis Helling Institutional Development Consultant AFTUW Institutional development
Brighton Musungwa Sr\. Financial Management Specialist AFTFM Financial management
Joao Tinga Financial Management Analyst AFTFM Financial management
Mafalda Duarte Capacity Building and Operations AFTUW Capacity building program
Consultant
Carolyn Winter Sr\. Social Development Specialist AFTS1 Citizens report cards
Luz Meza-Bartrina Sr\. Counsel LEGAF Legal advice
Slahhedine Ben-Halima Sr\. Procurement Specialist AFTPC Procurement
Antonio Chamuco Procurement Specialist AFTPC Procurement
Suzanne Morris Sr\. Finance Officer CTR Financial management
Lurdes Malate Program Assistant AFCO2 Program assistance
Salma Chande Office Assistant AFCO2 Program assistance
Uri Raich Urban Specialist AFTU1 Project design
Ali Alwahti Urban Specialist AFTU1 Project design
Rildo Santos Program Assistant AFTU1 Program assistance
Roberto Santoro Municipal Finance Consultant AFTUW Municipal finance
Rafael Saute Communications Specialist EXT Communications
Serigne Omar Fye Sr\. Environmental Specialist AFTS1 Safeguards
Diep Nguyen Van-Houtte M&E Specialist AFTQK M&E design
Anne Louise Grinsted Junior Professional Officer AFCO2 Project design
Supervision / ICR
Ali Alwahti Urban Specialist LCSUW Project implementation
Uri Raich Senior Urban Specialist AFTUW TTL
Theresa Marissa J\. Gamulo Procurement Analyst AFTUW Procurement
António L\. Chamuço Senior Procurement Specialist AFTPC Procurement
Maria Isabel Nhassengo- Procurement Assistant AFCS2 Procurement
36
Massingue
Amós Martinho Malate Procurement Analyst AFTPC Procurement
Nilsa Ricardina João Comé Team Assistant AFCS2 Program assistance
Daryoush Kianpour Senior Information Technology Specialist MNSPS IFMIS
José N\. Nascimento Consultant AFTUW Engineering
Louis Helling Consultant AFTUW Institutional development
Cary Anne Cadman Senior Forestry Specialist AFTSG Safeguards
Kristine Schwebach Operations Analyst AFTCS Operations support
Jutta Ursula Kern Sr\. Monitoring and Evaluation Specialist AFTDE M&E implementation
Elvis Teodoro Bernado Financial Management Analyst AFTFM Financial management
Langa
Arlete Quitéria Comissário Program Assistant AFCS2 Program assistance
Kate Kuper Senior Urban Specialist AFTUW TTL
Wendy Ayres Senior Economist (Consultant) AFTUW ICR primary author
(b) Staff Time and Cost (from SAP)
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle No\. of Staff Weeks US$ Thousands
(including travel and consultant
costs)
Lending
Fiscal 2007 103\.82 463,259\.78
TOTAL: 463,259\.78
Supervision/ICR
Fiscal 2007 2\.43 7,358\.37
Fiscal 2008 82\.05 311,258\.04
Fiscal 2009 73\.71 286,391\.93
Fiscal 2010 28\.40 235,741\.36
Fiscal 2011 21\.73 82,032\.11
Fiscal 2012 0\.60 7,731\.88
TOTAL 930,513\.69
37
Annex 5: Citizens Report Cards
1\. The first Maputo municipal citizen report card was introduced in 2005 as a contribution
to project formulation for MMDP Phase I\. Previously, there had been no systematic assessment
of the quality and coverage of municipal services, nor of citizen priorities and satisfaction with
respect to these services\. The results of this first CCM were well received by municipal
authorities and were employed as a reference in project design consultations with key public
sector, private sector, and civil society stakeholders\. The citizenâs report card assisted in
identification of the main priorities for the municipalityâs service improvement plans, reflected in
investment priorities for IDA credit resources, as well as a way of measuring progress in the
satisfaction of citizen priorities\.
2\. From the outset, the CCM and IDA teams agreed on the usefulness of this tool and
committed to its regular (annual) application as a support to structured communication channel
between citizens and authorities and to monitoring citizen perceptions of project outcomes\.
Specifically, there was agreement on the following objectives and strengths of the citizenâs
report card:
ï Establish a system of open and effective communication between the CCM and the
citizens in the all the municipal districts of the city (as the citizens report card is
representative at the district level)\.
ï Identify the services that residents consider priority in each district to guide the priorities
in the provision of services by the CCM\.
ï Produce information on the provision and quality of services in the districts\.
ï Assist in monitoring and evaluating the efficiency of delivery of such services
ï Increase the accountability of service providers before the CCM and citizens\.
ï Strengthening the voice of the citizen and community participation\.
3\. As an illustrative example, figure 1 presents the graphic synthesis of the 2005 (baseline)
citizens report card assessment of quality and importance of urban services in the form they were
frequently presented and discussed by municipal authorities with both internal and external
stakeholders\.
38
Figure 1: Synthesis of the findings from the 2005 Citizenâs Report Card
4\. Based on its acceptance during project formulation, the citizenâs report card methodology
was employed throughout implementation: public dissemination of its results was used as a key
performance indicator for governance improvement activities supported under the MMDP I\. The
regular use of this governance tool has allowed the management of CCM to permanently monitor
service delivery and citizen satisfaction (or not) with municipal performance\. Results are
broadly disseminated both at the time of their release, including a formal presentation to the
municipal assembly, and subsequently in neighborhood meetings and as a basis for civil society
consultations\. Specifically, the Mayor has adopted this tool as a thermometer of his own
popularity and has used the results for strategic planning\.
5\. The CCM has continued to be employed both as a strategic planning tool and as a
monitoring tool for citizen satisfaction with the provision of urban services\. Further refinements
of the methodology have introduced citizen assessments of service quality which complement
satisfaction measures with descriptive characterization of frequency and coverage of service
provision\. The citizenâs report card has also increasingly collected and presented data at
submunicipal level to assist in the geographical targeting of service improvement\. As an
illustration, matrix 1 presents differentiated priorities for each of Maputoâs seven municipal
districts from the 2010 citizenâs report card\.
39
Matrix 1: Service priorities by municipal district
KaMubuk-
KaMpfumu Nhlamankulu KaMaxakeni KaMavota KaTembe KaNyaka
wana
Solid waste Neighborhood Water Solid waste Solid waste Water Electricity
1 collection security provision collection collection provision provision
Accessibility Accessibility Neighborhood Water Neighborhood Accessibility Water
2 security provision cleanliness provision
Neighborhood Water Health Neighborhood Water Public Public
3 cleanliness Provision security provision transport transport
Traffic Solid waste Solid waste Accessibility Accessibility Electricity Accessibility
4 Management collection collection provision
Drainage Neighborhood Accessibility Health Electricity Health Neighborhood
5 cleanliness provision cleanliness
Health Drainage Schools Public Neighborhood Solid waste Solid waste
6 transport security collection collection
Markets Health Neighborhood Electricity Public Agriculture Markets
7 cleanliness provision transport
Public Drainage Electricity Schools Health Schools Agriculture
8 transport provision
Parks Markets Public Neighborhood Schools Neighborhood Health
9 transport Cleanliness cleanliness
Municipal Public Markets Markets Fire fighting Markets Schools
10 police transport
Source: 2010 Maputo citizens report card\.
6\. In conclusion, the Maputo municipal citizenâs report card has been broadly recognized as
a useful basis for increasing the responsiveness of municipal policies, plans, and actions by
aligning them with citizen concerns and preferences and for providing an objective reference
underpinning dialogue and accountability between municipal officials and civil society\. Because
of this recognition, during project formulation it was agreed Maputoâs citizens report card will
continue to play a significant role in municipal planning, monitoring, and governance for MMDP
Phase II\.
7\. For the purposes of the project, the findings of the citizenâs report cards substitute for
information that may have been collected from a project-specific beneficiary survey\.
40
Annex 6: Summary of Borrowerâs ICR and/or Comments on Draft ICR
Summary of Borrowerâs ICR and/or Comments on Draft ICR
1\. Assessment of the operationâs objective, design, implementation, and operational
experience
1\.1 Global Objective
1\. The program development objective is âStrengthen the Maputo City Councilâs
institutional and financial capacity to support achievement of long-term service delivery goals,
and to implement selected priority investmentsâ?\.
2\. The project has contributed decisively to create the basis for organizational and
management tools on which the CCM may base its governance objectives in the medium and
long terms\. The project accomplished that through the creation or improvement of tools for
strategic, operational, and urban planning; human resource management; information systems;
communication; transparent and participatory governance\. It sought to adjust the organizational
structure to fit the Vision, Mission and Strategic Objectives of CCM\. Also, it supported the
financial pillars for financial management and revenue generation for the present and future
sustainability of the organization\. In addition, the project began to address the main problems of
service provision, in particular the quality of roads and collection of municipal solid waste\.
1\.2 Project Rationale
3\. The project was designed combining a long-term view, of provision of municipal services
with quality and comprehensiveness (Component C), with the short and medium-term view of
building a sustainable institution and revenue generation capacity (Component A and B) to
support investment in municipal services and ensure their maintenance of quality\.
4\. The project was designed based on the following conceptual logic:
a\. The Vision: Maputo, as a prosperous, attractive, clean, secure, and united city
b\. The Mission: Enhance the coverage and quality of municipal services offered to
residents of Maputo by strengthening institutional and financial capacity
c\. Program components to ensure the operational implementation of the Mission:
Components A and B to ensure human resources, management capacity and
financial resources for governance and service delivery to citizens; and component
C focused on planning and Service Delivery Improvements\.
1\.3 Design
5\. The design of the project was a participatory process of governance and an opportunity
for organizational learning for the leadership and staff of CCM for the following reasons:
41
ï The development of a Logical Framework (survey of problems and identification
of priorities) based on the collection of citizens' expectations during the election
campaign, in consultative sessions with partners from the private and public
sectors and civil society;
ï Different versions of the Logical Framework, developed with support from the
IDA team, were presented and validated by the private and public sector partners,
and civil society;
ï The development of the Logical Framework was the work of Councilors,
Directors and Technicians of CCM (about 90 people) with the support of IDA\.
6\. Project was designed to ensure the full integration of local planning instruments (i\.e\.
objectives, outputs and activities) into CCM work flow and routines, also in alignment with the
activities and results identified in CCMâs Election Manifesto and Plan of Activities\.
7\. The mechanisms for project coordination and implementation were fully integrated to the
existing management structures\. The management and implementation of the project was under
the direct responsibility of the mayor, Councilors, Directors and Staff of the CCM\.
1\.4 Implementation and the outputs
8\. The global and specific objectives of the project were achieved almost entirely\. Of the
seven Performance Indicators Triggers, 6 were met or exceeded our targets for Phase 1 of
PROMAPUTO, namely:
-% of nominal increase of CCM revenues (Component B)
- Additional km unpaved roads in good condition for each year (component C2)
- Tons of Solid Waste collected and deposited in the waste dump (component C3)
- Realization and Dissemination of Citizen Report Cards (Component A)
-% of units with staff table defined and current employees redeployed (Component A)
- Ratio of own revenue / expenses (Component B)
9\. The indicator on design and implementation of SIGEF was not achieved in its totality\.
10\. We believe that the implementation of Phase 1 of PROMAPUTO was positive, even
without reaching the "Trigger" of SIGEF, based on the following facts:
- Level of Performance and Impact achieved internal and external
- Level of Budget Execution
- Establishing mechanisms and management systems with the potential to enhance the
performance and sustainability for the future of the CCM
- Level of cooperation and professionalism of the CCM and IDA teams
2\. Assessment of the outcome of the operation against the agreed objectives
11\. Taking into account the specific Objectives of each component of the project, we do the
following assessment:
42
12\. Component A on institutional development and municipal governance aims at:
rationalizing the municipalityâs internal processes for service delivery; improving the
performance of the municipalityâs functional units; and improving governance\.
13\. We believe that the overall objective of the component was achieved in a satisfactory
way based on the evaluation of the main results planned and achieved:
Results Assessment
Strategic and operational planning Satisfactory
methodology
Restructuring Plan for all Organizational Satisfactory
Units defined and implemented (Modeling
Processes, Job Description Manual, Staff
Table, Competencies Profile Assessment and
Redeployment Plan)
Annual Citizens Report Card implemented Satisfactory
and results
Integrated Human Resources Management
System defined (Strategy, Global and
Satisfactory
Specific Policies defined and Manual of
Procedures)
Human Resources Reinforcement Plan Satisfactory
(recruitment of new qualified technicians and
integrated in Organizational Units)
Annual Training Plans Satisfactory
Deconcentration Plan for Municipal Districts Satisfactory
HIV/AIDS Satisfactory
Information and communications technology Moderately satisfactory
Communication Moderately satisfactory
Public Sector Relations Moderately satisfactory
Anti-Corruption Moderately satisfactory
Public Private Partnerships Program Satisfactory
14\. Component B on municipal finance aims at: improve the municipal public finance
systems by increasing its own-source revenues (local taxes and fees) and enhancing the budget
planning, execution, and control functions\.
15\. We believe that the overall objective of the component was achieved in a moderately
satisfactory way based on the evaluation of the main results planned and achieved:
Results Assessment
Number of additional tax payers registered in tax cadastre Moderately satisfactory
(property taxes and business services taxes)
Cadastre team Moderately satisfactory
Database of property taxes Moderately satisfactory
IPRA regulation Satisfactory
43
TAE regulation Satisfactory
Collection of Fees Moderately satisfactory
IFMIS design and implementation Not satisfactory
Planning and Budgeting Improvements Moderately satisfactory
Mid Term Expenditure Framework (CFMP) Satisfactory
Selection of auditor for 2008 and 2009 financial years (FY) Satisfactory
Consulting service for Evaluation of municipal real estate
Satisfactory
patrimonial
16\. Component C on planning, infrastructure rehabilitation and service delivery
improvements aims at: support urban planning and target investments to improve and rehabilitate
critical urban services, including roads and drainage, solid waste management, a cemetery and
street lighting\.
17\. We believe that the overall objective of the component was achieved in a satisfactory
way, based on the evaluation of the main results planned and achieved:
Results Assessment
Baixa Marginal Urbanization Plan Not satisfactory (postponed for ProMaputo II)
Zimpeto Urbanization Plan Satisfactory
Magoanine A, B and C Urbanization Plan Satisfactory
Urbanization Plan for Laulane, Ferroviário, 3
Satisfactory
de Fevereiro, Mahotas
Urbanization Plan for Costa do Sol Satisfactory
Albazine Urbanization Plan Satisfactory
Urban Structure Plan Satisfactory
Municipal Geographic Information System: Satisfactory
System Development
Municipal Geographic Information System: Satisfactory
Aerial Photography
Municipal Geographic Information System: Satisfactory
Hardware and software
Environmental Impact Assessment for Satisfactory
Michafutene/ Marracuene Cemetery
Environmental Impact Assessment for Julius Satisfactory
Nyerere Av\.
Av Sebastiao Mabote rehabilitation Satisfactory
Increase street light network Satisfactory
Rehabilitation of paved and unpaved roads Satisfactory
Cemetery Construction Moderately satisfactory
Solid waste collection in urban areas Satisfactory
Solid waste collection in suburban areas and Satisfactory
markets
Primary Waste collection Satisfactory
Operation of Municipal Dump Site Hulene Moderately satisfactory
44
3\. Evaluation of the borrowerâs own performance
18\. We introduce our self-assessment for the various components of coordination and
implementation of the project:
3\.1 Coordination Model
3\.1\.1 Positive Aspects:
Result: Level of results achieved (impact, disbursements) when compared with other
programs
Office of Strategic and Institutional Development:
⢠Office of Strategic and Institutional Development with monitoring tools
⢠Good leadership by the CCM
⢠Monthly meetings between Office of Strategic and Institutional Development
and IDA team
Monitoring:
⢠Weekly meetings to analyze the implementation process with the participation
of heads of components
Mainstream in the objectives and structure of the CCM
⢠Convergence of the instruments of governance and priorities with the objectives
of CCM
⢠Insertion of the Project Implementation Unit of the CCM in the organizational
structure and leadership of the Mayor\.
3\.1\.2 Aspects to be improved:
Information Flow
⢠Information flow between various departments and Office of Strategic and
Institutional Development can be more expedite
⢠Management and coordination within the CCM must be improved
Unclear roles and priorities
⢠Communication CCM / World Bank was not always good
⢠The role of the Office of Strategic and Institutional Development was not
always respected by the executive areas
⢠Coordination of components: planning and monitoring of each component head
could be improved
⢠Lack of prioritization
Weak capacity
⢠Office of Strategic and Institutional Development without national staff and
implementing and coordinating assignments simultaneously
⢠Need to decrease the operational role of Office of Strategic and Institutional
Development and increase the coordination and facilitation role
3\.2\. Financial Management
3\.2\.1 Positive Aspects:
⢠Ensuring resources facilitates the implementation
⢠Model allows secure payments
45
⢠Commitment met in relation to new technical and bonus payments
⢠Introduction of management philosophy that combines the planning and budget results
3\.2\.2 Aspects to be improved:
Result:
⢠Late payment of invoices
Poor Information Flow
⢠The sectors must improve their information on budget execution
Unclear roles
⢠Several commands in financial management
Lack of knowledge of procedures
⢠Problems resulting from lack of knowledge of the rules and procedures of
financial management and in particular of IDA rules and regulations;
⢠Lack of flexibility or redistribution of the work redesign activities by problems
in the budgets
⢠Management oriented to procedures not to results
3\.3\. Procurement
3\.3\.1 Positive Aspects:
⢠Identified the problem of inefficiency and implementation process with the participation
of heads of components
⢠Creation of the Department of Procurement\. Streamlined procurement unit to deal with
IDA and non-IDA transactions
⢠Of the 189 bids, almost all were performed\.
3\.3\.2 Aspects to be improved:
Result
⢠Delay in issuing calls for tender
⢠Delay in response to procurement processes
Procedures and unclear priorities
⢠Ambiguity of procurement procedures to be used in acquisitions of the Program and
other acquisitions in the CCM (Need to improve harmonization)
⢠Lack of domain rules of the World Bank by the technical, administrative and juries\.
⢠Stiffness in the procurement processes
Poor communication
⢠Lack of regular and rapid communication between the Purchasing Department, and
other Departments, and Office of Strategic and Institutional Development
Weak capacity and discontinuity of training
⢠Many activities are delayed for lack of skilled personnel in the field
⢠Moving systematic employee of the Department of Procurement (high turnover)
⢠Continuous loss of key procurement personnel due to the limited Mozambican market\.
46
3\.4\. Reporting
3\.4\.1 Positive Aspects:
Result:
⢠Financial Monitoring Reports clear and timely
⢠Monitoring good fast and accurate
⢠Achievement of agreed actions and timeliness of reports
Role of Office of Strategic and Institutional Development
⢠Office of Strategic and Institutional Development as systematizing information and
responsible for preparing the final quarterly and annual report
3\.4\.2 Aspects to be improved:
ï Great demand by IDA: Level of IDA's requirement for the reporting (Financial
Monitoring Reports) incompatible with the learning time of the CCM (since the
responsibilities are integrated into existing structures)
3\.5\. Operations Manual
3\.5\.1 Positive Aspects:
⢠Existence of an operations manual to guide the implementation
⢠In general it was well implemented
3\.5\.2 Aspects to be improved:
⢠Operations Manual requires adjustments for new challenges\.
3\.6\. Technical Assistance Strategy
3\.6\.1 Positive Aspects:
Result: The support necessary for the proper performance of the program was guaranteed
Technical Assistants capable, qualified and available:
⢠Technical assistance of good quality
⢠Almost permanent availability of Technical Assistance
3\.6\.2 Aspects to be improved:
Dependence of Technical Assistants: High dependence of Technical Assistants at the
beginning of program
Poor transfer of know-how:
⢠Limited transmission of knowledge and know-how
⢠Must work more with the respective areas and technicians with CCM\.
Unclear roles of Technical Assistants: Ambiguity regarding the role of technical
assistance regarding advising vs\. execution\. This challenge was made more complicated
because (i) there is an enormous lack on capacitated personnel to execute work, and (ii)
existing municipal personnel already has full workloads and cannot easily take on new
demands from the Project\.
47
4\. Evaluation of the performance of the Bank, any co financiers, or of other partners
19\. The Bank has played fundamental role to keep the project on track as well as to achieve
the main goal\. The Bank missions has maintain close contact and dialogue with giving rapid and
positive response for the problems and questions related to the implementation and management
of the project\.
20\. During the project implementation the Bank mission was made regular visit to the project
included field mission to supervise and monitor the implementation and discuss the progress and
strategy related to the project\. Supervision regularly reviewed compliance with fiduciary,
environmental, and other safeguards\. The Bank maintained a close dialogue with Mayor,
councilors, technical staff, and development partners throughout implementation\. The stability of
the Team members of IDA between the stage of formulation, negotiation and implementation
allowed a better understanding of the institutional and local levels and a very effective
teamwork\.
5\. Assisting the preparation of the Bankâs ICR
21\. The Bankâs ICR was prepared by a consultant that worked in strong collaboration with
the Coordination of the project (Office of Strategic and Institutional Development)\. The
preparation has included meetings with the managers and technical staff and some field visits on
roads and Solid Waste projects in different municipal districts\. In additional, the draft report was
discussed and feedback provided to the Bank authorities\.
48
Annex 7: List of Supporting Documents
Project documents
Project Concept Note
Project Appraisal Document, December 21, 2006
Mozambique Country Partnership Strategy, April 24, 2007
Financing Agreement, February 9, 2007
Aide memoires
Midterm Review, April 2009
Implementation Support Reports, 12 total from July 2007 to August 2011
Quarterly and annual progress reports prepared by the City Council of Maputo
Other project files: back-to-office reports, financial audits\.
Background studies
CESO\. 2005\. âAnalysis of Current Human Resources of Maputo City Council\.â?
Deloitte & Touche\. 2005\. âStudies on Maputo City Council Revenues\.â?
Metier Consultoria and Desenvolvimento\. 2006\. âCity of Maputo, Municipal Scorecard on
Urban Services\.â?
Faber, Robbert and Manuel Lourenqo Rodrigues\. 2006\. âStudy to determine the revenue
potential of the Municipality of Maputo\.â?
Noronha, Joao\. 2006\. âStudy on Revenues from Markets and Fairs\.â?
Brandberg, Bjom\. 2005\. âSanitation and Hygiene Study\.â?
SAL and Caldeira Pty (ltd)\. 2006\. âPublic Private Infrastructure Advisory Facility, Public
Private Partnerships Framework Study\.â?
Universidad Europea de Madrid Faculty of Architecture\. 2006\. âCities Alliance Phase I
Report\.â?
Consortium Usec, Ibam, Multiservicos\. 2006\. âFunctional Analysis of CCM\.â?
Cruz, Catarina\. 2006\. âEnlargement of the Cadastral Base of IPRA Contributors\.â?
Borges, Alfredo\. 2006\. âStudy on Information Technology System for reform of Municipal
Finances\.â?
Dray, Madalena\. 2006\. âEnvironment and Social Management Framework for ProMaputo\.â?
Thompson, Gaye\. 2006\. âResettlement Policy Framework for ProMaputo\.â?
Metier Consultoria and Desenvolvimento\. 2006\. âCity of Maputo, Basic Poverty Assessment\.â?
Buendia, Miguel\. 2006\. âCity of Maputo Anti-Corruption Strategy\.â?
49
Map of Mozambique
50
IBRD 33451R1
30° E 35° E 40° E
10° S 10° S
Lake
La ke TA N Z A N I A To
Mtwara
Malawi
Mocimboa
MOZAMBIQUE Mueda da Praia
a
end
Lug
Metangula CABO
ssa
lo DELGADO Pemba
NIASSA Me
Lichinga
Lichinga
ue
Montepuez
M A LAWI
ALAWI Marrupa
q
Catur bi io
To
Chipata To
m au
a e Lúr
ZAMBIA Lilongwe
oz t
Mualadzi
To
M Pla
Nacala
To
Petauke
Mangoche
Cuamba NAMPULA
Furancungo Ribáu
Ribáuè
15° S To 15° S
To Zomba
Lusaka FÃngo
FÃngoè Montes Namule Nampula Moçambique
Lago de TETE Zam
(2,419 m)
Cahora Bassa be Gurué
Guru
Zumbo Songo ze To Alto Molócue
Blantyre
Ligo
Moatize
Milange
n
ha
Tete Angoche
un
ZAMBÃZIA
Lic
go
Changara
Mocuba
To
Mutoko
Namacurra Pebane
Sena
Za
mb Quelimane
ZIMBABWE Catandica ez
e
Gorogosa Inhaminga
To
Harare SOFALA
Chimoio INDIA N O CE AN
in
To
Masvingo
MANICA
a
Pl
Monte Binga
(2,438 m)
(2,436 Beira 20° S
20° S
u e
i
To Bu z
Masvingo
i q
Espungabera
m b
Nova Mambone
e
z a
Sav
Inhassôro
To
Rutenga
M o
Vilanculos
Chicualacuala 0 50 100 150 200 Kilometers
MachaÃla
To
Messina INHAMBANE
0 50 100 150 Miles
Chigubo
Mapai
GAZA
Ch a
Lim
po
M O Z A M B I QUE
ngane
op
SOUTH
o
Massingir Inhambane
AFRICA Panda
SELECTED CITIES AND TOWNS
Guija Inharrime
Chibito PROVINCE CAPITALS
25° S MAPUTO NATIONAL CAPITAL 25S
To Xai-Xai
Nelspruit This map was produced by RIVERS
Manhica the Map Design Unit of The
World Bank\. The boundaries, MAIN ROADS
Moamba colors, denominations and
Matela MAPUTO
any other information shown
RAILROADS
on this map do not imply, on
To the part of The World Bank
Mbabane Group, any judgment on the PROVINCE BOUNDARIES
legal status of any territory,
SWAZILAND Zitundo
or any endorsement or
acceptance of such
INTERNATIONAL BOUNDARIES
boundaries\.
30° E 35° E
JANUARY 2007 | REVIEW |
P005692 |  Second agriculture sector adjustment loan
Report No: ; Type: Report/Evaluation Memorandum ; Country: Tunisia; Region: Middle East And North Africa; Sector: Agriculture Adjustment; Major
Sector: Agriculture; ProjectID: P005692
Tunisia_Agriculture Sector Adjustment Loan II (Ln\. 3078-TUN)
The Tunisia Agriculture Sector Adjustment II (ASAL II) project, supported by Loan 3078-TUN for US$84\.0 million
equivalent, was approved in FY89\. Following a six-month extension, the loan was closed on June 30, 1995\. A balance of
US$1\.4 million was canceled\. Additional financing of US$16 million equivalent, linked to the ASAL II conditions, was
provided by the German Kreditanstalt fâ r Wiederaufbau (KfW)\. The Implementation Completion Report (ICR) was
prepared by the Natural Resources and Environment Division of the Middle East and North Africa Region\. The
Borrower's contribution is appended to the ICR\.
This loan, for a hybrid project, continued support to the Government's Medium-Term Agricultural Sector Adjustment
Program (MTASAP), begun under the First Agricultural Sector Adjustment Loan (Ln\. 2754-TUN)\. The main objectives
of the loan were to promote greater efficiency and economy in the production of agricultural products and in the use of
public resources in the sector and to enhance the role of the private sector in the provision of commercially-viable sector
support services\. Major policy reforms in support of these objectives were: (i) parastatal privatization (divestiture of
parastatal marketing boards to the private sector, with increased competition); (ii) pricing and marketing changes (subsidy
reduction and aligning producer prices with world prices, subject to a 15 percent tariff); and (iii) adjustment of agricultural
support services (privatization where possible and better funding of public sector research and extension)\. The loan
provided US$50 million for import support and US$34 million for investment sub-projects\.
Overall the MTASAP achieved its major policy objectives and achieved satisfactory development results\. Subsidies on
inputs (fertilizers, pesticides, seeds, animal feeds) were substantially reduced or eliminated and parastatal reform was
generally successful, including the liberalization of domestic marketing and foreign trade in edible oils and of importation
of tractors\. Three factors explain these results: a high level of government ownership, the unanticipated decentralization
of the Ministry of Agriculture, and highly favorable weather which increased farm profitability and reduced farmer
resistance to removing input subsidies\. Exceptions to this overall satisfactory outcome are the remaining overprotection
of wheat production, inadequate privatization of cereals marketing and meat imports, and a lack of clarity about the aims
of a number of remaining parastatals\.
The investment component was not defined in detail until a year after loan effectiveness\. Most investment sub-projects
were completed as expected despite delays and some ultimate financing from other sources\. However, the economic
impact of these investments was not recalculated\. In retrospect, the decision to set up a hybrid loan_including both import
support and financing of investment sub-projects_made the project extremely complicated causing unusually heavy
demands for preparation and supervision that were not fully met\. The impetus for choosing such a lending instrument was
not clearly articulated\.
As the ICR points out, there was a divergence between the stated objectives and those pursued during supervision\. The
Bank's main concern was related to reducing the fiscal imbalance and sector inefficiencies (through pricing reforms)\. Pre-
appraisal analysis revealed that the side effects of such policies would be marginally negative sector growth and minor
declines in farm incomes\. However, these expected results were not described in the President's report to avoid
diminishing support for the project, and the project was cast in terms of growth and public resource efficiency objectives\.
This explains most of the implementation shortcomings\. As the ICR points out_and OED agrees_in hindsight, a frank
discussion of the policy implications would have been better, even if they would have complicated appraisal\.
The ICR and OED rate project outcome as satisfactory, sustainability as likely, and institutional development as modest\.
The ICR rates Bank performance as satisfactory, but OED rates Bank performance as unsatisfactory\. This difference rests
on the above reported failure to communicate to the Borrower and Board the analysis of likely project impact\.
The ICR is satisfactory, providing a full and frank account of project experience\. The weakness is the absence of a re-
estimate of the economic rate of return (reflecting weak project monitoring, as described in the ICR)\. No audit is planned\. | REVIEW |
P001333 |  ICRR 11115
Report Number : ICRR11115
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 03/27/2002
PROJ ID : P001333 Appraisal Actual
Project Name : Sexually Transmitted Project Costs 65\.5 55\.5
US$M )
(US$M)
Country : Kenya Loan /Credit (US$M)
Loan/ US$M ) 40 36\.94
Sector (s): Board: HE - Health (91%), Cofinancing
Central government US$M )
(US$M)
administration (9%)
L/C Number : C2686
Board Approval 95
FY )
(FY)
Partners involved : Closing Date 06/30/2001 06/30/2001
Prepared by : Reviewed by : Group Manager : Group :
Timothy A\. Johnston George T\. K\. Pitman Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The project sought to support the government's strategy to address the STI /HIV/AIDS epidemic\. The three major
project objectives were to:
Strengthen institutional capacity at the national and district levels to design, implement, monitor and evaluate
interventions;
Promote preventive measures to reduce the risks of STI transmission;
Enhance both health sector and community provision of physical and psychological care and develop strategies
to mitigate the session economic consequences of AIDS \.
The following targets were to be achieved by the end of project implementation :
75 percent of target population able to cite 2 ways to protect themselves from HIV /AIDS
30 percent increase in reported condom use among the target population;
20 percent decrease in reported sexual partners;
Increase appropriate case management of STIs to 70 percent\.
b\. Components
The project had three components, corresponding to the major objectives :
Strengthen institutional capacity ($13\.1 million) at national and district levels to design, implement, and evaluate
interventions;
Promote preventive measures to reduce risk of STI transmission ($26\.7 million), including through (i) improved
clinical management of STDs; (ii) information, education, and communication (IEC) activities; (iii) supply and
distribute condoms\.
Enhance physical and psychological care ($19\.4 million) at both community and health sector levels, including
through: (i) support for TB control; (ii) treatment of opportunistic infections; (iii) support for home-based care;
and (iv) minimize risk of HIV exposure for health workers \.
c\. Comments on Project Cost, Financing and Dates
According to the ICR, the IDA credit provided $ 22 million for drugs (for STIs and opportunistic infections ), $7 million
for IEC materials, $4\.5 million for technical assistance and training, and $ 1\.5 million for vehicles\. $0\.9 million of the
undisbursed credit balance was cancelled at project closing \.
3\. Achievement of Relevant Objectives:
The Project design was relevant, but was placed too much emphasis on curative interventions, and not enough
attention to implementation arrangements \. Following the midterm review (1997), the Bank gave increased attention
to building political support for a comprehensive HIV /AIDS control program, and to resolving implementation
bottlenecks at the national and district level \. The project was part of a larger program, with bilateral donors (USAID,
DfID, Belgium) providing over $20 million in grant financing for STIs/HIV over the same time period, making it difficult
to differentiate the project's contributions to achievement of the stated targets \. In addition, project monitoring and
evaluation was weak, such that although project objectives were stated in terms of quantitative benchmarks for
sexual behavior and STI treatment, no baselines were established, and progress toward stated objectives was not
regularly tracked\. (Behavior trends can be inferred from various surveys, including 1993 and 1998 DHS, a project
completion/baseline survey (2000), and a USAID-sponsored knowledge, attitudes, and practices (KAP) survey
(2001)\.)
Various surveys suggest improved knowledge of HIV /AIDS and a reduction in high risk behaviors since the
mid-1990s -- but risky behavior and significant misconceptions remain widespread \. The project and Bank
dialogue appear to have contributed to increased visibility and political support for AIDS issues, strengthened
capacity at national and district levels, and supported workshops and media campaigns to encourage behavior
change\. The project financed substantial IEC activities, including national media campaigns and support for
establishing a curriculum in reproductive health in all schools \. But there is little evidence on the output or impact
of these campaigns\. It seems plausible, however, that the project contributed to positive behavior trends, and
laid the groundwork for further strengthening of the national and district -level response\.
Despite initial delays in drug procurement and distribution, the project improved the availability of drugs for
treating sexually transmitted infections \. But continued difficulties in the drug distribution system contributed to
periodic shortages of drugs at the facility level, despite adequate central financing \. As such, 80% of health
centers surveyed for the ICR reported adequate supply of STI drugs in previous 3 months, and 94 % of clinics
sampled had received STD drugs \. Some staff in each district have received training in STD case management,
but there are no reliable trend data on appropriate case management of STDs, so it is unclear if the 70 % target
for appropriate case management has been met \. (The ICR asserts that 88% of STI cases were appropriately
diagnosed, but this figure is based only on the percentage of STI patients returning for treatment -- not a reliable
indicator of treatment effectiveness )\. The project did not finance condoms due to availability of grant financing
from donors\.
Consistent with the decentralization process underway in the health sector, the project eventually succeeded in
allowing districts to directly incur project expenditures, which allowed district officials -- for the first time -- to
financed their own programs and that of local NGOs (for both prevention and community care activities )\. This
was an important step in improving local program autonomy and flexibility \. The project also financed various
training and capacity building activities in STI treatment and program management at the national and district
level\.
The project set a target of maintaining adult HIV prevalence below 15%\. According to sentinal surveillance,
adult HIV prevalence increased from 7\.5 percent in 1995 to 14\.9% in 1999 (the change in the annual incidence
(new infections) of HIV is not known)\. It is possible that HIV prevalence is lower than would have occurred in the
absence of the project -- particularly if project-financed IEC contributed to behavior change -- but this is difficult
to assess\. STI treatment can reduce the likelihood of HIV transmission, but recent studies suggest that the
impact of STI treatment on HIV incidence in mature epidemics may be less than previously thought \.
4\. Significant Outcomes/Impacts:
While the government was reluctant to openly address HIV /AIDS in the early 1990s, the Bank and its partners
used the project as a platform for dialogue on the need for a stronger national response \. The government has
since finalized a national HIV/AIDS policy, approved a Parliamentary Sessional Paper on AIDS (1997), and
established a National AIDS Control Council (2000)\. The President also has declared AIDS a national
emergency\. The Project and Bank dialogue may have contributed to this improved political climate and policy
framework\.
Although condom use remains low among married couples (6%), it has increased among unmarried couples,
casual partners, and commercial sex workers \. The percentage of sexually active men who have ever used a
condom increased steadily from one -third in 1993 to half in 2001\. More importantly, men using condoms with
non-regular partners increased from 43% in 1997 to 63% in 2001, and both commercial sex workers and their
customers report use of condoms in over three -quarters of encounters\.
The number of men reporting more than one sexual partner declined from 27% in 1997 to 19% in 2001 (women
reporting >1 sexual partner remained low and unchanged at less than 4%)\. National and district level awareness
campaigns, which this project helped support, may have contributed to this progress \. (The project's specific
contributions to these changes in condom use and sexual behavior are difficult to assess, however )\.
Prevalence of syphilis (a treatable STI) among women attending antenatal clinics declined from 7% (1995, 1997)
to 5% in 2000\. This could be attributable to improved STI treatment, although behavior change may also have
played a role\.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Planned operational research, monitoring, and evaluation activities were not completed (HIV surveillance was
supported by other donors )\. Moreover, documentation on specific project outputs, activities, and expenditures
are inadequate because of poor record keeping \.
Improving AIDS care and mitigation was mostly unsuccessful \. The project planned to disburse substantial
resources for care and prevention activities by communities and NGOs, but the government's disbursement
system made it very difficult to get authorization to incur expenditure for these activities (except for a few
activities sponsored by districts ), despite a Memorandum of Understanding developed at the beginning of the
project\.
Because of various bottlenecks in transferring project resources to districts, only 10% of project resources went
directly to districts (against a planned 20%)\. The ICR reports that districts implemented most of their planned
activities despite the funding shortfall \. Despite progress in training, less than a quarter of district health team
members received training in management skills, and only 20 % of sampled health facilities had work plans for
HIV/AIDS\.
Risky sexual behavior also persists, particularly among youth \. In Mombassa, for example, only 12 % of sexually
active girls (15-19) reported using condoms -- and half of women 18-19 reported becoming sexually active
before age 18, with no apparently change since the early 1990s\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Satisfactory The project made little progress on the third
component/objective\.
Institutional Dev \.: Substantial Modest Project appears to have contributed to
substantial progress at the district level, but
skill gaps persist, and the project made limited
contributions to strengthening NGO capacity,
research and M&E\.
Sustainability : Likely Non-evaluable A number of project activities are being
continued through subsequent projects,
but drug procurement will not be
sustained\. The PPAR mission will further
assess sustainability prospects \.
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
Reducing the incidence and prevalence of HIV requires a shift from a narrow medical focus to an emphasis on
changing behavior -- particularly among youth and high -risk groups -- and improving the socio-political
environment\.
A strong monitoring and evaluation program requires clear and measurable indicators that are systematically
collected over time\. This includes tracking project outputs, as well as program outcomes \.
Decentralizing project activities to district level can improve local implementation, but needs to be matched by
giving districts sufficient authority to incur expenditures, strengthen accountability, and capacity building for
planning and management\.
Project planning to finance NGO/community activities needs to develop clear modalities for doing so \.
8\. Assessment Recommended? Yes No
Why? To provide lessons on the Bank's early efforts in addressing STIs /HIV/AIDS, as part of a possible
OED thematic study\. An OED mission is scheduled for February, 2002\.
9\. Comments on Quality of ICR:
The ICR provides a good overview of the project activities, and discusses strengths and shortcomings \. But it contains
some inconsistencies, and should have been more explicit about problems in the quality some of the data on which it
based its assessment of project impact \. It does note that there were methodological problems in the evaluation
survey conducted following project completion \. But the ICR reports without qualification that 88 percent of STI cases
were appropriately diagnosed (based on questionable facility data ) and that condom use was 100% among survey
respondents who admitted visiting commercial sex workers (even though only 4 men acknowledged seeing CSWs )\. | REVIEW |
P078458 |  ICRR 13626
Report Number : ICRR13626
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 01/30/2012
PROJ ID : P078458 Appraisal Actual
Project Name : Et-ict Assisted Dev US$M ):
Project Costs (US$M): 31\.80 24\.36
Sim (fy05)
Country : Ethiopia Loan /Credit (US$M):
Loan/ US$M ): 25\.00 16\.44
Sector Board : Cofinancing (US$M ):
US$M): 1\.80 2\.92
Sector (s): General information
and communications
sector (60%)
General education
sector (10%)
General public
administration sector
(10%)
Health (10%)
General industry and
trade sector (10%)
Theme (s): Rural services and
infrastructure (25% -
P)
Decentralization (25%
- P)
Education for the
knowledge economy
(24% - P)
Other human
development (13% - S)
Trade facilitation and
market access (13% -
S)
L/C Number : C3985
Board Approval Date : 09/16/2004
Partners involved : German Development Closing Date : 05/31/2010 05/31/2010
Service (DED)
Evaluator : Panel Reviewer : Group Manager : Group :
Robert Mark Lacey Ridley Nelson IEG ICR Review 1 IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
The original project development objective (PDO) according to the Project Appraisal Document (PAD) was âto
assist communities to improve their livelihood through the use of appropriate Information and Communication
Technologies (ICT) that facilitate increased access to markets, development information, and public services \.â? The
original PDO in the Development Credit Agreement (DCA) was virtually identical\. The project was formally
restructured with Board approval on December 10, 2008\. This was followed by an Amendment to the DCA dated
January 29, 2009, on page 1 of which stated the revised PDO: âto increase the use of Information and
Communication Technologies by Communities in Project Target Areas \.â?
The ICR stated (pages 13 and 14) that, despite the fact that the PDO has been formally revised, a single rather than
a split evaluation will be conducted \. Two main reasons are cited for this : (i) âThe cancellation of the Rural
Connectivity sub-component [see Section 2c below] did not really change the nature and course of the project; â? and
(ii) âNeither the underlying development objective nor the fundamental activities of the project were changed â¦The
change of PDO removed ambiguities and strengthened the practicality and credibility of the [Results Framework] but
did not change the fundamental development objective of the project or its components \.â?
IEG, however, considers the change in the wording of the PDO quite substantial \. The removal of the phrases âto
assist communities to improve their livelihood â? and "that facilitate increased access to markets, development
information, and public services " from the revised objectives means that the achievement of the PDO became
considerably less demanding after restructuring \. Moreover, the target to reduce the business transaction cost for ICT
users by at least 30% was dropped at restructuring (see Section 4 below)\. This Review will, therefore, carry out a
split evaluation of the project in accordance with the guidelines \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
Yes
Date of Board Approval: 12/10/2008
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project had two original components:
1\. Policy and Institutional Support (US$12\.66 million at appraisal; US$11\.88 million at closure):
Policy, regulatory and legal framework \.
Development of ICT standards
Institutional strengthening of the Ethiopian ICT Development Agency (EICTDA), the Ethiopian
Telecommunication\. Agency (ETA), the Ethiopian Broadcasting Authority (EBA), and the College of
Telecommunication and Information Technology (CTIT)\. The component also included US$ 2\.87 million for
project management\.
2\. Application and Community Support (US$17\.40 million at appraisal, US$10\.78 million at closure):
Rural connectivity and access \.
ICT private sector development (business incubation or BIC)\.
Computer Refurbishment and Training Center (CRTC)\.
ICT Training of Trainers (TVET-TOT)\.
Community ICT Development (CIDEV) and Community Radios (CR)\.
The only change to the components made at restructuring was the cancellation of the Rural Connectivity and Access
sub-component\. According to the ICR (pages 4-5), this subcomponent âwas designed as a pilot test for provision of
3,000 rural telecommunications points of service \.â? However, by mid-2006, âthe [Government] had decided to install
five times as many rural telephones in connection with a backbone expansion contract signed with [a Chinese
company]\.â?
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Cost\.
Cost Final project costs were US$24\.36 million, US$7\.44 million less than the appraisal estimate of US$ 31\.80
million\. The bulk of the reduction came from the cancellation of the Rural Connectivity and Access sub -component
(US$8\.30 million), marginally counterbalanced by small increases in the cost of some components
Financing \.
The project team informed IEG in subsequent discussions that the restructuring was agreed with the Authorities
at the Mid Term Review (MTR) in March 2008\. As well as the revisions to the PDO, it was then recommended
that the resources from the cancelled Rural Connectivity sub -component (US$8\.30 million) be reallocated to
strengthen the CIDEV and TVET sub -programs\. However, the restructuring approved by the Board in December
2008 involved a general redeployment of resources from several ongoing projects in the country portfolio,
including US$10 million from this one, to the Global Food Crisis Response Program \.
The German Development Service (DED)âs advisory contribution, to which the ICR attributes critical importance
amounted to nearly US$3 million, compared to an appraisal estimate of US$ 1\.80 million\.
The Borrower contribution was as planned at US$ 5 million\.
Dates\.
Dates The project closed on schedule on May 31, 2010\. At the MTR, it was recommended that the closing date be
extended for two years in order to give the new entities created by the project sufficient time to solidify their
operations and move nearer to financial and managerial self -sufficiency\. The ICR reports (page 11) that this was not
done since at the time there appeared to be uncertainties that the project would attain the results that had been
hoped at appraisal, and that the decision not to grant an extension âis at the root of the high risk to development
outcomeâ? (see Section 7 below)\.
3\. Relevance of Objectives & Design:
Relevance of Original Objectives (Modest ):
According to the ICR (page 1), the project aimed to support the Bank âs goals as set out in the 2003-2005
Country Assistance Strategy (CAS) for Ethiopia, in particular fostering economic growth through the creation of a
favorable environment for private sector participation in ICT and strengthening the key ICT sector agencies \.
However, the PDO as originally stated did not aim at changing the environment for private sector participation in
the ICT sector, nor did it include the goal of strengthening sector agencies, or specifically address the CAS
objective of reducing the cost of ICT services, including the Internet \.
The PDO is, nonetheless, consistent with one of the four strategic goals of the 2008-2011 CAS (page ii):
âimproving access to, and quality of, basic service delivery, in order to sustain the emerging basic service âtake
offâ [noted in the previous CAS period ],â? although this is not the CAS goal referred to in the ICR \.
The project team subsequently informed IEG that the operation was intended to be a capacity -building exercise,
responding to the Governmentâs Letter of Sector Policy of June 17 2004, which states that âThe Government of
Ethiopia is engaged in a major program for development of ICTs in Ethiopia through a comprehensive ICT
Capacity Building Program\.â? However, there is nothing in the PDO statement to indicate that capacity building
was to be a major focus\.
Relevance of original design (Modest ):
As the ICR acknowledges (pages 2- 3): ââ¦measuring project success directly through improvements in the
livelihood of ICT-using communities was not realistic or credible within the time span of the project \.â? The project
team subsequently informed IEG that there were no survey or baseline data which could have been used to
measure the project's impact on the livelihood of the population \. Even had such data been available, attribution
to the project would have been highly uncertain \.
A decision was taken during preparation not to support sector reform issues through the project, but rather
through the Poverty Reduction Support Credit series \. Nevertheless, design still left it âwith several
[telecommunications] sector reform objectives that it could not expect to accomplish or about which it lacked
appropriate leverage,â? and which âcreated confusion on the degree to which project success would be measured
by progress on telecommunication sector reform â? (ICR, page 6)\.
Relevance of Revised Objectives (Substantial ):
The revised PDO posits a simplified and less ambitious set of goals for the project, and is more consistent with
the Governmentâs view of the ICT sector âas an enabler of efforts to achieve sustainable development and
poverty reduction through support of the capacity building pillar of the country âs Sustainable Development and
Poverty Reduction Program (SDRP) adopted in 2002â? (ICR, page 1)\.
The revised PDO is also consistent with the CAS goal of improving access to basic services \.
Relevance of Revised Design (Modest ):
The objective âto increase the use of ICTâ? is vaguely defined, since it contains no reference to the intensity of
use or to the quality of services to be provided to the user \.
The project was designed to increase demand for ICT services, but without any assurance that Ethiopia âs
deficient telephonic and electrical infrastructures would be improved to enable them to carry the increased
traffic\.
Although the PAD states (page 25) that the incubators would be established under a public -private partnership
arrangement, the model actually used relied entirely on the public sector for the initial investment and the grants
provided\.
Design does not clarify how the financial sustainability of the enterprises benefiting from the business incubators
would be reached and sustained \. There is no timetable for their exit from the program \. The projectâs M&E
system was not designed to monitor financial viability \.
4\. Achievement of Objectives (Efficacy):
The efficacy of the original PDO -- to assist communities to improve their livelihood through the use of appropriate
Information and Communication Technologies (ICT) that facilitate increased access to markets, development
information, and public services â is rated as modest \. The ICR makes no attempt to assess whether or not the
livelihood of the target communities has improved \. Nor is the impact of project activities on community livelihood
considered beyond the statements that the increased use of ICT by the communities and the supply response of the
ICT industry may be regarded as âproxiesâ? for improved livelihoods\. In subsequent written comments to IEG, the
project team argued that, in view of the âinternational consensus on the strong correlation between ICT and economic
developmentâ¦\.it seems appropriate for project designers to have chosen the growth of the ICT service industry as
the most practical proxy to measure achievement of the project development objectives \.â? This, however, leads to a
tautological argument â the PDO was to improve livelihoods through increased access to, and usage of, ICT services,
which are themselves the proxy indicators for enhanced livelihoods \.
The efficacy of the revised PDO -- to increase the use of Information and Communication Technologies by
Communities in Project Target Areas â is rated as substantial, although with caveats , given that the output-oriented
objectives were largely attained, albeit in the absence of wider sector reform and assurances of financial viability,
both essential to their sustainability :
The ICR reports (page 5) that the project leaves behind 65 community ICT centers throughout Ethiopia, serving
over 70,000 clients per month, seven community radios, four regional ICT business incubators with 55 start-up
company tenants, one âstate-of-the-artâ? computer refurbishment and de-manufacturing facility, training to over
9,000 people and strengthening of some sector institutions, notably the EICTDA \.
The number of private sector entities offering ICT services grew from a country -wide baseline of 5,714 to 12,352,
as against a revised target at restructuring of 12,089 (the original target -- a 15% annual growth in areas served
by the project -- would also have been exceeded on the reasonable assumption that the number of ICT entities
in those areas grew at least at the same rate as in the country as a whole )\.
The average number of monthly users in the project areas (72,542 at closure) rose to more than seven times the
revised target, and also substantially exceeded the original target \.
The ICR states (page 16) that the project benefited the affected communities, enterprises, and training
organizations through improved access to ICT services; increased access to general information; enhanced
computer literacy; teaching of specialized technical skills (including, in some cases, international exposure and
academic training); greater access to capital, technology and facilities; and creation of direct employment \. These
benefits are not, however, quantified \.
The target to reduce the business transaction cost for ICT users by at least 30% was dropped at restructuring
(the ICR states on page 17 that the project had no leverage to pursue it )\. Although tariffs for Internet and other
non-telephonic services fell by 35\.5% during the project period, âthese achievements cannot be attributed to
ICTAD [the project]â? (ICR, page 15)\. Despite the lower tariffs, âdue to its low GNP Ethiopia ranks as the second
most expensive country in the world for fixed line broadband tariffs as [a] proportion of monthly income (2085%)
according to ITUâs 2009 statisticsâ? (ICR, page 81)\.
Although the project has revealed the considerable extent of the pent -up demand for ICT services among poor
and disadvantaged rural communities, the effective demand for such services, and hence the income of
community ICT providers, remains seriously constrained by frequent power supply failures and interruptions to
telephone communications\. As a result, increased demand has resulted in significant bottlenecks \. The ICR
(page 83) quotes the Chinese company which is installing the fiber optic network as stating that, countrywide,
320 base stations cannot be used commercially because of a lack of power supply \.
Little information is contained in the project documents on quality of ICT service, and statistics of increased
access and usage mean little in the absence of such data \. The ICR notes (page 76) that âpoor quality of mobile
and Internet service can still jeopardize project achievements \.â? It also reports (page 82) that an e-learning
training course visited during the ICR preparation mission had to be suspended for three weeks due to the poor
quality of Internet connectivity \.
There is little or no competition and only limited private sector participation in the provision of ICT services \.
According to the ICR (page 25): âEven though ISP licenses were issued and thus the related dated covenant
was technically met, the original intention of the parties to spur the improvement of Internet services through
limited competition was not accomplished \. While technical difficulties with the infrastructure may have prevented
ETC from enabling the ISP licensees to operate, since ETC is a government -owned monopoly these difficulties
were ultimately under government control \.â?
5\. Efficiency (not applicable to DPLs):
Neither the PAD nor the ICR attempt a cost benefit analysis \. The ICR calculates the unit cost of the various
activities financed under the project which, in the absence of meaningful in -country or inter-country comparisons,
means little\. Subsequently, the project team produced comparators of the cost of project inputs (training, preparation
of legal changes, cost of business incubators ) drawn mostly from other Regions (Europe, the Middle East and Asia)\.
The costs of the corresponding inputs in Ethiopia are uniformly lower than their comparators \. The project team has
also stated that "Throughout project implementation, a âleast cost approachâ was followed by the PMU and all partner
institutions\." For example, direct procurement of equipment for community radios from small manufacturers lowered
the unit cost from an average of US$ 130,000 per community radio set-up to about US$56,000\. Efforts were made to
find low-rent space for the business incubation centers, by taking advantage of local authority offers of financial and
material contributions\. EBAâs use of peer-to-peer exchanges with other African broadcasting entities reduced the cost
of developing the draft broadcasting law and relevant licensing regulations \. Local consultants and DED technical
advisers were preferred to the extent possible for consultancy and TA assignments \. CIDEV centers and other
development sites were, whenever possible, equipped with refurbished computers at an average cost of US$ 105 per
unit compared to some US$800 for each new machine\. Although efficiency could be negatively affected by poor
quality of service leading to under -utilization of the equipment provided, overall it is rated substantial , both before
and after restructuring\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Outcome before restructuring was moderately unsatisfactory (relevance, efficacy were modest, while efficiency
was substantial)\. The post-restructuring PDO was achieved to a substantial extent, albeit with some caveats, and
efficiency remained substantial \. Relevance of objectives was substantial, and that of design modest \. The
post-restructuring outcome is therefore assessed as moderately satisfactory \. Applying the weighting criterion of the
percentage disbursed before restructuring (34\.5% of the final loan amount), in accordance with IEG guidelines,
results in an overall outcome rating of moderately satisfactory \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
IEG concurs with the ICRâs assessment (pages 19-20) that the risk to development outcome is high given that âthe
arrangements for continuity, sustainability and scaling up of project activities remain unfinished and consequently
weak:â?
Many of the entities created under the project started after delays of two years or more and have not yet reached
the point of financial or operational sustainability \. Required financial support from Government is not assured \.
Income-generating activities of the community ICT centers are often seriously affected by power failures and
interruptions to telephone and internet connections \.
Responsibility for continuation of the CIDEV, CR, BIC and TVET -TOT programs will, according to information
given to the ICR team, be transferred to regional counterparts of EICTDA \. Irrespective of the merits of this
decision, no arrangements seem to be in place to provide necessary training, incentives, transition support, and
above all financial resources, to enable these local authorities to perform their task \.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
Quality at Entry :
The Bank worked intensively with GOE since early 2002 to develop an ICT capacity building program \. High
level workshops were organized which attempted to establish the link between the CAS and SDPRP
objectives and the activities to be undertaken during the project \. IDA was effective during preparation in
mobilizing both funds and technical cooperation from other external partners, notably a US$ 0\.97 million
PHRD grant from the Government of Japan to finance the bulk of preparation activities, and a US$ 1\.80
million (later increased to US$2\.92 million) grant from DED financing long term advisory support \.
Considerable efforts were also undertaken to facilitate the incorporation of stakeholder views and
requirements into project design \.
However, there were three significant QAE shortcomings :
Implementation arrangements were both unduly complex and inadequately designed \. Implementation
was to require active partnerships and division of responsibilities between some 20 different agencies or
groups of agencies (see ICR, pages 7-8), many of which were new and were collaborating for the first
time\. Rather than providing the detailed guidance needed, the operational and administrative manuals
stated only in the most general terms how the different institutions were meant to work together (ICR,
page 21)\. Each partnership required âcomprehensive design, negotiation, formalization through MOU â?
(ICR, page 7) which were not provided and had to be addressed during implementation, thus
contributing significantly to delays \.
As noted in Section 3 above, there was confusion during preparation concerning the scope and
objectives of the project\. This was, according to the ICR, meant to be a capacity building operation \.
There were, nevertheless, three performance indicators related to broader telecommunication reform --
laws allowing competitive provision of connectivity and other ICT -related goods and services; provision
of âbackboneâ? services at competitive rates; and effective regulation and enforcement of national policy
by an independent Regulator\. These were beyond the scope and leverage of the project, and lacked the
agreement of the Authorities\.
M&E displays a number of important weaknesses, a point of particular consequence in an operation of
this nature, since a good monitoring system is necessary to measure the effectiveness of a Business
Incubator program\. It usually takes a few years for incubated businesses to reach maturity and there is a
need to identify those enterprises that are failing to achieve expected milestones, and thus might need
further support, as well as monitoring exits from the program \.
Supervision :
The ICR reports (page 6) that implementation benefited from high quality support provided by a core IDA
team that remained unchanged from design to completion \.
IDA was, according to the ICR, flexible and timely in its responses to delays and coordination issues
between the many agencies involved in the project, bringing in external expertise when appropriate and
organizing ad hoc workshops and other meetings \. Similar guidance was provided in dealing with lack of
familiarity with Bank procurement policies and procedures, though this took several years to become
effective\.
The ICR notes (page 22) that the IDA team was "flexible and creative in its analysis and corrective action
when various [business incubator related ] project activities stalled\.between June 2008 and June 2009\."
These efforts enabled the obstacles to be overcome and the business incubator program to achieve its
intermediate outcome indicators\. IDA was similarly proactive in helping to resolve contractual issues related
to the CRTC program\.
IDA could, however, have been more proactive in working with the Borrower to develop a sustainable
approach to the Business Incubation program -- for example, by relying more on partnerships with the private
sector to provide the necessary infrastructure with matching grants where appropriate \.
The ICR reports (page 23) a "clear if minor shortcoming in IDA's supervision of this project \. IDA changed
four times its project FM specialist and provided accurate but often ineffective follow up on issues that
remained unresolved for long periods of time \." Although IDA "maintained accurate supervision of the
financial accounts of the project, which were regularly audited and found broadly correct, " there is no
information in the ICR as to whether or not there are any outstanding balances still remaining, and the
project team has not clarified this in subsequent conversations with IEG (see Section 11 below)\.
IDA could have been more proactive in working with the Borrower to address weaknesses in the M&E
system which undermined the testing and piloting of the Business Incubation approach \.
at -Entry :Moderately Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government :
According to the ICR, (page 24), GoE satisfactorily met âthe majorityâ? of its project-related commitments\.
Counterpart funding was provided mostly on time and the empowerment of EICTDA (the main implementing
agency) and its project management unit (PMU) was generally adequate\. The agency was enabled to
convene the rest of government as well as other stakeholders to formulate policy recommendations relevant
to the ICT developments supported by the project \. Government was also open to stakeholder viewpoints and
a number of consultations were held during both preparation and implementation \.
However, there were a number of significant shortcomings in government performance \.
The public sector entities created under the project were not provided with the institutional, financial and
human resources required for their successful operation and sustainability \.
The IDA-proposed staffing plan for the PMU was rejected by the Government with negative
consequences for project implementation (see under Implementing Agencies below )\.
Despite IDAâs urging, compensation packages for high -skill positions were not set competitively,
resulting in both staff attrition and recruitment difficulties \.
Although Internet Service Provider licenses were issued, thereby signifying nominal compliance with a
dated covenant, the licensees were not allowed to operate since this was considered to be in
contravention of ETCâs monopoly\.
Although the number of rural telephone connections established by the Government well surpassed the
3,000 set for the original pilot to be supported under the project, these services are provided exclusively
by ETC\. Testing of private public partnerships for the provision of rural services did not, therefore, take
place, and an opportunity to gain knowledge of âreal-worldâ? regulatory issues (competition, access rules,
interconnection charges etc \.) was lost\.
Implementing Agency :
EICTDA performed well in its leadership role, particular in terms of advocacy with higher levels of
Government, mediation with local authorities and coordination with stakeholders \.
However, its performance reflected a number of important shortcomings including :
Initiation of business incubation programs without adequate preparation in the form of a design
document and mechanisms for monitoring and control \.
Allowing encroachment on project staff time for non -project business\.
Inadequate accountability for tasks performed by the EICTDA itself rather than by the PMU \.
Inability to appoint or maintain dedicated counterpart staff, partly due to inadequate compensation \.
As noted in Section 8 above, the partnerships required to implement the project were difficult to activate \.
The numerous institutions involved âencountered restrictions, changing priorities and contingencies that
seriously affected their performance â¦[and]â¦absorbed large amounts of staff time â? (ICR, page 9)\.
As a result of inadequacies in the implementing institutions, the PMU was forced to fill the capacity gaps of
various partners\. The Unit itself was already understaffed (see Government performance above ) and unable
to assume these additional responsibilities effectively \. The ICR reports (page 10) that the increased burden
was borne largely by the PMU manager and his DED advisers \.
Financial management was weak (see Section 11 below)\.
a\. Government Performance :Moderately Unsatisfactory
b\. Implementing Agency Performance :Moderately Unsatisfactory
c\. Overall Borrower Performance :Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
Design \. The ICR states (page 44) that the M&E system met the requirements of the 2002 National ICT Capacity
Building Program\. The results framework in the PAD provided a logical linkage between project activities and
components, the results indicators for each component, and the outcome indicators to measure the degree of
attainment of the PDO\. However, one significant drawback was the over -ambition (given the size and scope of the
project and the country context ) of certain indicators, especially the development of an empirical base for evaluating
the impact of improved ICT services on urban and rural development, poverty alleviation and gender equality for
which there were no baseline data \. There were too many indicators (over 20), which were not prioritized\. Many of
them measured outputs rather than outcomes \. Another shortcoming, the consequences of which became fully
apparent after restructuring, was the absence of any indicators of quality of service provided by CIDEVs or CRs or of
their financial performance\.
Implementation \. The ICR reports that the M&E system allowed the development of survey methods and of a
consistent four-year data set on the development of ICT nationwide and on rural access to services in particular \. A
number of surveys were carried out to monitor the impact of specific activities such as CIDEV, TVET and BIC, and of
employment creation\. However, the ICR also points out (pages 11-12) that âthe [M&E] system did not collect routine,
accurate service statistics from the CIDEV centers, " a particularly significant weakness in an operation supporting a
Business Incubator program\. As a result, "a major effort had to be made for this ICR to collect the data necessary for
the assessment of project outcomes \.â?
Utilization : According to the ICR (page 45), it was âsuggestedâ? that the projectâs M&E system could be used to track
progress against the Government âs own benchmarks for ICT development \. However, while the system did track the
growth of network infrastructure, the user base, tariffs, and some quality of service variables, the resulting data could
not be compared with official targets since the latter are not made public \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards \. The project, which consisted largely of capacity building activities was classified as Category C, and
the PAD states (page 63) that no safeguards policies were triggered \. Although no construction activities were
envisaged at appraisal, such activities did take place during implementation \. However, the project team informed IEG
that these consisted only of the internal refurbishing of existing buildings, and that there were no negative
environmental consequences of this activity \. There was no land acquisition \.
Fiduciary \.
The ICR reports (page 11) that the project accounts were regularly audited and âfound correct,â? although the final
audit was still pending at the time of ICR completion \. The project team subsequently informed IEG that the final audit
report was unqualified, but it nevertheless expressed concerns about internal controls, bank account reconciliations,
failure to count cash on hand, long standing accounts receivable, and differences between the records of the
EICTDA and some business incubation centers about funds transferred to them \. The audit made recommendations
to address these issues; however, it is not clear if these recommendations will be addressed since the PMU has
been dissolved and the EICTDA absorbed under a new Ministry \.
Financial management presented âsignificant shortcomingsâ? (ICR, page 11)\. After the first three years of
implementation, when financial activity was low, there were âconstant delays in posting of transactions and in
production of complete and accurate financial reports \.â? The computerized financial management system (FMS) that
was set up was under-utilized or often not utilized at all \. As a result, incorrectly formatted and incomplete financial
reports were submitted to IDA and âun-reconciled balances\.persisted until the end of the project â? (ICR, page 11)\.
The difficulties were compounded by foreign exchange scarcity, staffing shortages and slow procurement processes,
as well as frequent changes in IDA's financial management specialist (see Section 8 above)\. The project team did
not confirm to IEG that there are now no unaccounted for balances remaining \.
Thanks to lack of familiarity with Bank procedures and the inclusion of construction contracts that were not originally
envisaged, procurement performance was very weak for much of the implementation period and was rated
unsatisfactory in the October, 2009 ISR\. However, the ICR reports (page 11) that "Corrective action from EICTDA's
Director General on down was energetic and effective \. Procurement had fully caught up by project closing and the
project ended with a well-deserved satisfactory rating in this area \."
Unforeseen Impacts \. None is reported in the ICR\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Moderately Although the post-restructuring PDO
Satisfactory was substantially achieved, and
efficiency was also substantial, design
relevance was modest (Sections 3-6)\.
Risk to Development High High
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately There were significant shortcomings in
Satisfactory Unsatisfactory both government and implementing
agency performance (Sections 9 and
11)\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The main lessons that can be drawn from the experience of this project are :
Before embarking on a project, the Bank should ensure that there is sufficient common ground between its
strategic goals and those of the Borrower to enable the operation to achieve its objectives \. In this case, the
original objectives represent an attempted compromise between two opposing viewpoints which, in the event,
proved not to be viable\. Although the revised objectives were more consistent with government policy, they
had only limited relevance to IDA's country and sector strategies \.
In order to meet effectively the considerable pent -up demand for ICT services among poor people in rural
areas, it is essential to have in place an adequate infrastructure, both in the telecommunications sector itself
as well as in supporting sectors such as electric power \.
Since it will be necessary to rely in large part on private investment to improve telecommunications
infrastructure, wider sector reform is critically necessary to the achievement of relevant project objectives \.
Bank experience has demonstrated the importance of private -public sector partnerships in developing and
implementing sustainable and financially viable Business Incubator programs \. In this case, total reliance on
public sector provision of facilities and financing presents a high risk to sustainability \.
A strong M&E system is a necessary tool for operations following a testing and piloting approach such as that
of Business Incubators\.
14\. Assessment Recommended? Yes No
Why? To verify the ratings and document lessons learned \.
15\. Comments on Quality of ICR:
The ICR contains most of the elements necessary to evaluate the project, and is rated satisfactory \. There are,
however, two noteworthy drawbacks \. First, the argument supporting the decision to make an exception to the
guidelines and not to undertake a split evaluation is weak given the significant change in the wording of the PDO
following restructuring\. Second, the rating of efficiency is not founded on a comparison of unit costs with those in
similar operations elsewhere\. Greater clarity regarding whether or not project account audits were qualified would
have been useful (information on this was subsequently provided by the project team )\. Information as to whether
unaccounted for balances still remain is not provided in the ICR, and neither was the issue clarified in subsequent
conversations with the project team \. It would also have been helpful to have stated in the appropriate place that -- as
the project team subsequently mentioned -- no safeguard policies were triggered by the project, although some
construction activity was financed \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P067610 |  ICRR 12730
Report Number : ICRR12730
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 08/30/2007
PROJ ID : P067610 Appraisal Actual
Project Name : Lake Sarez Risk US$M ):
Project Costs (US$M): 4\.38 4\.29
Mitigation Project
Country : Tajikistan Loan/ US$M ):
Loan /Credit (US$M): 0\.47 0\.45
Sector Board : ENV Cofinancing (US$M ):
US$M): 3\.65 3\.61
Sector (s): Central government
administration (100%)
Theme (s): Natural disaster
management (100% -
P)
L/C Number : C3388
Board Approval Date : 06/22/2000
Partners involved : Aga Khan, Closing Date : 12/31/2005 12/31/2006
Switzerland, Japan,
USAID
Evaluator : Panel Reviewer : Group Manager : Group :
Ronald S\. Parker George T\. K\. Pitman Alain A\. Barbu IEGSG
2\. Project Objectives and Components:
a\. Objectives:
In 1911 a major landslide blocked the Murghab river, eventually leading to the formation of Lake Sarez \. The stability
of the rubble dam is unknown, and the consequences of its failure could affect five million people in four countries \.
The primary project objective was to help alert and prepare vulnerable people in case of a disaster associated with
an outburst flood from Lake Sarez and other frequent natural hazards such as mudslides, rockfalls, avalanches, and
seasonal floods that are common in the project area \. To achieve this objective, the project aimed at : (i) enhancing
the current monitoring system of Lake Sarez and establishing a community -based early warning system; (ii)
enhancing prevention, mitigation and preparedness capabilities of communities at risk; (iii) preparing a long-term
strategy to deal with the risks and resources associated with Lake Sarez; and (iv) strengthening national capacity \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Component A \. Monitoring and Early Warning systems (Total US$ 2\.5 million, Swiss Trust Fund US$ 1\.7 million,
SECO ] US$0
Switzerland [SECO] US$ 0\.8 million )\. Design and install a monitoring system and an early warning system to
safeguard communities located in the Murgab and Bartang valleys and to define a long -term strategy for Lake Sarez\.
This component was to include the following three sub -components:
consultancy services for the preparation of the detailed design of the monitoring and early warning systems \.
the equipment and installation of the monitoring system of the lake, and the early warning system in the villages
most at risk
a Panel of Experts (POE) to review, steer and advise on the implementation of the project \.
Component B \. Social training and safety -related supplies (Total US$ 0\.75 million, Aga Khan Development Network
AKDN] US$0
[AKDN] US$0\.50 million, USAID US$ 0\.25 million )\. Make the early warning system community -based and help
communities prepare for a potential outburst flood from Lake Sarez, as well as for smaller -scale higher-frequency
natural disasters that occur frequently in the project area \.
Component C \. Study of Long -term Solutions (Total US$ 0\.4 million, SECO US$ 0\.4 million )\. A study to critically
review and integrate past studies and rank options to reduce the potential risk posed by Lake Sarez \.
Component D \. Institutional Strengthening (Total US$ 0\.64 million, IDA US$ 0\.47 million, Government of Tajikistan
US$0
US$ 0\.17 million )\. Consultancy services and equipment to strengthen the capabilities of the Sarez Agency and other
units within the Ministry of Emergency Situations and Civil Defense (MESCD), as well as the incremental operating
costs associated with project management \.
Based on the mid-term review, Component D was revised to pass the responsibility for implementation on to a small
Project Implementation Team established within the MESCD, and that Usoi Department would take over
responsibility for the operation and maintenance of the monitoring and early warning systems, and the technical
assistance\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The cost of component D was increased by a $ 85,000 PHRD grant to enable the strengthening of the capacity of
the new Project Implementation Unit (PIU) to manage project implementation and ensure compliance with World
Bankâs procedures and guidelines \. This grant financed consultant services in financial management, procurement
and monitoring\. The original closing date of the project was extended by one year because the supply and
installation phase was completed only in December 2004, and it was always intended to support the operation of the
system for 3 years\. Parallel funding (a JSDF grant of US$1\.6 million) was provided by the âGrassroots Initiativeâ? of
the Embassy of Japan, and implemented by the same NGO implementing component B \.
3\. Relevance of Objectives & Design:
The objectives set for the project were relevant in the context of the natural hazards posed by Lake Sarez and the
terrain that surrounds it\. At design, a QAG report commended the team on project preparation \.The project design
gave emphasis to the importance of building awareness among the communities directly at risk of natural disasters,
and it maintained strong linkages between local and national responders to a natural disaster \. The implementation
strategy and arrangements were suitable to the context of the Republic of Tajikistan and to the socioeconomic and
geographic characteristics of the target territory \. The current CAS prioritizes improving the business environment and
creating more job opportunities\. The reduction of risks associated with natural hazards contributes, to some degree,
to the former\. In addition, the CAS calls for strengthening the links between the central government, local
governments, communities and households \. This priority is fully reflected in this operation \.
4\. Achievement of Objectives (Efficacy):
The primary objective--to help alert and prepare vulnerable people in case of floods associated with Lake Sarez,
as well as slides, rockfalls, avalanches, and seasonal downpours has been substantially achieved \. The Monitoring
and Early Warning Systems were installed in December 2004 and since then have been operated and maintained \.
Additional communication equipment, provided under JSDF is operated locally by the communities \. The components
of the Monitoring System are used to trigger alarms, and data has been analyzed to assess the status of the lake and
its dynamic behavior\. Training in the operation and maintenance of the monitoring and early warning systems was
given, although some staff still have weak basic computer skills \. All vulnerable communities developed disaster
management plans and organized response groups in case of emergency \. And they received disaster mitigation and
first aid training\. Evacuation paths and shelter sites have been identified \. The studies on dam failure and landslide
risk were completed\. A multi-stakeholder workshop found that now there is a better general understanding of the
risks posed by the landslide -dam-lake system and better preparedness both locally and at the national level \.
Institutional strengthening activities, however, did not live up to initial expectations : capacities were very low at entry,
and it may have been over-optimistic to envisage that adequate capacity could be achieved within the project
duration\. On the other hand, cooperation from other governmental and research institutions has been helpful,
although there is no formal mechanism to ensure that it continues to occur on a regular basis \.
5\. Efficiency (not applicable to DPLs):
The costs of project activities were in line with initial cost estimates \. The cost of a (statistical/potential) life saved
for this project was found to be in the order of US$ 232\. In comparison with international benchmarks, the cost per
Disability-Adjusted Life Year (DALY) potentially averted by this project was in line with the range established in the
1993 World Development Report (i\.e\., less than US$250 per DALY saved)\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
A state-of-the-art Early Warning and Monitoring System was constructed \. Furthermore, the project leveraged ten
times the loan amount in parallel financing to provide relatively isolated local communities with a means of
communication and improving access roads \. The project is an example of effective donor coordination and synergy \.
The Ministry of Emergency Situations and Civil Defense was well supported \. Gabions (stacked wire baskets filled
with stones) and other simple engineering solutions were used to protect housing and economic assets from
recurrent floods, landslides and mudslides \. The project had a livelihoods impact on local communities in the Bartang
valley\. Improvements made to the main access road in the Bartang valley, meant that 2006 was the first winter that
the entire community was not completely cut off from the rest of the country and from basic food and fuel supplies \.
Radios installed under the project provide a vital means of communication among villages \. The improvements in
communication and in roads have meant that previously isolated communities can build social capital in the region \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Communities have shown commitment to the operation and maintenance of the equipment and emergency
facilities provided under the project \. Adequate funding has been made available for the first year of operation \.
Despite this, the long-term institutional achievements of the project are at considerable risk, because a major public
sector restructuring has not yet clarified which agency will be responsible for the O&M of the monitoring and early
warning systems\. And the recent reorganization may also cause a reduction in funds allocated for the O&M of the
system\. Staff reorganization and attrition of trained individuals may hamper system functionality \. Increased inflow
from the lakeâs tributaries and a consequent rise in the lake âs average level may mean (if it continues undiminished)
that additional work is required, and there is no way to know if funding will be available for this work \. One possible
solution under discussion is commercial exploitation of lake water for the production of hydropower \. An indicator of
the instability of the hydro-geology of the area is that landsliding continues unabated, and flooding has destroyed a
monitoring station, its access bridge and portion of the access route to the dam house \.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
The project built on extensive background analysis conducted during exploratory missions in the region, and
through coordination with other donors, and with local government officials \. The project design drew on lessons
learned from Bank experience in risk mitigation and other related projects \. Specifically, the project was designed
to incorporate ânonstructuralâ? or community development and capacity building components side by side with
investments in infrastructure to enhance the sustainability of the project \. Second, the project drew on
experiences in emergency response planning, which had shown the importance of designating âsafe havensâ? for
public shelter and also in designating a Panel of Experts to advise the government \.
at -Entry :Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Satisfactory
c\. Overall Bank Performance :Satisfactory
9\. Assessment of Borrower Performance:
The Government has demonstrated a strong commitment to reducing the threats posed by Lake Sarez but the
financial and human resources required for a project as complex as LSRMP were difficult to mobilize \. During
project implementation coordination between the project implementers and the geology institute and the
department of hydrology and meteorology was sub -optimal\. The first PIU failed to establish an acceptable
financial management system\. When the management of the project was transferred to a small Project
Coordination Team, however, the overall performance improved \. The MESCD made a commendable effort to
identify and engage adequate staff for the project, and although problems arose, it had a proactive and
constructive attitude in addressing them \.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
Design : The monitoring and evaluation indicators were designed to track capacity increases (of the implementing
partners and beneficiaries) as well as to measure physical outputs \. Key outputs under the M&E framework included :
(i) proportion of vulnerable communities able to implement disaster management plans and to contact authorities
within minutes from the disaster onset; (ii) Government and NGO personnel able to predict occurrence of a disaster
and to respond effectively when a disaster occurs; (iii) increased dialogue and financial support for Lake Sarez
disaster mitigation and prevention issues through new partnerships with the international and scientific community;
and, (iv) that the Monitoring System and Early Warning System work and people know how to use them \.
Implementation : During project implementation, the key output indicators showed satisfactory progress \. Utilization :
It proved difficult to accurately capture the softer project -caused improvements and achievements \. For example, the
improved capacity of communities, local NGOs, and local government officials was known to be crucial to
vulnerability reduction, but the system was unable to show real progress because these things proved not to be
easily quantifiable\. In the future progress in these areas will have to be assessed using qualitative indicators,
supplemented by human judgment\.
a\. M&E Quality Rating : Substantial
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
The project triggered safeguards on the environment, indigenous peoples, and safety of dams \. Compliance has
been rated satisfactory or highly satisfactory for the entire duration of the operation \. The project had no negative
effect on the local environment as well as no substantial alteration to the existing pre -investment conditions\.
Additionally, the project reduced the risks posed by Lake Sarez to indigenous people, and benefited local
communities through enhanced access to services and communication \. Water flows and management have not been
altered from pre-project conditions\. Acceptable quarterly financial monitoring reports were regularly submitted to the
Bank\. Project financial statements have been audited, and satisfactory audit reports together with project financial
statements have been submitted to the Bank \. The Project Coordination Team maintained an internal control
environment that was adequate, although there were weaknesses of the performance of the Sarez Agency, which
was responsible for project implementation during the earliest stages of project implementation \. Procurement
guidelines were followed despite limited prior knowledge of the Bank âs procurement procedures\. The weak capacity
in procurement was foreseen, and adequately addressed in the project design through a requirement that stipulated
100 percent review of procurement\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Moderate Significant Public sector restructuring, the rise in
Outcome : the lake level, and the severity of
recent landsliding and flooding are
significant risks (see Section 7)\.
Bank Performance : Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
1\. Community involvement in risk reduction operations is key to their success \. Community engagement and
sustained participation provide a strong basis for future operation and maintenance of the equipment and facilities
delivered by the project\. Positive social impacts stem from two -way communication, and the distribution of radios
allows widely separated communities to communicate with each other, not only about disaster management
issues, but also about social events \.
2\. Linking M&E indicators with intended outcomes sometimes requires qualitative data \. Monitoring the
effectiveness and quality of training is always a challenge \. It is almost insurmountably difficult to assess the
capacity developed at community level with a quantitative indicator \. When indicators focus on the number of
trainings held, or the number of people trained, it says little about the quality of the training or any enhanced
abilities of beneficiaries (to execute disaster preparedness plans or to do anything else )\.
3\. Monitoring project implementation in remote and difficult areas is challenging \. The remoteness of the target
communities and the independence of the operations managed by the implementing NGO created a situation that
was difficult to monitor--which delayed decisions on actions necessary to improve performance \. Successful
monitoring frameworks should be shared between operations of this kind \.
4\. Panels of Experts are most valuable at critical milestones of project implementation \. The composition of a POE
is critical\. The project experience showed that : (a) the most effective POEs are rather small (2 to 4 members) and
the members should be carefully chosen to cover each of the major disciplines involved in the project; (b) the best
type of Board member is a mature individual with an established technical reputation and with wide practical
experience; (c) the ability of the expert to work in a team, and to actively participate in consensus building is
crucial; and (d) when forming the POE the client should not only ask each potential member whether they would be
willing to serve on the POE but also whether they would be willing to serve together with other potential POE
members\.
5\. At an early stage of the project âs preparation, the borrower should be supported in a thorough analysis of its
implementation capacity\. For a project that entails complexity and requires high level of technical competence, the
implementing agency should be identified with a well -established administrative body, with strong and reliable
leadership, both of which are likely to remain and be strengthened throughout the operation \. However, when the
projects is implemented in a context presenting broader governance problems, fiduciary setbacks should be
anticipated at the design phase, and potential delays factored in to the implementation strategy and schedule \.
14\. Assessment Recommended? Yes No
Why? An update of ND study should examine the experience of the implementers and functionality of the systems
established by this project in light of the experience they acquire in the next several years \. The project experience is
also highly relevant to the IEG Safeguards study \.
15\. Comments on Quality of ICR:
The ICR provides a thorough discussion of project achievements and the challenges faced \. Evidence is used
throughout to support evaluative judgments, and the lessons identified are useful and clearly based on the project
experience\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P107303 |  ICRR 13887
Report Number : ICRR13887
IEG ICR Review
Independent Evaluation Group
1\. Project Data : Date Posted : 05/02/2012
Country : Malawi
Is this Review for a Programmatic Series? Yes No
How many operations were planned for the 3
series?
How many were approved? 3
Series ID : S117238
First Project ID : P099313 Appraisal Actual
Project Name : Mw-prsc-1 US$M ):
Project Costs (US$M): 20\.00 20\.00
L/C Number : CH333 Loan/ US$M ):
Loan /Credit (US$M): 20\.00 20\.00
Sector Board : Economic Policy US$M ):
Cofinancing (US$M):
Cofinanciers : Board Approval Date : 11/03/2007
Closing Date : 06/30/2008 06/30/2008
Sector (s): Central government administration (29%); Agro-industry marketing and trade (29%); Law
and justice (14%); General agriculture fishing and forestry sector (14%); Petrochemicals and
fertilizers (14%)
Theme (s): Rural markets (33% - P); Rural policies and institutions (17% - S); Administrative and civil
service reform (17% - S); Legal institutions for a market economy (17% - S); Public
expenditure; financial management and procurement (16% - S)
Second Project ID :P107303 Appraisal Actual
Project Name : Malawi Poverty Project Costs (US$M):
US$M ): 30\.00 30\.00
Reduction Support
Credit 2
L/C Number : CH480 Loan/
Loan US$M):
/Credit (US$M ): 30\.00 30\.00
Sector Board : Economic Policy US$M ):
Cofinancing (US$M):
Board Approval Date : 05/28/2009
Cofinancers : Closing Date : 06/30/2010 06/30/2010
Sector (s): Central government administration (53%), General agriculture fishing and forestry sector
(13%), Petrochemicals and fertilizers (13%), Agro-industry marketing and trade (13%), Law
and justice (8%)
Theme (s): Rural markets (29% - P), Public expenditure, financial management and procurement (29% -
P), Legal institutions for a market economy (14% - S), Administrative and civil service reform
(14%), Debt management and fiscal sustainability (14% - S)
Third Project ID :P117238 Appraisal Actual
Project Name : Malawi: Poverty Project Costs ( US$M):
US$M ): 35\.60 35\.60
Reduction Support
Credit 3
L/C Number : Loan/ US$M):
Loan /Credit (US$M): 35\.60 35\.60
Sector Board : Economic Policy US$M ):
Cofinancing (US$M):
Board Approval Date : 06/08/2010
Cofinancers : Closing Date : 05/31/2011 05/31/2011
Sector (s): Central government administration (56%), Crops (33%), General industry and trade sector
(11%)
Theme (s): Public expenditure, financial management and procurement (45%), Rural markets (22%),
Social safety nets (11%), Regulation and competition policy (11%), Administrative and civil
service reform (11%)
Evaluator : Panel Reviewer : ICR Review Group :
Coordinator :
Brian Ames Kris Hallberg Ismail Arslan IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
The Poverty Reduction Support Grants (PRSGs) are a series of three annual programmatic development policy
operations (DPOs) whose overarching objective is to support the achievement of the country âs medium-term
development objectives of accelerating growth while at the same time ensuring that the vulnerable are
adequately protected from shocks as outlined in the Malawi Growth and Development Strategy (MGDS)
(PRSG-1 Program Document, pg\. 22; PRSG-2 Program Document, pg\. 22/23; and PRSG-3 Program Document,
pg\. 19)\. It is therefore expected that at the end of the programmatic series, the PRSGs will have contributed
towards increased economic growth and poverty reduction by supporting implementation of policy and
institutional reforms that will lead to increased agricultural productivity, increased private sector investment,
improved household resilience to shocks, and sustained improvement in fiscal management \.
The DPO series was designed to support the four main components of the government âs MGDS, namely (1)
improving the functioning of agricultural markets, (2) improving the business climate, (3) dealing with
vulnerability to shocks, and (4) improving economic governance \. Each PRSG was designed to support
government actions in some or all of the four components \.
The program development objectives (PDOs) of PRSG-1 were to support actions already undertaken by the
government in three of the four components of its program, namely improving the functioning of agricultural
markets, improving the business climate, and improving economic governance (PRSG-1 Program Document,
pg\. 26)\.
The PDOs of PRSG-2 were to support reforms in all four components of the government âs program, specifically
to deepen maize and fertilizer markets, continue improvements in the business environment, address the
vulnerability of poor households to shocks, and continue improvement in economic governance with regard to
the budget process, debt and payroll management and systems of accountability in public financial management
(PRSG-2 Program Document, pg\. 22)\.
The PDOs of PRSG-3 were to support reforms in all four components of the government âs program, specifically
to improve the functioning of agricultural input and output markets as well as manage weather risks, continue
improvement in the business environment, address the vulnerability of poor households to shocks, and continue
improvements in economic governance (PRSG-3 Program Document, pg\. 18)\.
b\. If this is a single DPL operation (not part of a series), were the project objectives/ key
associated outcome targets revised during implementation?
No
c\. Policy Areas:
The PRSG series covered four main policy areas :
1\. Improving the functioning of agricultural markets : The focus of the DPO series in this area was on improving
the functioning of agricultural output markets for maize and tobacco and of input markets for fertilizer and land \.
At the end of the program period, the expectation was that agricultural output markets would be available in rural
areas, private sector operators in produce marketing would increase in urban and semi -urban areas, the
pass-through of border prices to tobacco farmers would be increased, a better targeted, more cost effective, and
sustainable fertilizer subsidy program would be in place, and there would be an increase in cultivated land \.
PRSG-1 focused on: (1) the strategic refocus of Agricultural Development and Marketing Corporation
(ADMARC) by starting to wind down non-core business interests (i\.e\., share in Manica, Clark Cotton, Alexander
Forbes, and Sugar Corporation of Malawi ) held through ADMARC Investment Holding Company (AIHC); (2) the
establishment of three satellite tobacco auction floors; (3) implementation of a targeted fertilizer and seed
subsidy program with 28% private sector participation in fertilizer distribution; and (4) the strengthening of
capacity at the local level to collect land rent through the recruitment and deployment of 24 District land Officers
and 55 Land Clerks\.
PRSG-2 focused on: (1) the enhancement of private sector participation in maize markets through the
establishment of the Malawi Agricultural Warehousing and Trading company (MAWTCO) and the initial transfer
of six warehouses from ADMARC to MAWTCO; and (2) commencement of a performance assessment by the
government to evaluate public and private sector involvement in wholesale and retail trade of subsidized
fertilizer based on four agreed performance indicators (quality of product sold, quality of service provided,
additional services offered, and other related issues )\.
PRSG-3 focused on: (1) the implementation of a macro weather insurance scheme to improve the predictability
of maize markets and complement physical storage of maize stocks and (2) the preparation and publication of a
medium-term action plan for the Farm Input Subsidy Program (FISP) in consultation with fertilizer and seed
associations\.
2\. Improving the business climate : The focus of the DPO series was on supporting the government âs broad
program of âsecond generationâ? reforms to improve the domestic business environment with a view to
stimulating private sector investment and employment creation \. In particular, the series supported government
efforts aimed at improving the business legal and regulatory environment \. At the end of the program period, the
expectation was that the number of businesses starting up would increase which would, in turn, increase the
share of private sector investment in GDP \. It was also envisaged at the onset of the PRSG series that increasing
energy supply and provision could be a focus of future DPOs, if preparation of a sound financial viability plan for
the Electricity Supply Commission of Malawi was completed as envisaged \. However, this sub-component was
not pursued in the subsequent DPOs \.
PRSG-1 focused on improving the legal and regulatory environment through the establishment of a Commercial
Division of the High Courtârules of procedure for the court were reviewed and gazetted, premises were secured,
and four judges were appointment âthereby setting the foundation for the impact of this reform to be felt and
monitored during the subsequent operations in the series \. PRSG-2 focused on improving the business legal and
regulatory environment by reducing the length of time it takes to settle commercial disputes to 290 days or less\.
Finally, PRSG-3 focused on the completion of an audit of pending Higher Court cases of commercial nature for
possible transfer to the newly created Commercial Court \. This was on account of the backlog of commercial
cases that were still pending at the General Division of the High Court as the Commercial Court had only been
hearing new cases\.
3\. Dealing with vulnerability to shocks : The focus of the DPO series was initially on improving coordination and
coverage of social protection programs and improving the national response to climatic shocks \. However,
although the sub-component on climatic shocks was discussed in general in the initial Program Document for
PRSG-1, there were no specific measures supported and it was removed altogether from the subsequent DPOs
in the series\. At the end of the program period, the expectation was that households â resilience to shocks would
be improved through greater coordination and coverage of social protection programs and that this
rationalization would lead to increased government funding of the programs \.
PRSG-1 did not focus on any specific measures regarding this component except to indicate the triggers that
were being put forward for PRSG-2 and indicatively for PRSG-3\. PRSG-2 focused on strengthening the targeting
of the fertilizer subsidy program through introduction and implementation of improved guidelines for targeting for
the 2008/09 season\. This was expected to lead to a more transparent targeting process than in previous years,
with other community leaders (beyond local leaders) to be involved in the process and the list of beneficiary to
be confirmed by members of the community at a public meeting \. Finally, PRSG-3 focused on further improving
the targeting mechanism by publishing revised guidelines for identification of beneficiaries for the 2009/10
fertilizer subsidy program based on field experiences from implementing the 2008/09 program\.
4\. Improving economic governance : The focus of the DPO series was on supporting the government âs efforts
aimed at good governance, particularly with regard to improved fiscal management and the fight against
corruption\. Specifically, the series sought to improve the budget process, the payroll management system, the
timeliness and follow-up of external audits of the budget, and debt management \. At the end of the program
period, the expectations was that there would be improved allocation and expenditure on priority activities
identified in the MGDS, that the civil service payroll system would be âcleanâ? and up to date, that there would be
a more effective external audit system in place with fewer audit queries and loss of public funds through fraud
and theft, and reduced variability between forecast and actual debt service payments \.
PRSG-1 focused on the reconciliation of the payroll with the backlog of personnel data and the auditing of
government entities representing 50 percent of expenditures for financial year 2004/05\. There were no prior
actions in the area of improving the budget process or debt management, as the authorities at that time were
reviewing how best to improve the alignment of the budget to the MDGS and of finalizing their draft debt policy \.
PRSG-2 focused on the introduction of a budget calendar that incorporated all budget -related activities, the
undertaking of a review of the Human Resource Management Information system (HRMIS) and personnel audit,
the submission to Parliament of the delayed Audit Reports for 2004/05 and 2005/06, the development and
approval by Cabinet of a Debt Management Policy \. Finally, PRSG-3 focused on the finalization of the revised
structure of the budget classification and the associated Chart of Accounts, the undertaking of a procurement
review of the FY 2009/10 fertilizer program and commencement of implementation of its key recommendations,
ensuring the follow-up on audit queries through the issuance of a Treasury Minute containing responses to
issues raised by the Public Accounts Committee, the development of action plans to address weaknesses
identified in the HRMIS review and personnel audit, and the operationalization of the Debt Management
Committee\.
It should be noted that although the above four policy areas were not revised in the programmatic series of
DPOs, there were two important modifications \. First, the initial focus of the component on reducing
vulnerabilities to shocks was on improving (a) the national response to climatic shocks and (b) the governmentâs
coordination of social protection programs \. Due to budgetary pressures in the wake of the global crisis, the
sub-component on social protection was modified in PRSG -2 to focus instead on supporting improved targeting
of beneficiaries of the fertilizer subsidy program given that it was the key social protection program in terms of
budgetary cost and impact on the poor \. Second, although improving energy supply and provision was initially
mentioned in PRSG-1 as a sub component under âImproving the Business Climateâ?, there was no specific prior
action in that DPO and it was dropped altogether in the remaining operations of the programmatic series \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The PRSG series consisted of three successive single tranche operations which disbursed upon effectiveness \.
PRSG-1 was approved on October 30, 2007 and became effective on November 28, 2007\. PRSG-2 was
approved on May 28, 2009 and became effective on June 22, 2009\. PRSG-3 was approved on June 8, 2010
and became effective on June 21, 2010\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
The overarching goal of the DPO series and the PDOs of the individual PRSG operations were consistent with
both the governmentâs and the Bankâs strategies for the country at closure \.
The PRSG series was fully aligned with the government âs MGDS, the countryâs second generation poverty
reduction strategy paper covering the five -year period 2006/07-2010/11\. The PRSGâs policy components were
aligned with key government priorities set out in the MGDS, such as well functioning agricultural markets (MGDS
Key Priority Area Number 1-Agriculture and Food Security, Sub -Theme 2-Agricultural Productivity), improving
the business environment (MGDS Theme 1: Sustainable Economic Growth, Sub-Theme 2: Enabling
Environment for Private Sector Led Growth ), social protection (MGDS Sub-Theme 1: Protecting the Vulnerable,
Strategy 1: Providing efficient and effective support to the most vulnerable ) and improving economic governance
(MGDS Theme 5: Improved Governance, Sub-Theme 2: Public Policy Formulation, Fiscal Management, Public
Sector Management, and Corruption)\.
The program was also fully aligned with the Bank âs fourth CAS (FY2007-10), which was designed to assist the
government achieve four key outcomes : (a) improving smallholder agricultural productivity and integration into
agro-processing; (b) putting in place a foundation for long -term economic growth through improved infrastructure
and investment climate; (c) reducing vulnerability at the household level to HIV /AIDS and malnutrition; and (d)
sustaining improvements in expenditure management, transparency, and accountability \. Moreover, the CAS
specifically envisaged a series of DPOs for each year over the CAS period \.
Finally, the PRSG series was implemented within the harmonized framework for the provision of budget support
in Malawi entitled the Common Approach to Budget Support (CABS)\. The objectives, policy areas, prior actions,
and triggers of the PRSG series were jointly identified with the Government in close consultation with CABS â
development partners and the CABS Performance Assessment Framework (PAF) was fully aligned with the
programâs objectives\. The relevance of objectives was high \.
b\. Relevance of Design:
The PRSG series was designed to support the achievement of the government âs development objectives
through the implementation of a set of key measures \. The selection of key reforms (prior actions) in improving
the functioning of agricultural markets, improving the business climate, addressing vulnerability to shocks, and
improving economic governance was appropriate and consistent with the MDGS â objectives\. Moreover, the
selection of specific policy actions benefited from wide consultation within the country \. It was prepared after
consulting Government ministries and departments on specific reforms that were considered critical to achieving
the MDGS goals and objectives\.
The Results Framework provided a clear statement of objectives and the casual chain that was linked to the
expected final outcomes\. The prior actions were appropriate and relevant to the key measures required for
achieving the development policy objectives \. Moreover, as indicated in the ICR, the program documents
appropriately identified that exogenous factors could have a negative impact on certain outcome indicators and
would need to be taken into account, including the 2008/09 global food and fertilizer price shocks, as well as
hikes in world fertilizer and oil prices and possible weather shocks \. The relevance of design was substantial \.
4\. Achievement of Objectives (Efficacy):
Efficacy is determined by assessing the achievement of the overarching objective \.as well as of the PDOs for
each of the individual PRSG operations The ICR reviewed progress of the 8 PDO indicators identified in PRSG
series, as well as progress towards macro -economic stability\.
Overarching objectives
The overarching objectives of the DPO series were to support the government in implementing its MGDS whose
aim was to sustain economic growth and reduce poverty \. As noted above, the design of the PRSG series was
fully aligned with the MGDS and, hence, the set of operations did support the authorities in implementing their
strategy\. Moreover, the objective of sustaining economic growth was largely achieved, as Malawi continued to
register high rates of economic growth (7\.3 percent) throughout the program period despite the onset of the
global financial crisis and the hikes in world food and fuel prices \. The high rates of growth were driven principally
by strong performance in the agriculture sector, which arose largely due to good outcomes in the tobacco and
maize sectors and were spurred on by the availability of key inputs, including fertilizer \. These were all areas that
benefited directly from the policies implemented under the PRSG series \. The ICR is therefore fair when it says
that progress in the four reform areas, especially agriculture, would have likely been slower in the absence of the
PRSG series of operations\. At the same time, other factors beyond the scope of the program also contributed to
the good growth performance, such as good weather \. Moreover, slippages in macroeconomic policies and
performance at the end of the program period threatened the country âs growth prospects going forward \.
As regards the poverty reduction objective, it is likely that the program contributed to insulating the poor and
most vulnerable from the severe effects of the exogenous shocks that hit the country through the program âs
focus on agricultural input and output markets and its support for private sector development and social
protection\. Although the ICR did not substantiate this with evidence, the details can be found in the program
documents\. For example, âqualitative information from independent monitoring reports show that more poor
households are benefiting the from the [fertilizer subsidy] programâ? (PRSG-3 Program Document, pg\. 36)\. At the
same time, as the ICR rightly notes, despite these gains, poverty remains deeply entrenched in the country \. On
balance efficacy in achieving the overarching objective was substantial \.
Objective 1: Improving the Functioning of Agricultural Markets
The PRSG series had four areas of focus regarding achieving the objective of improving the functioning of
agricultural markets, including with regard to the tobacco market, maize market, fertilizer market, and land
market\.
Tobacco market : The targeted outcomes were broadly achieved \. The goal was to reduce waiting time for
sellers, reduce farmersâ transport and marketing costs, and improve the overall efficiency of tobacco markets in
the country through the establishment of satellite auction floors in outlying markets \. Although the M&E
framework in the PRSG series did not include indicators for monitoring the impact of the tobacco market
reforms, the ICR noted that available statistics indicated that the six newly created satellite auction floors
comprised over 12 percent of total annual sales of tobacco in terms of volume and that more smallholder
farmers were now able to access the depots, carry out transactions, and reduce the time and cost spent
traveling to the sale points (i\.e\., transport and other logistical costs declined from 10 US cents per kg to 5 US
cents per kg)\. The ICR also noted that there was anecdotal evidence that congestion and waiting time at the
auction sites had been reduced considerably, that the incomes of small holder tobacco farmers had increased in
recent years, and that the national food security situation had improved due to higher tobacco production levels
and prices\. It should be noted, however, that good weather conditions also likely contributed to the good
performance\. At the same time, as pointed out in the ICR, there remains significant challenges regarding the
effective and efficient operation of the satellite stations, including capacity and operational constraints such as
inadequate storage infrastructure, security, lack of necessary technology and equipment \. In addition, the
reforms to operationalize contract farming had progressed slowly such that the indicative trigger regarding this
reform was replaced\. But, on balance, it is fair to say that the DPO series played a key role in the continuation
and sustainability of the ongoing tobacco reform effort \.
Maize market : The targeted outcomes were partially achieved \. The goal was to increase production and
productivity in the maize output market through an increased role of the private sector and a reduction in the role
of ADMARC\. The end of program target for maize yields (1\.60 metric tons) was surpassed half-way through the
program period (1\.78 metric tons) and continued to rise (2\.29 metric tons on average for 2008/09-2010/11)\.
However, although the maize output market reforms inevitably played a contributing role, increases in maize
production and productivity also benefited from the reforms in the fertilizer input subsidy program \. At the end of
the DPO series, it is clear that ADMARC no longer maintained the same degree of dominance as it had prior to
the reforms\. Its operations had shifted focus towards its core function of providing markets where market failures
occurred, normally in rural areas \. Moreover, six of ADMARCâs warehouses were transferred to the newly created
warehouse company MAWTCO\. In turn, private sector activity in the output market increased during the program
period\. For example, the indicator on ADMARC markets in urban and semi -urban areas was achieved half -way
through the PRGS series\. Also, private commodity groups apparently increased their market shares \. However,
some of the reforms were stalled or reversed \. MAWTCO has yet to become fully operational since the
appointment of its CEO has been delayed for well over a year \. Also, the government increased ADMARC âs
presence in certain urban markets in the aftermath of the 2008 global food and fuel crisis, and continues to use
the parastatal enterprise to purchase maize and distribute inputs \. This is in part because the reform program did
not have broad-based government buy-in\.
Fertilizer market : The targeted outcomes were partially achieved \. The goal was to increase small-holder
productivity through the improved the functioning of the fertilizer input market, including a greater role for the
private sector\. Although the programâs M&E framework did not include indicators in this area, various reports
(i\.e\., the 2010/11 Government of Malawi/World Bank joint review of the FISP, UK DFID reports on the FISP, etc \.)
indicated that all fertilizer under the FISP is now procured through open and competitive tender and that private
sector involvement in the importation of subsidized fertilizers had increased (to over 80 percent)\. Importantly, the
ICR credits the FISP with helping poor households cushion themselves against exogenous shocks through the
economy-wide effects created by the greater availability and lower cost of key food crops like maize \. At the
same time, there were delays and reversals in the reform effort \. While the private sector participation in fertilizer
distribution increased under PRSG-1, it declined during the implementation of PRSG -2 as the government
rescinded private sector authorization to distribute subsidized fertilizer following the 2008 food crisis\. Similarly,
following the hike in world fuel and fertilizer prices in 2011, the government reduced the level of FISP imports in
order to contain the budget impact and allocated only 64 percent of the total to the private sector \.
Land market : The targeted outcome was not achieved \. The objective was to increase the area of cultivated
land by strengthening the operation of land markets \. The government did hire Land Officers and Clerks at the
district level under PRSG-1 to support decentralization of land administrative services and increase the
collection of land rents with a view to increasing smallholder access to land \. However, these officials could not
become operation on account of the Cabinet âs non-approval of the new land taxation structure, following
opposition from smallholder farmers\. Instead, the government is undertaking another review of the land rental
structure, delaying the reform process \. As indicated in the ICR and program documents, it appears that there
was a lack of buy-in to the land market reform on account of insufficient consultations with stakeholders \.
Efficacy in achieving the first objective is rated modest \.
Objective 2: Improving the Business Climate :
The DPO series had two main areas of focus regarding achieving the objective of improving the business
climate, including increasing access to commercial justice and improving the business license regime \. Together,
reforms in these areas were expected to result in an increase in private investment, which rose steadily over the
period 2006-2010--averaging 15 percent of GDP and reaching a high of 19\.1 percent of GDP in 2009\. While
there was good progress in implementing all the reform measures envisaged under the DPO series, not all of the
end-of-program outcomes were fully achieved \.
Increasing access to commercial justice : The targeted outcome was broadly achieved \. The goal was to reduce
the large backlog of commercial cases and to thereby strengthen contract enforcement \. There was good
progress in improving efficiency in the clearance of commercial disputes following the establishment of the
commercial division of the High Court under PRSG -1\. The average number of days required to settle a
commercial dispute declined from 337 days (2006) to 125 days (2007), well below the target of 290 days set
under PRSG-2\. This has subsequently declined to 96 days as of September 2010\. Moreover, the completion of
the case audit at the High Court under PRGS -3 allows the litigating parties to move their case to the commercial
court, whose backlog has been substantially reduced \.
Improving the business license regime : The targeted outcome was partly achieved \. The goal was to increase
the number of registered businesses through the establishment of a one -stop investment shop for business
licensing\. To this end, the authorities drafted a revised Malawi Investment and Trade Center (MITC) bill in 2008,
which was a trigger for PRSG-3 at the PRSG-2 stage\. However, the establishment of the MITC was delayed
because of the lack of approval by both the Cabinet and the Parliament, and the trigger was subsequently
dropped as Bank staff who realized that it would not achieve the intended objective of establishing the one -stop
shop\. The ICR also indicated that there had been limited progress introducing a Single Business License \. Under
the program, the number of days required to obtain a business license and permit was to be reduced from 185 to
30 days by 2012\. Although the Ministry of Industry and Trade reported that the number of days had narrowed to
16 days in 2011, the ICR noted that there was really no means for tracking progress \. The programâs M&E
framework included an indicator on the number of business licenses issued per month and the target was to
increase licenses issued from the baseline of 60 to 70 by the end of the program period \. However, data to track
this indicator have been difficult to obtain \. The ICR, however, does make reference to the number of days
required to start a business as reported in Doing Business, but this worsened from 37 days (2007) to 39 days
(2012)\.
Efficacy in achieving the second objective is rated substantial \.
Objective 3: Dealing with Vulnerability to Shocks
The DPO series had three main areas of focus regarding achieving the objective of dealing with vulnerability to
shocks, including improving coordination of coverage of the national social protection programs, improving the
farm input program, and improving the function of agricultural output markets through a macro weather
insurance scheme\. The implementation of reforms in this policy area has been modest \. The government
remains unsure how to proceed with the national social protection reform and, hence, the focus shifted at the
PRSG-2 stage to support improvements in a single social protection program, namely, the FISP \. However,
neither the Results Framework nor the M&E Framework were modified to take this change into account \. There
was good progress, however, in developing the national weather insurance scheme \.
Improving coordination and coverage of social protection programs : The original aim of the PRSG series was
to support government coordination of its social protection programs though the creation of a Social Protection
Unit, the development of a Social Protection Policy, the rationalization of the various existing social protection
programs (PRSG-2 indicative target), and the allocation of sufficient budgetary resources for social protection
programs in line with the new policy (PRSG-3 indicative target)\. However, there was a political stalemate as the
Cabinet did not approve the draft Social Protection Policy in 2008 nor when it was resubmitted in 2010\. As a
result, there has been little progress in this reform area \. This begs the question as to whether there was
sufficient consultation and ownership of the policy reform at the time of program design \.
Improving the Farm Input Subsidy Program : The aim was to help shield the poor and vulnerable from
agricultural-related shocks through improvements in the FISP \. The FISP is countryâs most important social
protection program and accounts for over 60 percent of the Ministry of Agriculture âs budget\. The Government
introduced new guidelines to improve the targeting of the fertilizer subsidy program to poorer households in
2008/09 (PRSG-2 prior action) and published revised guidelines for the 2009/10 program based on field
experiences from 2008/09 (PRSG-3 prior action)\. However, as noted above, the DPO series â Results and M&E
frameworks were not adjusted to monitor progress in this area \. The ICR does makes reference to a UK
DFID-financed evaluation report on the FISP, which indicated that there had been improvement in beneficiary
targeting, and to the PRSG-3 Program Document, which indicated that there were clear improvements in
targeting the poor and vulnerable under the FISP \.
Implementing the National Weather Insurance Scheme : The aim was to help improve the functioning of
agricultural output markets (principally maize) through the development and implementation of a weather
insurance scheme\. Drawing on the findings of a 2004 Weather-Based Insurance Study, the authorities were
originally going to put in place a Repo deal or a Call Option scheme \. This prior action for PRSG-3 was
subsequently modified to reflect the fact that these two specific options were no longer relevant to the current
circumstances and that weather insurance scheme was the preferred option \. This scheme was been in place
over the past four years and its premium is funded with assistance from DFID \. Moreover, the government's
budgeted allocation for the purchase of weather insurance is being reimbursed through a Bank -funded
agriculture SWAP\.
Efficacy in achieving the third objective is rated modest \.
Objective 4: Improving Economic Governance :
The DPO series had four main areas of focus regarding achieving the objective of improving economic
governance, including the budget process, payroll management, external audit and follow up, and debt
management\.
Budget process : The goal of improving the budget process was to reduce the variance between budget and
actual expenditure (indicator) by strengthening the alignment with the MDGS and improving the monitoring of
budget implementation\. During the program series, this was achieved by the introduction of a budget calendar
that captured all budgeted activities (PRSG-2 prior action), the finalization of a revised structure of the budget
classification and the associated âChart of Accountsâ? (PRSG-3 prior action), and the undertaking of a
procurement review of fertilizer subsidy program and implementation of its key recommendations (PRSG-3 prior
actions)\. The variance between budgeted and actual expenditure (monitoring indicator) declined from the
baseline of 10 percent (2006/07) to 6\.8 percent (2009/10)\. This was higher than the end of program target of 5%
set at the beginning of the PRSG series, but was below the 2011 PEFA target of 7\.8%\. The procurement review
of the FISP also contributed to an improved focus on the âvalue for moneyâ? which improved the management of
this important budget line item\.
Payroll management : The goal of improving payroll management was to strengthen control over the payroll and
reduce the variance between the budgeted and actual payroll \. This was to be achieved through the
reconciliation of the payroll with the backlog of personnel data (PRSG-1 prior action), the undertaking of a review
of the Human Resource Management Information System (HRMIS) and personnel audit of the civil service
(PRSG-2 prior action), and the development of action plans to address weaknesses identified in the HRMIS
review and personnel audit (PRSG-3 prior action)\. At the end of the program, the variance between the
budgeted and actual wage bill was 0\.2 percent (2010/11), well below the baseline of 5 percent 2004/05 and the
program target of 3%\. There were also improvements in the identification and elimination of ghost workers from
the payroll\. For example, it 2010/11, 4,878 ghost workers were purged from the system and another 8,868
possible ghost workers were identified and under review \.
External audit and follow up : The goal of improving external audit and follow up was to improve the timeliness
of the submission of audit reports to Parliament and the follow up of internal and external audit
recommendations\. This was to be achieved by auditing central government entities representing 50 percent of
government expenditures (PRSG-1 prior action), having the delayed audit report for FY 2015/06 submitted to
Parliament (PRGS-2 prior action), and following up on audit queries through the issuance of a Treasury Minute
containing responses to the issues raised by the Public Accounts Committee (PRSG-3 prior action)\. At the end
of the program period, the number of months between the end of a fiscal year and the submission of the audit
report to Parliament declined from the baseline of 24 months (2004/05) to 6 months (2009/10), well below the
program target of 10 months\. The rollout of the Integrated Financial Management System (IFMIS) at the central
government and district council level played a critical role in achieving this outcome \. However, a number of
transactions continue to take outside the IFMIS \. Hence, in order to ensure accurate government financial
statement, all transactions will need to be fully captured by IFMIS \. Moreover, there are lags of five years in the
preparation of Treasury Minutes and the follow up on the audit recommendations remain ineffective due to the
non-functioning of the Internal Audit Committee and the backlog of the Public Accounts Committee discussions
on audit reports\.
Debt management : The goal of improving debt management is to ensure public debt sustainability through
improved monitoring\. This was to be achieved through Cabinet approval of the country âs debt and aid
management policy (PRSG-2 prior action) and the operationalization of a debt management committee (PRSG-3
prior action), and measured through a decline in the ratio of the domestic debt to GDP (indicator)\. The debt
management office has begun issuing semi -annual debt reports and conducting in -house debt sustainability
analyses\. Following good progress on fiscal consolidation on the part of the government, domestic debt declined
from the baseline of 20% of GDP (2005/06) to 16\.1 percent of GDP at the end of the program period \. This is well
above the end of program target of 10% of GDP, but was due principally to the onset of the global financial crisis
and the related fiscal slippages beginning in 2008/09\. However, as noted in the ICR, the program target was far
more ambitious than the medium-term target of the Governmentâs macroeconomic program, which called for
reductions in domestic debt of 1\.5 percent per annum\. Although the debt situation is presently within sustainable
thresholds, continued deterioration in the macroeconomic environment could push domestic debt outside these
thresholds\.
Efficacy in achieving the fourth objective is rated substantial \.
Macroeconomic policy
On the macroeconomic front, the DPO series was to support the broad objective of sustained economic growth \.
The economy remained resilient throughout the program period despite the hikes in world food and fuel prices in
2008 and the onset of the global financial crisis in 2009\. During the initial program period, real GDP growth
averaged 7\.3 percent, largely on account of high growth in the smallholder agriculture sector, following
consecutive years of bumper tobacco and maize harvests, good weather, and the availability of fertilizer thanks
to the FISP\. Inflation remained within single digits due mainly to the government âs prudent fiscal policies, which
narrowed the budget deficit to below 3 percent of GDP on average, but also on account of the good weather and
bumper harvests\.
However, with the onset of the global financial crisis, the country âs current account deficit deteriorated and its
fiscal deficit increased, largely due to higher outlays on input subsidies \. This, in turn, led to higher domestic
borrowing and substantial increase in domestic debt \. The fixed exchange rate (the kwacha was pegged to the
US dollar) in the face of a loosening of fiscal policy resulted in an overvaluation of the country âs currency, a loss
of competitiveness, a worsening in the terms of trade, an increase the overall balance of payments deficit, and a
reduction in foreign reserves, which fell to the equivalent of less than one month of imports by end -2009\.
Following satisfactory completion of an arrangement under the IMF âs Exogenous Shocks Facility in December
2009, the authorities entered into a new medium -term macroeconomic program under the IMF âs Enhanced
Credit Facility\. This allowed the government to restore its fiscal and external balances and strengthen its reserve
position\. Over the medium-term, growth was expected to remain robust, inflation moderate, and reserves were
to increase to the equivalent of three months of imports \.
5\. Efficiency (not applicable to DPLs):
6\. Outcome:
The moderately satisfactory rating reflects the âhighâ? relevance of the programsâ objectives, the "substantialâ?
relevance of the programsâ design, and the mixed (âsubstantialâ? and "modest") achievements of each of the four
development objectives and outcomes \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The risk that the development outcomes overall will not be maintained is significant \.
The first area of risk is with regard to exogenous shocks \. The continuation of the global financial crisis, hikes in
world fuel and food prices, and declines in donor financing risk a further deterioration in the country âs terms of
trade and balance of payments and increasing pressure on the budget, thereby jeopardizing the overall program
development objectives\. Mitigating measures include the recent development of weather insurance mechanisms
to help insulate against weather and other agriculture -related shocks\. Similarly, a shift in government policy
away from a fixed to a more flexible exchange rate arrangement would help improve the terms of trade,
competitiveness, economic diversification and, ultimately, growth \. Finally, satisfactory implementation of the
three-year IMF ECF arrangement would, among other things, strengthen the country âs foreign reserve position
and help catalyze donor support and private capital in -flows\.
The second area of risk is possible government policy reversals \. In terms of macroeconomic policies,
continuation of a prudent fiscal and monetary stance along with a more flexible exchange rate regime will be
critical to the achievement of the program development objectives \. If instead the authorities respond to the
pressures arising from global financial crisis and world commodity price shocks by maintaining non -priority
spending and accommodating their fiscal deficits with central bank financing, the recent gains in macroeconomic
stability could be reversed (and there are already signs that this is happening )\. With regard to sector and
structural policies, the greatest risk of policy reversal is in the area of maize and fertilizer sector reforms, as the
government has already delayed the operationalization of MAWTCO and permitted ADMARC to have an
expanded presence in both of these markets \. This risk could be mitigated in part if the government implemented
the draft ADMARC Strategy (2010-2015)\. In contrast, the risk of policy reversals with regard to the tobacco
sector, the business climate, and economic management is more moderate, as these reforms are fairly well
entrenched, their legal regulatory frameworks well established, and are receiving support from the country âs
development partners\.
The third area of risk is the lack of reliable electricity \. This is having a detrimental impact on the productive
sectors of the economy and thereby undermining growth \. Mitigating measures would be investments in
electricity generation and distribution, including the Malawi -Mozambique Interconnector Project, but the
government has yet to take sufficient actions on this front \. If left unattended, this could undermine the program
seriesâ overarching objective of sustainable growth and poverty reduction \.
The final area of risk is the government âs limited administrative capacity to implement its program in a
satisfactory manner\. This is a function of both the lack of institutional capacity and coordination amongst the key
ministries and agencies involved in program implementation \. This capacity is being further challenged by the
impact of HIV/AIDS on human capital\. Mitigating factors include donor-funded technical assistance and training,
implementation of the multi-donor CABS program monitoring framework, and creation of an inter -ministerial
steering committee for program monitoring and implementation \. There would also need to be further positive
developments regarding HIV/AIDS\.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
a\. Quality at entry:
The quality at entry was moderately satisfactory \. The program design had strong analytical underpinnings,
benefited from the lessons from previous DPOs, and was integrated within the harmonized CABS
performance assessment framework \. But quality at entry was also impeded by certain offsetting factors \.
The preparation of the PRSG series was informed by key analytical studies and reviews \. These included
sector studies (i\.e\., the 2004 Malawi Agricultural Policy Options, and the 2006 study on Options for
Restructuring ADMARC), poverty and social impact analyses (i\.e\., the 2004 PSIA on ADMARC reforms, the
2006 Tobacco PSIA, and the 2006 Poverty and Vulnerability Assessment ), business climate studies (i\.e\., the
2006 Investment Climate Assessment, the 2006 Doing Business Country Profile for Malawi, and the 2006
World Bank Doing Business Survey ), and public financial management studies (the 2003 Malawi Country
Financial Accountability Assessment, the 2004 HIPC AAP Report, the EUâs 2005 and 2006 PEFAs, the 2007
Public Expenditure Review, and the 2007 Accounting and Auditing ROSC)\. These analyses helped Bank
staff identify and design the priority policy and institutional reforms to be supported by the programmatic
series\.
Bank staff incorporated the lessons learned from the most recent DPOs into the design of the PRSG series \.
The main lesson was the importance of having a well -focused operation with a few key measures across a
selective set of policy areas in light of the Government âs institutional capacity constraints \. Staff consequently
designed the PRSG series with only four policy components and a few critical actions and triggers \. Another
lesson learned was the importance of having well defined triggers \. In the past, staff had great difficulty in
agreeing with the government on whether a trigger had been met \. As a result, staff endeavored in the PRSG
series to define prior actions and triggers as clearly as possible \. Staff was broadly successful in this regard,
although there were probably too many process -oriented prior actions and triggers than outcome -oriented,
which should be addressed going forward \.
The PRSG series was implemented within the harmonized CABS framework \. This greatly facilitated a close
and consistent policy dialogue and coordination of budget support and program monitoring between the
authorities and its development partners \. This also allowed Bank staff to be more selective in choosing the
policy areas that would be supported through the PRSG series, as well as the relevant prior actions and
triggers, in line with the Good Practice Principles on Conditionality \. The prior actions represented only those
actions that staff believed were critical for achieving the program's PDO and outcomes \. The specific policy
and institutional changes were subsequently translated into indicators and targets and were included in the
CABS PAF\.
Despite the above, quality at entry was compromised by the following two main factors \. First the selection of
certain reform actions (i\.e\., maize, fertilizer, and social protection reforms ) could have greatly benefited from
a more substantial political economy analysis and effort to ensure sufficient political buy -in\. This was
particularly important given the problems and policy reversals that were subsequently experienced in
program implementation\. Second, the design of the M&E framework could have benefited from greater
efforts at developing an adequate monitoring system and set of indicators that covered all the policy
components in the DPO series\. This was particularly important given that the Government âs was unable to
generate comprehensive data that could be used to monitor performance and outcome indicators \.
at -Entry Rating :
Quality -at- Moderately Satisfactory
b\. Quality of supervision:
The quality of supervision was satisfactory \. As noted above, the PRGS series was fully integrated into to the
CABS performance evaluation framework (PAF)\. This included a set of indicators and targets that were
agreed with government in consultation with key stakeholders \. Moreover, the CABS framework allowed for
joint reviews of the Governmentâs performance in meeting the targets contained in the PAF \. There were two
reviews each year that were strategically linked to the budget cycle \. The March review looked at
performance in the preceding period and drew lessons for use in preparing the subsequent budget and
program\. The October review assessed performance during the current period \. Bank staff participated in
these reviews, as well as in the IMF program reviews \.
Equally important, key staff (i\.e\., the TTL and the core specialists ) was based in Malawi, which allowed for
continual monitoring and dialogue with the authorities throughout program implementation \. Moreover, the
structure of the DPO series itself allowed staff to draw on lessons gleaned during the supervision phase of
the previous operation when preparing the subsequent operation \. This allowed Bank staff to respond quickly
and flexibly when problems arose that could threaten the development outcomes \. Such was the case when
the decision was taken to shift away from the broader social protection strategy measures to focus instead
on the FISP\. This was also the case when the decision was taken to include joint procurement reviews of the
FISP as a PRSG-3 trigger given that the cost of the subsidy could threaten the PDO \.
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The authorities demonstrated full ownership and strong commitment to their program \. First, their MGDS built
on its predecessor (the 2002 PRSP) and clearly spelt out the country âs development priorities and integrated
several new sector strategies and policies, including with regard to land reform, public /private partnerships,
and HIV/AIDS\. Second, their commitment to the maintenance of prudent macroeconomic policies and to the
CABS process created a positive enabling environment for implementing the PRGS series \. Third,
government performance in strengthening capacity and economic governance, particularly with regard to
fiscal and public financial management systems, was quite strong \. Finally, the authorities included all key
stakeholders (i\.e\., representatives from the private sector, civil society, development partners, and the
general public) in the design, implementation, and monitoring of the MGDS \.
At the same time, there were critical shortcomings in government performance \. First, the authorities included
critical agriculture and social protection reforms in their program without having sufficient buy -in from across
the government, which impeded implementation \. Second, policy reversals, particularly with regard to the
development of a national social protection policy and the role of ADMARC in the maize and fertilizer sector,
undermined the governmentâs credibility\. Third, the governmentâs institutional capacity constraints impeded
its ability to manage program implementation across a wide set of issues, which also impeded
implementation\. Last, the MDGSâs monitoring and evaluation (M&E) system did not generate sufficiently
comprehensive data and information for monitoring performance and outcome indicators in its results
framework, and would have benefited from even wider public participation and enhanced coordination
between the government and stakeholders \.
Government Performance Rating : Moderately Satisfactory
b\. Implementing Agency Performance:
Implementing Agency Performance Rating : Not Applicable
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Monitoring and evaluation of the MGDS was coordinated by the M&E Division in the Ministry of Economic
Planning and Development\. The implementation of an M&E master plan and road map has wide support from
international, regional, and bilateral partners \. Program monitoring also took place through the CABS review
framework, which included the Bank \. The authorities have put in place a system of data collection for use in
monitoring the implementation of the MGDS\. However, weaknesses in this area have prevented the generation
of data and other information that are comprehensive enough for assessing the PAF indicators, including the
subset of indicators used for evaluating performance under the PRGS series of operations \.
b\. M&E Implementation:
M&E implementation was impeded by the limitations in M&E design \. The authoritiesâ inability to generate data
that could be used in assessing PAF indicators undermined program monitoring and evaluation \. In addition,
while the PAF included a set of prior actions, triggers, and related targets, it did not include monitoring
indicators\. Hence, program monitoring was done on the basis of achieving targets for prior actions rather than
on assessing the broader development impact \. This was done in the context of the February /March CABS
review which involved a comprehensive assessment of performance against the program targets \.
c\. M&E Utilization:
The September/October CABS review assesses budget implementation during the first half of the year and
makes recommendations during the preparation of the subsequent budget, while the February /March review
attempts to draw lessons from overall program implementation to feed into recommendations on subsequent
budget operations\. Similarly, the conclusions of the assessment of performance during the supervision of a
particular operation in the PRGS series is used in the preparation of the subsequent operation, thereby allowing
flexible responses to actual circumstances and changing conditions \.
M&E Quality Rating : Modest
11\. Other Issues
a\. Safeguards:
The ICR did not mention any safeguard issues nor do there appear to be any safeguard -related issues\. Bank
staff assessed the environmental impact of the PRSG program using the DPL toolkit \. The assessment indicated
that the PRSG-supported reforms in tobacco marketing could potentially place significant pressure on the
environment (i\.e\., greater use of firewood, further loss of forest, increase pressure on existing forest resources )\.
It also identified measures that the government was putting in place to mitigate the potential negative effects,
including replanting and rehabilitating 150,000 hectares of softwood and 50,000 hectares of hardwood timber\.
Moreover, the PRSG program is no longer supporting reforms in tobacco \. Staff also reviewed the possible
impact of PRSG-supported reforms in ADMARC, agricultural marketing, increased fertilizer use, and improving
the cost of doing business, but found that the negative environment impacts of these reforms were likely to be
minimal\.
b\. Fiduciary Compliance:
The ICR did not mention any outstanding fiduciary issues nor do there appear to be any apparent issues
regarding fiduciary compliance\. The program documents, however, indicated that Bank staff were satisfied that
the public finance management system was satisfactory to support the PRSG series of operations, although
weaknesses remained\. The main weaknesses were with regard to external auditing (particularly the timely
submission and follow up of audit reports to Parliament ), effectiveness of payroll controls, and public access to
key information\. Under the MGDS, however, the Government has taken steps to clear the audit backlog, conduct
an HRMIS review and payroll audit, enhance the independence of the Auditor General âs office, and create a unit
dedicated to coordinating PFM implementation and to preparing a road map for next steps \. With regard to
procurement, the Government has approved a Public Procurement Act based on international procurement
standards, established an Office of Public Procurement with supervisory oversight responsibilities \. Finally, the
government has implemented measures aimed at increasing the transparency of the budget execution process
and requires all key ministries to prepare procurement plans as part of the budget preparation process \.
c\. Unintended Impacts (positive or negative):
The ICR did not mention any unintended impacts nor do there appear to be any apparent unintended impacts \.
The design of the PRSG series benefited from an assessment of the possible poverty and social impact of the
policy and institutional reforms under consideration \. These included the 2004 PSIA on ADMARC reforms, the
2006 Tobacco PSIA, and the 2006 Poverty and Vulnerability Assessment \. The reform of ADMARC involved the
retrenchment of a large number of staff, but careful attention was paid to the development of an appropriate
severance package for retrenched staff \. In addition, mistakes in rationalizing the operation could result in some
rural areas neither being served by ADMARC or the private sector \.
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Significant Significant
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR highlighted six key lessons learned from the implementation of the PRSG series that are appropriate,
noteworthy, and should inform the preparation of future DPOs \.
1\. The importance of government ownership \. Key institutional reforms in agriculture and social protection
were not implemented because of a lack of buy -in across the government\.
2\. The need to assess the political economy of sensitive reforms \. The political economy dimensions of certain
key reforms under the PRSG series (i\.e\., maize marketing, fertilizer subsidy, and social protection ) were
underestimated\. As result, progress in implementation in these areas was slow and policy reversals occurred \.
3\. There is merit in working within a harmonized framework \. CABS provided the authorities and Bank staff with
a harmonized framework for the provision of budget support that also enhanced the quality of policy dialogue
across donors and provided political leverage for good governance \.
4\. Flexibility in the program assessment framework should be encouraged\. It is difficult to foresee all the
relevant issues and internal /external developments at the beginning of a DPO series \.
5\. A robust and flexible M&E framewor k is important for tracking progress in PDOs \. The MGDS M&E
framework did not generate sufficiently comprehensive information for monitoring outcome indicators,
particularly regarding tobacco market, fertilizer market, and commercial justice reforms \.
6\. The bar for policy reform should be set sufficiently high enough to mobilize change while avoiding overly
ambitious and complex measures\. An important lesson learned from earlier DPOs was that programs should
be focused given existing institutional capacity constraints \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR was comprehensive and its tone candid \. It made a good case for the importance of ownership and
buy-in to the authoritiesâ program, as well as of alignment of CAS and PRSG series to the MDGS \. It also
comprehensively assessed the program objectives, policies, and targets, while underscoring the weaknesses in
the M&E system\. It underscored the mistakes that Bank staff made in underestimating the importance of taking
political economy considerations into account in the design, development, and implementation of politically
sensitive social and structural reforms in order to minimize the risk of policy reversals, program changes, and
shortfalls in achieving the program objectives \. The ICR could have been more streamlined in its presentation
and avoided repetition and redundancies \. Moreover, it could have integrated the discussion of the program âs
performance and M&E indicators into a more holistic presentation that allowed the reader to see the link
between inputs, outputs, outcomes and the achievement of the overall PDOs \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P007400 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 20243
IMPLEMENTATION COMPLETION REPORT
(28605; 28695)
ON A GLOBAL ENVIRONMENTAL FACILITY GRANT
IN THE AMOUNT OF SDR 2\.8 MILLION
TO THE
GOVERNMENT OF JAMAICA
FOR
A DEMAND-SIDE MANAGEMENT
DEMONSTRATION PROJECT
June 1, 2000
Finance, Private Sector and Infrastructure Department
Country Management Unit 3
Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective )
Currency Unit = Jamaica Dollar J$
J$1\.00 = US$ 0\.02
US$ 1\.00 = J$41\.04 (February 2000)
FISCAL YEAR
April 1 March 31
ABBREVIATIONS AND ACRONYMS
CFL Compact Fluorescent Lamp
DSM Demand Side Management
ESMAP Energy Sector Management Assistance Program
GEF Global Environmental Fund
GET Global Environmental Trust
IDB Inter-American Development Bank
IPP Independent Power Producer
JPS Jamaica Public Service Company, Limited
MME Ministry of Mining and Energy
NGO Non-Governmental Organization
NRCA Natural Resource Conservation Authority
PPF Project Preparation Facility (WorldBank)
PV Photovoltaic
SWH Solar Water Heater
1 RC Total Resource Cost
KWh Kilowatt-hour
M\.T\. Metric ton (1,000 Kilowatt)
MW Megawatt (1,000 Kilowatt)
MWh Megawatt-hour (1,000 Kilowatt-hour)
Vice President: David de Ferranti
Country Manager/Director: Orsalia Kalantzopoulos
Sector Manager/Director: Danny M\. Leipziger
Task Team Leader/Task Manager: Joerg-Uwe Richter
FOR OMCLAL USE ONLY
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 3
5\. Major Factors Affecting Implementation and Outcome 5
6\. Sustainability 6
7\. Bank and Borrower Performance 7
8\. Lessons Learned 8
9\. Partner Comments 9
10\. Additional Information 9
Annex 1\. Key Performance Indicators/Log Frame Matrix 10
Annex 2\. Project Costs and Financing 12
Annex 3\. Economic Costs and Benefits 14
Annex 4\. Bank Inputs 15
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 17
Annex 6\. Ratings of Bank and Borrower Performance 18
Annex 7\. List of Supporting Documents 19
This document has a restricted distnbution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authozaion\.
Project ID: P007400 Project Name: DEMAND SIDE MANAGEME
Team Leader: Joerg-Uwe Richter TL Unit: LCSFE
ICR Type: Core ICR Report Date\. June 1, 2000
1\. Project Data
Name: DEMAND SIDE MANAGEME L/C/TFNumber: 28605; 28695
Country/Department: JAMAICA Region: Latin America and
Caribbean Region
Sector/subsector: IY - Other Industry
KEY DATES
Original Revised/Actual
PCD: Effective: 08/15/94
Appraisal: 10/03/93 MTR: 11/06/96
Approval: 06/01/94 Closing: 12/31/98 12/31/99
Borrower/Implementing Agency: GOVERNMENT OF JAMAICAIJPS
Other Partners: IDB; ROCKEFELLER FOUNDATION
STAFF Current At Appraisal
Vice President:
Country Manager: Orsalia Kalantzopoulos Yoshiaki Abe
Sector Manager: Susan Goldmark Peter Ludwig
Team Leader at ICR: Joerg-Uwe Richter Abderrahmane Megateli
ICR Primary Author: Sunil Mathrani
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
According to the June 1994 GET Fund Grant Agreement and the March 1994 GEF Memorandum and
Recommendation of the Director, which constitutes the basic appraisal docunent, the main objectives of
the Project were to (i) demonstrate, on a pilot scale, and over a five-year time frame, the potential for
electricity savings to reduce fossil fuel requirements for electricity generation, with corresponding
reductions in C02, NOx, and S02 emissions; and (ii) strengthen the institutional capacity of the electricity
sector and other relevant public and non-public agencies to engage in energy efficiency enhancement,
implement the savings programs developed through the Project on a larger scale, and develop a framework
for broadening the program on a country-wide scale\. The broader, long-term objective was to develop the
basis for expanding the scope of the program (if successful), on a Jamaica-wide basis and for having
electric utilities in other developing countries replicate similar programs\.
These objectives were appropriate and relevant to the issues confronting the electricity sector in the
early/mid-1990s, which remained heavily dependent on imported fossil fuels and faced serious generation
capacity constraints\. These constraints have been eased since 1997 as new and more fuel-efficient
generating plants have come on stream, reducing the attractiveness of DSM measures for the Jamaica
Public Service Company, Ltd\. (JPS), the electric utility and implementing agency for this Project\.
Hlowever, electricity demand growth has remained robust, despite low and even negative GDP growth since
the mid- 1 990s, thereby giving DSM programs a fresh impetus for the coming years as JPS capacity reserve
shrinks\.
In the Jamaican context, the Project was innovative as well as risky because there was no prior
institutional capability to carry out DSM programs nor exposure of end-users to an energy-saving program\.
3\.2 Revised Objective:
No revisions\.
3\.3 Original Components:
As initially designed, the Project had six components:
* Measures to achieve electricity savings in commercial buildings;
* Electricity savings program for the residential sector;
* Assessment of potential energy savings in the industrial sector;
* Program monitoring, evaluation, and quality control;
* Institutional development of the DSM Unit set up to implement the Project; and
* Institutional development of related entities such as the Jamaica Bureau of Standards, the Natural
Resource Conservation Authority, and local environmental NGOs\.
Based on prior results, two renewable energy components were added in the fnal year of project
implementation, i\.e\., (i) dissemination of solar water heaters to commercial (hotels) and residential
consumers, thereby reducing demand for electricity; and (ii) pilot testing of solar photovoltaic systems for
isolated rural communities that are unlikely to receive grid-supplied electricity in the foreseeable future\.
This was made possible through cost savings and the scaling back of other project components\.
Assessment of Design
While adequate overall, the project design had two important inadequacies, which had a significant impact
on project implementation\. First, the project design should have incorporated greater autonomy for the
-2-
DSM Unit, backed up by an inter-institutional advisory board, to ensure that JPS's corporate goals did not
constrain the objectives of the DSM program\. Second, revolving fund arrangements should have been
incorporated in all those components where project funds were on-lent to, and subsequently reimbursed by
consumers who purchased efficiency enhancing equipment\.
3\.4 Revised Components:
Component; Cost; Rating
COMMERCIAL SECTOR; $3,600,000; S
RESIDENTLAL SECTOR; $1,400,000; S
INDUSTRIAL SECTOR; $100,000; S
MONITORING, EVALUATION, QUALITY CONTROL; $1,200,000\.00; S
INSTITUTION BUILDING; $1,200,000; S
3\.5 Quality at Entry:
Satisfactory
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The Project has substantially achieved its objectives, by demonstrating considerable potential for saving
electricity\. For the residential sector, the energy savings mobilized indicate that there would be significant
potential for additional savings at low cost, so the Project provides an adequate basis for extending the
lighting, solar water heating, and solar P\.V\. programs on a larger scale\. On the other hand, results in the
industrial and commercial sectors are below expectations and the project experience indicates that
important obstacles need to be overcome to attain substantial energy savings in these sectors\. While this
was not a primary project objective, the greenhouse gas reduction targets were not attained (14,000 tons
instead of 86,000 tons as expected), largely because of the low participation rate among commercial
consumers\.
Public awareness of energy conservation and of environmental impacts of fossil fuel use was enhanced
under the Project, which successfully involved relevant NGOs\. The Project's institutional development
objective was met through creating an indigenous capability for DSM activities, the first of its kind in the
Caribbean, both within JPS and among major energy consumers, NGOs, and educational institutions\. This
was achieved through dissemination of best practices including for energy efficiency auditing\. The
acceptance in principle of the DSM Unit's business plan by JPS' senior management and the establishment
of a revolving fund for financing energy-efficiency related expenditures provide some certainty that these
achievements are sustainable\.
For the above reasons, the ICR assesses the overall project outcome as satisfactorv\. despite the shortfall in
meeting the electricity savings and emission reduction targets\.
4\.2 Outputs by components:
In physical terms, the Project's energy savings targets were 7 peak MW or 30,000 MWh by December 31,
1998, the original completion date\. At the time of the mid-term review (November 1996), the contribution
of the different components to the overall targets was revised to take account of implementation experience
during the Project's first two years, but the final overall targets remained essentially unchanged\. With
hindsight, these targets were unrealistically high and should have been reviewed more thoroughly at the
time of the mid-term review\.
The Project only partially achieved its physical goals, essentially due to cutbacks in expected participation
- 3-
by large commercial energy users related to the cut-off in funding by JPS and Inter-American Development
Bank (IDB)\. At completion, the Project is estimated to have cut grid-based electricity demand by about
4MW and produced annual energy savings of about 13,000 MWh, about 60% and 40%, respectively, of
the initial targets\.
Residential Program: In terms of public impact, the residential lighting program was the most successful
component of the Project\. By the time of project closure, over 32,000 households participated in the
program and almost 100,000 CFLs (costing about US$1 million) had been sold to JPS consumers, thereby
cutting peak demand by about 1\.7MW\. This component had a difficult start, with both poor consumer
response to the pilot test and quality problems with the compact fluorescent lamps (CFLs)\. However, the
DSM Unit's flexible and creative approach to promoting and marketing helped to overcome these problems,
and by the end, the Project exceeded its initial targets\. A consultants' review has concluded that the
program was popular with consumers, satisfaction is high and a solid basis exists for replicating it on a
larger scale, given that nearly 10% of JPS residential consumers participated in it\. However, the fnancing
of an expanded program would make it necessary that JPS transfer back to the DSM Unit some of the
funds collected from consumers who purchased CFLs during the first phase of the Project\.
Since the solar water heating program was completed only recently (late 1999), evaluation of the actual
benefits could not be undertaken at this stage\. However, a 0\.6 MW reduction in peak demand is projected
as result of the 300 SWHs installed in residential households\. For this component, a revolving fund was set
up to ensure that the repayments over two years are plowed back into funding an extension of the program\.
Commercial Program: Energy audits of 15 large-volume commercial consumers were carried out by the
DSM Unit and six of these consumers implemented the recommended energy efficiency measures\. The
major barrier to broader implementation was the lack of low-cost financing, the weakness of the Jamaican
economy, and the inability of firms to self-finance the necessary investments\. JPS' decision to reverse its
prior commitment to pre-finance the necessary investments seriously affected this component\. The
commercial program is estimated to have produced energy savings of 3,700 MWh p\.a\. and 0\.2MW of peak
demand reduction\.
Institutional development: The bulk of project expenditures and outputs relate to capacity building in
DSM techniques through training, technical assistance, and consultants' advice\. The DSM Unit has
developed into a valuable resource of experienced and well-trained staff\. The Project also channeled about
US$ 0\.4mn to Natural Resource Conservation Authority (NRCA) and two NGOs (Jamaica Environment
Trust and the National Consumers League) that participated in public awareness campaigns to promote
energy conservation\.
Program monitoring and evaluation: Because its nature as a pilot project - which was intended to serve
as basis for larger DSM programs both in Jamaica and elsewhere - the project design attached considerable
importance to monitoring and evaluation of results by independent consultants: 10% of project funds were
allocated to this purpose\. The results of each major component were reviewed and assessed by consultants
who were not previously involved in project implementation\. The information on energy savings obtained
from these evaluations provide a useful basis for the DSM Unit to market its services to other potential
clients in the future\.
Project Components financed by other Sources
JPS provided approximately US$3\.0 million to cover the DSM Unit's personnel and administrative
expenses, as well as funding for a public education campaign directed at residential and commercial
-4 -
customers (US$0\.34 million)\.
IDB As part of an US$80\.0 million Energy Rehabilitation Loan, US$4\.0 million (later reduced to US$2\.6
million) were made available for dissemination of CFLs, retrofitting of the JPS head office, assessment of
solar water heating and refrigeration options, and energy audits for commercial consumers\.
'Rockefeller Foundation US$0\.237million were made available for feasibility studies on cogeneration
options and implementation of one project\.
Canadian Trust Fund US$0\.16 million financed 19 assessments of large-volume industrial energy users\.
There was no investment follow-up by these users\.
4\.3 Net Present Value/Economic rate ofreturn:
At appraisal, the cost-effectiveness of the proposed programs were evaluated using the societal, total
resource cost (TRC)\. including taxes and subsidies, and participation tests, which are commonly used in
North America to assess DSM programs\. The resulting benefit/cost ratios were 1\.47 for the societal test;
1\.31 for the TRC test; and 3\.5 for the participation test\. Based on actual project data, the ex-post results
are 4\.52 for the societal test; 4\.03 for the TRC test, and 7\.78 for the total participation test\. These results
were achieved despite the scaling down of the Project, largely because the results from the residential
component exceeded original assumptions by a considerable margin\.
4\.4 Financial rate of return:
N/A
4\.5 Institutional development impact:
As result of substantial capacity building in DSM techniques that took place under the Project, the DSM
Unit now constitutes a valuable resource of experienced and well-trained staff\. Given that the Project has
identified considerable potential for expanding DSM activities, there is a strong case for preserving and
expanding the DSM Unit which contains a pool of expertise with the potential to apply its skills to future
programs both in Jamaica and in other Caribbean countries\.
The participation of NGOs in the Project proved to be useful to furthering the goals of DSM, while at the
same time better equipping these agencies to pursue their own activities\. However, the substantial
assistance (US$ 0\.6mn of IDB loan funding) planned for the Jamaica Bureau of Standards to carry out
energy efficiency tests and labeling of appliances and to disseminate building codes was eliminated due to
the Govemments failure to provide in time a site needed to construct laboratory premises, as well as lack
of other counterpart resources\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
International petroleum prices were low for most of the project period, thereby reducing the incentive to
conserve energy\. (It has not been possible to gauge the effect of the resurgence of this price since early
1999\.) No other significant factors outside the control of the Govermnent or the implementing agency
affected project implementation\.
5\.2 Factors generally subject to government control:
The macroeconomic deterioration since the mid- 1990s and attendant financial crisis greatly reduced the
willingness and ability of industrial and commercial consumers to invest in energy efficiency investments\.
At the time of appraisal, annual GDP growth was projected at 3\.5% and energy demand was projected to
increase at about the same rate\. Instead, the Jamaican economy experienced stagnation and even decline
for the past several years (while electricity demand continued to increase at about 50/op\.a\.), which altered
the context within which the Project was implemented\.
The Government was supportive in principle of energy efficiency programs but provided little effective
assistance\. It was not until the end of the Project that the Government through the Ministry of Mining and
Energy (MME) exerted pressure on JPS to pursue DSM programs\.
There was insufficient involvement of other energy sector entities or major consumers in monitoring and
supporting the DSM Unit's activities\. The Unit depended almost entirely upon JPS senior management and
external donors to set its priorities and finance its work program\. As such, the Unit did not benefit from the
guidance of many important players in the Jamaican energy scene\. The Unit was over-reliant on the sole
commitment of JPS, which was not always forthcoming\.
According to larger energy users, the lack of attractive financing or tax relief for energy efficiency
investments has deterred investment in efficiency enhancing equipment\. Interest rates on local borrowing in
Jamaica were very high during the project period and in conjunction with the sluggish business
environment, they were a major reason for the poor response by individual and commercial energy users\.
5\.3 Factors generally subject to implementing agency control:
In the initial financing plan for the Project, JPS committed itself to provide US$4\.3mn in local currency,
and would have been the single largest contributor project fnancing\. However, the implementation period
coincided with an electricity tariff freeze, which was aggravated by JPS' financial crisis in 1995-96
resulting from the accidental destruction of a significant part of its generation capacity\. JPS was forced to
reduce its financial contribution to the project component for large-volume commercial consumers\. This
led to a sharply lower participation rate of the largest energy users and thus, a disproportionate shortfall in
overall energy savings resulting from the Project\.
During project implementation, JPS management exhibited an uneven degree of commitment to DSM goals\.
Initial support during project preparation and the early implementation phase was high, given JPS
generation capacity constraints at that time\. However, the justification of DSM programs within JPS
became more difficult once supply bottlenecks were removed after two new IPPs initiated service\. Nor did
JPS integrate DSM programs into its long-term load forecasting and generation expansion planning\.
5\.4 Costs and financing:
The Project was completed at a cost of US$9\.85 million, 21 percent below the appraisal estimate of
US$12\.5 million and 5 percent below the - revised - mid-term review estimate\. This reduction occurred
both because JPS and IDB reduced their contribution to project funding (due primarily to the requirements
to allocate funds to repair the Old Harbour generating plant damaged in mid-1994) and costs of several
activities were lower than originally estimated\. The GET grant financed US$ 3\.57 million; the IDB loan,
US$2\.68 million; the grants from the Rockefeller Foundation and Canadian Trust Fund, US$0\.20 million
and US$0\.15 million, respectively; and JPS, US$3\.25 million\. Toward the end of the Project, funds were
reallocated from consulting services and training to pilot projects for solar water heating and solar PV\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The Project's sustainability is assessed as uncertain because the institutional arrangements for future DSM
activities in Jamaica as yet have not been clearly defined in terms of their scope and location\. While
supportive of DSM activities, the Government in general and MIME in particular do not yet have an explicit
DSM policy as part of its overall energy sector strategy or a vision for the future role of the DSM Unit\.
Several alternative institutional arrangements have been mooted and a decision by Government and JPS is
-6 -
urgently needed on the future importance of DMS in general and the role of the DSM Unit in particular\.
6\.2 Transition arrangement to regular operations:
At present, JPS continues to pay the salaries of the DSM Unit staff and its operating costs\. JPS intends to
keep the DSM Unit as a distinct entity but integrate the Unit more closely into its mainstream activities,
pending a fnal government decision\. However, DSM activities may not always be compatible with JPS'
corporate goal of maximizing electricity supplies, in terms of coverage and per-capita consumption\. In
order to build on the achievements of the Project and to sustain the present public interest in CFLs, solar
water heater (SWH) and solar PV systems, it is essential that JPS and/or other sources provide the DSM
Unit with adequate funding to pursue these programs\.
The DSM Unit has indicated that with adequate funding, it would be feasible, over a three-year period, to
disseminate a further 200,000 CFLs to residential users, and about 3,000 SWHs and 1,000 solar PV
systems in remote rural households\. These targets need to be firmed up as part of the Unit's business plan\.
Once approved and costed, they would be the basis for assessing the Unit's performance in the next two -
three years\.
Further project monitoring by the World Bank in the next six - twelve months is recommended as part of
the dialogue with the Government, in order to assist in ensuring the sustainability of the DSM Unit and in
defining its future range of interventions\. The value of the Project as "demonstration" of the potential for
DSM programs in Jamaica and elsewhere also depends on a review by GET and the Bank of possible
follow-on activities of this nature in other Caribbean countries\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
The Project's objectives fitted well into the prevailing sectoral objectives of reducing generation capacity
shortages, and the Government's overall objectives to minimize its fuel import bill and reduce power plant
emissions\. Preparation and appraisal were thorough, although the design of the procurement arrangements
imposed an excessive degree of prior Bank scrutiny\. Arrangements for more ex-post reviews of
procurement decisions would have helped to reduce the extent of micro-management by the Bank's task
managers that resulted from the need for prior clearance of even nominal expenditures\. Finally, the
appraisal did not sufficiently recognize the risk of: (i) non-implementation of efficiency audit
recommendations due to financial constraints; and (ii) uneven commitment by JPS management to DSM
goals\.
7\.2 Supervision:
Overall, project supervision by the Bank was satisfactorv, with nine missions in five years that provided the
required expertise\. However, there should have been more intensive supervision during the first two years
of the Project when substantial delays in project start-up and changes in management of the DSM Unit
occurred\. At that time, other - considerably larger and more complex - Bank-financed projects and major
sectoral policy issues (such as JPS privatization) dominated staff and borrower attention\. The Project also
suffered from a rapid turnover in task managers during 1996-98 and a hiatus in task management in late
1997 and early 1998\. Thereafter, closer supervision by the Bank ensured that the demonstration
components proposed by the DSM Unit were implemented expeditiously and the Project was completed
within the extended closing period, with nearly all available funds being utilized\.
-7-
7\.3 Overall Bankperformance:
On account of adequate project preparation and supervision, the Bank's overall performance is rated
satisfactory\.
Borrower
7\.4 Preparation:
The Project was based on the recommendations of an ESMAP study on energy efficiency options (e\.g\.
building codes; equipment labeling) and work by the Conservation Law Foundation and Rockefeller
Foundation which recommended pilots for enhancing energy efficiency of commercial users\. A PPF was
granted for project preparation undertaken by consultants\.
7\.5 Government implementation performance:
While the Government's energy policy document acknowledged the importance of energy efficiency
enhancement, the Project did not receive the necessary effective support from MME whose participation in
the Project was generally limited to monitoring progress\. An urgent decision by the Government is needed
on the institutional arrangements for future DSM activities in Jamaica\.
7\.6 Implementing Agency:
DSM Unit: Project execution was slow in the first two years but accelerated considerably later\. Unit
management and staff were committed to making the Project a success, and showed initiative in seeking
solutions to the difficulties encountered during implementation\. Project results were satisfactory overall,
despite the cutback in JPS' financial contribution\. However, the Unit should have been more proactive
toward the end of the Project to ensure the sustainability of its operations beyond project completion\.
JPS: JPS management exhibited uneven support to DSM\. The decision to reduce its financial support to
the program, although understandable in the circumstances, impeded the Project's impact on the
commercial and industrial sectors and thus reduced the degree to which the energy savings targets could be
met\. Toward the end of project implementation, JPS did not actively explore alternatives for transfonning
the DSM Unit into an energy services company, which has added to the uncertainties about the Unit's
future\.
7\.7 Overall Borrower performance:
Satisfactory on balance, on the strength of the DSM Unit's performance, notwithstanding the lack of
effective government support\.
8\. Lessons Learned
The key lessons that can be drawn from this Project are:
* A supportive policy environment, through strong and proactive commitment by the Government and the
major energy sector entities, is essential for DSM programs to succeed;
* There is a potential conflict between a narrow goal of maximizing electricity supplies and a DSM
program;
* The institutional arrangements for DSM programs need to ensure that the implementing agency has
adequate managerial and fnancial autonomy;
* Public awareness and promotional campaigns are critical to the success of DSM programs;
* Energy efficiency audits in the industrial, commercial, and residential sectors need to be accompanied
by appropriate financing, if there is to be adequate investment follow-up to the audit recommendations;
and
* Prospects for sustainability are enhanced if revolving fund mechanisms to recycle consumer
repayments are incorporated in the project design and adhered to\.
-8 -
9\. Partner Comments
(a) Borrower/implementing agency:
See attached\.
(b) Cofinanciers:
None received\.
(c) Other partners (NGOs/private sector):
None received\.
10\. Additional Information
Map IBRD 30858
-9-
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome/Impact Indicators
ca~~~~ 4
Energy savings of 7 peak N/A Energy savings of 4 peak MW
MW or 30,000 MWh 13,000 MWh
Reduction of C02 N/A Reduction of C02 emissions by
emissions by 88\.590 tons 14\.000 tons
-10-
Output Indicators:
JAMAICA: DSM - Electricity Savings Targets and Achievements
(MW, MWh, Tons of C02 emissions)
Indicator Projected in last PSR Actual/Latest Estimate
/Matrix
TARGETS (ANNUAL)* ACHIEVEMENTS
(ANNUAL
C02 C02
Emission Emission
Mw Reduc- MW Reduc-
Peak tions Peak tions
Demand MWh (Metric Demand MWh (metric
Tons) Tons)
Residential 0\.002 18 21\.0 0\.005 58\.0 6\.0
Phase 1
Residential 1\.000 4,393 5,228 1\.67 5,437 6,470
Phase II _
Large
Commercial
Retrofits - New 5\.700 4,479 11,660 0\.278 3,788 4,500
Construction
Small 0\.001 51 61 0\.04 111 132
Commercial \.
SWH Residential (Combined - 0\.56 274 326
with
Commercial!
SWH 0\.170 157 187 - 608 724\.55
Commercial
SolarPV - - I-N/A 7 8
I Total 6\.720 - 97 ,157 2\.553 10,313 I12,166
*Original Five Year Cumulative Targets have been annualized to facilitate comparison with achievements which
were estimated on an annual basis\. This was necessary because most of the programs were not implemented
until late 1998 and 1999\.
- 11 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Project Cost By Component US$ million US$ million _
Commercial Sector 3\.56 0\.96 26\.97
Residential Sector 1\.38 1\.43 103\.62
Industrial Sector Assessment 0\.15 0\.15 100
Programs Monitoring and Evaluation and Quality Control 1\.18 0\.35 29\.66
DSM Unit Institutional Building & Administrative Costs 4\.20 6\.57 156\.43
Institutional Strengthening 0\.79 0\.39 49\.37
Total Baseline Cost 11\.26 9\.85
Physical Contingencies 1\.24
Total Project Costs 12\.50 9\.85
Total Financing Required 12\.50 9\.85
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
Expenditure Category ICB Procureent Method N\.B\.F\. Total Cost
1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 0\.00 1\.12 0\.06 4\.84 6\.02
(0\.00) (1\.12) (0\.00) (0\.00) (1\.12)
3\. Services 0\.00 2\.62 0\.00 2\.27 4\.89
(0\.00) (2\.62) (0\.00) (0\.00) (2\.62)
4\. Miscellaneous 0\.00 0\.00 0\.00 1\.59 1\.59
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.00 3\.74 0\.06 8\.70 12\.50
(0\.00) (3\.74) (0\.00) (0\.00) (3\.74)
- 12 -
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
Procurement Method Cs
Expenditure Category ICBCB B Oer N\.B\.f\. Total Cost
1\. Works 0\.00 0\.80 0\.00 0\.80 1\.60
(0\.00) (0\.80) (0\.00) (0\.00) (0\.80)
2\. Goods 0\.00 0\.54 0\.00 1\.27 1\.81
(0\.00) (0\.54) (0\.00) (0\.00) (0\.54)
3\. Services 0\.00 1\.46 0\.34 0\.75 2\.55
(0\.00) (1\.46) (0\.00) (0\.00) (1\.46)
4\. Miscellaneous 0\.00 0\.00 3\.88 0\.00 3\.88
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.00 2\.80 4\.22 2\.82 9\.84
_ (0\.00) (2\.80) (0\.00) (0\.00) (2\.80)
"Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2' Tncludes civil works and goods to be procured through national shopping, consulting services, services of contracted
staff of the project management office, training, technical assistance services, and incremental operating costs related to
(i) managing the project, and (ii) re-lending project funds to local govenmuent units\.
Project Financing by Component (in US$ million equivalent)
Percentage of Appraisal
Appraisal Estimate Actual/Latest Estimate
Bank Govt\. CoF\. Bank Govt\. CoF\. Bank IGovt\. CoF\.
Commercial Sector 2\.72 0\.84 0\.96 0\.0 0\.0 114\.3
Residential Sector 1\.38 1\.41 0\.0 0\.0 102\.2
Industrial Sector 0\.15 0\.15 0\.0 0\.0 100\.0
Assessment
Program Monitoring and 0\.59 0\.59 0\.35 59\.3 0\.0 0\.0
Evaluation Control
DSM Unit lnstittuional 2\.27 1\.36 0\.57 2\.84 3\.22 0\.53 125\.1 236\.8 93\.0
Building and
Administrative Costs
Institutional Strengthening 0\.19 0\.60 0\.39 205\.3 0\.0 0\.0
Contingencies 0\.75 0\.23 0\.26 0\.00 0\.0 0\.0 0\.0
Total 3\.80 4\.31 4\.39 3\.58 3\.22 3\.06 94\.2 74\.7 69\.7
-13 -
Annex 3: Economic Costs and Benefits
Economic rate of return
Benefit/Cost Ratio Appraisal Actual
Societal Test 1\.47 4\.52
Total Resource Cost Test 1\.31 4\.03
Participant Test 3\.86 7\.78
-14 -
Annex 4\. Bank Inputs
(a) M_ sions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, I FMS\. etc\.) Implementation Development
MonthNear Count Specialty Progress Objective
Identification/Preparation 2 1 Sr\. Financial Analyst, 1
September 1992 Energy Efficiency Specialist
(Consultant)
7/18-7/30/1993 4 1 Sr\. Financial Analyst, 1
Energy Specialist, 2 Consultants
Appraisal/Negotiation
10/4-10/24/1993 4 1 Sr\. Financial Analyst, 1
Energy Specialist, 1
Consultant, 1 Procurement
Specialist
Supervision
10/26/1994 3 1 Sr\. Financial Analyst, 2 S S
Consultants
6/7-6/14/1995 2 1 Sr\. Financial Analyst, I S S
Consultant
11/5-11/17/1995 1 1 Sr\. Financial Analyst U U
315-3/9/1996 1 1 Sr\. Power Engineer S S
7/21-7/24/1996 1 1 Sr\. Operations Officer S S
11/17 -12/2/1996 2 1 Sr\. Operations Officer, 1 Sr\. S S
Power Engineer
5/2-9 1997 2 1 Sr\. Operations Officer, 1 Sr\. S S
Power Engineer
5/4-5/13/1998 3 1\. Sr\.Energy Economist, 1 Sr\. S S
Operations Officer, 1 Sector
Leader
9/27-10/3/1998 2 1 Sr\. Energy Economist S S
3/28 - 4/2/ 1999 1 Sr\. Energy Economist, 1 S S
Energy Efficiency Specialist
12/2-12/8/1999 I Sr\. Energy Economist S S
ICR
1/31-2/7/2000 2 1 Sr\. Energy Economist, I S S
Energy Efficiency Specialist
(Consultant)
- 15 -
(b) Staff\.
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ (,000)
Identification/Preparation 24\.2 69\.0
Appraisal/Negotiation 5\.8 16\.8
Supervision 68\.8 209\.1
ICR 10\.0 37\.5
Total 108\.8 332\.4
-16 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Z Macro policies O H OSUOM O N * NA
Z Sector Policies 0 H O SUO M O N 0 NA
Z Physical OH OSU-M ON ONA
7 Financial O H OSU*M O N O NA
Z Institutional Development 0 H O SU *M 0 N 0 NA
Z Environmental O H OSU*M O N O NA
Social
Z Poverty Reduction O H OSUOM O N O NA
Z Gender O H OSUOM O N O NA
O Other (Please specifj)
Z Private sector development 0 H O SUO M 0 N 0 NA
f Public sector management 0 H O SUO M 0 N 0 NA
!Z Other (Please specify)
-17 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
O Lending OHS*S OU OHU
D Supervision OHS OS OU OHU
O Overall OHS OS OU O HU
6\.2 Borrowerperformance Rating
I Preparation OHS *S OU O HU
I Government implementation performance O HS O S 0 U 0 HU
I Implementation agency performance O HS OS 0 U 0 HU
O] Overall OHS OS OU O HU
-18 -
Annex 7\. List of Supporting Documents
See Project file for:
Global Environment Trust Fund Grant Agreement June 1, 1994
Memorandum and Recommendation of the Director; Latin America and Caribbean Country Department
III, to the Regional Vice President, March 1, 1994
Supervision Mission reports, 1994-99
ICR Mission back-to-office report, February 11, 2000
-19 -
DSM Project Review for the period
June 1994 to December 1999
A Review of the Project Targets, Achievements and Lessons Learnt
Presented to the World Bank
March 13, 2000
Demand Side
Mangement
Unit
-20-
Exeutive Summary
Ihe Jamaica Public Service Company developed a Demand Side Management Demonsuaion
Project in collaboration with the Inter-American Development Banrk the Global Envionment Trust
Facility/World Bank (tustee), the Rockefeller Foundafion, and the Canadian Trust Facility/IDB
(trustee)\.
The total project cost was originally estimated at US$12\.5 milon, with the IDB Loan 605/OC-
JA providing USS4\.0 million, the Rockefeller Foundation providing a grant of USS237,000, the
Canadian Trust Fund providing a grant of USS150,000, the World Bank/GET Facility providing
a grant of USS3\.8 million and parallel financing by JPSCo of USS4\.31 million\. The total project
cost was revised to US$] 0\.37 million subsequent to the Mid-term review undertaken by the
World Bank over the period November17- December 2,1996 The final date for disbursement
under IDB's Loan Contract was February 1999, and the closing date for the World Bank/GET
grant was December 31, 1999\.Total disbursement under the GET Grant as of December 31, 1999
was US$3\.568 million\.
Project Objectives
\. The principal objectives of the project were to: (i) save fuel consumption; (ii) defer generation
capacity expansion; (iii) reduce emissions of greenhouse gases; (iv) build institutional capability
in the Jamaica electric power sector and the energy-related private sector, (v) support the ongoing
efforts in testing and adopting energy efficient equipment; (vi) increase public awareness; (vii)
demonstrate the potential gains to utilities of other developing countries; (viii) provide cost
savings to JPSCo and participating customers; and (xi) expand the use of new technologies in
Jamaica The project had an energy savings target of about 7 peak MW and 30,000 MWh by
1999\. Additionally, the project included institutional stengthening for the JPSCo DSM Unit,
and other institutions such as the Jamaica Bureau of Standa ds (JBS), Natural Resource
Conservation Authority (NRCA), Jamaica Environment Trust (JET) and other Non-
Governmental Organizations (NGOs)\.
-21-
*Demard Side MAanagement
bemoistration Project
Project Implementation Performance
Ihe Demand Side Management Unit, within the Corporate Services Division executed the
Project, which becam effective on June 1, 1994\. Cooperation in the implementation and
enhancement of individual DSM programme plans was provided by the Jamaica
Environment Trust, the National Consumers' League, the United Consumers in Action, and
the Natural Consevation Resource Authonty\. The Jamaica Bureau of Standards was also
involved in the testing of energy efficiency lighting equipment and in providing information
on Solar Water Heating Standards and Energy Efficiency Building Codes and Standards\.
The programmes falling under the umbrella of the Demand Side Management
Demonstration Project were as follows:
* Residential Phase I and i,
* Small Commercial Phase I and II,
a Lage Commercial Retrofit,
* Large Conmercial New Construction,
* Assessments of Solar Water Heating, Refrigeration and Air Conditioning systems,
and
* Cogeneration component targeted to hotels and industial facilities\.
* Solar Water Heating Pilots in the Commercial and Residential Sectors
* Photovoltaic Pilot Programme in two rural villages
This report provides an encapsulated revicw of the Demand Side Management
Demonstration Project by outlining the main project tagets, accomplishments, lessons
leamt and recommended actions to enhance the project's future sustainability\.
The Project faced severl risks to the realization of projected benefits- These were
technical, institutional and market The technical risks relate to the issues surrounding the
unique characteristics of the power in Jamaica which is supplied at II OV, 50Hz\. The
insitutional risks relate to the ability to adequately staff the DSM Unit, and supporting
areas\. The market risks relate to the possibility of weak interest or paricipation in DSM
programs, which would affect penetration and savings targets\.
A major factor contributing to the slow pace of implementation during the first two years
was the deterioration in JPSCo's cash flow, which was aggravated by the June3, 1994
explosion at the Old Harbour Power Station This situation was further compounded by the
fact that the Govermment decided not to award a rate increase at the time\. Consequently,
expenditures were restricted to essential core functions only which impacted on the timely
hiring of staff for the DSM UniL
3
-22-
*Demand Side Managemnent
Demonstration Project
Achievement of Project Objectives
Residental Phase I and II programmes
The Residential Phase I and H energy-efficiency programs wee launched in March 1994
and Febluary 1996, under the umbrella theme " Power Saver Programmes - increasing
energy efficiency and building awareness\." These programmes provided customers with
new ener efficient compact fluorescent lamps, low flow showerheads, faucet and sink
aerators, refrigerator gasket replacement its and technical assistance in appliane operation
and maintance\. The Phase I programme was a direct installtion deivery method and
Phase I was implemented through a direct contact delivery metbod At JPSCo commecial
offices over a three -year period\.
Residential Phase 1 Programme
* Provision of compact fluorescent lamps (CFLs) and other energy efficient devices at
no cost to 100 participants\. The group of 100 participants was selected via an Essay
Competition conducted for students between the ages of 10 and 18\. Both winning
students and their teachers were selected
* The objective was to establish thc technical criteria regarding equipment performance,
customer response and installation problems\.
* Engineering estimates exceeded the original targets of 2kW and 18,000 kWh\. The
programme resulted in reduced annual energy use of 58,021 kWh and peak coincident
demand reduction of 5\.2 kW and saving of 835,965 gallons of water each year\.
JPSCo's school based publicity strategy generated a geat deal of press coverage as
well as contact with students, teachers, and parents, concerning changes in apliance
usage patterns and purchasing habits\. Pilot participants expressed a high level of
satisfaction with the products and services received\.
Feedback from customers was used to enhance the design and development of the
Residential Phase 1 lProgranme\.
Residential Phase 11 Power Saver Programme
The second phase of the residential powcr saver programme sought to increase the
saturation of high-efficiency electrical equipment, boost consumer demand, and the
commercial viability of the equipment in the residential market\.
T1his programme involved the provision of energy efficiency measures to 30,000
customers at a discounted price\. Implementation was carried out over a three-year period,
1996-98\. Contact was made with customers directly at JPSCo commercial offices\. The
4
-23-
*bemand Side Manayement
Demonstration Project
aim was to solicit participation from customers ftrough our customer service offices
island-wide
This was the first time that JPSCo had embarked on a project of this type\. In particular,
the development of new accounting procedures and a computerized subsystem was
complex and encountered many delays\. As a result, this impacted severely on the ability
of the DSM Unit to respond to customer needs in the early stages of the programme\. For
instance, the subsystem required frequent modifications to the database tracking
programme by the IS department\. This affected the implementation of the computer
subsystem in the Customer Service Offices through the non-programming of cash-
receipting machines\. The DSM Unit was also constrained by this deficiency in that the
database tracking system was at first limited\. The link to the mainframe, which facilitated
the approval of customers for the programme, was frequently out of service, resulting in
futher delays\.
The distribution of equipmcnt to various JPSCo Customer Service Offices island-wide
was at first tardy and the DSM Unit had to exert additional coordination efforts in this
area\.
At the end of December 31 the target of 30,000 participants were achieved\. The
programme's original savings targets of 1\.0MW and 4,393 MWh/ year were substantially
exceeded With actual savings of 1\.67MW and 5,437 MWh respectively\.
Commercial Componejnts
The Commercial program components were launched in October 1996, after much
preparaton and the dissemination and review of programme plans\. These programmes arc
more complex dtan the residential programmes because they are hinged on the Energy
Efficieny Building Code, which was only available for dissemination in January 1996\.
The Jamaica Bureau of Standards held their first traiing course since the official printed
copies were available in the beginnin of October 1996\. Prior to the Launch, the DSM Unit
was not only involved in developing the programs but also in recruiting and training
additional persons to cany out the implementation and direct contact marketing required to
realize healthy participation rates\. Details on these programmes are presented below\.
Large Commercial Retrofit Programme
This programme was a major facet of the commercial-scctor component of the Project
The objectives of this programme were:
establishing of technical potential for energy conservation in the large
commercial sector,
a demonstration of the means for achieving conservation in large existing
buildings;
5
-24-
lebmand Side Management
DemonsfrOtion Project
establish the steps that will be taken - and the resources - required to foster
conservation in the large commercial sector cost effectively on a broad scale;
achieve a limited amount of energy conservation savings commensurate with
the program budget - peak shaving of 2\.72 MW for the utility and an energy
savings of 11,907 MWh for the customers were targeted\.
increase customer awareness of energy saving measures and reduce technical
nsk\.
The programme design involved the provision of financial incentives for the
implementation of energy efficiency measures in 13 large commercial facilities (in the
R40 and R50 rate class)\.
An energy auditing consulting finn, DSE Consultants Inc\., of Canada completed energy
audits of fifteen large facilities\. The quality of the audits and recommendadons were of a
high standard\. Implementation achievements were, however, severely curtailed by the
decline of the Jamaican cconomy and the concomitant scarcity of relatively cheap capital
The adoption of new energy efficient technologies was further limited by JPSCo's
corporate decision to withdraw offers of financing for large customers and minimize
financing subsidies to small customers\. At the end of the programme on December31,
1999, six facilities had completed installations of energy efficiency retrofits resulting in
esimated energy savings of 3,703 MWh equivalent to cost savings of USS978,504\.
Large Commercial New Construction Programme
This programme involved the provision of financial incentives for the implementation of
energy saving devices in seven (7) new large commercial facilities (in the R40 & RS0
rate class)\. The programme had several broad objectives which included:
* Establishing the technical potential for conservation as well as the likely market
penetration in the large commercial new construction sector\.
* Providing information and technical assistance to help builders, architects, engineers,
and developers early in the planning and design stages of new commercial buildings
to maximize the level of achievable savings\.
The prograrmnme had a specific goal of reducing the peak utility demand by 3\.07 MW and
conserving 9,459 MWh\.
A listing of all new commercial buildings for construcion islandwide, approved by the
relevant Parish Councils, was developed in-house\. From this listing 47 buildings met the
criterion of size( >1000m2)\. Letters were sent to these developers and owners informing
them about the New Construction Progranmme and inviting them to express interest in
participating\. A mailing soliciting participation was also made to architects and engineers
6
-25-
*bemand Side Management
Demonstration Project
for buildings not captured in the above method\. A total of 15 responses, were received
and these were invited to attend the October 25 launch\.
However, given the depressed state of the economy, new construction activities were
practically non-existent in the commercial sector\.
Small Commercial Direct Installation Program\.
The Small Commercial Programme sought to give businesses a boost by offsetting
operating costs with the provision of financial and technical assistance to owners of
existing buildings under 1000 square metres in size- The small buildings (R20) tariff
class represents the most commercial customers in Jamaica\. A major objective of the
programme was to determine the technical potential and market penetration for
conservation in the small commercial sector\.
The programme was launched as a part of the Commercial 'Power Plus' Progranme on
October 25, 1996\.Ten small commercial (R20) facilities were targeted for audits and
retrofitting\. Under this programme, selected facilities received financing to purchase
state-of- the-art energy-efficiency measures at attractive interest rates\. JPSCo also
provided fimding to reduce the payback period of the recommended measures to three
years, based on data gathered during the site audit\. The customer will therefore pay only a
portion of the total cost\.
The energy audits were conducted free of cost, and the energy efficiency measures
installed directly by a contractor provided by JPSCo\. Under the programme ten facilities
were retrofitted with estimated energy savings of 111,268 kWh and demand savings of
41kW\.
Technology Assessments
The DSM Demonstration Project features four Technology Assessment studies:
* Solar Water Heating
* Industrial-Sector Efficiency-Enhancement
* Refrigeration Efficiency-Enhancement
* Air Conditioning Efficiency-Enhancement
The basic purposes of these studies were: (1) to identify the segment-specific market
potential for one or more energy-efficiency technologies that could be promoted within
one or more applicable market segments, and (2) if the results of Step I are favorable, to
develop an appropriate Pilot Programme to promotc the technology(ies) on a limited
scale, to gain actual experience with customer reactions, acceptance barriers, etc\. All
studies have been satisfactorily completed\.
7
-26-
*Demand Sidte Management
Oemonsfrtion Projct
Solar Water Heater Commercial Programme
This programme involved the supply, installation and maintenance of solar water heating
systems in approximately 15 hotels, primarily to promote the use of solar energy and to
test the technical efficiency, customer acceptancc and cost-effectiveness of commercial
solar applications\. Two contracts were awarded to undertake this activity, Solar
Dynamics (EC) Ltd\. and (2) Energy Services and Products Ltd\. Participants will repay
costs through electricity bill over three -year period in order to create a revolviag fund for
future solar activities\.
The programme has been moderately successful with (13) thirteen facilities participating
in the progmmune, encompassing largc and small hotels as well as student
accommodation halls of residence at the University of the West Indies\.
Solar Water Heating Residential Promramme
The Residential Solar Programme involved the installation of solar water heating systems
in 300 domestic households\. Participating customers will repay the cost of each system
over a two-year period on electric bill\., thcreby establishing a revolving fund for future
interventions in the solar water heating market\.
As of November 30, 1999, the contrctor Isratech Jamaica Ltd\., had installed aIl 200 solar
water-heafing units\. The programme had been very successful\. Approval was
subsequently given by the World Bank to expand the programme to include another 100
insllatons\. These additional units havc also been installed\. Plans are currently
underway to expand the programme through the revolving fund to be established, during
fiscal year 2000\.
Photovoltaic Pilot Programme
This progamme represented a pioneering effort at using environmentally benign
technology to provide energy to isolated rural villages as a cost-effective complement to
traditional grid expansion\. The programme involved the installation of photovoltaic
equipment (pancls, cables, batteries and inverter) in about forty homes in small remote
rural villages\. Two villages were targeted, 28 homes in Middle Bonnett in St\. Catherine
and 14 homes in Ballymony in St\. Ann\.
Implementation was undertaken by a local contractor Automatic Control Engineering Ltd\.
and completed by December 31, 1999\. A solar powered streetlight and lighting for the
local church was also installed at Middle Bonnet
-
-27-
abemand Side Management
bemoAsrtrotion Project
Project Sustainabiity
A business plan has been prepared by the DSM Unit, which charts the way for the fature
sustainability of encrgy efficiency activities\. It is proposed that the existing DSM Unit
will contnue to operate as a quasi energy services entity, fully owned by JPSCo\. or by
some type of joint venture arrangement between JPSCo and other public/private sector
agencies\. The principal performance indicators of the new DSM Unit will include inter
alia
1\. Sale of 200,000 compact fluorescent lamps over a 3 year period\.
2\. Annual sale and maintenance of 1000 Domestic Solar Water Heaters over the next
three years\.
3\. Sale of 1000 photovoltaic systems to rural homes over a three year period\.
4\. Provision of energy auditing, training and performance contracting services to the
public and private sectors\.
5\. Installation and lcasc financing of solar water heating systems to 12 hotel/institutional
facilities\.
A energy performance-contracting pilot is planned with assistance from a North
American Energy Services Company\.
Bank Performance
The Bank demonstrated noteworthy flexibility in granting approvals for use of the GET
financing for activities, which were not previously earmarked under the original financing
plan\. These included the residential and commercial solar water heating programmes,
the photovoltaic pilot programme -the first of its kind in the English speaking Caribbean-,
as well as assistance to corporate efforts to review the tariff structure and to reduce
technical and non-technical losses\. The quality of bank supervisory staff was in general of
a very high standard and committed to the achievement of the goals of the programme as
evident in support given for the granting of two extensions to the project's original
closing date\. On a broader level, efficiency gains in procurement administration would
have resulted from greater decentralisation at the local level, for approvals of a plethora
of relatively small expenditures\.
Borrower Performance
Major delays in project implementation at the start of the project werc a reflection of a
confluence of unforeseen factors\. Perhaps the most salient was the June 1994 explosion at
the Old Harbour Power Plant, aad the resultant cash flow deterioration\. The latter
impacted on the ability of DSM Unit to recruit staff and to provide financial incentives to
commercial participants\. Unfarniliarity with the modus operandi and procurement
proclivities of donor agencies was also another initial factor\.
9
-28-
*Demand Side Management
Demonstration Project
On another level the DSM demonstration pilot contributed positively to the corporate
public image and customers perception of the local utility, given the less han buoyant
state of the economy\.
Notwithstanding the initial delays the project gained substantial momentum in later years,
achieving several objectives and targets\.
Overall Assessment of Project Results
The Demand Side Mnagnt Demonstration Project achieved one of its major
objectives, that of sensitising and generating public awareness of the benefits of energy
efficiency\. The contribution of the Jamaica Environment Trust (JET)\. The National
Consumers League (NCL) and the Natural Resources Conservation Authority (NRCA) in
the dissemination of information cannot be overstated\.
Another major achievement was the significant institutional capacity building resulting
from trinng on energy efficiency matters received by the staff of DSM Unit, other
project stakeholders and participating customers\. DSM staff has already replicated several
of these training exposures to wider interest groups\.
With reards to market transformation, the spill over benefits of the pilot programmes
have becn evidenced in substantial increased sales of energy efficient equipment by local
vendors particularly compact fluorescent lamps, electronic ballasts and Tg tubes\.
to
-29-
TEL: 02&\.9)70 FAX9261835 MINISTRY OF MINING & ENERGY
ANY UrYC9UAQJTXFLd 36 IIIAALGAIR ROAD
TOtti CMs ruVntiJON t'n KINGSTON 10, 3AMAICA
hF:tAp\. Al itIF P0XlOVN~
lMay 30, 2000
Mr\. Joerg-iwe Richler
Senior Economist
LCSFP
The World Bank
Washington D\.C\.
Dear Mr\. Richter:
Ena!a3PDemandSi,ka\., 8mtnt Pilot F'roect
i have read with interest the draft tmplementation Completion Report and have found it to be
quite frank and reftective of the way in which tee project was n1pfemanted aa weU as the re3ults
optained\. I agree with your flndings irn regard to s te fact that thw energy conservation
opporlunities presente{j to ffteen memnbers at the industrial sector were not fully exploited
because of a lacr of sutflcienty attractie tinding\.
In regard to the claim by some large energy consumera that there is a lack of tax relief for energy
effciency investments, I have to art or remind you that Energy Saving Devices are zero-rated
tor purposes of the Geeneral Consumption Tax\. The followingr is an extract from the Tax Guide
which has been published for generai information:
ItEMS WHI 0 RArED
r\. Tre foYlowing Lighfing Equipment
ea) crn6p8c(,ffoarcent lamps and ballastz
(bj tuoresceit fixtures an tubes;
(C) circularfuorescentflampS$
fcf) fluorescent ballasts
(a) high intensit discharge fixtures and tbes
tV fAbraegass panels for skyligh5ng,
-30^
2\. Automatec, electronic orcomputerized lighting control systems including occupancy
sensors and photo-cells for such systems\.
3\. Solar panels and tubes for solar water heating systems\.
4\. Solar cells designed to produce electricity from the sun\.
5, Apparatus or machine'y designed to produce motive power, hest, light or efectrcity
through the utdization of renewable sources of energy, for example, sun, wind and
water\.
In addition, the Customs Duties on these items have also been effectively reduced from 20% to
5%\.
On the matter of the DSM Unit, the position of the Govemment in general and the MME in
particular is that the Unit shall continue to operate on a long-term basis\. Bearing in mind the
apparent contradictions in having such a unit to be fully dependent on the power utility, the
arrangement will be for the Petroleum Corporation of Jamaica to play a majority role in the future
operation of the Unit\. The mechanism (Energy Service Company?) has not yet been finally
decided but you will be further advised\.
The pilot-scale achievements of the Demand Side Management Project have been so convincing
in regard to the efficient use of energy, the containment oF energy costs at both the micro and
national level and in terms of alternative energy development that Jamaica must continue with its
implementation\. The primary question is a matter of sufficiently attractive funding to hold the
interest of consumers, including the large users\. Even if the Jamaica Public Service Company
returned to the DSM Unit some of the funds from the sale of CFLs, more financial support will be
required to establish an independent DSM entity firmly on its feet\. I believe that the World Bank
can be of considerable assistance in this regard and I urge you to consider this,
Kindly accept my sincere apologies fbr such a delay in this response\. I had hoped to be able to
be more specific in regard to institutional arrangements for the future of the DSM Unit\.
Yours sincerely,
Godfrey W\. Per s
Permanent Sec tary\.
-31-
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P078619 | Document of
The World Bank
Report No: 39486
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-37970, IDA-39570, IDA 41080)
ON A
PROGRAMMATIC CREDIT
IN THE AMOUNT OF SDR 206\.7 MILLION
(US$298 MILLION EQUIVALENT)
AND
GRANTS
IN THE AMOUNT OF SDR 54\.5 MILLION
(US$77 MILLION EQUIVALENT)
TO
THE REPUBLIC OF GHANA
FOR A
POVERTY REDUCTION SUPPORT CREDIT (1-3)
APRIL 17, 2007
POVERTY REDUCTION AND ECONOMIC MANAGEMENT
AFTP4
AFRICA REGION
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of April 2007)
Currency Unit = Cedis
Cedis = US$ 0\.0001071
US$1\.00 = Cedis 9,335\.0
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
APR Annual Progress Report
BPEMS Budget and Public Expenditure Management
CAS Country Assistance Strategy
CEM Country Economic Memorandum
CFAA Country Financial Accountability Assessment
CPAR Country Financial Accountability Assessment
CWIQ Core Welfare Indicators Questionnaire
DPs Development Partners
ECG Electricity Company of Ghana
FINSSP Financial Sector Strategic Plan
GDP Gross Domestic Product
GLSS Ghana Living Standards Survey
GoG Government of Ghana
GPER Gross Primary Enrollment Rate
GPRS Ghana Poverty Reduction Strategy
HIPC Highly Indebted Poor Countries
IDA International Development Association
IMF International Monetary Fund
JSA Joint Staff Assessment
M&E Monitoring and Evaluation
MDAs Ministries, Departments, and Agencies
MDBS Multi-Donor Budgetary Support
MDGs Millennium Development Goals
MMR Maternal Mortality Rate
MoFEP Ministry of Finance and Economic Planning
NDPC National Development Planning Committee
NHS National Health Insurance Scheme
PEM Public Expenditure Management
PER Public Expenditure Review
PLWHA People Living with HIV/AIDS
PRGF Poverty Reduction and Growth Facility
PRSC Poverty Reduction Support Credit
PSIA Poverty and Social Impact Analysis
SEA Strategy Environmental Assessment
VALCO Volta Aluminum Company
VRA Volta River Authority
Acting Vice President: Hartwig Shafer
Country Director: Mats Karlsson
Sector Manager: Antonella Bassani
Task Team Leader: Carlos Cavalcanti
ICR Primary Author: Karen Hendrixson
GHANA
IMPLEMENTATION COMPLETION AND RESULTS REPORT (ICRR)
CONTENTS
Page No\.
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Program Performance in ISRs
H\. Restructuring
1\. Program Context, Development Objectives and Design\.1
2\. Key Factors Affecting Implementation and Outcomes\.6
3\. Assessment of Outcomes \.17
4\. Assessment of Risk to Development Outcome\.24
5\. Assessment of Bank and Borrower Performance\.26
6\. Lessons Learned\.30
Annex 1: Policy Matrix: Policy Objectives, Expected Outcomes, and Actual Outcomes under
PRSC 1-3\.35
Annex 2: Bank Lending and Implementation Support/Supervision Processes\.39
Annex 3: Beneficiary Survey Results\.43
Annex 4: Stakeholder Workshop Report and Results\.44
Annex 5: Summary of Borrower's ICR and/or Comments on Draft ICR\.45
Annex 6: Comments of Cofinanciers and Other Partners/Stakeholders\.46
Annex 7: List of Supporting Documents \.47
Annex 8: Supporting the GPRS Implementation through the PRSC\.49
MAP
A\. Basic Information
Program 1
Country Ghana Program Name GH: PRSC I
Program ID P076808 L/C/TF Number(s) IDA-37970,IDA-H0520
ICR Date 04/26/2007 ICR Type Core ICR
MINISTRY OF
FINANCE &
Lending Instrument PRC Borrower
ECONOMIC
PLANNING
Original Total
XDR 90\.8M Disbursed Amount XDR 90\.8M
Commitment
Implementing Agencies
Ministry of Finance and Economic Planning
Cofinanciers and Other External Partners
Program 2
Country Ghana Program Name GH: PRSC II
Program ID P083246 L/C/TF Number(s) IDA-39570,IDA-H1150
ICR Date 04/26/2007 ICR Type Core ICR
MINISTRY OF
FINANCE &
Lending Instrument PRC Borrower
ECONOMIC
PLANNING
Original Total
XDR 86\.2M Disbursed Amount XDR 86\.2M
Commitment
Implementing Agencies
Ministry of Finance and Economic Planning
Cofinanciers and Other External Partners
Program 3
GH Third Poverty
Country Ghana Program Name Reduction Support
Credit
Program ID P078619 L/C/TF Number(s) IDA-41080
ICR Date 04/26/2007 ICR Type Core ICR
GOVERNMENT OF
Lending Instrument DPL Borrower
GHANA
Original Total
XDR 84\.2M Disbursed Amount XDR 84\.2M
Commitment
Implementing Agencies
Ministry of Finance and Economic Planning
i
Cofinanciers and Other External Partners
B\. Key Dates
GH: PRSC I - P076808
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 03/25/2003 Effectiveness: 06/25/2003 06/25/2003
Appraisal: 04/28/2003 Restructuring(s):
Approval: 06/24/2003 Mid-term Review:
Closing: 06/30/2004 06/30/2004
GH: PRSC II - P083246
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 02/09/2004 Effectiveness: 07/15/2004 07/15/2004
Appraisal: 04/12/2004 Restructuring(s):
Approval: 07/13/2004 Mid-term Review:
Closing: 06/30/2005 06/30/2005
GH Third Poverty Reduction Support Credit - P078619
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 03/08/2005 Effectiveness: 08/30/2005 08/30/2005
Appraisal: Restructuring(s):
Approval: 08/25/2005 Mid-term Review:
Closing: 06/30/2006 06/30/2006
C\. Ratings Summary
C\.1 Performance Rating by ICR
GH: PRSC I - P076808
Outcomes Satisfactory
Risk to Development Outcome Moderate
Bank Performance Satisfactory
Borrower Performance Satisfactory
GH: PRSC II - P083246
Outcomes Satisfactory
Risk to Development Outcome Moderate
ii
Bank Performance Satisfactory
Borrower Performance Satisfactory
GH Third Poverty Reduction Support Credit - P078619
Outcomes Satisfactory
Risk to Development Outcome Moderate
Bank Performance Satisfactory
Borrower Performance Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
GH: PRSC I - P076808
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Satisfactory
Performance Performance
GH: PRSC II - P083246
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Satisfactory
Performance Performance
GH Third Poverty Reduction Support Credit - P078619
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Satisfactory
Performance Performance
iii
C\.3 Quality at Entry and Implementation Performance Indicators
GH: PRSC I - P076808
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA)
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA)
DO rating before
Closing/Inactive status
GH: PRSC II - P083246
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA)
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA)
DO rating before
Satisfactory
Closing/Inactive status
GH Third Poverty Reduction Support Credit - P078619
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA)
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA)
DO rating before
Satisfactory
Closing/Inactive status
D\. Sector and Theme Codes
GH: PRSC I - P076808
Original Actual
Sector Code (as % of total Bank financing)
General education sector 20 20
General industry and trade sector 20 20
General public administration sector 30 30
Health 20 20
iv
Other social services 10 10
Theme Code (Primary/Secondary)
Education for all Primary Primary
Health system performance Primary Primary
Poverty strategy, analysis and monitoring Primary Primary
Public expenditure, financial management and
Primary Primary
procurement
Social risk mitigation Primary Secondary
GH: PRSC II - P083246
Original Actual
Sector Code (as % of total Bank financing)
General education sector 20 20
General industry and trade sector 5 5
General public administration sector 50 50
Health 20 20
Other social services 5 5
Theme Code (Primary/Secondary)
Administrative and civil service reform Secondary Primary
Education for all Primary Primary
Health system performance Primary Primary
Poverty strategy, analysis and monitoring Primary Primary
Public expenditure, financial management and
Primary Primary
procurement
GH Third Poverty Reduction Support Credit - P078619
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 50 50
General industry and trade sector 10 10
Health 15 15
Power 10 10
Primary education 15 15
Theme Code (Primary/Secondary)
Administrative and civil service reform Secondary Primary
v
Education for all Secondary Primary
Export development and competitiveness Secondary Secondary
Health system performance Secondary Primary
Public expenditure, financial management and
Primary Primary
procurement
E\. Bank Staff
GH: PRSC I - P076808
Positions At ICR At Approval
Vice President: Gobind T\. Nankani Callisto E\. Madavo
Country Director: Mats Karlsson Mats Karlsson
Sector Manager: Robert R\. Blake Emmanuel Akpa
Task Team Leader: Carlos B\. Cavalcanti Marcelo R\. Andrade
ICR Team Leader: Carlos B\. Cavalcanti
ICR Primary Author: Carlos B\. Cavalcanti
Marta Berhane
Karen L\. Hendrixson
GH: PRSC II - P083246
Positions At ICR At Approval
Vice President: Gobind T\. Nankani Gobind T\. Nankani
Country Director: Mats Karlsson Mats Karlsson
Sector Manager: Robert R\. Blake Robert R\. Blake
Task Team Leader: Carlos B\. Cavalcanti Carlos B\. Cavalcanti
ICR Team Leader: Carlos B\. Cavalcanti
ICR Primary Author: Carlos B\. Cavalcanti
Marta Berhane
Karen L\. Hendrixson
GH Third Poverty Reduction Support Credit - P078619
Positions At ICR At Approval
Vice President: Gobind T\. Nankani Gobind T\. Nankani
Country Director: Mats Karlsson Mats Karlsson
Sector Manager: Robert R\. Blake Robert R\. Blake
Task Team Leader: Carlos B\. Cavalcanti Carlos B\. Cavalcanti
ICR Team Leader: Carlos B\. Cavalcanti
ICR Primary Author: Carlos B\. Cavalcanti
Marta Berhane
Karen L\. Hendrixson
vi
F\. Results Framework Analysis
Program Development Objectives (from Program Document)
Prepared annually within a rolling three-year horizon, the PRSCs 1-3 were a
comprehensive series of operations that were designed to support the Government in
implementing cross-cutting policies and reforms aimed at improving the living conditions
of the population through three components: (i) the promotion of growth, income and
employment; (ii) improving service delivery for human development; and (iii) improving
governance and public sector reform\. These three components encompassed the five
thematic themes of the GPRS, namely (i) ensuring macroeconomic stability; (ii)
expanding production and employment; (iii) supporting human development; (iv)
protecting the vulnerable and extremely poor; and (v) promoting good governance and
public sector reform\. While the support provided under PRSC 1-3 was primarily
budgetary funding for the implementation of the GPRS, particular attention was also
focused on: (i) leveraging the poverty emphasis of several sector-focused operations by
ensuring appropriated expenditure allocation (level and structure) and addressing some of
the financing implications of proposed policy actions (e\.g\., removal of school fees); (ii)
policy dialogue; and (iii) monitoring resource allocations and outcomes\. Each PRSC also
monitored welfare and poverty indicators to enable assessments of whether poverty
reduction objectives (both income and non-income dimensions of poverty) were being
achieved\.The close and parallel linkage between the PRSCs and the GPRS ensured that
these operations were highly responsive to the country's circumstances and development
priorities\. The budget support provided by the PRSCs was also complemented by a series
of Bank investment and technical assistance operations in the education and health sector,
HIV/AIDS, public sector reform, and finance and private sector development\.
The three PRSCs were each in the amount of $125 million\. They were on standard
highly concessional IDA terms, with PRSCs 1 and 2 also being roughly one third in the
form of grants to assist in implementing critical human development services supported
by these operations\. The PRSCs were coordinated with budget support from other donors,
with coordination increasing over the three-year period\. This coordination took place
through the Multi-Donor Budgetary Support (MDBS) framework between the GoG and
its DPs\. The goals of this framework were to: (i) support implementation of the GPRS
through the budget, thereby ensuring consistency in the policy dialogue; (ii) develop a
common progress framework; (iii) reduce Government transaction costs from negotiating
and reporting to multiple donors: (iv) enhance the predictability of resource flows; and
(v) conduct joint progress reviews between the GoG and its DPs\. The purpose of the
MDBS was to harmonize the dialogue and efforts of Ghana's development partners with
the Government's own development strategy\. While the principles of the common MDBS
framework were agreed upon in 2003, a common progress assessment framework (PAF)
to measure GPRS performance was not developed until 2004\.
The PRSCs were intended to provide a series of benefits\. The main and ultimate benefit
was the human progress towards achieving the MDGs as a result of the economic growth
and improvements in service delivery that would result from the implementation of the
vii
GPRS\. The additional benefits of PRSC 1-3 were to be (i) the maintenance of
macroeconomic stability by contributing to the closing of the external financing gap, and
(ii) enabling the GoG to generate the funds required to execute the GPRS policies and
programs\.
Each of the three PRSCs were centered on the same three components described above,
but the actions supported under each one varied somewhat because, broadly speaking, the
actions completed under the program supported by PRSC-1 focused on laying out the
groundwork for legislative changes and designing strategies for key areas of the reform
agenda\. Subsequent operations would then build on the reforms implemented in each
preceding operation\. The key objectives of each operation are discussed below\. (The key
modifications to the policy areas under each operation are addressed in Section 6\.5
below\.)
PRSC-1: The first component of PRSC-1 focused on ensuring progress on
macroeconomic stability and pro-poor growth by eliminating factors inhibiting growth\.
The first set of actions included: (i) reducing the high public domestic debt, which
crowded out credit to the private sector, kept interest rates high, and limited the scope in
the budget for financing services that were supportive of development; and (ii) reducing
the cost of doing business, such as the unreliable and "high-price" supply of critical
inputs, especially energy, and the administrative costs of complying with government
regulations\. The second set of actions consisted of removing constraints on rural
development\. The rural sector was selected because: (i) it included the bulk of the
country's natural resources; (ii) it was home to the largest number of the people; and (iii)
it embraced the largest proportion of the poor\.
The second component of PRSC-1 aimed at improving service delivery in education,
health, and social protection\. It focused on: (i) expanding access to education and health
services, with particular attention to the needs of underserved areas and populations; and
(ii) improving the efficiency and equity of financing\. By focusing on these actions, the
program aimed at dealing with issues such as (i) redressing the unequal regional and
gender outcomes in health and education; and (ii) attaining sustainable and equitable
financing of these critical services\. The program also aimed at contributing to sharpening
the national focus on reaching the MDGs by 2015, adding value to the support already
provided by sector projects\.
The third component of PRSC-1 incorporated actions designed to: (i) strengthen the
institutions of participatory democracy and accountable rule; and (ii) improve the
efficiency of the public services and the quality of public expenditure management
(PEM)\. Again, the areas identified for PRSC support were selected with a view of adding
value to the existing sectoral support by elevating the issues to the center of Government,
where collective interest generated by the GPRS would facilitate debate, consensus
building, and decision-making\.
PRSC-2: Reforms supported by PRSC-2 built on the measures implemented with the
support of PRSC-1\. As with PRSC-1, the first component of PRSC-2 focused on ensuring
progress on macroeconomic stability and pro-poor growth by eliminating factors
viii
inhibiting growth, including reducing public domestic debt to create room for increased
credit to the private sector; and strengthening the business environment through the
expansion of energy supply services, increased trade facilitation, and the removal of
administrative barriers for business development\. The second set of actions consisted of
removing constraints on rural development through an increase in Government's support
to agriculture and developing a new framework for micro-finance, as well as adding a
focus on natural resources, primarily in the form of completion of a strategic
environmental assessment (SEA)\.
Under the second component of PRSC-2, measures to improve service delivery in
education again focused on: (i) increasing access and completion of quality basic
education, with particular attention to the needs of underserved areas and populations;
and (ii) improving the efficiency and equity of financing\. Measures to improve the
delivery of health services centered on bridging the equity gaps in the access to health
care services in deprived regions, and at reducing the spread of HIV/AIDS\. Measures to
improve social protection focused on actions supporting the vulnerable and the excluded,
such as people living with HIV/AIDS, orphans, homeless, and children living on the
street\.
The third component of PRSC-2 incorporated actions designed to strengthen
governance and public sector management\. The policy actions supported under this
component ranged from strengthening governance institutions and moving ahead with
decentralization, to carrying out public sector reforms, including PEM modernization,
and building the capacity to monitor and evaluate the policy agenda\.
PRSC-3: Policies supported by PRSC-3 built on reforms implemented under PRSC-2\.
The first component of PRSC-3 focused on actions aimed at ensuring progress in
attaining macroeconomic stability and pro-poor growth\. Measures focused on (i) creating
a more diversified financial sector to enable an increase in credit to the private sector; (ii)
strengthening the business environment through the expansion of energy supply services
and the removal of administrative barriers to business development; and (iii) encouraging
the development of extension services, especially for poorer farmers\. The component also
supported measures to improve the performance of the rural sector through policy actions
aimed at strengthening the government's support to agriculture\. In the area of natural
resources management, attention shifted towards the more pressing issues relating to the
management of forestry resources\.
The second component incorporated measures aimed at assisting Ghana reach the MDG
goals by improving service delivery in education, health, social protection, water, and
sanitation\. The measures to improve service delivery in education focused on increasing
access and completion of quality basic education, particularly in the three most deprived
regions (Northern, Upper East, and Upper West), and on improving the efficiency and
equity of education financing\. Measures to improve the delivery of health services
centered on bridging the equity gaps in the access to health care serves in four deprived
regions (Northern, Upper East, and Upper West, plus the Central region) and at reducing
the spread of HIV/AIDS\.Measures to improve social protection focused on actions
ix
supporting the vulnerable and the excluded (such as orphans, the homeless, and people
living with HIV/AIDS)\. Finally, measures to expand the provision of safe water and
sanitation included the development of a comprehensive sector strategy addressing a
variety of measures, including existing coverage, implementation capacity, and the
incidence of water-borne diseases\.
The third component of PRSC-3 incorporated measures designed to strengthen
governance and public sector management\. These actions included moving forward with
a medium-term agenda for public sector reform that included decentralization, improving
public sector performance, modernizing the fiduciary and PEM frameworks, and
strengthening the capacity to monitor and evaluate the policy agenda\.
Revised Program Development Objectives (as approved by original approving authority)
Program objectives remained unchanged\. Approximately 13 policy indicators in the
policy matrix were eliminated under PRSC-2 (and subsequent operations)\. Key
indicators that were eliminated included one relating to foreign direct investment,
reflecting a shift under PRSC-2 away from improving the investment climate towards a
greater focus on enhancing private sector competitiveness\. In addition, the indicators
supporting improved rural sector growth were revised, with "real per capita food
production" replacing three indicators used under PRSC-1 (the indicators that were
dropped were "increased cocoa exports," "increased producer prices for cocoa," and
"agriculture growth")\.
A number of new indicators were also added under PRSC-2\. To reflect the addition of
natural resource management as a policy area, an indicator for "forest coverage" was
added to measure the improved management of natural resources\. (Under PRSC-3, this
indicator was again revised, to "forest plantation coverage\.") Two other indicators -- the
"ratio of population per nurse in the four deprived regions," and the "ratio of population
per doctor in the four deprived regions" -- were also added under PRSC-2 as better
measurements of improving access to quality health care services\. PRSC-2 also added
indicators for the primary pupil-teacher ratio in the three most deprived regions, and an
improvement in the pupil-textbook ratio in these regions\. Under PRSC-3, still more of
the indicators in the policy matrix were modified in language, or dropped\. The
quantitative monitoring indicators were also modified somewhat in each successive
program document\. These changes reflected modifications in the policy areas addressed
under these operations, development priorities on the ground, and the harmonization of
the progress framework used by the GoG and its DPs\.
(a) PDO Indicator(s)
x
GH: PRSC I - P076808
Original Target Formally Actual Value
Baseline Values (from Revised Achieved at
Indicator
Value approval Target Completion or
documents) Values Target Years
Indicator 1 : Satisfactory Implementation of the Ghana Poverty Reduction Strategy (GPRS)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
Indicator 2 : Increase in poverty reducing expenditures (baseline: 2002=4\.8% of GDP)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
Indicator 3 : Increase in primary school enrollment (baseline: 2002=81%)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
GH: PRSC II - P083246
Original Target Formally Actual Value
Baseline Values (from Revised Achieved at
Indicator
Value approval Target Completion or
documents) Values Target Years
The PRSC 2 was the second of three operations aimed at supporting the
Indicator 1 :
implementation of the Ghana Poverty Reduction Strategy (GPRS)\.
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
xi
Policies and reforms aimed at improving living conditions of the population
Indicator 2 : by:promoting growth, incomes and employment; imp roving service delivery
for human development; and strengthening governance
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
GH Third Poverty Reduction Support Credit - P078619
Original Target Formally Actual Value
Baseline Values (from Revised Achieved at
Indicator
Value approval Target Completion or
documents) Values Target Years
Satisfactory implementation of the Ghana Growth and Poverty Reduction
Indicator 1 :
Strategy
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
Indicator 2 : Increase Poverty Reduction Expenditures
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. %
achievement)
(b) Intermediate Outcome Indicator(s)
xii
GH: PRSC I - P076808
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Increase in the female primary enrollment rate (baseline:
Indicator 1 :
2002=78%)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
GH: PRSC II - P083246
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Under the program for improved delivery of human services,
progress was achieved in increasing the share of supervised delive
Indicator 1 :
ries, reducing the HIV/AIDS prevalence rate among pregnant
women, and raisi
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
GH Third Poverty Reduction Support Credit - P078619
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
The Ghanaian economy is in its fourth year of expansion\. The
Indicator 1 :
latest figures indicate annual real GDP growth rate of 6 percent \.
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
xiii
Indicator 2 : Reduction in the poverty headcount index (baseline: 2003=35%)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
G\. Ratings of Program Performance in ISRs
GH: PRSC II - P083246
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 06/29/2005 Satisfactory Satisfactory 127\.50
GH Third Poverty Reduction Support Credit - P078619
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 09/26/2005 Satisfactory Satisfactory 123\.43
2 06/29/2006 Satisfactory Satisfactory 123\.43
3 10/06/2006 Satisfactory Satisfactory 123\.43
H\. Restructuring (if any)
xiv
1\. Program Context, Development Objectives and Design
1\.1\.Context at Appraisal
Since embarking on economic reforms in the mid-1980s, Ghana has made considerable progress
in laying the foundations for sustainable growth and poverty reduction\. This has resulted in
significant growth and increased private sector activity and investment over the last two decades\.
In parallel, important political reforms were also adopted that moved the country firmly to a
democratic form of government\. This progress has been periodically interrupted, however, by
episodes of weak macroeconomic management associated with the electoral cycle, as occurred in
1992, 1996, and 2000\. As a consequence, the newly elected government inherited in 2001 a very
difficult economic situation but nonetheless moved quickly to restore stability, including
increasing retail petroleum prices by 60 percent, increasing electricity and water tariffs to stem
losses at those utilities, and raising taxes and cutting expenditures\. Sustained implementation of
tight financial policies in 2001 resulted in significant macroeconomic stabilization, enabling
inflation to be halved (from 42 percent), the exchange rate to remain stable, and foreign reserves
to be rebuilt
Program implementation during 2002, the year prior to the implementation of the first Poverty
Reduction Support Credit (PRSC-1), was mixed, however\. While real GDP growth accelerated to
about 4\.5 percent, inflation was further reduced (to 15 percent), and reserves continued to
strengthen (to 2 months), there were serious fiscal and quasi-fiscal slippages associated with
weaknesses in public expenditure management; particularly in the management of the wage bill,
payment of unbudgeted 2001 expenditures, delays in divestiture, and non-implementation of
revenue-enhancing measures\. Moreover the failure to adjust petroleum prices contributed to the
GoG having to assume the debt of the refinery (equivalent to almost 3 percent of GDP) and
domestic debt rose to 29 percent of GDP by end-2002\.
To reverse these slippages, the GoG redoubled its reform efforts in late 2002 and early 2003 and -
- following a broad participatory process -- finalized a comprehensive poverty reduction strategy
(GPRS) that set poverty reduction goals in alignment with the MDGs\. It identified measures to
increase growth, income, and employment; improve the delivery of basic social services; and
enhance governance and public sector management\. The GPRS recognized that there could be no
meaningful poverty reduction without a strong economic foundation and sustained growth\. In
March 2003, the Bank-Fund Joint Staff Assessment (JSA) of the GPRS concluded that it
provided a sound framework for implementing the Government's anti-poverty agenda and that
the medium-term macroeconomic framework set out in the GPRS was realistic\.i
It was in this context that the Bank and Ghana's other key development partners (DPs) considered
that the country's stable democratic governance, improving investment climate, and progress in
achieving the MDGs constituted a good set of fundamentals on which to build support for the
GPRS through a coordinated approach (discussed further below)\. The series of three PRSCs,
designed in 2003, was the Bank's major contribution to this partnership\.
The PRSCs focused on programmatic lending that was grounded in Ghana's clear commitment
and capacity to reform, structured in a series of operations supporting a medium-term reform
program, and disbursed on the basis of completed actions rather than future commitments\. The
funds provided under the PRSCs would help to maintain macroeconomic stability by contributing
to the closing of the external financing gap, as well as enable the Government to generate the
funds needed to execute the GPRS policies and programs\.
1
1\.2\.Original Program Development Objectives (PDO) and Key Indicators
Prepared annually within a rolling three-year horizon, the PRSCs 1-3 were a comprehensive
series of operations that were designed to support the Government in implementing cross-cutting
policies and reforms aimed at improving the living conditions of the population through three
components: (i) the promotion of growth, income and employment; (ii) improving service
delivery for human development; and (iii) improving governance and public sector reform\. These
three components encompassed the five thematic themes of the GPRS, namely (i) ensuring
macroeconomic stability; (ii) expanding production and employment; (iii) supporting human
development; (iv) protecting the vulnerable and extremely poor; and (v) promoting good
governance and public sector reform\. While the support provided under PRSC 1-3 was primarily
budgetary funding for the implementation of the GPRS, particular attention was also focused on:
(i) leveraging the poverty emphasis of several sector-focused operations by ensuring appropriated
expenditure allocation (level and structure) and addressing some of the financing implications of
proposed policy actions (e\.g\., removal of school fees); (ii) policy dialogue; and (iii) monitoring
resource allocations and outcomes\. Each PRSC also monitored welfare and poverty indicators to
enable assessments of whether poverty reduction objectives (both income and non-income
dimensions of poverty) were being achieved\. The close and parallel linkage between the PRSCs
and the GPRS ensured that these operations were highly responsive to the country's
circumstances and development priorities\. The budget support provided by the PRSCs was also
complemented by a series of Bank investment and technical assistance operations in the
education and health sector, HIV/AIDS, public sector reform, and finance and private sector
development\.
The three PRSCs were each in the amount of $125 million\. They were on standard highly
concessional IDA terms, with PRSCs 1 and 2 also being roughly one third in the form of grants to
assist in implementing critical human development services supported by these operations\. The
PRSCs were coordinated with budget support from other donors, with coordination increasing
over the three-year period\. This coordination took place through the Multi-Donor Budgetary
Support (MDBS) framework between the GoG and its DPs\.ii The goals of this framework were
to: (i) support implementation of the GPRS through the budget, thereby ensuring consistency in
the policy dialogue; (ii) develop a common progress framework; (iii) reduce Government
transaction costs from negotiating and reporting to multiple donors: (iv) enhance the
predictability of resource flows; and (v) conduct joint progress reviews between the GoG and its
DPs\. The purpose of the MDBS was to harmonize the dialogue and efforts of Ghana's
development partners with the Government's own development strategy\. While the principles of
the common MDBS framework were agreed upon in 2003, a common progress assessment
framework (PAF) to measure GPRS performance was not developed until 2004\.
The PRSCs were intended to provide a series of benefits\. The main and ultimate benefit was the
human progress towards achieving the MDGs as a result of the economic growth and
improvements in service delivery that would result from the implementation of the GPRS\. The
additional benefits of PRSC 1-3 were to be (i) the maintenance of macroeconomic stability by
contributing to the closing of the external financing gap, and (ii) enabling the GoG to generate the
funds required to execute the GPRS policies and programs\.
Each of the three PRSCs were centered on the same three components described above, but the
actions supported under each one varied somewhat because, broadly speaking, the actions
completed under the program supported by PRSC-1 focused on laying out the groundwork for
legislative changes and designing strategies for key areas of the reform agenda\. Subsequent
operations would then build on the reforms implemented in each preceding operation\. The key
2
objectives of each operation are discussed below\. (The key modifications to the policy areas
under each operation are addressed in Section 6\.5 below\.)
PRSC-1: The first component of PRSC-1 focused on ensuring progress on macroeconomic
stability and pro-poor growth by eliminating factors inhibiting growth\. The first set of actions
included: (i) reducing the high public domestic debt, which crowded out credit to the private
sector, kept interest rates high, and limited the scope in the budget for financing services that
were supportive of development; and (ii) reducing the cost of doing business, such as the
unreliable and "high-price" supply of critical inputs, especially energy, and the administrative
costs of complying with government regulations\. The second set of actions consisted of
removing constraints on rural development\. The rural sector was selected because: (i) it included
the bulk of the country's natural resources; (ii) it was home to the largest number of the people;
and (iii) it embraced the largest proportion of the poor\.
The second component of PRSC-1 aimed at improving service delivery in education, health, and
social protection\. It focused on: (i) expanding access to education and health services, with
particular attention to the needs of underserved areas and populations; and (ii) improving the
efficiency and equity of financing\. By focusing on these actions, the program aimed at dealing
with issues such as (i) redressing the unequal regional and gender outcomes in health and
education; and (ii) attaining sustainable and equitable financing of these critical services\. The
program also aimed at contributing to sharpening the national focus on reaching the MDGs by
2015, adding value to the support already provided by sector projects\.
The third component of PRSC-1 incorporated actions designed to: (i) strengthen the institutions of
participatory democracy and accountable rule; and (ii) improve the efficiency of the public
services and the quality of public expenditure management (PEM)\. Again, the areas identified for
PRSC support were selected with a view of adding value to the existing sectoral support by
elevating the issues to the center of Government, where collective interest generated by the GPRS
would facilitate debate, consensus building, and decision-making\.
PRSC-2: Reforms supported by PRSC-2 built on the measures implemented with the support of
PRSC-1\. As with PRSC-1, the first component of PRSC-2 focused on ensuring progress on
macroeconomic stability and pro-poor growth by eliminating factors inhibiting growth, including
reducing public domestic debt to create room for increased credit to the private sector; and
strengthening the business environment through the expansion of energy supply services,
increased trade facilitation, and the removal of administrative barriers for business development\.
The second set of actions consisted of removing constraints on rural development through an
increase in Government's support to agriculture and developing a new framework for micro-
finance, as well as adding a focus on natural resources, primarily in the form of completion of a
strategic environmental assessment (SEA)\.
Under the second component of PRSC-2, measures to improve service delivery in education
again focused on: (i) increasing access and completion of quality basic education, with particular
attention to the needs of underserved areas and populations; and (ii) improving the efficiency and
equity of financing\. Measures to improve the delivery of health services centered on bridging the
equity gaps in the access to health care services in deprived regions, and at reducing the spread of
HIV/AIDS\. Measures to improve social protection focused on actions supporting the vulnerable
and the excluded, such as people living with HIV/AIDS, orphans, homeless, and children living
on the street\.
The third component of PRSC-2 incorporated actions designed to strengthen governance and public
sector management\. The policy actions supported under this component ranged from strengthening
3
governance institutions and moving ahead with decentralization, to carrying out public sector
reforms, including PEM modernization, and building the capacity to monitor and evaluate the policy
agenda\.
PRSC-3: Policies supported by PRSC-3 built on reforms implemented under PRSC-2\. The first
component of PRSC-3 focused on actions aimed at ensuring progress in attaining
macroeconomic stability and pro-poor growth\. Measures focused on (i) creating a more
diversified financial sector to enable an increase in credit to the private sector; (ii) strengthening
the business environment through the expansion of energy supply services and the removal of
administrative barriers to business development; and (iii) encouraging the development of
extension services, especially for poorer farmers\. The component also supported measures to
improve the performance of the rural sector through policy actions aimed at strengthening the
government's support to agriculture\. In the area of natural resources management, attention
shifted towards the more pressing issues relating to the management of forestry resources\.
The second component incorporated measures aimed at assisting Ghana reach the MDG goals by
improving service delivery in education, health, social protection, water, and sanitation\. The
measures to improve service delivery in education focused on increasing access and completion
of quality basic education, particularly in the three most deprived regions (Northern, Upper East,
and Upper West), and on improving the efficiency and equity of education financing\. Measures
to improve the delivery of health services centered on bridging the equity gaps in the access to
health care serves in four deprived regions (Northern, Upper East, and Upper West, plus the
Central region) and at reducing the spread of HIV/AIDS\. Measures to improve social protection
focused on actions supporting the vulnerable and the excluded (such as orphans, the homeless,
and people living with HIV/AIDS)\. Finally, measures to expand the provision of safe water and
sanitation included the development of a comprehensive sector strategy addressing a variety of
measures, including existing coverage, implementation capacity, and the incidence of water-
borne diseases\.
The third component of PRSC-3 incorporated measures designed to strengthen governance and
public sector management\. These actions included moving forward with a medium-term agenda
for public sector reform that included decentralization, improving public sector performance,
modernizing the fiduciary and PEM frameworks, and strengthening the capacity to monitor and
evaluate the policy agenda\.
1\.3\.Revised PDO
Program objectives remained unchanged\. Approximately 13 policy indicators in the policy
matrix were eliminated under PRSC-2 (and subsequent operations)\. Key indicators that were
eliminated included one relating to foreign direct investment, reflecting a shift under PRSC-2
away from improving the investment climate towards a greater focus on enhancing private sector
competitiveness\. In addition, the indicators supporting improved rural sector growth were
revised, with "real per capita food production" replacing three indicators used under PRSC-1 (the
indicators that were dropped were "increased cocoa exports," "increased producer prices for
cocoa," and "agriculture growth")\.
A number of new indicators were also added under PRSC-2\. To reflect the addition of natural
resource management as a policy area, an indicator for "forest coverage" was added to measure
the improved management of natural resources\. (Under PRSC-3, this indicator was again revised,
to "forest plantation coverage\.") Two other indicators -- the "ratio of population per nurse in the
four deprived regions," and the "ratio of population per doctor in the four deprived regions" --
4
were also added under PRSC-2 as better measurements of improving access to quality health care
services\. PRSC-2 also added indicators for the primary pupil-teacher ratio in the three most
deprived regions, and an improvement in the pupil-textbook ratio in these regions\. Under PRSC-
3, still more of the indicators in the policy matrix were modified in language, or dropped\. The
quantitative monitoring indicators were also modified somewhat in each successive program
document\. These changes reflected modifications in the policy areas addressed under these
operations, development priorities on the ground, and the harmonization of the progress
framework used by the GoG and its DPs\.
1\.4\.Original Policy Areas Supported by the Program
The policy areas supported by PRSC-1 correspond to the three components outlined above,
namely:
(i) Promoting growth, income, and employment (addressing the issues of high public
domestic debt; high-cost business environment and obstacles to competitiveness; and the
stagnation of rural development)\.
(ii) Improving service delivery for human development (education, health, HIV/AIDs, and
the vulnerable and excluded)\.
(iii)Improving governance and public sector management (building a democratic,
inclusive, and decentralized state; improving the performance of the public sector;
strengthening the fiduciary framework and public expenditure management (PEM); and
strengthening the capacity to monitor and evaluate the policy agenda)\.
The policy areas supported by PRSC-2 are (new issues are in italics):
(i) Promoting growth, income, and employment (addressing high public domestic debt;
high-cost business environment; the low reliability of energy supply; high cost of bringing
agricultural production to market; and ineffective management of natural resources)\.
(ii) Improving service delivery for human development (education, health, HIV/AIDs, and
the poor and vulnerable)\.
(iii)Improving governance and public sector management (improving the performance of
the public sector; strengthening public financial management; strengthening governance
institutions; and strengthening the capacity to monitor and evaluate the policy agenda)\.
The policy areas supported by PRSC-3 are (new issues are in italics):
(i) Promoting growth, income, and employment (addressing high public domestic debt;
high-cost business environment; the low reliability of energy supply; low level of financial
intermediation; high cost of bringing agricultural production to market; and ineffective
management of natural resources)\.
(ii) Improving service delivery for human development (education, health, HIV/AIDs,
social protection; and water and sanitation)\.
(iii)Improving governance and public sector management (improving the performance of
the public sector; strengthening public financial management; strengthening governance
institutions; and enhancing the capacity to monitor and evaluate the policy agenda)\.
5
1\.5\.Revised Policy Areas
Although there was broad continuity between each of the PRSC operations, the programmatic
approach inherent to the PRSCs enabled greater adaptability for step-by-step institutional reforms
or other modifications\. Thus, while project components and objectives remained unchanged
throughout the three operations, some new areas of focus were added in PRSC-2 and subsequent
operations\. These areas, and the rationale for their addition, were: (i) creation of a more
diversified financial sector, to address the low level of financial intermediation compared to other
SSA countries, and which constrained private sector growth; (ii) a focus on the improved
management of natural resources, to prevent the depletion of the quality and quantity of Ghana's
natural resource base; and (iii) improving rural sector farm and non-farm growth by addressing
financial, transport and other barriers to the expansion of non-cocoa agriculture and poverty
reduction\. In addition, the policy objective of decentralized government was replaced with
improved governance and accountability broadening this policy objective\.
Beginning with PRSC-3, there was also an increased emphasis on actions that aimed at improving
service delivery at the decentralized level in sectors that accounted for a larger share of
expenditures on wages and salaries (e\.g\., education and health), broadening the focus of reforms
to incorporate reforms aimed at improving human resource management\. In response to the
preliminary findings from the 2003 Core Welfare Indicators Questionnaire (CWIQ) survey,
PRSC-3 placed an increasing emphasis on broadening access to education and health services,
especially in the deprived regions\. PRSC-3 also introduced a water sector and sanitation strategy
after the Demographic and Health Survey (DHS) indicated deterioration in infant mortality and
under-5 mortality rates between 1997 and 2003\. This deterioration was attributable in part to
emerging problems with child malnutrition, as well as to slow progress in increasing access to
safe water sources and to safe sanitation\.iii A social protection strategy was also added to help
address emerging problems with child welfare in urban and peri-urban areas\. There was also an
expanded educational focus to expand teacher retention schemes in deprived districts and ensure
timely delivery of core textbooks in deprived regions\.
The addition of the new areas to PRSC-2 corresponded to the use for the first time of the joint
performance matrix developed under the MDBS framework\. Similarly, modifications to PRSC-3
were made in response to emerging developmental needs\. As such, these modifications to the
original areas of focus under PRSC-1 were largely opportunistic and reflected new evidence on
development priorities and therefore should be viewed positively, rather than reflecting
negatively on the original design of PRSC-1\.iv
1\.6\.Other significant changes
There were no other changes in design, financing, or implementation arrangements\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Program Performance
As noted, most of the actions completed under PRSC-1 focused on laying out the groundwork for
legislative changes and developing strategies for key areas of the reform agenda\. Follow-up
actions were then implemented in the context of PRSC-2 and PRSC-3\. The discussion below
highlights program performance for each individual credit\.
PRSC-1: Prior to Board presentation of PRSC-1, the Government had completed all planned
actions aimed at promoting growth, incomes, and employment; accelerating human resource
6
development, and strengthening governance and public sector management (see Table 1 below
for a list of prior actions)\. Progress in the implementation of the PRSC-1 reform program was
broadly satisfactory, as discussed below in each component area\.
Growth, Income, and Employment Promotion: The implementation of PRSC-1 began against the
backdrop of the completion of the GPRS, and the renewal of efforts to achieve macroeconomic
stability and accelerate growth\. In February 2003, the Government redoubled its reform efforts,
raising petroleum prices by around 90 percent to stem loses of the state-owned oil refinery
company\. Increases in utility prices followed suit, with the adoption of an automatic adjustment
mechanism for electricity and water tariffs\. There was a significant improvement in the external
environment, with rising prices for the country's main export commodities (cocoa and gold), and
an increase in aid inflows and debt relief\. Political sensitivity, especially as the 2004 electoral
process drew nearer, and limited capacity within the public sector, meant, however, that there
were delays in following up on actions designed to encourage private sector development and
carry out the public sector reform agenda\. At the time, these delays raised legitimate questions
about the sustainability of the advances under PRSC-1, given the importance of these reforms for
the implementation of the country's broader development program\. Nonetheless, macroeconomic
growth rose to 5\.2 percent, up from 4\.5 percent in 2002, and the overall fiscal deficit fell to 4\.5
percent of GDP, down from 6\.8 percent in 2002\. This combination of a growing economy with
fiscal discipline enabled a decline in the debt-to-GDP ratio to 19\.6 percent by end-2003,
compared to 26\.2 percent at end-2002\.
Human Service Delivery Improvement: Progress was made in the implementation of social
policies in the education and health sectors\. As noted in the GoG's 2003 Annual Progress Report
(APR) on the GPRS, however, renewed efforts were still needed to improve basic social services
delivery targeted to the poor\. A particular concern was the DHS' documentation of a
deterioration of health indices, namely the increase in infant mortality and under-5 mortality
rates, as well as the slow reduction in maternal mortality rates\.
Governance and Public Sector Management Strengthening: Actions to strengthen controls over
public finances included improving the scope, timing and quality of the reporting of budget
execution, with a new monthly report on the budget execution, and quarterly reports on poverty-
related expenditures\. Progress was made on the development and implementation of a
monitoring and evaluation (M&E) framework\.
PRSC-2: Prior to Board presentation of PRSC-2, the Government had completed all planned
actions in the three component areas, as shown in Table 1 below\. Progress in the implementation
of the PRSC-2 reform program was broadly satisfactory, as discussed below for each component
area\.
Growth, Income, and Employment Promotion: Despite the fact that 2004 was an election year,
overall spending was controlled, annual inflation fell to 12\.6 percent (down from 26\.7 percent in
2003), and real GDP growth reached 5\.6 percent, up from 5\.2 percent in the prior year\. This
performance was a sharp turnaround from previous election years, when macroeconomic
management slipped sharply\. Progress was also achieved in (i) the share of total domestic credit
going to the private sector, which rose to an estimated 54\.7 percent by end-2004, up from 47\.3
percent at end-2002; and (ii) subsidies to public sector utility companies declined in real terms by
40 percent from 480 billion cedis at end-2002 to an estimated 278 billion cedis (in 2002 prices) at
end-2004\.
Private sector development received a further boost with actions taken to remove certain
administrative and regulatory barriers to investment\. These efforts included reducing the time
7
needed to obtain the environment certificate and tax registration and lowering the tax registration
fee, thereby reducing the time required for business registration to 85 days in 2004, down from
129 days in 2002\. Private sector competitiveness was enhanced with the installation of
automated clearance procedures (GCMS/GCNET) at the Tema (July 2003) and Takoradi
(November 2003) seaports, yielding a reduction in the average clearance time at customs by
reducing the number of clearance steps from 11 to 3\. Progress in the power sector reform
consisted of: (i) the formation of the Volta River Authority (VRA) holding company, creating the
legal basis for the separation of power transmission, generation and distribution; (ii) the
restructuring of a large share of the debt obligations of the VRA and Electricity Corporation of
Ghana (ECG) to the Government, and (iii) the beginning of the revaluation of assets and the
separation of VRA's balance sheet\. Power tariffs were adjusted twice in the year (March and
October 2003), in accordance with the cost recovery formula, yielding an 18 percent increase in
prices for end-users\. There were delays, however, in adjusting the price of retail petroleum
products according to the cost recovery formula, leaving prices unchanged from the February
2003 level and leading to an unplanned fiscal gap of around 1\.4 percent of GDP in 2004\.
Actions taken to broaden access of the rural sector to credit included the review of the National
Framework Paper for Micro-Finance Institutions (MFI), aimed at addressing issues of capacity
building of MFIs; the development of a suitable regulatory mechanism for MFI industry; the
promotion of linkages between the formal and informal institutions; and training for results in
improved portfolio management\. Several actions were also taken towards implementation of the
Financial Sector Strategic Plan (FINSSIP), deepening savings mobilization for old age and
housing\. In the domain of natural resources management, a SEA was completed to help identify
options to better enforce environmental regulations and standards in areas ranging from land
forestry and water, to housing, health, and transport\. Forestry reserve management was also
strengthened with the continuation of a plantation program, the transparent and competitive
allocation of timber rights, and the establishment of a framework for log tracking\.
Human Service Delivery Improvement: Improvement in human service delivery resulted from
actions carried out in the areas of education, health, and HIV/AIDS\. To redress existing gender
imbalances in educational outcomes, incentive schemes (including scholarships) were established
to enable girls to complete primary school in deprived districts\. In the 2003/04 school year, a
total of 5,000 needy pupils, of whom 80 percent were girls, benefited from these schemes\. There
was an additional 8\.9 billion cedis allocated for scholarships for the same period\. As a result of
these efforts national gross primary enrollment rates (GPER) rose from 81 percent in the 2002/03
school year to 86\.3 percent in 2003/04 and enrollment rates among female students rose from
78\.0 percent to 82\.2 percent\.
Progress in the health sector was achieved through the implementation of a fee exemption policy
for maternal deliveries in the four deprived regions\. This program was expanded to two
additional regions and adequately funded in the 2004 budget, using HIPC resources\. Supervised
deliveries rose to 53 percent by 2004, up from 49 percent in 2002; this increase was particularly
pronounced in the deprived regions\. The HIV/AIDS prevalence rate among pregnant women
dropped to 3\.1 percent in early 2005, down from 3\.6 percent in 2003\. Efforts to contain the
spread of HIV/AIDS involved the implementation of Government-sponsored HIV/AIDS
communitybased programs, which became fully operational in 200 communities with activities
ranging from awareness creation and advocacy, to support to orphans, vulnerable children, and to
people living with HIV/AIDS\. In the area of assisting the poor and vulnerable, a pilot program
targeted at vulnerable street children became operational, reaching 1700 children through
vocation and formal training\. A national water policy was also developed and deprived districts
were supported in planning water and sanitation plans\. However, although poverty-related
8
expenditures rose to 7\.7 percent of GDP by end-2004, up from 6\.5 percent at end-2003, budget
execution was very uneven across sectors, with agriculture, rural electricity, basic education, and
feeder roads programs reporting high execution rates and primary health and rural water reporting
much lower rates\.
Governance and Public Sector Management Strengthening\. Progress under this component
focused on laying the legislative groundwork for decentralization; developing a strategy for
public sector reform; PEM strengthening; drafting key governance legislation; and upgrading the
M&E system\. Progress on the decentralization and public sector reform agenda consisted of the
establishment of the Office of Accountability in the Office of the President; the inauguration of
an in-country Peer Review Council for the Africa Peer Review Mechanism (APRM); and
Government funding for the Electoral Commission's preparation of the 2004 National Elections -
- more specifically the voter registration exercise\. Important pieces of legislation -- the Freedom
of Information and the Whistle Blower bills -- were submitted to Cabinet in April 2004 to further
enhance the transparency and accountability of public institutions\.
Less progress was made, however, in public sector reform aimed at improving the service
delivery capacity of the civil and public service, including implementing a professional human
resources framework; commencing organizational restructuring of the civil service; and
establishing a regulatory framework for SAs and continuing the restructuring of selected SAs\.
Delays in these areas occurred owing to the sensitive nature of the reforms, the resultant need for
extensive consultations with stakeholders, and the fact that the work was carried out by a
relatively small team\.
As part of actions aimed at improving public expenditure management, the President signed into
law the Financial Administration Act (FAA), the Internal Audit Agency Act (IAA), and the
Public Procurement Act (PPA)\. The FAA defined the duties and responsibilities of the Minister
of Finance and the Controller and Account General in managing public resources\. The IAA
enabled the establishment of an apex body to coordinate, facilitate and provide quality assurance
for internal audit controls in Government ministries and agencies\. The implementation of the
PPA aimed at attaining greater value for public money spent on goods and services\. Budget
reporting was strengthened with the help of new computer-based information and accounting
management system (BPEMS), which was installed in the Ministries of Education, Health, Roads
and Transport\. Specific results include (i) monthly (commitment and expenditure) budget
execution reports reconciled with the Bank of Ghana produced with no more than 8 weeks lag;
and (ii) quarterly report on the execution of poverty-related expenditures produced with no more
than 8 weeks lag\. Finally, M&E capacity was improved with the completion of the 2003 GPRS
APR, the implementation of the GPRS M&E plan, and several Poverty and Social Impact
Analyses (PSIAs) conducted in 2003 and early 2004\.
PRSC-3: Progress under PRSC-3 was broadly satisfactory, but the Government did not meet all
the prior actions in full before Board presentation of PRSC-3\. Most, but not all prior actions were
completed without changes to the original triggers, but some actions were moved to subsequent
PRSCs (see Table 1 below on prior actions)\. The outcomes of PRSC-3 are discussed below by
program component\.
Growth, Income, and Employment Promotion: Macroeconomic management remained prudent in
2005, resulting in strong real GDP growth and macroeconomic stability, notwithstanding a sharp
increase in international crude oil prices\. Annual real GDP growth reached 5\.9 percent in 2005,
up from 5\.6 percent in 2004, and the fiscal deficit continued to shrink, falling to 3\.0 percent of
GDP by end-year, down from 3\.6 percent of GDP in 2004\. The 2005 target for the overall fiscal
deficit was surpassed, with the domestic debt-to-GDP ratio declining further to 11 percent by
9
end-2005, down from 15 percent at end-2004\. Lower levels of domestic public debt and
moderate inflation (which was 15 percent by end-year, and declined to 9\.9 percent by March
2006) allowed, in turn, for nominal interest rates on treasury bills to ease to 11\.5 percent by end-
2005, down from 16\.4 percent at end-2004\. Declining public sector deficits enabled an increase in
the share of credit allocated to the private sector to rise to 55 percent by end-2005, up from
around 50 percent in the previous year\. Fiscal management maintained its pro-poor orientation,
however, with poverty-related expenditures increasing to 8\.5 percent of GDP in 2005, up from
7\.7 percent in 2004\.
There was also a further decline in the time required for business registration, falling to 81 days in
2005, down from 85 days in 2004\. In the area of power sector reform, primary efforts included
progress to reduce ECG system losses in line with the targets envisioned in the draft proposal for
the Management Support Services Agreement; (ii) settling ECG accounts receivable from
Ministries, Departments, and Agencies (MDAs) and the Ghana Water Company within 90 days;
and (iii) carrying out a comprehensive tariff review, ensuring that VRA and ECG earn an
adequate return on capital and ensuring that transmission service was separated from the bulk
service tariff in the tariff structure\. The ECG's system losses declined marginally, reaching 25\.47
percent by end-year, down from 26\.54 percent at end-2004, but remained high\.
Finally, progress was made in the implementation of the petroleum deregulation program, under
which the importation of crude oil and refined products was handled through competitive
tendering under the supervision of an independent agency the National Petroleum Tender Board
(NPTB)\. As part of this deregulation process, there was also a re-alignment of domestic
petroleum prices; although the GoG had resisted raising prices in 2004, domestic retail prices for
petroleum products were adjusted three times during 2005 by the NPTB to automatically reflect
the cost of imported oil, thereby beginning the transition away from Government-set prices\.
Human Service Delivery Improvement: Outcomes in the areas of primary school enrolment,
supervised maternal deliveries, HIV/AIDS prevalence rates, and under-5 malaria mortality rates
indicated that the policies pursued under the GPRS were yielding positive results\. In the area of
education, Government- controlled fees were eliminated and capitation fees were introduced for
all students attending basic education\. As a result, there was an increase in GPER, with the
national GPER reaching 87 percent by mid-2005, up from 81 percent in mid-2003, and the
enrollment rate also improved in all three deprived regions and among girls\. Over 8,000 trainee
teachers took part in district sponsorship schemes in the 2004-05 year, with the objective of being
posted back in the districts that sponsored them in order to reduce primary pupil-teacher ratios in
poorer districts in the deprived regions\. (This program had become increasingly important
because the primary pupil-teacher ratios in some regions had actually worsened, owing to the
higher GPER reported above\.) Finally, textbook-primary pupil ratios continued to improve, both
nationally and in the deprived regions\.
In the area of health, the share of overall supervised maternal deliveries rose marginally to 54\.2
percent by 2005, up from 52\.4 percent in 2002, although there were marked increases in some of
the deprived regions\. There was also a further decline in the HIV/AIDS prevalence rate among
pregnant women remained at 3\.1 percent in early 2005, down from 3\.6 percent in 2002\. In the
area of malaria prevention, the fatality rate from malaria for children under-five declined from 3\.7
percent in 2002 to 2\.4 percent in 2005, in part due to an increase (from 10 to 25 percent) of
children sleeping under insecticide-treated bed nets\. Less encouraging, however, was the decline
in investment in water facilities, following the steady increase in new investment in 2003 and
2005\. For example the construction of new boreholes and the completion of small town pipe
systems were, respectively, 21 and 50 percent lower in 2005\.
10
Governance and Public Sector Management Strengthening: Progress in this component primarily
occurred in strengthening public financial management, with improvements in budget coverage,
timelier external auditing of the accounts of the consolidated fund, and in the implementation of
new public procurement and internal audit legislation\. The budget coverage was broadened to
include more information on internally generated funds and donor grants\. External audit reports
became timelier, with the annual report by the Accountant General being submitted to Parliament
within less of 12 months of the closing of the accounts\. Beginning in August 2005 monthly
reports on budget execution were generally completed within six weeks\. There was progress in
implementing the new public procurement law, with increased coverage provided by the entity
tender committees and the tender review boards, and -- under the auspices of the new internal
audit agency law -- the number of MDAs submitting internal audit reports began rising\.
Progress in the public sector reform area was again slow\. Most of the progress in the public
sector reform area in 2005 consisted of preparing and setting up institutional arrangements for the
new public sector reform strategy rather than actual policy outcomes\. These steps included the
creation of the Ministry for Public Sector Reform; the submission of the Subvented Agencies
Reform Act to Parliament; and the launching of a broad reach-out program to communicate and
ensure the buy-in of stakeholders\. The Government's implementation of other public sector
reform measures, however, was less favorable, particularly in the area of civil service reform\. As
a result, the public sector reform trigger was not met, even though these measures were largely
technical in nature and had been chosen precisely because as technical measures they would
be less controversial and easier to enact\.
Table 1: PRSC 1-3 Prior Actions
PRSC-1
List prior actions from Legal Agreement/ Program Document Status
To promote growth, incomes, and employment:
Implementation of the automatic tariff adjustment mechanism and electricity tariffs Completed
raised by a combined total of 72 percent in late 2002 and 2003\. Retail petroleum
prices brought to import parity levels in January 2003 and an automatic petroleum
price adjustment formula made effective in May 2003\.
Cabinet approval of the power sector reform, aimed at restructuring the Volta River Completed
Authority, including separation of transmission from generation an confirmation of
the role of private sector on thermal generation
Completion of a survey of regulatory and administrative costs of business, Completed
undertaken to prepare an action plan for reducing transaction costs of business\.
To improve service delivery for human development:
Completion of the school mapping exercise in five deprived districts with the Completed
objective of improving the targeting of budget resources\.
Launching of the national policy of Community-Based Health Services\. Completed
Implementation of a fee exemption policy for maternal deliveries in four Completed
underserved regions (Northern, Upper East, Upper West, and Central)\.
To improve governance and public expenditure management:
Approval by Cabinet of the Central Internal Audit Agency Bill, aimed at ensuring Completed
effective and efficient management of state resources, including revenues,
expenditures, assets and liabilities\.
Submission of a Procurement Bill to Parliament to provide the legal framework Completed
for ensuring that public resources are used to finance quality expenditures\.
Installation of the new computerized budget and public expenditure accounting Completed
and information system (BPMES) was made operational in the Ministry of
Finance and Economic Planning and at the Controller's and Accounting General
Department to improve the efficiency in managing public expenditure\.
11
PRSC-2 Status
To promote growth, incomes, and employment:
Launching power sector reform, including the implementation of the first year of Completed
the public-private partnership plan\.
Completing the automation (GCMS/GCNET) of customs procedures to speed up Completed
clearance times at Takoradi and Tema ports\.
Developing and beginning implementation of a Cabinet approved private sector Completed
development strategy with an action plan to remove key regulatory and
administrative barriers for business development\.
To improve service delivery for human development: Completed
Establishing incentive schemes, including scholarships, to enable girls to complete
primary school in deprived districts\.
Implement fee exemption policy on maternal deliveries in the deprived regions\. Completed
Approving a new health recurrent expenditure allocation formula to protecting the Completed
deprived areas\.
To improve governance and public expenditure management:
Beginning implementation of the Procurement Act, designed to ensure value for Completed
money in government purchases, by establishing the Public Procurement
Institutions (Public Procurement Board, Secretariat, Entity Tender Committees,
and Tender Review Boards)\. Completed (with a note
Issuing to Cabinet a policy statement on public sector reform\. that it was submitted to
Cabinet)
Expanding the newcomputerized budget and public expenditure accounting and Partially completed
information system (BPEMS) to cover the Ministries of Education, Health, and
Roads and Transport\.
PRSC-3 Status
To promote growth, incomes, and employment:
Continue power sector reform, including (i) issuing for request for proposals for Completed, with
bidders for the performance-based ECG Management Support Services changes when defining
Agreements; and (ii) continuing the process of transforming VRA into two separate the retained prior
companies (generation and distribution), and an independent transmission actions\. ECG action
company, with the enactment of the VRA Amendment Act\. moved to PRSC-4
Implement 2004 tranche of the PSDS action plan, including (i) strengthening of the
institutional framework for implementation of the strategy; (ii) completing and Completed, with no
beginning implementation of the National Trade Policy; (iii) establishing four Land changes in defining the
Registries in the regions; (iv) extending GCMS/GCNet facilities to Aflao and retained prior actions\.
Elubo; and (v) completing the automation of Registrar-General's department\.
To improve service delivery for human development:
Eliminate all government-controlled fees and introduce capitation grants for girls in
public primary schools in deprived districts and in all public primary schools for Completed, with no
the disabled\. changes
Assess health professional attraction and retention program in consultation with
stakeholders and decentralize management of human resources continued, Completed, with no
including the identification of options for decentralizing personnel\. changes
To improve governance and public expenditure management:
Begin implementation of priority areas of public sector reform aimed at improving
service delivery capacity of the civil and public service by (i) finalizing and
implementing a professional HR framework; (ii) developing and commencing Completed, with no
implementation of a communications strategy; (iii) commencing organizational changes
restructuring of the civil service; and (iv) establishing a regulatory framework for
subvented agencies and continuing the restructuring of selected subvented
agencies\.
Deepen payroll management and control by (i) strengthening systems for payroll
management and control; (ii) developing and implementing systems for capture
and management of subvented agencies payroll data; and (iii) clarifying Completed, with
institutional responsibilities for payroll and personnel database management\. changes relative to the
12
original triggers, in
defining the retained
prior actions\. Some
Within the context of existing legislation, develop guidelines and procedures for actions moved to
more comprehensive collation of annual financial accounts comprised of (i) subsequent PRSCs
consolidated fund; (ii) statutory funds; and (iii) funds from donor funded sector
projects and programs\. Completed, with no
Increase in the 2005 budget, compared to the 2004 budget, the share of non-salary changes
poverty-related domestically-financed expenditures (including HIPC)\.
Fully operationalizing Public Procurement Institutions with MDAs\.
Continuing to have the preparation of the budget informed by the GPRS Annual Completed, with no
Progress Report\. changes
Completed, with no
changes
Completed, with no
changes
2\.2 Major Factors Affecting Implementation
A number of factors contributed to the largely successful implementation and outcome of these
operations\. Some of these were intrinsic to the operations themselves including strong
Government ownership; extensive donor coordination; and extensive analytical work -- while
others were exogenous to the loans' design, including favorable commodity prices and high levels
of remittances\.
Strong Government commitment: The GoG had full ownership of the programs supported by the
PRSC 1-3 because these operations (i) were fully aligned with the GPRS for which the
preparation was led by the Government -- and were consequently highly responsive to the
borrower's circumstances and development priorities; and (ii) important reform measures were
adopted as prior actions for each operation\. The PSRC program design drew upon the lessons
learned in previous adjustment operationsv -- primarily the need to ensure Government
"ownership" of the reform process, and the need for realism and selectivity in defining the reform
agenda\.vi The program document for PRSC-1 underscored the importance of ensuring ownership
of the reform program for the satisfactory implementation of the country's poverty reduction
strategy\. By presupposing and building on strong ownership, the PRSCs addressed a major factor
(i\.e\., lack of ownership) that led to low evaluation ratings on sustainability in the previous lending
portfolio under the FY01-03 Country Assistance Strategy (CAS)\.vii While most of the actions
completed under the program supported by PRSC-1 focused on laying out the groundwork for
legislative changes, and developing strategies for key areas of the reform agenda, achieving the
expected policy outcomes was contingent on follow up actions that, in some instances, would be
supported by subsequent operations\. This condition reinforced the importance of ensuring broad
ownership of the program from the onset, and of building in mechanisms for regular consultations
during implementation\.
Effectiveness of donor coordination: Bilateral and multilateral donor assistance played an
important role through the common MDBS framework\. The MDBS aided harmonization by
providing a framework for policy dialogue and decisions linked to progress in the GPRS
implementation, including the use of common triggers by the all DPs, the Bank, the EC, and the
AfDB (except for outcome-based triggers, which the Bank and the AfDB chose not to use to
underpin disbursements) as well as the use of common performance indicators for monitoring and
implementation\.
This harmonization increased steadily over time\. The Bank and the DPs carried out two joint
missions for the preparation of PRSC-2 which resulted in aligned mission schedules and advance
13
agreement on policy actions and the timing of future development reviews\. As a result, there was
achieved an almost complete overlap between the key policy actions agreed under MDBS 2004
and those envisioned under PRSC-2\. The DPs and the GoG also agreed on a joint matrix of
policy actions to be supported by PRSC-3 and MDBS-2005, thereby aligning monitoring and
evaluation frameworks\. This close donor harmonization reduced transaction costs for the
Government by reducing the number of visiting missions and reporting requirements, thereby
freeing Government officials to focus more on program implementation\. In addition, the timely
and predictable disbursements of budgetary assistance aided macroeconomic planning and
stability\.
Soundness of background analysis: The analytical basis for the PRSCs was sound, drawing on
recently completed work on poverty and social analysis, as well as from country economic and
fiduciary work\. Although recent poverty data were not available, a poverty analysis had been
carried out jointly with the Government and which drew on the results of the 1998/99 household
expenditure survey, and allowing the program to focus on policy actions that addressed poverty
equity gaps across regions, and age and gender groups\. The analytical work also included two
integrative pieces on growth, poverty and public policy, permitting the program to focus on
critical aspects of the interface between these three areas, as well as a variety of work on fiduciary
arrangements to improve public financial management and public procurement (see Box 1
below)\.
Box 1: PRSCs 1-3 Analytical Basis
The specific analytical work that informed each operation included:
PRSC-1: The 1997 CEM entitled "Ghana Growth, Private Sector, and Poverty Reduction", and the 2001 CEM
entitled "Ghana International Competitiveness, Opportunities and Challenges Facing Non-Traditional Exports;"
the FY03 Country Procurement Assessment Report (CPAR); the FY03 Poverty Report entitled "Reducing Poverty
and Improving Human Development;" the FY03 FIAS study on "Regulatory Barriers to Investment in Ghana;" as
well as analytical work by the GoG and other DPs
PRSC-2: PRSC-2 was built on the analytical work carried out in previous years, as described above, as well as the
FY04 CEM on "Public Policy, Growth, and Poverty;" the FY04 Public Expenditure Review (PER) focusing on
budget design and implementation; the FY04 Country Financial Accountability Assessment (CFAA) assessing
fiduciary risks and arrangements; and the Bank-Fund 2004 HIPC Public Expenditure Assessment and Action Plan
which assessed the capacity of the public expenditure management system to track poverty-reducing expenditures\.
PRSC-2 was also prepared in parallel with, and in close coordination, with the IMF's three-year PRGF (approved
May 2003)\.
PRSC-3: PRSC-3 was built on analytical work carried out in previous years, as described above, as well as on the
FY05 CFAA; FY05 PER; and findings of the 2005 External Review of the Public Financial Management
evaluating budget design and execution\.
Remittances: Official remittances from Ghanaians living abroad were strong during the three
operations, reaching an estimated US$780 million in 2003 and exceeding US$1 billion in 2004\.
(These figures do not include informal remittances, which the Bank of Ghana believes are
substantial\.) These remittances helped to fuel Ghana's strong economic growth from 2003-05, as
well as contributed to the growth of specific sectors such as construction\.
Favorable commodity prices: Ghana was also the beneficiary of a substantial improvement in the
terms of trade for cocoa, gold, and timber during this period (although this was offset by rising
petroleum prices from end-2004), and had record cocoa crops in 2003 and 2004\. These inflows
14
enabled Ghana to finance its budget deficit and pay down domestic debt, thereby enabling a
reduction in interest rates, a build-up of foreign reserves, and an improvement in the availability
of credit to the private sector\. It also enabled increased allocation to social priorities, despite
increases in petroleum prices\.
Some factors affected implementation less positively\. One, the implementation of the public
sector reform areas of the PRSCs were slower than anticipated, owing to a lack of government
capacity and the political sensitivities associated with this reform area\. Two, wages and salaries
accounted for a large share of overall poverty-related spending, equivalent to 55 percent of all
spending in 2005\. While this trend was particularly evident in the basic education and primary
health sectors, by 2005 wages and salaries were beginning to account for higher than anticipated
increases in expenditures in agriculture and other sector programs\. As a result, poverty-related
programs did not fully benefit from the available external assistance as wage and salary
commitments ended up accounting for over two-thirds of poverty expenditure\. In addition, the
execution of the budget across programs was tilted toward programs with high payrolls, such as
education and health, while more investment-intensive programs, such as rural energy and
agriculture, presented lower budget execution rates\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
M&E Design: M&E design and capabilities were weak at the beginning of the GPRS, but did
strengthen over the three operations\. As noted in the program document for PRSC-1, the
Government's M&E capability in 2003 was characterized by: (i) the lack of a M&E framework
to provide oversight over the implementation of the GPRS; (ii) problems in using M&E findings
to adjust Government polices; and (iii) gaps in the availability of poverty-related data and
insufficient use of participatory M&E findings\. At that time, the last household survey data on
poverty that were available were from 1998/99, providing an inadequate baseline for measuring
progress under the GPRS\. In 2003, a Core Welfare Indicator Questionnaire (CWIQ) and the
Demographic and Health Survey (DHS) were finalized, providing baseline data on a variety of
poverty, health and other indicators; however\.
While the GPRS established a variety of indicators for measuring progress,viii data collection for
both the 2003 and 2004 Annual Progress Reports (2003 and 2004) was made difficult owing to
the (i) lack of feedback and incentives to motivate staff in the MDAs, Regions, and Districts to
institutionalize M&E activities; (ii) inconsistencies in data between the regions and districts; (iii)
challenges of addressing the M&E needs of different stakeholders; and (iv) inadequate resources
for M&E at all levels\. As a result, there was only inconsistent reporting of district- and regional-
level indicators\. Initial data collection efforts were also limited by the lack of participatory M&E
in the initial years of the program; for example, neither civil society nor Parliament were involved
in the preparation of the first APR (2003), although this was improved upon in the 2004 APR
(and is being expanded still further under GPRS II)\.
M&E Implementation: M&E implementation strengthened each year under PRSC 1-3\. PRSC-
1 focused on establishing a M&E system for the GPRS, while PRSC-2 and PRSC-3 focused on
further strengthening this system\. As noted, the first APR which provides the key platform for
M&E of progress towards GPRS targets -- was prepared in 2003 by the National Development
and Planning Council (NDPC) to track the monitoring indicators under GPRS-1\. APRs have been
completed for subsequent years of the GPRS; the quality of these assessments has improved over
time, and the 2005 APR was considered by donors to be a strong step forward\.
15
Other improvements in M&E implementation include: (i) better dissemination of the APRs to
Parliamentarians, the MDAs, regional planning and operation officers, and rural communities
(including the use of radio programs and video presentations); (ii) better usage of the APRs to
inform the budget process (beginning with the 2005 budget); and (iii) the introduction of
participatory M&E\. Participatory M&E, started on a pilot basis in late 2004 to obtain feedback
from citizens about the extent to which enhanced access to basic services was being achieved at
the community level, and also included the development of citizens report cards to assess
satisfaction with the delivery of basic services (water, education, and health)\. In addition, the
Government has also established numerous institutional structures for the ongoing review of
GPRS indicators, targets, and policies\.ix Less positive, however, is the fact that although the
NDPC which is the Government's main M&E agency has chosen not to draw on tools for
social accountability for which training has been provided, such as the citizen report cards\.
Furthermore, the NDPC has had a 50 percent turnover in staff in the last two years, hampering its
ability to carryout M&E and to link the outcome of this M&E back to program design\. These
factors could create serious implications for future program quality and undermine M&E
sustainability\.
To assess the poverty and social impact of selected policy reforms policies on the poor, four
PSIAs were completed under PRSC 1-3, and technical committees representing a cross-cutting
section of Government and in partnership with local research teams were established to oversee
follow-up measures\.x Appropriate criteria were used to select these studies, including (i)
potential size of impact; (ii) prominence of the issue in the GPRS policy agenda; (iii) the timing
and urgency of policy or reform; (iv) the level of national debate surrounding the reform; and (v)
the lack of existing analysis\. Preparation of a new series of M&E PSIAs began in 2005, which
will be applied to updating the GPRS, rather than simply focusing on informing short-term policy
making\.
M&E Utilization: M&E utilization has been weak and still needs improvement\. The Bank-
Fund JSA of the 2003 APR noted that the APR's main weakness was that it did not draw policy
conclusions and concrete recommendations from its comprehensive analysis and did not identify
links to the development outcomes detailed in the GPRS M&E plan\. Accordingly, a key focus of
PRSC-2 and PRSC-3 was on improving the link between policies and outcomes and
institutionalizing the use of data and analysis particularly the APRs and PSIAs -- to better
inform policy decisions and budget allocations\. As a result, the APRs have become increasingly
central to the domestic dialogue (e\.g\., guidance on the budget) and the budget support dialogue,
and some of the PSIAs have been used to inform follow-up actions (e\.g\., the PSIA on the
economic transformation of the agriculture sector informed the revision of the Food and
Agriculture Sector Development Policy -- FASDEP)\.
Nevertheless, a number of weaknesses still remain\. In general, the 2003 CWIQ, the 2003 DHS,
and the PSIAs have been underused\.xi While there was an increase in participatory M&E in 2004
and the results were incorporated into the 2004 APR, feedback mechanisms are still needed to
ensure adequate follow-up of these findings\. Budget outcomes are not comprehensively reported,
so M&E cannot feed back effectively; however, the ability to close the loop from M&E back to
program design will be critical to the quality of future programs supported by PRSC 4-7 (see
Section 7\.4 below)\. It is in this context that forthcoming PRSC operations appropriately continue
to focus on strengthening M&E capabilities and building the sustainability of M&E capacity and
utilization\.
2\.4 Expected Next Phase/Follow-up Operation
16
PRSCs 1-3 are being followed by a second series of four annual operations covering the period
2006-2009 and supporting the implementation of the GPRS I,, in line with the 2004 CAS
Progress Report\. The design of this new series was coordinated with the other DPs that
participated in the MDBS framework supporting the first GPRS, and the MDBS framework will
continue to be used\. This new series of operations is focusing on the three broad components of
GPRS II: (i) accelerated private sector-led growth, (ii) vigorous human resources development,
and (iii) strengthened good governance and civic responsibility\. A key element of the GPRS II is
a focus on the macroeconomic environment as a platform to generate growth, rather just an area
where performance stability needs to be maintained\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
The Bank's strategy to progressively increase the share of assistance developed programmatically
through the PRSCs became central to the Bank's FY04-07 CAS and accounted for around 50
percent of overall Bank lending during the CAS period\. The CAS itself was firmly rooted in the
Strategic Framework for IDA in Africa (SFIA) and the West Africa Regional Integration
Assistance Strategy\. The CAS also included several non-lending activities that provided the
analytical underpinnings for the PRSCs' support to strengthening fiduciary arrangements,
including PERs, CFAAs, and CPARs\. The CAS itself was properly driven by the PRSP and was
developed through extensive consultations with Government, stakeholders, and civil society\. As
a result, it was closely aligned with the GPRS program and focus\.xii The three broad components
of the PRSCs encompassed the five thematic pillars of the GPRS and were compatible with the
MDGs (see Annex 9 for a figurative representation of the close alignment of the CAS, GPRS, and
the PRSCs)\. xiii The consistency between the CAS, GPRS, and the PRSCs was further reinforced
by the fact that the PRSCs were an integral part of the larger and concerted MDBS effort which
focused on strengthening the complementarity between the GPRS and inflows of development
assistance\.
The PRSCs were complemented by a series of specific investment and technical assistance
operations, covering the education sector, HIV/AIDS, public sector reform, and finance and
private sector development\. These operations were also consistent with other Bank lending to
support poverty reduction, most particularly the Community Based Rural Development aimed at
reducing rural poverty; the second phase of the Community Water and Sanitation APL to increase
coverage of improved water and sanitation services; and the Community Based Poverty
Alleviation LIL testing approaches and mechanisms for achieving community-based poverty
reduction through improved nutrition, food security, and support to street children, among others\.
Project design was also sound because it maintained a focus on monitoring poverty outcomes to
ensure that sector programs delivered results in terms of human development indicators that are
directly relevant to the MDGs\.
Under the PRSCs, disbursements took place at project effectiveness based on the Government's
satisfactory accomplishment of prior actions\. This design ensured that key essential reforms
needed to support the goals of each phase of the PRSC program would be enacted up-front,
giving this lending mechanism advantages over structural adjustment credits used previously\. As
seen in Table 1 above, the prior actions show a consistent unfolding of a reform package designed
to support the implementation of the GPRS, and ensuring a high level of continuity from
operation to operation\. By channeling resources through the budget, instead of through projects
where Government decision-making is limited, the MDBS fostered decision-making by the
Ministry of Finance, Cabinet, and Parliament, giving these entities a greater stake in the pro-poor
17
agenda, sound financial management, and decision-making, thereby enhancing democratic
accountability\.xiv
It should be noted, however, that the decision to utilize this type of lending instrument -- rather
than a conditionality-based operation where tranche release(s) were dependent upon the
completion of specified actions was not without risk\. Ghana's performance under the two
previous credits (Economic Support Reform Operations II and III) was uneven, xv and the
approaching 2004 elections which in previous years had always been accompanied by weak
macroeconomic management augured poorly for the success of the Government program
supported by PRSC-1; and in fact, delays in actions to encourage private sector development and
carry out the public sector reform agenda in 2003 did raise legitimate questions at the time about
the sustainability of the advances under PRSC-1\. Nonetheless, the risk of going ahead with this
type of instrument was warranted given that the approach used under ERSO II and III was not
entirely successful in fostering significant or sustained reforms (particularly in the areas of public
sector reform, privatization of state-owned enterprises, and reform of the energy sector)\.
In contrast to typical Bank practice, PRSC-1 was developed ahead of the finalization of the FY04
CAS, (which typically would have provided the strategic context for the PRSC), and the
conclusion of the FY03 CFAA (which would have updated the knowledge required for the
definition of prior actions and triggers in the area of fiduciary safeguards)\. There were, however,
four rationales for moving forward with the PRSC\. One, it was felt that the FY00 CAS and the
upstream work on the FY04 CAS provided enough clarification of the strategic context for the
PRSC-1\. Two, on the analytical side, the FY01 CFAA and the mission report of the FY03
CFAA-update provided sufficient inputs for the design of the prior actions and triggers of PRSC-
1\. Three, and perhaps most importantly, the Ghanaian authorities requested that the Bank show
its support to the GPRS early, and align that support with the GPRS implementation timeframe in
order to sustain the national enthusiasm that had been built around the program\. Finally, the
choice was also influenced by the Bank's need to maintain its key role among the DPs who were
moving ahead with multi-year budgetary assistance\. While this approach was not without risks
given the need to keep improving the fiduciary framework, it appears to have succeeded both in
maintaining the momentum built under the GPRS and unifying the Bank's assistance with the
other DPs\.
The program document for each PRSC identified a number of risks to each operation, as well as
reasonable mitigating factors offsetting those risks, as shown in Box 2 below\. The risk of
electorally-induced economic slippages was correctly identified, incorporating the lessons learned
from previous election cycles in Ghana\. Three risks fiduciary risks, capacity limitations, and
exogenous shocks were common to all three operations, but were in fact intrinsically addressed
by the very nature of the actions implemented under the programmatic series (e\.g\., PEM
strengthening and capacity building), or by the nature of the MDBS framework, which provided a
forum ensuring access to emergency financing (as long as the program remained sound)\.
Box 2: Identified Risks and Mitigating Factors, PRSC 1-3
Identified Risk Mitigating Factor
PRSC-1
1\. Sustainability failure owing to 1\. Use of communication & dialogue to gain social acceptance of the
political/social pressures reforms, as used successfully to gain acceptance of overdue
petroleum price & utility adjustments\. Sound & early poverty
measures also reduce risk of opposition\.
2\. Terms of trade shocks or increased 2\. To some extent, excellent relations with MDBS DPs should ensure
regional stability threaten macro- access to emergency financing or enable adjustment in disbursement
18
Identified Risk Mitigating Factor
financial framework timing, as long as program is sound\.
3\. Residual fiduciary risks to funds 3\. Residual fiduciary risks exist, but will diminish with improvements
in budget management & greater focus on fiscal transparency,
Parliamentary oversight, & budget account disclosures -- all part of
GPRS process\.
4\. Implementation capacity outpaced by 4\. Bank leading DP effort to harmonize program content & adoption of
program common framework in 2004 will help\. Donor support under MDBS
will make TA necessary if needed\.
PRSC-2
1\. GoG cannot sustain current fiscal stance 1\. GoG's recent track record on fiscal management & early action in
in run up to elections\. identifying expenditure savings & additional revenue measures to
offset price subsidies for retail petroleum products\.
2\. Macro-financial context may deteriorate 2\. To some extent, excellent relations with MDBS DPs should ensure
as a result of exogenous shocks access to emergency financing or enable adjustment in disbursement
timing, as long as program is sound\.
3\. Fiduciary weaknesses may limit the 3\. Risk is steadily decreasing with progress on strengthening PEM
impact of the program regulatory framework\.
4\. Capacity limitations may lead to only 4\. Government continues to build its capacity as well as draw on the
partial implementation extensive technical assistance being provided by DPs\.
PRSC-3
1\. GoG is delayed in implementing 1\. Recent increases in retail petroleum product prices close existing gap
planned structural reforms in the energy between domestic and import parity prices\.
sector, leading to a deterioration in the
fiscal stance & interruption in Fund
program\.
2\. Macro-financial context deteriorates as a 2\. Somewhat mitigated by commitment from DPs to stand ready to
result of exogenous shocks, making adjust timing of disbursements as long as problem remains sound\.
program implementation difficult\.
3\. Fiduciary weaknesses limit impact of 3\. Risk is steadily reducing owing to continued progress on PEM
the program regulatory framework
4\. Capacity limitations lead to only partial 4\. Government continues to build its capacity as well as draw on the
implementation extensive technical assistance being provided by DPs
Finally, program design correctly included the energy sector\. This inclusion -- which occurred as
a result of the Bank's urging -- was initially opposed by some DPs who argued that the energy
sector was not a sufficiently cross-cutting issue to be included\. In retrospect, the Bank's
persuasiveness on including this focus was well advised, as energy issues continue to play a
significant role in the economy\. As discussed further below, progress in the energy sector was
slow and the sector is currently in crisis; however, this reflects the political sensitivity of these
reforms, rather than poor program design or insufficient attention by the Bank\.
Nonetheless, while the PRSC 1-3 were a well designed and implemented series of operations that
were clearly aligned with both the Bank and the borrower's objectives, program design did suffer
from a number of weaknesses\. A principal weakness was the fact that water and sanitation-
related actions were not included under PRSC-1 but were added to the PRSC agenda under
PRSC-3 after the DHS Survey indicated deterioration in infant morality and under-5 mortality
rates between 1997 and 2003\. While this omission in part reflected the time needed to better
align DP priorities in this area under the MDBS framework, it is regrettable, given the clear and
direct link between access to safe water and sanitation and positive health outcomes, and that
increasing access to water and sanitation is the most important infrastructure investment for
achieving the human development MDGs\.xvi The omission of this area essentially meant that
improvements in human development indicators resulting from water and sanitation interventions
were delayed by two years\.
19
A second weakness in program design is the fact that none of the poverty survey instruments
correspond to the period of time covered by the PRSC operations\. While extensive work has
been done on implementing and strengthening the Ghanaian M&E system for tracking poverty-
related trends, there is no survey instrument aligned with this programmatic series of operations\.
The Ghana Living Standards Survey (GLSS5) was not completed as originally planned and the
results were not expected to be available until end-2006\. The DHS and CWIQ were last
completed in 2003 and will not be carried out again until 2008\. Thus, while some poverty-related
impacts are measured (e\.g\., GPER), there is no measure of poverty headcount or distribution to
inform either the evaluation of PRSC 1-3 or to inform the design and implementation of the next
programmatic series of operations\.
Program assessment is also made difficult by the complexity of the program design\. While a
policy matrix which set forth the (i) policy objectives; (ii) actions to be completed under each
component in each operation and the two succeeding operations; and (iii) expected outcomes --
was included in the program document for each PRSC, these matrices are inconsistent over the
program period\. The extensiveness of the areas covered under the PRSCs as well as the
multiplicity of donors, each with somewhat different priorities resulted in a complex policy
matrix containing multiple monitorable outcomes (e\.g\., 51 in total in the policy matrix for PRSC-
1)\. Under PRSC-2, however, 13 of these original outcomes were either eliminated entirely, or
were replaced by new outcomes; in some cases, the outcomes remained the same but the
quantification was removed, which makes performance assessment subjective and difficult\.
Finally, for some outcomes the wording was changed so that while still similar, they were not
precisely the same; again, this makes it difficult to assess performance across the range of these
operations\.xvii While some of the changes between PRSC-1 and PRSC-2 can be attributed to the
agreement on a harmonized performance framework under the MDBS, not all of them can,
because a number of the outcome indicators that were modified under PRSC-2 were subsequently
eliminated under PRSC-3, when still more new indicators were added\. Many of these changes
may have been for sound reasons -- for example, identification of a more representative indicator
while others may have been made to accommodate the varying priorities of the DPs and to
ensure harmony under the MDBS\. Nonetheless it impedes an effective evaluation of program
progress across the entire programmatic series of operations in accordance with ICR
requirements\.xviii
3\.2 Achievement of Program Development Objectives
The key policy achievements that were achieved under the PRSC operations are discussed below;
additional details can be found in Annex 1 which contains a detailed policy matrix of all the
PRSC 1-3's policy objectives, expected outcomes, and actual outcomes\.
Overall Outcomes of PRSC 1-3: In the area of promoting growth, investment, and employment,
accelerated economic growth coincided with macroeconomic stabilization under the PRSC 1-3
series\. GDP growth averaged 5\.6 percent, rising from 4 percent a year during 2000-02, and real
GDP per capita increased accordingly (see Table 2 below)\. End-period inflation was nearly
halved to 14\.3 percent from an average of 24\.3 percent during 2000-02; the cedi stabilized against
the US dollar; gross international reserves were built up; and the goal of halving the stock of
government domestic debt relative to GDP a key anchor in the fiscal program aimed at
"crowding in "private sector access to financial resources was achieved\. Domestically financed
public spending on pro-poor services was also increased from 4\.8 percent of GDP in 2002 to 8\.2
percent in 2005\. The business environment was improved through a reduction in clearance
procedures at the seaports and a decrease in the number of days needed to register a business\.
Finally, in the area of sectoral reforms, Ghana made strong progress in moving petroleum and
20
electric power prices to reflect world market prices and the costs of production, albeit with some
delays\. The Government also established mechanisms for evidence-based adjustments in these
areas, thus reducing political pressures for delays when prices needed to be raised\.
Less positively, only limited progress was made in reducing ECG system losses, which declined
only marginally (from 26 percent in 2002 to 25\.5 percent at end-2005, far short of the target of 18
percent)\.xix Likewise, electricity subsidies continue to be high, as VRA supplies energy to the
aluminum smelter (the Volta Aluminum Company -- VALCO) at 2\.7 cents per kwh, compared to
its marginal cost of 10 cents per kwh, and continued weaknesses in the energy sector may have
negative implications for future growth and operations (discussed further in Section 9 below)\.xx
Finally, although the time needed to register a new business was reduced by 48 days (to 81 days)
under PRSC 1-3, this is still among the highest in the region, underscoring the need for continued
progress\.
In terms of improved service delivery for human development, there was encouraging progress in
expanding access to education and health services\. Gross primary enrollment rates reached 92
percent by the 2005-06, up from 81 percent in mid-2003\. The gender parity index narrowed,
although the 2005 MDG of equality appears not to have been achieved\. Supervised maternal
deliveries rose slightly at the national level, almost 2 percentage points, to about 54 percent, from
2002 to 2005\. In both gross primary enrollment and supervised maternal deliveries, marked
improvements occurred in the four relatively deprived regions\. The HIV/AIDS prevalence rate
among pregnant women fell to 3\.1 percent in 2005 from 3\.6 percent in 2003 (and declined further
to 2\.9 percent by 2006)\. In addition, the under-five mortality rate due to malaria fell from 3\.7
percent in 2002 to 2\.4 percent in 2005\. Other key health indicators, however, have shown little
improvement\. The indicators for maternal and infant mortality stagnated and child malnutrition
worsened in a few of the regions\. A participatory survey carried out by a group of NGOs in
2004-05 corroborated these findings at the grass-roots level, and the responses in the survey were
extremely critical across a range of services in health and education with respect to the quality of
these services\.xxi
In the area of governance and public sector management strengthening, progress has been mixed,
despite clear steps in selected areas\. Progress under this component was reported primarily in
strengthening public financial management, with improvements in budget coverage, timelier
external auditing of the accounts of the consolidated fund, and in the implementation of new
public procurement and internal audit legislation\.xxii External audit reports became timelier, with
the annual report by the Accountant General being submitted to Parliament within less than 12
months of the closing of the accounts\. There was also progress in implementing the new public
procurement law, with increased coverage provided by the entity tender committees and the
tender review boards\. Under the new internal audit agency law, the number of MDAs submitting
internal audit reports began rising\. Less positively, some actions which seemed like important
reform achievements at the time of implementation have not had a real impact or their impact has
been slow to be realized\. For example, while the Freedom of Information Act was submitted to
Cabinet in 2004, it has still not been passed into law\. Similarly, while the BPEMS was installed
in the Ministries of Road/Transport and Education under PRSC-2, it was not used for processing
transactions or producing reports until 2006,xxiii and the establishment of Office of Accountability
in the Office of the President still lacks sufficient funding or capacity building to fulfill its
mandate\. Progress in public sector reform and on the decentralization agenda was also slow
throughout the PRSCs, and the implementation of approved reform programs needs to be
accelerated to improve productivity in the public sector and empower local authorities\.xxiv As
discussed in Section 9 below, these delays in reform may have negative implications for future
operations, as budget support provided through the PRSCs and other MDBS flows was primarily
21
used to replenish the country's reserves and to reduce domestic debt, rather than going into
service delivery that would have tested the absorptive capacity of the country\. As donor
resources continue to flow to poverty-related areas, however, the effectiveness of this funding
risks being compromised if the capacity, performance, integrity, and efficiency of the public
service is not improved further\.xxv
Table 2: Ghana: Key Macroeconomic Indicators, 2003-05 (%)
2003 2004 2005
Real GDP growth 5\.2 5\.6 5\.9
Real GDP per capita 2\.6 3\.0 3\.2
CPI inflation1 26\.7 12\.6 15\.1
Gross Investment/GDP 22\.9 28\.4 29\.9
Gross National Savings 20\.7 25\.7 22\.8
Current Account Balance/GDP (incl\. Grants) 1\.7 -2\.7 -7\.0
Overall Budget Balance/GDP (incl\. Grants) -4\.4 -3\.6 -3\.0
1) Annual average\.
Source: IMF, 2006\.
3\.3 Justification of Overall Outcome Rating
Rating:
PRSC-1 Satisfactory
PRSC-2 Satisfactory
PRSC-3 Satisfactory
All three of these operations are rated satisfactory\. The operations' development objectives were
satisfactorily achieved in an efficient fashion, and, as discussed above, the PRSCs' objectives,
design, implementation, and outcomes were highly relevant to country circumstances and
development priorities and were highly consistent with Bank strategies and goals\.
3\.4 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
Poverty: A number of measures under the PRSCs reflected more effective targeting of the poor
by removing financial barriers to health and education\. These were directly related to the goal of
achieving the MDGs and included: (i) the introduction of scholarships to enable girls to complete
primary school in deprived districts (PRSC-2); (ii) elimination of Government-controlled school
fees for primary school pupils in deprived areas (PRSC-2) and subsequently nationwide (PRSC-
3); (iii) reforming the exemption system to provide health system subsidies for the poorest (PRSC
1-3); and (iv) funding maternal delivery exemptions (PRSC 1-3)\. In addition, a number of these
policies gave first priority to the three most deprived regions, thereby helping to address regional
disparities in poverty\.
In addition, there were a number of broader measures to address non-income dimensions of
poverty, also in accordance with achieving the MDGs\. These include: (i) increasing resources for
education going to deprived districts (PRSC 1-3); (ii) implementing Community-based Health
22
Planning and Services (PRSC-1); (iii) implementing a high impact rapid delivery program for
under-five mortality and maternal mortality rates (PRSC-1); (iv) implementing community
initiatives to prevent HIV transmission and provide care to PLWHAs, AIDS orphans, and
families (PRSC 1-2); (v) implementing a teacher retention scheme (PRSC 2-3); and (vi) ensuring
timely delivery of textbooks for primary schools (PRSC 2-3)\. All of these measures were also
targeted at the most deprived regions in order address regional disparities in poverty\.
The positive outcomes (detailed above in Section 8\.2) relating to primary school enrollment,
supervised maternal deliveries, HIV/AIDS prevalence rates, and under-5 malaria fatality rates
indicate that the human development policies supported by the PRSCs were appropriate\. Less
progress was shown for the health indicators, however, with targets being missed in the areas of
child malnutrition, under-five mortality rates, maternal mortality, and infant mortality; although
the lack of data subsequent to the 2003 DHS means that a conclusive assessment of these targets
is not yet possible for these operations\.xxvi
It is not possible to assess the broader impact of the PRSCs on poverty headcount at this time
owing to the lack of data\. Although domestically financed public spending on pro-poor basic
services increased from 4\.8 percent of GDP in 2002 to 8\.2 percent in 2005, not all such spending
necessarily translates into poverty reduction; for example, wages and salaries accounted for 55
percent of overall poverty-related spending in 2005, and much of the increase in the wage bill
was due to higher salaries, rather than an increase in employment\. Notwithstanding the lack of
data, however, Ghana's economic growth during PRSC 1-3 may have had a favorable impact on
poverty\. The reduction in poverty that occurred between 1997 and 2003 was primarily due to the
acceleration in economic growth (although a reduction in inequality also contributed)\. Given
Ghana's strong economic growth during 2003-05, as well as the high level of remittances,xxvii it is
probable that poverty continued to decline under PRSC 1-3; however, the distributional impact of
this growth on poverty may be skewed to the Western, Volta, Ashanti, and Brong Ahafo regions,
where production of cocoa, timber, and gold exports is concentrated, rather than to poverty-
endemic areas\.
Gender: To promote gender equity in enrollment and retention, all Government-controlled fees
were eliminated and scholarships were introduced to enable girls to complete primary school in
deprived districts\. The resulting improvement in female enrollment clearly had a positive gender
impact\. In the longer term, this is likely to have a positive impact on poverty reduction as there is
a strong gender dimension to poverty in Ghana, with gender inequalities reflecting differences in
access to education\. The omission of a water focus from PRSC 1-2, however, may have had
negative gender implications, as women are traditionally responsible for water provision for
domestic purposes, and carry heavier burdens in the quest for water\. As noted, the gender parity
index is narrowing, but the 2005 MDG of equality may not have been achieved\. Finally, there is
no gender-specific budgeting that would ensure budgetary expenditures with specific gender
outcomes\.
(b) Institutional Change/Strengthening
The institutional development impact of the reform measures implemented under PRSC 1-3 was
substantial\. Many of the reforms implemented were the genesis for important institutional
innovations\. The latter includes the amendment of the Volta River Authority (VRA) Act, and the
new Financial Administration, Internal Audit Agency and Public Procurement Acts (FAA, IAA
and PPA)\. The amendment of the VRA established the legal basis for the separation of power
transmission from generation\. Similarly, the FAA implied a new framework for the management
of state resources, leading to clearer reporting responsibilities and greater accountability within
23
the public sector\. Finally, the IAA established the legal basis for setting up an apex body to
coordinate, facilitate and provide quality assurance for Internal audit controls in government
ministries and agencies, while the PPA strengthened the public procurement institutions,
including the creation of a Public Procurement Board, aimed at reviewing procurement practices
within the public sector and at increasing accountability throughout the public sector\.
An indirect and intangible impact of the MDBS process has been the apparent strengthening of
the MoFEP which is responsible for overseeing the implementation of the MDBS/PRSC program\.
The Government led the development of the GPRS and a consequence of the MDBS process has
been a further increase in ownership by the Government and a shift to a greater emphasis on the
national budget process\. GoG officials state that the MDBS has led to a greater focus on
improving intra-government coordination and setting priorities\.xxviii As a consequence of the
greater focus on the budget process, the MoFEP has emerged as an increasingly important and
active institution and has reportedly found it easier to recruit and retain staff, thereby improving
the Ministry's capacity and capabilities over the course of PRSC 1-3\.xxix In addition, by
strengthening the links between the GPRS and the budgetary process, there has been a greater
involvement of key decision-makers in budget preparation, thereby strengthening the integration
of cross-sectoral issues\.
Although the capacity of the MOFEP has strengthened over the course of PRSC 1-3, it is less
certain that the capacity of key poverty-related ministries such as Health and Education have been
significantly improved\. The lack of progress on the public sector reform aspects of the PRSCs
means that the capacity of the Ghanaian civil services remains very weak\. This weakness may
negatively affect program implementation in subsequent PRSCs as the next phase of reforms will
be more capacity-intensive as greater efforts are spent on expanding and improving core services
and because of the significant debt reduction that has already occurred\.
(c) Other Unintended Outcomes and Impacts
During the PRSC 1-3, budget allocations to poverty-related programs increased fairly steadily,
rising from 4\.7 percent of GDP in 2002 to 8\.5 percent of a (larger) GDP in 2005\. Spending on
wages and salaries in both 2003 and 2004, however, ended up accounting for a larger-than-
anticipated share of poverty-related expenditures, thereby reducing the amounts available for non-
wage expenditures such as school textbooks and medical drugs which tend to be positively
correlated with the quality of service delivery\. The increase in spending on wages and salaries
was particularly pronounced in agriculture, primary health, and feeder roads programs, where the
increases exceeded the overall increase in spending on poverty-related expenditures, reflecting
delays in carrying out investments in these three programs\.xxx
4\. Assessment of Risk to Development Outcome
Rating:
PRSC-1 Moderate
PRSC-2 Moderate
PRSC-3 Moderate
Any assessment of development outcome is necessarily predicated on both the continuation of
sound macroeconomic polices to foster continued economic growth and sustained inflows of
external remittances and official transfers, particularly since domestic resources are insufficient to
finance the GPRS II\. Nonetheless, future sustainability is supported by the fact that
24
macroeconomic policy-making remains sound\.xxxi PRSC-3 took place in the fourth year of
economic expansion, and macroeconomic performance under PRSC-4 remained positive, with
estimated GDP growth of 6 percent; strong expansion in agriculture and mining; a decline in
twelve-month inflation from 14\.8 percent at end-2005 to 10\.5 percent in June 2006 (despite
significant upward adjustments of domestic petroleum prices); and further narrowing of the
external current account deficit resulting from new gold production, an increase in cocoa exports,
and continued strong remittance flows (which are estimated to increase to 17 percent of GDP in
2006, up from 15 percent in 2005)\. Moreover, the introduction of a petroleum pricing formula has
addressed what had been a perennial problem with substantial negative macroeconomic impacts
in Ghana i\.e\., the failure to implement timely petroleum price adjustments and the continued
use of this formula should help shore up future macroeconomic stability\.xxxii In addition, donor
commitment remains strong, which augurs well for continued flows of budgetary and other
assistance\.
In addition, the institutional creation and strengthening that occurred under the PRSCs will also
aid sustainability\. Many of the measures implemented under PRSC 1-3 have created structures
that will not easily be dismantled; for example the audit units, procurement board, and land
registries\. A number of legal actions for example, the FAA, the PPB and the IAA cannot be
easily reversed\. In addition, improvements in processes such as budget management and external
auditing are self-reinforcing and contribute to good outcomes\.
Finally, sustainability is supported by the Government's development of GPRS-II, including a
prioritized result matrix, an aid harmonization and effectiveness action plan, and a support
overview indicating actual and projected disbursements by DPs by sector and pillar\. This
indicates the GoG's commitment to moving forward with its poverty reduction agenda and
facilitates the alignment of future DP support with national strategies and the budget, thereby
aiding implementation and increasing the likelihood of continued positive progress\. In addition,
the strong involvement of civil society and other groups in the development of GPRS-II, and the
growing use of participatory M&E, makes sustained national commitment to the program more
likely\. Implementation of successor programmatic operations (PRSC 4-7), and continuation of
the MDBS framework in support of GPRS II, will help maintain the development outcomes
achieved under PRSC 1-3 by providing continued budget and other assistance\.
Notwithstanding these favorable influences, however, several factors remain that could pose a
risk to development outcomes\. These include: (i) the continued appreciation of the cedi (which
has increased about 20 percent in trade-weighted terms over the last two years) which would slow
export growth; (ii) remaining fiduciary weaknesses that might limit the impact of the program and
lead to only partial funding from Ghana's DPs; and (iii) as with any country with a narrow
economic base, substantial terms of trade shocks or reductions in remittances that could
undermine macroeconomic performance\. There are, however, mitigating factors that lessen the
likelihood of some these risks\. They include (i) the fact that the cedi has been recently
undervalued and the prospect of lower energy import bills in the near future once the investments
in the West African gas pipeline are completed; and (ii) continuing progress on strengthening the
PEM regulatory framework and budget management\. Finally, the risk of exogenous shocks is
offset by Ghana's track record of prudent economic management and the excellent relations it
maintains with the MDBS partners, providing access to emergency finance if needed (assuming
positive program progress)\.
More troubling, however, are the larger threats to sustainability stemming from the energy and
public sectors\. The energy sector remains problematic\. The introduction of a petroleum pricing
formula was a significant achievement, and similarly, recent initiatives to, inter alia, earmark
25
budget funds to compensate VRA for the differences in cost of generation and sale of power to
VALCO are addressing the quasi-fiscal deficits stemming delays in adjusting electricity tariffs
and continued sales of power at subsidized rates to VALCO\. Continued economic growth,
however is predicated on successfully addressing a myriad of energy sector issues; energy sector
reforms, however, have been a thorny issue for successive Governments since the 1990s, the
reforms that remain to be achieved are complex, and power shortages are expected to depress
GDP in 2007\.xxxiii Finally, while the GoG is addressing VALCO's deficits, the Government's
plans to undertake non-concessional borrowing raises questions about future debt sustainability\.
xxxiv
Sustainability is also threatened by the slow progress on public sector reforms under PRSC 1-3\.
The large size of the public sector continues to constrain economic expansion by limiting private
sector growth and reducing the scope for fiscal management\. Many health targets were missed,
and as noted above, the use of external assistance over 2003-05 to pay down debt and replenish
reserves did not test the public sector's ability to spend increased resources effectively, yet such
delivery is essential to ensuring that poverty is attacked comprehensively\. Moreover, economic
growth, although strong, is threatened by the large size of the wage bill, which is the fastest
growing expenditure item in the budget, and which increased significantly in the 2007 budget
statement\.xxxv High wages and salaries also absorb a large proportion of recurrent expenditures in
education and health, thereby reducing funds available for items such as textbooks,
pharmaceuticals, or clinics\.xxxvi Finally, reforms in both the public sector and in the energy area
will have to place in the context of the approaching 2008 election which is likely to slow progress
on politically difficult issues such as wages\.
The chief mitigating factors to these more substantive risks include the Government's
considerable commitment to moving forward with the GPRS-II, as discussed above, and the
effectiveness of the policy dialogue between the Government and its MDBS partners\. In
addition, PRSCs 4-7 continue to focus on cross-cutting issues such as public sector reform and
decentralization, and the Bank's Economic Management Capacity Building project (US$25 m\.
FY06-11) aims at improving the efficiency of public sector management and enhancing the
quality of service delivery\. Notwithstanding the efforts of the Bank and the other DPs to mitigate
these risks, however, realism requires an upfront recognition that reform progress is likely to slow
in the run-up to the 2008 elections\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating:
PRSC-1 Satisfactory
PRSC-2 Satisfactory
PRSC-3 Satisfactory
PRSC- 1: The overall objectives of the PRSCs were well aligned with Government's
development agenda, priorities, and policies, as set out in the GPRS and they became a central
element of the CAS\. As noted, lessons learned from past adjustment operations regarding the
need for government ownership were incorporated in the design of the PRSC program and risk
assessment and mitigating measures were appropriate\. Similarly noted above, in preparing
26
PRSC-1 the Bank built on substantial analytical work already available on the country\. In
preparing and supervising the credit, the Bank worked closely with the IMF and the DPs
participating in the MDBS, allowing the program to harmonize with -- rather than duplicate -- the
implementation of ongoing sector programs and projects\. Collaboration and joint support
between the IMF and Bank for implementation of the GPRS is evidenced through joint
assessments of the 2003 APR\. Credit disbursement procedures followed the Bank's disbursement
procedures for development policy credits\. Finally, the outcomes of PRSC-1 were sustained
through the development and implementation of subsequent operations (PRSC-2 and PRSC-3)\.
PRSC-2: Overall, Bank performance was satisfactory during credit preparation and appraisal\.
PRSC-2 was prepared in parallel and in close coordination with IMF's PRGF, following the
agreed institutional division of labor with the IMF taking the lead on macro-economic sector
issues, and the macroeconomic impact of issues such as public sector reform, while the Bank took
the lead on structural and social issues\. Collaboration and joint support for the implementation of
the PRSC is evidenced through the joint assessment of the 2004 APR, the 2004 HIPC
Expenditure Tracking Assessment and Action Plan, and the mid-2004 assessment of progress
toward the completion point under the Enhanced HIPC Initiative\. In the number of areas where
the mandates of the two institutions overlapped, such as energy sector reforms, the work was
coordinated to ensure that consistent advice was provided to the Borrower\.
PRSC-2 also further deepened the harmonization of donor practices\. In the run up to the
preparation of the program, development partners carried out two joint missions (June and
September 2003) that were important first steps in aligning mission schedules and advancing
agreements on policy actions and on the timing of future assessment reviews\. These efforts led to
a better alignment of programs for 2004, with an almost complete overlap between key policy
actions agreed under the MDBS 2004 and those envisioned under PRSC-2\. The objectives of the
PRSC-2 were also well aligned with Government's development agenda, priorities and policies,
as set out in the GPRS\. Lessons learned from the implementation of the PRSC-1 primarily, the
need for closer coordination with the DPsxxxvii -- were incorporated in the design of the PRSC-2,
allowing the PRSC-2 to draw from work on poverty and social analysis, as well as from country
economic and fiduciary work completed earlier\. Finally, the outcomes of PRSC-2 were sustained
through the development and implementation of subsequent operations (PRSC-3)\.
PRSC-3: The appraisal mission for PRSC-3 was carried out during the joint 2004
supervisory missions which were again conducted in close coordination with the MDBS
partners\. (Under the MDBS framework, a minimum of two review and appraisal missions
must take place each year)\. This joint work further deepened the cooperation among the
DPs, thereby ensuring agreements on policy actions and the timing of future assessment
reviews, and producing a strong alignment of programs for 2005 and 2006\. Finally, the
outcomes of PRSC-3 were sustained through the development and implementation of the
subsequent operation (PRSC 4)\.
(b) Quality of Supervision
Rating
PRSC-1 Satisfactory
PRSC-2 Satisfactory
PRSC-3 Satisfactory
27
PRSC-1: Supervision of progress against the 2003 triggers was conducted through a joint
MDBS/PRSC mission by the Bank and other DPs\. Supervision was thorough, and in fact could
not be cursory owing to the nature of the MDBS framework and the number of donors\.
Supervisory missions contained an appropriate mixture of expertise in the areas of
macroeconomics, health, agriculture, financial management, natural resources, operations,
procurement, and education\. Macroeconomic supervision was exercised through the IMF's
PRGF program (approved May 2003) and the IMF Resident Representative in Accra\.
PRSC-2: Supervision of the credit occurred through joint MDBS/PRSC missions which
included observers from the US, French, and Japanese development agencies, as well as
representatives from multilateral agencies such as UNDP and WHO, as well as a Bank mission\.
Bank supervision was therefore aligned with the activities of other donors, focusing on the year-
long verification process that monitored implementation of the policies supported by the
PRSC/MDBS and identified how to best measure the completion of the agreed policy actions\.
Supervisory missions also contained an appropriate mixture of personnel relevant to the policy
areas of PRSC-2\. Program implementation was also monitored through a series of standardized
reports produced at pre-defined intervals; these reporting requirements were established as part of
the MDBS framework and improved the Bank supervisory capabilities during PRSC-2 and
subsequent operations (see Box 3 below)\. Finally, macroeconomic supervision was exercised
through the IMF's three-year PRGF) and the IMF Resident Representative\.
Box 3: GoG Reporting Under the PRSC/MDBS
1\. Quarterly reports on macro-economic developments to assess progress on the implementation of the framework
agreed between the Government, the IMF and the World Bank, with a lag of no more than 8 weeks after the end of
each quarter\.
2\. Quarterly reports on budget expenditures with breakdown by Ministry, Department and Agency with a lag of no
more than 8 weeks after the end of each quarter\. These reports will also present the breakdown for Items 1-4 of the
Ghanaian budget\.
3\. Quarterly reports on domestically financed poverty-related expenditures (including HIPC-financed expenditures),
with a lag of no more than 8 weeks after the end of each quarter\. These reports would include a breakdown along main
poverty-related expenditure programs (education, health, etc\.) and a breakdown for Items 1-4 of the Ghanaian budget
(personnel, administration, services, investment)
4\. A joint Aide-Memoire from the Review and Appraisal sessions reporting on the Progress Assessment Framework
and triggers/targets (completed by the GoG with its DPs)
5\. Selected-flows audit (in advance of the first review and appraisal session)\.
6\. Annual report (not later than March) on progress on the implementation of the GPRS\.
PRSC-3: Bank supervision was aligned with the activities of other donors, focusing on the year-
long verification process that monitors implementation of the policies supported by the
PRSC/MDBS and identified how to best measure the completion of the agreed policy actions\.
Supervisory missions again contained an appropriate mixture of personnel relevant to the policy
areas of PRSC-3\. As with PRSC-2, program implementation was also monitored through a series
of standardized reports produced at pre-defined intervals, and macroeconomic supervision was
exercised through the IMF's PRGF and the IMF Resident Representative\.
During the joint MDBS-/PRSC review mission from April-June 2005, the GoG agreed that only
four of the six subsets formulated in the 2005 Technical Annex to the MDBS-Framework
Memorandum had been fully achieved\. The Bank nevertheless felt that there was sufficient
progress in all the actions envisioned under the PRSC-3 policy matrix, although the bilateral DPs
and the EC decided to release only two-thirds of their performance tranche\.xxxviii This action by
the Bank reflected flexibility, in that decisions about tranche release were based on overall
28
progress, rather than exact compliance with specific trigger indicators, in cases where mitigating
circumstances existed\.
(c) Justification of Rating for Overall Bank Performance
As Bank performance for both quality at entry and supervision was rated satisfactory, overall
Bank performance is rated satisfactory in accordance with the ICRR harmonized evaluation
criteria guidelines\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
PRSC-1: Overall Borrower performance was also satisfactory\. The joint Bank-IMF staff
assessment of the GPRS had already underscored the soundness of the GPRS framework for
implementing the Government's poverty reduction agenda\. Areas that received particular
mention included: (i) the commitment to ensuring macroeconomic stability, as a necessary
condition for accelerated growth and poverty reduction; (ii) the understanding of the need to
remove obstacles in the access by the poor to basic human services (education, health, social
protection); and (iii) the attention given by the authorities to the significance of improving
transparency and accountability of public institutions, including the upgrading of public financial
management\. While some of the other areas of the reform program were less well developed,
including private sector development and public sector reform, actions under the program
supported by the PRSCs aimed at elaborating these elements of the program in a timely fashion\.
PRSC-2: Overall Borrower performance was satisfactory\. Macroeconomic stabilization was
maintained and considerable progress was achieved in implementing the GPRS and its broad
range of sectoral strategies\. In particular, the Borrower set a historical precedent in maintaining
sustained growth and a broadly stable macroeconomic environment during an election year\.
Public financial management was improved through several actions: (i) new legislation for
financial administration, internal auditing, and procurement; (ii) practices that helped minimize
the risk of budget slippages and accumulation of arrears; (iii) the prompt reconciliation of
budgetary and banking accounts; (iv) the increase of frequency and timeliness of reporting on
budget execution; and (v) the control of proper use of public resources\. To ensure the efficient
use of public funds, as well as greater transparency and accountability, the Public Procurement
Institutions were established after the Procurement Act was signed into law in December 2003\.
Also, Ghana maintained a favorable ranking in Transparency's International Corruption
Perception Index, behind only Mauritius, Botswana, and Namibia\. To encourage private sector
competitiveness, the Government introduced various initiatives to reduce the cost of doing
business in the country, including the installation of automated clearance procedures at the Tema
and Takoradi seaports, and the steps to reduce the time of registering businesses\. It was in this
context that Ghana reached the completion point of the Enhanced HIPC Initiative in July 2004\.
Funding from HIPC relief amounted to 866 billion cedis, with around 20 percent of the resources
used to pay down domestic debt, while the remaining resources were allocated to programs and
projects for the medium-term priority areas outlined in the GPRS, particularly in the areas
perceived to have greater impact on the poor\. These action and activities undertaken by the
29
Government underscored the country's commitment to the tenets and aspirations of the GPRS
with regard to growth and poverty reduction\.
PRSC-3: Government performance continued to be broadly satisfactory\. Domestic debt
reduction was substantial and economic growth continued to be strong\. Introduction of a
petroleum pricing formula addressed what had been a longstanding weakness in the Ghanaian
macroeconomic environment\. Government officials have acknowledged that the greater
ownership fostered by the MDBS framework has sharpened their focus on setting priorities and
on strengthening intra-government coordination\. Similarly, Government officials have noted that
the need to identify policy targets and monitor outcomes, while working with external
stakeholders, has increased their commitment to reform design and implementation\.xxxix
Government relations with the MDBS partners continue to be excellent, setting the stage for
subsequent operations\.
(b) Implementing Agency or Agencies Performance
The Ministry of Economy and Finance was fully responsible for implementing the PRSCs
programs\.
(c) Justification of Rating for Overall Borrower Performance
Rating:
PRSC-1 Satisfactory
PRSC-2 Satisfactory
PRSC-3 Satisfactory
Government performance is rated satisfactory in accordance with the following criteria (as
identified in the ICRR guidelines): Government ownership and commitment to achieving the
development objectives was strong; stakeholders and civil society were consulted at the
beginning of the GPRS development and this consultation has strengthened over the period
covered by PRSC 1-3; fiduciary requirements were met satisfactorily; the relationships and
coordination with the Bank and other donors through the MDBS were excellent throughout; and
appropriate and supportive enabling environment reforms were largely adopted, albeit sometimes
with delays\. In addition, M&E capacity improved over the course of the operations and M&E
data were beginning to be incorporated into decision-making (in the context of the budget) by the
end of this series of operations\. Finally, the GPRS II built on the lessons learned during the
implementation of GPRS I and provides a comprehensive framework for growth and poverty
reduction and transition to the next series of operations (PRSC 4-7)\.
6\. Lessons Learned
There are a number of lessons to be learned from this series of operations\. They relate to the
impact of the MDBS/PRSC framework on the Government, its institutions, and the Government's
reform progress; the operation, management, benefits, and weaknesses of the MDBS/PRSC
framework; and, more generally, to the design of operations to support poverty reduction\.
The lessons relating to the impact of the MDBS/PRSC on the Government include:
1\. There was a clear impact on Government ownership of the reform program\. The Bank's
decision to support country-led reforms through the PRSCs, rather than through structural
30
adjustment or other mechanisms, proved effective because it encouraged the GoG to
"step up" to provide leadership and accountability under PRSC-1\. Subsequently,
improved donor harmonization and the strengthened predictability of considerable
budgetary support -- combined with sizeable debt relief -- raised the stakes still further
and fostered improved decision-making by the Government at various levels\. The result
has been improved Government coordination in budget preparation, with strengthened
integration of cross-sectoral issues and institutional strengthening of the MoFEP\.
2\. The increased harmonization among the DPs under the MDBS framework contributed to
the successful implementation of PRSC 1-3 and thus had high returns for the GoG\.
These returns are reflected in higher and timely disbursements of budgetary support that
were well aligned with the budgetary calendar and predictable in their disbursement\.xl
This harmonization also appears to have resulted in reduced transaction costs for the GoG
in dealing with donors owing to the reduction in the number of visiting missions and
reporting requirements\.xli Additional benefits include greater knowledge dissemination
among the DPs and strengthened policy dialogue on cross-cutting strategic objectives,
resulting in better project design\.
3\. The PRSCs also -- by enabling Government ownership of the reform program and by not
relying on prescriptive means to reach the outcomes agreed to by the DPs and the GoG --
gave the Government greater flexibility and opportunity to experiment with different
approaches\. For example, the use of capitation grants to reach the non-prescriptive
benchmark to increase national GPER from 80 percent to 88\.5 percent -- was a GoG-
driven approach which succeeded quickly and beyond expectations\. This success then
enabled a focus on additional and related areas such as improving pupil:textbook ratios
and the recruitment of teachers for deprived areas\. It is conceivable that without this
flexibility the Government may have been less willing to experiment with new
approaches\.
4\. As a way to induce reform, the MDBS framework has an important advantage over a
conditionality-based mechanism\. Conditionality-based lending pits those favoring
reform against those opposing it, and enables the non-reformers to assert that the
reformers are implementing changes because donors are telling them to do so\. Use of the
MDBS, however, enables a government to develop a framework and build support for
reforms that are manageable and domestically acceptable\. As a result, progress on
politically difficult reforms may be slower, but the resultant reforms are also likely to be
more sustainable than donor-driven ones\.
The lessons learned from the operation and management of the MDBS/PRSC framework
included:
1\. While the MDBS simplifies a government's interactions with donors, it is not a simple
process to manage\. Multiple donors operating through a single framework means that
multiple interests, priorities, and perspectives have to be accommodated and reconciled\.
This can result as happened with the PRSC 1-3 in a complex performance matrix with
multiple benchmarks that represents a compromise between the various DPs and the
Government and reflects a variety of objectives\. The balance of power within the MDBS
is uneven, as donors have unequal weights depending on the amount of resources they are
providing, but as all the DPs are IDA contributors, the Bank must work to achieve
compromise among the partners\. Finally, the multiplicity of donors also means that it is
difficult to reconcile different evaluations of Government performance and whether prior
31
actions have or have not been met\. As a result of these factors, the MDBS probably
results in higher transaction costs for the Bank because managing these diverse interests
and perspectives is highly staff - and time-intensive\. Moreover; these transaction costs
are probably larger in a high profile country such as Ghana\. As such, these transactions
costs are probably unavoidable but should be acknowledged as a public good provided by
the Bank on behalf of its members\.
2\. Another consequence is the difficulty of ensuring that the selection of benchmarks does
not lead to a performance matrix that is reduced to a least common denominator grouping
of actions on which every DP can agree\. The Bank's preferred approach to this challenge
was to base the performance matrix on the Government's annual budget statement
because such statements are typically ambitious, thereby setting higher standards for the
Government to meet and ensuring that the prior actions and triggers are not too "soft\." In
addition, this approach ensures Government ownership, as well as accountability to civil
society, thereby addressing a key weakness of structural adjustment lending\. This
approach is not without weaknesses, however, and was not universally accepted by all
donors, as many important reforms are not reflected in a budget statement (e\.g\., BPEMS
establishment)\. While a key advantage of the MDBS is the fact that much of the dialogue
towards establishing appropriate benchmarks can take place between donors, rather than
between the donors and the government, the MDBS does not eliminate this tension over
what are appropriate triggers\. In addition, the need to identify targets on which all parties
can agree can lead to an excessive focus on the targets themselves, rather than on broader
policy issues\.xlii
3\. In addition to the differences over what are appropriate triggers, there is also an inherent
tension within a MDBS over whether the respective triggers have been satisfied\. Some
DPs will press for stricter interpretations to ensure that the Government's commitment is
not slackening, while others will be more flexible, focusing on the overall progress that
has been made rather than whether an individual trigger had been completed in letter and
spirit\.xliii These differences in interpretation will cause tension between the DPs
themselves and between the DPs and the Government\. All of these approaches have
implications for future reform efforts\. For example, if DPs are less flexible in
interpreting whether triggers have been met, Governments may suggest less ambitious
triggers in the future, making them easier to meet, but undermining overall pace of
reform\. Similarly, rolling an incomplete prior action into the next PRSC may ensure that
dialogue is continued, while simply rewording a prior action to declare that is achieved
may not be as effective\.
4\. There is a learning curve associated with the MDBS, and donors should be realistic about
what can be achieved under the first year of its operation\. The establishment and use of
the MDBS is an inherently evolving process, particularly in terms of dialogue with the
Government, identifying key priorities, and developing trust between the Government
and the DPs\. The Ministry of Finance must transition to a new role with a focus on
overseeing developments in a variety of sectors across the entire poverty reduction
program, rather than monitoring implementation of specific conditionalities for tranche
release\. This broader focus requires more sector skills and better communication
between Government ministries; these are not easily developed, and as a consequence,
implementation of the first operation of a MDBS is unlikely to be entirely smooth\.
5\. Similarly, the complexity of initial program design and multiple and complex
benchmarks may be an inevitable outcome of reconciling the divergent interests of
32
multiple donors\. Simplification of program design is facilitated, however, once a quality
partnership is consolidated and expanded, and trust between the Government and its DPs
becomes stronger\.
6\. Use of a PRSC framework is a step away from the more traditional conditionality-based
project lending process to one that is linked to a program as whole\. Accordingly, it
requires a higher level of trust by donors in the policies, implementational capacity, and
good faith of the government being assisted, xliv and therefore may not be appropriate for
all borrowers\. On the other hand, given the greater government ownership that can be
fostered under the PRSC mechanism, there may be a greater likelihood of
implementation than there would be under a conditionality-based approach\.
7\. A MDBS may not be suitable for all countries because the provision of budget-based
assistance requires that adequate public expenditure management practices and fiduciary
safeguards are in place\. Concomitantly, a MDBS may not work as effectively in
countries lacking a reasonably well qualified and capable cadre of government officials\.
8\. The use of a MDBS is also not without risk because once the first set of prior actions is
met, continued reform implementation is uncertain\. To a great extent, PRSC 1
constituted a "leap of faith" by Bank management and staff regarding the GoG's
commitment to poverty reform\. By contrast, however, undertaking such risk may well be
warranted, particularly as was the case in Ghana the two previous conditionality-
based lending programs (ERSO II and III) achieved only limited success\.
9\. While achieving consensus among donors may be more difficult to achieve under the
MDBS, there are considerable benefits to donors in terms of their ability to move the
development agenda forward\. When donors are dispersed and acting individually,
governments have greater leeway to be selective about which reforms they will pursue,
and the influence of any single donor is reduced because the assistance that can be
provided by an individual donor is smaller\. By contrast, when the resources of donors are
combined, Governments have greater incentive to proceed with reforms\. This greater
incentive combined with greater ownership of the reform program can create
sustainable reform momentum\. Nonetheless, there continue to be limitations as to how
much reform can be achieved in politically difficult areas\. While the Bank and DPs
worked hard to achieve greater reform in the energy and public sectors, reform progress
was slow\. Finally, reform progress will slow down (as in developed countries) in the
period preceding an election, and the Bank and DPs will have to build this realism into
the performance assessment framework\.
10\. Although the Bank and a Government may see the MDBS as an improvement over
donor-led, conditionality-based, structural adjustment lending, this perspective is not
always shared by the NGO community\. A number of NGOs in Ghana view benchmarks
and prior actions as implied conditionality ("structural adjustment by other means")\. As
a consequence, this perception means extensive consultation with NGOs will still be
needed\.
11\. Finally, since a MDBS is closely linked to a program, rather than to a specific sector or
project, the comprehensiveness and efficacy of program design will play a critical role in
the subsequent success of any Bank operations linked to a MDBS\. This, in turn, places a
greater emphasis on the need for up-front joint staff assessments that are thorough,
33
constructive, and candid when examining the design, proposed modes of implementation,
and potential constraints and obstacles of programs such as Preps\.
Finally, the poverty reduction lessons to be learned from these operations are:
1\. Poverty is a multi-faceted phenomenon\. Any poverty-focused program design must to
be successful incorporate cross-cutting interventions from the start that include well-
coordinated interventions in sectors that are closely linked (e\.g\., health and water, or
health and nutrition, public sector reform and health, etc\.)\. The poor outcomes achieved
in a number of health indicators under PRSC 1-3 indicate that a tighter cross-cutting
focus is probably necessary to achieve key poverty outcomes, particularly in deprived
distressed regions\.
2\. High degrees of Government ownership of the reform program will translate into
satisfactory implementation of the country's poverty reduction strategy\. Throughout
PRSC 1-3, the Government increasingly assumed more and more leadership and initiative
in the dialogue to define the content and focus of the policy matrix\. As a result, the
process of formulating the development agenda has now been fully internalized by the
Ghanaian Government, thereby increasing the likelihood of its implementation\. Since the
overriding objective of the PRSC is to improve human development indicators, the
usefulness of the PRSC in fostering this necessary government ownership is a positive
outcome\.
34
Annex 1: Policy Matrix: Policy Objectives, Expected Outcomes, and Actual
Outcomes under PRSC 1-3
Policy Objective Expected Outcome Actual Outcome
I\. Promoting Growth, Income and Employment
A\. Increasing scope for financing development (private sector credit and budget allocation)
A1 Create a more diversified Long-term investment increased 2003: Gross Investment/GDP 22\.9%:
financial sector and improve 2005: Gross Investment/GDP 29\.9%
access to financial service
Savings to GDP increased 2003: Gross national savings/GDP
20\.7%
2005: Gross national savings/GDP
Credit to the private sector as a share 22\.8%
of domestic credit increased*
End-2002: 44% allocated to the
private sector
End-2005: 55% allocated to the
private sector
B\. Improving the environment for business while protecting the poor
B1\. Expand supply of energy Subsidies reduced: VRA operating loss is 300 billion
services while protecting the 2002 (actual): 450 billion cedis* (unedited) at end-2005
poor
System losses reduced:* 2005: System losses: 25\.5%
2002 (actual) 26%
2005 (planned) 18%
B\.2 Enhance private sector Exports increased* NA (Indicator eliminated under
competitiveness PRSC-2)
Non-traditional exports increased
2003: US$2\.471 million
2005: US$2\.802 million
Time required to register a business
reduced* 2002: 129 days
2005: 81 days
Clearance times at customs reduced* Installation of automated customs
procedures at seaports reduced
number of clearance steps from 11 to
3
Number of consignments subjected to
physical examination at Customs
reduced* N/A
C\. Improving performance of rural sector in interest of rural poor
C\.1 Improve rural sector farm Real per capita food production N/A
and non-farm growth increases 2 percent annually*
C\.2 Improve management of Forest cover expanded from 20,000 81,000 ha\. by end-2005
natural resources hectares in 2002 to 80,000 hectares by
end-2007
II Improving Service Delivery for Human Development
A\. Education
A\.1 Increase access, completion, From 2001 to 2005, national GPER 2004/05: 87\.5%
and quality in basic education, increased from 80% to 88\.5%, *
particularly in 3 most deprived
regions (Northern, Upper East,
and Upper West
In the 3 most deprived regions:
35
Northern 62% to 70% 2004/05: 72\.7%
Upper East 70% to 79% 2004/05: 80\.5%
Upper West 56% to 73%* 2004/05: 77\.3%
From 2002 to 2005, girls GPER 2004/05: 84\.5%
increased from 76% to 88\.5%*
From 2002 to 2005, primary N/A, but primary completion rates are
completion rate increased from 66% expected to reach 100% by 2012, 3
to 74% years ahead of target date
2005:
Primary pupil: teacher ratio in 3 most Northern: 35\.1
deprived regions improved 2002-05* Upper East: 45\.1
Northern: 35:1 (maintained) Upper West: 35\.1
Upper East: 51:1 to 45:1
Upper West: 38\.7: to 37:1
For 2005/06 school year :
Pupil:textbook ratio improved in three
most deprived regions from 2001/02 -Northern: 1\.3\.
to 2005* -Upper East: 1:3\.
-Northern 1:1:3 to 1:3 -Upper West: 1:3
-Upper East: 1:1\.4 to 1\.3
-Upper West: 1:1\.9 to l\.3
A\. 2 Improve efficiency and Proportion of non-salary budget 2005: 20% (achieved in 53
equity of financing education to 40 deprived Districts increased deprived districts, not 40, owing
with attention to greater poverty from 16% in 2002 to 17% in 2005 to the increase in the number of
impact districts in the same area)
Actual non-salary expenditures as 2005: 24%
share of actual total expenditures
in the education sector increased:*
2002: 22\.9
2005: 24\.5%
Actual non-salary expenditure as 2005: 5\.4%
a share of total discretionary
budget increased*
2002: 5\.2%
2005: 5\.5%
B\. Health
B\.1 Bridge equity gaps in access Ratio of population per nurse in the 1,450:1 mid-2005
to quality health care four deprived regions decreased from
2,000:1 in 2002 to 1,500 in 2005
Ratio of population per doctor in the 9,170 by mid-2005
four deprived regions decreased from
20,000:1 in 2002 to 16,500 in 2005
B\.2 Ensure sustainable financing Percent of budget allocations for N/A
arrangements that protect the goods, services and investment (items
poor 2, 3, and 4 in the budget) to deprived
districts increased
2004: 54% nationally, with marked
Supervised maternal deliveries in increased in deprived regions
targeted areas (4 regions) increased
from 49% in 2002 to 55% in 2006*
National Health Insurance Scheme
Fiscally sustainable National Health implemented 2005; covers 17\.9% of
Insurance scheme that protects the population
36
poor
N/A
Outpatient visits per capita in
deprived regions increased from 0\.48
in 2002 to 0\.6 in 2006\.
C\. HIV/AIDS
C\.1 Reduce the spread of the Prevalence of HIV among pregnant 2005: 3\.1% (2006: 2\.9%)
HIV/AIDS epidemic women retained below 5% in 2005
(3\.6% in 2001)*
D\. Social Protection
D\.1 Implement special programs Targeting of resources for vulnerable - National Youth Employment
to support the vulnerable and the groups improved* Strategy approved\. Social protection
excluded strategy prepared & integrated into
GPRS II\.
- Social Welfare services provided to
women & children who are victims
of violence & those with AIDS
E\. Water and Sanitation
E\. 1 Increased access to safe Access to safe water increased to 55 2003: 46\.4% with access to safe
sustainable water and sanitation percent and sanitation to 28 percent water
coverage for rural and small by 2006 2004: 51\.7% of rural population with
town populations access to safe water
Sector investment increased Investment in water facilities declined
in 2005, after improving in 2004
Sector planning and coordination Medium-term implementation plan
improved for rural water to be completed (under
PRSC-4)
III Improving Governance and Public Sector Management
A\. Building a democratic, inclusive, and decentralized state
A\.1 Improved governance and Legal and institutional framework to Whistleblower and Freedom of
public accountability reduce fraud and combat corruption Information Acts passed
strengthened
A\.2 Implement framework for Service delivery at the local level Service delivery remains problematic
decentralized delivery of local improved
public services
B\. Improving performance of the public sector
B\.1 Implement refocused public Service delivery at national and local Service delivery remains problematic
sector reform levels improved
Credible baseline payroll data New payroll database established
established (PRSC-5)
C\. Strengthening public expenditure management
C\.1 Modernize PEM regulatory Compliance with generally accepted By end-2005 Ghana met 8 out of 16
framework public finance standards increased* HIPC public expenditure benchmarks,
up from 7 in 2004 and 1 in 2001
Completeness of budget and financial Comprehensiveness of budget
statements for the Consolidated Fund statement increased, with 50% of
improved* public funds presented in the budget
statement
37
Capacity in the area of PFM
strengthened* 2006 PEFA assessment confirms that
PFM system has improved since 2004
C\.2 Strengthen budget Compliance with generally accepted FAA & FAR provide legal framework
formulation public finance standards increased* for public resource management &
provide basis for additional capacity
building
Budget strategic policy priorities
aligned with GPRS* Begun in 2005
C\.3 Strengthen budget execution Control to reduce fiduciary risks Financial Administration Act passed;
and reporting improved and improvement of budget implementation of internal audit units
outcomes supported* in key MDAs ongoing under PRSC 4-
5
Value for money and quality of public
spending improved* Public Procurement Act passed\.
Tender Review Boards established;
standard bidding documents prepared;
& number of tenders advertised in
Expenditure management made more press increased
transparent and accountable*
2005 Appropriations Act shows
allocations of internally generated
funds, increasing transparency
Scope for waste and irregularity in the
execution of public expenditures
reduced* Internal Audit Agency Act passed;
implementation of internal audit units
in key MDAs ongoing under PRSC 4-
Compliance with legal regulations 5
ensured*
FAA & FAR provided strong legal
framework for PFM
Quality and timeliness of external
audit strengthened* Annual report by Accountant General
submitted to Parliament within less
than 12 months of account closing
Transparency improved and public
awareness of Government operations 2006 PEFA assessment shows that
raised* budget transparency has increased
since 2004\. More timely completion
of accounts and submission of audit
reports to Parliament, which is more
actively scrutinizing both budget and
accounts\.
D\. Strengthening the capacity to M&E of Government activities M&E plan implemented\. APRs begin
monitor and evaluate the policy improved* in 2003\.
agenda
2003 & 2004 APRs submitted to
Closer Parliamentary scrutiny of Parliament in 2004
performance under the GPRS*
Preliminary GLSS5 data due
Comprehensiveness of poverty data December 2006\. Core Welfare
improved* indicators Questionnaire published\.
Five PSIAs completed\.
Ongoing
Efficiency of policy interventions
improved*
38
Annex 2: Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
P083246 - GH: PRSC I
Responsibility/
Names Title Unit
Specialty
Lending
Marcelo Andrade Sr\. Country Economist AFTH2
Benoit Millot Lead Education Specialist AFTH2
Laura L\. Rose Health Economist AFTH2
Eunice Yaa Brimfah Dapaah Education Sector Specialist\. AFTH2
Evelyn Awittor Operation Officer AFTH2
Eileen Murray Sr\. Operation Officer AFTP4
Guenter Heidenhof Lead Public Sector Specialist AFTPR
Yongmei Zhou Sr\. Economist AFTPR
Emmabel Hammond Team Assistant AFCW1
Smile Kwawukume Senior Public Sector Specialist AFTPR
Jan Walliser Sr\. Economist AFTP4
B\. Boubacar-Sidi Economist AFTP4
Danial Boakye Economist AFTP4
Mangesh Hoskote Sr\. Economist (Health) AFTEG
Sarah Keener Sr\. Social Development Specialist SDV
Mbuba Mbunga Sr\. Procurement Specialist AFTPC
Michael Wong Sr\. Private Sector Dev\. Specialist AFTPS
Kofi-Boateng Agyen Sr\. Operations Officer AFTPS
Solomon Bekure AFTR2
Patience Mensah Agricultural Economist AFTR2
Edward Dwumfour Sr\. Natural Resource Management Spec\. AFTR2
Margo Thomas Sr\. Operation Officer IFC
Gert Van Der Linde Lead Management Financial Specialist AFTFM
Iradj Talai Manager Financial Management AFTFM
Irene Xenakis Operation Adviser AFRVP
David Webber Lead Financial Officer LOAG
Ayman Adu-Haija LOAG
Karen Hudes Sr\. Counsel LEGAF
Supervision
P083246 - GH: PRSC II
Responsibility/
Names Title Unit
Specialty
Lending
Carlos Cavalcanti Sr\. Country Economist AFTP4
Benoit Millot Lead Education Specialist SASHD
Laura L\. Rose Sr\. Economist (Health) AFTH2
Kofi-Boateng Agyen Sr\. Operations Officer\. AFTPS
Marcelo R\. Andrade Sr\. Country Economist AFTP4
Evelyn Awittor Operations Officer AFTH2
Marta Berhane Language Program Assistant AFTP4
Yongmei Zhou Sr\. Economist AFTPR
Smile Kwawukume Senior Public Sector Specialist AFTPR
39
Simplice Zouhon-Bi Consultant AFTP4
Donald O'Leary AFTEG
Richard Senou AFTEG
Subramaniam Iyer Lead Financial Analyst AFTEG
Daniel Kwabena Boakye Economist AFTP4
Eunice Yaa Brimfah Dapaah Education Spec\. AFTH2
Edward Felix Dwumfour Sr\. Natural Resources Mgmt\. Specialist AFTS4
Emmabel Hammond Team Assistant AFCW1
Anthony Thompson AFTFS
Papa Thiam Sr\. Private Sector Development Spec\. AFTPS
Mbuba Mbungu Sr\. Procurement Specialist AFTPC
Sarah Keener Sr\. Social Development Spec\. AFTFS
Philip Brynnum Jespersen Program Officer AFCW1
Gert Van Der Linde Sr\. Financial Management Spec\. AFTFM
Edward Dwumfour Sr\. Natural Resources Mgmt\. Specialist AFTS4
Irene Xenakis Operations Adviser AFTOS
Smile Kwawukume Senior Public Sector Specialist AFTPR
Patience Mensah Sr\. Agric\. Economist AFTS4
Karen Hudes Sr\. Counsel LEGAF
Ayman Adu-Haija LOAG1
Arthur Majoribanks Swatson Water & Sanitation Specialist AFTU2
Supervision
P078619 GH: PRSC III
Responsibility/
Names Title Unit
Specialty
Lending
Carlos Cavalcanti Sr\. Country Economist AFTP4
Gayatri Acharya Sr\. Economist AFST4
Koffi-Baoteng Agyen Sr\. Operations Officer AFTPS
Ferdinand Tsri Apronti Procurement Spec\. AFTPC
Armarquaye Armar Lead Energy Specialist ETWEN
Benoit Millot Lead Education Specialist SASHD
Laura L\. Rose Sr\. Economist (Health) AFTH2
Eunice Yaa Brimfah Dapaah Education Spec\. AFTH2
Evelyn Awittor Operations Officer AFTH2
Marta Berhane Language Program Assistant AFTP4
Edward Felix Dwumfour Sr\. Nat\. Resources Mgmt\. Spec\. AFTS4
Eileen Murray Sr\. Operation Officer AFTH2
Vivek Srivasta Sr\. Public Sector Spec\. AFTP4
Smile Kwawukume Sr\. Public Sector Specialist AFTPR
Marcel Andrade Sr\. Country Economist AFTP4
Daniel Kwabena Boakye Economist AFTP4
Simplice Zouhon-Bi Consultant AFTP4
Sona Varma Sr\. Economist PRMDE
Tala Khartabill PRMDE
Donald O'Leary AFTEG
Richard Senou AFTEG
Subramaniam V\. Iyer Sector Manager, Energy AFTEG
40
Philip Brynnum Jespersen Program Officer AFCW1
Mbula Mbungu Sr\. Procurement Specialist AFTPC
Papa Thiam Sr\. Private Sector Development Spec\. AFTPS
Kofi-Boateng Agyen Sr\. Operations Officer AFTPS
Anthony Thompson Sector Manager AFTS
C\. Juan Costain Lead Financial Sector Specialist AFTS
Patience Mensah Agricultural Economist AFTS4
Edward Dwumfour Sr\. Natural Resources Mgmt\. Specialist AFTS4
Arthur Majoribanks Swatson Water & Sanitation Spec\. AFTU2
Frederick Yankey Sr\. Financial Management Spec\. AFTFM
Gert Van Der Linde Sr\. Financial Management Spec\. AFTFM
Irene Xenakis Operations Adviser AFTOS
Agnes Albert-Loth Sr\. Financial Officer LOAG2
Wolfgan Chabad Finance Officer LOAG2
Manush Hristov Counsel LEGAF
Supervision
(b) Staff Time and Cost
P076808 - GH: PRSC I
Staff Time and Cost (Bank Budget Only)
Stage USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY02 70\.95
FY03 368\.34
FY04 0\.00
FY05 0\.00
Total: 439\.29
Supervision
FY02 0\.00
FY03 0\.00
FY04 83\.59
FY05 4\.37
Total: 87\.96
P083246 - GH: PRSC II
Staff Time and Cost (Bank Budget Only)
Stage USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY04 375\.37
FY05 9\.84
FY06 0\.00
Total: 385\.21
Supervision
41
FY04 0\.00
FY05 119\.71
FY06 18\.71
Total: 138\.42
P078619 GH: PRSC III
Staff Time and Cost (Bank Budget Only)
Stage USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY05 28 179\.27
FY06 23 101\.72
FY07 0\.00
Total: 51 280\.99
Supervision
FY05 0\.00
FY06 2 12\.84
FY07 23\.70
Total: 2 36\.54
42
Annex 3: Beneficiary Survey Results
N/A
43
Annex 4: Stakeholder Workshop Report and Results
N/A
44
Annex 5: Summary of Borrower's ICR and/or Comments on Draft ICR
The Borrower reviewed the draft ICRR and was in full agreement with the findings,
adding that the document reflected their views and experiences with the implementation
of this first PRSC series\.
45
Annex 6: Comments of Cofinanciers and Other Partners/Stakeholders
N/A
46
Annex 7: List of Supporting Documents
1\. Program Document, [June 27th, 2005]
2\. Letter of Development Policy, [June 28th, 2005]
3\. Tranche Release Document, [August 30th, 2005]
World Bank Documents
PRSC-1
Memorandum for Regional Operations Committee (ROC) Review Meeting, "Ghana: Poverty
Reduction Strategy Credit (PRSC)," April 1, 2003\.
Agreed Minute of Negotiations, First Poverty Reduction Support Credit (PRSC 1), May 21-22,
2003\.
Program Document, "Ghana: Poverty Reduction Support Credit and Grant," (Report No\. 25995-
GH), May 29, 2003\.
Project Status Report, PRSC-1, December 3, 2003\.
Country Assistance Strategy, Republic of Ghana (Report No\. 27838-GH), February 20, 2004\.
Implementation Completion Report, "Ghana: Poverty Reduction Support Credit (1)," (Report
No: 30896-GH), December 14, 2004\.
PRSC-2
Concept Review Meeting Minutes, "Ghana: PRSC-2," February 9, 2004\.
ROC Meeting Draft Minutes, "Ghana: Second Poverty Reduction Strategy Credit," April 6,
2004\.
Program Document, "Ghana: Second Poverty Reduction Support Credit and Grant," (Report No\.
29177-GH), June 7, 2004\.
Project Status Report, "Ghana: PRSC II," December 15, 2004\.
Agreed Minute of Negotiations, "Ghana: PRSC-2", May 14, 2004\.
Implementation Completion Report, "Ghana: Second Poverty Reduction Credit" (Report No: --
GH), November 28, 2005,
PRSC-3 (and Subsequent Operations)
Concept Review Meeting Minutes, "Ghana: Third Poverty Reduction Support Credit," March 8,
2005\.
ROC Meeting Draft Minutes, "Ghana: Third Poverty Reduction Support Credit," April 25, 2005\.
47
Aide-Memoire, "Ghana: Joint Multi Donor Budgetary Support Mission (MDBS 2005)/Third
World Bank Poverty Reduction Support Credit," April 26-June 2, 2005\.
Agreed Minutes of Negotiations, "Ghana: PRSC-3," June 17, 2005\.
Program Document, "Ghana: Third Poverty Reduction Support Credit," (Report No\. 33096-GH),
July 27, 2005\.
Program Document, "Ghana: Fourth Poverty Reduction Support Credit," (Report No\. 35975-
GH), May 1, 2006\.
Draft Program Document, "Ghana: Proposed Fifth Poverty Reduction Support Credit,"
December 2006\.
Joint Bank-Fund Documents
Draft Aide-Memoire, "Ghana: Joint Mission Multi-Donor Budgetary Support/Poverty Reduction
Support Credit," September 3-14, 2003\.
Joint IDA-IMF Staff Assessment of the [Republic of Ghana] Poverty Reduction Strategy Paper
(Report No\. 25495-GH), March 4, 2003\.
Draft Aide-Memoire, "Ghana: Joint Multi Donor Budgetary Support Mission (MDBS
2004/PRSC-2)," April 8-28, 2004\.
Joint IDA-IMF Staff Assessment of the [Republic of Ghana] Poverty Reduction Strategy Paper,
Annual Progress Report, (Report No\. 29181-GH), June 8, 2004\.
Joint IDA-IMF Staff Advisory Note of the [Republic of Ghana] Growth and Poverty Reduction
Strategy and 2004 Annual Progress Report (Report No\. 35767-GH), April 21, 2006\.
IMF Documents
"Ghana Sixth and Final Review under the Three-Year Arrangement Under the Poverty
Reduction and Growth Facility and Request for Waiver of Nonobservance of Performance
Criterion," EBS/06/132, October 18, 2006\.
Other Documents
Lawson, Andrew; Gyimah Boadi, Ato Ghartey, Adom Ghartey, Tony Killick, Zainab Kizilbash,
&Tim Williamson, "Initial Observations on Immediate Effects and Recommendations on Future
Design and Management of Ghana MDBS," Preliminary Report to the Government of Ghana and
to the MDBS Partners, Centre for Democratic Development (Accra) and Overseas Development
Institute (London), October 2006\.
Miovic, Peter, "Reflections on Ghana and the Poverty Reduction Support Credits (PRSCs),"
Paper Commissioned by the AFTP4 Unit in the Africa Region of the World Bank, October 31,
2006\.
48
Annex 8: Supporting the GPRS Implementation through the PRSC
GPRS Objectives Macroeconomic Stability Production & Human Protection for the Good Governance
Gainful Resource Vulnerable & the
Employment Development & Excluded
Basic Services
CAS Pillars/ Promoting growth, income & employment Improving Service Delivery for Human Governance & Public Sector Reform
PRSC Support Development
PRSC Focus Financing Business Rural Educa Health Social Water & Decentrali Public Public Monitoring &
development environment development & tion Protection Sanitation zation Sector Financial Evaluation
& trade Natural Reform Management
facilitation Resource
Management
PRSC Policy dialogue/specific actions Outcome monitoring/public expenditure Policy dialogue/public financial management
Instruments dialogue dialogue/specific actions
Note: Figure incorporates water and sanitation focus, which was not included until PRSC-3\.
Source: Program Document for PRSC-3 (Report No\. 33096-GH), p\.30
49
i Ghana: Poverty Reduction Strategy Paper and JSA, Report No\. 25495-GH, March 4, 2003\.
ii Ghana was one of the first countries to participate in a joint matrix to underpin the budget support
disbursement of multiple donors\. Members of the MDBS included seven bilateral al partners (Canada,
Denmark, Germany, the Netherlands, Switzerland, and the United Kingdom), plus the World Bank, EU,
and the AfDB\. The United States, France, and Japan participate as observers\.
iiiBetween 1997-2003, the average increase in access to safe water sources was just under 9 percent, with
the Greater Accra region experiencing a 12 percent decline (albeit from levels higher than the national
average)\. Access to safe sanitation also continued to be low, with the national average at just over 50
percent, and access in the three deprived regions was at 20 percent or lower\.
iv In fact, the Program Document for PRSC-1 noted that the program associated with the PRSC series of
operations might be subsequently broadened as needed to meet the credit's main objectives\.
v Implementation Completion Report, Third Economic Reform Support Operation, Report No\. 26214-GH,
June 27, 2003, and Implementation Completion Report, Second Economic Reform Support Operation,
Report No\. 26744-GH, December 15, 2003\.
vi The other lessons informing the design of the PRSCs were: (i) flexibility is crucial to respond to evolving
situations; (ii) donor coordination is vital to avoid overstretching the Government; and (iii) quick
disbursing operations should occur in a context where they can add value to other instruments and sector-
specific projects\.
vii Discussed at the Board in March 2004 (Report 27838-GH)\.
viiiThere were initially 52 indicators; they were subsequently increased to 60 as more indicators were
identified\.
ix These include the National Intra-Agency Poverty Monitoring Groups, which are inter-sectoral and
include governmental and non-governmental representatives; the GPRS dissemination committee; the PSIA
Technical and Advisory Committees; and regional poverty monitoring groups\.
x These PSIAs focused on: (i) changes to the electricity tariff structure and the impact of the poor; (ii)
degree to which policies to promote agricultural growth could benefit small landholders; (iii) a
vulnerability mapping exercise to improve the knowledge base for managing targeted interventions for the
extreme poor and vulnerable; and (iv) institutional changes resulting from decentralization that may affect
access to or quality of services or resources\.
xi According to the Joint Staff Assessment Note on the GPRS II\.
xii The CAS' close alignment with the GPRS and GPRS II is indicated by the CAS Progress Report
(discussed by the Board in June 2006) which confirmed that the strategy laid out in 2004 can continue to
guide the Bank's program for Ghana\.
xiiiThese are: ensuring macroeconomic stability; expanding production and employment; improving the
delivery of services for human development; protecting the vulnerable and extremely poor; and promoting
good governance and public sector reform\.
xiv According to a study by the Centre for Democratic Development (CDD) and Overseas Development
Institute (ODI) on the MDBS\. Lawson, Andrew, et al\., "Initial Observations on Immediate Effects and
Recommendations on Future Design and Management of Ghana MDBS," Preliminary Report by the Centre
for Democratic Development (CDD) and Overseas Development Institute (ODI) (hereafter CDD/ODI),
October 2006, p\. 17\.
xv During these operations a number of objectives were achieved only partially or only after considerable
delay, and some were not achieved at all\. The second tranche under ERSO II had to be restructured,
50
reflecting a lack of progress on some objectives, and Ghana's Fifth Review (in 2002) under the Fund's
PRGF Arrangement could also not be completed and the final tranche was not disbursed\.
xvi The fact that PRSC-1 preceded the CAS finalization may also have contributed to the omission of a
water and sanitation focus, as the CAS rightly noted that an improved water supply and sanitation were
necessary to meet the human development MDGs\.
xvii For example, "reduce number of consignments subjected to physical examination at Customs from
average 60 percent in 2002 to average 10 percent\.in 2004" under PRSC-1 was changed to "Clearance
times reduced" under PRSC-2\.
xviiiICR guidelines state the measurable indicators for monitoring progress should be "those in the PD of
the first operation of the series\." It should be noted that the complexity of the policy matrix is being
addressed in the upcoming PRSC-5, where the Board has endorsed a maximum of 30 triggers and
benchmarks\.
xix ECG losses continued to decline slightly in 2006, reaching 23\.4 percent by July 2006\.
xx Since VALCO came back into operation in September 2005, the VRA's finances have been drained, and
as a result, VRA's preliminary (unaudtited ) financial statement for 2005 show an operating loss of about
300 billion cedis, down from an estimated operating profit of 400 billion cedis one year earlier (when
VALCO was not in operation)\. VRA's losses compromise its ability to meet its commitment under the
ECOWAS energy protocol\.
xxi In an exercise led by the Institute for Policy Alternatives (IPA) with 10 Ghanaian NGOs\. IPA,
"Community Voices: A Civil Society Assessment of Pro-Poor Policies and Programmes in Ghana's
Poverty Reduction Strategy," (2006), cited in Miovic, Peter, "Reflections on Ghana and the Poverty
Reduction Support Credits (PRSCs)," October 31, 2006, p\. 3\.
xxii By end-2005, Ghana met 8 out of 16 HIPC public expenditure benchmarks, up from 7 benchmarks in
2004 and only 1 in 2001\.
xxiiiThe BPEMS is an example of a reform that has been slower to realize than expected, but not as a result
of government inaction\. Its operationalization was delayed by (i) the high costs of installing this new
system; (ii) Ghana's own specific demands, which increased the costs and lengthened the installation time;
and (iii) the transition in project management from a team of consultants to the government itself\. As a
consultant-led project, the BPEMS ran for six years with no result, primarily because the consultants had a
vested interest in keeping the project going\. When the project came under the umbrella of the budget
support program, however, and the funds were directed to the government's budget, so that they could
define their own priorities\. There was as a result an opportunity cost to how they spent the money, rather
than an earmarked fund (with few outside accountability systems) to support whatever the project
management defined as priority\.
xxiv Progress in 2006 continued to be slow and public sector reform consisted of preparing and setting up
the institutional arrangements for the new public sector reform strategy, including a submission of the
Subvented Agencies Reform Act to Parliament and launching of a broad reach-out program to
communicate and ensure buy-in from stakeholders\.
xxv CDD/ODI, p\. 10\.
xxvi In the absence of the DHS data, the Bank monitored several intermediate indicators of improvements in
health outcomes\. In addition to the supervised maternal deliveries already noted, the ratio of nurses per
10,000 population and doctors per 10,000 people were monitored\. As seen in Annex 1, both of these
showed improvements under these operations\.
xxvii A recent study concluded that "remittances have probably reduced poverty by (i) increasing incomes
(by more than 20 percent for the poorest 20 percent of households) and (ii) diversifying income\. It appears
that, on the margin, remittances have significantly increased (by 20-30) percent investment in education
and health\." R\. Adams, "Remittances and Poverty in Ghana," WPS 3838, 2006\.
51
xxviii The CDD/ODI assessment of the MDBS concluded that the MDBS's "contribution to the improved
standing of MoFEP may be one of the most important ways in which the MDBS has contributed to the
quality of policy making and economic management in Ghana\." CDD/ODI, pp\. 16, 20\.
xxix The improved ability to recruit and retain staff has occurred not "because of improved terms and
conditions but because the ministry was seen as an important and active institution\." CDD/ODI, p\. 20\.
xxx Spending on wages and salaries reached particularly high rates in agriculture, education, and health
programs, for example, ranging between 57 and 77 percent of total amounts available\.
xxxi In October 2006, the IMF Board positively assessed Ghana's economic performance, noting that the
country continued to improve its performance during the first half of 2006, supported by strong
macroeconomic policy implementation and a favorable external environment\.
xxxii Beginning in April 2006, the Government started reviewing petroleum product prices monthly instead
of quarterly to reduce lead-lag effects on pricing\. A domestic petroleum retail price was increased over 30
percent in the first seven months of 2006\.
xxxiii Power shortages (due to load management and low water levels in the Akosombo dam) are likely to
slowdown mining activities, including new operations, and have a negative impact on manufacturing in
2006-07\. The combined effect of lower mining production and manufacturing are expected to lower real
GDP growth in 2007 to 5\.7 percent, down from an estimated 6\.2 percent in 2006\. While planned
investments should allow the power supply to be restored to full capacity by 2008, taking advantage of
these investments will require three sets of actions: (i) establishment of an independent system operator for
the power transmission company, a required prior step for hooking up to the West African Gas Pipeline
(WAGP); (ii) realigning electricity tariffs; and (iii) ensuring that the gas from the WAGP is used
productively, including setting up a local gas distribution company, converting oil-based power plants, and
ensuring that the VRA's finances are sufficiently sound so it can meet its monthly gas payment
obligations\.
xxxiv While the Bank currently projects (in the context of MDBS-6/PRSC-5) that Ghana's debt sustainability
is likely to remain positive, this assessment notes that sustainability could be undermined by a slowdown in
either economic growth or reduced concessionality in external borrowing\.
xxxv In the 2007 budget statement, public sector wages and salaries were budgeted to increase by 20 percent
over the projected outturn for 2006 and 32 percent over the budgeted amount for 2006\. As a result, the
program document for PRSC-5 projects that wages and salaries will account for an estimated 10 percent of
GDP in 2007, equivalent to more than third of government revenues (excluding grants),\.
xxxvi In education, less than 5 percent of all budgeted expenditures in 2006 were for non-salary expenditures\.
In the health sector, three-quarters of expenditures are for wages and salaries
xxxvii While there was considerable overlap between the focus of the Bank and the DPs at the time of PRSC-
1, there was not full consultation with the other DPs because PRSC-1 was prepared under a very short
deadline (4 months) so that the Bank could respond to the GoG's request for early support to the GPRS\.
This consultation was consequently improved in the context of PRSC 2-3, including better information
sharing; the establishment of a joint chairmanship of the MDBS, with the Bank and a DP serving as co-
chairs; and the up-front submission of PRSC Program Documents to the MDBS partners for their review
and comment\.
xxxviiiThe actions in subset one (growth, income, and employment) and two (public sector governance) were
expected to be completed shortly (July/August 2005)\. The key action remaining to be completed within the
framework of the Bank's PRSC arrangement was the enactment of the VRA Amendment Bill, which was
expected only after July 1, 2005\.
xxxix CDD/ODI, pp\. 16, 17\.
xl The MDBS substantially reduced the unpredictability of annual aid flows\. MoFEP data show that the
year-to-year deviations of actual MDBS disbursements were quite limited: only -0\.1 percent in 2003, -
2\.3% in 2004, and +1\.2 percent in 2005\. (The deviation was likely to be larger in 2006, however, as the
52
GOG anticipated that actual MDBS disbursements would be approximately 80 % of what was originally
budgeted, after the MDBS partners concluded that the Government did not satisfy one of the agreed trigger
conditions\.) In 2007, predictability will be further strengthened as the MDBS moves to a "year-plus-one"
basis so that any assistance that is withheld owing to non-compliance will take effect in the financial year
after that in which the break occurs\. While the MDBS was less successful at reducing within-year
predictability, making day-to-day cash flow management difficult, the strong year-on-year predictability is
a valuable contributor to strengthening macroeconomic management and fiscal planning\. CDD/ODI, pp\.
12\.-13\.
xli It should be noted that some officials within the GoG would argue that the reduced transaction costs from
fewer missions and reporting requirements has, in fact, been undermined by donors "preoccupation" with
programmatic details, thereby absorbing the attention of Ministers and senior officials\. CDD/ODI, p\. 18
xlii The GoG has complained that the 2006 negotiations over the 2007 MDBS were too focused on the
"precise determination of trigger provisions and not about much larger issues of policy\. CDD/ODI, p\. 18\.
xliiiUnder PRSC 1-3, the Bank's approach generally has been to focus on overall progress, as demonstrated
under PRSC-3 (see Section 10\.1\.b on supervision) and PRSC-2, when the BPEMS trigger (and HIPC
completion trigger) was re-worded because it was deemed that although the BPEMS was not fully
operational, this was not a sufficiently strong enough reason to delay the HIPC completion, particularly as
the GoG had taken other significant actions (e\.g\., adjustment of gasoline prices and establishment of an
automatic electricity tariff adjustment mechanism)\.
xliv CDD/ODI, p\. 16\.
53
IBRD 33411
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This map was produced by Sekondi
the Map Design Unit of The Axim Takoradi RIVERS
World Bank\. The boundaries, Gulf of G uinea
colors, denominations and
any other information shown MAIN ROADS
on this map do not imply, on
the part of The World Bank 0 20 40 60 80 Kilometers RAILROADS
Group, any judgment on the
legal status of any territory, REGION BOUNDARIES
or any endorsement or 0 20 40 60 Miles
a c c e p t a n c e o f s u c h
boundaries\. 2°W 0° INTERNATIONAL BOUNDARIES
SEPTEMBER 2004 | REVIEW |
P115145 | Document of
The World Bank
Report No\.: 78787
PROJECT PERFORMANCE ASSESSMENT REPORT
DOMINICAN REPUBLIC
PUBLIC FINANCE AND SOCIAL SECTOR DEVELOPMENT POLICY LOAN
(IBRD-77790)
June 27, 2013
IEG Public Sector Evaluation
Independent Evaluation Group
ÿþi i
C u r r e n c y E q u i v a l e n t s ( a n n u a l a v e r a g e s )
C u r r e n c y U n i t = D o m i n i c a n P e s o s
2 0 0 8 U S $ 1 \. 0 0 $ 3 5 \. 5
2 0 0 9 U S $ 1 \. 0 0 $ 3 6 \. 1
2 0 1 0 U S $ 1 \. 0 0 $ 3 7 \. 9
2 0 1 1 U S $ 1 \. 0 0 $ 3 8 \. 8
A b b r e v i a t i o n s a n d A c r o n y m s
A D E S S A d m i n i s t r a d o r a d e S u b s i d i o s S o c i a l e s ( S o c i a l S u b s i d i e s A d m i n i s t r a t i o n )
A P L A d a p t a b l e P r o g r a m L o a n
C D E E E D o m i n i c a n C o r p o r a t i o n o f S t a t e E l e c t r i c a l E n t e r p r i s e
D P L D e v e l o p m e n t P o l i c y L o a n
I C R I m p l e m e n t a t i o n C o m p l e t i o n a n d R e s u l t s R e p o r t
I E G I n d e p e n d e n t E v a l u a t i o n G r o u p
I F I s I n t e r n a t i o n a l F i n a n c i a l I n s t i t u t i o n s
P P A R P r o j e c t P e r f o r m a n c e A s s e s s m e n t R e p o r t
P R A P r o g r a m a d e R e d u c c i o n d e A p a g o n e s ( P r o g r a m f o r R e d u c t i o n o f B l a c k o u t s )
S I U B E N S i s t e m a U n i c o d e B e n e f i c i a r i o s ( U n i f i e d S y s t e m o f B e n e f i c i a r i e s )
F i s c a l Y e a r
G o v e r n m e n t : J a n u a r y 1 ' t - D e c e m b e r 3 1 S t
D i r e c t o r - G e n e r a l , I n d e p e n d e n t E v a l u a t i o n M s \. C a r o l i n e H e i d e r
D i r e c t o r , I E G P u b l i c S e c t o r E v a l u a t i o n M r \. E m m a n u e l J i m e n e z
M a n a g e r , I E G P u b l i c S e c t o r E v a l u a t i o n M r \. M a r k S u n d b e r g
T a s k M a n a g e r M r \. N a v i n G i r i s h a n k a r
P P A R A u t h o r M r \. J u a n J \. F e r n á n d e z - A n s o l a
111
Contents
Principal Ratings\. \. \. \. v
Key Staff Responsible\.v
Preface\. vii
Summary\.ix
1\. Background and Context\. \.1
2\. Objectives, Design, and their Relevance \.5
Objectives\.5
Relevance of Objectives \.5
Design\.6
Relevance of Design\.7
3\. Implementation\.10
Macroeconomic Framework\. 10
Implementation Experience\. 10
Monitoring and Evaluation Implementation\.11
4\. Achievement of the Objectives\. 12
Objective 1: Continue improving the efficiency of budget processes, especially for
social protection and public health (modest)\.12
Objective 2: Promote fiscal sustainability (substantial)\.13
5\. Ratings\. 14
Outcome\. 14
Risk to Development Outcome\. \. 16
Bank Performance \. 17
Borrower Performance\. 18
Monitoring and Evaluation \. \. 19
6\. Lessons \. 19
References \. 21
Annex A\. Basic Data Sheet\. \. 23
Annex B\. List of Persons Met\. \. 25
This report was prepared by Juan J\. Ferrnindez-Ansola, who assessed the project in November - December
2012\. The Task Manager for the report is Navin Girishankar\. The report was peer reviewed by Eric Bell
and panel reviewed by Nils Fostvedt\. Yezena Yimer provided administrative support\.
iv
Boxes
Box 1 \.The Electricity Sector\. \. \. 3
Box 2: The Relationship of the Public Finance and Social Sector Loan to Other World
Bank Operations\. \. 5
Tables
Table 1\. Program Support to the Dominican Republic from International Financial
Institutions for Budget and International Reserves (billion US$) \.1
Table 2\. Dominican Republic: Macroeconomic Indicators 2008-2012 \. \. 10
Table 3\. Operations Achievement of Outcomes, Ratings and Policies \. \. 15
V
Principal Ratings
ICR * ICR Review* PPAR
Outcome Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory
Risk to Substantial Significant Significant
Development
Outcome
Bank Performance Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory
Borrower Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory
Performance
* The Implementation Completion and Results (ICR) report is a self-evaluation by the responsible Bank department\. The ICR
Review is an intermediate IEG product that seeks to independently verify the findings of the ICR\.
Key Staff Responsible
Division Chief!
Project Task Manager/Leader Sector Director Country Director
Appraisal Maurizio Bussolo Rodrigo A\. Chaves Yvonne M\. Tsikata
Completion Elizabeth N\. Ruppert Oscar Calvo-Gonzalez Francoise Clottes
Bulmer
Vi
IEG Mission: Improving World Bank Group development results through excellence in
independent evaluation\.
About this Report
The Independent Evaluation Group assesses the programs and activities of the World Bank for two purposes:
first, to ensure the integrity of the Bank's self-evaluation process and to verify that the Bank's work is producing the
expected results, and second, to help develop improved directions, policies, and procedures through the
dissemination of lessons drawn from experience\. As part of this work, IEG annually assesses 20-25 percent of the
Bank's lending operations through field work\. In selecting operations for assessment, preference is given to those that
are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which
Executive Directors or Bank management have requested assessments; and those that are likely to generate
important lessons\.
To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other
documents, visit the borrowing country to discuss the operation with the government, and other in-country
stakeholders, and interview Bank staff and other donor agency staff both at headquarters and in local offices as
appropriate\.
Each PPAR is subject to internal IEG peer review, Panel review, and management approval\. Once cleared
internally, the PPAR is commented on by the responsible Bank department\. The PPAR is also sent to the borrower
for review\. IEG incorporates both Bank and borrower comments as appropriate, and the borrowers' comments are
attached to the document that is sent to the Bank's Board of Executive Directors\. After an assessment report has
been sent to the Board, it is disclosed to the public\.
About the IEG Rating System for Public Sector Evaluations
IEG's use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to
lending instrument, project design, or sectoral approach\. IEG evaluators all apply the same basic method to arrive
at their project ratings\. Following is the definition and rating scale used for each evaluation criterion (additional
information is available on the IEG website: http://ieg\.worldbankgroup\.org)\.
Outcome: The extent to which the operation's major relevant objectives were achieved, or are expected to
be achieved, efficiently\. The rating has three dimensions: relevance, efficacy, and efficiency\. Relevance includes
relevance of objectives and relevance of design\. Relevance of objectives is the extent to which the project's
objectives are consistent with the country's current development priorities and with current Bank country and
sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, Country
Assistance Strategies, Sector Strategy Papers, Operational Policies)\. Relevance of design is the extent to which
the project's design is consistent with the stated objectives\. Efficacy is the extent to which the project's objectives
were achieved, or are expected to be achieved, taking into account their relative importance\. Efficiency is the
extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital
and benefits at least cost compared to alternatives\. The efficiency dimension generally is not applied to adjustment
operations\. Possible ratings for Outcome: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately
Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
Risk to Development Outcome: The risk, at the time of evaluation, that development outcomes (or
expected outcomes) will not be maintained (or realized)\. Possible ratings for Risk to Development Outcome: High,
Significant, Moderate, Negligible to Low, Not Evaluable\.
Bank Performance: The extent to which services provided by the Bank ensured quality at entry of the
operation and supported effective implementation through appropriate supervision (including ensuring adequate
transition arrangements for regular operation of supported activities after loan/credit closing, toward the
achievement of development outcomes\. The rating has two dimensions: quality at entry and quality of supervision\.
Possible ratings for Bank Performance: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately
Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
Borrower Performance: The extent to which the borrower (including the government and implementing
agency or agencies) ensured quality of preparation and implementation, and complied with covenants and
agreements, toward the achievement of development outcomes\. The rating has two dimensions: government
performance and implementing agency(ies) performance\. Possible ratings for Borrower Performance: Highly
Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly
Unsatisfactory\.
vii
Preface
This is the Project Performance Assessment Report for the US$150 million Dominican
Republic Public Finance and Social Sector Development Policy Loan, which was
approved on November 17, 2009 and closed on December 31, 2010, as scheduled\. The
loan was fully disbursed on December 3, 2009\.
This report was prepared by Juan J\. Femindez-Ansola, IEG consultant, who visited Santo
Domingo November 19-24, 2012 and met with officials from the Ministry of Education,
Ministry of Health, Ministry of Finance, Ministry of Economy and Planning, Single
System of Beneficiaries (SIUBEN), Social Subsidies Administration, the Social Cabinet,
and representatives of International Financial Institutions\. This project performance
assessment report is based on information gathered during that mission, as well as on
other sources, such as the World Economic Forum's Competitiveness Report and the
United Nation's Millennium Development Goals\. The IEG mission wishes to thank the
authorities and all other counterparts for their cooperation and hospitality during the
mission\.
This report is part of a group of project evaluations that contribute to the planned review
of World Bank support to middle-income countries\. The countries in the PPAR cluster-
Grenada, Dominican Republic, Jamaica, and St Lucia-represent an important group of
middle-income countries that face the particular problems of smaller states\.
Following standard IEG procedure, the report was sent to the government of Dominican
Republic for comments, but no comments were received\.

ix
Summary
The $150 million Public Finance and Social Sector Development Policy Loan responded
to the adverse effects of the global financial crisis on the Dominican Republic in 2009\.
The role of this operation, together with financing from other international financial
institutions (IFIs), was to mitigate the worst effects of the crisis\. After four years of one
of the strongest economic performances in Latin America, the global crisis hit the country
hard causing GDP growth to slow from 51 percent in 2008 to 31 percent in 2009\.
Moreover, prospects were for a further slowdown in a setting where private market
perceptions had deteriorated markedly\. Substantial financial support from the World
Bank, the International Monetary Fund (IMF), and the Inter-American Development
Bank helped reverse the economic decline\. But key structural issues-such as reform of
the electricity sector-needed to be addressed for a sustainable recovery\. This operation
also addressed such issues, and promoted better targeting of social policies and
improvements in expenditure efficiency\.
The contribution of the Bank to the financing package consisted of two development
policy loans (DPLs) for the health sector, and the public finance and social sectors,
respectively\. Preparing two development policy operations simultaneously taxed the
administrative and institutional capacity of the country, which had little experience
negotiating and implementing them\. The urgency to finalize the negotiations to deliver
the external financing militated against opening a dialogue on longer term reforms, and
promoted a focus on issues that were already part of the ongoing dialogue\.
The early results of the coordinated effort by the international financial institutions were
striking on the macroeconomic front\. Supported by a fiscal stimulus of about 1 percent of
GDP, the economy expanded by 71 percent in 2010 and 12-month inflation remained
contained at 6 1 percent, against a central bank target of 6-7 percent\.
The objectives of the operation to improve the efficiency of budget processes, especially
for social protection and public health, and fiscal sustainability were substantially
relevant\. They fit well with the government agenda to protecting the most vulnerable
sectors in the face of a crisis and opening space in the budget for social protection
expenditure while maintaining the budget deficit on a sustainable trend\. The operation's
design relevance was modest, primarily because it lacked metrics or indicators to measure
progress towards better expenditure efficiency\.
Monitoring and evaluation (M&E) was not fully designed by the operation, as input,
output, and impact evidence anticipated in the design was not collected and analyzed in a
sound and timely manner by the Bank or the government\. This in turn led to blind spots
in supervision of the project\. Monitoring was mostly done by the Bank and its partners,
particularly the IMF through its regular program reviews\. The M&E that required
government involvement was less effective, and the Bank team missed opportunities to
modify certain targets because of poor follow-up on the development of the operation's
indicators\. This outcome points to the need for M&E to be an integral part of the design
of the operation, rather than relying on other partners, which may or may not be reliable
in monitoring the activity\.
x
The outcome of the project is rated moderately satisfactory\. It achieved its objective to
promote fiscal sustainability\. The Program to Reduce Blackouts was eliminated and
replaced by targeted subsidy programs\. This was a significant achievement because of the
political resistance to the measure, which achieved permanent fiscal savings\. Although
the target of households for BONOLUZ, the new targeted electricity subsidy, was not
achieved in 2010, today over 500,000 households receive BONOLUZ\. While electricity
tariffs were raised for a combined 25 percent in 2009 and 2010, transfers to the electricity
sector increased due to non-payment by consumers, higher consumption, and higher
world oil prices\. The objective to continue improving the efficiency of budget processes
was modestly achieved\. While efforts were launched -program budgeting for results;
improving the targeting of social program and subsidies; controlling inefficient budget
transfers-results are taking much longer to materialize than the one-year period of this
operation\. At the same time, the operation launched policies in the education, health, and
social sectors that have been followed up by other Bank interventions and are starting to
show results now\.
The risk to development outcome is significant\. Cutting budget transfers to the
electricity sector remains a challenge because of vested interests, and political pressures
have been too strong to introduce sustained reforms in the electricity sector\. It also
remains unclear how the incipient reforms on budget processes are being cemented
institutionally and if they can be sustained\. Bank performance is rated moderately
satisfactory\. The Bank responded to a financing crisis in the Dominican Republic and
coordinated closely with other IFIs\. The design of the operation displayed a tension
between the Bank's corporate imperative to deliver funding quickly and the development
imperative that required embedding the program design within a longer term reform
concept\. Taking into account this tension and the time constraint under which the
program was prepared, there was a degree of care in program preparation except for
M&E that was given a cursory treatment and performed poorly\. Borrower performance
is rated moderately satisfactory\. The government did not have much experience with
preparing and implementing a social sector development policy loan, and this operation
represented a major challenge\. Government ownership and commitment was strong from
the outset in light of the significant exceptional financing needs of the budget\. The Social
Cabinet-led by the Vice-President-coordinated effectively the main effort of design
and implementation of the operation\.
Since the operation closed at the end of 2010 macroeconomic policy has gone off-track,
underscoring the significant risk to development outcomes\. The IMF stand-by
arrangement was suspended in mid-2011, mainly because the Dominican Republic did
not bring electricity prices into alignment with cost recovery as envisaged\. A new
government elected in 2012 has not made completely clear its intentions with respect to
increasing electricity tariffs, but the consensus seems to be that tariffs will not be
increased\. Owing significantly to transfers to the electricity sector, the deficit is estimated
at 812 percent of GDP in 2012, against the target of one-to-two percent of GDP in the
stand-by arrangement's original macroeconomic framework\. The IMF left a strong
message in a November 2012 visit to Santo Domingo, emphasizing the need for fiscal
consolidation to sustain macroeconomic stability\.
xi
Lessons
Five lessons emerge from implementation of this operation:
* The imperative to respond at a time of crisis can be in conflict with starting a dialogue
on requirements for longer term reform\.
* An overly complex design-typical of a normal development policy loan-without
short term indicators that can be monitored (for reforms that will take far longer than
the duration of the operation) can detract from efficacy\.
* In light of the previous two lessons, a development policy loan may be the wrong
instrument to support a country in a financial crisis\.
* The lack of updated political economy analysis can hamper reforms and Bank value
added\.
* A critical mass of Bank interventions in a country can act as a "shock absorber" for
shortcomings in individual operations and help deliver results at times of crisis\.
Caroline Heider
Director-General
Evaluation

1
1\. Background and Context
MACROECONOMIC BACKGROUND
1\.1 During 2004-08 the Dominican Republic experienced a remarkable economic
performance as a result of buoyant external conditions, fairly good policies, and private
sector optimism about the country's prospects\. Real gross domestic product (GDP) grew by
40 percent-the best performance in a quarter century, and one of the largest expansions in
Latin America; annual inflation fell from over 50 percent to 41 percent; fiscal deficits were
cut in half to 41 percent of GDP; and the public debt ratio was reduced from 60 percent of
GDP in 2004 to 35 percent in 2008 (IMF 2010)\.
1\.2 The global financial crisis hit the country hard in 2009: capital inflows slowed down
considerably, external demand became much weaker, and domestic demand also slowed,
with private investment and public spending showing the largest deceleration\. As a result,
annual GDP growth slowed to 31 percent from 51 percent in 2008, and prospects were for a
further slowdown in a setting where private market perceptions of the Dominican Republic
had deteriorated significantly\.
1\.3 In this context, in mid-2009 the authorities approached the World Bank, the Inter-
American Development Bank, and the International Monetary Fund (IMF) in the hope of
obtaining prompt external financing that would cover the significant balance of payments
need, finance a widening fiscal gap, and pursue a countercyclical policy that would contain
the adverse effects of the global financial crisis on economic growth\. The budget in particular
was in dire need of financing to avoid a drastic adjustment that would have led the economy
into recession\.
1\.4 The resulting program of financial support for the budget amounted to US$1\.1 billion
in 2009 and US$0\.6 billion in 2010\. The budget support financing commitments were split
virtually evenly for 2009-10 between the World Bank, the Interamerican Development Bank,
and the IMF (Table 1)\. In addition the IMF committed a further US$1\.3 billion to strengthen
the international reserves of the central bank\. The main channels for World Bank financing in
2009 were the Public Finance and Social Sector development policy loan (DPL), assessed in
Table 1\. Program Support to the Dominican Republic from International Financial Institutions
for Budget and International Reserves (billion US$)
Budget Support Central Bank International Reserves
2009 2010 2009 2010 2011
World Bank 0\.4 0\.2 -- -- --
Interamerican Development 0\.4 0\.2 -- -- --
Bank
IMF 0\.3 0\.2 0\.4 0\.7 0\.2
Source: IMF, 2010\.
2
this document, and the first programmatic DPL (series of three) on Performance and
Accountability of the Social Sectors\.'
1\.5 In the absence of such exceptional multilateral financing, the economy would have
stagnated in 2009 and probably contracted in 2010\. The multilateral program supported a
macroeconomic framework containing a significant fiscal stimulus to offset slowing private
sector demand and a drastic slowdown of capital inflows\. The macroeconomic situation
improved significantly following the coordinated multilateral effort\. Supported by a fiscal
stimulus of about 1 percent of GDP, the economy expanded by 72 percent in 2010; 12-
month inflation remained contained at 61 percent against a central bank target of 6-7 percent
for the year\. The external current account deficit widened somewhat to 71 percent of GDP in
2010 (IMF 2011)\.
1\.6 The World Bank, IMF, and Inter-American Development Bank teams coordinated
closely their interventions and discussions with the government\. A key focus of the
cooperation was on electricity sector reform, an important part of the World Bank- and IMF-
promoted structural reforms\. Discussions also included broad macroeconomic issues
including fiscal and tax administration reforms, as well as poverty alleviation and external
financing\. In the fall of 2009, teams from all three international financial institutions met
with President Leonel Ferndndez to establish a path for electricity sector reform, which
eventually led to the official reform strategy of the government\.
THREE KEY AREAS: ELECTRICITY, SOCIAL PROTECTION, AND TAXATION
1\.7 Mitigating the impact of the global crisis on growth was a priority of the financial
program supported by the international financial institutions (IFIs)\. The consolidated public
sector exhibited a large deficit in 2008, but the IFIs and the government still felt that there
was a strong case for relaxing the fiscal stance further in the latter part of 2009 and the first
half of 2010, and then start a process of fiscal consolidation once the world economy
strengthened and the economy got closer to capacity\. Three sets of issues underpinned fiscal
policy for this period, and were core policies of this operation to attain the objectives of
improved fiscal sustainability and better public expenditure efficiency:
* Social protection\. The government was concerned that the coverage of existing
safety nets was insufficient to mitigate the impact of the global crisis on the most
vulnerable\. Thus under this operation it intended to strengthen the social protection
response and open fiscal space for such a response\. Increases in spending would be
focused on social expenditures to protect the poor and on capital expenditures for the
greatest fiscal multiplier effect\. The World Bank team wanted to make sure that social
protection would at least be maintained, and that services in health and education
financed by the operation would be covered by a "budget lock" that would protect
them from spending cuts\.
* Electricity sector reform\. A large share of budget transfers was taken up by the
electricity sector for many years, and absorbed over 1 percent of GDP in 2009\. The
Subsequently the Bank Executive Board approved a three-phase Adaptable Program Loan for the Health
Sector\.
3
government had spent about 2/4 percent of GDP in electricity subsidies in 2008, or
about US$1\.2 billion\. If resources of this magnitude had instead been allocated each
year as transfers to the poor (about 750,000 families), each family would have
received US$130 a month-going a long way toward eliminating poverty in the
country (about 30 percent of the population in 2009)\. Such a transfer would have
been more than enough to eliminate extreme poverty\. The electricity sector was thus a
macroeconomic problem with large social opportunity costs, and electricity reform
was rightly seen as crucial to free up resources for social and infrastructure
investment (Box 1)\.
* Taxation\. The decline in tax revenues observed in 2008-09 was partly attributed to
tax evasion and other abuses in the context of the introduction of tax exemptions
aimed at improving competitiveness\. Tax exemptions were estimated by the Ministry
of Finance to exceed 5 percent of GDP in 2009\. Maintaining tax revenue would thus
require the development of a tax compliance strategy including sustained efforts to
improve tax and customs administration, and rationalization of tax exemptions\.
Box 1\.The Electricity Sector
The electricity sector in the Dominican Republic has a long track record of poor performance, leading to losses
measured in percentage points of GDP covered by the budget\. The sector has failed to deliver acceptable
service, and blackouts are common in most parts of the country\. Virtually all large companies, hotels, and
hospitals have installed large and costly power units that allow them to operate even when the power grid fails\.
These units impose a sizable financial and social cost\.
Major structural impediments in the sector are related to its poor management structure:
Non-technical losses: About 40 percent of distributed electricity is lost in transit, primarily due to more than
30 percent of electricity that is used illegally and for free\. A large number of consumers do not have meters at
consumption points\.
Restrictive contracts: Generators charge government-owned distributors energy prices much in excess of their
own costs, and with around 10 percent financing charge on floating debt\. A debt of US$1 billion-not unusual
in past few years-will carry a financial cost for the budget of about US$100 million a year\.
Tariff structure to consumers: Electricity prices charged to consumers have no adjustment mechanism to
reflect changes in costs\.
Subsidy structure: Subsidies to consumers were poorly targeted until 2009, with moral hazard for distributors
due to the expectation that the government would cover financial losses\. The Programa de Reducci6n de
Apagones (PRA)-the official blackout reduction program-provided subsidies on a geographic basis until
eliminated in 2009, promoting the settlement of firms in areas with subsidies\. As a result most of the
government electricity subsidy went to firms, families, and individuals that did not need it\.
Weak incentives for reducing losses: The incentives are weak for distributors to reduce losses because the
government will cover them, and generators know that they will eventually be paid, including a substantial
financial charge of about 10 percent a year\. Distribution companies have low operating efficiency and no
incentive to improve it\.
Weak financial planning: Unnecessary delays in fulfilling financial commitments result in transfers to
electricity generators that are very costly for society\.
Source: IMF 2010\.
4
PAST WORLD BANK AND OTHER DONOR SUPPORT
1\.8 Over the past 30 years the World Bank has had a difficult relationship with the
Dominican Republic (IEG 2003)\. Up until the late 1980's the dialogue was uneasy due to a
combination of country sensitivity to external interference and Bank skepticism about
country commitment to reform\. The Bank then stepped-up its dialogue with and lending to
the Dominican Republic in the early 1990's but pulled back again a few years later because it
believed that the country faced intractable questions of governance and institutional
capacities\. The Bank thus missed the opportunity to assist the country during the crucial first
few years of reform (1992-94)\. The Bank tried to maintain the dialogue in the years that
followed but did not manage to regain the influence over policies it had before\. Moreover,
the Bank felt that the government's stabilization and reform program was too gradual and
selective in terms of the sectors to be liberalized\. The consequence of a stop-and-go
relationship was that a number of critical development issues (for example, reform of the
electricity sector) remained in the doldrums\. A three-tranche Power Sector Development
Policy Loan planned to be disbursed over a one-year period (June 2005-April 2006) was
extended twice-the second time to March 2009-and became a halting effort to comply
with conditionality over four years\. The first and second tranches required waivers regarding
electricity tariff adjustments, and the third tranche was cancelled due to lack of progress on
agreed electricity sector reforms\.
1\.9 World Bank support has been directed primarily to investment projects, technical
assistance, and the electricity sector\. Following the 2003 financial crisis in the Dominican
Republic, the Bank concentrated on projects that would strengthen public institutions,
stabilize the economy and improve competitiveness, increase social equity, and improve
access to social and basic infrastructure services\. As of September 30, 2009 the Bank's total
commitments amounted to US$326\.2 million of which US$234 million remained to be
disbursed\. The loan portfolio consisted of ten loans: seven for investment, two for technical
assistance, and an Emergency Recovery Loan (electricity sector)\. Except for the Power
Sector DPL, the Dominican Republic had limited experience with Bank development policy
lending, and the two negotiated as part of the IFI fnancing package (Public Finance and
Social Sector-the operation now being assessed-and Performance and Accountability of
the Social Sectors) were the first encompassing public sector and social sector reforms (Box
2)\. The International Finance Corporation (IFC) had a portfolio of US$370 million in 2009
covering projects in healthcare, telecommunications, transport, tourism, agribusiness,
financial and investment sectors, and free trade zones\.
1\.10 The IMF had an ongoing relationship with the Dominican Republic through
surveillance of economic policies and post-program monitoring; there was no program in
place in mid-2009\. The relationship included a substantial amount of technical assistance in
the fiscal, financial, and statistical areas\. As of October 9, 2009 the Inter-American
Development Bank's portfolio amounted to US$604\.7 million spread over a wide range of
investment projects, of which US$303\.1 was undisbursed\.
5
Box 2: The Relationship of the Public Finance and Social Sector Loan to Other World Bank
Operations
This operation had synergies with three other World Bank operations: the Performance and Accountability of Social
Sectors DPL series, the two-phase Adaptable Program Loan for the health sector, and the Social Sectors Investment
Program\. These interventions in health, education, and the social sectors targeted improvements in quality and coverage
of services, while the main objective of the operation assessed in this report was to improve expenditure efficiency\.
The Performance and Accountability of Social Sectors series of three DPLs (US$370 million over three fiscal years)-
the first of the three presented to the Board on the same date of this operation-aimed to enhance the performance of the
social sectors, improve budget management, and enhance transparency and accountability to users of social services\.
The objectives of the two-phase Adaptable Program Loan for health (US$60 million) was to improve the quality of
public spending in the health sector\. The first phase was ongoing at the time of this operation\.
A two-phase Social Sector Investment Program-the first phase ongoing at the time of this operation-for about US$30
million to strengthen the safety net for the poor\.
2\. Objectives, Design, and their Relevance
2\.1 Against a history of ambivalence regarding economic reform in the Dominican
Republic, particularly in the electricity sector, the Public Finance and Social Sector
Development Policy Loan faced the opportunity to re-launch the Bank's policy dialogue on
broad reform priorities with the authorities, and cement the Dominican Republic's policy
ownership in the midst of its dire need for budget financing\. The challenge required the right
selectivity of interventions, a proper balance of ambitiousness and realism in the policy
measures, and an appropriate monitoring and evaluation framework that would allow timely
follow-up of policy and economic developments\.
Objectives
2\.2 The operation's stated objective was to support the Dominican Republic in key
aspects of its program, namely: "(i) to continue improving the efficiency of budget processes
generally and of social protection and public health, in particular; and (ii) to promote fiscal
sustainability through the consolidation of overall sector balances and debt management\."
(pp\. 26-27 of the program document) The overall objective of the loan was not revised\.
Relevance of Objectives
2\.3 The objectives of this operation were aligned with the government's reform agenda,
the National Development Strategy, and the four strategic objectives of the 2010-13 Country
Partnership Strategy: (i) strengthen social cohesion and improve access to and quality of
services; (ii) promote competitiveness in a sustainable and resilient economic environment;
(iii) enhance the quality of public expenditures and institutional development; and (iv) build
capacity and constituencies for reform\. The operation helped the government to prioritize
spending, thus avoiding a sharp increase in poverty as had been the case in previous crises\.
2\.4 The government faced three key issues on the social and budget spheres in the midst
of a global financial crisis that had already slowed down the economy significantly:
6
* Protecting the most vulnerable sectors of society from an external shock that was
affecting the whole country\.
* Opening space in the budget for essential social protection transfers\.
* Guaranteeing revenues that would finance the cost of social protection\.
It had to address these issues without compromising fiscal and debt sustainability\.
2\.5 The first operation objective-to improve budget processes-addressed the
government's priorities and fiscal requirements by targeting an improvement in the
efficiency of spending, especially on health, education, and social protection\. The second
objective-fiscal sustainability-aimed at making space for key spending to protect the most
vulnerable within a financing constraint that would be consistent with sustainable
government debt\. Relevance of objectives is thus rated substantial\.
Design
2\.6 The design of the operation was a one-tranche operation aimed at supporting the
Dominican Republic's budget in the face of increasing vulnerabilities resulting from the
global financial crisis\. As part of a crisis response, the operation complemented the efforts of
the other IFIs to mitigate the impact of the crisis on the country\.
POLICY AREAS
2\.7 The two policy areas were directly aligned with the two objectives\. The first policy
area of the operation was to continue improving the efficiency of budget processes
generally and of social protection and public health in particular\. The following activities
would support this area:
* Introducing and expanding performance-informed budgets in the Ministries of Health,
Education, Agriculture, and Labor\. These ministries would undertake pilot results
agreements setting out strategic plans, objectives, and performance indicators\.
* Better targeting of social and other expenditures\. The key measures in this area would
reduce the ceiling of subsidized electricity tariffs from 700 kWh per month to a
maximum of 300 kWh per month, remove the universal subsidy for liquefied gas and
replace it by a new subsidy (BONOGAS) administered as a targeted cash transfer,
and ending the Program for Reduction of Blackouts (PRA) and related subsidies
based on a geographic criteria\.
* Updating the SIUBEN beneficiary database for 2009 to minimize errors of inclusion
or exclusion and thus improving the effectiveness of the targeting of social programs\.
* Implementing the mandates of the universal health insurance laws\.
* Ensuring that targeted subsidies to finance health insurance for the poor are protected
and, as fiscal conditions permit, that the expansion trend continues\.
2\.8 The second policy area was to promote fiscal sustainability through the
consolidation of overall public sector balances and debt management, which would be
supported by the following activities:
7
* Maintaining macroeconomic stability by the government's adoption and adherence to
the publicly announced financing plan for 2009\.
* Enhancing tax administration and revenues from internal and customs sources\. The
main action was to include as an annex to the 2009 budget an estimation of costs of
tax exemptions on domestic and international transactions\.
* Reducing the fiscal burden from the losses of the electricity sector\. Main actions
referred to increase electricity tariffs by 12% percent by July 2009, simplify the tariff
structure for residential customers from eight to four blocks, and imcrease the Cost
Recovery Index from 64 percent in December 2008 to 66 percent in March 2009\.
* Improving debt management\. Main measure referred to reducing significant arrears to
electricity generators and other government suppliers\.
M&E DESIGN
2\.9 Monitoring and evaluation was not part of the public sector culture in the Dominican
Republic at the time of the operation, and has only recently started to develop in some areas
of the public sector (for example in the Ministries of Education and Health)\. The operation
did not change this culture noticeably\. More specifically:
* The objective of budget processes and efficiency of public spending did not have
indicators or targets\. As a result, the authorities were left to their own devices in this
area, rather than counting on a concrete plan with steps that they would need to take\.
There were no outcome indicators in this area\.
* Indicators on budget spending referred mostly to quantity or quality rather than
spending efficiency, which was the objective of the operation\.
* The outcome indicator for Ministry of Finance transfers to the Dominican State
Electrical Enterprise Corporation (CDEEE) was independent of international oil
prices, which seems unrealistic in a country nearly fully dependent on oil to produce
energy\. At a minimum it should have been subject to review at frequent intervals\.
Relevance of Design
2\.10 There appears to be a logical chain linking policies under the operation with the
objectives and planned outcomes\. Synergies with other operations in the health and education
sectors were required to achieve results over time and sustain policies\.
2\.11 The operation was designed to have the most significant effect on the spending side
of the budget by concentrating on three planks: strengthening public sector institutions for
better budget management, improving the efficiency of health sector spending and targeting
better social protection spending, and reducing drastically electricity sector transfers
(replacing a share of them by transfers targeted to the poor)\. The operation incorporated
findings from analytical and fiduciary reports, although some of the information and analysis
is likely to not have been fully up-to-date\.2
2 The Public Expenditure Review (2004), Poverty Assessment (2005), Country Economic Memorandum (2006),
and Country Fiduciary Accountability Assessment and Procurement Assessment Report (2004)\.
8
2\.12 Strengthening public sector institutions\. To improve the prioritization of annual
budgets and coordination across line ministries, the operation was to develop a multi-annual
budget, with a multi-year public investment plan\. To this end, the operation proposed the
introduction of performance-based budgeting in the ministries of health, education,
agriculture and labor\. Pilot results agreements to be developed during the operation's period
would propose strategic plans and identify performance indicators that would feed into
subsequent budgeting decisions\.
2\.13 Improving efficiency of health services and better target social spending At the
operation's appraisal health insurance coverage reached about a third of the poor and
extremely poor, and the efficiency of health services was low as reflected by poor health
results from significant health spending\. High maternal mortality rates went hand in hand
with suboptimal access to nutrition for mothers and children\. One of the government's
priorities-supported by the operation-was to reform the health sector to improve equitable
access to health services and expand health insurance coverage for the population, in
particular the poor and vulnerable groups\. An ambitious government goal was to achieve
universal health insurance, diminish inequalities in the public financing of health care
services, and reduce the risk to households from financial shocks generated by catastrophic
and out-of-pocket expenditures\. Steps towards this goal in the next few years included
protecting the fiscal resources for the fully subsidized regime (covering 1\.2 million
individuals in 2009) and expanding its coverage as fiscal resources allowed\. Moreover, the
plan contemplated the consolidation of efficiency gains in the procurement and distribution
of medicines\. While the operation supported an increase in health care coverage, its
interventions to increase the efficiency of health spending were minor\. On social protection
targeting, the idea was to conduct a new survey (previous one done in 2005) to identify poor
and extremely poor households, and use the new survey to better target social spending\.
2\.14 Reducing energy sector transfers\. Budget transfers to the electricity sector, as
noted, constituted for many years a macroeconomic problem in the Dominican Republic, and
crowded out fiscal space needed to support essential social protection programs\. The design
aimed contain un-targeted electricity sector budget transfers in 2009-10, with a view to
reducing them drastically and eventually eliminating them by 2012\. The strategy included the
idea to improve cost-recovery, which was at 50-60 percent\.
2\.15 The relevance of design was weakened by the lack of a roadmap for interventions that
would deliver an improvement in the efficiency of spending\. The authorities needed such
roadmap because they did not have experience with performance-based budgeting\. This
weakness was compounded by a lack of metrics (indicators or targets) which could be used
to measure progress toward better expenditure efficiency\. Moreover, this operation intended
to achieve in one year outcomes that would normally take several years, particularly in a
country where a number of institutions are still being developed\.
2\.16 The objective to improve the budget processes and spending efficiency is a case in
point\. It had had no indicator or target on spending efficiency, and of four ministries
expected to develop results-based budgets and programs, only two have started and
implemented initial steps\. The results being targeted were outputs rather than outcomes
(better efficiency), a number of indicators were on quantity, coverage, or quality rather than
9
expenditure efficiency, and the process of establishing programs for results remains incipient\.
Given the level of institutional development in the country, these outcomes were to be
expected\. The operation itself is ambiguous on some of the issues: although one of the
indicators refers to improved targeting of social spending (a quality issue), the relevant prior
action refers to sufficient resources to finance the Family Health Insurance (a quantity
measure)\. Moreover the operation did not focus enough effort on spending efficiency and
better budget processes, which are the core of one of its objectives\.
2\.17 Similar glitches occurred to the household survey, which was expected from the
Sistema Uinico de Beneficiarios (SIUBEN) within the program period\. SIUBEN was not
institutionally developed to carry out the full survey in 2010, as targeted by the DPL\. The
survey was eventually started in July 2011 and completed in May 2012, but its results are not
being used for the targeting of social programs, which are still using the 2004 survey\.
2\.18 The policies to achieve universal health insurance, diminish inequalities in the
financing of health care services, and reduce the risk to households from financial shocks
generated by catastrophic and out-of-pocket expenditures were not related to expenditure
efficiency, and their extreme ambition was not supported by intermediate steps during the
operation's time frame\.
2\.19 By contrast, the approach to electricity transfers from the budget was more realistic
and within the grasp of policy-makers\. In the end, the target was met only partially, a result
of policy failures rather than poor design\. This sub-objective would have benefited from an
up-to-date political economy analysis of the electricity reforms supported by the operation,
given the long history of policy failure in this area and the high political sensitivity of the
topic\.
2\.20 The design on tax policies was imprecise, without concrete targets or policies\.
Although tax exemptions were identified and quantified as a prior action, without a practical
implementing plan there was little reason to expect that tax policy and administration would
improve The most significant achievement was the publication-with the budget document
for 2009-of a comprehensive analysis and quantification of tax expenditures, but this was
done before the approval of the operation (prior action)\.
2\.21 Taking all loan design elements into account, the relevance of design to the objectives
is rated as modest\.
10
3\. Implementation
3\.1 The Bank's Board approved the operation on November 17, 2009 as a single tranche
operation based on the implementation of a number of prior actions and planned milestones\.
The loan became effective on December 1, 2009 and was closed on December 31, 2010\. All
prior actions were met, and the loan was fully disbursed on December 3, 2009\.
Macroeconomic Framework
3\.2 Except for the increase world oil prices that started in the second half of 2009, the
overall domestic macroeconomic environment provided a positive backdrop to the
performance and implementation of the operation\. The prompt intervention of the
international financial institutions averted a serious recession in 2009, and the economy
recovered strongly in 2010 (Table 2)\. Inflation remained contained at about 6 percent during
the operation and the consolidated fiscal deficit declined slightly to 4\.1 percent in 2010\. In
the face of increasing world oil prices, budget transfers to the electricity sector remained
above 1 percent of GDP through 2011 and increased significantly in 2012\.
Table 2\. Dominican Republic: Macroeconomic Indicators 2008-2012
2008 2009 2010 2011 2012
GDP Growth (annual %) 5\.3 3\.5 7\.8 4\.5 4\.0
Consumer Price Inflation (e-o-p %) 4\.5 5\.8 6\.2 7\.8 4\.0
Public Sector Balance/GDP (%) -4\.4 -4\.5 -4\.1 -4\.5 -8\.5
Budget Transfers Electricity Sector/GDP (%) 2\.7 1\.4 1\.2 1\.2 1\.8
Public Debt/GDP (%) 35\.3 37\.8 38\.8 40\.0 44\.9
World Oil Prices (US$/bbl) 97\.0 61\.8 79\.3 104\.0 105\.0
Source: IMF, March 2013 and IMF, April 2013
3\.3 The operation planted seeds in two policy areas (budget processes and fiscal
sustainability) and the policy dialogue continued under other Bank interventions in these
areas\. With exception of electricity sector and macroeconomic policies, the policies
themselves have been sustained by the authorities, and in some instances carried through to
conclusion by other interventions in the social and health sectors\.
Implementation Experience
3\.4 The main factor that affected program implementation adversely was a significant
increase in world oil prices\.World oil prices increased significantly between end-2008 and
end-2010\. In 2010 alone, the price of fuel oil #6-which is used to generate electricity-
increased by 28 percent, endangering the objective of fiscal sustainability\.This translated into
US$160 million in additional electricity sector losses to be covered by the budget\. Moreover,
a planned flexible electricity tariff pricing mechanism linked to market input prices
(including oil) was postponed due to increased political pressure on the government to avoid
further tariff increases\.In addition, liquefied gas subsidies increased, and higher food prices
led to lower real incomes and increased the demand for budgetary income support\.
11
3\.5 The government and Bank energy that characterized the preparation of the loan-up
to Board approval-appears to have fizzled out following loan effectiveness\. On the
government side, officials appear to have taken a respite after the strenuous sprint of
preparing two DPLs and an IMF stand-by arrangement during the second half of 2009\. Over
time, as the economy recovered strongly and external financing constraints slackened,
government compliance with IFI policy conditionality became less urgent\. As a result, policy
implementation lagged commitments under the loan\. On the Bank side, supervision and
follow-up were weak, and the only Implementation Supervision Report of the operation was
prepared after the loan closed\. Moreover, the monitoring and evaluation framework of the
loan was weak to provide early warning signs of a reform effort that was lagging behind
agreed benchmarks\.
3\.6 Coordination with other development partners, particularly the Interamerican
Development Bank and the IMF, was good\. With the former, the work was mutually
reinforcing in the energy and social sector areas\. With the IMF the focus of cooperation was
on macroeconomic stability, particularly budget transfers to the energy sector\. All three
institutions had joint meetings at the highest levels regarding energy sector policies,
especially electricity tariffs\. This unified front was helpful in getting the electricity tariff
increases in 2009 and 2010\. In 2011 the government decided to not increase electricity rates
as envisaged, and this decision in turn led to the suspension in 2011 and eventual expiration
in early 2012 of the IMF's stand-by arrangement\.
Monitoring and Evaluation Implementation
3\.7 The output and outcome evidence anticipated in the design was not collected and
analyzed in a timely manner\. Procurement and financing bottlenecks in the household survey
delayed implementation of the SIUBEN database\. Monitoring and evaluation was stronger in
those areas where there was overlap with other Bank interventions (for example, on social
sector accountability, and health sector reform) or the IMF, but this is because the other
interventions and the IMF implemented closer monitoring and evaluation of their conditions\.
3\.8 For the actual outcome indicators of the operation, the data requirements were
manageable and M&E was for the most part carried out by the Bank and its partners, such as
the IMF through its regular reviews of the stand-by arrangement\. The government generally
did not have a framework or resources to carry out adequate M&E under this operation\.
3\.9 Yet, some indicators were overoptimistic, and others were not followed closely
enough to improve project implementation\. At least one indicator proved to be unrealistic to
achieve within the 13-month time-frame of the DPL: the new household survey launch was
bogged down by procurement delays which then triggered politically motivated financing
delays\. The indicator relating to BONOLUZ3 combined two targets in one\. Closer follow-up
thus might have provided greater clarity on this indicator by identifying the two sub-targets
and setting levels appropriate to the timeframe of the operation\.
' BONOLUZ is a program of subsidies for electricity consumption targeted to poor households\.
12
4\. Achievement of the Objectives
4\.1 The objectives of the Public Finance and Social Sector DPL were: (i) to continue
improving the efficiency of budget processes generally and of social protection and public
health in particular, and (ii) to promote fiscal sustainability through the consolidation of
overall public sector balances and debt management (World Bank 2009b, pp\. 26-27)\.
Objective 1: Continue improving the efficiency of budget processes,
especially for social protection and public health (modest)
4\.2 The operation helped develop institutions needed to improve the efficiency and
quality of spending for poverty reduction and human development\. A multi-ministerial
committee contracted diagnostic studies to identify areas requiring institutional strengthening
to implement results-based budgeting, and help define the basis for expected results\. The
committee would then use the analysis to set criteria for performance indicators and design
the incentives to promote the meeting of the expected results\. The ministries of education and
health started to develop programs that are expected to improve the efficiency and quality of
services over time\. For now, these programs are targeting coverage of health and education
services, rather than efficiency and quality\. As an example, the programs target investments
in schools and primary care facilities\. At the same time, the Ministry of Health has
introduced results-based management agreements with all the regional health services,
creating incentives for health care providers to improve timeliness and quality at the first
level of care, focusing on mother and child care\. Moreover, programs under a separate
development policy operation in the health area have promoted the certification to
international standards of primary care facilities, which should over time result in better
primary health care services\. There was no progress in performance-based budgeting in the
Ministries of Agriculture and Labor\.
4\.3 Across-the-board electricity subsidies have been a drag on the budget\. As prior
actions under this operation the ceiling of subsidized electricity tariffs was reduced from
700/kWh to a maximum of 300/kWh per month, the universal subsidy for liquefied gas was
reduced and replaced by a new subsidy (BONOGAS) which is administered as a targeted
cash transfer, and the Program for Reduction of Blackouts-with subsidies based on a
geographic criteria-was eliminated\.
4\.4 This operation was also expected to contribute to better targeting social services\. The
main expected contribution in terms of targeting services and subsidies to the poor was the
implementation of a new survey by SIUBEN, but the survey was delayed by over a year and
is not yet used for the targeting of social sector policies\.
4\.5 At the same time, this operation helped the government expand and consolidate the
health component of social protection through an increase in coverage of the family health
insurance scheme, and ensured that targeted subsidies to finance health insurance for the poor
were protected expenditures in the budget\. While both these measures are worthwhile in their
own right, they did not contribute directly to improve the efficiency of public spending which
was the primary objective of the operation\.
13
4\.6 The programs and results frameworks in the education and health sectors supported
by the operation are starting to show results slowly\. Similarly the work on social program
targeting is beginning to bear fruit now\. Results so far have been quite modest underlining
the long-term nature of the problems being addressed, and this operation did not have metrics
or indicators to measure progress in expenditure efficiency\.
4\.7 The Interamerican Development Bank also worked on education, health, and social
protection in close cooperation with the World Bank\. The government ensured that the IDB's
and Bank's interventions were mutually reinforcing and did not overlap\.
4\.8 While it is difficult to estimate what might have happened under Objective 1 in the
absence of the loan, discussions with country counterparts identified two key items of value
added:
* Replacing the the Program for Reduction of Blackouts (PRA) by new, more
targeted subsidies BONOLUZ and BONOGAS: The elimination of the PRA-a
program of geographic electricity subsidies-resulted from discussions under this
operation and the corresponding policy commitments\. It would have been very
difficult to do it in the absence of this operation\.
* Protecting expenditure in education and health: Under this operation certain
programs in education and health were protected through specific "locked" funding in
the budget\. While this generates rigidities on the spending side, it also ensures the
continuity of programs that eventually will deliver anticipated results in the respective
areas\.
Objective 2: Promote fiscal sustainability (substantial)\.
4\.9 This operation's second objective was supported by a planned reduction of electricity
sector transfers through managerial improvements in the electricity sector, electricity tariff
increases, and better targeting of subsidies to consumers (the latter two were prior actions or
milestones of the operation)\. Moreover the operation envisaged improvements on taxation
and debt management\.
4\.10 The Dominican Republic's budget has been traditionally stretched by untargeted
electricity subsidies amounting to 1-3 percent of GDP depending on the level of world oil
prices and tax exemptions amounting to nearly 5 percent of GDP\. Any exercise to strengthen
the fiscal account required addressing these two issues\.
4\.11 The operation was not successful in reducing budget subsidies to the electricity
sector\. In 2012 transfers are estimated by the authorities to have amounted to US$1\.2 billion
or 1\.8 percent of GDP, up from 1\.4 percent of GDP in 2009\. However, on targeting subsidies,
the operation had success by promoting the elimination of PRA (geographically based
subsidies), and replacing it by BONOLUZ and BONOGAS subsidies\.4 The background work
on subsidies to the electricity sector was done in close cooperation with the IMF, although
4 These are subsidies to poor households to cover the cost of electricity and gas consumption\.
14
the World Bank took the lead under this operation\. The policies advocated were part of an
ongoing dialogue on electricity sector reform under a technical assistance loan approved in
February 2004, the Bank's three-tranche Programmatic Power Sector Reform Loan (closed in
March 2009), and the follow-on Distribution Rehabilitation Loan that became effective in
May 2009\. The replacement of the Program for Reduction of Blackouts by BONOLUZ and
BONOGAS, and the increase in electricity tariffs in 2009 and 2010 are attributable to the
operation\.
4\.12 On taxation, through a prior action the operation helped the government assess,
quantify, and make public the cost of tax exemptions to the budget\. But beyond that, it did
not contain a specific strategy to improve revenue administration and collection\. During the
program period the government developed a strategy to improve tax administration, although
the Bank did not have direct involvement in its preparation\.
4\.13 Also through a prior action, the operation helped the government clear arrears to
electricity sector operators\. Moreover, the government reduced arrears to other government
suppliers\. While both these actions made debts more manageable, the operation did not
contain measures to improve debt management per se\.
4\.14 While the IMF was the main government counterpart on macroeconomic policies,
several measures under this operation contributed to fiscal sustainability\. In particular, the
electricity tariff increase and the end of untargeted electricity subsidies carried out under the
operation were essential for fiscal sustainability\.
4\.15 It is difficult to estimate what might have happened in the absence of the loan under
Objective 2, but discussions with country counterparts identified two items of valued added
by the operation:
* Raising electricity tariffs: Electricity tariffs were raised by about 25 percent in steps
as a result of the operation\. This saves the budget about US$200 million a year\. In the
absence of this operation the raising of electricity tariffs would have been very
difficult to do\.
* Budget Financing: The Dominican Republic was in dire need of budget financing,
and the DPL played a significant role in this regard\. Without the IFI package, the
country would have not had obvious financing alternatives in the second half of 2009
and a corresponding need for draconian fiscal adjustment\.
5\. Ratings
Outcome
5\.1 The outcome of this operation is rated moderately satisfactory\.
5\.2 The objectives of the loan were aligned with the government's reform agenda, and
addressed three key issues of that agenda: protecting the most vulnerable sectors of society
from an external shock that was affecting the whole country; opening space in the budget for
15
essential social protection transfers; and guaranteeing revenues that would finance the cost of
social protection\. Thus relevance of objectives is rated substantiaL
5\.3 The relevance of design is rated as modest\. Implementing the policies under of the
loan would indeed help achieve the objectives on public spending for poverty reduction and
human development, and mitigate the impact of the global financial crisis on the Dominican
Republic's public finances\. The budgeting for results would over time improve spending
efficiency if done right\. The problem with the design however is that a one-year operation
was intended to achieve outcomes that would normally take several years, particularly in a
country where a number of institutions are still being developed\. Moreover, the authorities
did not have a roadmap of spending reform that would improve efficiency, with indicators
that could measure the improvement of spending efficiency over time\.
5\.4 The design of the loan however needs to be put in the context of the situation at the
time: (i) the Bank's corporate imperative in 2009 was to accelerate lending to emerging
markets to contain the spread of the global financial crisis from industrial to emerging
markets (IEG 2011)\. There is an inherent tension between this priority and the need to
establish a long-term dialogue on reform policies; and (ii) the operation was part of a
portfolio of loans provided to the Dominican Republic at the time,5 and as such could rely on
the other loans to act as a "shock absorbers" of weak performance, by their following up and
monitoring implementation of measures that were only partially implemented under this
operation \.
5\.5 Achievement of the operation's objectives was mixed (see Table 3)\. While efforts
were launched in a number of areas-program budgeting for results; improving targeting of
social programs and subsidies; improving the quality of health spending; controlling
inefficient budget transfers (electricity); and improving tax collections-expected results
took much longer to materialize than the period of this operation\.
5\.6 At the same time, this operation launched policy improvements in the education,
health, and social sectors that have been followed up by other Bank interventions and are
starting to show promising results\.
Table 3\. Operations Achievement of Outcomes, Ratings and Policies
Objective and policies Level of Explanation/Main Achievements and Issues
achievement
Objective 1\. Continue Modest While efforts were launched, budget for results remains
improving the efficiency of incipient, and the household survey for targeting social
budget processes, programs was not done\. Health results improved measured by
especially for social life expectancy and infant mortality indicators, but it is unclear
protection and public if health spending efficiency improved or that health budget
health processes improved significantly\.
5 Social Sector DPL; Health Sector DPL; IMF stand-by arrangement; and several fast-disbursing loans from the
Inter-American Development Bank\.
16
Policies for Objective 1
Improve institutions for NA Of four target ministries for results-based budgets, two
budgeting and expenditure (Education/Health) have taken initial steps\. Targets are for
management\. inputs/outputs rather than results\.
Better target social and The ceiling for subsidized electricity tariffs was cut in more than
other expenditures half\. The universal subsidy for liquefied gas was replaced by a
new subsidy (BONOGAS) provided as a cash transfer, and the
across-the-board Program for Reduction of Blackouts (PRA)
was eliminated\.
Implement the mandates NA Coverage of subsidized health care regime increased from 1\.23
of the universal health million to over 2 million, and the budget for health increased by
insurance laws 35 percent\.
Improve targeting of NA Household survey needed to achieve the objective was not
spending intended for the implemented primarily due to procurement problems\. SIUBEN
poor by updating the data base not updated\.
SIUBEN beneficiary
database for 2009
Ensure that targeted Targeted subsidies to finance health insurance for the poor are
subsidies to finance health protected in the budget\.
insurance for the poor are
protected
Objective 2\. Promote Substantial Fiscal sustainability improved in the Dominican Republic\. The
Fiscal Sustainability elimination of the PRA and replacement by targeted subsidy
programs was a very significant achievement of the operation
because of the political resistance to the measure\. The measure
resulted in permanent fiscal savings\. Although the target of
households for BONOLUZ was not achieved in 2010, today
over 500,000 households receive BONOLUZ\. The tax sub-
objectives are hard to assess\.
Policies for Objective 2
Reduce the fiscal burden NA Although electricity tariffs were raised for a combined 25
from losses of the percent in 2009 and 2010, transfers to the electricity sector
electricity sector increased from 1\.1 percent of GDP in 2009 to 1\.2 percent in
2010 due to non-payment by consumers, higher consumption,
and higher world oil prices\. PRA was eliminated, and
BONOLUZ reached 135,000 households against the 450,000
household targeted by the DPL\.
Adoption and adherence to NA The government adhered to the 2009 financing plan as a prior
the publicly announced action which led to the approval of the operation and of the IMF
financing plan for 2009 stand-by arrangement\.
Improve the effectiveness NA The DPL supported two main measures: (i) requiring large firms
of revenue collection by to file and pay on-line; and (ii) automatic retention of VAT on
domestic and customs credit card purchases\. Tax revenues remained at around 13
authorities percent of GDP\. The authorities prepared a strategy to
rationalize tax exemptions and improve tax administration\.
Improve debt management The government reduced arrears to electricity generators and
other government suppliers\.
Source: World Bank 2011, IMF 2010, IMF 2011, and IEG discussions with counterparts in the Dominican Republic\.
Risk to Development Outcome
5\.7 The risk to development outcome is significant\.
17
5\.8 On efficiency of public spending, the authorities are making progress supported by
several World Bank interventions\. The mechanisms and policies being implemented in this
area will continue while the interventions continue and World Bank financing is available\. It
remains unclear whether the policies are being entrenched institutionally for the longer term\.
Their sustainability will depend on political will of the administration\.
5\.9 On cutting budget transfers to the electricity sector, which is essential for fiscal
sustainability, real progress has been slow to come and generally followed by setbacks\.
Vested interests and political pressures have been too strong to introduce sustained reforms
in the electricity sector\.
5\.10 On tax policies and administration, again there has been a history of back and forth
depending on budget urgencies and the influence of interested and powerful groups\. This is
unlikely to change\.
Bank Performance
5\.11 Quality at entry was moderately satisfactory\.
5\.12 This operation was strategically relevant by supporting the government to address
three key issues on the social and budget spheres: protecting the most vulnerable sectors of
society from an external shock that was affecting the whole country; opening space in the
budget for essential social protection transfers; and guaranteeing revenues that would finance
the cost of social protection\.
5\.13 The World Bank showed the required responsiveness to assist the Dominican
Republic financially in the midst of the global financial crisis, thus avoiding seriously
adverse effects on society\. In doing this it coordinated closely with other IFIs, which made
the effort more meaningful for the Dominican Republic, and also embedded this operation
within a critical mass of interventions that proved a step forward in some areas\.
5\.14 The design of the operation displayed the tension between the corporate imperative to
deliver funding quickly, and the development imperative that required embedding the
program design within a longer term reform concept\. As a result, a one-year operation was
intended to achieve outcomes that normally would take several years to achieve, particularly
in a country where a number of institutions are still being developed\. The consequence was
that the operation managed to plant seeds in the relevant policy areas but not to show a
number of the anticipated results within its time horizon\.
5\.15 The prior actions and planned milestones represented a reasonable basis for the
operation, although some of them (for example, agreement of various ministries to pilot
programs on performance budgeting) proved to be more wishful thinking than real plans\.
5\.16 Analytical and advisory support for the operation's activities was not significant
because the operation relied on analytic work from other Bank operations\. The main parallel
Bank activities that provided analytic and advisory activities were the Performance and
Accountability of Social Sector series and the three-phase Adaptable Program Loan for the
18
Health Sector\. The policies on performance-based budgeting in several ministries suffered
from the lack of technical assistance support from the Bank\. The operation was prepared over
a short period (concept note 4/15/2009 to Board approval on 11/17/2009), which did not
provide enough time for extensive policy dialogue and meaningful analytic work that go
along with a normal DPL\. Monitoring and evaluation were poorly designed; there were no
indicators or targets for the objective of budget processes and efficiency of public spending\.
5\.17 Quality of supervision was moderately satisfactory\.
5\.18 Monitoring arrangements were challenging to design in the time-horizon of a single-
tranche operation\. Moreover, supervision was difficult because a number of sub-objectives
did not have indicators or targets\. At the same time the World Bank was slow to identify and
resolve threats to the achievement of the relevant development outcomes\. The indicator
relating to BONOLUZ combined two targets in one, and closer follow-up would have
provided greater clarity on this indicator by identifying the two sub-targets and setting levels
appropriate to the time-frame of the operation\. The outcome indicator for Ministry of Finance
transfers to the electricity complex was independent of international oil prices, which seems
unrealistic in a country nearly fully dependent on oil to produce energy\. At a minimum it
should have been subject to review at frequent intervals\.
5\.19 Supervision was stronger in areas where there was policy overlap with other World
Bank interventions in the social sectors and health\. Owing to follow-up from the latter
interventions, the SIUBEN survey was eventually implemented with delay, and progress was
made in results-based budgeting in the ministries of Education and Health\.
Borrower Performance
5\.20 The government did not have much experience with preparing and implementing a
DPL in the social sector\. Therefore this project represented a major challenge, particularly
for the Social Cabinet, which led by the Vice-President effectively coordinated the effort on
the Dominican Republic's side\.
5\.21 Government ownership and commitment was strong from the outset in light of the
significant exceptional financing needs of the budget\. The government did not have a strong
monitoring and evaluation set up and had to develop ad hoc mechanisms to follow-up on the
implementation of prior actions and other measures\. It was a good effort of policy
implementation in a very difficult economic environment, although monitoring could have
been better\. The government shares part of the responsibility (with the Bank) for the weak
monitoring and evaluation of this operation\.
5\.22 At the same time a number of outcome targets were only partially achieved because
of poor institutional development of some of the agencies in charge of social policies\. Other
outcomes were not achieved, in part because political commitment fizzled as the economy
recovered strongly and the financial constraints became less acute in 2010\.
5\.23 Overall, the rating for borrower performance is moderately satisfactory\.
19
Monitoring and Evaluation
5\.24 Monitoring and evaluation was modest\.
5\.25 Design and implementation\. Although there were time-bound, measurable
indicators in most prior actions, a number of loan sub-objectives did not have indicators or
targets\. The output and outcome evidence anticipated in the design was not collected and
analyzed in a sound and timely manner by the Bank or the government, which led to blind-
spots in supervision of the project\. For the objectives with outcome indicators the data
requirements were manageable and M&E was for the most part carried out by the Bank and
its partners, particularly the IMF through its regular reviews of the stand-by arrangement\.
The M&E that required government involvement was less effective, and the Bank team
missed opportunities to modify certain targets because of poor follow-up on the development
of indicators\.
5\.26 Use of M&E data\. The monitoring and evaluation focus was more on inputs or
outputs than on outcomes, and the system was not used in a timely manner to evaluate
progress and effect required program modifications\. The operation did not formalize
stakeholder involvement, such as consumer associations, in monitoring, which could have
helped subsequent interventions and support the sustainability of policies\.
6\. Lessons
6\.1 Since the operation was closed at end-2010 macroeconomic policy has gone off-track\.
The IMF stand-by arrangement was suspended in mid-2011, mainly because the Dominican
Republic did not bring electricity prices in close alignment with cost recovery as envisaged\.
A new government elected in 2012 has not been completely clear about its intentions with
respect to increasing electricity tariffs, but the consensus seems to be that tariffs will not be
increased\. Owing significantly to transfers to the electricity sector, the budget deficit is
estimated at 812 percent of GDP in 2012, against the target of 1-2 percent of GDP in the
standby arrangement's original macroeconomic framework\. The IMF left a very strong
message in a November 2012 visit to Santo Domingo, underscoring the need for fiscal
consolidation to sustain macroeconomic stability (IMF 2012b)\.
6\.2 The Education and Health ministries with Bank support continue to make progress in
the implementation of programs for results\. The current challenge is to move from targeting
inputs and outputs to targeting efficiency and quality of service delivery and results\. The
SIUBEN survey was completed in April/May 2012, but it is still not used for targeting social
policies because the authorities have to prepare a transition strategy from the 2004 survey to
the 2012 survey\. In particular, they need to decide on a transition period for families that
were classified poor under the 2004 survey and are no longer categorized as poor under the
2012 survey\.
6\.3 Five lessons emerge from implementation of this operation:
* The imperative to respond at a time of crisis can be in conflict with starting a
dialogue on requirements for longer term reform\. In the rush to provide the
20
Dominican Republic with urgently needed budget financing it was difficult to
discuss and prepare a loan with the requisite measures needed for longer term
reform\. The extensive policy dialogue and meaningful analytic work that go along
with a normal development policy operation were not part of this operation's
preparation\. In this context it was difficult to propose a realistic timing for policy
implementation and have in place the monitoring and evaluation mechanisms that
would ensure success\. This predicament was exacerbated by the limited
experience of Dominican Republic technical teams on putting together the
operation policy framework, with the respective monitoring and evaluation
mechanisms\.
An overly complex design-typical of a normal development policy loan-
without short term indicators that can be monitored (for reforms that will
take far longer than the duration of the operation) can detract from efficacy\.
This operation's policy framework was too complex for a one-year operation
designed over a short time frame\. The short preparation period for the operation
and the lack of a realistic policy framework-for example on the implementation
of results-based budgeting-hurt the results of the program and reduced its
efficacy\.
* In light of the previous two lessons, a development policy loan may be the
wrong instrument to support a country in a financial crisis\. By definition a
development policy loan requires serious policy reforms and longer term policy
commitments which may be difficult for both the Bank and the country to design
well when the country is in urgent need of budget financing\.
* The lack of updated political economy analysis can hamper reforms and
Bank value added\. Such assessment was lacking in the case of electricity
reforms of the operation which contributed to prolong poor results in the
electricity sector\. Reforms of the electricity sector have been supported by the
Bank through several loans at least since the 1980's (over thirty years)\. And as in
the past, dialogue under this operation was ineffective in durably influencing
long-dating government policies of subsidizing electricity\. Energy subsidies
remain a major drain on the budget, and other means will have to be found to
strengthen this dialogue and obtain results in the electricity sector\.
* A critical mass of Bank interventions in a country can act as a "shock
absorber" for shortcomings in individual operation and help deliver results
at times of crisis\. Although outcomes under this operation were not achieved as
envisaged, the respective policies generally have continued to be implemented
under follow-on or parallel operations\. The result is that-with the exception of
the electricity sector and macroeconomic policies-the operation's policies have
been sustained and results in some areas are materializing with a lag\. Moreover,
the parallel and follow-on Bank interventions have helped offset in part the
weaknesses in the monitoring and evaluation framework of the operation\.
21
References
IEG\. 2003\. Country Assistance Evaluation for the Dominican Republic\. Washington DC:
World Bank,
\. 2011\. The World Bank Group's Response to the Global Economic Crisis-Phase
II\. Washington DC: World Bank\.
IMF \. 2010\. "Country Report No\. 10/135\." Washington, DC, May\.
\.2011\. "Country Report No\. 11/177\." Washington, DC, July\.
\. 2012a\. "Consultation with the Dominican Republic Article IV", Public
Information Notice No\. 13/26, March 8, 2013\.
\. 2012b\. "Mission to the Dominican Republic Article IV" Press Release No\.
12/445, November 18, 2012\.
\. 2013\. "World Economic Outlook\." Washington, DC\.
United Nations\. 2012\. Millennium Development Goals\. New York\.
Word Bank\. 2009a\. "Country Partnership Strategy for Dominican Republic, FY10-
FY13"\. Washington D\.C\.
2009b\. "Program Document for the Proposed Public Finance and Social Sector
Development Policy Loan to the Dominican Republic\." Report No\. 49236-DO
Washington DC:
\. 2011\. "Implementation Completion and Results Report on the Public Finance and
Social Sector Development Policy Loan to the Dominican Republic," Report No:
ICR00001881\. Washington DC\.
World Economic Forum\. 2009\. "Global Competitiveness Report\."
\. 2012\. "Global Competitiveness Report\."

23 ANNEX A
Annex A\. Basic Data Sheet
DOMINICAN REPUBLIC: PUBLIC FINANCE AND SOCIAL
SECTOR DEVELOPMENT POLICY LOAN
Key Project Data (amounts in US$ million)
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total project costs 150\.0 150\.0 100\.0
Loan amount 150\.0 150\.0 100\.0
Cofinancing
Cancellation
Cumulative Estimated and Actual Disbursements
FY10
Appraisal estimate (US$M) 150\.0
Actual (US$M) 150\.0
Actual as % of appraisal 100\.0
Date of Final Disbursements: 12/03/2009
Project Dates
Original Actual
Initiating memorandum 11/12/2008 04/15/2009
Negotiations 11/12/2008 07/29/2009
Board approval 12/23/2008 11/17/2009
Signing 12/01/2009
Effectiveness 12/01/2009
Closing date 12/31/2010 12/31/2010
ANNEX A 24
Task Team Members
Responsibility/
Names Title Unit spenib
Specialt
Lending
[Maurizio Bussolo Sr\. Economist LCSPE TTL
Carine Clert Sr\. Social Protection Specialist LCSHS Social sector
Fernando Montenegro Torres Sr\. Health Economist LCSHH Social sector
Juan Miguel Cayo Sr\. Energy Specialist LCSEG Electricity
Marco Arena Consultant
Carolina Biagini Majorel Consultant LCSPS
Benu Bidani Sector Leader LCC3C
Christina Malmberg Calvo Sector Leader LCSSD
[Leritza Monsanto Abreu Consultant LCSPE
[David Reinstein Sr\. Energy Specialist LCSEG
Roby Senderowitsch Country Manager LCCDO
Cornelia Teliuc Sr\. Social Protection Specialist LCSHS
Theo David Thomas Sr\. Public Sector Specialist EASPR
David Seth Warren Sector Leader LCSHD
Tammy Lynn Pertillar Temporary LCSPE
Steven Benjamin Webb Consultant IEGCC
Supervision
Maurizio Bussolo Sr\. Economist LCSPE Supervision, ISR
Elizabeth Ruppert Bulmer Sr\. Country Economist LCSPE ICR Team Leader
Miguel Sanchez Martin Jr\. Professional Officer LCSPE ICR - Macro
Timothy Cheston Jr\. Professional Associate LCSHS ICR - Social sectors
Jasmin Chakeri Sr\. Country Economist LCSPE ICR - Mission
Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage NUSD Thousands (including
travel and consultant costs)
Lending
FY09 43 250\.6
FY10 10 60\.2
Total: 53 310\.8
Supervision/ICR
FY10 3 34\.4
FY11 6 30\.6
Total: 9 65\.0
25 ANNEX B
Annex B\. List of Persons Met
Government
Patricia Angeles, Gerente de Operaciones, Administraci6n Financiera e Informatica,
Ministerio de Finanzas
Yuderka Arrendell, Directora Sistemas de Salud-Programaci6n por Resultados, Ministry of
Health\.
Ramon Gonzalez, Director General de Administradora de Subsidios Sociales (ADESS) and
his five-member management team\.
David Lapaix, Director de Programaci6n Financiera y Estudios Economicos, Ministerio de
Educacion\.
Dra\. Magdalena Lizardo, Directora Unidad de Anilisis Economico y Social, Ministerio de
Economia, Planificacion, y Desarrollo\.
Juan Monegro, Vice-Minister, Ministerio de Economia, Planificaci6n y Desarrollo\.
Enrique Ogando, Coordinador General, Unidad T6cnica de Proyectos, Gabinete Social\.
Luis Nuiez, Vice-Minister, Credito Publico, Ministerio de Finanzas, and his management
team\.
Miriam Rodriguez, former Director Sistema Unico de Beneficiarios (SIUBEN)
Nelson Rodriguez, Vice-Minister of Health\.
Victor Sdnchez, Vice-Minister of Education\.
Ram6n Sarante, Director T6cnico, Administraci6n Financiera e Informtica, Ministerio de
Finanzas\.
Yira Tavdrez, Advisor, Ministry of Health\.
Joel Tejeda, Sub-Gerente de Politicas Monetaria, Cambiaria, y Financiera, Central Bank\.
Former Government Officials Involved with the Operation
Susana Gamez, former Technical Director of Social Cabinet\.
Ing\. Celso Marranzini, former Director, Dominican Corporation of State Electrical Enterprise
(CDEEE)\.
Ing\. Manuel Pumarol, former Advisor, Social Cabinet\.
Ing\. Van Elder Espinal, former Director, Social Subsidies Administration (ADESS)\.
Academia
Rolando Guzmin, Rector Intec University, Santo Domingo (technical university)\.
World Bank
Marilyn Brito, Head of Implementation Unit, World Bank Projects at the Dominican
Corporation of State Electricity Enterprises (CDEEE)\.
Maurizio Bussolo, Task-Team Leader, World Bank, Washington DC\.
ANNEX B 26
Other Donors
Francisco Carreras, European Union Delegation
Sandro Parodi, Advisor, Inter-American Development Bank (Santo Domingo office)\.
Alejandro Santos, Mission Chief, IMF, Washington DC | REVIEW |
P085133 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Govt Finl Mgt & Revenue Admin Project (P085133)
Report Number : ICRR0020347
1\. Project Data
Project ID Project Name
P085133 Govt Finl Mgt & Revenue Admin Project
Country Practice Area(Lead)
Indonesia Governance
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-47620,IDA-40260,TF-53556,TF- 30-Jun-2009 67,915,016\.00
90047,TF-91414
Bank Approval Date Closing Date (Actual)
21-Dec-2004 31-Dec-2015
IBRD/IDA (USD) Grants (USD)
Original Commitment 60,000,000\.00 7,124,538\.00
Revised Commitment 59,999,904\.23 4,835,776\.14
Actual 59,967,836\.83 4,835,776\.14
Prepared by Reviewed by ICR Review Coordinator Group
Judyth L\. Twigg Clay Wescott Lourdes N\. Pagaran IEGEC (Unit 1)
2\. Project Objectives and Components
a\. Objectives
According to the Loan Agreement (p\. 22), the project's objective was "to improve efficiency, governance,
integrity and transparency in the Borrower's public financial management and revenue administration\."
The Development Credit Agreement (p\. 1) cites a letter from the Borrower describing a slightly different set of
objectives: "to implement policy and process reforms to strengthen efficiency, governance and accountability
in public financial management and the revenue administration\."
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In the June 2009 restructuring paper (Annex 1), the objective was revised to focus only on public financial
management: "The objective of the Project is to improve efficiency, governance, integrity and transparency in
the Borrower's public financial management\." Many activities related to tax administration were instead
picked up by a separate Specific Investment Loan (Project for Indonesian Tax Administration Reform, which
was eventually cancelled after very little disbursement), and the government decided to implement customs
administration reform without donor assistance\.
For purposes of this validation, the objectives are taken from the original Loan Agreement and Restructuring
Paper, and a split rating is performed\. At the time of restructuring, US$ 4\.86 million, or 7\.3 percent of Bank
financing, had been disbursed\. This review assesses the following specific objectives: (i) improve efficiency
in the Borrowerâs public financial management; (ii) improve governance in the Borrowerâs public financial
management; (iii) improve integrity and transparency in the Borrowerâs public financial management; and (iv)
improve efficiency, governance, integrity and transparency in the Borrowerâs revenue administration\.
The project was originally conceived as the first phase of a three-part, twelve-year Adaptable Program Loan
(2004-2015), with the overall program objective to "facilitate the realization of poverty reduction goals through
higher resource mobilization and more effective public resource management" (Project Appraisal Document,
PAD, p\. 3)\. The first phase was ultimately extended through 2015 as a Specific Investment Loan under the
revised objectives, and the second and third planned phases were never implemented\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
Yes
Did the Board approve the revised objectives/key associated outcome targets?
Yes
Date of Board Approval
05-Jun-2009
PHEVALUNDERTAKENLBL
c\. Will a split evaluation be undertaken?
---
d\. Components
The project contained four components (the ICR provides actual costs by component only for Bank
financing):
A\. Public Financial Management (PFM) (appraisal: US$ 66\.9 million; actual Bank financing US$ 61\.18
million)\. This component was intended to support the Ministry of Finance and Bappenas (the National
Development and Planning Agency) in strengthening the effectiveness, transparency, and accountability of
government spending through technical assistance and investment for: (a) strengthening of policy capacity;
(b) strengthening of budget planning and development, reform of the budget process, and unified budget
preparation (including capacity building support for four pilot line ministries); (c) budget implementation and
treasury modernization, including the design and implementation of an automated treasury payment and
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budget preparation system (SPAN); (d) public procurement reform, including a pilot e-procurement system;
and (e) implementation of public sector accounting standards\.
B\. Revenue Administration (appraisal: US$ 2\.8 million; actual Bank financing US$ 0\.26 million)\. This
component was intended to improve compliance and revenue collection, promote integrity, and facilitate
services for traders\. It was to finance investment and technical assistance for the Directorate General of
Customs and Excise to strengthen client services through improved organization and management,
customs operations, trade facilitation, and integration and consolidation of information systems and
technology infrastructure\.
C\. Governance and Accountability (appraisal: US$ 5\.4 million; actual Bank financing, US$ 1\.40 million)\.
This component was to strengthen entities functioning as strategic checks and balances in the broader
governance and accountability framework\. It was to finance investment and technical assistance: (a) to
the House of Representatives for strengthening parliamentary capacity for budget analysis and oversight;
(b) to the Tax Court for facilitating revenue dispute resolution through strengthening the Court's efficiency,
transparency, and professionalism; and (c) to the Office of the Inspector General of the Ministry of
Finance for strengthening internal accountability\.
D\. Project Governance and Implementation (appraisal: US$ 4\.9 million; actual Bank financing US$ 2\.85
million)\. This component was to strengthen project governance, ownership, sustainability, and
coordination\. It was to finance investment and technical assistance for change management and
socialization, communication, monitoring and evaluation (M&E), and project implementation\.
At the 2009 restructuring, activities related to revenue and tax administration were dropped\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost: Total project cost at appraisal was US$ 80 million\. At the June 2009 restructuring, costs
were increased to US$ 95 million\. Final project costs were US$ 96\.55 million\.
Financing: The project was to be financed by an International Bank for Reconstruction and Development
loan of US$ 55 million, of which US$ 55 million was disbursed (actual spending by the government was
US$ 54\.4 million, with the government refunding the unspent balance to the Bank), and an International
Development Association credit of US$ 5 million, of which US$ 4\.97 million was disbursed\. The Japanese
Ministry of Finance was to contribute a US$ 5 million Policy and Human Resource Development grant, of
which US$ 4\.6 million was disbursed\.
A Public Financial Management Multi-Donor Trust Fund, approved in April 2007, was to contribute US$
3\.85 million\. According to the ICR (p\. 34), about US$ 1\.2 million of these funds was allocated to support
activities not part of the project's scope, and therefore US$ 2\.6 million of this Trust Fund is to be
considered disbursed under the project\.
Total Bank financing including grants was therefore US$ 66\.57 million (ICR, Annex 1)\.
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Borrower Contribution: The Borrower's originally planned contribution was US$ 15 million, increased to
US$ 30 million at the June 2009 restructuring\. The actual Government contribution was US$ 30 million\.
Dates: This project was originally approved by the Board on December 21, 2004\. The project underwent
two restructuring processes\. In June 2009, a Board-approved restructuring revised the project's objectives
and components and extended the closing date from June 30, 2009 to December 31, 2013\. In December
2013, the closing date was extended by two years to December 31, 2015\.
3\. Relevance of Objectives & Design
a\. Relevance of Objectives
The original objectives were relevant to country conditions, government plan, and the Bankâs country
assistance strategy\. At appraisal, perceptions of corruption in public financial management practices were a
formidable barrier to addressing Indonesia's poverty and development challenges\. The Minister of Finance
had proposed rolling out reforms in stages, creating initial islands of effectiveness and integrity to proceed
first and serve as role models for the others\. This project was intended to establish such an "island" at the
Ministry of Finance as the basis for expansion of effective and efficient governance and transparency
throughout the public sector\. The objectives followed from a 2002 Ministry of Finance White Paper that laid
out the rationale behind the reforms, stressing that transparency in government budget preparation and
accountability in treasury management would strengthen the responsive, efficient, and effective allocation
and use of resources, forming an essential element of the country's anti-poverty program (PAD, p\. 2 and
Annex 1 p\.16)\. Good governance remains a key element of the government's National Medium-Term
Development Plan (2015-2018), and one of the core engagement areas of the Bank's current Country
Partnership Framework (2016-2020) is enhanced revenue generation and improved effectiveness of public
spending\. Even after the dropping of the revenue administration part of the objectives at restructuring, the
objectives were still highly responsive to government and Bank priorities\.
Rating Revised Rating
High High
b\. Relevance of Design
The project's planned activities were well aligned with its intended outcomes\. Efficiency gains were to be
expected from the implementation of the State Treasury and Budget System (SPAN) and Treasury Single
Account (TSA) systems\. Governance improvements were to stem from the project's interventions in policy
and budget planning capacity development in the Ministry of Finance and Parliament\. Transparency and
integrity were to be enhanced through procurement reforms\. Highly specialized experts participated in the
construction of each component\. However, it was an important shortcoming that the readiness of the
revenue administration institutions to undertake major reforms was overestimated, rendering the scope of the
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project overly ambitious even for a long-term adaptable program loan\. The project's original design was
therefore rated Modest\. Once the objectives and activities were recalibrated at the 2009 restructuring, design
became Substantial\.
Rating Revised Rating
Modest Substantial
4\. Achievement of Objectives (Efficacy)
PHEFFICACYTBL
Objective 1
Objective
Improve efficiency in the Borrower's public financial management
Rationale
Outputs:
SPAN and TSA systems were rolled out\. The SPAN is operational in 222 locations across the entire country,
managing 100 percent of financial transactions of over 24,000 government spending units\. The TSA is now
operational in all Treasury offices, with all state receipts deposited in and all state expenditures withdrawn
from it, through electronic transfer\.
Outcomes:
Informal "fees" that previously were given to expedite payments have been discontinued\. Direct deposits
are now used for salaries of 1\.62 million civil servants and payments to 300,000 suppliers, saving
approximately US$ 55 million annually in printing and internal communications costs\. The number of bank
accounts being managed for payment of salaries has been reduced from 750 to three\. OM-SPAN, an on-
line monitoring system for payment transactions, can now be used to check on payment status on a real-
time basis\. Government officials can now monitor the budget execution process almost in real time, a
substantial improvement over the previous system that required reconciliation of multiple reporting systems
from several databases\. While the number of Treasury staff has remained constant, the volume of payment
transactions increased from 32 million transactions in the amount of Rp590 trillion in 2008, to 44 million
transactions in the amount of Rp1,400 trillion in 2013\. In addition, since full implementation of TSA in 2009,
over US$ 300 million has been saved in interest earnings due to consolidation of cash balances, the bringing
into compliance of off-budget accounts, and the closing of miscellaneous accounts of line ministries\. An
audit of 2015 financial reports was expected in mid-2016\.
Rating
Substantial
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PHREVDELTBL
PHEFFICACYTBL
Objective 2
Objective
Improve governance in the Borrower's public financial management
Rationale
Outputs:
The capacity of members of Parliament to scrutinize and oversee the annual budget was improved through
analytical support to the budget formulation process\. The project also supported training and
professionalization of Fiscal Policy Office staff\. For example, training was offered to staff (seven of whom
completed Ph\.D\. programs, 12 master's programs, and 18 specialized training)\.
Outcomes:
An annual budget review, undertaken by Parliament over a period of about seven months, now covers the
country's macroeconomic framework, main fiscal policies, and expenditures and revenues\. The relevant
parliamentary sectoral budget commissions hold detailed discussions of the annual work plans of line
ministries\. The amount of time Parliament has to review the draft budget once it is tabled has increased
from 6-8 weeks prior to the project to 8-10 weeks\.
A medium-term expenditure framework (MTEF) was introduced in the 2011 budget, but its fine tuning and
the operationalization of performance-based budgeting are not yet realized\. A Ministry of Finance regulation
issued in 2015 obligates line ministries to submit three-year forward estimates along with annual budget
proposals\. Integration between the Treasury and the Budget Preparation module of SPAN remains a
challenge (ICR, p\. 28)\.
Rating
Modest
PHREVDELTBL
PHEFFICACYTBL
Objective 3
Objective
Improve integrity and transparency in the Borrower's public financial management
Rationale
Outputs:
SPAN was rolled out\. A new module (a supplier database) was introduced to reduce payment errors to
unintended recipients\. Annual budget ceiling data are integrated with SPAN\. The ICR (p\. 16) states that
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there has been "progress in terms of ensuring greater access to the semi-annual budget report," but the
exact nature of that progress is not clear\.
A special investigative unit was set up in the Office of the Inspector General to look into allegations of
corruption against Ministry of Finance staff, including tax officers\.
The Treasury has made progress transitioning from cash-based accounting to accrual-based accounting\.
Outcomes:
SPAN has reduced opportunities for informality and trimmed down leakages due to erroneous payments or
over-spending (as spending units cannot disburse beyond the budget ceiling)\. Manual checks of payments
for 300,000 suppliers have been replaced with direct payment to accounts, increasing fiscal discipline over
payments\.
Individual line ministries now have their own internal auditors, and these audits have been on time and cover
all ministries and agencies\. There are still discrepancies in the recording of some transactions
(intergovernmental revenues, non-tax oil and gas revenue, and foreign exchange debt), but these are all
within the internal auditor's materiality threshold of 0\.5 percent\.
Monthly budget execution reports are now generated on time, and the reconciliation mechanism between
regional and local Treasury offices is now done electronically\. Agency websites now offer access to contract
awards above a threshold of IDR 50 million\.
Rating
Substantial
PHREVDELTBL
PHEFFICACYTBL
Objective 4
Objective
Improve efficiency, governance, integrity and transparency in the Borrower's revenue administration
Rationale
The revenue administration-related component of the project was dropped at the 2009 restructuring\. There
were no outputs or outcomes associated with this objective\. The number of registered taxpayers increased
from 19 million in 2010 to 30 million in 2014\. However, the compliance rate of tax return filing remains low
(59 percent in 2014), and there is no evidence of increased tax revenue\.
Rating
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Negligible
PHREVDELTBL
PHREVISEDTBL
5\. Efficiency
The PAD (p\. 77) contained minimal economic and financial analysis, noting only that project benefits would
include financial gains from minimizing idle cash balances within government agencies, and from
performance improvements in revenue collection, public resource management, and execution of budgetary
transactions\. It explained that the major benefits were difficult to quantify\.
The ICR (p\. 18 and Annex 4) finds a 50% rate of return over a 15-year period using a 15 percent discount
rate, with a net present value of US$ 632 million\. This is based on calculations derived from project costs net
of interest savings and opportunity savings from centralized cash accounts held in the TSA at the Central
Bank, and productivity/time savings from decreased reliance on manual checks and paper documentation\.
Costs included actual project costs, including government financing, and support from parallel projects\. The
net present value remains positive even at higher discount rates\.
The ICR (p\. 16) cites comparative studies of financial management information system implementation
showing that Indonesia's investment per user and implementation time were in line with comparators with
similar utilization and features\. It also (p\. 15) states that the Project Services Support Unit ensured that
project activities were consistent with the government's anti-corruption plan and that procurement activities
were consistent with the Procurement Plan\. Numerous economic benefits accruing from SPAN are listed,
most of which account for system rather than project efficiency\.
However, there were numerous inefficiencies, as implementation was "wrought with delays" (ICR, p\. 9)\. The
hardware and software procurements for SPAN were not synchronized effectively (see Section 8a)\.
Necessary server capacity was underestimated, and indecisiveness about procuring new servers led to
delays of almost two years\. There are indications that excessive risk aversion due to concern over ex-post
audits (for new, higher-capacity servers and other items) created a difficult political and governance climate,
with the ICR stating that "fiduciary safeguards and mitigation measures that were built into the procurement
processes were not conducive to expediency" (p\. 8)\. In addition, the contract with the SPAN developer did
not specify a date for finalizing system requirements, and as a result, many additional unanticipated features
were continually requested and incorporated into the system, drawing out the development process\.
Contention between the developer and the Ministry of Finance -- with the developer contesting new system
elements, and the ministry accusing the developer of inexperience, high turnover of key staff, and failure to
understand user needs -- eventually reached formal adjudication, with a US$ 18\.7 million claim against the
ministry finally dropped when both parties admitted responsibility for delays\. All of these challenges with the
SPAN contract produced significant cost overruns\.
Overall, an operation originally envisaged as a 12-year program to address both public resource management
and revenue generation actually took 11 years to complete elements related just to budget planning and
execution (initially scheduled as a 4\.5-year first phase)\. Delays, cost overruns, and limited achieved benefits
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compared to those originally planned indicate that, despite high estimated returns, the project did not take a
least-cost approach to achieving desired outcomes\. Efficiency is therefore rated Modest\.
Efficiency Rating
Modest
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal 0
ï¨Not Applicable
100\.00
ICR Estimate ï¼ 50\.00
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Relevance of both the original and revised objectives is rated High, as the objectives were responsive to country
conditions, government plan, and Bank strategy\. Relevance of design is rated Modest under the original
objectives, as planned activities were overly ambitious and did not adequately take into account readiness for
reform across all stakeholders\. Relevance of design improved to Substantial at the 2009 restructuring, when
objectives were narrowed only to public financial management reform and components adjusted accordingly\.
Achievement of the objective to improve efficiency of public financial management is rated Substantial, as the
development and rollout of SPAN and TSA produced important time and cost savings\. Achievement of the
objective to improve integrity and transparency in public financial management is also rated Substantial, with
increased automation and direct payment reducing opportunities for leakage and informality\. However,
achievement of the objective to improve the governance of public financial management is rated Modest, as
longer-term budget planning is still not routine\. There was negligible achievement of the objectives to improve
efficiency, governance, integrity and transparency of revenue administration, as most planned activities in this
area were not implemented and outcomes not achieved\. Project efficiency is rated Modest, as the procurement
of the SPAN system (accounting for the large majority of project funds) encountered significant roadblocks
resulting in delays and cost overruns\.
Outcome under the original objectives, with high relevance of objectives, modest relevance of design,
substantial achievement of two objectives related to public financial management, modest achievement of the
other objective related to public financial management, negligible achievement of all three objectives related to
revenue administration, and modest efficiency, is rated as Moderately Unsatisfactory\.
Outcome under the revised objectives, with high relevance of objectives, modest relevance of design,
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substantial achievement of two objectives and modest achievement of the third, and modest efficiency, is rated
as Moderately Satisfactory\.
According to IEG/OPCS harmonized criteria, when a project's objectives are revised, the final outcome rating is
determined by the percentage of disbursements under each set of objectives\. In this case, the majority of funds
were disbursed under the revised objectives, and therefore the overall Outcome rating is Moderately
Satisfactory\.
a\. Outcome Rating
Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating
There is minimal risk of return to pre-SPAN business processes\. Key stakeholders remain committed to use of
the system, including the President of the country, who officially launched the system in front of his
Cabinet\. The information system department of the Ministry of Finance (PUSINTEK) has significantly increased
its capacity, and is now a reliable service provider for the ministry\.
However, there are significant technical and financial risks\. There is no human resource policy in place that
would create the basis for development and retention of staff; organizational needs for staff promotion and
rotation force DG Treasury to rotate its information technology personnel out of the SPAN unit periodically,
causing a continuous loss of technical expertise and experience\. A strategic, long-term relationship with
technology providers that would ensure proper maintenance, care, and enhancement of SPAN has not been
cultivated, largely due to challenges with the government's procurement framework that make it difficult to enter
into multi-year contracts with reputable service providers\. Information security management has not received
proper attention, and there is no business continuity plan in place in the event of a natural disaster\. The SPAN
system requires ongoing enhancement and operational support, and DG Treasury is exploring options to
finance these activities, including a possible follow-up project\. The project team added that a small facility
through a trust fund is currently financing a government audit of the system; it is hoped that the resulting
blueprint of needs for the next 5-10 years will provide the government and Country Management Unit with
sufficient information to move forward with longer-term support\.
a\. Risk to Development Outcome Rating
Substantial
8\. Assessment of Bank Performance
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a\. Quality-at-Entry
The project incorporated lessons learned from the implementation of similar financial management
information systems in other middle-income countries, including the need for high-level government
commitment, a thorough needs assessment, intensive technical assistance, and rigorous supervision\. It
addressed the government commitment issue by focusing first on the area in which the government showed
greatest interest (public expenditure)\. The PAD (pp\. 86-108) contained the Government's Governance and
Accountability Action Plan, intended to strengthen management control over the project, and to mitigate the
risk of corruption, collusion, nepotism, and fraud\. It identified risks arising from the fragile project governance
and accountability environment and presented detailed mechanisms to address those risks\. Implementation
arrangements, including relevant working committees/groups, implementation units, services and support
units, and a complaints handling unit, were specified in detail in the PAD (p\. 57)\.
However, there were shortcomings\. Project preparation was undertaken under considerable time pressure to
lock in a very ambitious reform agenda prior to elections\. The readiness of the revenue administration
institutions to undertake major reforms was significantly overestimated\. Inadequate ownership and
commitment by these agencies led to recommendations, not heeded, at the Project Concept Note and Quality
at Entry Review stages that the tax and customs reform elements of the project be dropped; negligible
progress in these areas led to cancellation of the relevant subcomponents and revision of project objectives in
2009\. Planning for the SPAN contract was also inadequate, with about 36 percent underestimation of costs,
underestimation of necessary server capacity, and mistiming of hardware and software delivery (the hardware
was delivered several years before the software application was ready, making the former outdated by the
time the system was ready to become operational)\. These risks should have been identifiable, given the
degree to which investments in information technology had been repeatedly flagged by the Bank for
procurement difficulties\. Moreover, the SPAN contract failed to include a number of elements necessary for
effective operation: system security, independent testing prior to final acceptance, risk management, and
legal advisory services\. Finally, the project's results framework included several indicators with no baselines
or clear targets\. Because of these shortcomings, the quality-at-entry is rated as Moderately Unsatisfactory\.
Quality-at-Entry Rating
Moderately Unsatisfactory
b\. Quality of supervision
Supervision missions were conducted regularly and appropriately staffed, with stability among core specialists
across the project's lifetime\. The Bank team continually used the project as a vehicle to convene and
coordinate multiple stakeholders within and outside the Ministry of Finance to push the reform agenda
forward\. It adapted effectively when it became apparent that the project's original objectives were
unrealistically ambitious, shifting capacity building and revenue administration activities to the public financial
management multi-donor trust fund, and as changes were needed during the development of SPAN\.
However, there were moderate shortcomings\. The project's results framework was never updated, with non-
observance of the project's numerous milestones and triggers "a common and acceptable occurrence" (ICR, p\.
23)\. According to the ICR (p\. 24), there were shortcomings with candor and quality of performance reporting
(implementation progress ratings did not reflect the serious procurement challenges the project was facing)
and with focus on development impact\. In addition, post-implementation challenges related to staffing,
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technical capacity, business continuity planning, and surge capacity were known to the supervision team but
not adequately addressed\.
Quality of Supervision Rating
Moderately Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
The government was strongly committed to development of a modern budget and treasury system, even as
the project experienced two restructurings and eight ministers of finance\. Even though readiness for reform
differed among the various Directorates General (DG) within the Ministry of Finance, there was top-
level desire to drive comprehensive reform under a single umbrella\. The Ministry effectively intervened to
resolve a lengthy impasse around the SPAN procurement (disagreement between the government and the
Bank over disqualification of a bidder), and a steering committee of representatives from across the ministry
was critical for building consensus around the reform\. The Treasury established a new directorate of
Treasury Transformation to take responsibility for SPAN, employing about 100 dedicated staff\. Due to
differential commitments among DGs to the pace and scope of reform, the finance ministry
eventually decided to proceed with tax and customs administration reform through different vehicles,
leading to the restructuring that refocused the project's objectives only on public spending\.
There were eight effectiveness conditions to be completed within 90 days after the loan was signed, but
these took almost ten months, and some of them were waived (including a change management
consultancy that might have mitigated some of the obstacles that arose)\. Most importantly, the DGs of Tax
and Customs & Excise were ambivalent about the project from its inception, eventually resulting in
cancellation of activities in their areas and revision of the project's objectives; the top echelons of the
government never succeeded in compelling these agencies to fulfill their responsibilities as outlined in the
loan agreement and appraisal documents (ICR, p\. 26)\.
Government Performance Rating
Moderately Satisfactory
b\. Implementing Agency Performance
Each of the project's nine sub-components had its own Project Implementation Unit to manage day-to-day
operations, with the Unit located in DG Treasury serving as the Project Services and Support Unit for
overall coordination\. Many of the initial implementing units cancelled their participation in the project after
the first several years, as little was accomplished and the tax and customs elements were eliminated\. As
the project's focus moved entirely to procurement and implementation of SPAN, DG Treasury assumed
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most implementation responsibility\. There was strong and consistent leadership at DG Treasury and the
services and support unit across the project's lifetime\. Despite numerous challenges with SPAN
contracting, piloting, testing, and rollout, and the consequent delays and cost overruns, the team conducted
all required tests to ensure that the functionality and reliability of the system met government requirements\.
There was full compliance with fiduciary covenants during implementation with internal control
arrangements in place (ICR, p\. 12)\.
Implementing Agency Performance Rating
Moderately Satisfactory
Overall Borrower Performance Rating
Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization
a\. M&E Design
The PAD (pp\. 22-31) contained a results framework specifying outcome indicators at the project level and
intermediate results indicators by sub-component\. Most of the specified indicators were qualitative and lacked
precise baselines and targets, and there was not clear mapping of indicators to the development objectives\. No
management information system was set up to systematically collect data, but a timeline and institutional
responsibility for data collection and analysis were noted\. Triggers for movement to the second and third
phases of the planned adaptable program loan were specified (PAD, pp\. 33-34)\.
b\. M&E Implementation
The implementation units submitted semi-annual reports on status of all indicators throughout the entire
operation in a timely manner, occasionally using the services of several different M&E consultants\. The
project's Implementation Status Reports did not report on M&E indicators\. When the project was
restructured, attention was focused on challenges related to the SPAN contract, and "the M&E arrangement
was not considered to be critical to finalize the restructuring process to ensure reform momentum and project
continuity" (ICR, p\. 14)\. As a result, the project's formal indicators remained inadequate measures of
progress toward achievement of objectives, and the ICR team had to bring in additional data to measure and
verify progress\.
c\. M&E Utilization
Mid-course adjustments, according to the ICR (p\. 11), were made on the basis of day-to-day, informal
interaction between the Bank team and government counterparts, not due to data and analysis emerging
from the formal M&E system\.
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M&E Quality Rating
Modest
11\. Other Issues
a\. Safeguards
The project was environmental category "C\." No safeguard policies were triggered\.
b\. Fiduciary Compliance
Financial management: There was full compliance with the Bank's fiduciary policies\. Financial management
systems were in place and performed in a satisfactory manner, though there were some implementation
inefficiencies resulting from intensive review of payment requests and demands for documentation\. Auditors
expressed an Adverse Opinion for the FY 2013 project audit due to a dispute on accounting principles and
adequacy of supporting documents\. Immediate action was taken to provide necessary documents and improve
systems, and auditors provided clean opinions on all project financial reports from that point forward\.
Procurement: Procurement of the SPAN information system represented 70 percent of project disbursements\.
It was complex and took five years to complete\. An independent verification and validation consultancy was
introduced to support the Ministry of Finance and other stakeholders to handle complex procurements and
contract management, and this consultancy was essential to customization of commercial off-the-shelf software
for SPAN\. Nonetheless, a number of other procurement packages not related to SPAN were ultimately
cancelled because of issues between the Bank and government teams (ICR, p\. 32)\. For example, during a
single-sourced consultancy package in a procurement for the Tax Court, government auditors disregarded the
Bankâs advice and no-objection, overriding Bank procurement guidelines and leading to procurement failure\. In
addition, throughout project implementation, procurement evaluation committees were very conservative
because of the personal liability of committee members on procurement decisions, producing significant delays
in implementation, disqualification of potentially well qualified bidders, and the need for repeat processes\.
c\. Unintended impacts (Positive or Negative)
None reported\.
d\. Other
---
Page 14 of 16
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Govt Finl Mgt & Revenue Admin Project (P085133)
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Moderately Moderately
Outcome ---
Satisfactory Satisfactory
Risk to Development
Substantial Substantial ---
Outcome
Moderately Moderately
Bank Performance ---
Satisfactory Satisfactory
Moderately Moderately
Borrower Performance ---
Satisfactory Satisfactory
Quality of ICR Substantial ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the
relevant ratings as warranted beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as
appropriate\.
13\. Lessons
The ICR (pp\. 29-32) includes detailed and insightful lessons, including:
A single project is often not adequate to encompass complex reform across multiple agencies, even when high-
level political commitment is strong\. In this case, reforms of revenue and expenditure agencies were eventually
de-linked, as institutional readiness for the latter was considerably stronger\.
Information technology procurements will always turn out to be more complicated than originally envisaged\. In
this case, it would have been preferable to front-load the SPAN procurement activities, with approval of all
technical specifications for the core contract a condition for going to the Board\. In all cases, a detailed project
procurement strategy should be in place during preparation to guide market approach, selection methods and
arrangements, sequencing, and risk management\.
A well-conceived exit strategy, built into a project at the design stage, can ensure project sustainability beyond
implementation\. In this case, achieved outcomes are at risk due to technical and human resource
considerations that were foreseeable and could have been mitigated through prior planning\.
14\. Assessment Recommended?
No
Page 15 of 16
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Govt Finl Mgt & Revenue Admin Project (P085133)
15\. Comments on Quality of ICR
The intensive learning ICR begins with a concise and data-rich executive summary, providing a useful
overview of this long and complex project\. The ICR focuses explicitly on demonstrating the theory of change
linking the project's activities and outcomes\. The document is thorough yet efficient in its presentation of the
project's preparation and implementation experience\. It effectively harnesses data outside the project's formal
results framework to assess achievement of objectives\. However, there is some repetition of text, and key
elements of the project's storyline are occasionally difficult to locate\.
Finally, the ICR could have done more to build on its assertion that the underlying theory of change was that
improvements in public financial management would contribute to economic growth and poverty reduction
(ICR, p\. 1)\. While the project's results framework itself did not capture such high-level outcomes, there was
reportedly other ongoing work that might have been tapped\. Collecting some evidence connecting the public
financial management results achieved by this operation with improvements in service delivery would help to
confirm that the theory of change was correct\. Additional evidence to support this might be collected with
a comprehensive public expenditure review, as well as public expenditure tracking studies in key sectors\.
a\. Quality of ICR Rating
Substantial
Page 16 of 16 | REVIEW |
P096181 | Document of
The World Bank
Report No: ICR00004037
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-52400 IDA-H2340 IDA-H3190 TF-13509 TF-90160)
ON
TWO GRANTS AND A CREDIT
IN THE AMOUNT OF SDR 9\.90 MILLION
(US$ 14\.7 MILLION EQUIVALENT)
TO THE
REPUBLIC OF KOSOVO
FOR A
ENERGY SECTOR CLEAN-UP AND LAND RECLAMATION PROJECT
February 28, 2017
Environment and Natural Resource Global Practice
Europe and Central Asia Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective 01/09/2017)
Currency Unit = SDR
1\.00 = US$ 1\.34
US$ 1\.00 = 0\.74
FISCAL YEAR
July 1 â June 30
ABBREVIATIONS AND ACRONYMS
AF Additional Financing
BAT Best Available Techniques
CLRP Clean-up and Land Reclamation Project
CLRP-FAF Clean-up and Land Reclamation Project â First Additional Financing
CLRP-SAF Clean-up and Land Reclamation Project â Second Additional Financing
CSO Civil Society Organizations
DALY Disability Adjusted Life Years
DO Development Objective
EIA Environmental Impact Assessment
EMP Environmental Management Plan
ERR Economic Rate of Return
ESIA Environmental and Social Impact Assessment
ESTAP Energy Sector Technical Assistance Project
EU European Union
GDP Gross Domestic Product
GOK Government of Kosovo
GON Government of The Netherlands
ICR Implementation Completion Report
IDA International Development Association
IP Implementation Progress
ISN Interim Strategy Note
ISR Implementation Supervision Report
JICA Japan International Cooperation Agency
KEM Kosovo Economic Memorandum
KEK Kosovo Energy Cooperation
KEPA Kosovo Environmental Protection Agency
KPP Kosovo Power Project
KTA Kosovo Trust Agency
LPI Lignite Power Initiative
LPTAP Lignite Power Technical Assistance Project
MED Ministry of Economic Development
MESP Ministry of Environment and Spatial Planning
i
MOF Ministry of Finance
MW Mega Watts
NGO Non-Governmental Organizations
NMF New Mining Field
ORAF Operational Risk Assessment Framework
PAD Project Appraisal Document
PDO Project Development Objective
PISG Provisional Institutions of Self-Government
PMU Project Management Unit
UNMIK United Nations Interim Administration Mission in Kosovo
USD United States Dollars
RAP Resettlement Action Plan
RPF Resettlement Policy Framework
SAF Second Additional Financing
WB World Bank
Senior Global Practice Director: Karin Kemper
Practice Manager: Valerie Hickey
Project Team Leader: Katelijn van den Berg
ICR Team Leader: Jiang Ru
ICR Lead Author: Sanne Agnete Tikjoeb
ii
KOSOVO
Energy Sector Clean-Up and Land Reclamation Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design \.1
2\. Key Factors Affecting Implementation and Outcomes \.7
3\. Assessment of Outcomes \.14
4\. Assessment of Risk to Development Outcome \.24
5\. Assessment of Bank and Borrower Performance \.25
6\. Lessons Learned\.28
7\. Comments on Issues Raised by Borrower/Implementing Agencies \.29
Annex 1\. Project Costs and Financing \.30
Annex 2\. Outputs by Component\.31
Annex 3\. Economic and Financial Analysis \.43
Annex 4\. Bank Lending and Implementation Support/Supervision Processes 48
Annex 5\. Beneficiary Survey Results \.50
Annex 6\. Stakeholder Workshop Report and Results \.41
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \.52
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \.107
Annex 9\. List of Supporting Documents \.108
MAP
iii
A\. Basic Information
Energy Sector Cleanup
Country: Kosovo Project Name: and Land Reclamation
Project
IDA-52400,IDA-
Project ID: P096181 L/C/TF Number(s): H2340,IDA-H3190,TF-
13509,TF-90160
ICR Date: 02/28/2017 ICR Type: Core ICR
Lending Instrument: SIL Borrower: KOSOVO
Original Total
XDR 3\.80M Disbursed Amount: XDR 9\.67M
Commitment:
Revised Amount: XDR 9\.90M
Environmental Category: A
Implementing Agencies:
Kosovo Energy Cooperation
Ministry of Environment and Spatial Planning
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 08/31/2005 Effectiveness: 02/28/2007 02/28/2007
06/03/2009
11/16/2010
12/15/2011
05/17/2012
Appraisal: 04/26/2006 Restructuring(s): 11/26/2012
03/28/2013*
12/23/2014
06/30/2015
02/25/2016
Approval: 06/13/2006 Mid-term Review: 02/15/2010 02/15/2010
Closing: 12/31/2010 08/31/2016
*This date was pulled from the system and could not be changed, but the actual date of Board approval is May 10, 2013\.
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
iv
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Moderately Satisfactory Moderately Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Moderately Satisfactory
Performance: Performance:
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry
Yes None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Major Sector/Sector
Energy and Extractives
Other Energy and Extractives 70 70
Mining 30 30
Major Theme/Theme/Sub Theme
Environment and Natural Resource Management
Environmental Health and Pollution Management 39 39
Air quality management 13 13
Soil Pollution 13 13
Water Pollution 13 13
Environmental policies and institutions 20 20
Urban and Rural Development
Rural Development 40 40
Land Administration and Management 40 40
v
E\. Bank Staff
Positions At ICR At Approval
Vice President: Cyril E Muller Shigeo Katsu
Country Director: Ellen A\. Goldstein Orsalia Kalantzopoulos
Practice
Valerie Hickey Laura Tuck
Manager/Manager:
Project Team Leader: Katelijn Van den Berg Frank Van Woerden
ICR Team Leader: Jiang Ru
ICR Primary Author: Sanne Agnete Tikjoeb
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The objectives of the Kosovo Cleanup and Land Reclamation Project were to: (a) address
environmental legacy issues related to open dumping of ashes on land from KEK's Kosovo A
thermal power plant; (b) enable KEK to free land for community development purposes currently
taken by overburden materials and enable KEK to remove Kosovo A ash dump; and(c) build
capacity in KEK for continued clean-up and environmentally good practice mining operations\.
The PDO as stated in the Financing Agreement was: To address environmental legacy issues
related to the open dumping of ashes from KEK's Kosovo A thermal power plant; (ii) to enable
KEK to free land for community development purposes currently taken by overburden material
and to enable KEK to remove the Kosovo A ash dump; and (iii) to initiate structural operations in
KEK for continued clean-up and environmentally good practice mining operations\.
Revised Project Development Objectives (as approved by original approving authority)
The project development objectives and related indicators were revised twice\. See section 1\.3 for
an explanation of the justifications for revising the PDO\.
In the first Board-approved restructuring of June 3, 2009, part (b) of the PDO was modified as
follows: (b) enable KEK to free land for community development purposes currently taken by
overburden materials and enable KEK to remediate Kosovo A ash dump\.
In the second Board-approved restructuring of March 28, 20131, part (c) of the PDO was
modified as follows: (c) support KEK and MESP to implement continued clean-up operations and
environmental good practices in the mining and energy sector\.
In conclusion, the final PDO at project closing was to: (a) address environmental legacy issues
related to open dumping of ashes on land from KEK's Kosovo A thermal power plant; (b) enable
KEK to free land for community development purposes currently taken by overburden materials
and enable KEK to remediate Kosovo A ash dump; and (c) support KEK and MESP to implement
continued clean-up operations and environmental good practices in the mining and energy sector\.
1
This date was pulled from the system and could not be changed, but the actual date of Board approval is May 10,
2013\. To be consistent, the ICR will make reference to March 28, 2013 throughout the document\.
vi
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Percentage of ash disposal that complies with environmental good practice and is
Indicator 1 :
redirected from open dumping on the Kosovo A Ash Dump to the Mirash mine
Value
0% 100% 100% 100%
quantitative or
Qualitative)
Date achieved 05/15/2006 07/01/2008 12/31/2014 12/31/2013
Comments
Target 100% achieved by December 2013 when the wet ash system became
(incl\. %
operational\. Indicator relates to PDO Outcome (a)\.
achievement)
Remediation of Kosovo A Ash Dump, eliminating dust problems and pollution
Indicator 2 :
infiltration from the ashes into groundwater
Value
0% 55% 74%
quantitative or
Qualitative)
Date achieved 06/03/2009 12/31/2010 08/31/2016
Target achieved in November 2010 with 74% of the 243 ha large Kosovo A ash
Comments
dump remediated within the original timeframe, and exceeded by 35% at project
(incl\. %
closing\. Indicator revised in 2009 and relates to PDO Outcome (b)\.
achievement)
Indicator 3 : Contaminated land managed or dump sites closed under the project
Value
0 ha 156 ha 179 ha
quantitative or
Qualitative)
Date achieved 05/15/2006 12/31/2014 08/31/2016
Target exceeded by 14 percent at project closing\. The unit of measurement in
hectares was intended to complement the remediation indicator in percentage\.
Comments
Target of 156 ha referred to the size of Kosovo A ash dump to be remediated
(incl\. %
under the project, which involved managing contaminated parts and closing the
achievement)
dump site\. Core Sector Indicator added in the 2013 and relates to PDO Outcome
(b)\.
Reduce dust arising from the transport of ash and initiate and enable KEK to
Indicator 4 :
eliminate dust arising from the ash dump
Value
<300 mg/m2/day <100 mg/m2/day
quantitative or
Qualitative)
Date achieved 12/31/2010 12/31/2013
Target added by ICR team, and 100% achieved in December 2013 with the
introduction of the wet ash system\. A target for the indicator was never defined,
Comments tracked, revised nor dropped\. Instead, the ICR team applied the legally allowed
(incl\. % daily value per square meter as a reasonable target\. By 2015, the dust level was
achievement) below the level that the monitoring points could register and thereby considered
eliminated\. Six dust filters near the ash dump has collected data for years, which
was used to assess the result\. Indicator relates to PDO Outcomes (a) and (b)\.
vii
Land reclaimed for natural habitats, agriculture, or other land use purposes in
Indicator 5 :
KEK overburden areas
Value
0 ha 450 ha 526 ha 653 ha
quantitative or
Qualitative)
Date achieved 05/15/2006 12/31/2010 12/31/2014 08/31/2016
Target scaled-up in 2013 and exceeded by 24% at project closing\. It is important
to notice the wording âreclaimed forâ certain âpurposesâ, which implies that the
Comments project will prepare land for such use as natural habitat or agriculture\. Allowing
(incl\. % access to the land for such purposes is different, and according to the legal
achievement) covenants of the project subject to IDAâs approval of a land use plan\. See section
1\.2\. Indicator relates to PDO Outcome (b)\. Original target achieved in October,
2011 and exceeded by 45%\.
Land reclaimed for natural habitats, agriculture, or other land use purposes in
Indicator 6 :
KEK overburden areas
Value
0% 55% 68%
quantitative or
Qualitative)
Date achieved 05/15/2006 12/31/2014 08/31/2016
Target exceeded by 24 percent\. The unit of measurement in percentage was
Comments
intended to complement the original reclamation indicator in hectares\. See also
(incl\. %
PDO indicator 5 and section 1\.2\. Indicator added in 2013 and relates to PDO
achievement)
Outcome (b)\.
Increase capacities in KEK for continued clean-up operations and environmental
Indicator 7 : good practices in the mining and energy sector (as measured by nr of hectares
remediated and reclaimed with KEK own resources)
KEK staff fully
responsible for
Value Limited capabilities in
clean-up and land 127 ha 165 ha
quantitative or KEK MESP and MEM
reclamation
Qualitative)
operations
Date achieved 05/15/2006 12/31/2010 12/31/2014 08/31/2016
Target achieved in October, 2010, within the original timeframe\. Indicator
scaled-up in 2013 and target exceeded by 30%\. Original target achieved with the
establishment of the Reclamation Department carrying out operations using own
Comments staff and equipment\. Indicator revised in 2013 to reflect the expertise developed
(incl\. % at KEK and define a meaningful target for the on-going work by the Reclamation
achievement) Department\. The target of 127 ha refers to reclamation of overburden areas and is
in essence an extension of PDO indicators 5 and 6, i\.e\. âcontinued clean-up
operations and environmental good practicesâ\. Indicator relates to PDO Outcome
(c)\.
Increase capacities in MESP for continued clean-up operations and
Indicator 8 :
environmental good practices in the mining and energy sector
No ESIA for KPP ESIA for KPP ESIA for KPP Draft ESIA for KPP
Value prepared\. Resettlement prepared and prepared and prepared, but not
quantitative or for Shala neighborhood of disseminated in disseminated disseminated\.
Qualitative) Hade village not yet line with Bank in line with Resettlement
completed in line with policies and good Bank policies Completion Report
viii
approved RAP\. international and good finalized
practices\. Resettle international p and publicly
ment for Shala ractices\. disclosed as
neighborhood of Resettlement documented
Hade village for Shala evidence for
completed in line neighborhood achievement of the
with approved of Hade resettlement
RAP\. village objective in line
completed in with the approved
line with RAP
approved RAP
Date achieved 03/28/2013 12/31/2014 08/31/2016 12/31/2016
Target partly achieved\. Uncertainties about the specific configuration of the
proposed power plant prevented finalization of ESIA\. The target for increasing
Comments
MESPâs capacity was defined in regards to two of MESPâs core responsibilities,
(incl\. %
namely impact assessments and resettlements, which are important to âcontinued
achievement)
clean-up operations and environmental good practices in the mining and energy
sector\. Indicator added in 2013 and relates to PDO Outcome (c)\.
All found priority hazardous substances from the gasification site safely removed
Indicator 9 :
and treated/disposed (tars, benzene, phenols, methanol, oily compounds)
Value
0 tons 17,545 tons 21,783 tons 22,116 tons
quantitative or
Qualitative)
Date achieved 05/21/2007 12/31/2010 12/31/2014 08/31/2016
Comments
Target achieved and exceeded in November 2015\. Indicator revised in 2013 and
(incl\. %
relates to PDO Outcome (c)\.
achievement)
Indicator 10 : Project beneficiaries
21,500 of
Value 21,500 of which
0 of which female 0 which female
quantitative or female 10,600
10,600
Qualitative)
Date achieved 03/28/2013 12/31/2014 08/31/2016
Target 100% achieved\. Target refers to residents of Obiliq municipality, which
Comments were most affected by high dust-levels\. The target was achieved by December,
(incl\. % 2013 when the wet ash transport system was commissioned and the target for 55
achievement) percent of remediation work on the ash dump had been completed\. Core Sector
Indicator added in 2013 and relates to PDO Outcomes (a) and (b)\.
ix
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Indicator 1 : Mirash mine prepared for sanitary disposal of Kosovo A ash
Mirash Mine
Mirash Mine Mirash Mine
Value prepared for
Mirash Mine unsuitable prepared for prepared for
(quantitative sanitary
for ash reception sanitary disposal sanitary disposal of
or Qualitative) disposal of
of Kosovo A ash Kosovo A ash
Kosovo A ash
Date achieved 05/15/2006 07/01/2009 12/31/2010 03/15/2010
Comments
(incl\. % Target 100% achieved\. Indicator relates to PDO Outcome (a)\.
achievement)
Reduction of houses at risk from geotechnical instabilities of Kosovo A ash
Indicator 2 :
dump
Value
(quantitative 10 houses at risk 0 houses at risk 0 houses at risk
or Qualitative)
Date achieved 05/15/2006 07/01/2010 07/01/2010
Comments
Target 100% achieved through stabilization Ash dump and Dragodan overburden
(incl\. %
dump near Dardhishte village\. Indicator relates to PDO Outcome (b)\.
achievement)
Preparation of full site clean-up investment plan and adaptation of health and
Indicator 3 :
safety regulations and low-cost remediation program
Preparation of full
Full site clean-up
site clean-up
investment plan
investment plan
prepared and
Value and adaptation of
No remediation plan health and safety
(quantitative health and safety
regulations and
or Qualitative) regulations
low-
and low-cost
cost remediation
remediation
program adapted
program
Date achieved 05/21/2007 07/01/2010 03/04/2010
Comments
(incl\. % Target 100% achieved\. Indicator added in 2007 and relates to PDO Outcome (c)\.
achievement)
Tons of found tar sludge, benzene, methanol, and oily compounds from the
Indicator 4 :
gasification site removed and disposed\.
Value
(quantitative 0 tons 4,300 tons 4,780 tons 5,109 tons
or Qualitative)
Date achieved 05/21/2007 12/31/2010 12/31/2014 10/30/2014
Comments
Target achieved and scaled-up in 2013\. Revised target exceeded by 7%\. Indicator
(incl\. %
added in 2007 and relates to PDO Outcome (c)\.
achievement)
x
Indicator 5 : Tons of found tar deposits from the gasification site safely removed and disposed
Value
(quantitative 0 tons 2,232 tons 2,232 tons 2,232 tons
or Qualitative)
Date achieved 03/28/2013 12/31/2014 06/30/2015 05/20/2015
Comments
(incl\. % Target 100% achieved\. Indicator added in 2013 and relates to PDO Outcome (c)\.
achievement)
Tons of found phenol in water solutions from the gasification site safely removed
Indicator 6 :
and treated
Part with highest
concentration 14,771 tons
Value 14,775 tons safely
13,245 tons present in removed, safely
(quantitative removed and
tanks on site remainder stored removed and
or Qualitative) treated
and monitored in treated
reliable tanks
Date achieved 05/21/2007 07/01/2010 12/31/2014 06/30/2012
Comments
Target scaled-up in 2013 and 100% achieved\. Indicator added in 2007 and relates
(incl\. %
to PDO Outcome (c)\. Original target intended for partial removal\.
achievement)
Indicator 7 : Environmental and social baseline data available for the ESIA
Environmental and
Value Environmental and
social baseline
(quantitative No data available social baseline data
data available for
or Qualitative) available for ESIA
ESIA
Date achieved 03/28/2013 12/31/2014 11/30/2015
Comments
(incl\. % Target 100% achieved\. Indicator added in 2013 and relates to PDO Outcome (c)\.
achievement)
Indicator 8 : Low carbon growth strategy prepared and disseminated
Low carbon Low carbon
Value
growth strategy growth Low carbon growth
(quantitative No strategy available
prepared and strategy strategy prepared
or Qualitative)
disseminated prepared
Date achieved 03/28/2013 12/31/2014 02/29/2016 09/30/2015
Comments
Revised target 100% achieved\. Indicator added in 2013 and relates to PDO
(incl\. %
Outcome (c)\.
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 10/12/2006 Satisfactory Satisfactory 0\.00
2 03/28/2007 Satisfactory Satisfactory 0\.00
3 03/28/2008 Moderately Satisfactory Moderately Satisfactory 0\.42
xi
4 01/06/2009 Moderately Satisfactory Moderately Satisfactory 1\.36
5 06/23/2009 Moderately Satisfactory Moderately Satisfactory 1\.68
6 03/11/2010 Moderately Satisfactory Moderately Satisfactory 3\.11
7 12/04/2010 Satisfactory Moderately Satisfactory 3\.24
8 06/27/2011 Satisfactory Satisfactory 3\.38
9 12/05/2011 Moderately Satisfactory Moderately Satisfactory 4\.61
10 10/06/2012 Satisfactory Satisfactory 9\.63
11 12/25/2012 Satisfactory Satisfactory 10\.44
12 08/21/2013 Satisfactory Satisfactory 10\.54
13 04/04/2014 Satisfactory Satisfactory 11\.02
14 11/22/2014 Moderately Satisfactory Moderately Satisfactory 11\.87
15 06/08/2015 Satisfactory Moderately Satisfactory 13\.19
16 12/13/2015 Satisfactory Moderately Satisfactory 13\.97
17 06/13/2016 Satisfactory Moderately Satisfactory 14\.40
18 08/30/2016 Satisfactory Moderately Satisfactory 14\.40
H\. Restructuring (if any)
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
First Board Level restructuring\.
06/03/2009 N MS MS 1\.47 Revision of component B and
related results indicators
Extension of closing date and
11/16/2010 N MS MS 3\.24
reallocations between categories
Extension of closing date and
12/15/2011 N MS MS 4\.97
reallocations between categories
Extension of closing date and
05/17/2012 N MS MS 6\.90
reallocations between categories
Extension of closing date and
11/26/2012 N S S 10\.12
reallocations between categories
Second Additional Financing
and Board Level Restructuring\.
Addition of Component F and
05/10/2013* N S S 10\.52 related key indicators and
revision of results framework
with scaled-up targets\.
Extension of closing date\.
Extension of closing date and
12/23/2014 N MS MS 12\.07
reallocations between categories
Extension of closing date and
06/30/2015 N S MS 13\.47 reallocations between categories
Revision of intermediate
xii
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
indicator âLow Carbon Growth
Study preparedâ\.
Extension of closing date and
02/25/2016 N S MS 14\.40
reallocations between categories
*This date was pulled from the system and could not be changed, but the actual date of Board approval is May 10, 2013\.
I\. Disbursement Profile
xiii
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
1\. In the aftermath of the 1999 conflict, Kosovo was battling a damaged economy, broken
trade links, international sanctions, a lack of investment, and weak institutional capacity\. Kosovo
was placed under the administration of the United Nations Interim Administration Mission in
Kosovo (UNMIK), who became the signatory to the Clean-up and Land Reclamation Project
(CLRP)\. Kosovo declared independence in 2008\.
2\. The 2004 Kosovo Economic Memorandum (KEM) identified the energy and mining
sectors as potential sources of economic growth\. Kosovoâs energy sector was dominated by the
Kosovo Energy Corporation (KEK), a public utility company, which at the time was managed by
an international company and operated the entire supply chain from mines, power generation,
transmission, and distribution\.
3\. Under the 2006 Interim Strategy Note (ISN) for Kosovo, the World Bankâs focus was on
the long-term development of the energy sector in support of Kosovoâs Lignite Power Initiative
(LPI)\. The CLRP would contribute to the objectives of the ISN, which proposed to lay the
foundation for the sustainable development of Kosovoâs high quality lignite resources and power
generation capacity, associated environmental and social improvements, and the transparent
competitive and fiscally responsible management of Kosovoâs public finances\.
4\. 98 percent of electricity generation in Kosovo came from two old, inefficient and highly
polluting coal-fired power plants near Prishtina: Kosovo A (345 MW, 40 year old) in poor
condition and the worst single-point source of pollution in Europe; and Kosovo B (540 MW, 27
year old)\. Rather than backfilling the mine with the coal ash as per international best available
techniques, dry ashes were disposed of in an open dump site using spreaders to swirl the ashes in
the air, causing the formation of an ash mountain and substantial air pollution\.
5\. Air pollution from the Kosovo A power plant and its dry ash open dump facility was
emitting unacceptable amounts of particulates into the air, a prime public health risk\.
Wastewaters from the mining and power operations were heavily polluted\. Large areas of land
used for dumping overburden material prevented other productive community uses\. Tons of
hazardous chemicals stored at the former gasification site at Kosovo A presented one of the
biggest environmental risks in Kosovo\. Outdated mining practices, an industrial infrastructure
that ignored environmental impacts, and a non-functioning environmental management system
were the main factors behind the poor environmental performance in the energy sector\.
6\. At the time of project preparation, Kosovo A was proposed to be shut down and
decommissioned\. KEK was financially instable and billing and collection for electricity services
were poor\. Future plans revolved around building a new coal-fired power plant, Kosovo C, but
lack of capacity and private investments, and public resistance to further developments in the
energy sector presented big obstacles\.
7\. The rationale for Bank involvement in the energy sector was to (a) establish enabling
frameworks and build local capacity for attracting private sector investments in new power plant
and mine operations with modern technologies in a transparent, environmentally and socially
sustainable, and fiscally responsible manner; (b) undertake measures to reduce air and water
pollution from the existing power plants; and (c) reclaim lands covered by lignite ash piles and
overburden material to free land for community development purposes\.
1
1\.2 Original Project Development Objectives (PDO) and Key Indicators
8\. The objectives of the Cleanup and Land Reclamation Project as stated in the Financing
Agreement were to: (a) address environmental legacy issues related to open dumping of ashes on
land from KEKâs Kosovo A thermal power plant; (b) to enable KEK to free land for community
development purposes currently taken by overburden materials and enable KEK to remove
Kosovo A ash dump; and (c) to initiate structural operations in KEK for continued clean-up
and environmentally good practice mining operations\.
9\. According to the legal covenant, no final decision on the use of the land reclaimed
pursuant to Component C can be taken without IDAâs prior consent\. That implies that while part
(b) of the PDO is to free land for community development purposes, access by the community for
such purposes is subject to IDAâs approval of a land use plan to be developed in a participatory
manner and in compliance with spatial planning legislation in Kosovo\.
10\. Table 5 in Annex 2 shows the original results framework from the PAD with slight
modifications to present the intended indicators and targets\.
1\.3 Revised PDO and Key Indicators, and reasons/justification
11\. The project development objectives and associated key indicators were revised twice: On
June 3, 2009 and on March 28, 20132\.
12\. It should be noted here that the ICR makes reference to the first and second restructuring
to mean the two restructurings, which required Board approval (see section H in the Datasheet\.)
In total, the project was restructured nine times, including eight times for an extension of the
project closing date and reallocation between disbursement categories\.
13\. In the first restructuring of June 3, 2009, part (b) of the PDO was modified as follows: (b)
enable KEK to free land for community development purposes currently taken by overburden
materials and enable KEK to remediate Kosovo A ash dump\.
14\. The justification for the revision of the PDO was based on the selection of an alternative
remediation option for the Kosovo A Ash dump in Component B, moving from ârelocation of
Kosovo A Ash Dump into the Mirash Open Pit Mineâ to a reshaping and coverage of the ash
dump while leaving it in place\. During project preparation, different remediation options were
investigated and the full removal option was selected as it was environmentally preferred 3 \.
Following project approval, detailed site investigations revealed a number of factors, which
justified this change of approach: (i) parts of the Kosovo A ash dump was contaminated with
hazardous waste, which would be costly and risky to remove; (ii) the ash dump itself provided a
reliable barrier against contamination of the underground and groundwater systems4; (iii) areas of
the ash dump had stratified soft and cemented layers of ash, requiring excavation equipment in
much better condition than KEK had available; (iv) it proved difficult to provide adequate
measures for dust control during transport of ashes using existing conveyor belts; and (v) pressed
by coal shortage in 2008, KEK extended exploitation in the Mirash mine and disposed of the
2
This date was pulled from the system and could not be changed, but the actual date of Board approval is May 10,
2013\. To be consistent, the ICR will make reference to March 28, 2013 throughout the document\.
3
Full removal of the ash dump had the advantage that the materials from the reshaping could be used for Mirash Mine
reclamation and the land underneath the ash dump - holding significant lignite reserves - would become available\.
4
The risk of contamination was foreseen in Project preparation, but could only be confirmed after execution of detailed
drilling and site investigation program\.
2
overburden material into the mine, complicating the option to simultaneously dispose of the dry
ashes from the Kosovo A ash dump and production line\. This prompted a change in the technical
design approach from full removal to in-situ remediation of the ash dump site, which included
reshaping, coverage and some partial removal of the ash dump\. This âadaptive restructuringâ
had the added advantage of a shorter implementation period, lower costs and lower environmental
risks not having to excavate hazardous chemicals, lower health risks given the significant
reduction in dust emission levels and mine workers handling of ash material, and it was an easier
operation to manage\.
15\. In the second restructuring of March 28, 2013, part (c) of the PDO was modified as
follows: (c) support KEK and MESP to implement continued clean-up operations and
environmental good practices in the mining and energy sector\.
16\. The scope of the project was broadened to include capacity building activities not only in
KEK, but also in the Ministry of Environment and Spatial Planning (MESP) in an effort to
strengthen their mandate in regards to developments in the mining and energy sector\. In this
âadaptive restructuringâ, the Bank responded to the growing need for technical assistance within
MESP to deal with environmental management and monitoring responsibilities\. With the addition
of Component F, Environmental Monitoring and Management, MESP became the second
Implementing Agency of the CLRP\.
17\. In conclusion, the final PDO of the CLRP was to: (a) address environmental legacy
issues related to open dumping of ashes on land from KEKâs Kosovo A thermal power plant; (b)
enable KEK to free land for community development purposes currently taken by overburden
materials and enable KEK to remediate Kosovo A ash dump; and (c) support KEK and MESP to
implement continued clean-up operations and environmental good practices in the mining and
energy sector\.
Key Indicators
18\. The results framework evolved throughout the life of the project as the project was
restructured twice and components were added as a result of the first and second additional
financing to widen and scale-up project activities\. Described below in chronological order, Table
6 in Annex 2 shows the original and revised results framework side-by-side\.
19\. On June 28, 2007, additional financing for clean-up of hazardous material at the former
Kosovo A gasification site was incorporated as Component E\. Three intermediate indicators were
added to track progress towards removal of highest priority hazardous substances from storage
tanks and partial removal of phenol in water solutions\.
20\. In the first restructuring on June 3, 2009, the PDO-level indicator linked to Component B
was modified\. As the approach changed from removal of Kosovo A ash dump to in-situ
remediation of the ash dump, the indicator was revised accordingly\. Originally, the target value
referred to âm3 of ashes removedâ\. The revised indicator would track the âpercentage of ash
dump remediatedâ\. Based on an interpretation of the original project design in the PAD, which
envisaged completion of 55 percent of the required works (i\.e\. âinitiate and enableâ), the same
target of 55 percent was applied to the remediation indicator\. The indicators were specifically set
at a lower number than 100 percent as the aim of the project was to initiate and enable the
implementing agency - the mining and electricity company KEK - to perform these works
themselves and to make reclamation a permanent activity of the mining company that would
continue after project closure\.
3
21\. In the second restructuring of March 28, 2013, the results framework underwent a major
overhaul:
- The first PDO indicator was reworded to allow for better tracking of results (baseline and
target value changed to percentage value)\.
- A core sector indicator linked to Component B was introduced at the PDO level to track
remediation of the ash dump site in hectares, as a companion to the revised indicator
tracking the same progress in percentage\. The target was calculated as 55 percent of the
ash dump size, but due to using 283 ha as the basis of the ash dump size, the target was
overestimated\. Given that the size of the ash dump is 243 ha (as noted in several places in
the same restructuring document) the correct target would have been 134 ha\. For
consistency, however, the ICR will use the target of 156 ha as entered\. At the time of the
restructuring, the target had already been met\.
- In the PAD and in all other project documentation throughout implementation, there
seems to be confusion about whether the original land reclamation target was 450 ha or
650 ha\. Strictly adhering to the original results framework in the PAD, the ICR team will
apply the target of 450 ha in this final evaluation of achievements\. This is also in line
with the wording used through-out the PAD to âinitiate and enableâ\. To reflect ongoing
work at the time of the restructuring, the target was scaled-up to 526 ha\. The revised
target was based on a calculation of 55 percent of an enlarged overburden dump area of
957 ha, which became known due to more detailed surveys done as part of
implementation, instead of the original 650 ha\.
- A PDO indicator linked to Component C was introduced to track land reclamation in
percentage, as a companion to the original indicator tracking the same progress in
hectares\. It is not clear to the ICR team on which basis the target of 55 percent was
defined\. In interpreting the original intent from the PAD, to âinitiate reclamation of 650
haâ with a target of 450 ha, this would imply a target equal to 69 percent\. For consistency,
the ICR team will refer to 55 percent\. At the time of the restructuring, the target had
already been met\.
- A PDO indicator linked to Component E and measured in tonnage was introduced to
reflect the enhanced development impact as the activities were scaled-up to remove all
priority â rather than the highest priority â hazardous substances\.
- Three intermediate indicators linked to Component E were revised to clarify in more
detail the precise substances to be removed, disposed, treated, and exported\. Targets were
scaled-up as additional financing was made available\.
- A PDO indicator linked to Component F was added to reflect capacity building for
continued clean-up operations and environmental good practices in KEK\. A land
reclamation target of an additional 127 ha of overburden areas was entered to reflect that
KEK would fully do this work using their own staff, equipment and financial resources\.
- A PDO indicator linked to Component F was added to reflect capacity building for
environmental monitoring and management in MESP\. This would be tracked by a)
delivering an ESIA for the new Kosovo Power Plant project, and b) supervising the
resettlement of Shala neighborhood in Hade village\.
- Two new intermediate indicators linked to Component F were also added to a) make
baseline data available for the ESIA and b) to prepare and disseminate a low carbon
growth strategy\.
- An overall core sector indicator of âProject beneficiariesâ, with a sub-indicator âof which
femalesâ, was added at the PDO level\.
- One PDO-level indicator was dropped to avoid duplication with a similar original
intermediate indicator (reduce loss of private property due to geotechnical instabilities\.)\.
- Four intermediate indicators were dropped to remove duplication with PDO-level
indicators\.
4
22\. On June 30, 2015, the intermediate indicator related to the preparation and dissemination
of a Low Carbon Growth Study was revised to âLow Carbon Growth Study preparedâ\.
23\. It should be noted that the original PDO indicator âReduce dust arising from the transport
of ash and initiate and enable KEK to eliminate dust arising from the ash dumpâ never had a
defined target nor was it ever tracked, revised or dropped\. In an effort to measure project
achievements against this original indicator, the ICR team has applied a target of âdust levels
below allowed daily value of 300 mg/m2/dayâ in accordance with local environmental legislation
in Kosovo\.
1\.4 Main Beneficiaries,
24\. The CLRP was designed to generate substantial environmental and health benefits\.
25\. Elimination of dust: The primary target group was the 21,500 beneficiaries in Obiliq
municipality, who were most affected by air pollution caused by particulate matters arising from
the dust\.
26\. Hazards due to geotechnical instabilities: The encroaching ash dump put at risk local
households hugging the edge of the dump site\. Nearby settlements would benefit from the
stabilization of the Kosovo A ash dump by preventing their loss of private property\.
27\. Reclamation of land: The reclamation of overburden dumps would make land available
for community purposes such as agriculture, natural habitats, recreation, and resettlement
purposes\. However, prior to any such dispositions by KEK, a consultative land use plan must be
prepared, satisfactory to IDA (legal covenant\.)
28\. Removal of hazardous chemicals: Possibly the single most urgent environmental risk in
Kosovo, aging tanks holding tons of dangerous chemicals were stored at the former gasification
site\. Spillage or leakage could have led to a major environmental disaster\. Their safe removal
would benefit both the environment and the people of Kosovo\.
29\. Capacity building at KEK and MESP: Officials at KEK and MESP would benefit from
training sessions, on-the-job training, international designs and good practice for reclamation,
technical assistance, study tours, expert review, exposure to best available technologies and
international good practices in environmental regulations, preparation of complex safeguard
documents such as the EIA for the hazardous chemical treatment and removal, and the ESIA for
the proposed Kosovo Power Project including generation of environmental baseline data, etc,
which will strengthen the institutions, improve the environmental performance of the energy and
mining sector, and benefit overall environmental and public health outcomes\.
1\.5 Original Components
30\. The project was approved with four components, each of which relates to all three parts
of the PDO\.
31\. Component A: Preparation of the Mirash Open Pit Mine for Ash Management
Prepare the Mirash open pit mine to receive and store ash from Kosovo A Power Plant and ash
removed from Kosovo Aâs open ash dump\. Activities include detailed site investigations,
5
drainage and mine water management system, and adaptation of the ash disposal system to stop
open ash dumping and redirect ash disposal to the prepared part of the mine\.
32\. Component B: Relocation of Kosovo A Ash Dumps into Mirash Open Pit Mine
Remove ash and overburden materials from the Kosovo A ash storage facility\. Activities include
repair of special mining equipment, build open conveyor belt systems, service roads, and access
ramps for moving the excavated ash to the disposal site in the mine for proper backfilling\.
33\. Component C: Reclamation of Overburden Dump Areas
Mobilize existing KEK earth moving equipment and reclaim about 4\.5 km2 of land through
reshaping and re-cultivating overburden dump areas\.
34\. Component D: Project Management
Support to KEK to implement the project\.
1\.6 Revised Components
35\. An overview of revised components is presented in Table 3 in Annex 2\.
36\. Component A: Preparation of the Mirash Open Pit Mine for Ash Management
Revised: June 3, 2009\. The original project design envisaged transportation of dry ash from the
Kosovo A power plant to the Mirash mine through a system of open conveyor belts\. In an effort
to considerably reduce dust formation and emissions and due to the substantial degradation of the
conveyor belt system transporting the dry ash, an alternative wet ash disposal system was
proposed and endorsed\. The hydraulic ash transport and disposal system required substantial co-
funding from KEK (first estimated at â¬4\.0 million, but requiring â¬7 million in total)\. Project
resources were reallocated to contribute to its installation for the environmental benefits\.
Meanwhile, KEK paid the remaining of the investment, as the wet-ash system also has substantial
economic benefits in terms of less breakdowns compared with the old conveyor belt system
allowing for more continuous operation of the power plant\.
37\. Component B: Remediation of Kosovo A Ash Dump
Revised: June 3, 2009\. Component B was modified to reflect the alternative option of
environmental remediation of the ash dump in-situ with containment measures and reallocation of
only those parts of the dump that had stability risks, rather than full excavation, removal and
transportation of the ash dump to the Mirash Mine as originally envisaged (see section 1\.3)\.
38\. Component C: Reclamation of Overburden Area
Revised: March 28, 2013\. Activities were scaled-up due to successful achievement of original
targets\. Additional financing was made available to purchase more tree seedlings to be planted in
the reclaimed overburden areas using KEKâs own staff and resources\.
39\. Component D: Project Management
Revised: June 3, 2009 and March 28, 2013\. With the addition of Component E, additional
resources were made available to KEK for the purposes of implementation, management, and
supervision\. With the addition of Component F, MESP became the second implementing agency
of the CLRP\. Additional financing was made available to both KEK and MESP to support
implementation efforts\.
40\. Component E: Removal of Hazardous Chemicals from Kosovo Aâs Gasification Site
Added: June 28, 2007\. Revised: May 10, 2013\. Component E, which was part of the original
project design, was not included at appraisal due to insufficient funds; but then included as part of
6
the first Additional Financing\. One of the most urgent environmental legacy issues that needed to
be addressed was the tons of hazardous waste stored in aging tanks at the former Kosovo A
gasification site\. Their safe removal would help eliminate one of the most eminent environmental
risks in Kosovo\. Activities were scaled-up to ensure that all priority substances were removed\.
41\. Component F: Environmental Monitoring and Management
Added: March 28, 2013\. Component F aimed at building capacity in MESP to strengthen their
mandate and capacity for improved environmental monitoring and management\. As part of the
Bankâs broader engagement in the mining and energy sector in Kosovo, Component F would
support a number activities in preparation for dialogues on the new Kosovo Power Project (KPP)
as well as supervise the implementation of a planned resettlement\. Including air, soil and water
monitoring and data collection, ESIA for proposed KPP, monitor the implementation of a
Resettlement Action Plan (RAP) for Shala neighborhood of Hade village, and low carbon growth
study\. It is important to reiterate that the project did not cause nor finance the resettlement; it only
supervised MESPâs responsibility to implement the RAP, which resulted from on-going mining
activities for the supply of coal to Kosovo A and Kosovo B power plant\.
1\.7 Other significant changes
42\. Funding allocations: The original project was approved with a financing gap of US$2\.71
million\. In December 2006, the Netherlands Ministry for Development Cooperation agreed to
make available a grant in the amount of US$4\.33 million equivalent to cover the gap\. In the first
and second additional financing, another US$5 million (IDA grant) and US$4\.2 million (IDA
credit) was made available\. KEK, in addition to the US$3\.15 million originally committed,
financed â¬7 million to implement the wet ash disposal system and contributed additional US$3
million in reclamation and project support\. This raised project costs from an original estimate of
US$11\.35 million to a total of over US$35 million\.
43\. Design, scope and scale: As described above, the project underwent significant changes
to its design, scope and scale â some of which had been anticipated at the preparation stage\. The
project was successful in attracting considerable co-financing for existing and new activities\. It
was able to expand the reach of clean-up and reclamation activities and take advantage of the
high interest in developing the mining and energy sector to promote good environmental practices
and build institutional capacity both in the industry and the ministry\. The scope was expanded
from an early focus on the mining sector to also include the energy sector, as the Bank engaged in
a broader dialogue with multiple development partners around plans for a new power plant\.
44\. Implementation schedule: The project closing date was extended eight times from
December 31, 2010 to August 31, 2016, a total of 5 years and 7 months\. A policy waiver for
OP13\.20 by the Bank Board of Executive Directors was obtained with the approval of the second
additional financing as the new closing date extended beyond three years of the original closing
date\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
45\. Drawing on lessons learned in other Kosovo projects, the design was kept simple with
clear development objectives and sound implementation arrangements with early stakeholder
participation\. These are the key success factors at the preparation stage that help explain why
and how the project achieved targeted outcomes\.
7
46\. The Bankâs recent experience in Kosovo had highlighted the importance of building
ownership in local institutions, preparation of comprehensive implementation arrangements,
selection of competent consultants, detailed reviews to ensure quality of consultantsâ outputs, and
wide consultations with local institutions, donors and other stakeholders\. All of these good
practices were taken into account in preparing the CLRP\. According to the PAD, extensive
consultations were undertaken with officials and managers from the Provisional Institutions of
Self-Government (PISG), KEK administrators, and the donor community\.
47\. Building local capacity of KEK equipment and expertise to enable project
implementation by the enterpriseâs own staff, in contrast to hiring an international firm, was
emphasized at the preparation stage\. This would allow for institutional change of old industrial
practices in favor of improved environmental performance and continued clean-up operations\.
48\. KEK showed early commitment to the project by (i) preparing an EIA and performing
drilling tests for pre-feasibility studies, (ii) by dedicating all existing mining and earth moving
equipment necessary for project implementation, and (iii) by allocating part of the Mirash mine to
receive intended dump material and ongoing production of ashes from Kosovo A power plant\.
49\. A number of design issues are worth noting\. First, the project was designed with a
financing gap in mind\. In consideration of this gap and the opportunity to close it, the flexible
design had pre-identified possible savings, such as less equipment to be repaired, which would
result in a longer implementation period for the activities and a greater reliance on internal KEK
resources, but would still allow for the achievement of project objectives\. Second, the technical
solution of redirecting the open conveyor belts for transfer of dry ash from the power plant to the
mine was disregarded soon after project approval\. The alternative hydraulic ash handling system
was very costly (see section 1\.6), and given the limited project funding available it was not a
feasible investment option for a plant that was earmarked for early closure5\. Third, the analysis of
alternatives in fact considered reshaping the ash dump, but the alternative of complete removal
was initially preferred, as the costs would be the same, but removal would allow future
development of the lignite deposits underneath the dump\. Although the possibility was raised in
the pre-Feasibility Study and the EIA during preparation that the underground below the ash
dump could be contaminated with phenols, it was only during the detailed site investigations
following project approval (a US$600,000 study), that phenols were discovered within the ash
layers, having been co-disposed with the ash\. Finally, the original results framework as approved
in the PAD lacked some specific and measurable targets (see section 2\.3), although most of the
targets could be deduced from the arrangements for results monitoring table in the PAD\.
50\. It is important to keep in mind that pollution management projects dealing with clean-up
and improved performance need to rely on extensive site investigations âas per international good
practice- typically executed following project approval as the cost of these investigations are
prohibitively expensive at the preparation stage\. Their costs are more easily absorbed into the
overall cost of the project, though it requires flexible and close supervision to allow for
modifications of the design to fit the reality on the ground\.
51\. A financial management assessment was conducted for the project and found that KEK
had satisfactory procedures in place to ensure proper financial accountability of the CLRP\. The
Kosovo Operational Procurement Review, completed in 2004, assessed the ability of
5
Later, plans for the new power plant became substantially delayed, and KEK decided the hydraulic ash system was
worth the investment\.
8
implementing agencies carrying out procurement processes under current conditions at âhigh
riskâ\. To mitigate these risks, the implementation plan stipulated that Bank procurement specialist
would provide (i) training to PMU and project related staff, (ii) Standard Bidding Documents, and
(iii) prior and post reviews of procurement actions\.
52\. The project was classified as a safeguards category âAâ and triggered OP 4\.01
Environmental Assessment\. Predicted environmental impacts were related to construction works
and to the transport of hazardous materials from the gasification plant for incineration if this
activity would be included in the project at a later stage\. Project activities would not require any
land acquisition or resettlement; hence OP 4\.12 was not triggered at the project preparation stage
(only later in the second project restructuring in 2013)\. Neither was OP 4\.37 on Safety of Dams
triggered as the project was designed to deal with ash disposal in a dry manner (nor was it
triggered with the introduction of a wet as system as the 1:1 ratio of ash and water allows the
water to drain and causes the ash to harden, thereby restoring the mine for proper land
reclamation)\.
53\. In hindsight, despite the fact that most of these risks were effectively
mitigated, implementation delay due to the prevailing country context and issues regarding
procurement and safeguards still arose during the implementation phase (see Section 2\.2 and
Section 2\.4)\. However, it would appear that no further measures by the project team taken at the
preparation stage could have prevented these problems\.
54\. Overall, given the Bankâs broad international experience in the mining and energy sector
and with economic development in post-conflict zones, the Bank was in a good position to assist
the Kosovar authorities in rehabilitating the power sector and to support KEK in completing the
project successfully\.
2\.2 Implementation
55\. In summarizing the implementation of the CLRP, and the first additional financing (FAF)
and second additional financing (SAF), itâs important to keep in mind the overall backdrop of the
prevailing country context over the decade from 2006 to 2016 when the project was implemented\.
As a new and emerging democracy, political instability of the government, hand-over of the
government function from UNMIK to the Government of Kosovo, frequent change of ministers,
and the absence of officials during prolonged appointment periods came to define day-to-day
operations for PMU staff\. It also bears mention that KEK management underwent transformation
from being under an international caretaker company with foreigners in charge at the beginning
of the project, to Kosovars being appointed to leadership positions and taking charge of KEK\. As
such, it is highly commendable how the project came to support the development of institutions in
their infancy and to leverage sustained growth and integration of environmental concerns into the
mining and energy sector\.
56\. The project enjoyed early implementation support from the Bank and the PMU\. There
was an eight months delay in declaring the project effective due to pending finalization of the
sub-granting agreement between UNMIK, Kosovo Trust Agency (KTA), and KEK\. With a
retroactive funding facility in place and a proactive PMU at KEK, implementation activities
began in September 2006 with contracts signed for US$275,000 and others in advanced stage of
procurement\. Effectiveness was declared on February 28, 2007\.
57\. During the first year of operation, the project was able to attract substantial additional
funding\. First, additional funds in the amount of US$4\.33 million from the Government of The
Netherlands (GON) were made available to close the financing gap, which was included in the
9
original project design\. Shortly after, an additional grant of US$5 million from IDA was allocated
in support of the initially intended removal of hazardous chemicals from the former gasification
site\. This became Component E in the first CLRP additional finance project paper\. Effectiveness
was declared on December 11, 2007\. This allowed for a substantial broadening of activities from
the original IDA Grant of US$5\.5 million and doubled the size of the project\.
58\. The progress towards achievement of the Project Development Objective (DO) and
Implementation progress ratings (IP) were downgraded to MS in early 2008, when the site
investigation confirmed that the ash dump was contaminated with chemicals and recommended a
different technical solution in Component A and B\. KEK management demonstrated ownership
of the project, expressing their support and financial commitment to the recommendations of the
site investigation, including installation of a hydraulic ash handling system\. This led to the first
project restructuring of June 3, 2009\.
59\. With those changes, the nature of the technical works for the remediation partially shifted
from a focus on use of special mining equipment for the planned excavation of the ash dump
towards wider reclamation efforts with use of earth moving equipment and investment in a new
ash disposal system\. This prompted a repositioning of the PMU within KEK with reporting
channels broadened from the Mining Division to also include the Generation Division\.
60\. A Mid-Term Review supervision mission was carried out on February 15-19, 2010\. Chief
among the points for discussion was the significant delay observed for component A, B, and C
due to (i) budget overrun for implementation of the hydraulic ash transport system, which
necessitated a second investment decision by KEK Board of Directors, and (ii) complications in
arranging contractual payment for earth moving equipment, which led to a 7 months delay in
delivery and the loss of the 2009 summer season for reclamation of overburden areas\.
61\. The DO and IP were upgraded to Satisfactory in 2011 with the approval by KEK
management to finance the hydraulic ash system\. Committing â¬7 million to the investment, the
wet ash system was fully commissioned by December, 2013\.
62\. For Component E, following the completion of a comprehensive EIA process in 2010,
delay in exporting hazardous material was mainly caused by the need to sign bilateral agreements
with the governments of countries to which the chemicals would be exported for incineration and
with all âtransitâ countries, since Kosovo could not ratify the Basel Convention regulating
international transport of hazardous waste as it is not a member of the United Nations\. All targets
were met by end of 2012, thereby meeting the objectives of the first additional financing\.
63\. In June, 2012 a request was received from the GOK proposing now under IDA Credit
terms additional financing to further scale-up existing cleanup and land reclamation activities
started under CLRP, as well as to fund new activities associated with the environmental and
social impact assessment for the KPP and with strengthening the mandate and capacity of MESP
(Component F)\. This led to the second additional financing of US$4\.2 million and a second grant
from the GON in the amount of US$1\.2 million, tripling the project size from its original scope\.
64\. The Operational Risk Assessment Framework (ORAF) recognized the reputational risks
posed (i) by the monitoring of the implementation of the RAP, as there were outstanding issues
from a previous resettlement by UNMIK, which could cast a shadow on the new resettlement
process as well as the possibility that the new RAP might be poorly implemented, and (ii) by the
Kosovo Power Project, as coal-fired power plants were controversial and often openly challenged
10
by NGOs/CSOs\. Mitigation of these risks was linked to the design of a Panel of Experts, who in
their technical capacity would assist the PMU and review consultant outputs\.
65\. The implementation of Component F was challenging from the start\. The resettlement
process was in breach of the RAP and the legal covenants by December, 2013, prompting the
Bank to threaten to invoke its right to suspend disbursements\. The issue was resolved when KEK
approved additional payments for financial assistance towards paying rent to 21 families
temporarily relocated before moving into new housing units under construction\.
66\. Progress on completing the New Hade resettlement site was slow\. Housing construction
by residents and completion and repair of water, sewage, and electricity infrastructure by MESP
proceeded with great delay\. In June, 2015 a complaint was submitted to the Inspection Panel (See
section 2\.4)\. While 52 households had obtained land titles in New Hade village, only 12
households were residing at the new site at project closing\.
67\. Bank monitoring of the RAP implementation remained steadfast and engaged\. It is noted
that the Bank used every management letter sent to the GOK since October, 2013 as an
opportunity to raise issues related to the RAP as well as other important on-going resettlement
issues6 to the highest level of attention\.
68\. Implementation of the ESIA also experienced delay\. Subject to intensive review by the
PMU, Panel of Experts, Bank staff, and the Stakeholder Review and Monitoring Committee, the
draft was significantly overhauled and revised multiple times\. Uncertainties remained to the end
about the specific configuration of the power plant for the proposed KPP\. This prompted short
interval extensions of the project closing date towards the end of the project\. However, as Bank
teams and the GOK continued to discuss the plant size proposed by the investor, the project
closed without the draft ESIA disclosed or publicly consulted7\.
69\. Component F was rated MU from its introduction in ISR 12 (August, 2013) until ISR 17
(June, 2016), two months before project closing\. It was upgraded to MS in the last ISR 18
(August, 2016) with the completion of all activities except for the public disclosure of the ESIA\.
70\. In summary, project implementation in post-conflict Kosovo was successful in
motivating the counterpart, scaling-up the project, and attracting substantial co-financing, which
leveraged the project to have a transformational impact on the institutional capacity for
environmental management, particularly in mining operations\.
71\. The project achieved the development objectives and exceeded most project indicators\.
This was accomplished through two PMUs with motivated and competent staff and close
supervision from a highly responsive Bank team\. It is commendable that the collaboration
between Bank and PMU teams continued to operate with commitment and efficiency to handle
unexpected implementation challenges\.
6
Including advice on: interpretation of Resettlement Policy Framework; proper allocation of responsibilities between KEK, MESP,
and municipality; expansion of Sibovc mine; future resettlement of Shibitulle village and Grabovci I Poshtem village; concerns
surrounding definition of economic zone in the New Mining Plan; recommendations from First, Second, Final Resettlement Reports\.
7
As per the project paper for the Second Additional Financing and restructuring, the objective of the ESIA for the KPP was to inform
the decision-making process of the proposed investment and increase the monitoring and management capacity of MESP\. It was not
foreseen to be the final ESIA, which is the responsibility of the winning private investor\.
11
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
72\. M&E design: The original M&E framework had sufficient baselines and targets, which
could be deduced from the arrangements for results monitoring table\. One PDO indicator (#4)
did not appear in the arrangements for results monitoring\.
73\. M&E implementation: The results framework was thoroughly revised in the 2013
restructuring, which made monitoring and evaluation of project achievements more meaningful
and measurable against linked PDOs\. The project team was careful to interpret the original intent
of each indicator included in the PAD and to strengthen its measurability against fixed targets\.
The project team also added new indicators and revised existing targets upwards to reflect
continued work by the implementing agency exceeding original targets\. For the hazardous waste
treatment and removal, information on progress was obtained from the contractor and supervising
engineer, through the PMU\.
74\. The responsibility to carry out ongoing M&E activities was placed within the KEK PMU\.
As the works were implemented by KEK itself rather than by external contractors, this was the
appropriate manner for data collection\. KEK reported on the progress of the amount of hectares
of remediated ash dump as well as reclamation works in the overburden dump areas\. In addition,
a systematic monitoring system consisting of six dust collection points with filter equipment
installed were sampled manually on a weekly basis\. These monitoring data served as a control
measure for planned remediation of the ash dump and improved ash disposal\. The 2013 results
framework restructuring would have benefited to include a target and indicator for air quality\.
The information was sufficient for informing the implementation support, resource allocation and
supervision activities\.
75\. M&E utilization: Three continuous and automatic air monitoring stations, financed by the
project and erected in the vicinity of Kosovo A power plant and the Mirash mine has produced a
significant amount of data, which has been used as a baseline for the ESIA, and is now being
maintained and utilized by KEPA, including for the section on air quality in the annual State of
the Environment Report\.
76\. Future evaluation: As part of the detailed site investigation, a water quality survey of the
ash dump itself did not detect any significant contamination of groundwater and surface water\.
Going forward, a future evaluation of the project could potentially look at groundwater pollution\.
The design of the remediation of the ash dump was such that there would be no further infiltration
of ash pollutants into the groundwater (âstore and release coverâ)\. However, unequivocal proof of
this natural process would take years to produce, as continuous monitoring of downstream water
sources would be required to determine if any contamination had occurred and what other sources
of water pollution there might be in the area also influencing water quality\.
2\.4 Safeguard and Fiduciary Compliance
77\. Hazardous chemicals found in Kosovo A ash dump\. During the early design phase of
project implementation, a full site investigation was completed together with a detailed EIA/EMP
for the ash dump remediation and overburden reclamation and approved by the WB\. A couple
of findings are worth noting as they relate to the project development objectives and laid the
foundation for the first project restructuring:
- Contamination of the ash dump by chemicals from the former gasification plant were not
originally expected or found during initial drilling\. The possibility for dumped phenols in
the mining galleries underneath the ash dump was considered as a possibility as it had
12
happened in other old mine shafts\. But the full site investigations demonstrated that
phenol and other by-products had also been discharged within the ash dump;
- A water quality survey of the ash dump itself did not detect any significant contamination
of groundwater and surface water by the ash nor by waste products from the gasification
plant found within the ash dump;
- The properties of the ash, fine grain sizes and high adsorption capacity, apparently cut off
the migration path for contaminants, and ash could represent a very effective containment
for the tar deposited;
78\. The CLRP project team was proactive in adopting the main recommendations in the site
investigation to (i) undertake minimal mass removal on the ash dump to avoid further slope
movements of the overburden area, (ii) cover the contaminated parts of the ash dump to avoid
penetration and contamination of groundwater from harmful substances, and (iii) rearrange
Kosovo A ash removal process to hydraulic transport (wet ash system) and (iv) process the
restructuring to the PDO, requiring Board approval\.
79\. The CLRP-FAF for adding Component E Hazardous Materials Clean-up at the
Gasification Site included a similar legal covenant obliging the implementing agency to execute a
second EIA with preparation of detailed design for treatment and removal of chemicals to be
approved by the World Bank prior to start of any works\. This detailed EIA was also prepared,
publicly disclosed and consulted in line with WB policies\.
80\. Inspection Panel Investigation Report\. On June 12, 2015 the Inspection Panel received a
complaint regarding resettlement and land issues related to three World Bank operations in
Kosovo, including the proposed KPP and the CLRP-SAF\. The complaint was filed by residents
of Hade Village, New Hade resettlement site, and Obiliq Municipality, and CSOs in Kosovo\.
81\. None of the resettlements cited in the Request or the Inspection Panelâs report result from
Bank-supported projects, but rather from ongoing mining activities in Kosovo\. The CLRP did not
cause nor finance the resettlement or infrastructure at the resettlement; it only monitored those
responsibilities within MESP\.
82\. Importantly for this ICR, the Inspection Panel notes that monitoring and supervision
under the CLRP-SAF was in compliance with OP/BP 4\.12\. However, the Inspection Panel
recognized the real and often severe harm caused by mining operations and the impact of
protracted resettlement processes\. In this case, the RAP was prepared under the Bank-financed
LPTAP in 2011\. Two years later, monitoring of the RAP was eventually folded into the CLRP-
SAF in 2013\. The Inspection Panel report points to the capacity constraints of the implementing
agency and acknowledges that the delay may have compromised the Bankâs ability to recommend
solutions to the Government at a critical stage in the process\.
83\. In Managementâs response to the Inspection Panel Investigation Report, it proposed three
follow-up actions: (i) repair 200-meter section of clogged sewage, (ii) provide technical
assistance to revise the RPF, and (iii) organize workshop with key government stakeholders and
KEK to discuss recommendations by end of February, 2017\.
84\. All follow-up actions have been completed by the project team\. The ICR team has
obtained confirmation from MESP that the sewage has been repaired as of December, 2016\. The
ICR team also notes that the Bank team during the ICR mission took every opportunity available
to explain and discuss with all relevant stakeholders critical issues regarding the need to revise
the RPF\. A workshop to provide technical assistance and discuss recommendations was held on
13
February 14th, 2017 with wide government participation\. Based on the results of the workshop, a
technical advisory note will be finalized and shared with GOK\. It is important to note that only
the sewage repair is directly linked to the CLRP, while the other two activities are dealing more
broadly with land acquisition and resettlement practices in the mining sector\.
2\.5 Post-completion Operation/Next Phase
85\. During the ICR mission, it was obvious that continued clean-up operations have been
fully institutionalized in KEK\. During a site visit, KEK staff from the Reclamation Department
was engaged in finalizing the remediation of the last 30-40 ha of the Kosovo A ash dump\.
Relations with local communities living near the reclaimed ash dump and overburden areas have
improved and the area near the ash dump is experiencing revitalization\. KEK is also fully
operating, financing and maintaining the wet ash hydraulic system\.
86\. The public sector in Kosovo is still heavily dependent on assistance from the
international donor community\. While local expertise and capacity deepens with every project,
funding for implementation and maintenance in the mining and energy sector has to be
continuously sought\.
87\. The Bank, for its part, continues to play an engaging role in the mining and energy sector
in Kosovo\. While the Bank has made no decisions so far on its potential support to the Kosovo
Power Project, on-going discussions and preparatory studies are building the foundation upon
which future decision-making will be based\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
88\. Relevance of objectives: High\.
89\. Relevance of design: Substantial\.
90\. The project is based on a proper diagnosis of development priorities\. The need
to rehabilitate the mining and power sector was a high priority for the GOK at the time of
appraisal and remains true today\. The CLRP came on the heels of a major conflict and decades of
outdated industrial practices and environmental neglect\. Continued supply of electricity was
essential for social and economic reasons, including for heating during the winter months, and to
build Kosovoâs economy and create jobs\.
91\. As the GOK prepares for the next phase of investments in lignite coal mining and
generation, the power sector is one of the key priorities outlined in the latest National
Development Strategy for 2016-2021\. The strategy âaims to provide reliable power supply that
will improve the conditions of doing business, facilitate increased private investments [â¦] and
improve peopleâs wellbeing\.â
92\. More specifically, the Ministry of Economic Development (MED) in Kosovo has
developed an Energy Strategy for 2013-2022\. The three pillars of the strategy speak directly to
the objective of the current project in addition to being aligned with a potential follow-on
operation in the KPP: âSecurity of sustainable and quality supplyâ; ârestructuring of the energy
sectorâ; and âdue consideration for environment protection and social issuesâ\.
93\. The first Country Partnership Strategy between the GOK and the World Bank for the
period FY12-FY15 also provides evidence of high project relevance\. Pillar 1 draws attention to
14
the continued need to âaccelerate broad-based economic growth and employment generationâ
with focused attention on supporting the energy infrastructure, and Pillar 2 seeks to âimprove
environmental managementâ supporting the government in increasing energy efficiency and
reducing environmental hazards\. The forthcoming Strategic Country Diagnostic and Country
Partnership Framework also place a significant emphasis on promotion of reliable energy and
natural resources management\.
94\. The component design and responsive implementation allowed the project to stay
relevant to emerging needs on the ground\.
95\. The project was designed with emphasis on building local capacity, technical expertise,
and institutional ownership, which was suitable given the objective for on-going reclamation
work to become a permanent activity in KEKâs mining practice\. In the PMU, administrators and
managers have received training on procurement and financial management enhancing their
capacity to manage large-scale investments such as this project\. At the company level, training on
operation and maintenance of supplied equipment has strengthened the technical expertise of staff
members and of the Reclamation Department, which was formed under the project\. These
outcomes will benefit the next phase of development in Kosovoâs power and mining sector, as the
true impact of the project has been the transformation of environmental legacy issues and
outdated mining and ash-handling practices by the industry\.
96\. Particularly in view of the EU accession process, the investments and capacity building
for land reclamation under CLRP are highly relevant to Kosovoâs move towards meeting
international standards\. Mine reclamation is an integral part of BAT for mines\.
97\. The original PDO was too narrowly worded with a focus on one technical solution to
meet the objective (see Section 6)\. The project team was responsive in revising the PDO early on
when the site investigation recommended a different technical solution, as well as in fulfilling
requests for additional activities and opportunities for scale-up, all while underpinning the
original project development objectives\. As such, the project design and implementation has
stayed highly relevant to achieving Bank and country development objectives throughout the
lifespan of the project\.
3\.2 Achievement of Project Development Objectives
Original Objectives (as approved)
98\. The only part of the original PDO, which necessitates a separate assessment of
achievements relates to Outcome (b), specifically the part that aims to âenable KEK to remove
the Kosovo A ash dump\.â The decision to change from removal of the ash dump to in-situ
remediation meant that the ash dump would remain in place\. Therefore, achievement of this
original objective is unsatisfactory\.
99\. Achievements of the remaining parts of the original objectives are assessed as part of the
revised objectives, as the second change to the PDO added to the overall project objectives (not
revising or detracting from them)\.
Revised Objectives (following the first and second level one restructurings)
100\. The project achieved stated development objectives and exceeded the targets of most
indicators\. First, it addressed environmental legacy issues related to open dumping of ashes on
land from KEKâs Kosovo A thermal power plant by directing 100 percent of coal ash produced at
Kosovo A power plant to the dedicated part of the Mirash mine by way of the hydraulic ash
handling system, which reduced dust levels of the ash handling to well below the daily allowed
15
value and even to below the level where it can be measured\. Second, it enabled KEK to free land
for community development purposes currently taken by overburden materials by reclaiming 653
ha of land, equal to 68 percent of the area, and enabled KEK to remediate Kosovo A ash dump by
remediating 179 ha of the ash dump, equal to 74 percent of the area\. Finally, it built capacity in
KEK and MESP to implement continued clean-up and environmentally good practices in the
mining and energy sector by (i) creating a Reclamation Department with more than 50 staff
members that is now a fully integrated part of KEK operations and that has reclaimed an
additional 127 ha of former overburden dump areas using own fund, staff, and equipment; (ii)
removing all priority hazardous chemicals from the former gasification site, 22,116 tons in total;
and (iii) strengthening the review and monitoring mandate of MESP regarding environmental and
social impacts of investments in the power sector\.
101\. Outcome A: Address environmental legacy issues related to open dumping of ashes
on land from Kosovo A thermal power plant\. Rating: High\.
102\. Outcome A is directly associated with outcomes from the activities completed under
Component A and B, i\.e\. halting the practice of open dumping of coal ashes and remediating the
ash dump itself\. By preparing part of the Mirash mine to receive ash slurry from the power
generation facility and by supporting the installation of a hydraulic ash handling and transport
system with pipelines leading to the dedicated part of the mine, the practice for the last 50 years
of openly dumping dry ash by using a spreader sitting atop of the ash dump has come to a
complete stop as of December, 2013 when the facility was fully commissioned in a ceremony
attended by public officials\.
103\. Indicator 1: Percentage of ash disposal that complies with environmental good practice
and is redirected from open dumping on the Kosovo A Dump to the Mirash mine: 100 %\.
104\. 100 percent of coal ashes from Kosovo A are now disposed of directly into the Mirash
mine in a wet manner, which eliminates dust arising from the transport and final disposal of the
ashes\. As the ash slowly hardens in a cemented form, the water is absorbed in the mix, which
allows for the mine to be restored by covering with overburden material and top soil and
eventually to be fully reclaimed for other productive uses\.
105\. Given that the technical solution of a wet ash disposal system is far superior to the
originally intended redirection of the dry ash conveyor belts and complies with environmental
good practice, the ICR team rates the achievement of this outcome High\. Installing the hydraulic
ash system required a highly leveraged investment and resulted in a significantly improved
environmental performance of Kosovo A, hence the project was successful in achieving above
and beyond the originally planned fulfillment of the PDO\. Results video:
http://www\.worldbank\.org/en/news/feature/2014/03/10/kosovo-open-ash-dumping-practice-ends\.
106\. Outcome B: Enable KEK to free land for community development purposes
currently taken by overburden materials and enable KEK to remediate Kosovo A ash dump\.
Rating: High\.
107\. Outcome B is directly associated with outcomes from the activities completed under
Component B and C\. By undertaking detailed site investigations and designs, by supplying earth
moving equipment, by training environmental staff, and by supporting and mainstreaming project
activities into KEK operations through the establishment of a Reclamation Department, the
project enabled KEK to remediate the ash dump and reclaim land from overburden dump areas
16
beyond original and revised scaled-up targets\. This has freed the land for community purposes
(see section 1\.2 for details about access to freed land)\.
108\. Indicator 2: Remediation of Kosovo A Ash Dump, eliminating dust problems and
pollution infiltration from the ashes into groundwater (%): 74%\.
109\. Indicator 3: Contaminated land managed or dump sites closed under the project: 179 ha\.
110\. The original target to remediate 55 percent of the 243 ha large Kosovo A ash dump was
achieved in November, 2010, within the original timeframe\. By project closing, a total of 74
percent of the ash dump was remediated\. This achievement exceeds the target of PDO indicator 2
by 35 percent\. Completion of the remaining 30-40 hectares of the ash dump is planned by KEK
with its own resources after project closing and on track for next winter season 2017/2018\.
111\. In hectares, a total of 179 ha of the Kosovo A ash dump site was remediated, i\.e\. closed\.
A scaled-up target of 156 ha was set in the 2013 restructuring, which had already been met at that
point, and by project closing this target of PDO indicator 3 was exceeded by 14 percent\.
112\. Remediation of the ash dump has eliminated dust problems (see Indicator 4 below)\.
Weekly readings of six manual monitoring points near the ash dump confirm that dust levels are
so low that they are barely measurable (Figure 3)\.
113\. Remediation has been undertaken in accordance with best available techniques to ensure
that no further contamination of ground water will take place from the ash dump\. The amount of
overburden material that covers the ash dump is sufficiently large to form a âstore and release
coverâ, where all rainwater is absorbed and subsequently evaporated\. To the extent that the
remaining part of the ash dump will be remediated to the same standard as hitherto, groundwater
contamination from the ash dump is unlikely\.
114\. The results have been documented in the following video:
http://www\.worldbank\.org/en/results/2012/10/06/cleaning-ash-and-chemical-waste-in-kosovo\.
Figure 1: Ash dump (before) Figure 2: Remediated ash dump (after)
115\. Indicator 4: Reduce dust arising from the transport of ash and initiate and enable KEK to
eliminate dust arising from the ash dump (mg/m2/day): < 100 mg/m2/day\.
116\. Remediation of the ash dump has had a measured effect on dust levels, which since
December 2013 has been well below the daily allowed value of 300 mg per square meter per day\.
17
Figure 3: Dust levels near Kosovo A ash dump, 2011-2015
117\. Figure 3 shows weekly readings of dust levels in six monitoring points near the site\.
Samples were analyzed for weight and granulometry and served as a control measure for planned
improvements of the ash dump operations\. The graph shows the drastically decreased level of dust
by the end of 2013 when the wet ash system was commissioned\. By 2015, the dust level was
below the level that the monitoring points could register\. The result fully satisfies the target of
PDO indicator 4\.
118\. Indicator 5: Land reclaimed for natural habitats, agriculture, or other land use purposes
in KEKâs overburden areas (ha): 653 ha\.
119\. Indicator 6: Land reclaimed for natural habitats, agriculture, or other land use purposes
in KEKâs overburden areas (%): 68%\.
120\. The original target to reclaim 450 ha of the 650 ha large overburden dump area for
community purposes such as natural habitats and agriculture was achieved in October, 2011\. A
scaled-up revised target of 526 ha was set in the 2013 restructuring, which had already been met
at that point\. By project closing and per the latest ISR, a total of 653 ha of overburden areas had
been reclaimed, exceeding the original target by 45 percent and the scaled-up target by 24 percent\.
121\. In percentage, a total of 68 percent of the larger 957 ha overburden area was reclaimed\. A
target of 55 percent was set in the 2013 restructuring, which had already been met at that point\.
By project closing and per the latest ISR, this target was exceeded by 24 percent\. While no land
reclamation target was defined as a percentage in the PAD, it is possible to deduce that the
original intent was to reclaim 69 percent of the then defined overburden dump area of 650 ha\.
Even as the baseline overburden dump area was enlarged, the final achievement was in
proportion to the originally intended scope\.
122\. The results fully satisfy the targets of PDO indicators 5 and 6\. The land reclamation
involved a number of different activities, including the detailed design to investigate in which area
works would be required, physical reshaping of heaps and slopes, construction of main and minor
access roads, installation of a surface drainage system, removal of illegally dumped trash, and
planting of trees and mixed vegetation\. While the project planted over 100,000 tree seedlings, the
survival rate of those trees is relatively low (Lizmir overburden area estimated at 87%, but Kalaja
overburden area only 60%)\. There were a variety of reasons for this, such as weed competition, a
fire, cows and rabbits\. KEK hired a guard to protect the seedlings better, but the survival rate of the
18
first Kalaja overburden area was still low\. For the second area, more robust seedlings were
purchased (see Annex 7 for more details in the Borrower ICR)\.
123\. Outcome C: Build capacity in KEK and MESP for continued clean-up and
environmentally good practices in the mining and energy sector\. Rating: Substantial\.
124\. Outcome C is associated with outcomes from Component C, E and F\. By building local
capacity through staff training, technical assistance and supervision, and expert reviews, the
project has initiated the establishment of a Reclamation Department of more than 50 staff in KEK,
strengthened the mandate of MESP regarding environmental and social impacts of investments in
the power sector, and removed all priority hazardous chemicals from the former gasification site\.
125\. Indicator 7: Increase capacities in KEK for continued clean-up operations and
environmental good practices in the mining and energy sector (ha): 165 ha\.
126\. An additional 165 ha of overburden dump areas were reclaimed using KEKs own staff,
equipment, and financial resources as a measure of their increased capacity in land reclamation,
which were non-existent before project start\. The 165 ha is reached by adding the baseline in
2013 of 69 ha plus additional hectares remediated in the Ash dump of 23 ha and plus additional
hectares reclaimed in the overburden areas of 73 ha\. A measurable target of 127 ha was set in the
2013 restructuring to reflect the original intent of âKEK staff fully responsible for clean-up and
land reclamation operationsâ as defined in the PAD\. The target was achieved by July, 2013 and
by project closing the target was exceeded by 30 percent\.
127\. The achievement is evident of the momentous institutional capacity for improved
environmental management, which has developed at KEK\. After 50 years of dumping dry ash on
open land, KEK established the Reclamation Department to carry out on-going reclamation work,
backfilling the depleted mine fields with wet ash and overburden material\. The reclamation
department has grown to encompass over 50 staff member, who possess the necessary technical
expertise and equipment to continue clean-up operations as an integrated business practice\. This
is the true expression of increased capacity in KEK, which has resulted from the project\.
128\. Indicator 8: Increase capacities in MESP for continued clean-up operations and
environmental good practices in the mining and energy sector (text): ESIA for KPP prepared and
resettlement of Shala neighborhood of Hade village completed\.
129\. As per the targets set when the indicator was introduced in the 2013 restructuring, the
project supported MESP in (i) completing a draft ESIA for the proposed KPP and in (ii)
monitoring the completion of the implementation of a RAP for Shala neighborhood of Hade
village\. Together, this was an expression of the increased capacity of MESP to review and
monitor environmental and social impacts related to investments in the mining and energy sector\.
130\. The target âESIA for KPP prepared and disseminated in line with Bankâs policies and
good international practicesâ was partially achieved\. The draft ESIA was completed in July, 2016\.
As there is on-going discussion between the GOK, WB, and potential investors as to the size and
specifications of the proposed KPP, the ESIA cannot be completed, disclosed, nor publicly
consulted upon yet\. As such, the ESIA was prepared, but not disseminated\.
131\. The target âResettlement of Shala neighborhood of Hade village completed in line with
approved RAPâ was achieved\. The final RAP completion report was delivered in July, 2016\.
While the Shala resettlement process became subject to an investigation by the Bankâs Inspection
19
Panel, the conclusion by the IP and management was that monitoring and supervision was carried
in compliance with the OP/BP 4\.12 (see section 2\.4)\. All pending action points outlined in the
Management Response have been completed by the time of submitting this ICR\.
132\. In addition, numerous training sessions were provided to staff from KEK, MESP, KEPA,
MOF, MED and other partners on resettlement planning, land acquisition, lignite-fired power
plants, open cast mining, ESIA, monitoring, procurement, etc\. with study tours to Germany and
Poland\. For an overview, see Annex 2\.
133\. These achievements satisfy PDO indicator 8\. However, perhaps the most significant
impact of the activities completed under Component F is a deepening of MESPâs commitment to
environmental and social management in the mining and energy sector, and a strengthening of
MESPs mandate regarding investments in the power sector going forward\. This is evidenced from
the activities, which are ongoing at MESP to revise the expropriation law to make an explicit link
to the RPF, and a growing interest to focus on environmental and social issues in the mine area\.
134\. Indicator 9: All found priority hazardous substances from the gasification site safely
removed and treated/disposed (tars, benzene, phenols, methanol, oily compounds) (tons): 22,116
tons\.
135\. The original target to remove, treat, and dispose of 4,300 tons of tar sludge, benzene,
methanol and oily compounds and 13,245 tons of phenol in water solutions was achieved in 2012\.
A revised and scaled-up target of 4,780 tons of tar sludge, benzene, methanol and oily compounds,
2,232 tons of tar deposits, and 14,771 tons of phenol in water solutions was set in the 2013
restructuring, as additional hazardous chemicals were discovered during implementation\. By
project closing, a total of 5,109 tons of tar sludge, benzene, methanol and oily compounds, 2,232
tons of tar deposits, and 14,775 tons of phenol in water solutions were removed from the former
gasification site and properly treated and/or disposed of, thereby exceeding the original target by
26 percent and the revised target by 2 percent\. See Table 1\.
Table 1: Overview of hazardous chemicals removed and disposed
Substance Original target (tn) Revised target (tn) Achieved (tn)
Tar sludge, benzene,
methanol, and oily
4,300 4,780 5,109
compounds, safely removed
and disposed
Tar deposits, removed and
- 2,232 2,232
disposed
Phenol in water solutions, Partial removal of 13,245
14,771 14,775
removed an treated on-site tons
Total Max\. 17,545 21,783 22,116
136\. The achievement is significant\. In part, because the continued degradation of the stored
chemicals at the former gasification site presented one of the biggest environmental risks in
Kosovo and in part, because of the tremendous challenges faced by the PMU and Bank team to
ensure the export and safe transportation of the most hazardous chemicals to other countries for
incineration\. As Kosovo is not a signatory to the Basel Convention, the PMU, contractor, in close
cooperation with MESP needed to prepare bilateral agreements with each country involved\.
20
137\. Indicator 10: Project beneficiaries: 21,500 residents in Obiliq municipality
138\. An overall target of 21,500 project beneficiaries was set in the 2013 restructuring to
reflect the group of residents in Obilic municipality most affected by high dust-levels\. This
number was also used as the basis for the financial and economic analysis of the project at
appraisal\. The target, which includes a sub-target of which 10,600 females, was reached by
December, 2012 when 55 percent of the ash dump had been remediated\.
3\.3 Efficiency
139\. Rating: Substantial
140\. The original PAD included an economic analysis based on the benefits of elimination of
health hazards due to dust, elimination of dangers to property due to geotechnical instability, and
increased access to land due to reclamation\. The analysis has been updated for the project
quantifying the actual substantial benefits to Kosovo\. The following benefits were quantified for
the project (see details in Annex 3):
- The complete halting of dry ash dumping on land and remediation of the Kosovo A ash
dump that ensures that there is no more dust arising from the ash dump and ash handling\.
This generates significant health benefits for the local population, with an estimated value
of US1\.9 million per year\.
- Due to the stabilization and remediation of the Kosovo A ash dump the hazards due to the
extensive geotechnical instabilities were removed and further loss of property in the areas
were eliminated\. Benefits estimated at US$350,000\.
- The reclamation of the overburden dumps will make land available that can be used in
the future for natural habitats, agriculture and resettlement purposes\. The values are
estimated at US$5\.5 million per year for the benefits of land reclaimed for future
agriculture and US$2\.3 million per year for land reclaimed for resettlement purposes\.
141\. The result of the economic analysis shows that the Economic Rate of Return (ERR) is 12
percent\. Details are provided in Annex 3\.
142\. The project design was based on a least-cost approach, where international funds from
IDA grants and credit were used to develop the design, to purchase / repair the equipment, and to
provide staff training for the remediation of the ash dump and reclamation of overburden dumps,
but the works were executed and financed by the mining and energy company, KEK\.
143\. The cost-effectiveness of the project becomes evident when compared with a similar
regional project\. For the CLRP, ash dump remediation cost approximately US$7 million for 179
hectares of which US$5\.5 million was spent from IDA resources and US$1\.5 million from KEKâs
contribution\. In comparison, the Gradac waste dump remediation in the Montenegro Industrial
Waste Management and Clean-up Project (P122139), which is also based on works such as
reshaping, stabilization, and covering is estimated at US$6\.35 million for 12\.5 hectares on the
basis of contractors executing the works\.
3\.4 Justification of Overall Outcome Rating
144\. Rating: Satisfactory\.
145\. Given that the project objectives were formally revised twice, the ICR team undertook a
split evaluation of the achievement of project outcomes against original and revised PDOs\. Table
2 below shows that early revision of the PDO (from removal to remediation of the ash dump)
significantly improved overall project achievements and resulted in âabove the lineâ rating\.
21
Table 2: Split evaluation of PDOs
Against first Against second
Against
revision of PDOs revision of PDOs Overall Comment
original PDOs
(2009) (2013)
1 Rating Unsatisfactory Satisfactory Satisfactory
2 Rating value 2 5 5
3 Weight (%
10% 62% 28%
disbursed)
4 Weighted
0\.2 3\.1 1\.4 4\.7
value
5 Final rating Early revision
(rounded) Satisfactory results in âabove
the lineâ rating
146\. Under the circumstances in a challenging country context, including Kosovoâs move
towards independence and the difficulties faced by an emerging nation and democracy, it is quite
remarkable that the project enjoyed such great support that it was able to attract additional
US$9\.2 million in IDA funds and over US$20 million from other sources to achieve outcomes far
beyond what was initially planned\. Perhaps most importantly, the project ignited change of
outdated ash-handling and overburden dumping practices and inadequate regulatory frameworks,
with a high degree of neglect for the environment and the health of population, by enabling KEK
to reclaim land as an integrated part of mining operations and encouraging the systematic and
detailed assessment of environmental and social impacts of new power generation and mining
activities using proper air, soil, water and groundwater baseline data\.
147\. In arriving at an overall outcome rating of satisfactory, it is noted that: a) the Project
enjoyed a high degree of relevance of objectives and remained relevant and feasible with a
technical change to the design; b) the achievement of project development outcomes was
satisfactory against revised objectives; c) the outputs and outcomes were wider than and exceeded
the objectives defined under the original project; and d) the economic analysis confirms the
substantial efficiency of investing in clean-up of environmental legacy issues and improved
environmental performance, based on a least-cost design that underpins the inherent sustainability
of project development outcomes\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
148\. The importance of power to the provision of other basic services cannot
be underestimated\. Power is central to sustainable economic, social, and environmental
development as well as to poverty reduction and is paramount to Kosovoâs overall development
process\. This was recognized in the Bankâs Interim Strategy Note applicable at the time of project
approval, and remains true today\. Without better environmental and social performance of the
power generation sector and its associated mining, it will be challenging if not impossible to
continue to deliver these basic services of power provision to the citizens of Kosovo\.
149\. At the community and plant level, the positive health impacts of remediating the ash
dump and halting the practice of openly dumping coal ashes are in no uncertain terms large\. The
largest impacts are felt by KEK employees and nearby resident, who are less exposed to high dust
levels on a daily basis and where the remediation of the ash dump allowed for villages in the
neighborhood to experience some revitalization\.
22
150\. While revitalization of surrounding villages was not a formal objective of the project,
anecdotal evidence of project impacts is easy to find\. During the ICR mission, a visit to Dardhiste
village bordering the Kosovo A ash dump showed how the town is flourishing following
remediation of the ash dump and Dragodan overburden area\. Housing construction is on the rise,
as residents are moving back to the village, and a new mosque was erected\. Similarly, in nearby
Lizmir located next to part of a reclaimed overburden area, investments in existing infrastructure,
such as improvements to the local school, are materializing\.
(b) Institutional Change/Strengthening
151\. At KEK, the key evidence of institutional strengthening is the establishment of a full-time
mining Reclamation Department with more than 50 staff, which now has many years of
experience in land reclamation works\. Prior to and following project closure, reclamation works
have been continued by KEK with full responsibility for equipment, staff, and funding\. In
addition, KEK has been fully responsible for the operation and maintenance of the wet ash system
since its commission in December, 2013 and has operated it without any major issues\.
152\. At MESP, extensive training in Best Available Techniques and International Standards
for mining and electricity production for government officials will have a longer-term impact on
the capacity of the Ministry\. Environmental baseline data, collected as part of the impact
assessment, is now being used for many other purposes\.
153\. Three continuous and automatic air quality stations, purchased and installed under the
project, are also fully integrated in the operations and maintenance by the Kosovo Hydro-
Meteorological Institute, under MESP\. Information is published annually in the State of the
Environment Report: See (http://www\.ammk-rks\.net/?page=2,7,367)\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
154\. The project helped motivate KEK management to understand the positive returns of
investing in technological solutions with high environmental performance\. During the lifetime of
the project, KEK invested additional â¬30 million in retrofitting existing stacks at Kosovo A with
new filters (electrostatic precipitators), thereby significantly reducing air pollution\. In addition,
the wet ash system also generated substantial benefits for lesser stoppage of the Kosovo A power
plant, as the old dry ash conveyor belt system broke down frequently and each time the ash
handling and transport was stopped, the power plant also had to stop production\.
155\. Relations with local communities have improved\. The Reclamation Department, which
was established under the project and now a fixed part of KEK operations are in close contact
with residents from nearby villages\. During the ICR mission, the team had a couple of encounters
with local residents, who expressed gratitude for the helpful KEK staff to make available their
earth moving equipment, shovels, and trucks in solving local problems on the ground, such as
removal of illegally dumped trash, layering a school yard, and flattening a dirt road\. The
remediation of the ash dump and halting of handling and dumping of dry ash was also a key
factor in the revitalization of villages close to the ash dump (such as Dardhiste)\.
156\. On November 30, 2016 Kosovoâs National Assembly approved Law No\. 05/L â 044 on
the environmentally endangered zone of Obiliq and its surroundings\. The purpose of the law is to
define the municipality and its surroundings as a zone of particular environmental risk and
undertake the measures to reduce the negative impact from the sources of pollution\. The law has
not yet been signed into effect\.
23
157\. The Government has set up a multi-agency commissions to prepare legislative packages
to: a) update the Spatial Plan for the New Mining Field (NMF) to reflect the new 450MW plant
configuration, recognizing that the Zone of Special Economic Interest area is too large and
adjustment of construction freeze is required; b) update the Resettlement Policy Framework for
the NMF based on lessons learned to date; and c) amend the Expropriation Law to include a link
to the updated RPF so that it becomes part of the legal framework and corrects the current legal
gap\. While not a direct outcome, the project has helped motivate this development\.
158\. As indicated, the pilot resettlement training and study tour that was organized under the
Project in December 2014 was scaled up by the Bank, in partnership with other stakeholders, into
a two week-long international practical course on âLand Acquisition, Resettlement and Social
Sustainabilityâ in Groningen, The Netherlands (July 6-17, 2015)\. The course is delivered by
internationally recognized experts, includes 30 experienced practitioners (including 5 from
Kosovo) from over 10 countries and also has a study tour to the lignite mine in Germany\. This
course has been and will continue to be offered every six months\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
159\. N/A
4\. Assessment of Risk to Development Outcome
160\. Rating: Moderate\. In assessing the risks, each part of the PDO is considered\.
161\. First, many of the development outcomes achieved in addressing environmental legacy
issues are not easily reversed, and the practices that created those legacies are unlikely to be
repeated\. Open dumping of coal ashes has been stopped through cost-effective investments in a
hydraulic ash handling system with a fairly short pay-back period\. The conveyor belts which used
to transport the dry ash have been dismantled, and the wet ash handling system is an integrated
part of the power plant\. The remediation of the ash dump, the reclamation of the overburden areas,
and the removal of hazardous chemicals from the former gasification site are all fixed
achievements\. At this point, it is unlikely that the mining and energy sector would reverse to
using outdated practices with high environmental costs, as these are impediments to attracting
international funding for future investments and not in line with Kosovo legislation\.
162\. Second, enabling KEK to free land for community development purposes and to
remediate the ash dump was achieved through establishing and mainstreaming the Reclamation
Department into daily operations\. Thus, at project closing, KEK possesses the technical expertise,
the equipment, and the operational and financial frameworks to finalize the remediation of the
remaining hectares of the ash dump and continue with land reclamation of overburden areas and
mine restoration as an integrated part of KEKs business practice\. The main risk going forward
relates to the upkeep and maintenance of expensive machinery and equipment needed\. Too often,
replacement of spare parts can leave work undone for extended periods of time\. However, the
reputational gains from proper environmental and social management as well as the EU Directive
which have been transposed into Kosovo legislation and which require the power and mining
sector to start working in accordance with Best Available Techniques are likely to pull KEK
further in the direction of complying with international standards\.
163\. Third, the risks at an institutional level for continued clean-up operations and
environmentally good practices in the mining and energy sector are mainly tied to external
relations and events, such as Kosovoâs accession to EU and foreign and multilateral investments
in a new power plant and its associated mine\. As Kosovo relies heavily on donor funds and
24
foreign direct investments and is on an EU accession path, the risk to changing institutional
priorities is low\. However, at the local level, there seems to a greater risk of a national and
institutional brain drain, as competent staff seeks new opportunities abroad or in the private sector,
where salaries are more competitive\.
164\. Overall, the CLRP has ignited a change of outdated ash handling and overburden
dumping practices and inadequate regulatory frameworks in the mining and energy sector with
substantial tangible and irreversible outcomes\. Hence, the overall assessment of risk to
development outcomes is moderate\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
165\. Rating: Moderately Satisfactory
166\. At the project preparation stage, the Bank team employed due diligence in basing the
project on a solid diagnostic foundation of development priorities, taking into account the lessons
learned from other clean-up projects in the mining and energy sector\. The strategic relevance of
the project, and the overall project concept to initiate and enable KEK to improve environmental
performance as part of regular mining and electricity production was sound and remained
relevant throughout its lifetime\. The project enjoyed early high-level commitment and local
ownership\. Provisions for procurement, financial management, and safeguards were all adequate
at the preparation stage\.
167\. The project was delivered to Board in less than 10 months, which is substantially shorter
compared to other pollution management projects in ECA, such as in Kazakhstan8(2 years and 8
9
months) and Montenegro (3 years and 6 months)\. The project concept included legal covenants
to prepare and have the WB approve detailed environmental impact assessments after the
finalization of the site investigations and detailed design of the remediation works prior to the
start of civil works\.
168\. One moderate short-coming by the Bank team in ensuring quality at entry relate to the
definition of the PDO in relation to the design of component B, which rested on the findings of
the detailed site investigation\. If the PDO has been worded a bit more broadly instead of
specifying to âremoveâ the ash dump, the change in technical solution to âremediateâ the ash
dump would not have required a Board Level restructuring\. Pollution management projects
always constitute risks, and flexibility is needed to allow for adaption of the preferred technical
solution once more details from the site investigations of the pollution situation become available\.
(b) Quality of Supervision
169\. Rating: Moderately Satisfactory
170\. The World Bank task team conducted 29 implementation support missions in 10 years, or
2\.9 missions per year: a rate above the planned two implementation support missions per
year\. Given the structurally complex implementation period with two additional financing
projects enveloped into the CLRP, and two restructurings with substantial widening of the
8
Nura River Clean-up Project, Ust Kamenogorsk Environmental Remediation Project\.
9
Industrial Waste Management and Clean-up Project\.
25
original design and scale-up of original targets, the high number of missions is evident of a highly
engaged Bank team\.
171\. What is notable is the level of dedication by the Bank team, demonstrated by being
responsive and proactive\. There was substantial technical support to assist KEK in complex
procurement and technical implementation\. Exemplary examples of this are: (i) The first-ever
export of hazardous waste from Kosovo to other EU countries through establishment of bilateral
agreements with all transit and waste import countries as Kosovo is not a signatory to the Basel
Convention; (ii) The remediation of the ash and overburden dumps by the implementing agency
itself without prior experience in such work; (iii) The substantial supervision support to the
supply and installation contract for the wet ash system, which is a BAT option in ash
management and which has been operating since hand-over without problems; and (iv) The
support to two PMUs, staffed with technical, financial, and procurement personnel\. Extensive
training and hands-on learning was made available to ensure compliance with Bank policies and
standards\.
172\. The adaptive and proactive restructuring of the project design related to Component A
and B with regards to installing a hydraulic ash transport system and in-situ remediation of the
ash dump served the project well\. In contrast, the late addition of Component F and the
challenging implementation that followed became a liability for the entire project, which in effect
had fulfilled all original targets by the time of the 2013 second Additional Financing and
restructuring\. While it is commendable that the project was so successful in attracting additional
co-financing for expanded and new activities, it is worth considering if these activities would not
have benefitted from being executed under separate projects\. Component F significantly delayed
project implementation and increased costs of supervision incrementally in the final years of
implementation (see Annex 4)\.
173\. The Bank team showed timely and dedicated attention to the Inspection Panel
investigation, which began in 2015\. Management remained engaged in raising critical
resettlement issues to a high-level of attention\. Post project closing, the Bank has continued to
work on completing outstanding issue related to the resettlement of Shala neighborhood of Hade
village\.
(c) Justification of Rating for Overall Bank Performance
174\. Rating: Moderately Satisfactory
175\. The Bank project team demonstrated a high level of commitment and supported the
PMUs in a timely and appropriate manner\. The additional requests for financing from the
Borrower to scale-up activities and the on-going discussions between the Bank and the GOK
about future investments in Kosovoâs power sector is a testament to the trust and leverage that the
Bank has brought to bear over the years\.
176\. The project was prepared in a timely fashion and in accordance with good international
practices for clean-up and land reclamation projects, and project implementation adapted to the
changing of local conditions and uncertainties\.
177\. The decision to add an entire new set of activities at the heels of an otherwise successful
implementation period was questionable\. By rolling in a second PMU and a new set of activities
with high reputational risks late in the implementation phase, there were less than optimal
conditions for a successful implementation of the CLRP-SAF\.
26
5\.2 Borrower Performance
(a) Government Performance
178\. Rating: Moderately Satisfactory
179\. The Government of Kosovo fulfilled its obligations adequately\. There was some
difficulty with ratification immediately following Board approval, which resulted in a seven
monthsâ delay before effectiveness\. However, following effectiveness, transactions proceeded
smoothly, although with some interruptions in regular transactions due to the overall political
environment in the country\.
(b) Implementing Agency or Agencies Performance
180\. Rating: Moderately Satisfactory
181\. The PMU at KEK performed satisfactorily\. The high level of ownership, the growing
technical capacity of staff members, the dedication and professionalism of the team are all key
factors in explaining the successful achievement of project targets\. Particularly commendable is
KEKâs significant co-financing for the wet ash system (â¬7 million), which was not part of the
original design, but which became essential to achieving intended project outcomes\. Equally
important to project outcomes was the newly established Reclamation Department, which started
to focus for the first time in KEKâs history on remediation of environmental legacies and which
exceeded the project targets and is continuing to date with all remediation and reclamation works
fully funded by KEK\. KEK has fully mainstreamed the department of 50 staff into their daily
operations and annual budget\.
182\. The main implementation challenge for the PMU at KEK occurred early in the project
and related to the delay in approving contract payments for the supply of earth moving equipment,
which affected the implementation schedule of component B and C\. KEK also failed to make
timely payments for temporary rent allowances in the resettlement of Shala neighborhood of
Hade village\. This caused the project to be in bad standing with the legal covenants\.
183\. The PMU at MESP performed moderately satisfactorily\. A competent team of staff
members were assembled, though hitting the ground running in the midst of project
implementation required significant support from the Bank team\. The main challenges faced by
the PMU at MESP related to the quality of the ESIA, which based on expert reviews required
significant revision, and completing the resettlement of Shala neighborhood of Hade village\.
However, MESP was dedicated to and did fix the broken sewage section at the resettlement even
after project closure\. MESP has grown its capacity for handling future resettlements and
strengthened their overall mandate for managing environmental and social impacts in the mining
and energy sector\.
(c) Justification of Rating for Overall Borrower Performance
184\. Rating: Moderately Satisfactory
185\. The overall rating for Borrower performance is moderately satisfactory\. Despite a
challenging implementation environment with a number of external factors affecting the project,
the Borrower and implementing agencies achieved the stated development objectives and
exceeded them\. This is attributable to two dedicated and competent PMUs supported by a
committed GOK and by a responsive Bank team\.
27
6\. Lessons Learned
186\. Client and stakeholder ownership\. One of the key lessons, which were reflected in the
project design, was the importance of ownership of local institutions and project implementation
by the enterpriseâs own staff\. This model was based on a previous successful clean-up mining
operation in Trepca and applied in a similar manner to involve KEK in the implementation
arrangements\. Indeed, the implementation arrangements created such ownership for the clean-up
operations with the establishment of a full time Reclamation Department of more than 50 staff
members and the continuing of clean-up operations following the project closing date\. It is also
evidenced by the large amount of additional co-financing that KEK made available in
environmental investments, first in the wet ash system and later in the filters that were applied for
the stacks\.
187\. PDO should focus on problem, not the technical solution\. The PDO could have used a
more flexible wording for the âremovalâ of the Kosovo A ash dump to allow for this adaptation
and to avoid a Board restructuring once the full project design was finalized\. In pollution clean-up
projects, adaptation to local conditions and inherent uncertainties regarding the extent of pollution
is largely a process of âlearning by doingâ, and flexibility during project implementation is a key
factor to allow for adaptation once more detailed investigations of the pollution situation become
available\. Pollution remediation is a risky business based on its legacy, and exposed intrinsically
to a high level of uncertainty, even with the most advanced knowledge and sophisticated
technology\. When contamination occurs, the involved physicochemical processes tends to be
governed by complex, multi-factorial conditions that can lead to extremely irregular pollution
distributions and create a high probability for unforeseen situations that are uncovered only
during implementation and even during remediation works\. And this all has implications on costs\.
In allowing adequate time and resources for rigorous site investigations, there is a need for
flexible supervision to adapt to these circumstances during implementation and allow the project
objectives to be achieved using the most appropriate technical solutions\.
188\. Late term addition of project activities are to be avoided\. Another lesson learned
relates to the late decision of adding a new component with the responsibility of monitoring a
resettlement process unrelated to the project\. In 2013 when the second additional financing was
approved, most key indicators had already been met\. In hindsight, it appears that the technical and
investment focused CLRP should not have become overburdened by unrelated resettlement issues
with high reputational costs\.
189\. Trade-offs in preparing pollution management projects\. Another lesson is related to
the trade-offs inherent in preparing pollution management projects, specifically clean-up and
reclamation projects\. These projects typically require detailed technical investigations prior to
project design which are often time and budget intensive\. However, the preparation period for
typical Bank projects does not afford the time that is required for such detailed investigations to
be carried out prior to project approval\. At the same time, countries may also not be willing to
borrow money for conducting those studies without the assurance of a loan\. This creates a
situation as exemplified in the Kosovo CLRP project where project redesign is called for shortly
after loan approval\. This is to be resolved by having a more flexible PDO as mentioned above or
a longer preparation time in case countries are willing to borrow to this end or substantial grant
financing is available\.
190\. Flexible M&E framework\. Project level M&E should be given due attention at the
project preparation and implementation stage\. Due to the nature of a clean-up operations, project
level indicators need to be given due attention for changes and monitoring during implementation\.
28
Since monitoring is complex it should thus be given greater attention and weight during
implementation\. It is also important to have the client assume these responsibilities to foster a
target- and results-driven mindset within the country\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
(b) Cofinanciers
(c) Other partners and stakeholders
N/A
29
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Estimate Actual (USD Percentage of
Components
(USD millions) millions) Appraisal
2\.76
Component A 2\.76 802
9\.203
Component B 5\.48 6\.48 118
4\.05
Component C 2\.40 177
0\.202
1\.42
Component D 0\.72 0\.491 279
0\.102
5\.631
Component E 1\.602 n/a
0\.602
2\.302
Component F n/a
0\.602
Total Baseline / Project Cost* 11\.36 35\.43 312
Total Financing Required 11\.36 35\.43 312
*
No contingencies or front-end fees applicable\.
(b) Financing
Appraisal
Actual
Type of Estimate Percentage of
Source of Funds (USD
Cofinancing (USD Appraisal
millions)
millions)
6\.00
Borrower 3\.15 483
9\.203
5\.50
IDA Grant 5\.50 191
5\.001
NETHERLANDS: Min\. of Foreign
4\.334 n/a
Affairs / Min\. of Dev\. Coop\.
NETHERLANDS: Trust Fund 1\.20*2 n/a
IDA Credit 4\.202 n/a
Total Financing Available 8\.65 35\.43 410
1
First additional financing, June 28, 2007\.
2
Second additional financing, March 28, 2013\.
3
Approximate estimate of KEKâs co-financing for the wet ash disposal system of 9\.2 million in USD on June 3, 2009,
the date of the first project restructuring\.
4
Grant of â¬3 million from the GON covered the initial financing gap of US$2\.71 million, and the balance was
earmarked to Component D and E (US$1\.12 million) at the time of the first additional financing\.
* Additional self-standing grant of â¬0\.9 million from the GON financed further environmental monitoring and
management at MESP, supporting the overall project objectives through equipment repairs and removal of hazardous
chemicals from the gasification site\.
30
Annex 2\. Outputs by Component
191\. The following section provides (i) an overview of revised components, (ii) an
overview of outputs by components, (iii) a timeline of important events, (iv) an overview
of the original and revised results framework, (v) before and after photos of key project
achievements; and (vi) an overview of key training sessions\.
Table 3: Overview of revised components
Final components Revised / Added Scope Rationale
Component A: June 3, 2009\. Revision Changed from dry ash Reduce dust formation
Preparation of the of planned activity did to wet ash disposal and emissions\.
Mirash Open Pit not require Board system\.
Mine for Ash approval\.
Management
Component B: June 3, 2009\. First Changed from Detailed site
Remediation of Board approved removal to in-situ investigations revealed
Kosovo A Ash project-level remediation of a number of technical,
Dump restructuring\. Kosovo A ash dump\. environmental, and
financial reasons\.
Component C: March 28, 2013\. Additional tree Scale-up\.
Reclamation of Board approved planting in
Overburden Area additional financing to overburden areas\.
scale-up of activities\.
Component D: March 28, 2013\. Project support to MESP would be the IA
Project Management Second Board both KEK and MESP of new Component F
approved additional as implementing
financing\. agencies
Component E: June 28, 2007\. When added, funds New component,
Removal of Included in the first covered the removal which would eliminate
Hazardous Board approved of highest priority one of the most urgent
Chemicals from additional financing\. hazardous chemicals environmental risks in
Kosovo Aâs from the former Kosovo\.
Gasification Site March 28, 2013\. gasification site\. Part of the original
Scaled up in the project design, the
second Board Scale-up of activities component was not
approved additional ensured full removal included due to
financing\. of all priority insufficient funds at
hazardous chemicals\. the time\.
Component F: March 28, 2013\. Implement ESIA for New component, to
Environmental Added in the second KPP and monitor the support MESP in
Monitoring and Board approved implementation of building capacity for
Management project-level RAP of Shala continued
restructuring and neighborhood of Hade environmental
additional financing\. village\. management and
monitoring\.
31
Table 4: Outputs by component
Component Output
Component A: - Prepared site investigations and detailed design
Preparation of the - Reshaped dedicated part of the mine
Mirash Open Pit Mine - Installation of a simple base liner
for Ash Management - Drainage and mine water management system
- Installation of hydraulic ash handling system
- Installation of pipeline leading from Kosovo A power
plant to Mirash mine for disposal of wet ash
Component B: - Delivery of earth moving equipment
Remediation of Kosovo - Removal of unstable parts of the ash dump
A Ash Dump - Contaminated parts of the ash dump covered on site
- Reshaped and covered ash dump to allow re-vegetation
Component C: - Prepared site investigations
Reclamation of - Undertook civil works
Overburden Dump - Planted 138,000 tree seedlings, survival rate much lower
Areas at 60%-80%
Component D: Project - Daily project implementation support
Management - Training on procurement and financial management
- Monitoring and evaluation of project outputs and impacts
Component E: - Prepared feasibility study, EIA and EMP
Removal of Hazardous - Repackaging of chemicals for export
Chemicals from Kosovo - On-site treatment of phenol solutions in water
Aâs Gasification Site - Preparation of export permits
- Preparation of bilateral export agreements with
destination countries
- Export of hazardous chemicals
Component F: - Installation of three air monitoring stations
Environmental - Implementation of soil and water monitoring program
Monitoring and - Preparation of ESIA for proposed KPP
Management - Implementation of Expert Panel for review functioning
- Monitored the implementation of the RAP for Shala
neighborhood of Hade village
- Preparation of Low carbon growth energy strategy
32
Project Timeline
Concept Review: August 31, 2005
Project approval: June 13, 2006
First additional financing: June 28, 2007
First Board-level restructuring: June 3, 2009
Mid-Term Review: February 15, 2010
Second additional financing and Board-level restructuring: March 28, 201310
Project closing: August 31, 2016
ICR Mission: November 13-18, 2016
10
This date was pulled from the system and could not be changed, but the actual date of Board approval is May 10,
2013\. To be consistent, the ICR will make reference to March 28, 2013 throughout the document\.
33
Original and Revised Results Framework
Table 5: Original results framework from PAD
PDO Indicator Intermediate Indicator Target
Disposal of ashes from Kosovo A Prepare Mirash mine for sanitary 100%
at the open ash dump will be disposal of Kosovo A ashes\.
stopped and redirected to the Transfer of ash stream from Kosovo A 0% of ash production to go
Mirash mine\. to the dump site will be stopped and to open ash dump
redirected to the Mirash mine\.
Initiate and enable KEK to Initiate the removal of Kosovo A ash West tip removed for 100%
remove Kosovo A ash dump and dump and final disposal in the Mirash East tip removed for 20%
final disposal in the Mirash mine, mine, eliminating dust problems and
thereby initiate and enable KEK pollution infiltration from the ashes
to eliminate pollution infiltration into the groundwater\.
from the ashes into the
groundwater\.
Reduce dust arising from the N/A N/A
transport of ash and initiate and
enable KEK to eliminate dust
arising from the ash dump\.
Initiate and enable KEK to reduce Enable reduction of loss of property in 0 houses at risk
loss of private property in the area the areas by eliminating the
by eliminating the extensive geotechnical instabilities from the
geotechnical instabilities from the Kosovo ash dump\. Baseline: 10
Kosovo A ash dump and adjacent houses at risk\.
overburden dumps\.
Initiate and enable KEK to Initiate reclamation of 6\.5 km2 of land 4\.5 km2
achieve land reclamation for available (650 hectares) for
natural habitats, agriculture, community development including
resettlement or other land use agriculture, resettlement purposes
purposes\. and/or natural habitats\.
Increase in capacity in institutions Increase in capacity in institutions and KEK staff fully responsible
and KEK for good environmental KEK for good practices for lignite for clean-up and land
practices mining operations\. mining operations\. reclamation operations
34
Table 6: Original and revised results framework
PDO Level Indicators Comments
Original (PAD) Revised
Indicator Target* Indicator Target
Disposal of ashes from Kosovo 0% of ash Percentage of ash disposal that 100% Revised: March 28, 2013\. Reworded to allow
A at the open ash dump will be production still complies with environmental for better tracking of results (baseline and
stopped and redirected to the dumped on open ash good practice and is redirected target value changed to percentage value)\.
Mirash mine\. dumps from open dumping on the
Kosovo A Ash Dump to the
Mirash Mine
Initiate and enable KEK to West tip removed Remediation of Kosovo A Ash 55% Revised: April 21, 2009\.
remove Kosovo A ash dump for 100% Dump, eliminating dust As the approach changed from removal of
and final disposal in the Mirash East tip removed for problems and pollution Kosovo A ash dump to in-situ remediation of
mine, thereby initiate and 20% infiltration from the ashes into the ash dump, the indicator was revised
enable KEK to eliminate (of 25 million m3) the groundwater\. accordingly\. Originally, the target value
pollution infiltration from the referred to âm3 of ashes removedâ\. The
ashes into the groundwater\. revised indicator would track the âpercentage
of ash dump remediatedâ\. Based on an
interpretation of the original project design in
the PAD, which envisaged completion of 55
percent of the required works (i\.e\. âinitiate
and enableâ), the same target of 55 percent
was applied to the remediation indicator\.
Contaminated land managed 156 ha Added: March 28, 2013\.
or (industrial) dump sites Core sector PDO indicator linked to
closed under the project (core Component B introduced to track
sector indicator)\. remediation of the ash dump site in hectares,
as a companion to PDO indicator 2\. The
target was calculated as 55 percent of the ash
dump size, but due to using 283 ha as the
basis of the ash dump size, the target was
overestimated\. Given that the size of the ash
dump is 243 ha (as noted several places in
the same restructuring document) the correct
target would have been 134 ha\. For
consistency, however, this ICR will use the
35
PDO Level Indicators Comments
Original (PAD) Revised
Indicator Target* Indicator Target
target of 156 ha as entered\. At the time of the
restructuring, the target had already been
met\.
Reduce dust arising from the N/A Reduce dust arising from the <300 mg/m2/day Indicator target never defined, tracked,
transport of ash and initiate and transport of ash and initiate revised nor dropped\. In an effort to measure
enable KEK to eliminate dust and enable KEK to eliminate project achievements against this original
arising from the ash dump\. dust arising from the ash indicator, the ICR team has applied a target
dump\. of âdust levels below allowed daily value of
300 mg/m2/dayâ in accordance with local
environmental legislation in Kosovo\.
Initiate and enable KEK to 4\.5 km2 Land reclaimed for natural 526 ha Revised: March 28, 2013\.
achieve land reclamation for habitats, agriculture or other Strictly adhering to the original results
natural habitats, agriculture, land use purposes in KEKâs framework in the PAD, the ICR team will
resettlement or other land use overburden areas\. apply the target of 450 ha in this final
purposes\. evaluation of achievements\. This is in line
with the wording used through-out the PAD
to âinitiate and enableâ\. To reflect ongoing
work at the time of the restructuring, the
target was scaled-up to 526 ha\. The revised
target was based on a calculation of 55
percent of an enlarged overburden dump area
of 957 ha, which became known due to more
detailed surveys done as part of
implementation, instead of the original 650
ha\.
Land reclaimed for natural 55% Added: March 28, 2015\.
habitats, agriculture or other Indicator linked to Component C was
land use purposes in KEKâs introduced to track land reclamation in
overburden areas\. percentage, as a companion to the original
PDO indicator 5\. It is not clear to the ICR
team on which basis the target of 55 percent
was defined\. In interpreting the original
intent from the PAD, to âinitiate reclamation
of 650 haâ with a target of 450 ha, this would
36
PDO Level Indicators Comments
Original (PAD) Revised
Indicator Target* Indicator Target
imply a target equal to 69 percent\. For
consistency, the ICR team will refer to 55
percent\. At the time of the restructuring, the
target had already been met\.
Initiate and enable KEK to 0 houses at risk Revised: March 28, 2013\.
reduce loss of private property Dropped as a PDO level indicator to avoid
in the area by eliminating the duplication with intermediate-level indicator\.
extensive geotechnical
instabilities from the Kosovo A
ash dump and adjacent
overburden dumps\.
Increase in capacity in KEK staff fully Increase capacities in KEK for 127 ha Revised: March 28, 2013\.
institutions and KEK for good responsible for continued clean-up operations Indicator linked to Component F was revised
environmental practices mining clean-up and land and environmental good to reflect capacity building for continued
operations\. reclamation practices in the mining and clean-up operations and environmental good
operations energy sector\. practices in KEK\. A land reclamation target
of an additional 127 ha of overburden areas
was entered to reflect that KEK would do
this work fully with their own resources and
staff\.
Increase capacities in MESP ESIA for KPP Added: March 28, 2013\.
for environmental good prepared and Iindicator linked to Component F was added
practices in the mining and disseminated in to reflect capacity building for environmental
energy sector\. line with Bankâs monitoring and management in MESP\. This
policies and good would be tracked by a) delivering an ESIA
international for the new Kosovo Power Plant project, and
practices\. b) supervising the resettlement of Shala
neighborhood in Hade village\.
Resettlement of
Shala
neighborhood of
Hade village
completed in line
with approved
37
PDO Level Indicators Comments
Original (PAD) Revised
Indicator Target* Indicator Target
RAP\.
All found priority hazardous 21,783 tons Added: March 28, 2013\.
substances from the A PDO indicator linked to Component E and
gasification sire safely measured in tonnage was introduced to
removed and treated/disposed reflect the enhanced development impact as
(tars, benzene, phenols, the activities were scaled-up to remove all
methanol, oily compounds)\. priority â rather than the highest priority â
hazardous substances\.
Project beneficiaries\. 21,500 Added: March 28, 2013\.
of which female 10,600
(beneficiaries)\.
Intermediate Level
Original (PAD) Revised
Indicator Target* Indicator Target
Prepare Mirash mine for 100% Mirash mine prepared for Mirash mine Revised: March 28, 2013\.
sanitary disposal of Kosovo A sanitary disposal of Kosovo A prepared for Target revised from percentage to text,
ashes\. ash\. sanitary disposal however, there is no difference in the output
of Kosovo A ash\. or outcome\.
Transfer of ash stream from 0% Dropped to remove duplication with PDO
Kosovo A to the dump site will level indicator\.
be stopped and redirected to the
Mirash mine\.
Initiate the removal of Kosovo West tip removed Dropped\. Component restructured from
A ash dump and final disposal for 100% removal to in-situ remediation of ash dump\.
in the Mirash mine, eliminating East tip removed for
dust problems and pollution 20%
infiltration from the ashes into (of 25 million m3)
the groundwater\.
Enable reduction of loss of 0 houses at risk Reduction of houses at risk 0 houses at risk Revised: March 28, 2013\.
property in the areas by from geotechnical instabilities Slight modification of language\.
eliminating the geotechnical of Kosovo A ash dump\.
instabilities from the Kosovo
ash dump\. Baseline: 10 houses
38
PDO Level Indicators Comments
Original (PAD) Revised
Indicator Target* Indicator Target
at risk\.
Initiate reclamation of 6\.5 km2 4\.5 km2 Dropped to remove duplication with PDO
of land available (650 hectares) level indicator\.
for community development
including agriculture,
resettlement purposes and/or
natural habitats\.
Increase in capacity in KEK staff fully Dropped to remove duplication with PDO
institutions and KEK for good responsible for level indicator\.
practices for lignite mining clean-up and land
operations\. reclamation
operations
New (1st Restructuring) Revised (2nd Restructuring)
Removal of highest priority Removal of 4,300 Tons of found tar sludge, 4,780 tons Added:
hazardous substances from tons benzene, methanol and oily Revised: March 28, 2013\.
storage tanks at the gasification compounds from the Revised to clarify in more detail the precise
site (tars, benzene, phenols, gasification site safely substances to be removed, disposed, treated,
methanol, oily compounds)\. removed and disposed\. and exported\. Targets were scaled-up as
Tons of found tar deposits 2,232 tons additional financing was made available\.
from the gasification sire
safely removed and disposed\.
Partial removal and Part with highest Tons of found phenol in water 14,771 tons
containment of phenols in water concentration solutions from the gasification
solutions\. removed, remainder site safely removed and
stored and treated\.
monitored in
reliable tanks\.
Preparation of full site clean-up Preparation of full Preparation of full site clean- Site clean-up and Revised march 28, 2013\.
investment plan and adaptation site clean-up up investment plan and low-cost Slight modification of language\.
of health and safety regulations investment plan and adaptation of health and safety investment and
and low-cost remediation adaptation of health regulations and low-cost remediation plan
program\. and safety remediation program\. prepared,
regulations and low- including health
cost remediation and safety
39
PDO Level Indicators Comments
Original (PAD) Revised
Indicator Target* Indicator Target
program\. regulation\.
New (2nd Restructuring) Revised (3rd Restructuring)
Environmental and social Environmental and
baseline data available for ESIA social baseline data
available for ESIA\.
Low carbon growth strategy Low carbon growth Low carbon growth strategy Low carbon Revised: March 28, 2013\.
prepared and disseminated\. strategy prepared prepared\. growth strategy Revised to not include dissemination of the
and disseminated\. prepared\. study\.
* PDO-level targets are mirrored at the intermediate level in the original results framework and applied here to both levels\.
40
Photos
192\. The following before and after photos give an impression of project achievements\.
Figure 4: Wet ash silo during construction Figure 5: Wet ash disposal in depleted Mirash mine
Figure 6: Storage tanks on gasification site Figure 7: Tar sludge on open areas
Figure 8: Work in progress Figure 9: Hazardous waste packaged for export
41
Training Sessions
193\. The following are the most important training activities provided under the CLRP: (i) On
May 13-14, 2014 a Workshop on International Good Practices on Resettlement for 25 key staff
from MESP, KEK, MED, Ministry of Finance and the Municipality of Obiliq/Obilic\. During this
Workshop, internationally recognized resettlement experts shared international good practices
and provided recommendations to the GoK regarding institutional arrangements, need for
medium and long-term resettlement planning, and enhancements to the RPF\. (ii) Another, more
comprehensive, three-day training workshop for 30 staff members from KEK and MESP was
conducted in December 2014 by international experts and this included a study tour to
resettlements related to lignite mining in Germany\. That experience was scaled up by the Bank, in
partnership with other stakeholders, into a two week-long international practical course on âLand
Acquisition, Resettlement and Social Sustainabilityâ in Groningen, The Netherlands (July 6-17,
2015)\. The course is delivered by internationally recognized experts, includes 30 experienced
practitioners (including 5 from Kosovo) from over 10 countries and also has a study tour to the
lignite mine in Germany\. This course has been, and will continue to be, offered every six months\.
194\. In addition, there was a study tour to Poland to strengthen the capacity within the
Ministry of Environment and Spatial Planning, the Kosovo Environmental Protection Agency and
its inspectorates and the Ministry of Economic Development in the field of lignite-fired power
plants, including open cast mining, in the following areas: (i) Environmental Impact Assessment
for new power plants and how the review and quality control is organized; (ii) permitting tasks as
they are defined in Integrated Pollution Prevention and Control legislation (IPPC) and key
elements of IPPC permit including application and approval procedures ; (iii) frequency and type
of inspections to monitor compliance with the permit conditions, (iv) emission registry including
emission monitoring obligations for industries and submission requirements to authorities, (v)
Best Available Techniques for lignite fired power plants; and (vi) site visit to 3 recently
constructed or renovated lignite fired power plants to view their environmental compliance,
emission monitoring regime and environmental investments\.
42
Annex 3\. Economic and Financial Analysis
1\. The original PAD included an economic analysis based on the benefits of
elimination of health hazards due to dust, elimination of dangers to property due to
geotechnical instability, increased access to land due to reclamation\.
2\. Elimination of dust from dust handling and ash dumping\. The largest contribution
to health damage is caused by Particulate Matter\. The dust monitoring executed as part of
the Project demonstrated that the dust levels from the ash dump and ash handling are now
negligible as they are below the detectable threshold of the monitoring equipment\. Also
the wet ash system eliminated any dust from the ash handling\. This benefits the 21,500
people living in Obiliq municipality\. The original estimates for the quantitative effect of
air pollution on mortality, cases of chronic bronchitis etc\. were updated on the basis of
the well-known international studies examining the dose-response relationships between
exposure to fine particles and health impacts\. These dose-response functions present a
change in the crude mortality rates and Disability Adjusted Life Years (DALYs)
attributable to a change in 10 ug/m3 of annual mean concentrations of PM10\. The
estimated number of DALYs for Obiliq municipality caused by the ash dump and ash
practices amount to 215 cases per year\. This represents a benefit of US$1\.9 million per
year\.
3\. The Kosovo A ash dump presented a hazard due to the geotechnical instabilities
and its pressure on the land and endangered nearby settlements in the past\. The benefits
of prevention of loss of properties have been estimated at US$350,000\.
4\. The reclamation of the overburden dumps made land available for community
purposes\. Total benefits of land which was unproductive before is estimated at US$4 5\.5
million per year for the benefits of land reclaimed for future agriculture and US$2\.3
million per year for the land reclaimed for future resettlement purposes\. Land reclaimed
for natural habitats have not been valued though represent a substantial benefit\.
5\. The results of the economic analysis show that the Economic Rate of Return
(ERR) is 12 percent, as shown in the two tables below\.
43
DALYs - URBAN AIR POLLUTION
Key param eters Obiliq
Year
Population 21,500
Adult population >14 yrs 17,200 80%
Children population <14 yrs 4,300 20%
Crude death rate (per 1000) 10
Annual average PM10 (ug/m3) attributable to ash
dump 65
Exposed total population 90% 19,350
Exposed adult population 15,480
Exposed children pop population 3,870
Annual average SO2 (ug/m3) attributable to pow er
sector -
Im pacts per Cases Obiliq DALYs per 10,000 DALYs Obiliq
Health categories PM10 Units 1 ug/m 3 m unicipality cases m unicipality
Premature mortality % change in crude mortality rate 0\.084 11 100,000 106
Chronic bronchitis per 100 000 adults 3\.06 31 12,037 37
Hospital admissions per 100 000 population 1\.2 15 264 0
Emergency room visits per 100 000 population 23\.54 296 3 0
Restricted activity days per 100 000 adults 5750 57,857 3 17
Low er respiratory illness in children per 100 000 children 169 425 3 0
Respiratory symptoms per 100 000 adults 18300 184,135 3 55
Health categories SO2 Units
Cough days per 100,000 children 1\.81 - 3 0
Chest discomfort days per 100,000 adults 1,000 - 3 0
TOTAL DALYS LOST PER YR 216
44
All costs in USD
Years 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Costs
Overal disbursements per year WB financing (1,470,000) (1,770,000) (1,730,000) (5,150,000) (400,000) (1,550,000) (1,400,000) (930,000)
Operational costs KEK:
Additional contribution KEK wet ash (3,000,000) (6,000,000)
Maintenance and operating costs (200,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000)
Staff costs (200,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000)
Total costs (1,870,000) (2,570,000) (2,530,000) (8,950,000) (7,200,000) (2,350,000) (2,200,000) (1,730,000) - - - - - - -
Benefits
Removal of ash dumps
DALYs prevented from air pollution 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323
Reshaping and recultivation of land of overburden dumps
Available land for natural habitats
Available land for resettlement (Bardh field) 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000
Available land for agriculture (Bardh field) 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Available land for agriculture other 4,500,000 4,500,000 4,500,000 4,500,000 4,500,000
Relocation of ASF into Mirash OPM
Prevention of further damage remaining houses 350,000
Total benefits - - 350,000 - 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 1,943,323 9,743,323 9,743,323 9,743,323 9,743,323 9,743,323 4,243,323 4,243,323 4,243,323 4,243,323 4,243,323
CASH FLOW (1,870,000) (2,570,000) (2,180,000) (8,950,000) (5,256,677) (406,677) (256,677) 213,323 1,943,323 1,943,323 1,943,323 9,743,323 9,743,323 9,743,323 9,743,323 9,743,323 4,243,323 4,243,323 4,243,323 4,243,323 4,243,323
IRR 12%
45
6\. The project design also was based on a very cost effective approach (least cost),
where the international funds from the IDA grants and credit were used to develop the
international design and purchase equipment and training for the ash dump remediation
and reclamation of overburden dumps, but the works itself were executed and financed
by the mining and energy company KEK based on existing staff and with their own funds\.
For the Ash dump remediation, approximately US$5\.5 million was spend from IDA
resources and US$1\.5 million from KEKâs contribution for reshaping and covering of the
Ash dump totaling US$7\.0 million for 243 hectares\. In comparison, the Gradac waste
dump remediation in the Montenegro Industrial Waste Management and Clean-up Project
(P122139) - which is also based on simple works such as reshaping, stabilization and
covering is estimated at US$6\.35 million for 12\.5 hectares on the basis of contractors
executing the works\.
7\. A number of other key benefits are also a result of the project, but are difficult to
quantify:
ï Reduced health and environmental risks due to the treatment and removal of
hazardous chemicals, which were stored at the gasification site in corroding tanks;
The gasification site clean-up also presents a cost effective approach since the
clean-up costs of major chemical spill in the Sitnica river would be a multitude of
the costs spend on local treatment and export and destruction of chemicals
abroad 11\. These observed and potential risks were: (i) toxic emissions into the
atmosphere (evaporation of volatile chemicals); (ii) toxic emissions into the
groundwater (seepage through soil); (iii) contamination of surface water runoff by
toxic substances; (iv) threat to health and safety by accidental skin contact,
inhalation, digestion; (v) risk of large scale spills due to technical deficiencies of
storage facilities, with strong risk of contamination of the Sitnica river; (vi) risk of
fire and explosions\.
ï Regular air quality monitoring in the municipality close to the power plants and
the mines and public disclosure of the data\.
ï The structural operations of the project in the electricity company KEK for clean-
up and sustainable mining operations and the capacity building of environmental
officials in central (particularly MESP) and the local government will contribute
to a better approach to deal with environmental legacy issues from lignite mining
and power generation and improve monitoring and environmental performance of
current mining and electricity production operations as the institutions were
exposed to best practices in terms of mining rehabilitation and energy production\.
This is particularly evidenced by the full-time mining reclamation department
which was established in KEK with more than 50 staff and now with many years
of experience in mining and land reclamation works, and extensive training\.
11
In case of a spill of the materials that used to be stored in the corroding tanks, the amount of
contaminated materials that would require treatment would a multitude of the relatively small amount of
22,000 tons of chemicals that were now treated and destructed\.
46
ï Capacity of environmental officials in central (particularly MESP) and the local
government though extensive training in what constitutes Best Available
Techniques and International Standards for mining and electricity production\.
ï Environmental baseline information that became available for impact assessment\.
ï The remediation of the ash dump and halting of the air pollution was a key factor
in the current observed revitalization of the villages closest to the ash dump\.
47
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Pramod Agrawal Consultant SASDA
George Anjaparidze Junior Professional Associate ECSSD
Elmas Arisoy Practice Manager GGO08
Bernard Baratz Consultant GEEDR
Irene Bomani Operations Analyst GFA07
Olav Rex Christensen Senior Public Finance Specialist GEDDR
Drite Dade Sr Natural Resources Mgmt\. Spe GEN03
Daniel P\. Gerber Sr Agricultural Specialist GFA03
Ronald N\. Hoffer Consultant GENDR
Paula F\. Lytle Senior Social Development Spec GSU07
Norval Stanley Peabody Consultant GEEDR
Frank Van Woerden Lead Environmental Engineer GEN2A
Ardian Ymeri Temporary ECSHD
Supervision/ICR
Baraku, Trandelina ECSEN
Imeri, Bekim ECSSD
Berroa, Diomedes Lead Specialist OPSPF
Bomani, Irene Operations Analyst GFA07
Bujupi, Krenar E T Consultant ECSEG
Floroiu, Ruxandra Maria Lead Environmental Specialist GEN03
Elona Gjika Financial Management Specialist ECADE
Gjika, Elona ECSSD
Imeri, Bekim Senior Social Development Spec GSU03
Kirov, Plamen Stoyanov Senior Procurement Specialist GGO06
Maho, Arben Procurement Specialist GGO03
Mitchell, Andrew Michael ECSSD
Moises Matsinhe, Luisa Senior Executive Assistant AFCS2
Muhoho, Ida N\. Consultant GGODR
Noel, Maria Lourdes Senior Program Assistant GEN2B
Ru, Jiang ICR Team Leader GEN03
Shayne, Adam Chief Counsel LEGAM
Smajic, Ifeta GSU03
Tikjoeb, Sanne Agnete ICR Lead Author GEN03
Van den Berg, Katelijn Senior Environmental Specialist GEN05
Van Woerden, Frank ECSSD
Vrenezi, Edon Senior Operations Officer LCROS
Villegas, Jorge E\. GSU03
48
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY06 36 206,000
FY07
FY08
Total: 36 206,000
Supervision/ICR
FY06
FY07 14 78,000
FY08 11 65,000
FY09 13 73,000
FY10 13 72,000
FY11 16 92,000
FY12 15 87,000
FY13 13 77,000
FY14 27 154,000
FY15 23 130,000
FY16 14 80,000
Total: 195 1,114,000
49
Annex 5\. Beneficiary Survey Results
(if any)
Not applicable\.
50
Annex 6\. Stakeholder Workshop Report and Results
(if any)
Not applicable\.
51
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
52
53
Projekti për Pastrimin dhe Rikultivimin e Tokës / Clean Up and Land Reclamation Project (CLRP)
IMPLEMENTATION COMPLETION REPORT
âCLEAN UP AND LAND RECLAMATION PROJECTâ
Funding provided by the Government of the Netherlands and by the World Bank
Prepared by: Project Management Units, KEK and Ministry of Environment and Spatial
Planning
Table of content
1\. PROJECT DESCRIPTION
1\.1 Backgroundâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.
1\.1\.1 TPPA Ash Dump and South Dump areaâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦
1\.1\.2 Ash Disposal from TPPAâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦
1\.1\.3 KEKs Gasification Plant site Obiliqâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦
1\.2 Project Financial Backgroundâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.
1\.3 Projects main objectiveâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.
2\. PROJECT IMPLEMENTATION
2\.1 Operation Arrangementsâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.
2\.2 Project Implementation
2\.2\.1 Part A - Preparation of the Mirash Open Pit Mine for Ash Managementâ¦â¦
2\.2\.2 Part B - Construction of Wet Ash Transport Systemâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦
2\.2\.3 Part C - Reclamation of Kosovo A ash dump and overburden dumpsâ¦â¦â¦\.
2\.2\.4 Part D - Project Implementationâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.
2\.2\.5 Part E - Hazardous Chemicals Clean-up at the Kosovo A Gasification Siteâ¦\.
2\.2\.6 Part G - Repair of Trepca Stan Terg mine Slurry Pumpâ¦â¦â¦â¦â¦â¦â¦â¦â¦
2\.2\.7 Part H â MESP Environmental Monitoring and Managementâ¦â¦â¦â¦â¦â¦\.
3\. PROGRAM SUSTAINABILITYâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.
4\. INSTITUTIONAL ARRANGEMENT AND STAKEHOLDERS FOR PROGRAM
5\. IMPLEMENTATIONS ISSUES ENCOUNTEREDâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦
Annex: Pictures of Works
List of abbreviations
TPP Thermal Power Plant
KEK Korporata Energjetike e Kosoves (Kosovo Energy Corporation)
IDA International Development Organization
MESP Ministry of Environment and Spatial Planning
MEM Ministry of Energy and Mines
UNMIK United Nations Mission in Kosovo
PMU Project Management Unit
PIU Project Implementation Unit
KPC Kosovo Protection Corps
CLRP Cleaning and Land Reclamation Project
MW Mega Watt
Btu British thermal unit
LLOC Liquids with Low Organic Content
LHOC Liquids with High Organic Content
PAH Polyaromatic hidrocarbons
TOC Total Organic Carbon
KTA Kosovo Trust Agency
ICMM Independent Commission of Mines and Minerals
mlcm Million cubic meters
ha Hectares
m Meters
1\. P
PROJECT D ION
DESCRIPTI
und
1\.1 Backgrou
h rich and
Kosovo has d high qualit ty lignite reserves\. The mines supp ply two therm mal power p plants
(TPP A and TPP B) ), constructeed between 1964 and 1 1985 in the direct vicin mines\.
nity of the m
Power pl lants are commplex system ms converting natural s sources to thhermal and electrical en nergy\.
Power Plant Kosova a A has five u
e operating units : A1, A2, A
called: A3, A4 and A5, located d near
Obiliq Ci om Prishtina
ity, 8 km fro a\. A1 unit staarted its operration on 1962, A2 on 1965, A3 on 1970,
A4 on 19971 and A5 on 1975\. To ogether Koso ovo A units have the cap pacity to prooduce 800 (MMW)\.
Currently A and A5 are function
y only A3, A4, ning\. Power plant Kosov va B has two o operating units:
B1 that started operaating on 1983 3 and B2 on 1984\. Toget ther they prooduce 678 (M MW)\.
a a main fu
Lignite as uel of Powe er plants wa as initially taaken from s surface mine es in Mirashh and
T
Bardhi\. These m
two mines were explored till l the year 2
2012\. Curren nite is taken from
ntly the lign
s
Sibovci southwest m and Sitn
mine nica surface mine\.
m
On surfacce mining, th s that cove
he layer of soil ers lignite, in
n depth fromm 5 â 100 m, is excavated d and
d
usually dump m
near mines, in ordder to use it on
o later activ clamation of
vities for rec mines\.
f explored m
This mat terial is callled overbur rden\. The biggest
b dummp directly b borders Mir rash south mmine\.
Addition d
nal outside dumps ocated in the
are lo e hills west o of the Bardh hi mine, in t ast of
the plains ea
the Mirassh mine and d north of both of the min nes\. The out tside dumps are complet tely in owneership
of the miining compa any KEK and have not been b reclaim
med before\. A shaping of the surface e was
implemen nted in somme cases only y as the site investigatio ons and desi ign study innvestigated wwhich
measures s were requ uired in orde er to be able to make the land av vailable for future use\. \. The
locations
s of the Bar M
rdhi and Mirash miness, the Therm mal Power P Plant (TPP) ) Kosovo A A, the
Kosovo A Ash Dump p and the ouutside overbuurden dumps s are shown i wing map\.
in the follow
out with main features,
General Mine Lay-o f burden dumps a
overb ps
and Ash dump
s component ar
Projects reas
p
In some parts o
of the outside dum
mps, slope mo
ovement was erved and concluded that
s being obse t they
t safe for the
were not here were also substanti
e public\. Th ial issues wi anagement a
ith water ma at the
tes\. The Clea
dump sit L
aning and Land mation Projec
Reclam reclamation of Kosova A ash
ct includes r
dump, South overbu urden Dump nd Kuzmin overburden dump, Vasileva and K
p, Lismir an Kalaja
den dump\.
overburd
1\.1\.1 Origin
O h
and history of th
he TPP A As nd South Du
sh Dump an ump Area
As a pr roduct created by com mbustion of the lignite during the e energy prroduction, iss ash
productioon\. Besides the overbur h of both of
rden, the ash was also du
f the TPPâs w umped on ou utside
dumps fo or a long timme\. Whereas s, the ash du
umping of TP PP B was ch nside dumpi
hanged to in ing in
the residu e former Mirash - East mine,
ual pit of the m from 2 h of TPP A was still dum
2006, the ash mped
on an out l
tside dump located he D-Field in
on th nity of TPP A
n direct vicin A\.
5
Kosovo A Ash dump in 2010
Spread
der dumping as vo A Ash Dum
sh on the Kosov mp
lace, ash and
In this pl d overburden n was dumped\. The over mping was o
rburden dum originally plaanned
for coverring the ash with soil forr reclamatioon purposes\. This overbu urden was du umped when n one
of the old M
dest mine - Mirashi mine, was opene ed, in the 19
960âs\. But th uld not be pu
his idea cou ut into
practice, so the over rburden was w
s dumped west and souuth of the allready partlyy existing ssouth-
western wing
w of the ash dump in two slice es, up to thee middle of the 90âs\. Later, parts o of the
overburdden dump we ere covered with ash com ming from T TPP Kosova a A, merging g with the ov verall
ash dump p, which bec came part of ated by Recl
f the area trea oject\.
lamation Pro
The totall dump consisting of the e ash and acc companying g overburdenn dump cove of 243
ers an area o
ha\. The total volum me dumped in i this area comes to m more than 444 ml cm\. T The dry ash h was
dumped by b two sprea aders and pu
umped via op pened pipes\.
The Kos sovo A Ash h dumps also o covers a former und derground mmining area\. Parts of the old
undergro ound mining galleries ex xtend under the ash dum mp area and d could be oobserved eas st and
t ash dump
west of the u
p\. Here the underground d galleries caaused crackss on the surf ctures
face (see pic
T former shaft of the
below)\. The e so called Krusevci
K undderground mmine was located in the e area
north-we h dump\. The shaft has be
est of the ash een filled and fter closure o
d covered af of mine by KKEK\.
59
cks on the surfa
Crac o ash dump
ace of surface of used by underg
Cau es
ground gallerie
The southern section d
n of the ash dump was th n for ash dum
he area still in operation mping at the
e start
of the Project\. The dump was div outh-eastern
vided into 2 parts, the so uth-western w
n and the sou wing\.
h
The ash head b
belt conveyor ran between both
h wings\. Bo oth dumps co ould be oper ndent
rated indepen
with a separate bench yor and spre
h belt convey eader\.
ump south-easte
Ash du uth-western wi
ern and the sou ing
60
Stability problems fr d
rom the ash dump occurrred, which le
ead to ash an den displacem
nd overburd ments
and crack h body\. Priva
ks in the ash ate houses at
a the Wester rn Boundary ovo A Ash d
y of the Koso dump
were end dangered, ca aused by the overburde en material moving tow wards the hoouses whichh was
b the movin
pushed by (
ng ash body (See s below)\.
pictures
mp near private properties
Ash dum ump near priva
Ash du ate properties
Slope movement of the ash dump and ng of private pr
a endangerin he pushed overb
roperties by th al\.
burden materia
Whereas the dumped n material was
d overburden w more or ally re-green
r less natura re ash
ning, the pur
body rem out any vege
mained witho etation for many
m decade sed a lot of p
es\. This caus problems with air
n coming fro
pollution om both the dumping of f ash and al so from the uncovered dump itself f, (see
b
pictures below)\.
tion from ash dump
Air pollut d llution from as
Air pol sh dump
61
Another environmen w the found
ntal aspect was d contaminat ash and the u
tion of the a underground d with
phenol annd other by- g
-products of the former gasification plant\. This wwas done onn the period wwhen
ion plant sta
gasificati n the years 1
arted operating, between 1970 â 1980 0\. These cheemicals had been
discharge h dump and the
ed in the ash t old underground min ning galleries lying beloww the dump\. \.
cts of the form
By-produc n plant at the ash
mer gasification und mining gal
a dump and old undergrou he ash
lleries below th
dump\.
In 2008, at the west d
tern border of the ash dump he corner be
(in th etween the aash dump an nd its
accompa anying overbburden dump v
p) near the village of D
Dardhishte an n old ventila of the
ation shaft o
undergro ound mining collapsed annd created a crater with diameter of f more than 8 m and dep pth of
el app\. 15 m depth\. Sign
at least 36\.5 m, with a water leve rs of strong s
nificant layer smelling tar were
observed d\.
Summariizing, the maain observedd and potentiial environmmental probleems and haza ed at
ards identifie
Kosovo A Ash Dump p were:
1 V
Very strong dust generat tion
2 H
Hazards due e geotechnic
e to extensive ies
cal instabiliti
3 S
Seepage p n water throu
of precipitation ugh ash into groundwater r
4 S and surf
Soil ontamination
face water co n by dust annd washout oof fines
5 P
Potential oundwater co
gro ontamination ns by buried e deposits un
d toxic waste nder the dummp
(
(phenols, rs from form
tar mer gasification plant)
6 D
Dump repressents highly degraded la
and unfit for any agricult dential purpo
tural or resid oses
igin and his
1\.1\.2 Ori al from Pow
story of the ash disposa Kosovo A (T
wer Station K TPP A)
own coal po
In the bro ower station Kosovo A (TPP A), con Blocks 3-5 w
nsisting of B output
with a total o
M energy has
of 400 MW, h been pro 6 years Bloc
oduced for 46 ck 1 and Bloock 2 are not in use anymmore\.
The trans t silos by open convey
sport of the dry ash was done from the yor systems to the Koso ovo A
ash dump h dumpsite th
p\. At the ash he bottom assh was distri
ibuted eastboound and weest bound via a two
spreaderss\.
62
on system-con
Old ash transportatio nveyer belts ation system- sp
Old ash transporta preader
Con
nveyer belt tran up to the dump
nsporting ash u
While op perating the dump (drain nage and tran e ash), a larg
nsport of the ge environm mental impac ct was
p
caused by air pollution and the pollution of ground wate er\. The stabi dump couldn
ility of the d nât be
guarantee he dump wou
ed in case th uld be extennded and the e closeness oof the village e Dardhishtaa also
i
made it impossible o extend the
to e dump due to t environm mental and teechnical aspe ects\. The exi isting
machiner ry of the ash ystem includ
h transport sy ding the silos
s, was also in
n a bad techn ion\.
nical conditi
Conventi ional operati ntire ash tran
ion of the en nsport machi inery was thu us hardly po ossible, safe work
from the standpoint of o industriall safety was not given, a and further ooperating of f the ash trannsport
u
system under presennt conditionss after consiidering aspec cts of enviroonmental pr rotection wa as not
le\. For these
justifiabl e reasons, a decision wa as made dur ring the imp plementation n of the CLR RP to
fully repllace the dry ash transporrt and dumpi wet-ash handi
ing with a w ing system\.
1\.1\.3 Hi b
istory and background
d of the KEK
Kâs Gasifica
ation Plant S ic (Kastriot
Site at Obili ti)\.
The Gasi ification Sitee is an indusstrial park next
n to the KKosovo A Th hermal Power Plant (TP PP A)
that cove ers an estima ated area of roughly 40 ha\. The Gas lant Site is lo
sification Pl ocated withiin the
municipa ality of Ob bilic, approx ximately 10 0 km eastw wards from the city of Prishtina\. The
productio on/conversio f the gasifica
on unities of ation plant wwere out of ooperation mo ecade
ore than a de
ago\. The ey consisted d of the mai in gasificatiion plant, a steam and power gen neration plannt, an
ammonia a separatio
a plant, an air on plant and d a large sto y infrastruct
orage facility ture\. The vaarious
units are connected by b a number of aerial and d buried pipeelines\.
At its we estern side, the Gasifica ation Plant is geograph hically constrrained by a railroad an nd the
p
thermal power plant A (TPP A)\. North-east a highway is s running froom Obilic alo ong the induustrial
area\. The e south boun ndary is defined by conv transfer the b
veyors that tr brown coal f from the opeen pit
mine to the preparat tion plant\. In t
n addition there is a ro
oad to the hi igh way\. Th he closest hu uman
settlemen nts are locat ance of ca\. 500
ted at a dista 5 m north h to the induustrial area\. At the southh, the
first settlements are also
a at a dist 5 m from the gasificat
tance of ca\. 500 rea\. In additi
tion plant ar ion to
63
the Sitnica River the ecosystem s
m includes some se areas are mostly use
green areas\. Thes ed for
ural purposes
agricultu s\.
tion plant locat
Gasificat tion tion plant aeria
Gasificat al view
The plannt consumed dried brown ite) and prod
n coal (ligni duced two p primary prod dium-
ducts: a med
h
Btu fuel gas and hydrogen for use in am mmonia syn nthesis\. Varrious by-pro oducts were also
producedd: tar, medium oil, naphttha and crudee oil\.
The main e clean-up pr
n goal of the o remove the
roject was to e hazardous compounds in order to bring
nt benefits in
significan e
i terms of eliminating the
t risks and for negative effects on p
d concern fo public
nd for potentially environ
health an nmental imppacts arising from the act n\.
tual situation
Summari izing, the ma ain observed d and potenti ial environmmental probleems and haza ed at
ards identifie
tion site, wer
Gasificat re:
1 P
Persistent dour of phen
od nols and poly yaromatic hy ydrocarbons (PAHs) on t the whole arrea
a at the op
and pen tar depos opylether wa
sit\. Diisopro as percepted in close disttances to thee
c
correspondin ng tanks\.
2 D to their nature (haza
Due ardous waste es) and theirr amount (ca\. 20â000 t), tthe chemical l
r
residues resented a po
repr otential risk of environmmental polluttion and hum man health\.
3 H
Hydro geoloogical site in
nvestigations s showed run taminated su
n-off of cont urface water and
c
contaminatio on of the surrrounding so oil and groun ndwater\.
3 P
Physical connditions of th
he storage innfrastructure were subjec process of
ct to a rapid p
d
deterioration n\.
4 If chemicals s were accide entally relea
ased (e\.g\. lea er levels of s
akage), highe safety protecction
m
measures woould be need ded\. Uncontr rolled situati
ions may leaad to environnmental pollu ution
a the impl
and lementation of remedial actions\.
64
1\.2 Project Financial Background
The International Development Organisation (IDA) made available USD 10\.5 million and the
Government of the Netherlands made available Euro 3\.85 million for the above mentioned
project components while KEK as an implementing agency has supporting the project with some
3\.5 million Euros in terms of operation costs and also has invested more than Euro 8\.5 million in
the wet ash transport component\.
The government of the Netherlands made available additional Euro 229,000 for continuing
works in the clean-up of stored waste from former gasification site\.
The Additional Financing IDA Credit and KEK as implementing agency was supported by
Additional Financing for restructuring and further scale-up of the existing clean âup and land
reclamation activities, particularly related to the full removal of hazardous chemicals on the
gasification site\.
1\.3 Project main Objective
The main objective of the Clean-up and Land Reclamation Project (CLRP) was the improvement
of the environmental situation in the surroundings of the KEK mines and power generation
capacities by a reduction of dust emissions from the existing TPP A ash dump\. The concept of
remediation of the ash dump and the reclamation of the overburden outside dumps enabled a
fastest possible and sustainable improvement of the environmental situation\. Kosovo B Ash
dump was not part of the Project, as the geotechnical stability of the Kosovo B ash dump was
better and the surface hard and cemented, causing lest dust and air pollution problems but
therefore also more difficult to remove/reshape\.
The conversion from ash dry dumping, to wet ash removal, would lead to a reduction by around
80%, of the dust emissions caused by the ash dump\. This corresponds to the portion, which is
caused by transporting and dumping of dry ash\. The remaining 20%, caused by the ash body
itself are likewise reduced by a partial covering with overburden material which will green\.
The contaminants of by-products of the former gasification plant that remain in the ash dump had
to be covered and compacted by cohesive material in order to avoid washing out\.
The similar actions were necessary to re-establish the public safety also in zones with high water
saturation in the dumped overburden\. Therefore the Project also aimed to initiate the reclamation
of 6\.5 km2 of the area covered by overburden dumps for community development purposes, such
as agriculture, resettlement purposes and/or natural habitats\.
In order to bring significant benefits in terms of eliminating the risks and concerns for negative
effects on public health and for potentially environmental impacts raised another goal of clean-
up project: to remove the hazardous compounds from Gasification site
The Overall CLR Project consisted of the following components:
Component A - Preparation of the Mirash Open Pit Mine for Ash Management
(i) Geotechnical, environmental and hydro-geological investigations, analyses, an
environmental assessment and environmental management plans, and detailed design
for all project components, including Components B and C;
65
(ii) Reshaping of a dedicated part of the Mirash mine and installation of a simple base
liner (overburden clay lash mix), including affiliated preparatory works for the
reception of ashes and overburden materials;
(iii) Inclusion of a drainage and mine water management system, and
(iv) Adaptation of Kosovo A Thermal Power Plant direct ash disposal system to stop open
ash dumping and redirect ash disposal to the prepared compartment of the Mirash
mine\. Construction of Wet Ash Transport system
Component B âRemediation of Kosovo A Ash Dump
Initiate and enable KEK to perform environmental remediation of the Kosovo A Ash Dump in-
situ with containment measures and reallocation of those parts of the dump that have stability
risks in order to eliminate dust problems and pollution infiltration from the ashes into the
groundwater\.
Component C - Reclamation of overburden dump areas
Initiate and enable KEK to reclaim the overburden dump areas (Southern, Lugu i thelle & Kalaja
and Vasileva overburden dumps)\. This component focuses on reclamation of about the land
through investigation, reshaping and re-cultivating the overburden dumps in the South Field and
locations west of the Bardhi mine in order to free land for community purposes\.
Component D - Project management
Provision of technical assistance to KEK and MESP for the purposes of Project implementation,
including the financing of trainings and Incremental Operating Costs such as: Project
Management, short term experts, office equipment for MESP and audits\.
Component E - Hazardous Chemicals Clean-up at the Kosovo A Gasification Site
(i) Removal and disposal of tar deposits and tar sludge from the Kosovo A gasification site\.
(ii) Monitoring the implementation of tar deposits and tar sludge removal and disposal from
the Kosovo A gasification site\.
In particular, the clean-up project aimed to dispose of ca\. 20â000 t of hazardous wastes from the
following storage facilities: 12 vertical and 16 horizontal tanks, 156 barrels, 2 open basins, 1
open tar deposit,
Component F â MESP Environmental Monitoring and Management
Improving the review and monitoring function of MESP in relation to the environmental and
social implications of large power plant projects, through the provision of consultancy services
and technical assistance in the following areas: (i) review of environmental impact assessments;
(ii) permitting tasks; and (iii) inspections to monitor compliance with permit conditions\.
66
2 OJECT IMP
PRO TATION
PLEMENT
2\.1 peration arrangements
Op
The Gran aged by two
nt was mana MESP and K
o PMUâs (M ties were sp
KEK)\. The responsibilit plit as
follows:
KEK
P
Part A - Preparation sh Open Pit Mine
of the Miras M for Ash uction of We
h Management\. Constru et
Ash Tran m
nsport System
Part B âRRemediationn of Kosovo A Ash Dum mp
R
Part C - Reclamation den dump ar
n of overburd reas
P
Part D: Project Management
H
Part E: Hazardous Ch ean-up at the
hemicals Cle n Site
e Kosovo A Gasification
MESP
M
Part F: MESP M
Environmental Monitoring nd Managem
an ment
P
Part D: Project Management
ect Impleme
2\.2 Proje entation
P
2\.2\.1 Part paration of the depleted Mirash O
A - Prep for Ash Ma
Open Mine f anagement
A techni o the wet disposal con
ical study on ncept in thee depleted M Mirash Ope en Mine Pit t was
completeed by INKO e that provid
OS (Institute des professi onal consulltant servicees on energyy and
mines), in September 2007\. From m an environ nmental poin the wet disp
nt of view, t posal conceppt had
consideraable advanta ally in compa
ages, especia the previous
arison with t mp\.
s situation at the ash dum
The totall disposal arrea was connfined within n the depletted mine pit t boundariess\. The geoloogical
ations confirm
investiga c forming
med green clay g the bottom of the dispo enting
osal facility thus represe
w low perm
a thick natural seal with T material that was pla
meability\. The anned for pe ermanent dissposal
a waste water
was ash and w pumped rom Kosovo A power Plant\.
d as slurry fr
eparation of M
Works on pre Mirash pit
From the
e environme o view, the environmen
ental point of zed and risk
ntal impacts are minimiz ks are
ch reduced for
very muc fo the ash di easons prese
isposal for re ented below:
67
ï N additional
No l land is useed, no additioonal soil is i
impacted by y using explooited mine v voids\.
D
Disposal ility is confi
faci ined at botto
om of the m mine, minimi izing impactt of any spil llage,
lope failure or
sl o dam breac ch\.
ï D
Disposal facil
lity is isolate
ed from the surface wate adjacent area
er runoff at a on, in
as\. In additio
he bottom of
th f the pit mine the layers of gravel an nd clay were compressed der to
d well, in ord
revent the su
pr urface water r to flow undderground\.
ï Natural thick k clay layer\. The Mirash h pit is also in lower alt Sitnica Rive
titude than S er and
ue to ash: water ratio the
du dens out quic
e slurry hard ckly\.
ï N dust deve
No elopment due e to wet dispposal conceppt, sprinklingg system proovided as coounter
m
measure ase ash surfa
in ca ace dries out\.
ï N noise dur
No ring regular operations\. Noise by v vehicle access confined in open pit t, and
here is no ex
th xposed sourc ce for noise\.
ï D
Disposal facility supports g of mine an
s backfilling nd integrates well into mmine closure plan\.
N risks for long term ero
No posal facility
osion of disp y\.
es from Kosovo
Wet ash transportation pipe o A to Mirash pit mine
e was fully prepared
The mine p d started to re
and ash on Novem
eceive wet a mber, 2013\.
nstruction of
2\.2\.2 Con S
o Wet Ash Transport System
A group of internatio h
onal experts has been hired pare the Term
to prep ms of Refere et ash
ence for We
transport construction
n\. A bid for d constructio
r design and on of wet ash transportt for Power Plant
Kosovo A has been advertised on o 2009\. On n 2010, a CContract was er KEK Boa
s signed afte ard of
68
Directors
s gave appr roval on ad dditional fin
nance and c contract neggotiations wwith the awa arded
company y\. By the fiirst half of the year 2013, the Co ontractor haas finished wwith the Syystem
tion works\. The
construct T system was tested for f transport h to Mirash Mine, on m
tation of ash manual
mode\. On ugust, 2013 the
n 23rd of Au t System st tarted to wor
rk by transpo h from Koso
orting the ash ovo A
rash Mine\. The
blocks 3 and 5 to Mir T contracto EK employee
or trained KE es appointed th this
d to work wit
system fo
or 3 months\.
ures from the
The pictu on process ar
e constructio re showed b elow\.
uction of wet ash
Constru a system truction of wet
Const t ash system
or wet ash transportation
Pipes fo ash system buil
Wet a lding
Technicaal descriptionn of the main n components of the ash h transportatiion system
w ash bunk
Wet ash silo: In the wet m ashes are co
ker fire room ollected and accumulated ng
d, the resultin
Amount is 15 t/h\. The T size of wet ash silo amounts to
f the steel-w o 1000m³;fo or the contin nuous
discharge uitable comp
e of ashes, su ponents (vibr ration ground ed\.
d) are installe
Haulage system: UnderU the siilos suitable
e haulage sy ystem/conve eyors are at ttached\. The e ash
transport from the sillos to the folllowing consstruction unitt occurs as d d environmen
dust free and ntally
friendly as
a is possibl le in closed housing\. A certain adju usted volume e of drying aashes (150 t t/h) is
continuouusly supplyinng to the pree-mixing unit ditioner (mixi
t of the cond ing tank)\.
69
h Silo
Wet Ash t Ash Silo durin
Wet ction
ng the construc
r
Grinder: The firm, rough o the fire ro
parts of oom ash are carefully br roken in twoo parallel insttalled
d
grinders\. Here two double-roller a used\. Th
r crushers are he dimensio oning and co onstruction o occur
according n size (grit si
g to the grain e
ize) and the extraction om 15t/h\.
fro
Ejector: Ejectors are e used for the e hydraulic trransport of thhe ash-water n from the we
r suspension et ash
e pre-mixing
silo to the m
g unit of the mixing tank\. These eject tors are veryy simply deveeloped and ddo not
have any mobile com mponents, and d are therefor dy and low-m
re very sturd maintenance\. \.
Dry ash silo: The dry y ash bunker f two steel sil
r consists of los, each meeasuring 10000m³\. The am mount
of accum a is 150t/h
mulating dry ash xhaust is inst
h\. e central ex dry ash bunk
talled in the d ker\.
Purifier with stirrin ng device (m mixing tank) ): In the mixxing tank, the nd the wet as
e dry ash an sh are
readied innto a transpoortable thick mud\. The mixm ratio of th he two ash tyypes (dry-weet ash) amou unts to
10:1\.The mix ratio ash-water can c amount from 1:1 to o 4:1\. The pre-mixing unit receive es an
industriall water supp ply\. Using su uitable pump ps this sludg ge is transpo waste dump by a
orted to the w
pipe systeem\.
S
Slurry pump and f the system
d other parts of
Slurry pumps:
p The selection of f the pumps is effected f first of all, b
by the mediu um which is to be
carried, sludge,
s whichh is a mixtur re of fluid an
nd solid commponents\. Ind eign material
dividual fore l with
t conveyin
a size of 60-80% of the ng cylinder canc be transp ported witho out any difficculty\. The pumps
lled in a row
are instal w\. The arrang gement of the e pumps occ curs in pump p stations\. Thhere all nece
essary
armatures to the ope eration, meas suring and regulation m mechanisms a and lifts for maintenance e and
repair wo lled\. In the pumping
ork are instal p stati
ion the necesssary connec es for the fun
ction supplie nction
of the pumps
p so assemble
is als ed, such as industrial w water, rinse water, elec ctricity, hydr
raulic
aggregatees\.
70
Pipe work system: For the hyd draulic transsport of the ash water s suspension a completely y new
piping sy
ystem is deve eloped\. Withh the selectioon of suitablee piping nummerous factor dered,
rs are consid
g the operati
including ing paramet ters, the kind of deman nds, fittings, subsequent treatments, with
cceptance sp
quality ac pecifications\. Particulars indicated ressult from thee compositioon of the med dium,
the capaccity of the puumps, the rou ute guidance, and the resu g transfer, as well as asse
ulting piping embly
ns, resulting from it\. The course of th
condition pecified with
he trace is sp h the operatorr according tto the
ulations\. The
local regu e piping systtem consists of two para allel-running, redundant p pipes\. The ppiping
is accessi mes over the
ible at all tim e entire courrse of the lin
ne\. At unattaainable line s ervice
sections a se
e
way is established w
with a widtth of 2\.5 m\.m The nece essary armat tures for saafe operationn, for
changeov vers, for acti ivations and deactivation ns, maintenan nce work are e planned\. AAt exposed p places
emptying g and exhaus st options are
e installed\. The
T emptying g procedures lled, implem
s are control mented
w
in waste water basinss\. The emptying basins ar re built with reinforced cconcrete\.
Raw wa ater (untreaated water) maintenanc ce, raw wa ater reservo oir: For the plant two w water
ons with diffe
circulatio ferent compreession phase es are develop ped\. A cycle pressure is ne
e with high p eeded
w ashes from
for the transport of wet o the purifier
m the silo to r with the he rs and also fo
elp of ejector or the
injection into the mix he rinse wate
xing unit\. Th the slurry pip
er lines for t ping are alsoo attached viia the
high commpression pha ase\. The other cycle supp plies with loow pressure t he ejector wit
the top of th th the
necessary d and wet ashes\. Each
y water to pre-mix the dry h cycle is red dundantly eq quipped withh two
T operatin
centrifugal pumps\. The ng pressures are laid ou ut according g to the req quirements o of the
aggregate am\. The pum
es downstrea mps are arrannged together nse water pu
r with the rin ump (mixing g unit)
in a pummping house\. \. Appropriatte lifts for maintenance
m and repair mmeasures ar in the
re installed i
pumping house\. The supply of the w
e necessary water volumme for the con nstant supplyy of raw watter for
the waterr pumps beco omes securedd by the wate er chamber\. In the raw w water basin a pump pit is built,
there a drainage-pum mp evacuate es the resul lting sand m mud\. The r raw water b evated
basin is ele
implemen nted abovegrround in succh a way tha at by the geo odetic height t the supply pressure pum mp is
developed\.
ng and pipe wor
Water pumpin rk system
Measure ement and control tec chnique: Lo ocal and cen ntral controll of ash han ndling systeem is
t medium an
adapted to nd low presssure water pu umps and theere shall be interlock devvices betweeen the
L
pumps\. Level ator is consi
indica idered for se ettling sump
p\. In the ash h handling c control roomm the
operationn status (runnning or not running) of the pumps, acoustical in for failure an
ndications fo nd the
dications for settling sum
level ind mp are arrang ged on the ccontrol pane el\. The flow of low and d high
w
pressure water pumps d in the contr
s is displayed rol room\.
Control room: For ash a handling plant one co ontrol room is provided\. It is locatedd along side oof the
Slurry puump room\. It t includes thee control roo
om itself and
d electrical ro
oom\. It contrrols the ECOO, Air
b
heaters, bottom f ash from ESP, the con
ash, fly nveying to sl
lurry sump, t unloading sy
the storage u ystem,
71
the water h
r and slurry handling sysstem\. A statuus signaling equipment i is provided f for each sequuence
by comb bination of: on o off-chang ge, in coursse-fault, disc crepancy\. Va alves involvved in the sy ystem
operatingg sequence ar re incorporatte position eqquipment an nd shall be ac ctuated by acctuators\.
Operatin ng modes: -I In Automatic p
c mode the plant is startted, operated d and control lled automatically
in sequennces\. All int terlocks and safeties are e operating\. -In Manual mode opera ator can starrt and
operate thhe plant by starting each h equipment t separately following th he process loogical seque ences\.
locks and saf
All interl feties are opeerating\. In Local mode equipment ca an be started locally for test or
maintena ance purposes\.
Function nal systems: Four system ms are distingguished in th he ash handli ing system:
- Bottom ash, ECO an nd air heaterr ash conveyi ing
- Fly ash conveying
p
- Water pumping
p
- Slurry pumping\.
All systemms are interl locked all toggether to assume normal operation of f ash handlinng\. All equippment
is autommatically con ntrolled with h necessary interlocks\. Emergency shutdown p push buttonns are
a
located along the coonveyors\. An n automatic jam cleanin ng sequence is provided d for the cru usher\.
Running of all mot tors is autom matically co ontrolled wi ith automati ic change-ov ver for Stan nd-by
machines w
s\. Level in water reservooir permits to
t start pump ps or stop thhem for secu urity\. Condittioner
feeding iss made by va alves automa atically contrrolled\. Level conditioner a
ls in slurry c actuates autom matic
water ma p
ake up, and permit y pumps to start or stop
slurry p the in secur pumps start in an
rity\. Slurry p
automatic c sequence\. Selection of ump is made by control r
f a line of pu room before ations
e start\. Indica
of density p and spee
y, flow rate, pressure in pipe ed of first staage pump are e transmitted room\.
d in control r
Speed off this first stage can be ad djusted from the control r room\. Gland d seal pumps are automatically
controlledd with autom matic change e-over\. A pr ressure switc ch actuates a an alarm in control room m for
water preessure\. Level h
l probes in header tank permit
p to star rt to pumps or actuate an n alarm in coontrol
room\. Dr rain pumps area automatic cally controllled in local bby level prob be and a locaal panel\.
On the 12th on Nove ember, 2013 the Wet As sh Hydraulicc System waas handed ovver to KEK, fully
nal\. Wet ash area is estim
operation 025 after wh
mated to be filled by 20 be covered a
hich it can b and re
d for full reha
vegetated abilitation\.
ipes dumping wet
Pi ash pit mine
w ash on Mira
72
P
2\.2\.3 Part lamation of
B âRecl A Dump
f Kosovo A Ash
nvironmenta
En al Measures
Short-termm measures s are realized for the ex xisting dry ash handling g system too reduce the e dust
emissions\.
Tar depo y at the foot of the activ
osit: Directly ve western assh wing and in the Midd dle Western d dump
sector tarr-like waste products of f the gasifica were deposit
ation plant w ted in two f These
flat basins\. T
chemicals have been discharged in the ash dump d and thee old underg ground minin ng galleries lying
below th he dump\. Th hese tar depoosits with a thickness of f approx\. 0\.2 to 0\.7 m were covere ed by
cohesive material\. Th he covering layer with a thickness
t of about 1 m is s compacted by layers\.
The com mponent of cl h
leaning the hazardous waste
w on Gas e, as part of
sification site f the same pr roject
on 2010) late
started (o d
er then Ash dump remeddiation\. Undeer this compo onent, 800 t of waste fraaction
w Low Or
âLiquid with rganic Conteent, which wa as treated on
n site throughh a chemical l-physical prrocess
(oxidation by Fenton nâs reaction) was stored ata Kosovo A ash dump\. This mass w was covered d with
layers of ash and soil according too the environnmental acce eptable measures\.
Removal y disposed municipal waste
l of illegally w on th he western edge of the e Kosovo A ash
W
dump: Waste was duumped along g the eastside
e of the way between Da Fushe Kosov
ardishte and F vo on
o 400 m\. In
a length of n the norther
rn part of the
e way, the w waste consists pal waste dum
s of municip mped
there by the residents, whereas in n the southeern part main nly construc was dumped
ction waste w d\. The
ntity was about 500 m³\. These illega
total quan al waste dep posits were re emoved befo hwork
ore the earth
measures roperly by means
s started and deposited pr m t auxiliary eq
of light quipment\.
Removal l of illegally c
y disposed construction n waste on t the Kosovo A dump: A Along an unp paved
ding to the Dragodan
way lead D dummp, construc ction waste w ed\. This was
was deposite ste came fromm the
lants of over
former pl rburden dummping\. It was on an area of
s deposited o olume
f less than 0\.1 ha; the vo
roximately ca
was appr a\. 400 m³\. Thhese materiaals are remov
ved before th
he earthworkk measures st tarted
osited properly\. Owing to
and depo e elements he
o the size of the concrete eavy auxiliarry equipmen nt was
used\.
Protectioon of dange erous area around
a the collapsed
c unnderground ds mine struuctures: The e area
he Dardhisht
east of th te village waas marked by y a high pot er\. The danger was cause
tential dange ed by
underground hollows s from formmer mining activities as s well as coontaminationns, caused by the
dumping of byproducts of the ol on plant\. The
ld gasificatio the danger, e
e extent of t or the
especially fo
residents in the Dard e, was confir
dishte village rmed by an occurrence in March 20 008, when aan old
ventilatio apsed\. The shaft
on shaft colla s was 36 6\.5 m deep; The Reclam mation Depar rtment also filled
and reshaaped the colllapsed under rgrounds min ne structures res in Dardh
s on 6 hectar hishte Village and
construct nage and the road Dardhi
ted the drain ishte â Fushe e Kosova
73
apsed undergro
Colla ctures
ound mine struc Un
nderground min fter remediation
ne structures af n
N hte
Near Dardhish
Use of a water car: The accesses s of the truck nkled with w
ks were sprin water perman der to
nently, in ord
he dust forma
reduce th ation by the mobile equi applied to the accesses fo
ipment\. This especially a or the
ash dump sons with low
ps in the seas w rainfalls\.
prinkling with water during w
Sp s
working process
Operatio w
on at high wind velocit
ties or extre
eme dryness s: In ash op oving of ash
peration remo h was
ed in case of
interrupte v
f high wind velocities r reasons of d
for on\.
dust formatio
ning overbu
Kosovo A Ash Dump and adjoin p
urden dump
A detaile ed design for ng, cleaning, reshaping a
r investigatin and re-cultiv e dumps has been
vating of the
provided by consultin ng companie es, describingg as well the e necessary w works and eequipment ne eeded
for condu a
ucting such activities\.
By the ye ear 2009 plaanned machin nery and Hea avy Equipm ment has been n contracted\. Staff selecteed by
KEK hea adquarters haas been trainned to ensure e that all equuipment sha all be used properly and to its
H
fullest\. Hydraulic cavator, five articulated dump
exc d trucks ater tank trail
s, tractor, wa urpose
ler, multi-pu
nd rear assem
trailer, an mbly excavat tor for tractor
r were contra ave been rec
acted later ha ceived and teested\.
74
o the workin
Pictures of re presented below:
ng process ar
Heavy
H tation vehicles
transport king process
Work
orks on ash dum
Wo mp s on covering the ash dump
Works
75
The project concept coordinated with KEK and World Bank, after assessing different alternatives
for the TPP A ash dump removal, contained the following technical measures:
Conversion of present dry dumping of TPP A ash to wet ash disposal: Dust formation would
considerably be reduced by stopping of the ash dumping operation of the two spreaders on the
dump\. Wet ash disposal in the residual pit of the former Mirash East open cast mine field avoids
dislocation of source of emission at the same time\. The installation of the plants of the wet ash
disposal was partly financed by KEK and by the CLR budget\. (See Component / Part A)\.
Partial removal of ash and overburden from the instable areas of the ash dump: This refers
especially to the parts where the high of the dump had a level up to 48 m\. A lack of proper
dumping technology caused these masses to be thrown in very high natural angles\. In order to
reach the stability, the geotechnical analyses suggested creation of stable slopes in proper angle
and lowering the dump high\. Therefore this mass needed to be removed to other safe areas of the
ash dump via short transport distances\.
Use of mobile equipment for the earth-work measures: The dumped ash masses created natural
forms, which when being under influence of climatic condition, become solidified\. In order to
create stabilized forms, the dump needs to be reshaped and reformed according to the
geotechnical designs\. It is necessary to use the mobile heavy equipment for breaking the rough
slopes, moving masses and reshaping the area according to the geotechnical designs\.
Mass Removal
Based on the results of the site investigations and the accomplished soil-mechanical evaluations
there were prepared earthwork measures\. Before conducting the shaping works, the illegal waste
disposal on the south outside dump of and in the collapsed underground mines, were removed
and the basins with the tar deposits were excavated\.
Removing of the south-western wing of the south ash dump: The south-west wing of the ash
dump was embedded in an area dipping westward\. This fact and the alternating deposition of ash
dump and south overburden dump at the same time, led to a pressing out of the overburden
masses by the load of the ash\. This area was to be reshaped by removing the ash masses which
were transported by trucks and distributed on an area specified ahead on a distance about 30 m,
and reducing the high for approx\. 10 m\. The works were conducted during the rainy seasons\.
During the summer season the driveways and the working levels on the winning- as well as on
the dumping side were sprinkled for reducing dust formation\.
Recovery of cohesive overburden material for the shaping of the overburden dump near the ash
dump: In particular the western part of the dump, which was additionally loaded by the
overlaying ash masses, tended to creeping slides and endangers residential houses west of the
dump\. Annually, the dump moved forward for about 1\.5 m and especially in the rainy season\.
After reducing the load by the removing the ash, it was also be necessary to shape the
overburden dump\. The removed masses are used for covering parts of the ash dump in order to
reduce both the infiltration of surface water into the ash dump on the one hand and the dust
formation on the ash dump\. The works were conducted during seasons with low precipitation\.
During the summer season the driveways leading across the ash was sprinkled for reducing dust
formation\.
76
Working process
Levelingg: Apart from m the earthw work measur res describeed before, exxtensive gra ading works were
o in the are
carried out ea under rev view\. Beforee leveling thhe water accu umulations i in the sinks were
pumped and dischar rge, respectively\. Furthe er leveling wworks were possible on nly when the dry
dumping g of ash was finished\. TheT special design
d for assh dump sug ggested that the highest level
on the duump should be 40 m, an nd general an ngle of slopee to be 11áµ\. Considering at ash
g the fact tha
would be w 1 m of soil, the suggested high
e covered with h and slopee angle was the solution n that
tability with
creates st i
h requested insurance fac
ctor\. The nuumber of terr races variedd according tto the
m
slope of dump and mostly imitat f
ted natural forms\. In total there werre remediated 123 hectar res in
Kosovo A ash depos sit, and 56 he he accompan
ectares in th nying overbu urden dump\. The objecti ive of
the project for this pa
art was achieeved and exc ceeded\.
The drainnage channe els on ash du
ump were constructed on n 3700 m len ngth, all arou dump
und the ash d
ure below), and
(see pictu a with 300 00 m length on accompa anying overb burden dump p\.
annels on ash dump and so
Drainage cha den dump
outh overburd
ation Measu
Reclama ures
77
The rehaabilitation meeasures sugg n the framew
gested within work of this project were to the
e restricted t
nge of the dump
north ran d he accompan
and th nying overbuurden dump p\. These me easures sugg gested
p
mainly planting g
of grass on the soil covered northern ppart with a ssize of 40\.5 ha, soil-covvered
p 2\.7 ha and overbur
western part w a size of 89 ha\. T
rden dump with The Reclama ation Depart tment
takes car c
re only on cutting the grass period rder to prev
dically in or vent eventuaal fire from high
temperatuures during the summer he year 2017
rs\. During th going to be reshaped th
7, there are g he last
h 30 hectares
part with s of the wholle dump areaa\.
h dump after re
Ash eclamation h dump after re
Ash eclamation
d
Ash dump lamation
after recl clamation
Ash dump after rec
Monitori ematic air mo
ing: A syste onitoring system has beeen implemen monitoring p
nted by six m points
ure below)\. Weekly an
(see pictu nd monthly reports are provided by y KEK\. Sam mpling was done
monthly and samples s were analyz ht and granu
zed for weigh hese monitori
ulometry\. Th ved as
ing data serv
r planned imp
a control measure for o the ash du
provements of ons\.
ump operatio
78
The grapph below sho reased level of dust from
ows the decr m 2011 to th 013, and by 2015
he end of 20
t level that
the level was below the could registe
t the monitoring points c er\.
D level moni
Dust 011 to 2015
itoring from 20
b
Pictures below nts the ash dump
presen d aerial view
v on 2010 (left) com e 2016 (right
mpared to the t)
79
Ash dump before remedia (left) and 2016 (right)
ation on 2010 (
art C - Recla
2\.2\.4 Pa erburden du
amation ove umps
This com mponent was t mobilize existing KE
s projected to EK earth mo oving equipm ment and reclaim
about 650 f overburden
0 hectares of gh investigat
n land throug ng and re-cu
tion, reshapin ultivating in order
and to becom
for the la me usable aggain for commmunity purp poses\. This la mplete owne
and is in com ership
of KEK\. The total costs compris estigations, c
sed site inve civil works, planting and greening a areas\.
The acti ivities included physica al reshapingg, constructiion of main n and mino or access r roads,
on of a surface drainage system
installatio s and planting
p rees and mix
of tr xed vegetatioon\.
verburden dump
Lismir â Kuzmin ov d
This are a
ea covers around 782 hectares\. The
T d site inves
detailed stigation report and d design
ated the geol
investiga ditions, soil classificatio
logical cond ater managem
on stability, sloping, wa ment,
environmmental situation and land d use and cooncluded tha ce of the du
at the surfac ump was mo ore or
less natur ened, with a lot of (water
rally re-gree r filled), holees, slope moovement, butt also parts w
where
ure was infor
agricultu rmally execuuted by neighhboring villa ages\.
ws an overvie
The map below show iginal situati
ew of the ori min Dump
ion at the Lismir- Kuzm
80
w Map of the Lismir
Overview L Dump
Kuzmin Overburden D
The follo
owing range of reclamat tion measure es were foresseen in the L zmin Overbu
Lismir - Kuz urden
Dump: (i on of dump areas:
i) stabilizatio a oping and fl attening of d
(ii) slo uction
dump areas: (iii) constru
of accesss roads; (ivv) construction of drain nage channe ls; (v) plan es\. From the
nting of tree e site
investiga
ations and thet detailed
d design fo or the recla amation, the ere were also areas w where
reclamatiion was fore eseen by nattural vegetat tion due to t
the presence oles and natu
e of waterho urally
occurring a animal species\.
g rare plant and s In adddition, was te was remooved\.
Before After rees
Tr
r, Kuzmin dum
Lismir after remediatio
mp before and a on
Mass Reemoval
Based onn the results of the site investigationns the northeern part of thhe south dummp was sepaarated
n this project
from the treatment in rting the act
t\. Before star waste at the d
tivities, the w SE 3)
dump foot (S
was remooved and the d sinks were drained\.
e water filled
SM 1 Sta o the dump foot west of
abilization of Within this a
f the village of Lizmir: W hesive
area the coh
den masses were dump
overburd ped into a former bro ook bed w without appr ropriate drainage
81
measures s\. The high water satura ation of the dumped ma he undergro
aterial and th ound dipping g into
the south he reason cre
h east were th eeping slides continued west of Lizm mir\.
t counterac
In order to m
ct this slide movement, he following
th g measures w were taken:
- The dummp foot was drained by constructing g drainage caanals\.
- Levelin
ng of the enttire dump we zmir to avoid
est from Liz d damming wetness and harge
d direct disch
of the sur
rface water\.
- The red
duction of the dump heig ght northwesst of Lizmir i educe the load\.
in order to re
The dum s by draina
mp foot was slit age channelss along the f
foot on highest and lowe th the
est lines, wit
channels not more th han 1 m deppth, because the type of soil limits th
he depths off the canals\. The
access ro
oads were coonstructed onn more than 3 km distanc to be able to
ce, in order t dump
o access the d
areas, before and afte on\.
er reclamatio
w after remedi
SM 1 view iation
SM 2 Reshaping of th a
he instable areas betweeen Lizmir an nd Kuzmin: W Within this a ing of
area, reshapi
slopes is done in 1 section\. The works were e conducted during seaso ons with loww precipitation as
otherwisee the area could not be accessed by y the heavy equipment\. Driveways on around 4 km
were esta s
ablished in such a way th
hat they didn e nature rese
nât affect the erves\. In the lower part o
of the
dump the e two ditchess are combin itch\.
ned to one di
Access road e canals
ds and drainage
82
SM 3 Reshaping of th he steep eastern slope no mir: In this ra
orth of Lizm gest dump he
ange the larg eights
w partly 50
existed with 5 m\. The ou utside dump stands here e on horizon ntal ground; the general slope
t dump pa
angle of the artly reaches 18 to 20°\.
To ensurre a permane f the slope sy
ent safety of ystem, terraccing of this s m is impleme
slope system ented\.
The high aces amount
h of the terra t to 2 m, the errace with l
ere is one te h up to 60 m and
larger width
three sma w each terrace
aller\. Below age channels
e, the draina s were constr ructed on a length of 26650 m
distance\.
The workks were cond ducted durinng seasons with
w low prec Driveways we
cipitation\. D hed as
ere establish
ansport dista
required to reduce tra ances\.
ing of the terra
Reshapi aces
inage channels
Drai
es
Stabilizing Measure
ng and resha
Stabilizin aping measu ures were pla anned on 888 ha (14 % o of the area)\. The pastureland
a
and the already sting and uti
exis ilized fields were respec cted and not t changed\. O On SM1 â d dump
foot, wes lage Lismir, 40 hectares
st of the vill d were stabil
s of the land ned and resh
lized, flatten haped\.
The Lism mir commun nity, started to use it fo ral purposes\. On SM3- the areas on the
or agricultur
s
eastern slope, north of Lismir, 232 hectares area re-cultivvated with 6 60 000 forest trees\. Sinc ce the
a
planted area was not t fenced, thuus the grazinng cattle couuld damage the new pla ants, Reclammation
Department organize ed a special guarding un s increased t
ntil the plants their length enough to bbe out
T Departm
of risk\. The ment also org ganized a we eeding twice order to remo
e a year, in o ove the risk from
83
i
fire and increase the percentage of survival rate among the trees\. 87
7% of the planted trees were
successfuul in this area\.
Planted trees
South off the unpave ed road fromm Lizmir to Bardh there 4 ha area wi
e are a 46\.4 ith a lot of small
waterholes\. This area is reserved d as protect area\. The lar
ted natural a rgest part off it was natuurally
d on the bas
cultivated te investigat
sis of the sit clamation pla
tion and rec ended that n
an\. It is inte nature
shall dev u
velop here undisturbed\. The numer rous waterho e habitats fo
oles provide or rare plannt and
animal sp ow)
pecies\. (See pictures belo
ation
Natural created vegetat
ation
Natural created vegetat
The area nd eastern of
a northern an was extensiv
f the school in Lizmir w vely used as municipal w waste
dump by the villager tity of waste
rs\. The quant ated to 2,000
e was estima uted on an ar
0 m³, distribu rea of
84
about 2 ha\.
h Partly the e waste was dumped into ally water-fi
o the seasona which is integ
illed sink, w grated
em of the ou
in the drainage syste utside dump\. The contam minated area a lied behindd the overbuurden
dump\. Because
B of th
he direct vi
icinity to th
he area unde er review an nd the risk of surface w water
contamin K
nation, the KEK Reclamation Depart ed the site sim
tment cleare multaneously y\.
Western of the village Lizmir was w a further area conta aminated wi ith mostly ddomestic garrbage\.
The garbbage concent trated along the road bet tween Lizmi ir and Bardh me was estim
h\. The volum mated
m The Re
to 100 m³\. eclamation Department t removed t this garbagee with shovels and tr rucks,
supportedd by manual l clearing, constructed a road 800 m distance, t then the road Bardh
d Lismir â B
m distance\. The
of 1,8 km T reclama ation Departm
ment also he elped on layyering and sh chool
haping the sc
yard\. The elow shows some
e pictures be s entioned abo
of the activities me ove\.
r school yard
Works on Lismir nstruction
Road con
c
Road cleaning epartment
by De maintenance for
Plants m r community
d constructions
Road s
85
Illega al
al waste remova
rburden at Kalaja
The over K L
and Lugu lle
i Thel
An essenntial part of the opening-up masses of the Bardh hi mine wer re stored in t the outside ddump
T outside dump
Kalaja\. The d irectly south
lies di hwest of the Bardh villag of the
ge in the uphill terrain o
basement t and consistts of two ma ain parts, the
e bigger easttern part (Kaalaja) and thee smaller we estern
gu i Thell)\.
part (Lug
The outside dump Kalaja,
K dumped between 1964 and 19 978 is forme ed by a mor re or less fla
at and
wavy sur rface with a slight dippin ng in eastern Also the form
n direction\. A mer undergro ound of the d dump
was dippping into eastern directio on\. The dum mp extends ov ver an area o of 164 ha annd includes a about
25 mlcmm overburden n\. The thickn d
ness of the dumped overrburden com mes to 15 m in average\. With
the excepption of the eastern side the dump is enclosed d within the basement\. T The slope o on the
eastern si ump is locate
ide of the du v
ed in a flat valley\.
The outsside dump LuguL i Thell lie on a hig han the main
gher level th n part\. The dump bench h belt
conveyor u along a hi
r was built up om this posit
ill slope\. Fro tion about 4\.6 ml cm of overburden were
dumped over an area a of 49 ha in n the subjaccent valley bbetween 198 88 and 1991\. The foot o of the
ans against the opposite
slope lea e side of th he valley\. RRisks for the e public safefety could not be
observedd\. Some sma t northern
all plots at the n as well as the southern n boundary of the dum mp are
used for agriculture\.
Northernn of the Kala c
aja dump is connected a small flat duumping area a filled with overburden from
the openning-up of th he mine Bar rdh\. This 41 1 ha large d dump was bu uild up in ccombination with
trucks an
nd train oper c
ration and contains an overburden
o volume of 3
v 3\.2 ml cm only\. The average
thicknesss of this parrt of the dum mp comes to o less than 8 m\. The su urface has bbeen naturall ly re-
greened despite the higher conte ent of granuular material l from the oopening-up\. This 41 ha large
dump wa as build up ini combinat tion with truuck sand trai in operationn and contain ns an overbu urden
volume ofo 3\.2 ml cm m only\. The average thic ckness of thiis part of the dump com mes to less th han 8
m\. The su urface has been naturally y re-greenedd despite the higher cont tent of granuular material from
the openiing-up\.
86
O
Overburden Dum d Lugu i Thellë\.
mp Kalaja and
se Concept
Land Us
Kalaja ou urally used in
utside dump is agricultu nformally on nly in the we r on an area of 19
estern sector
ha\. The preparation of the cent tral horizonttal area in KKalaja for a agricultural uuse was alsoo not
recomme ended because of the prooofed heavy metal conce the dumped material (de
entration in t espite
irements of the resident
the requi ts in the adjaacent villagees)\. Two so oil samples wwere taken aat the
Kalaja ouutside dumpp\. The obtain s
ned results shows that c
cadmium val lues were fo cantly
ound signific
lower an a
nd below accepted standards, but nickel con ncentrations are confirm med well a above
standardss used for evaluation\. Chromium was analyz zed and als so found close to or a above
standardss\. The probblems related to nickel, , chrome an nd potential lly cadmium m originate from
overburdden material which was not expose ed to soil foormations\. In n a separatee academic study
w examined
nickel was cally in a pr
d systematic rofile from c face and con
coal to surfa ncentrations were
nd in the ord
also foun der of hundrreds mg/kg\. Nickel and d chrome are e both consi idered phytootoxic
and also toxic for huumans when entering the e food chainn\. Soil of thiis compositiion should nnot be
o pasture\.
used for agriculture or
alaja overburde
Ka d use concept
en dump - land
t agricultu
Besides the ural use theree was also a demand for r firewood byy the residen re the
nts\. Therefor
land use concept sugggested the preparation of a plantat tion for fast growing tre entral
ees in the ce
he dump Kal
part of th laja\. In total
l, 65 hectare
es have been
n flattened annd stabilized
d and 34 hecctares
are plant 000 forest trees\.
ted with 780 t Becauuse of the gr f area, a full
reat size of l fence was note
87
feasible, instead KEK d a guard to make sure t
K appointed were not dam
that plants w maged by ca attleâs
and other C
r animals\. Comparing to
o Lismir-Ku al rate of the
uzmin plants, the surviva Kalaja
e plants in K
is around 60% as there were problems with w weed competition n, fires, rab aused
bbits that ca
substanti o seedlings not to surviv
ial amounts of ve\.
w
Planting works â Kalaja dump
The surfa d
faces of the dump of Ka
alaja as well
l as the dum
mp of Lugu i Thellë hav eened
ve self re-gre
with gras a small trees\. The west
ss, brushes and art has been used for agr
tern main pa riculture for some
years, though this is not recomm mended and not in line with the lan nd use conce ept\. The dummp is
o
already optically egrated into the landscap
inte pe\. The drainnage channeels were connstructed on 2200
m, on thiis overburdenn site\.
n of drainage channels
Construction c alaja overburde
on Ka en dump
Dump Kalaja
K already
y had existing ditches which
w onnected to the existing
are co g watercours
ses in
ys with direc
the valley utheast\.
ctions to the east and sou
88
a  overburden areas treated during the pro
Map of all oject Â
89
Dump site Stabilizat Sloping and Constructi Constructio Planting Total area Areas Contaminated Areas to
ion of flattening on of n of of trees treated where land still be
dump (hect) access drainage (hect) (hect) detailed management/l reclaimed
areas (in roads (km) channels design and reclaimed by KEK in
hect) (m) investigated (hect) future (hect)
as already
suitable for
community
purposes
(hect)
Ash dump 123 123 6 3700 m 246 0 123 40
South 56 56 3000 m 112 0 56 24
Dragodani
ash and
overburden
Total ash 179 179 6 6700m 358 0 179 64
dump
South 91 91 7 2650 m 23 205 681 10
Lismir-
Kuzmin
Overburden
Kalaja and 65 65 6 2200 m 34 164 330 15
Lugu i thelle
overburden
Vasiljeva 0 0 0 0 0 0 79 50
overburden
Total 156 156 13 4850m 57 369 1090 1246 75
overburden
areas
Table 2\. Project target achievement Â
Â
2\.2\.5 Part D: Project Management
This component provided support to KEK to implement the project\. It included support for: (i)
project management and technical assistance in such areas as detailed design, construction
supervision, procurement and financial management; and (ii)monitoring and evaluation of
project impacts, including implementation of an environmental management plan for
construction activities carried out under the project\.
The responsibilities of the PMU were to:
ï Manage day-to-day project implementation, including, but not limited to, procurement,
project monitoring and evaluation, financial management, progress and financial
reporting in close cooperation with the Grant Unit of the Ministry of Economy and
Finance;
ï Prepare quarterly progress reports for KEKâs Board of Directors, the Association and the
Project Coordination Committee (PCC);
ï Draft Terms of Reference for consultant assignments;
ï Function as the counterpart of the services provided from the grant;
ï Review consultantsâ reports and monitor the performance of the consultants;
ï Serve as the Secretariat of the Project Coordination Committee and assist in follow up of
activities approved by the PCC;
ï Arrange for public consultations as required;
ï Ensure that project subcomponents are completed on schedule and achieve their planned
outcomes;
90
ï Ensure that procurement and financial management are carried out in accordance with
World Bank procedures and that the annual financial audit is submitted to the World
Bank within 6 months of the close of the financial year;
ï Maintain grant implementation records;
ï Serve as the contact point for information on the grant; and
ï Coordinate clean-up and reclamation activities with other KEK projects\.
The PMU reported through the head of KEKâs Services Division to KEKâs Board of Directors
and the PCC\. The Board provided to the PMU Director, advice and recommendations on grant
implementation\.
The IDA grant provided funds for the first two years of the project to hire a PMU director and a
procurement specialist, both with international experience\. Office equipment and incremental
operating costs were also financed by the grant\.
The PMU monitored implementation of project activities and the performance of the consultants
in accordance with the contracts, reviewed and approved the consultantsâ inception reports, mid-
term reports, and final reports\. A quarterly report on project implementation was submitted by
the PMU through UNMIK to the Association as per the formats agreed during Negotiations\.
The grant unit in the Ministry of Economy and Finance assisted in the reporting as well as in the
disbursement procedures\. An external auditor was appointed to audit the financial statements of
the project and the cost of the annual project audits will be paid from the Grant\. Procurement
activities were carried out in accordance with the World Bankâs Guidelines by KEK through its
PMU\.
The CLR-Project was established as independent structural unit within KEK\. Mainly consisted
of the personnel recruited from KEK and had partly also own equipment financed by the World
Bank budget\. KEK plans to allocate this department to the new opencast mine if activities in this
mine will prevail against the active mines\.
Initiated on 2007 as part of the project, the Reclamation Department was created and started
operating on 2009\. The main goal of this Department was to continue with the good
environmental international practices on land reclamation after mining activities\. The
Department was equipped with heavy vehicles and necessary tools by the project and partially
from KEK, in order to be fully operational\. There are 52 employees engaged in this Department,
who successfully got trained by the expert of the project\.
2\.2\.6 Part E: Hazardous Chemicals Clean-up at the Kosovo A Gasification Site
The main goal of the project was to remove the hazardous compounds in order to bring
significant benefits in terms of eliminating the risks and concern for negative effects on public
health and for potentially environmental impacts arising from the actual situation\. In particular,
the clean-up project aims to dispose of ca\. 20â000 t of hazardous wastes from the following
storage facilities:
⢠12 vertical and 16 horizontal tanks
⢠156 barrels
⢠2 open basins
⢠1 open tar deposit
Ca\. 15â000 t of liquids with low organic contents could be treated on site by chemical physical
91
Treatmennt, while Ca ctions consist
a\. 7â300 t of residue frac h organic con
ting of liquids with high ntent,
solvents, diisopropyl r residues ha
lether and tar nsported out
ave to be tran o and dispos
tside Kosovo sed of
in cemen w
nt plants and hazardous waste ration plants
inciner s\.
o gasification site
Tanks on
s and open basi
Reservoirs d on Gasificatio
ins with liquid on site
s filled with wa
Reservoirs aste T sludge on o
Tar opened area
Initially a design and ion contract for the gasi
d investigati ant clean-up has been sig
ification pla gned\.
The inve esults and in
estigation re nterim reporrt have beenn available in the first quarter 20009\. A
contract was signed for Environ nmental Imp pact Assessm ment of thiss report as a necessity prior
start-up of
o any physical works on n removal/treatment of tthese hazard EIA was fina
d materials\. E alized
th
where th uts came fro
he final inpu om the secon nd Public heearing, held on January \. EIA
y 27 , 2010\.
92
report wa as completed t report we
d and with this w assured E Environment tal Consent from Minist try of
Environm ment and Spa ng\.
atial Plannin
The cont E
tract with EPE/MOUR RIK consorti ium got sig gned early iin 2011 and d meanwhile the
n of the Inter
selection rnational Su C
upervision Company to supervise thhe works in gasification n Site
was cond ducted\. Both h contractorss started theiir works on site and the was to prepar
e first step w re the
infrastruc c
cture: the construction of access roads, as w well as forttified areas for storage e and
manipula ation was begun\. The negotiations with w other po osers and cou
ossible dispo ed out
untries turne
to be verry difficult because Koso ovo is not a member of t the Basel Coonvention\. TThis problem m was
solved by y having in place the bi ilateral agreements betw ween Republ lic of Kosov vo (as counttry of
origin of r
f the hazard waste) and receiving co
ountries Belg gium, Swede en as most h hazard wastee was
foreseen to be finally y disposed inn those count tries\.
w
Permits were grantedd by Ministr ry of Enviroonment and Spatial plan nning in Dec cember whil le the
bilateral agreements have been signeds ebruary 2012
in Fe were forward
2 and then w ded to respeective
authoritiees in the rec cipient Coun ntries\. All of
o the waste e that had too leave Kos sovo was alr ready
packed in n IBC containers, meani ing that metaal reservoirss have been emptied, cle eaned and ha anded
over cleaan to KEK\.
The pilot t test for cleaning up thee Liquids wi ith Low Org ganic Contennt (LLOC) started on the e 13th
of Augus st and was completed
c onn September r 7th,, 2011\. The pilot te
est showed t that 3 times more
n
than the planned, of chemicals necessary to remove the phenols\. Also, since the e discharge llimits
for the parameters chemical oxygen o Demmand (COD D), Total O Organic Car rbon (TOC) ) and
Sulphates cannot re each, an exe emption for r temporary discharging g limit was s granted by y the
Ministry of Environ nment and Spatial Pla anning on t the basis oof detailed analysis of f low
environmmental impac cts from the d
e sulphate discharge\. B
Below are s shown the p pictures fromm the
o site prepar
process of ration and clleaning proccess\.
e preparations
Site
truction of deco
Const reas and pavem
ontaminated ar e measurement
ment for vehicle ts
93
Work pr ning
rocess on clean
Work pr ning
rocess on clean
S
Sampling w
and works ined spaces
on confi
Packaging and n process
d transportation
94
A double e or in somee cases triple in three inde
e analysis (i ependent lab bs) of heavy y metals, pheenols,
sulphates s, sulphides, COD and TOC
T ensuredd the quality of the perm mitted dischar nd the
rge limits an
ke containing
filter cak ular residues from the Fe
g the particu enton reactioon\. Regular measuremen nts of
the impa act of the woork on the ennvironment do not show w any excee eding of limi its \.By mid April
2012, all h
l 30 basins have been trreated comppleting as su uch the local l treatment o of 14,755 toons of
w Low Org
Liquid with ganic Conten nt (LLOC)\.
During th P
he works, PMU in cooordination with the KEK K requested from the co ontractor to do a
sampling g of the undeerground tank B5 that wa asnât include on inventory list\. The B5
ed initially o 5 tank
has volum me of appro oximately 1000m3, filled with a mixt ture of solvents, creatin ng a high rissk for
the work kers and anyo t could use th
one else that he area in the future\.
The cont tractor clean
ned the tank and by com mpletion of t these activit ties, all the works under this
compone ent have bee en successfuully complet ted\. Therefo ore, under th his project c component, there
have been treated totally:
ï 7,300
7 L
tons LHOC exporrted outsidee the countr ry\.
ï 14,755
1 tons of LLOC tr reated on sitte\.
ï 494
4 big bags s (approx\. 550
5 t) left on n site, but re
epackaged an nd safely sto ored in warehhouse
(see
( picture)\.
Bags stored rehouse
d inside the war
B
Before After
process
Before and after cleaning p
95
process
Before and after cleaning p
rt F â MESP
2\.2\.7 Par mental Moni
P Environm ent
itoring and Manageme
This com
mponent aimeed at improvving the funcctioning of th
he examinat
tion and mon MESP
nitoring of M
ronmental and
with regard to envir a social im mpacts of la arge power plant projects by provviding
w
goods, works chnical assist
and tec ding:
tance, includ
(i) Air Quuality monit ns to have re
toring station on air quality
eliable data o y;
a Water Monitoring
(ii) Soil and M prrogram to co le data on ac
ollect reliabl ctual pollutio
on,
(iii) Envi a Social Im
ironmental and mpact Assesssment for th e proposed K Kosova Pow wer Project;
(iv) Mon he RAP implementation of
nitoring of th o the Shala Neighborho ood;
(v) Panel e
l of experts established t assist on ESIA
to E and mo onitoring of RAP; and
(vi) Low carbon ener s
rgy growth study
(vii) Studdy Tour to Poland
It is impo ention that al
ortant to me ll above men
ntioned activ
vities were a mprove the qu
aimed to im uality
of the wo M
orks within MESP and also
a to provi ed for succes
ide accurate data, neede edible
ssful and cre
ESIA doc cument to be or the Kosov
e prepared fo va e Re Powwer Plant\.
Q
(i) Air Quality itoring stati
moni ions;
These staations were aimed initia ally to be puurchased un nder Lignite Power Tech hnical Assisstance
Project (LPTAP)
( ut since the
bu e project was
w closed, it was fore eseen that t ns be
these station
ed to the CL
transferre LRP-AF proj oject\. Based on the analy ysis and win eloped by H
nd rose deve HMIK
(Hydro-m meteorologiccal Institute of Kosovo) best possibl for these AQ
le locations f QM stations were
selected\. These loca ations were in the muni icipality of Obiliq, all nearby the power plant and
ed to have be
distribute est area cove t the map b
erage (refer to below)
96
As locatiions where the stations would be installed, had ontinuous power supply
d to have co y, the
n cooperatio
project in on with mun nicipality of Obiliq and KEK had c e public loca
chosen three ations
that woulld accommo tations:
odate these st
Local co
ode of Name of the station M
Managed b
by: asured para
Mea amteres
ion
the stati
KS0110 Ob care
biliq- Healthc KEPA/
K K
HMIK SO2 , NO2, CO,O3, PM10/PM2\.5
nter
cen
KS0111 Da mary
ardhishte-Prim KEPA/
K K
HMIK SO2 , NO2, CO,O3, PM10/PM2\.5
School
KS0112 alaj-Kosova Mont
Pa M K K
KEPA/HMIK SO2 , NO2, CO,O3, PM10/PM2\.5
en from the table,
So as see t AQM stations wer re designed tto measure pparameters oof SO2, NO2, CO,
O3, PM10 0/PM2\.5 conti d report to HMIK
inuously and H l-time basis\.
on real \.
Additionnally to abovve mentioneed parameter rs, also winnd speed and nd air
d direction, pressure an
humidityy were measu ured\.
97
These continuous air monitoring stations had served best for what they were designated and
provided continuous data for the experts in charge for preparing Air Quality and Air modelling
chapters of the ESIA document\. They were procured and financed under the CLRP\.
All these data were required to have clear picture on actual situation and to make future
assumptions with new power units in operation\. Also the data is submitted to the Kosovo
Hydrometerological Institute which is using the data together with data from the stations across
the rest of Kosovo in monthly and yearly state of the air quality reports\.
(ii) Soil and Water Monitoring program
The main objectives of the assignment were the collection of field data with focus on soil,
surface water and groundwater to close the data gaps of the existing environmental database
mentioned above in order to provide sufficient environmental baseline data for a fully elaborated
ESIA with regard to
- future lignite open cast mining activities in the Sibovc South lignite license area
earmarked for coal supply under consideration of the abundant mining activities in
Bardh and Mirash open cast mines as well as already abundant open cast and
underground mining activities
- disposal of ash and waste water under consideration of existing TPPs Kosovo A and B
- fresh water supply under consideration of existing TPPs Kosovo A and B fresh water
consumption
The assignment included the following major tasks and issues:
- Sampling and analysis of surface water
- Sampling and analysis of waste water
- Sampling and analysis of ground water from existing wells and new drills
- Drilling and lining of new GWM, documentation of ground water levels in new and
existing GWM
- Reporting (maps, coordinates, documentation of drilling and lining of GWM, sampling
reports and analysis results, basic assessment/evaluation of analysis results)
- Measuring of flow rates of selected rivers and creeks in the area
There were two sampling campaigns undertaken during this assignment, while the number of
the total samples (soil, surface water and groundwater) are shown below:
Type of the sample Number of sampling points
Soil 60
Surface water 35
Ground water 29
Waste water 14
River sediments 24
For illustrative purposes, KEK area and groundwater sampling points are shown in the map
below
98
ironmental and Social Impact Ass
(iii) Envi sessment
The envi a social im
ironmental and mpact assessmment of the proposed K Kosova Powe er Project waas the
most imp gnment of th
portant assig s also other c
he project, as complement tary studies prepared showed
s known tha
this\. It is at it is the re
esponsibility
y of the devveloper, in thhis case thee winning pr rivate
sector bi idder to pre E
epare the Environmenta al and Soci ial Impact A Assessment for each o of the
separate sub-project ts subject to t national legal requi irements\. FFor the prop posed KPP P, the
Governm ment and the World Bank m
k agreed to make ent use of tim
efficie me and until the award o of that
specific concession in order for the Go overnment to commen nce the preparation o of an
Environm S
mental and Social Impacct Assessmen nt (ESIA) fo r the propossed KPP\.
The ToR tudy were prepared
Râs of the st p ry carefully and discussed with different loca
ver al and
onal stakeho
internatio olders to ma t all relevan
ake sure that followed\. Af
nt standards are being f fter a
procuremment process ium of comp
s, a consorti panies fromm Croatia, Sl snia and Ko
lovenia, Bos osovo
o prepare the
had won the tender to e ESIA\.
The proccess of the ESIA was a loong process, of difficultie
, with a lot o e implementa
es during the ation,
ason for this could be di
while rea ifferent, but it would be worth to me ention some: one of the most
importannt was that consultants s responsibl le to prepar re the ESIA A didnât un nderstand in n the
beginning that the ESIA
E we waanted them to t prepare w was not a do ocument me eant to be hhighly
l and on the other side also
technical a not know wing the fin nal technolog gy that was ggoing to be used,
made the document uminous tre
t quite volu eating differ rent types o of technolog ferent
gies in diff
condition
ns\.
99
Finally after agreeing with the right version of the document, the consultant prepared the
Scoping study as required by TOR, and after discussing it also in the stakeholder committee (a
committee with members from MESP, MoF, MED, Municipality of Obiliq and KEK) agreed to
make it publicly available and to hold a public debate with the affected people of the
municipality of Obiliq\. During the public debate the consultant presented the document and
alternatives that were considered and after the comments received the document was finalized\.
It should be noted that during this assignment, the public information office (PIO) was
established and served together with municipality of Obiliq to the concerned people\. Under this
project there was a full time employee who was stationed within the municipality building to
keep people up to date with the information from the project and raise further concerns or
complaints in case they had\.
Last but not least, also a web-site was established in order to provide more information related to
the document and latest notifications related to ESIA\. Where interested parties could read and
download monthly Air Quality Reports (from HMIK), latest version of the ESIA and other
related studies such as soil and water monitoring program\.
Throughout the process, the project team was assisted by the Panel of Expert, who were
international experts with experience on environment and social issues according to standards of
International Financial Institutions (IFI)\. This part will be further elaborated in next section\.
The ESIA was delivered draft, due to reached agreement between GoK and private investors
which was not foreseen by the actual ToRâs of the actual ESIA\. The process has now started to
revise the ESIA for update to the new power plant configuration\.
(iv) Monitoring of the RAP implementation of the Shala Neighborhood
Since one of the three objectives of the Clean-up and Land Reclamation-AF project there was
also the objective to support KEK and the Ministry of Environment and Spatial Planning
(MESP) to implement continued clean-up operations and environmental good practices in the
mining and energy sector, this assignment was related to what was said above and exclusively
for resettlement\.
As part of the this objective described above the AF-CLRP included a component aimed at
improving the review and monitoring function of the MESP in relation to the environmental and
social implications of large power sector projects and in particular the preparation of the Kosovo
Power Project (KPP), which was being supported by a separate WB operation\. The
aforementioned component included resources for, among other, the following activities: (a) the
Environmental and Social Impact Assessment (ESIA) for the proposed KPP; (b) international
ESIA and Resettlement Panel of Experts; and (c) monitoring of the implementation by the Hade
Project office under the MESP of the RAP for the Shala neighborhood of Hade village in
accordance with the World Bank's Operational Policy on Involuntary Resettlement 4\.12 (OP
4\.12) and International Finance Corporation's (IFC) Performance Standard 5 on Land
Acquisition and Involuntary Resettlement (PS5)\.
100
Therefore to help the project comply with above mentioned standards there was a consultant
hired to provide Consultant Services for the Monitoring of the Resettlement Action Plan (RAP)
for the Shala neighborhood of Hade village are aimed at supporting activity (c) above and
continue the work conducted by rePlan under a previous contract between 2010 and 2012\.
During this assignment the engaged consultant monitored the resettlement process which took
place in the new location designated for future resettlements\. The consultant during this period
produced two monitoring reports with the insights from the field visits and also a resettlement
completion audit followed by a stakeholder workshop\. The Resettlement Completion Report also
contained an Executive Summary which was publicly disclosed followed by public discussion
with the project affected people\.
(v) Panel of Experts (PoE) established to assist on ESIA and monitoring of RAP
During project implementation also two experts (social and environmental) were engaged\. These
experts had a crucial role in advising PIU and also companies on IFI standards to be followed
during implementation of ESIA and RAP\.
ESIA and RAP Panel of experts had the following objectives: (a) to ensure due diligence and
international quality standards in the studies, including integration of international standards for
data, methodologies, benchmarks for impacts, and design criteria; (b) to provide high level and
professional independent advice and guidance to support objectivity and credibility in the
assessment process, and (c) to share technical expertise and knowledge and so contribute to
dialogue amongst Consultants, the Government of Kosovo and other stakeholders\. The primary
outcome from their effort was to ensure international standards of the study, risk evaluation and
impact assessment are met, and to assure a level of confidence amongst the international
community in the quality and integrity of the assessment process and findings\.
POE members were experts with a broad knowledge of environmental, social, and technical
impacts and issues associated with open cast mine development and large scale coal and lignite
fired power projects\. Furthermore, they had full understanding and were knowledgeable in recent
EU Directives, BREFs and World Bank and EBRD Safeguard Policies and procedures required
for a âCategory Aâ project\. The POE worked as an integrated team; Experts did not only address
their own area of expertise, but contributed to the interdisciplinary work of the POE\. Their
collective professional knowledge and experience allowed them to address the following broad
areas of importance to the ESIA, including but not limited to: institutional aspects, technical
issues/design options and alternatives (particularly for pollution control), social and
environmental impact data requirements and impact analysis, resettlement and economic
rehabilitation projects, and public consultation and disclosure procedures\.
(vi) Low carbon energy growth study
Low carbon energy growth study was part of the project as an initiative from World Bank, not
only to consider fossil fueled energy but also to have a broad perspective on other renewable
energy sources as well as energy efficiency and their cost reflections as well\. In order to
complete this study a company ECOFYS, was engaged with extensive experience in similar
studies\. Below are described the scopes of the services undertaken under this assignment as well
as the findings\.
101
Task 1: Review the Climate Change Strategy and other relevant background documents
The Consultant had to review all available background documents, in particular: (i) the Climate
Change Strategy; (ii) the activities undertaken by Ministry of Economic Development (MED) to
meet the EU 20-20-20 targets in the framework of the Energy Community treaty, including the
Renewable Energy Action Plan and Energy Efficiency Action Plan; (iii) the several projects to
reduce Greenhouse Gases (GHG) in buildings and other sectors, such as the Energy Efficiency
and Renewable Energy Project, financed by the World Bank and implemented by the MED and
other donor financed GHG projects, such as from KfW, USAID and the EU\.
Task 2: Identification of key Greenhouse Gas emission reduction measures for key sectors, greenhouse gas
reduction potential and associated costs and investment needs
The Consultant had identified the key emission reduction measures which exist in the key
sectors in Kosovo, estimated the greenhouse gas reduction potential as well as the associated
costs and investment needs that are required in order to realize this reduction\. The consultant
had also identified the measures and actions which were already being realized and have
secured funding, the reduction potential which was estimated to be realized through these
projects already being implemented and for the remaining measures, the key parties which
would carry the investments required\.
Task 3: Preparation of Greenhouse Gas Abatement Costs curves
The purpose of this task was to provide a clear overview of all type of measures required for
Kosovo to meet its obligations towards the European Union and for Kosovo to follow a low
carbon development path, its investment costs and the greenhouse gas emission reduction
potential\. This task modeled the measures required based on 3 different scenarios in terms of
greenhouse gas reductions and compared this with a business as usual model scenario\.
Task 4: Training of MED and MESP on Greenhouse Gas Abatement Costs Curves and establishment of
database
The Consultant established a database containing the different type of measures, the estimated
investment costs and greenhouse gas emission reduction potential in the key sectors in the
MESP and MED, provided the model for the Greenhouse Gas Abatement Costs Curves and
provided a 4 day training to Kosovo officials on how to maintain the database and model the
Greenhouse Gas Abatement Costs Curves when updated information becomes available in the
future\.
Marginal abatement cost for 2024 projection for Kosovo, which came out as a result of this study
is shown below:
102
dy Tour to Poland
(vii) Stud P
Purpose ofo the study tour was to strengthen the capacity within the M Ministry of EEnvironment t and
P
Spatial Planning, the Kosovo Env vironmental Protection A Agency and its inspector e
rates and the
Ministry of Economi ic Developm ment in the field of lignite e-fired poweer plants, inccluding open n cast
i the follow
mining, in wing areas: (i i) Environme ental Impact t Assessmen nt for new po ower plants aand
r
how the review q
and quality contr zed; (ii) perm
rol is organiz mitting taskss as they are defined in
P
Integrated Pollution Prevention a Control legislation
and l (I
IPPC) and k key elements s of IPPC per rmit
1
including
g application n and approv val procedure es ; (iii) freq
quency and t type of inspe ections to
c
monitor compliance w the perm
with ons, (iv) emis
mit conditio ry including emission
ssion registr
monitorinng obligation ns for indust bmission req
tries and sub quirements too authorities, (v) Best
Availablee Technique es for lignite fired powerr plants; and (vi) site visi tly construct
it to 3 recent ted or
renovated ed power pla
d lignite fire ants to view their
t environ nmental commpliance, em mission
monitorinng regime an nd environm mental investmments\.
fi
Lignite fired p
power plants preferably in the range
r of 300 MW (small l units) rangiing until 5000
MW as th he 300 MW units are mo ost comparab ble to the pla anned unit size in Poland\. The idea of
1
d manuals used in the Minist
 Including guidelines and plications and permits\.  And branch guideli
try for IPPC app inesÂ
ergy sector\. Â
for the ene
103
the study tour was also to visit power plants which use Pulverized Coal Combustion (PCC)
technologies and units who use atmospheric circulated fluidized bed combustion (CFBC) and
perhaps different type of cooling systems direct once-through cooling (Patnow II)\. Key plants in
Poland who were built in the last 10 years and visited are:
BeÅchatów II PGE /BOT Elektrownia BeÅchatów 1 x 858
Belchatów SA\.
Patnow II Elektrowni PÄ
tnów-Adamów-Konin SA\. Patnow- Konin 1 x 464
(ZE PAK SA\.)
Turow 4, 5, 6 Turow Power Plant S\.A\. Turow 3 x 262
3 PROGRAM SUSTAINABILITY
Sustainability of the program was achieved through capacity building of the implementing
agency and other participating institutions\. KEKâs capacity in lignite mining operations was
enhanced by developing integrated approach to deal with environmental legacy issues from
lignite mining and power generation activities\. By building capacity within KEK and
environmental officials in central and local Government, the clean-up activities substantially
reduced the environmental pollution created by the ash deposited in the open ash dump\.
This project and its implementation model can be used for other similar projects, as a good
example with significant results\.
The sustainability was also achieved by investigation of the site using international good practice
to remove, package, and export for incineration or reprocessing of chemicals including phenol,
benzene and tarry residuals\.
The capacity building subcomponent of the Grant included a) Training of the local staff of
MESP, MF, KEK, Municipality of Obiliq and PMU and b) Forming a new Reclamation
Department within Mining Division, in order to continue with using international good practice
on remediation and land reclamation, c) Site visit to the RWE mining facilities in Germany\. The
purpose of the site visit is to study closely the successful implementation of the IPPC permitting
procedures, IED compliance and other environmental permitting procedures for the lignite-fired
power plants in Germany\.
4 INSTITUTIONAL ARRANGEMENT AND STAKEHOLDERS FOR PROGRAM
IMPLEMENTATION
KEK is the main project beneficiary and implementing agency\. As the implementing agency,
KEK was responsible for day-to-day project management, including hiring and supervising
consultants\.
Internationally experienced specialists for the PMU were financed by the grant under component
D\. A Project Coordination Committee (PCC) was established to provide advice and monitor
project execution, and oversee coordination between KEK and local and central authorities\.
MEM, MESP and the Municipality of Obiliq played an advisory role and coordinated activities
such as the preparation of the EIA and the land use plan\.
104
The PCC was chaired by the Minister of MESP or higher duly authorized delegate and included
representatives from KEK, the Kosovo Trust Agency (KTA), the Ministry of Energy and
Mining, the Independent Commission of Mines and Minerals (ICMM), and the Municipality of
Obiliq\.
Representation in the PCC required participation from all key institutions that have involvement
or an interest in one or more of the aspects of implementation\. The Chair of the PCC convened
regular meetings throughout the implementation of the Grant\. Attendance by representatives of
the KTA, KEK, MEM, MESP and the Municipality of Obiliq were mandatory\.
The detailed functions and responsibilities of the PCC and the PMU were defined in an
Operations Manual, which was adopted after project effectiveness\.
The key responsibilities of the PCC were to:
ï Coordinate the activities of the various agencies involved in the implementation of
subcomponents, especially those related to environmental and social aspects (regulatory
supervision particularly from MESP and MEM);
ï Ensure consultation with local institutions, donors and other stakeholders as appropriate,
based on recommendations from the PMU;
ï Review the PMUâs quarterly Progress reports;
ï Advise KEKâs Board of Directors on project execution and progress;
The PMU was to serve as the Secretariat for the PCC and prepare and distribute the Minutes /
Agenda for each PCC Meeting\.
5 IMPLEMENTATIONS ISSUES ENCOUNTERED
One of the issues encountered was that, the design of the Wet Ash System and construction
works were reviewed several times so there were delays on completing the works\. The reasons
claimed by the contractor were: (i) the addition of metal detectors and crushers to the scope of
works for the wet ash system, which had to be integrated into the procurement process to ensure
proper functioning of the wet ash system, (ii) the amount of extra underground water discovered
on site, and (iii) additional time required for clarification technical designs\. The other issues
encountered were also that the contractor was supplied with materials from local subcontractors
(against specifications on the contract) and later on tended to have problems with fulfilling the
responsibilities derived from the contract, in context of delivering proper invoices and payment
processing from KEK\.
The implementation of some of the components such as Component E was delayed as a result of
difficulties of the export permits from the Ministry of Environment and spatial planning\. Parallel
to the works, the efforts to get the necessary import permits, export contracts and usage permits
for the various chemicals were commenced\. The negotiations with other possible disposers and
countries turned out to be very difficult because Kosovo was not a member of the Basel
Convention\. This problem had to be solved by having in place the bilateral agreements between
Republic of Kosova (as country of origin of the hazard waste) and receiving countries like
Belgium, Germany, Sweden and Bulgaria as most hazard waste is foreseen to be finally disposed
in those countries\. Export permits were granted by Ministry of Environment and Spatial planning
in December while the bilateral agreements have been signed in February 2012 and then were
105
forwarded to respective authorities in the recipient Countries\. It took a year, on the first time, and
six months on the second time, for the export permits to be granted for the project\.
The works sometimes were delayed due to specific working conditions on ash dump, damaging
twice faster spare parts of the equipment\. This type of work required very intensive maintenance
in order to follow with the working dynamic\. KEK contracted a maintenance operator, for
maintaining all the equipment of mining division but their service did not satisfy our equipment
requirements\. As a result, many times the excavators were out of use for several months\.
106
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
N/A
107
Annex 9\. List of Supporting Documents
ï Project Appraisal Document, May 15, 2006 (Report No: 35870-XK)
ï Project Paper on Clean-up of the Gasification Site â First Additional Financing, May
21, 2007 (Report No: 39802-XK)
ï Restructuring Paper of June 3, 2009
ï Project and Restructuring Paper of March 28, 2013 (Report No: 73115-XK)
ï Restructuring Paper of June 29, 2015 (Report No: RES19837)
ï Implementation Status Reports number 1 through 18
ï Mid-Term Review
ï Aide Memoires
ï Borrowerâs Project Completion Report
ï World Bankâs Interim Strategy Note (ISN) for Kosovo
ï Law No\. 05/L â 044 On The Environmentally Endangered Zone Of Obiliq And Its
Surroundings, Republic of Kosovo, Assembly
ï Soil and Water Sampling and Analysis Program, GEOtest\. August, 2014
ï Site Investigation, Vattenfall Europe Mining AG and Deutsche Montan Technologie
GmbH\. April, 2008
ï Inspection Panel Investigation Report, World Bank Inspection Panel\. September,
2016 (Report No: 106658-XK)
ï Management Report And Recommendation, World Bank\. October, 2016 (Report No:
INSP/106658-XK)
ï Final Completion Report (2011 â2016) for MESP Monitoring Unit, Resettlement
Action Plan for Shala Neighborhood of Hade Village, rePlan Inc\. July, 2016
108
MAP
109 | REVIEW |
P097921 | Document of
The World Bank
Report No: ICR00003551
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-42500, IDA-45970)
ON A
CREDIT
IN THE AMOUNT OF SDR 188\.9 MILLION
(US$280 MILLION EQUIVALENT)
TO THE
FEDERAL REPUBLIC OF NIGERIA
FOR A
MALARIA CONTROL BOOSTER PROJECT
March 31, 2016
Health, Nutrition and Population Global Practice
Africa Region
i
CURRENCY EQUIVALENTS
(Exchange Rate Effective March 31, 2016)
Currency Unit = Nigerian Naira (NGN)
NGN 1\.00 = US$ 0\.01
US$ 1\.00 = NGN 199\.25
XDR 1\.00 = US$ 1\.41
FISCAL YEAR
July 01 â June 30
ABBREVIATIONS AND ACRONYMS
ACT Artemisinin-based Combination Therapy
AF Additional Financing
AIDS Acquired Immune Deficiency Syndrome
AMFm Affordable Medicines Facility-malaria
ANC Antenatal Care
BCC Behavior Change Communication
BMGF Bill and Melinda Gates Foundation
CD Country Director
CDD Community Directed Distributors
CDI Community Directed Intervention
CMU Country Management Unit
COMPASS Community Participation and Action for the Social Sector
CPS Country Partnership Strategy
CSS Community Systems Strengthening
DALY Disability-Adjusted Life Year
DDT Dichlorodiphenyltrichloroethane
DFID Department for International Development
DHS Demographic Health Survey
FA Financing Agreement
FBO Faith-based Organization
FCT Federal Capital Territory
FGON Federal Government of Nigeria
FMOF Federal Ministry of Finance
FMOH Federal Ministry of Health
GDP Gross Domestic Product
GFATM Global Fund to Fight AIDS, Tuberculosis and Malaria
GNI Gross National Income
HFA Health Facility Assessment
HIV Human Immunodeficiency Virus
HMIS Health Management Information System
HSS Health Systems Strengthening
ii
IDA International Development Association
IE Impact Evaluation
IEC Information, Education, and Communication
INMCH Integrated Neonatal, Maternal, and Child Health
INT Integrity Vice Presidency
IP Implementation Progress
IPT Intermittent Preventive Therapy
IRI Intermediate Results Indicator
IRR Internal Rate of Return
IRS Indoor Residual Spraying
ISR Implementation Status Report
ITN Insecticide Treated Mosquito Net
IVM Integrated Vector Management
LGA Local Government Areas
LLIN Long-Lasting Insecticidal Nets
LMIS Logistic Management Information System
LQAS Lot quality assurance sampling
M&E Monitoring and Evaluation
MCBP Malaria Control Booster Project
MDG Millennium Development Goal
MDG-F Millennium Development Goals Achievement Fund
MICS Multiple Indicator Cluster Survey
MIS Malaria Indicator Survey
MNCH Maternal, Newborn and Child Health
MPP Malaria Plus Package
MTR Midterm Review
NEEDS National Economic Empowerment and Development Strategy
NGO Non-Governmental Organization
NIFAA Nigerian Inter-Faith Action Association
NMCP National Malaria Control Program
NMSP National Malaria Strategic Plan
NPV Net Present Value
PAD Project Appraisal Document
PDO Project Development Objective
PFMU Project Financial Management Unit
PIF Project Implementation Facilitator
PIU Project Implementation Unit
PMV Patent Medicine Vendor
PP Parent Project
PRS Poverty Reduction Strategy
PSC Project Steering Committee
PSM Procurement and Supply Management
QER Quality Enhancement Review
RBM Roll Back Malaria
RDT Rapid Diagnostic Test
RF Results Framework
iii
RVP Regional Vice Presidency
SCA Subsidiary Credit Agreement
SCM Supply Chain Management
SFH Society for Family Health
SMOH State Ministry of Health
SOML Saving One Million Lives
SP Sulphamethoxazole-Pyrimethamine
SUFI Scale Up for Impact
SuNMaP Support to National Malaria Programme
TB Tuberculosis
UNDP United Nations Development Programme
UNICEF United Nations Children's Emergency Fund
USAID United States Agency for International Development
US-PMI United States Presidentâs Malaria Initiative
WHO World Health Organization
Vice President: Makhtar Diop
Country Director: Rachid Benmessaoud
Practice Manager: Trina Haque
Project Team Leader: Noel Chisaka
ICR Team Leader: Noel Chisaka
ICR Team Author: F\. Brian Pascual
iv
NIGERIA
Malaria Control Booster Project
TABLE OF CONTENTS
Data Sheet
A\. Basic Information\. vii
B\. Key Dates \. vii
C\. Ratings Summary \. vii
D\. Sector and Theme Codes \. viii
E\. Bank Staff \. ix
F\. Results Framework Analysis \. ix
G\. Ratings of Project Performance in ISRs \. xiv
H\. Restructuring \. xiv
I\. Disbursement Profile \. xvi
1\. Project Context, Development Objectives and Design \. 1
1\.1 Context at Appraisal \. 1
1\.2 Original Project Development Objectives (PDOs) and Key Indicators\. 2
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators,
and reasons/justification \. 2
1\.4 Main Beneficiaries \. 3
1\.5 Original Components (as approved) \. 3
1\.6 Revised Components \. 4
1\.7 Other significant changes \. 4
2\. Key Factors Affecting Implementation and Outcomes \. 6
2\.1 Project Preparation, Design and Quality at Entry \. 7
2\.2 Implementation \. 9
2\.3 M&E Design, Implementation and Utilization \. 11
2\.4 Safeguard and Fiduciary Compliance \. 13
2\.5 Post-completion Operation/Next Phase \. 15
3\. Assessment of Outcomes \. 15
3\.1 Relevance of Objectives, Design and Implementation \. 15
3\.2 Achievement of PDOs \. 17
3\.3 Efficiency \. 21
3\.4 Justification of Overall Outcome Rating \. 22
3\.5 Overarching Themes, Other Outcomes and Impacts \. 22
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops \. 23
4\. Assessment of Risk to Development Outcome\. 23
5\. Assessment of Bank and Borrower Performance \. 23
5\.1 Bank Performance \. 23
5\.2 Borrower Performance \. 25
6\. Lessons Learned \. 26
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 27
Annex 1\. Project Costs and Financing \. 28
v
(a) Project Cost by Component (in USD Million equivalent) \. 28
(b) Financing \. 28
Annex 2\. Outputs by Component \. 29
Annex 3\. Economic and Financial Analysis \. 33
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 43
(a) Task Team members \. 43
(b) Staff Time and Cost\. 44
Annex 5\. Beneficiary Survey Results \. 45
Annex 6\. Stakeholder Workshop Report and Results\. 46
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 47
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 57
Annex 9\. List of Supporting Documents \. 58
Annex 10\. Results Framework and Monitoring\. 60
Annex 11\. Impact Evaluation Summary \. 66
MAP \. 75
vi
A\. Basic Information
Malaria Control
Country: Nigeria Project Name:
Booster Project
IDA-42500,
Project ID: P097921 L/C/TF Number(s):
IDA-45970
ICR Date: 03/31/2016 ICR Type: Core ICR
FEDERAL
Lending Instrument: SIL Borrower: GOVERNMENT OF
NIGERIA (FGON)
Original Total
XDR 121\.70M Disbursed Amount: XDR 178\.29M
Commitment:
Revised Amount: XDR 188\.17M
Environmental Category: B
Implementing Agencies: Federal Ministry of Health, National Malaria Elimination Program,
and the State Ministries of Health and State Malaria Control Programs from Kano, Jigawa,
Gombe, Bauchi, Akwa Ibom, Rivers, and Anambra\.
Cofinanciers and Other External Partners: External partners included Roll Back Malaria
(RBM), The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), U\.S\. Presidentâs
Malaria Initiative (USG/PMI), and U\.K\. Department for International Development (DFID)
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 01/26/2006 Effectiveness: 05/15/2007 05/15/2007
06/16/2009
07/26/2011
Appraisal: 07/10/2006 Restructuring(s): 08/04/2011
06/28/2013
06/23/2014
Approval: 12/12/2006 Mid-term Review: 06/15/2010 10/28/2010
Closing: 03/31/2012 03/15/2015
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Satisfactory
Borrower Performance: Moderately Satisfactory
vii
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Satisfactory NA
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Moderately Satisfactory
Performance: Performance:
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem
Quality at Entry
Project at any time No None
(QEA):
(Yes/No):
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: Satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 38 38
Health 23 23
Other social services 2 2
Sub-national government administration 33 33
Tertiary education 4 4
Theme Code (as % of total Bank financing)
Child health 14 14
Health system performance 29 29
Malaria 29 29
Other Private Sector Development 14 14
Population and reproductive health 14 14
viii
E\. Bank Staff
Positions At ICR At Approval
Vice President: Makhtar Diop Gobind T\. Nankani
Country Director: Rachid Benmessaoud Hafez M\. H\. Ghanem
Practice
Trina S\. Haque Laura Frigenti
Manager/Manager:
Project Team Leader: Noel Chisaka Ramesh Govindaraj
ICR Team Leader: Noel Chisaka
ICR Primary Author: F\. Brian Pascual
F\. Results Framework Analysis
Project Development Objectives (PDOs)
The PDOs are (i) to ensure that the target population will have improved access to, and
utilization of, a well-defined set of Malaria Plus Package interventions (MPP); and (ii) to
strengthen Federal and States ability to manage and oversee delivery of malaria plus
interventions\.
Revised PDOs (as approved by original approving authority)
NA
(a) PDO Indicator(s)
Original
Actual Value
Target Values Formally
Achieved at
Indicator Baseline Value (from Revised
Completion or
approval Target Values
Target Years
documents)
Indicator 1:
Percentage of children < 5 years
with fever treated with an 3\.7% 80\.0% 15\.0% 45\.0%
effective antimalarial within 24
hours from onset of symptoms
Date achieved 08-Dec-2006 15-May-2007 04-Aug-2011 03-Mar-2015
EXCEEDED: The target was revised from 80% to 15% to
reflect a more realistic end target based on experiences from
other countries with ongoing artemisinin-based combination
therapies (ACTs) use, global availability of ACTs, focused
Comments
treatment intervention, and the need to reduce artemisinin-
(incl\. % achievement)
resistant malaria parasites\. The achievement represents a
significantly higher rate than the 30% of children < 5 years in
non-Project States treated with effective antimalarial within 24
hours of onset of symptoms\.
Indicator 2: 3\.6% 60\.0% 74\.4%
ix
Percentage of children < 5 years
who slept under an insecticide-
treated nets (ITN) the night
preceding the survey
Date achieved 08-Dec-2006 15-May-2007 03-Mar-2015
EXCEEDED: The actual value at the end of Project surpassed
Comments the target by 24%\. The achievement is significantly higher than
(incl\. % achievement) the 37% rate of children < 5 years in non-Project sites who slept
under an ITN the night preceding the survey\.
Indicator 3:
Percentage of pregnant women
who received two or more doses 8\.3% 25\.0% 52\.6%
of intermittent preventive
treatment (IPT)
Date achieved 08-Dec-2006 15-May-2007 03-Mar-2015
EXCEEDED: The Project surpassed the target by over 110%
Comments and reflected a significantly higher proportion compared to non-
(incl\. % achievement) Project sites where only 41% of pregnant women received 2+
doses of IPT\.
Indicator 4:
Percentage of pregnant women
4\.1% 50\.0% 73\.4%
who slept under bed net night
before the survey
Date achieved 12-Aug-2006 15-May-2007 03-Mar-2015
EXCEEDED: The actual value at the end of Project surpassed
Comments the target by 47%\. The achievement is significantly higher than
(incl\. % achievement) the 48% rate of pregnant women in non-Project sites who slept
under an ITN the night preceding the survey\.
Indicator 5:
Number of direct Project NA 16,000,000 18,000,000
Beneficiaries of which female
Date achieved 08-Dec-2006 4-Aug-2011 03-Mar-2015
Comments EXCEEDED: The target was attained well before the end-of-
(incl\. % achievement) Project household survey was conducted\.
Indicator 6:
Number of children under five
NA 6,000,000 26,465,138
who received Vitamin A
supplementation
Date achieved 08-Dec-2006 4-Aug-2011 03-Mar-2015
EXCEEDED: The target was attained well before the end-of-
Comments Project household survey was conducted\. The data came from
(incl\. % achievement) Maternal, Neonatal, and Child Health (MNCH) week post
campaign surveys
Indicator 7:
Percentage of States regularly
using monitoring and evaluation
0\.0 80\.0% 100\.0%
data to manage malaria and
Maternal and Child Health
(MCH) programs
x
Date achieved 30-Sep-2006 15-May-2007 03-Mar-2015
Dropped Indicator: This indicator was removed because the
Project had consistently met its target since 2009\. Thus, it added
Comments
limited value and was not relevant to track\. The indicator was
(incl\. % achievement)
included in this table to maintain a measure of how the Project
performed in achieving PDO II\.
(b) Intermediate Outcome Indicator(s)
Original
Actual Value
Target Values Formally
Achieved at
Indicator Baseline Value (from Revised
Completion or
approval Target Values
Target Years
documents)
Indicator 1:
Percentage of households with
2\.6% 80% 99\.6%
at least one ITN/ long-lasting
insecticidal nets (LLIN)
Date achieved 08-Dec-2006 15-May-2007 03-Mar-2015
EXCEEDED: The Project surpassed the target by 25% and
Comments
helped increase percentage of households with at least one
(incl\. % achievement)
ITN/LLIN by 38 times the baseline value\.
Indicator 2:
Percentage of children aged 0-
23 months with diarrhea in the
last two weeks who received 25\.3% 50\.0% 59\.4%
oral rehydration solution (ORS)
and/or recommended home
fluids
Date achieved 08-Dec-2006 15-May-2007 03-Mar-2015
EXCEEDED: The Project surpassed the target by 19% and
Comments helped increase the percentage of children aged 0-23 months
(incl\. % achievement) with diarrhea received ORS and/or recommended fluids by 2\.5
times baseline value\.
Indicator 3:
Percentage of women with
children <1 year of age who 63\.0% 72\.0% 87\.5%
received antenatal care (ANC)
during last pregnancy
Date achieved 08-Dec-2006 15-May-2007 03-Mar-2015
Comments EXCEEDED: The Project helped increase the percentage of
(incl\. % achievement) women who received ANC by 39%\.
Indicator 4:
Number of Long-lasting
0 12,400,000 51,392,304
insecticide-treated malaria nets
purchased and/or distributed
Date achieved 08-Dec-2006 15-May-2007 07-Jan-2015
Comments
EXCEEDED: The Project surpassed the target by three times\.
(incl\. % achievement)
xi
Indicator 5:
Percentage of health facilities
using laboratory confirmation
5\.0% 30\.0% 31\.4%
as the basis for treatment of
fever in children >5yrs and
adults
Date achieved 01-Nov-2009 15-May-2007 07-Jan-2015
EXCEEDED: The Project surpassed the target and increased
Comments
the percentage of health facilities using laboratory confirmation
(incl\. % achievement)
by 6\.3 times the baseline value\.
Indicator 6:
Percentage households sprayed
3\.0% 80\.0% 83\.0%
with indoor residual spraying
(IRS) in the last 12 months
Date achieved 12-Aug-2006 31-Mar-2012 07-Jan-2015
EXCEEDED: This indicator reflects coverage of IRS in the
entire state\. However, the Project States only supported IRS
Comments
only in two Local Government Area (LGAs) across the six
(incl\. % achievement)
supported States\. Hence the coverage shown reflects post IRS
reports /surveys, which is 83\.0\.
Indicator 7:
Number of LLINs distributed in 5,200,000 20,700,000 32,592,304
22 additional states
Date achieved 26-Jul-2011 26-Jul-2011 03-Mar-2015
EXCEEDED: The Project surpassed the target by 58%\. This
Comments reflected the additional support that the Project provided on an
(incl\. % achievement) urgent basis in distributing 30 million LLINs to 22 non-Project
States\.
Indicator 8:
Percentage of children <5years
of age with fever in the last 2
weeks treated with an effective
0\.0% 15\.0% 40\.0%
anti-malarial within 24 hours of
onset of symptoms in
communities with community-
directed intervention (CDI)
Date achieved 01-Nov-2006 16-June-2009 03-Mar-2015
EXCEEDED: The Project surpassed the target by 167%\.
Comments
Results were from the Impact Evaluation end stage that focused
(incl\. % achievement)
primarily on patent medicine vendors (PMVs) and CDI States\.
Indicator 9:
Percentage of care givers who
62\.3% 70\.0% 85\.0%
knows at least two symptoms of
malaria
Date achieved 30-Sep-2010 16-June-2009 03-Mar-2015
EXCEEDED: The Project surpassed the target by 21%\. Results
Comments
from Impact Evaluation end stage that focused primarily on
(incl\. % achievement)
PMV ad CDI States
xii
Indicator 10:
Percentage of mothers of
children less than five years of
0\.0% 60\.0% 55\.5%
age in CDI communities who
know at least two ways of
preventing malaria
Date achieved 30-Jun-2009 16-June-2009 03-Mar-2015
PARTIALLY ACHIEVED: The Project made significant
Comments
progress in employing CDIs to increase knowledge and
(incl\. % achievement)
awareness, but was just short in achieving the target\.
Indicator 11:
Number of rapid diagnostic
0 12,000,000 14,400,000
tests (RDTs) distributed to
health facilities
Date achieved 30-Jun-2009 15-May-2007 03-Mar-2015
Comments
EXCEEDED: The Project surpassed the target by 20%\.
(incl\. % achievement)
Indicator 12:
Percentage of PMV knowing
0\.0% 80\.0% 60\.0%
the correct dose of ACT for
children < 5
Date achieved 31-Jul-2009 16-June-2009 03-Mar-2015
Comments PARTIALLY ACHIEVED: Results from Impact Evaluation
(incl\. % achievement) end stage that focused primarily on PMV ad CDI States
Indicator 13:
Percentage of sampled PMV
0\.0% 80\.0% 73\.3%
that had ACTs in stock at the
time of assessment
Date achieved 30-Jun-2009 16-June-2009 03-Mar-2015
PARTIALLY ACHEVIED: PMVs provide an important
avenue to access ACTs\. The FGON will need to work with
Comments
PMVs to improve and maintain adequate levels of ACTs\.
(incl\. % achievement)
Results from Impact Evaluation end stage that focused primarily
on PMV ad CDI States
Indicator 14:
Percentage of sampled
community-directed distributors 0\.0% 80\.0% 39\.1%
(CDDs) with no stock -outs in
the last three months
Date achieved 30-Jun-2009 16-June-2009 03-Mar-2015
NOT ACHIEVED: With CDDs representing an important
avenue for ACTs, the FGON will need to strengthen
Comments Community Health Systems to ensure that stock outs are not
(incl\. % achievement) experienced in more than 20% of CDDs\. Results from Impact
Evaluation end stage that focused primarily on PMV ad CDI
States
xiii
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 06/29/2007 Satisfactory Satisfactory 0\.44
2 12/20/2007 Satisfactory Satisfactory 19\.71
3 06/20/2008 Satisfactory Satisfactory 28\.96
4 01/10/2009 Satisfactory Satisfactory 44\.57
5 06/30/2009 Satisfactory Satisfactory 74\.48
6 12/16/2009 Satisfactory Moderately Satisfactory 85\.75
7 06/24/2010 Satisfactory Satisfactory 118\.62
8 12/22/2010 Satisfactory Moderately Satisfactory 133\.94
9 08/08/2011 Satisfactory Moderately Satisfactory 151\.38
Moderately
10 01/31/2012 Satisfactory 156\.27
Unsatisfactory
11 08/07/2012 Satisfactory Moderately Satisfactory 164\.16
12 02/10/2013 Satisfactory Satisfactory 183\.07
13 07/30/2013 Satisfactory Moderately Satisfactory 194\.34
14 03/12/2014 Satisfactory Moderately Satisfactory 211\.45
Moderately Moderately
15 09/29/2014 260\.83
Unsatisfactory Unsatisfactory
16 04/07/2015 Moderately Satisfactory Moderately Satisfactory 276\.13
H\. Restructuring
Board ISR Ratings at Amount
Restructuring Approved Restructuring Disbursed at Reason for Restructuring & Key
Date(s) PDO Restructuring Changes Made
DO IP
Change in USD millions
Additional Financing (AF) of
US$ 100 million to support
expanded, supplemental components
on Health System Strengthening,
Community System Strengthening,
communication, and procurement\.
The AF also supported scale up of
LLIN distribution to universal access
06/16/2009 Y S S 68\.8
levels\. The Project retained 4 of the
six original PDO indicators,
dropping indicators on infants who
were fed breast milk only in the last
24 hours, and percentage of States
using M&E data to manage
malaria/Maternal and Child Health
Programs\.
xiv
Board ISR Ratings at Amount
Restructuring Approved Restructuring Disbursed at Reason for Restructuring & Key
Date(s) PDO Restructuring Changes Made
DO IP
Change in USD millions
Reallocate proceeds of AF to finance
the cost of distributing 30 million
undelivered LLINs, which were
purchased by the FGON and RBM
partners, to 22 non-Project States\.
The restructuring also added an
additional intermediate indicator to
measure the number of nets
07/26/2011 N S MS 145\.80 distributed to these non-Project
States\. The Bank agreed to proceed
with the restructuring before the
more major restructuring planned
one month later given the pressing
need to distribute LLINs before the
rainy season and that the FGON had
a well-developed plan for
distributing LLINs\.
Based on results of the Midterm
Review (MTR) in November 2010,
the FGON requested to undertake the
following changes: refine and merge
the PDO and intermediate indicators
under the Parent Project and AF;
accelerate implementation through
enhanced activities; provide
additional support to strengthen
program management and risk
mitigation measures; and extend the
08/04/2011 N S MS 149\.40 Project closing date by 15 months to
June 30, 2013\. Specific changes to
the PDO indicators included: an
addition of one core mandatory
indicator to measure female
beneficiaries; replacement of
indicator on Breast Feeding with
Vitamin A coverage to better align
with Project activities; and revision
of target from 80% to 15% for
percentage of children under 5
treated with anti-malarial\.
Extension of the closing date by 12
months to June 30, 2014 to provide
sufficient time to complete
06/28/2013 N S S 185\.9
implementation activities that were
delayed due to the INT investigation\.
The restructuring also reallocated
xv
Board ISR Ratings at Amount
Restructuring Approved Restructuring Disbursed at Reason for Restructuring & Key
Date(s) PDO Restructuring Changes Made
DO IP
Change in USD millions
undisbursed funds to the Federal
level from State Subsidiary
Agreements of both underperforming
States and Kano when it decided to
discontinue from the Project\.
Extension of closing date by 9
months to March 31, 2015 to
complete the following: LLIN
distribution in Project States;
Behavior Change Communication
06/23/2014 N S MS 236\.56 (BCC) campaigns; end-of-Project
Lot Quality Assurance Sampling
(LQAS) household survey; and
respond to State-level demand for
implementation supervision\.
I\. Disbursement Profile
xvi
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
1\. The Federal Republic of Nigeria, Africaâs most populous country with a population of 140 million at the
time of project appraisal, represented one fifth of the Sub-Saharan African population\. Its land area of 351,649
square miles was divided administratively into 36 States â which were further subdivided into 774 local
government areas (LGAs) â and one Federal Capital Territory (FCT) located at Abuja\. The population was
equally divided between Muslims and Christians, with Sunni Muslims mainly concentrated in the northern part of
the country while Christians dominated the central and southern parts\.
2\. During the first half of the 2000s, Nigeria benefitted from oil revenues and exhibited an average Gross
Domestic Product (GDP) growth rate of 9\.7%\. With the overall decline in the economy in 2005 outside of the
energy sector, however, inflation rate rose to 15\.6% while the Gross National Income (GNI) per capita hovered at
US$660, making Nigeria one of the poorest countries in Africa\. At the time, Nigeria ranked at the lowest scale of
the UNDP Human Development Index, where it placed 158 out of 177 countries\. Moreover, the country suffered
significantly from the burden of childhood communicable diseases, including malaria\. An analysis of data from
1999 by the Federal Ministry of Health (FMOH) estimated that at least 50% of the population (70 million) had at
least one episode of malaria annually while children aged under 5 years (about 24 million) had 2 to 4 attacks of
malaria annually\. Consequently, nearly 30 percent of Nigerian deaths among children and 11 percent among
pregnant mothers were attributed to malaria\. The northern States experienced some of the highest child mortality
rates in Africa\.
3\. Although the Federal Government of Nigeria (FGON) had recognized malaria as a major public health
problem and used the primary health care system to address it, the growing concern about the increasing burden
of disease and death due to malaria spawned a renewed focus with the adoption of its first National Malaria
Control Policy in 1997\. The launch the following year of Roll Back Malaria (RBM), a multi-partner global
collaboration with a special focus on high transmission areas of Africa that aimed to reduce the burden of malaria
by 2010, generated the support and momentum that helped Nigeria set up its National Malaria Control Program
(NMCP) within the FMOH, to coordinate the control and prevention efforts\. Due to weak malaria control efforts
however, access to effective interventions remained low, particularly among the poor\. In the early 2000s for
example, only 34 percent of febrile children received anti-malaria treatment (chloroquine) and only 17 percent of
pregnant women received Intermittent Preventive Therapy (IPT)\. And despite endemic malaria, the ownership
and use of long-lasting insecticidal nets (LLINs), one of the main preventive interventions against malaria,
remained rare\. Data from the NMCP showed that only 6\.8 percent of households in 2005 owned at least one
Insecticide Treated Net (ITN); while the 2003 Demographic and Health Survey (DHS) in Nigeria found that only
one percent of children under five and only 1\.3 percent of pregnant women slept under an ITN\.
4\. At the time, the malaria response from the FGON centered around the 2001-2005 National Malaria
Strategic Plan (NMSP) that anchored its approach based on the RBM strategy\. The NSMP involved a multi-
pronged intervention that included: i) prompt and effective case management, including the use of artemisinin-
based combination therapies (ACTs) for treatment of uncomplicated malaria cases, with an initial focus on
children under five; ii) IPT of malaria in pregnancy; and iii) integrated vector management (IVM) including the
use of ITNs, indoor residual spraying (IRS), and environmental management\. The Plan incorporated other cross
cutting interventions such as advocacy; communication and social mobilization; effective program management;
monitoring and evaluation (M&E); and partnership and collaboration\.
5\. Despite this comprehensive set of interventions, coverage of key preventive and curative interventions
remained inadequate and well below the targeted 60% level at which major impact of the interventions on malaria
1
burden would be expected\. As such, the likelihood of reducing the prevalences of malaria, child mortality, and
maternal mortality to meet the health-related Millennium Development Goals (MDGs) appeared unlikely\. As a
result, the FGON began engaging various stakeholders (RBM, State Ministries in Nigeria, LGAs, and others) in
developing an accelerated and intensified plan for its 2006-2010 Country Strategic Plan: A Road Map for Impact
on Malaria in Nigeria\. This revised strategy aimed to: i) address national health and development priorities,
including the RBM goals and the MDGs; ii) provide an M&E framework to ensure Nigeria deploys an
appropriately evaluated and documented, evidence-based and cost-effective package of interventions; iii) scale-up
key preventive and curative interventions; and iv) facilitate efficient collaboration among all the partners in the
public sector, the private and commercial industry, and civil society\. At a total cost of US$845 million, the
Strategic Plan supported all 36 States, plus the Federal Capital Territory, to achieve results at national, regional,
and community levels\.
6\. The US$180 million IDA-financed World Bank Malaria Control Booster Project (MCBP) was intended to
be implemented for five years (May 2007 to March 2012) and serve seven States1, which represented more than
25 percent of the countryâs population\. The proposed MCBP complemented the goals of the 2006-2010 Country
Strategic Plan\. In addition, the Project aligned well with Nigeriaâs 2004 National Health Policy that identified
malaria control as a priority health program, and the Presidential Initiative for Accelerated Achievement of the
MDGs that included malaria control as a key component to achieving the health-related MDG\. The MCBP also
supported the FGONâs 2005 National Economic Empowerment and Development Strategy (NEEDS) â Nigeriaâs
Poverty Reduction Strategy (PRS) â that emphasized the development of strategic plans for malaria as a specific
action under the health component of the PRS\. From an economic standpoint, the FGON recognized that the cost
of malaria treatment and lost economic productivity due to malaria constituted a financial burden on the economy
and an obstacle to achieving its PRS\. Lastly, the MCBP followed the lead of the 2005-2009 Country Partnership
Strategy (CPS) that expected to achieve the following results: i) improved service delivery for human
development; ii) improved environment and services for non-oil growth; and iii) improved transparency and
accountability for better governance\.
1\.2 Original Project Development Objectives (PDOs) and Key Indicators
7\. The PDOs were (i) to ensure that the target population will have improved access to, and utilization of, a
well-defined set of Malaria Plus Package interventions (MPP); and (ii) to strengthen Federal and States ability to
manage and oversee delivery of malaria plus interventions\.
8\. The PDO indicators consisted of the following: (i) percentage of children under the age of 5 years with
fever treated with an effective antimalarial within 24 hours from onset of symptoms; (ii) percentage of infants aged
0 to 6 months who were fed only breast milk in the 24 hours preceding the survey; (iii) percentage of children under
the age of 5 years who slept under an ITN the night preceding the survey; (iv) percentage of pregnant women who
received two or more doses of IPT; (v) percentage of pregnant women who slept under an ITN the night preceding
the survey; and (vi) percentage of Participating States regularly using M&E data to manage malaria and/or maternity
and child programs\. The Project Appraisal Document (PAD) listed 19 intermediate results indicators (IRIs) intended
to monitor progress\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
9\. The PDOs remained the same throughout the Project\. Of the six original PDO indicators, one core
indicator based on the Bankâs new mandate was added â the number of female beneficiaries; one was dropped â
the use of M&E data for program management since the target had been consistently met and maintained over
time; and one was replaced â the indicator on the coverage of Vitamin A supplementation replaced the indicator
1
Kano, Jigawa, Gombe, and Bauchi in the North; Akwa Ibom, Rivers, and Anambra in the South\.
2
on Breastfeeding since the original indicator did not align well with activities that supported the Project\. The new
indicator on Vitamin A supplementation does not provide a timeframe, however, making it unclear if the target
was to be achieved on an annual basis or overall through the life of the Project\. Based on the description on the
results achieved as provided in the ISRs, the team understood the target to be achieved through the life of the
Project\. In addition, the end target of 80% for the percentage of children < 5 years of age treated with an anti-
malarial was revised with a more realistic end target of 15% as part of a restructuring in August 2011\. Based on
available evidence at the time, the need to change the target became necessary for the following reasons: i)
comparable attainments in other countries at the time using ACTs was around 7-12% among children under five
years after the drug policy transitioned to ACT use from Sulphamethoxazole-Pyrimethamines (SPs); ii) the global
cost of ACTs remained very high and a barrier since the Affordable Medicines Facility-malaria (AMFm), a
facility for subsidized malaria ACTs, had not yet been established, making the target too ambitious; and iii) the
availability of ACT continued to be a challenge globally\. In addition, the shift in focusing treatment only on
confirmed malaria not only greatly improved the rational for ACT use, but also reduced the actual ACTs needed
as a result of cutting unwarranted treatment of children solely based on the presence of fever\. In the long-term, the
focused treatment and limited use of ACT were anticipated to contribute to reducing artemisinin-resistant malaria
parasites\. At the time, given the 7-12% utilization rate, making the revised target of 15% actually higher than
expected\.
1\.4 Main Beneficiaries
10\. The main beneficiaries from the original Parent Project (PP) were pregnant women and children < five
years of age within the seven Project States, with significant spillover effects in improvements in maternal and
child health due to the comprehensive nature of the MPP\. Based on a revised malaria strategy in 2008 that
switched the focus to universal coverage, the main beneficiaries considered at risk shifted from children < 5 and
pregnant women to the entire population\.
1\.5 Original Components (as approved)
11\. Component 1: Strengthening leadership and coordination capacity of the federal government to
control malaria (Estimated cost at appraisal: US$86\.5 million; International Development Association
(IDA) financing: US$86\.5 million)\. To support the ability of FMOH staff to undertake these essential functions,
the Project will support: i) strengthening government to acquire and distribute commodities2 to combat malaria,
including 2 LLINs per household in 90% of population in Project States, ACT for children < 5 years, minimum of
2 IPTs for pregnant women during the 2nd and 3rd trimesters, and materials for IRS; ii) improving M&E for
evidence-based management; and iii) strengthening coordination and oversight capacity of NMCP\.
12\. Component 2: Strengthening the capacity of SMOHs and LGAs to deliver MPP interventions at
state and community levels in Project States (Estimated cost at appraisal: US$71\.5 million; IDA financing:
US$71\.5 million)\. The Project will expand the capacity of the SMOHs and the LGAs in the Project States, so as
to rapidly expand MPP services at both the facility and the community levels\. The Project will provide
appropriately tailored support to the States to improve their planning, implementation, coordination, and
supervision capacities\. The MPP services include the following: i) increasing access to, and utilization of, malaria
preventive measures including MPPs, targeted use of IRS, IVM and distribution of LLINs; ii) increasing access
to, and utilization of, effective diagnostic treatment services; iii) strengthening community mobilization and
communication for behavior change; iv) strengthening partnerships for resource mobilization and implementation;
v) improving M&E for state evidence-based management; and vi) enhancing capacity at State level for Project
coordination and oversight\.
2
Cost of commodities included among others US$14 million for LLINs, US$6\.1 million for ACT, US$250,000 for SP for IPT, and US$1\.2 million IRS\.
3
13\. In addition to the allocation set aside for Components 1 and 2, an additional unallocated amount of
US$22 million was set aside for contingencies\. In total, the Program Cost was US$180 million\.
1\.6 Revised Components
14\. While no components were revised, Additional Financing (AF) in 2009 added four enhanced,
supplemental components to be undertaken in concert with the existing components from the original Project (see
June 16, 2009 Restructuring in next section)
1\.7 Other significant changes
15\. Amendment to the Financing Agreement (Approved by the Country Director (CD) on 11/19/2007)\.
In response to the FGONâs request on 10/09/2007, the Financing Agreement (FA) was amended following a
dispute raised by the States regarding the procurement of Project Implementation Facilitators (PIFs) as a condition
of funds disbursement to the States\. The PIFs were intended to build capacity in specific areas of need and
expedite project implementation\. The States contended that a) the capacity assessment carried out by a joint
FMOH and World Bank team in January 2007 as the basis for establishing the need for hiring PIFs was flawed, b)
significant capacities had been built in several States since the assessment through the assistance provided by
other development partners, and c) many of the identified capacity gaps could be remedied through an infusion of
Project funds\. The States therefore resisted the hiring of PIFs, which blocked disbursement of funds needed to
cover for the operational expenses, significantly hampering implementation\. As a remedy, States were given 6
months to demonstrate their capacity to implement the Project without PIF assistance\. In addition, a joint team
carried out a second capacity assessment in early-2008\. At the end, the second assessment found that all States
required PIF assistance in the areas of logistics & supply management and in M&E\. Changes to Part B of Section
IV under Section 2 of the FA included:
ï Exempting the âOperating Costsâ category from the overall disbursement condition, thus allowing the States
to access Project funds to finance initial 6-month operating expenditures;
ï Indicating that only States deemed to be in need of PIFs will be subject to the disbursement conditions
specified in the FA, while others can start drawing without restriction on the amounts allocated to each
participating State\.
16\. Level II restructuring to provide AF, add supplemental components to support expanded activities,
and add IRIs (Approved by the CD on June 16, 2009)\. In response to the FGONâs request, the CD approved
US$100 million to scale up the MCBP for three years through the original closing date of the PP on March 31,
2012\. The need for the AF resulted from program policy changes in 2008 that entailed scaling up LLIN
distribution to universal access levels by 2010, considered a more optimal approach to malaria control\. This
meant distributing 4\.1 million additional LLINs to Project States beyond the 8\.3 million LLINs originally
planned\. The AF was to also support the costs associated with expanded, supplemental activities focused on
diagnosis, logistics, and community mobilization, and complimented by an impact evaluation study to assess the
effect of scaled up of project-supported activities\. An unallocated amount of US$20\.1 million set aside for
contingencies\. The AF retained the original PDOs, four of the six original PDO Indicators\. Sixteen new IRIs were
added to the RF to assess the progress of the supplemental activities (see Annex 10)\.
ï Component A: Health Systems Strengthening (HSS) (Estimated cost at restructuring US$25\.4 million)\.
To enhance activities under the original component 1 by supporting i) scale up Malaria Laboratory Diagnosis
and Improving Quality Assurance for Malaria Diagnosis (US$17\.0 million), ii) monitoring of drug and
insecticide resistance (US$5\.75 million) at sentinel sites at both Federal and State level, and iii) Supply Chain
Management (SCM) and Logistic Management Information System (LMIS) that will add malaria to ongoing
routine logistics activities by the FMOH for HIV and tuberculosis (TB, US$2\.65 million)\.
ï Component B: Community Systems Strengthening (CSS) (Estimated cost at restructuring US$7\.0
million)\. To enhance activities under the original component 2 by supporting pilot activities at the community
4
level: i) Health Service Delivery through Community Directed Intervention (CDI) (US$2\.0 million); ii)
Strengthening Health Service Delivery through the Private Sector (US$2\.0 million); and iii) Increasing
Demand for Health Services by intensifying Behavior Change Communication (BCC), including engaging
religious leaders of all faiths from the Nigerian Inter-Faith Action Association (NIFAA) to deliver malaria
messages and materials (US$3\.0 million)\. An impact evaluation (IE) was to be conducted to provide a formal
evaluation on the impact of the pilot interventions\.
ï Component C: Communications for advocacy, program implementation, and results (Estimated cost at
restructuring US$10\.0 million)\. To enhance activities under the original component 2 by strengthening and
implementing national communications strategy to ensure effective advocacy, strengthened program
implementation, and an emphasis on results\.
ï Component D: Commodity Procurement (Estimated cost at restructuring US$37\.5 million)\. To enhance
activities under the original component 1 by supporting the procurement of ACTs, SPs, and LLINs in view of
the universal coverage strategy\.
17\. Level II restructuring to reallocate proceeds of the AF Credit and revise the RF (Approved by the
CD on July 26, 2011)\. In response to the FGONâs request on 1/6/2011, the CD approved to reallocate unused AF
funds in the amount of US$22\.30 million to finance the cost of distributing 30 million undelivered LLINs to 22
non-Project states\. The undelivered LLINs were secured through the FGON and RBM partners, including the
GFATM under the universal coverage strategy\. The justification for the reallocation entailed strengthening the
federal capacity to manage universal coverage of LLINs that ensured that gains made in other States (including
the Project States) were not brought down by lack of progress in adjacent States\. Under the restructuring, the RF
was also revised to include an additional IRI that measured the number of nets distributed in these additional
States (second Annex 10)\. The Bank agreed to proceed with the restructuring before the more major restructuring
planned for one month later given the pressing need to get the LLINs distributed before the upcoming rainy
season and the well-developed work plan by the FGON to distribute LLINs\. The Bank made a strategic decision
to undertake the restructuring prior to the political transition that were to happen in the aftermath of the general
election in Nigeria; it was also the Bankâs response as a development partner to ongoing global malaria policy
changes\.
18\. Level II restructuring to revise the Projectâs RF, introduce enhanced implementation practices, and
extend the closing date (Approved by the CD on Aug 4, 2011)\. On 3/3/11, the FGON requested for the
restructuring based on the results of the Midterm Review (MTR) completed in November 2010\. According to the
MTR, the Project only progressed modestly in implementing treatment measures and HSS, particularly in the
areas of procurement, supply chain management, M&E, and communications\. The restructuring, which took place
after the newly elected government took office, aimed to increase efficiencies and involved the following
changes:
ï Refine and merge the PDO and intermediate indicators of the PP and the AF to achieve a comprehensive,
harmonized result framework (see Annex 10)\.
ï Enhance how the following activities were implemented: (i) ACT and IPT utilization; (ii) ITN use; (iii) IRS
coverage; and (iv) delivery of MPP interventions through Integrated Neonatal, Maternal and Child Health
(INMCH) weeks\.
ï Provide three additional consultants to the NMCP to help support and strengthen program management,
procurement, and communication activities\.
ï Extend the Project closing date to June 30, 2013 to ensure full implementation of activities and demonstration
of impact\.
19\. The Integrity Vice Presidency (INT) findings in 2011 resulted in changes to internal control
management and procurement oversight\. In February 2011, INT as the World Bankâs independent body that
investigates allegations of fraud and corruption noted serious financial anomalies across the Federal and State
levels, particularly in Akwa Ibom and Rivers\. The findings included numerous irregularities in the training
5
programs and procurement of low-value goods (mainly national procurement) that did not require review and
approval from the Bank\. The INT report also highlighted system weaknesses, noncompliance with Bank
procedures, and gaps in due diligence in the use of funds earmarked for program implementation\. In response, the
Project ring fenced components exposed to abuse through e-payment of all transactions and prior review of all
procurement packages\. The Bank increased oversight and supervision of Project\. During this time, the Bank
maintained strategic engagement with relevant ministries at the Federal and State levels\. The scope of work
within high-risk units was reduced until adequate staff replacements were in place and the capacity ensured\.
Instituting these measures delayed Project activities at the Federal level and in two States, especially for
procurement of antimicrobial commodities which were critical to overall service delivery\.
20\. Kano State terminates its Credit with the Bank\. On October 2012, Kano State elected to discontinue
its participation by opting out of the Project and terminating its access to the IDA Credit\. According to the
Governor of Kano, the State had enough resources to fund its program, and as such not willing to continue with
the World Bank support\. At the time, the Kano State Government made a decision to withdraw from a portfolio
wide engagement with the Bank, affecting other ongoing Projects such as the HIV/AIDS Program Development
Project II and the National Urban Water Sector Reform Project\. Actions undertaken to close Kanoâs malaria
engagement included among other things (i) refunding ineligible expenditures that accrued under the Project
(USD $11,846\.52) according to independent reviews by the Bank INT and Office of the Accountant General of
the FGON and (ii) refunding the balance in their designated account into the Bankâs account\.
21\. Level II restructuring to extend the Project closing date and to adjust the Projectâs legal document
(Approved by the Regional Vice Presidency (RVP) on June 28, 2013)\. The FGONâs request to restructure the
Project followed a proposal by the joint Project Steering Committee (PSC) on October 22, 2012\. The restructuring
sought i) a 12-month extension of the Project closing date from June 30, 2013 to June 30, 2014 and ii) a re-
allocation of undisbursed funds to the Federal level from State Subsidiary Agreements of both underperforming
States and Kano which at the time had just decided to discontinue from the Project and terminate its credit with
the Bank\. The closing date extension intended to provide the Project sufficient time to complete the activities that
had stalled for 8 months in the aftermath of the 2010 INT investigations\. The reallocation of resources, on the
other hand, was anticipated to bolster the economies of scale for procuring the remaining Project commodities3, as
well as to assist in fully utilizing the Project funds\. This was meant to increase the efficiency of the Projectâs
implementation\. Funds against the PP had been fully disbursed (US$180 million), while only 5\.9% of the US$100
million AF had been disbursed\. Because the 12-month extension resulted in a cumulative extension of 27 months
beyond the original Project closing date, the request required RVP clearance\.
22\. Level II restructuring to extend the closing date (Approved by the RVP on June 23, 2014)\. The Bank
approved the FGONâs request to extend the closing date of the Credit by nine months to March 31, 2105\. The
extension provided additional time to complete the following: i) LLIN distribution campaign in the six Project
States; ii) BCC campaign for demand-side interventions; iii) end stage evaluation of the project; and iv) increased
State level demand for implementation supervision\. Ratings at the time were S for Progress towards PDO and MS
for IP\. No change in PDO and RF\. Cumulative disbursement at the time was 99% against the original credit and
57% against the AF\. Given that the restructuring resulted in extending the closing date 36 months beyond the
original closing date, RVP approval was required\.
2\. Key Factors Affecting Implementation and Outcomes
3The commodities included i) 6\.75 million nets that helped partially cover the gap in LLINs that emerged as a result of the population
growth and decay of LLINs over time since the 2009/2010 distribution campaign; ii) IRS in all States by 2014, with the aim to cover 85%
of households from two LGAs per State; iii) 6\.2 million additional ACTs to ensure the supply chain pipelines in the medium term beyond
June 2013; and iv) a final round of Lot Quality Assurance Sampling (LQAS) survey in the first quarter of 2014\.
6
2\.1 Project Preparation, Design and Quality at Entry
23\. Soundness of background analysis: Throughout the preparation stage, the Bank worked in close
collaboration with development partners and technical agencies like the RBM Partnership, WHO, Department for
International Development (DFID), and United Nations Children's Emergency Fund (UNICEF)\. The design of the
operation took into account a program strategy that WHO recommended as effective and proven for the control of
malaria and was being used successfully in other countries\. In doing so, the analysis took into account lessons
learned from international and regional experiences, such as the need for a strong leadership and commitment at
all levels of government; a targeted technical approach using a package of effective tools to control malaria,
combining effective case management with preventive measures; a strong results-based M&E system to drive
decision-making and implementation; a partnership with private sector and community-based organizations to
achieve large-scale, sustainable impact; and decentralized implementation and control of finances to promote
program ownership by local governments, with the national malaria control programs retaining leadership in
specific aspects of implementation, such as procurement of essential commodities\.
24\. From a country specific perspective, the Project took an approach that complemented lessons learned
from Nigeriaâs 2001-2005 Country Strategic Plan, such as strengthening program management at all levels;
developing the national M&E capacity; and building the capacity of health staff as well as that of community-
based health workers\. In addition, the Bank incorporated key elements from previous and ongoing projects4 in
Nigeria, including the importance of i) strengthening program ownership and commitment at all levels, ii)
developing greater engagement with States, stakeholders, and partners, iii) linking annual work programs and
resources with targets for results, and iv) enhancing institutional capacity particularly in the procurement of
commodities\.
25\. The PAD highlighted two risks rated as substantial\. The first related to Nigeriaâs institutional and
implementation capacity constraints that could potentially hinder Project implementation\. As a mitigation
measure, the Bank team proposed to finance capacity strengthening through training, contracting with PIFs, and
resource mobilization for sustained Program development\. The second substantial risk was potential delays in
procurement\. The Bank team anticipated that incorporating direct payment and early tendering would respond to
this risk of non-availability\. No Quality Enhancement Review (QER) was conducted during the preparation stage\.
26\. Assessment of the Project Design: Based on these lessons, the Bank developed a Project that took
advantage of the existing framework and infrastructure for malaria control adopted by the NMCP, through its
collaboration with the RBM Partnership; this arrangement complemented and harnessed the funding and activities
of other partners, namely WHOâs involvement in case management, UNICEFâs work on developing the national
strategy for ITN, M&E, and support for coordination and communication across agencies and commercial
stakeholders, United States Agency for International Developmentâs (USAIDâs) initiative on developing
guidelines for malaria in pregnancy, DFID and GFATMâs contribution to the RBM Partnership, and the Bill and
Melinda Gates Foundation (BMGF)\. Moreover, the design was visionary in employing a Malaria Plus approach
that situated malaria within the overall maternal and child health landscape, when most malaria projects were
designed as single disease vertical projects\. This clearly pushed the Bank and the government at both levels to
engage broadly and seek ways to strengthen the delivery of a comprehensive package of services, moving beyond
the immediate boundaries of just malaria\. The Project adopted a phased approach by focusing only on seven
States based on limited IDA project financing and previous experience showing targeting all or a large number of
States slowed implementation\. The selection of these States came about as a result of a consultative process that
4Lessons are from Bank-financed projects as well as from projects financed by other donors\. The Bank Team worked closely with partners
managing the GFATM Project, DFID, Community Participation and Action for the Social Sector (COMPASS) Project by USAID, and
others\.
7
considered a list of criteria\.5 This was a sensible approach given that Project funds were not sufficient nor meant
to support the Governmentâs strategy nationwide, even though malaria endemic persisted over the entire country
albeit at varying degrees\. This synergy helped bring to bear everyoneâs contribution towards maximizing the
malaria control effort in Nigeria\. Other design alternatives were considered but rejected\.
27\. The 5-year timeframe for the original credit (May 2007 to March 2012) was reasonable given the
countryâs own multi-year National Strategic Plan 2006-2010, whose framework guided the design of the Project\.
Of the original US$180 million IDA Credit, US$22 million was designated as contingency funds, while US$158
million was allocated to the Project components\. Specifically, US$86\.5 million was designated for Component 1
of the Project to strengthen the capacity at the Federal level by enhancing procurement, M&E, and oversight
functions\. Under Component 2, $71\.5 million was designated to strengthen the health system to improve delivery
of the MPP in the target States, including increased access, utilization, implementation of preventive and
treatment services\. The allocation appeared justified given that both levels required additional boosts and funding
to strengthen capacity and undertake implementation\. The MCBP intended to increase coverage of malaria-
specific interventions with effective service delivery through the FMOHs and State Ministries of Health
(SMOHs), broader health-system development, and capacity building across multiple sectors\. The Project
envisioned supporting the country-led programs, including the NMCP with an emphasis on outcomes, flexibility
in approaches, and partnerships with civil society organizations and partner agencies\. It must be noted that the
Projectâs comprehensive and coordinated effort to control Malaria was the first of its kind in the country\.
28\. The project established PIUs at the Federal and State levels with staff seconded from various posts within
the Ministry of Health\. However, certain staff positions were specifically recruited to meet specific needs,
including PIFs who helped develop procedures and resource mobilization for sustained program development and
implementation at the State level\. Using existing structures and personnel helped to quickly establish the Project
infrastructure\. The structure of the Federal and State were well defined and their responsibilities outlined in the
main and subsidiary agreements on the basis that capacity strengthening for both the Federal and State PIUs
would be created to facilitate program supervision, M&E, procurement, and policy at the Federal level and the
implementation of activities at the States\. The approach was innovative due to a design focused on the
strengthening of State PIUs to function and implement activities with direct financing through subsidiary
agreements, without solely relying on the Federal PIU as in past projects\. At the Federal level, the design called
for establishing a PSC responsible for overseeing the Project\. The PSC was chaired by the Minister of Health and
consisted of representation from FMOH, Federal Ministry of Finance (FMOF), States and LGAs, other
development partners, Faith-based Organizations (FBOs), and the private sector\. In addition, funds were made
available to finance contracts for an M&E Agent to assist the NMCP develop an information system that
measured output indicators to track Project activities, quality of services, and their outcomes\. The M&E Agent
was also to provide support in developing a management cycle for using data routinely for decision-making\. In
addition, a contracted Federal level Logistic Support Specialist would assist States with tracking their own
allotments and consumption of commodities\. A Social Marketing Agent and Procurement Specialist were also
hired to assist with Project implementation\. To mitigate the substantial risk in potential delays in procurement, the
Project utilized direct payment and early tendering\.
29\. The project facilitated CDI training in the States, with CDI interventions being implemented in all (but
Akwa Ibom) States through NIFAA, which paired an imam with a pastor as members of Project Teams in each
State\. Consistent messages about malaria were announced in Mosques and Churches, which helped improve
interpersonal BCC at the community level\. As part of the CSS of innovative approaches introduced in the AF, the
5 Selection criteria: i) mortality rate among under-fives exceeded 260/1000; ii) access to effective primary health care services was poor to
non-existent (based on access within 5 kilometers; iii) access to secondary facilities was very poor or non-existent (based on required travel
time exceeding half a day); iv) the States demonstrated commitment to implement large scale campaigns to cut child mortality and/or a
comprehensive malaria booster program; v) documented Plasmodium Falciparum resistance to chloroquine and SP (the first line treatments
in use) exceeded 85 percent; vi) an implementable State-Level RBM Strategic Plan for malaria control (based on federal guidelines and
internationally recommended best practices) existed; and vii) no other significant donor aid for malaria control was currently available\.
8
project conducted an Impact Evaluation in Gombe and Anambra designed to look at the effectiveness, jointly and
in isolation, of CDI and Patent Medicine Vendor (PMV) interventions on key outcomes such as sleeping under
bed nets, prompt access to ACTs for treatment, and incidence of malaria\. Traditionally, CDIs and PMVs
represented significant and popular avenues in Nigeria for managing malaria\. CDIs for example played a role in
dispensing malaria commodities by giving community members the authority to decide on options for distribution
mechanism, timing of distribution, and selection of volunteer community directed distributors (CDDs)\. PMVs on
the other hand usually appeared as the first choice in health care in the country and served as the primary sources
of orthodox drugs for both rural and urban populations, especially the poor\. In addition to selling drugs, PMVs
also functioned as a major source of advice about illness and drug therapy\. Results from the IE were expected to
inform the FMOH and States how well these interventions worked on improving health outcomes\.
2\.2 Implementation
30\. A QER of the MCBPâs implementation stage was held on October 15, 2009 as part of the overall effort
by the Health, Nutrition, and Population in Africa Unit (now under the Health, Nutrition and Population Global
Practice) to strengthen portfolio performance of ongoing projects by identifying key achievements, systemic
challenges and constraints, lessons learned, and strategic options\. The rationale for including the MCBP in the
review revolved around Nigeriaâs slow progress in improving its health indices during the preceding 10 years and
the size of the Nigerian health portfolio, which was about 1/3 of the entire health portfolio of the African region\.
The discussion focused on three broad categories as described in Table 1\.
Table 1\. QER Discussion Points and Action Plan
Discussion Categories Action plan moving forward
1\. Institutional Arrangement: i) Progress of i) Disbursement is on course; ii) NMCP planned an orientation
disbursement; ii) delay in engaging PIFs; and iii) delay program for the PIFs within the month; iii) Bank provided
in participation of FBO in implementation\. $2million in project support to NIFAA to establish its secretariat
and run its operation for the following two years\.
2\. Implementation: i) Support for capacity building to i) Hired KPMG tax and audit firm to assist with capacity
PIUs were needed at Federal and State levels; ii) building; ii) FGON and State level took ownership of malaria
project team at Federal level visited States at great control through various documents and having malaria control
frequency and State levels came to Abuja for several as a budget line; iii) continue discussion on performance
meetings offering opportunity for interaction; and iii) incentive\.
incentives to PIU members not part of Project design
due to MOFâs concern for sustainability\.
3\. M&E: i) Difference in RF b/w PP and AF given that i) Project needs to develop table of planned surveys until the end
the AF has specific indicators for the health and of project; ii) Health Facility Assessment (HFA) 2009 would
community systems strengthening and community serve as a baseline upon which the HSS component of AF
components; ii) delay in reporting results of 2006 would be evaluated; iii) hire 3rd party firms to ensure
baseline due to lack of NMCP capacity to collate and independence of data; iv) use two non-participating states as
analyze the data, which was eventually contracted out\. control for the Lot Quality Assurance Sampling (LQAS)
household survey and HFA; v) PIFs to assist in routine data
collection and analysis; vi) for IE, the Project should be wary of
attribution but emphasize contribution\. However, having
comparison groups would be helpful in establishing attribution\.
31\. Mid-Term Review (MTR)\. At the MTR, which was conducted on 10/18/2010-11/12/2010, the Project
was rated as Satisfactory for its progress in achieving the PDOs\. Despite making headway in implementing
operationally vertical program areas that were highly visible, such as the rolling out bed nets, the Project was slow
in areas that required integration into the ongoing program and/or dependent upon sustained efforts of the entire
machinery, such as procurement, supply chain management, M&E, and communications\. The six main challenges
addressed in the MTR with their mitigation measure are described below\.
9
Table 2\. MTR findings â challenges and mitigation measures
Challenges Mitigation measures
1\. Delayed distribution of LLINs\. a) Finalized contact with NIFFA; b) ensured the CDIs were fully
functional; c) revitalize national BCC campaign\.
2\. Slow progress in improving the delivery of HSS a) Finalize contract with Society for Family Health (SFH) to
component\. spear head increased private access to ACTs through PMV; b)
improve availability of ACTs and Rapid Diagnostic Tests
(RDTs) and IEC/BCC for increased uptake of the service at
health facilities\.
3\. The Malaria Plus Interventions\. a)\. Use the National Neonatal Maternal Child Health weeks as
part for a rapid catch process through the leadership of Nigeriaâs
National Primary Health Care Development Agency\.
4\. Slow pace of disbursement\. a) Improve procurement TA; b) improve the level of technical
assistance in the NMCP to ensure project designated actions are
conducted in a timely manner; c) track the PIFs performance\.
5\. Ambiguity of certain intermediate outcome a) Recruit a firm to carry out follow-up HFA comparison with
indicators that affected their measurability and lack of the baseline HFA; b) use Health Management Information
unified RF that both reflected PP and AF indicators\. System (HMIS) data to measure progress of treatment activities
in the public sector treatment since 2006; c) recruit firm to
conduct next 2 LQAS and Maternal, Newborn and Child Health
(MNCH) week assessments; and d) streamline the RF,
indicators, and targets to ease collection of performance data\.
6\. Limited impact on PDOs given the delays in starting The mission agreed to restructure the program and seek
up the project, the low fund utilization to date, and the management approval on 03/03/11 for a project extension\.
long lead-time required for start-up of crucial
interventions such as CDI, PMV, and HSS measures\.
32\. The proposed changes were formally incorporated in the Project through a restructuring that was
requested by the FGON on 03/03/11 and approved by the Bank on 08/04/11\.
33\. Delay in contracting PIFs\. At the State level, in addition to the signing of the Subsidiary Credit
Agreement (SCA), a condition of disbursement was the procurement of State level PIFs\. However, there had been
considerable resistance initially from the Project States to the hiring of the PIFs\. A second capacity assessment of
the seven Project States undertaken by a joint supervision missions with the FMOF and FMOH in June 2008
found that all 7 States required the assistance of PIFs in the areas of logistics & supply management and M&E\.
Based on this assessment, the procurement of the PIFs were initiated in all seven States, thereby fulfilling the
disbursement condition specified in the FA\. However, the initial contention from the States resulted in several
months of delay and transaction cost of undertaking a Project restructuring\. It took three years before PIFs at all
States were hired and in place to provide much needed implementation support\. As evidence of the need for PIF
support, capacity at the States improved drastically upon the hiring of PIFs including undertaking i) training of
State level trainers in HMIS and M&E tools, ii) training for State level trainers in case management and
diagnosis, and iii) recruitment of CDI focal points\.
34\. Program Policy Change\. As part of the 2008 program policy change for which AF had been requested,
and in keeping with the global move towards 100% coverage of households with LLINs as the optimal strategy
for malaria control, a detailed joint plan of action was agreed to by the government and the partners to saturate the
country with LLINs, including the Project States\. The strategy involved utilizing a comprehensive and effective
set of interventions as recommended by the World Health Organization (WHO) for malaria control and as agreed
to by the FGON to ensure attainment of universal coverage by 2010\. This commitment meant implementing a
series of stand-alone net distribution campaigns conducted across the country in 2009-10 and distributing over 60
million nets within a two-year period, a scale up of a magnitude not witnessed anywhere else in the world\. The
shift in policy to universal coverage resulted in a 4\.1 million gap in LLINs in Project States, which brought the
total Bank procurement needs to 12\.4 million LLINs\. With Bank support, all seven States received their original
10
share of the 8\.3 million LLINs\. The additional 4\.1 million LLINs required for filling the gap arrived by January
2010\. As part of the FGONâs strategy to provide LLINs to all households in Nigeria, 63 million LLINs had been
secured through the FGON and RBM partners, including the GFATM\. However, due to a funding gap of
US$22\.30 million required for the operating costs to distribute the LLINs, 30 million LLINs had not been
delivered to 22 non-Project States\.
35\. Volatility in ratings for progress towards achievement of PDOs and implementation progress
during the last year of the Project\. Between April 2014 and March 2015, the ISR rating for progress towards
achieving the PDOs moved from S to MU to MS, while the rating for implementation progress moved from MS
to MU to MS\. Progress towards the achieving the PDOs was downgraded in April as a reflection of survey results
from the 2013 DHS that showed a reduction in both coverage and utilization of malaria interventions in both
Project States and non-Project States\. While several reasons might have explained the results6, the Project team
felt that the next nine months of Project had to intensify the BCC campaigns to improve availability of LLIN,
ACTs and RDTs in the Project States in order to reach indicator targets by the end of the Project\. AS for the
implementation progress, the downgrade reflected the delay in the implementation of LLIN redistribution, which
eventually affected the PDO achievement\. Based on the outstanding progress during the last nine months of
implementation, both in terms of outcomes and intensity, both PDO achievement and implementation progress
rating were upgraded to MS\. Result of the remarkable progress was evident in the results of the 2015 LQAS, in
which all PDOs targets were surpassed\.
2\.3 M&E Design, Implementation and Utilization
36\. M&E design\. When the Project started, the M&E unit of the NMCP had just been established and
required strengthening\. Moreover, data received through the recurrent health information system were incomplete
and exhibited substantial reporting delays and gaps\. Medical records in health facilities were also incomplete and
unreliable\. The Project design focused on the need for systematic and regular M&E aggregate data from the
States, through a decentralized M&E system, to assess the status of the overall process and introduce program and
policy changes as needed\. The Projectâs M&E plan, which came about after extensive consultations with the
NMCP and RBM partners, included four components:
ï LMIS to track all project commodities, such as ITN and ACT from their point of entry into Nigeria through to
the decentralized distribution and storage points in the Sates and LGAs\.
ï Rapid population-based survey â conducted at baseline, mid-Project cycle, and end-of-Project using a unique
LQAS methodology pioneered through the Project â to track coverage and use of ACT, ITN, and IRS\. Two
control States would be included in the assessment to help determine exogenous influences on key program
indicators\.
ï HFA â conducted at baseline and end-of-Project â in Project States and two control States to determine the
quality of care at a sample of health facilities and PMVs by assessing human, physical, and material inputs
available at service delivery points\.
ï Special Studies will be carried out as a means of enhancing rapid M&E approaches\.
6 Reasons for regression on achieving the PDOs: 1) LLIN life span is at least three years\. Since the initial distribution in the Project States
was done in 2009/2010, the current LLINs available at the time were less than half of the original numbers covered due to both degradation
and attrition, impacting coverage and utilization; 2) The timing in the implementation of the DHS survey was not optimal to malaria
transmission and hence the populationâs perceived risk was low\. This would led to a reduction in utilization of both prevention and
treatment interventions; 3) The sampling methodology may have under sampled high risk population most likely to use malaria
interventions; 4) The indicator on utilization of ACT by children under five was also impacted by a change in policy that required ACT use
given to those that had positive confirmation of malaria infection as shown by Rapid Diagnostic Tests and not merely the presence of fever
as was being done at the time of project development\. These changes in indicators as a result of global consent will impact greatly on the
end stage result\.
11
37\. At the State level, PIFs were to be brought in to i) support data collection teams comprised of the SMOHs
and the private sector, ii) help conduct HFAs that would be used to determine the quality of care of health
facilities, and iii) strengthen the M&E by emphasizing the use of data for monitoring and evaluating
implementation strategies and process indicators\. At the federal level, a contracted M&E Agent was to assist the
M&E Unit of the NMCP to strengthen its capacity to aggregate, analyze, and report to decision makers in an
accessible, rapidly usable form\. To ensure coordination between the Federal Government and the States, an
annual Forum for Health Results would take place that brought together both levels of government in order to
review M&E data, identify priorities, and develop action plans to overcome challenges\. Given that the RBM
approach fostered an outcome-driven program within the FMOH before the Project, the M&E design for the
MCBP promoted a more pro-active and responsive engagement among partners to combat malaria\.
38\. The Project had six PDO indicators, of which five were focused on monitoring the progress in delivering
MPP interventions in Project States under PDO 1\. These five PDO indicators adequately measured progress in
providing relevant services to the most vulnerable groups that include children < 5 years of age and pregnant
women\. On the other hand, the only PDO indicator designed to track the progress of strengthened ability at the
Federal and State level to manage and oversee MPP delivery as described under PDO 2 was one that monitored
the use of M&E data by Project States to prepare annual work plans\. This however was dropped as part of the AF
Restructuring in 2009 based on the argument that the indicator met its target consistently and thus added limited
value\. For the remainder of the Project, no PDO indicator was used to directly assess the achievement of PDO II,
while four of the fourteen IRIs were used to monitor PDO II\. Given the number of surveys that the Project was
anticipated to conduct, as well as the delay in conducting the mid-cycle LQAS survey in Q2 of 2009, it would
have been worthwhile to keep the original PDO II indicator to track sustained levels of commitment by the
Federal and States levels to maintain M&E capacity\. In addition, other indicators could have been incorporated
that assessed the capacity at both levels to manage MPP interventions\. With a significant amount of funding set
aside for large commodity purchases and small-scale activities, the RF could have included an indicator to assess
logistics or fiduciary oversight related to commodities purchased\. This would have been reasonable given that the
PAD identified weak procurement in Nigeria as a significant risk\. Having had such an indicator might have
signaled financial irregularities in the Project well in advance of the GFATM report that exposed the problem\.
Overall, the set of PDO indicators were heavily weighted towards monitoring PDO I\.
39\. M&E implementation\. The RF underwent three modifications to account for changes in the Projectâs
focus\. For example, new IRIs were added to the RF to reflect new activities introduced during the project
implementation stage (for more detailed description, refer to Section 1\.7 Other Significant Changes under relevant
Restructuring and to Annex 10)\. As part of the AF in 2009, 16 new IRIs were introduced to monitor progress of
additional activities\. In addition, a restructuring in 2011 introduced a new IRI that tracked net distribution in 22
States outside the seven Project States\. These changes resulted in having to track 36 IRIs, many of which had
inherent problems of definition and effective tracking\. Through another restructuring in the same year (2011), the
Project dropped 26 and revised 7 IRIs that posed measurement challenges, while adding 4 others that ensured
efficient and effective tracking and enhanced the Projectâs capacity to monitor implementation progress\. Indicator
targets were adjusted to better estimate the expected contribution of the Bank credit in the Project States\. The final
Results Framework (RF) included six PDO indicators and 14 IRIs (Annex 10)\.
40\. As part of ongoing discussions to coordinate overall effort within the Project and the country in general,
all partners agreed on a common set of M&E instruments â including using LQAS for routine monitoring, the
HFA, LMIS, HMIS, and IE\. This agreement ensured that the core of implementation of the national program
focused directly on results\.
41\. In addition to routine information systems being weak, ITN use rates and early treatment rates were
household level behaviors that were best measured through household surveys\. The fact that 70% of fevers were
treated in the private sector also argued against relying on public sector information systems\. Thus, the Project
had to rely on surveys to track progress\. The NMCP with Bank support undertook a baseline LQAS household
12
survey in 2006 to establish measures of key indicators set by the Project\. However, changes in the NMCP
leadership, including the Project Coordinator, resulted in some disruption of planned activities\. Thus, completing
the planned HFA that would have served as baseline for the assessing progress made on HSS interventions was
delayed by several months\. Conducting the mid-cycle LQAS was also delayed (planned for Q2 2009 and deferred
to Q1 2010) at the request of the NMCP and partners, recognizing i) delays in the net distribution campaign that
would have affected findings, ii) the onset of the rainy season, and iii) difficulties in finding an appropriate
consultant to undertake the exercise\. A new Project Coordinator who was appointed in December 2009 however
helped move things forward and catch up for lost time\. By 2010, signs of the effort to develop the M&E unit,
along with a core group of M&E experts, became evident as the country gained the capacity to adequately
monitor the Projectâs progress and to conduct its own surveys such as the LQAS, HFA, and the Malaria Indicator
Survey (MIS)\. Key outputs that followed included the LQAS in 2010 and HFA in 2010 to measure mid-cycle
progress\. The end-of-Project LQAS and HFA were completed in 2015\. The baseline, mid-cycle, and end-of-
Project surveys all used the Comparison States (Kaduna and Delta) to isolate impact of Project interventions on
Project States\.
42\. The Project facilitated in developing tools that harmonized Procurement and Supply Management (PSM)
and M&E management, and provided training in both service management and logistics management information
systems\. This produced a robust LMIS design that addressed supply chain management gaps for drugs and other
commodities\. This has impacted greatly on collection of malaria data and also routine collection of malaria
information from the LGA, to the State and to the Federal level\.
43\. Utilization\. The Project aided in strengthening the HMIS and in formalizing tools for quarterly reporting
on community distribution and usage; services statistics from the health facilities and management issues relating
to reporting\. By the end of the project, the system put in place provided quality data that tracked and reported
regularly on available commodities and impact on service delivery\. This, along with the LQAS, ensured that any
potential leakage of nets was minimized, and the impact on the beneficiaries was maximized\.
44\. Although none of the States were using M&E data for managing malaria programs when the Project
began, all States were using M&E data by 2015 to plan for their malaria interventions and were submitting M&E
data on a quarterly basis to the Federal level\. Both the Federal and State level were strengthened tremendously as
robust M&E units were established that could support monitoring of implementation and real time reporting of
malaria data\. Moreover, the core group of M&E experts led country malaria-based surveys such as the LQAS and
MIS, and guided the development of modules on malaria for DHS\. The NMCP has taken the lead for the
supervision and monitoring functions of all program interventions\.
45\. Findings from the LQAS surveys were used during annual work planning sessions to restructure and
improve the projects as well as to set targets for the following year\. In between the LQAS, results from the
Multiple Indicator Cluster Survey (MICS), DHS, and MIS Surveys were used throughout the Project to track
progress of the Project\. These were helpful in assessing trends of progress; despite the different methodologies
that produced different results, all consistently exhibited positive upward trend in Project indicators\.
2\.4 Safeguard and Fiduciary Compliance
46\. Safeguard\. Two safeguard policies were triggered by the Project: Environmental Assessment under the
Bankâs Operational Policy/Bank Procedure 4\.01 and Pest Management\. The Project received a Category B
environmental rating at the appraisal stage and was not expected to generate adverse environmental effects and
social impact given the risks associated using dichlorodiphenyltrichloroethane (DDT) and other pesticides for the
IRS, and with the handling of healthcare wastes related to the diagnosis and treatment of malaria (needles and
syringes, gloves, and glass slides)\. To address potential negative impacts however, the NMCP prepared an IVM
Plan that highlighted options for vector and human activities; identified DDT use for IRS as an integral part of the
13
IVM Plan; and made recommendations regarding capacity building, training, and awareness building to ensure
proper and effective implementation\. With regards to healthcare wastes, an addendum to the harmonized medical
waste management plan of the Abidjan-Lagos Corridor HIV/AIDS Project was prepared, given the absence of a
national healthcare waste management plan for Nigeria\.
47\. The Project introduced waste management practices in IRS, medical commodity procurement, and LLINs
campaigns\. Capacity for the oversight of the medical waste management was strengthened to ensure that
commodities procured through the project were disposed properly at waste facilities\. Moreover, the NMEP
developed i) policy guidelines on Environmental Health and Waste Management Safety Guards and ii) a training
manual to guide appropriate measure in Nigeria\. The States, with support from the Bank and the NMEP,
conducted environmental and social audits\.
48\. Fiduciary Compliance\. In April 2010, an assessment by the GFATM found flaws in the procurement
supply management and poor oversight arrangement that had failed to properly identify and address risks\. In
February 2011, the INT requested the assistance of the Bankâs Africa Region Unit and other external donors to
conduct a multi-phased proactive diagnostic review of the Project's fiduciary and logistics system to assess the
risks which had been brought to light in the GFATMâs report\. The review included forensic examination of
payment vouchers, visit to state facilities and meetings with key implementation partners and allied stakeholders\.
Following the INT review that identified evidence of funds mismanagement resulting from Project weaknesses in
internal control systems, noncompliance with Bank fiduciary procedures, and some fraudulent expenditures, the
client with support from the Bank conducted an in-depth financial management assessment from the inception of
the program based on the high-risk areas highlighted in the INT review\. This assessment identified approximately
US$6\.5 million of ineligible or potentially fraudulent expenditures\. In response, the FGON replaced senior
management of Project Implementation Units (PIUs) and Project Financial Management Units (PFMUs) at the
Federal and in Akwa Ibom and Rivers States, and took measures to increase its fiduciary oversight function\.
Moreover, the Governmentâs Economic and Financial Crimes Commission followed through with punitive
actions\. Also, the Program ensured that the LMIS addressed the SCM gaps underscored in the report\. The office
of the Auditor General, with strong support from the World Bank, also undertook a detailed review of a wider
cross section of fiduciary transactions\. A separate detailed review was carried out by Bank and the Controller
Accountant General to examine all expenditures from the inception of the Project\. The FMOF set-up a cross-
sectoral committee of Technical Officers (a\.k\.a\. Tiger Group) to further review the INT findings and draw up
recommendations for further actions to be executed by Federal Civil Service Commission\. During this time, the
Project adhered strictly to other follow-up actions (e-payment, cancellation of foreign travels, prior review of all
procurement packages, etc\.)\. The Federal and States reimbursed all ineligible expenditures\. Specific reviews of
key vulnerable activities such as the bed net distribution were carried out to learn lessons and strengthen
implementation\. The Bankâs Country Management Unit (CMU) provided guidance and leadership in ensuring
that the INT recommendations were followed through, allowing the project to continue with its implementation\.
The Bank Project Team continued to monitor progress by obtaining periodic status reports on all ongoing
procurement packages from the NMEP\. To assist with the steep learning curve required of the new staff members,
the Bank supported the development of a structured capacity building plan that included: i) capacity building
sessions; ii) frequent supervisory visits and ad hoc support; iii) adding an experienced consultant to help
strengthen the procurement unit at the Federal level; and iv) ensuring that the PFMU oversee the accounting unit\.
According to INTâs Report7, the response of the CMU, Client, and Bank Project Team created a best practice for
how to respond to an INT Review of a project implementation\.
49\. The procurement assessment conducted at Project preparation focused on procurement of big-ticket items
and was not flagged as a fiduciary risk\. And the INT found that large-scale procurements were implemented
reasonably well, with ITNs and other commodities generally ending up in their supposed destination\. The
fraudulent activities occurred in the small procurement of items such as training and travel expenses\. Although the
7 A Collaborative Approach between the Bank and Clients to Address Project Risks: the Case of the Malaria Booster Program (in draft)\.
14
small procurements did not meet the threshold to require prior Bank review, the total of these small purchases
added to big amounts\. This could have been flagged as a fiduciary risk in a country with weak procurement
systems at both the Federal and States level\. The Project might have mitigated the risk by i) limiting
travel/operating expenses and small scale- procurement, ii) contracting out training components and employing
performance based awards, iii) utilizing an e-procurement system that could help monitor and flag questionable
activities; and iv) incorporating an indicator in the RF that assessed fiduciary compliance vis-Ã -vis procurement\.
50\. Disbursement\. The total IDA Credit financing for the Project was US$280 million (US$180 million for
the PP and US$100 million for the AF)\. As illustrated in Annex 1, the Project utilized US$276\.13 million
(98\.62% of total financing) of the finances, including US$38\.23 million of the US$42\.1 million unallocated
amount (US$22\.0 million under the PP and US$20\.1 million under the AF)\. The original unallocated amount of
US$22 million under the PP found its use in contributing to the LLIN distribution procured by the GFATM to 22
non-Project States, while US$16\.23 million from the remaining unallocated amount under the AF was reallocated
to support the economics of scale through the procurement of commodities and assist in improving efficiency of
Project implementation\. With regards to FGONâs planned contribution of US$80 million, this came in various
ways including in providing seconded Federal level MOH officials to many PIUs, as well as in States through
complement procurement of drugs, RDTs, and LLINs\. In Anambra for example, the State government contributed
to further LLIN distribution following a gap that ensured the successful completing of the last net campaign
distribution\. The main and subsidiary agreements with the Federal and States posed a challenge however in that
the Project could not fully document line item contributions that point to the overall inputs that were coming from
the Government and the States as part of the US$80 million\.
2\.5 Post-completion Operation/Next Phase
51\. To help sustain the projectâs gains and the Governmentâs effort to control malaria, the Bankâs ongoing
US$500 million Project, The Saving One Million Lives (SOML) Initiative Program for Results, that run from
2015 to 2019 will assist with the integration of essential priority interventions into primary health care, equitable
increase access to, and utilization of quality health interventions, including for malaria\. Beyond the Bankâs
Project, the NMEP also designed its own malaria project with an integrated testing, treatment, and logistics
management program that was packaged as a public/private partnership\. The Projectâs 4-year budget was
estimated at NGN 72 billion, the financial analysis of which was conducted through the private sector\. While the
Federal Executive Council and the National Economic Council under previous Nigerian President Jonathan had
already approved the draft, the proposal was still awaiting a review and final approval from President Buhariâs
new government\. It should be noted that moving forward would require commitments from development partners\.
As such, the Federal Government and development partners are in advanced discussion about opportunities to use
innovative financing opportunities to fund the gaps in malaria control activities\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
52\. Relevance of PDO and design/implementation (combined implementation): Substantial
53\. Relevance of PDO: Substantial\. The PDOs remained consistent with Nigeriaâs 2009-2013 NMSP where
the FGON aimed to scale up for impact (SUFI) a package of interventions focused on prevention, treatment, and
behavior change through a strengthened health system\. During this period, an RBM Country Report on Nigeria
(Progress and Impact Series, 2012) highlighted the importance of ongoing efforts to reduce the malaria burden,
which remained unacceptably high\. Towards the end of the Project Cycle, the MCBPâs objectives continued to be
consistent with the 2014-2020 NMSP, particularly in ensuring that targeted population utilized appropriate
preventive measures; availability of appropriate antimalarial meds and commodities required for prevention and
15
treatment of malaria; and strengthened governance and coordination of all stakeholders for effective program
implementation\. The Bankâs 2010-2013 CPS for Nigeria underscored the need for all development partners to
help Nigeria expand malaria prevention, care, and treatment programs, similar to what the Project aimed to
achieve\. The 2014-2017 CPS that followed asserted the importance of increased access and utilization of quality
services for infectious diseases that remained with a very large burden of disease, which included malaria\.
54\. Relevance of design and implementation: Substantial\. The Projectâs planned activities were consistent
with the stated objectives, while the operational modalities responded to the needs of the country\. For example,
most of the allocation ($75\.5 million) went to the Federal level for the procurement and logistics of commodities,
which involved procuring and distributing 2 LLINs per household\. This was in line with the national strategy
where LLIN was used as the primary method of vector control\. And given the emphasis on better access to
prevention and treatment interventions mentioned in the various NMSPs, the comprehensive approach taken by
the Project of integrating a broad segment of the Northern and Southern populations, remained relevant
throughout the Project cycle and backed by global partners\. In step with the RBMâs Country Report on Nigeria
(Progress and Impact Series, 2012) that emphasized the need to work collaboratively in a broad partnership
fashion, the Projectâs coordinated efforts and open line communication with partners paid dividends â the Project
found itself responding successfully and quickly to re-allocating funds to cover the costs of distributing the nets
purchased by the GFATM to 22 additional States outside of the Project States, as requested by the FGON\. In
addition, the decision to move towards universal coverage in 2008 as the optimal method to control malaria
amplified the emphasis placed on diagnostics, health systems development, and community systems, along with a
required increase in commodities and technical & fiduciary systems, to which the Project responded\.
55\. The Projectâs approach of staffing and creating functional PIUs at State level was considered best practice
among partner agencies such as the GFATM, which has since then replicated the model in their own projects at
the State level allowing them to deal with the States directly and manage projects more closely\. This brought
about robust teams that could meet the demands of the malaria program\. Moreover, the role that NIFAA played in
BCC by spreading messages about LLIN exemplified Nigeriaâs goal of implementing interventions by involving
civil society organizations, traditional and religious leaders and the private sector\. Working with NIFAA was
innovative at the time since the Bank had never engaged Faith Based Organizations for BCC\. In the context of
Nigeria, it was important to maintain ties to both religious groups, to come together to undertake a unified effort
for the benefit of the country\. Other innovative strategies introduced as part by the Project have since then been
tested or expanded beyond the Project States\. For example, IRS is now being implemented in small pilots
generally at less than LGA level, through support from the United States Presidentâs Malaria Initiative (US-PMI)
and the Millennium Development Goals Achievement Fund (MDG-F)\. With regards to the IE designed by the
Bank to incorporate an evidence-base assessment of interventions, development partners have agreed to its use as
part of the harmonized set of tools to track progress in the battle against malaria\. The MCBP became the first
Bank Project in Nigeria to incorporate an IE into its design, which provided an important tool for evaluating what
aspects of the Project were effective and should be scaled up\.
56\. Given the weak capacity in Nigeria, the Project integrated a practical approach of bringing in technical
support to oversee specific tasks, including an M&E Agent and Logistic Support Agent at the Federal level\. This
allowed the Project to quickly gain that expertise and support needed to oversee the Project\. The design also
called for PIFs at the State level\. The Project however experienced months of delay in hiring the PIFs due to
objections from the State\. This might have been avoided by communicating with and involving the States better
and earlier on the process\. Not only did this result in months of initial lag in activities, but also incurred
transaction costs involved in undertaking a second needs assessment in the Project States and in amending the
financing agreement to resolve the dispute that States could not access funds to finance operating costs unless
PIFs were in place\. The significant role that PIFs played in strengthening the capacity of the States became
evident once they were hired, as implementation quickly progressed along with increased disbursement\.
16
57\. Although fiduciary weaknesses detected by INT threatened the implementation of the Project, the Bank
Project team reacted quickly to resolve the problem by initiating an in-depth review by the Bankâs FM team,
which led to the introduction of corrective measures and a turnaround of the project after a disbursement lag of six
to eight months\. In conjunction with Operations Staff, the response involved various units within the Bank, as
well as other donors active in the sector: GFATMâs Office of Inspector General, USAIDâs Office of Inspector
General, and United Nations Development Program\. To look into the details of issues raised, the Project Team
established a committee (Tiger team) consisting of the Project Team, PFM, Procurement, and the Bankâs External
Affairs Department while ensuring that all concerned stakeholders were involved in the process\. Despite the
various Bank units involved, the Bank operated as an integrated unit in terms of examining project
implementation behaviors that could impede development outcomes\. The Project Teamâs response was
considered best practice by INT and highlighted in the FY14-FY17 CPS as so\. Early engagement of national
counterparts was especially important as it fostered client ownership and buy-in\. In light of the INT, the Project
moved on by managing the risk and continued to deliver benefits\.
3\.2 Achievement of PDOs
58\. Rating: Substantial\. The overall rating is Substantial based on the following sub-ratings: i) PDO 1 â
High; ii) PDO II â Substantial\. A split evaluation was not needed since the only revision to the PDO was a change
in one target; there was no change in how the Project was evaluated\.
59\. The Project exceeded all six formal PDO indicators as summarized in Table 3 below\. Although the PDO
indicator on the percentage of States regularly using monitoring and evaluation data to manage malaria and MCH
programs had been dropped, this indicator was included below as a seventh indicator to provide a measurable
gauge of how well the program performed in achieving PDO II\.
Table 3\. Summary of PDO Achievement
PDO Indicator Baseline Target Actual PDO Focus PDO Achievement
Indicator 1: Percentage of children < 5 years with 3\.7% 15\.0% 45\.0% I Exceeded
fever treated with an effective antimalarial within
24 hours from onset of symptoms
Indicator 2: Percentage of children < 5 years who 3\.6% 60% 74\.4% I Exceeded
slept under an ITN the night preceding the survey
Indicator 3: Percentage of pregnant women who 8\.3% 25\.0% 52\.6% I Exceeded
received two or more doses of IPT
Indicator 4: Percentage of pregnant women who 4\.1% 50\.0% 73\.4% I Exceeded
slept under bed net night before the survey
Indicator 5: Direct Project Female Beneficiaries NA 16 million 18 million I Exceeded
Indicator 6: Number of children under five who NA 6 million 26\.5 million I Exceeded
received Vitamin A supplementation
Indicator 7: Percentage of States regularly using 0% 80% 100% II Exceeded
M&E data to manage malaria and MCH programs\.
60\. PDO I: To ensure that the target population will have improved access to, and utilization of, a well-
defined set of MPP\. Rating: High\. The coordination between the Federal MCBP and the States played a critical
role in establishing an enabling environment that allowed the NMCP to oversee Project and collaborate with
partner programs, as well as for the States to implement activities at the local level, all with the goal of achieving
the Project Objectives\. The achievements in PDO indicators 1 through 6 (Table 3) provided evidence of improved
access and utilization of MPP in the Project States\. The progress demonstrated in the indicators related to ITN use
(2 indicators) and treatment (2 indicators) represented significant achievements given that baseline values at the
start of the Project were in the single digits\. On average, these four indicators increased over the baseline value by
504%, and 64% over the target values\. The Project also succeeded in surpassing the target for the number of
17
children < 5 years who received Vitamin A supplementation, an important component of the MPP given that
complementary intake of micronutrients including Vitamin A can help prevent death from malaria-related
complications\. In addition, the Project exceeded the female beneficiary core sector indicator mandated by the
World Bank\.
61\. An end-of-Project survey conducted during the last three months of the Project (January to March 2015)
compared Project States with Comparison States\.8 The results showed how much more the Project States
improved compared to the Comparison States\. For example, the survey found that while both groups had a high
proportion of households that owned at least one LLIN (99\.2%), likely due to the success of the nationwide LLIN
distribution following the 2008 decision to attain universal LLIN coverage, the proportion of children under 5
years and pregnant women who slept under LLINs in the Project States (68\.7% and 69\.3%, respectively)
compared to the Comparison States (36\.6% and 47\.9%, respectively) statistically differed significantly (Figure 1)\.
Figure 1\. Ownership and use of LLIN by children under 5 years of age and pregnant women
Project States (n=1,235 households)
Comparison States (n=361 households)
Ownership of at least 1 LLIN 99\.2%
99\.2%
Children under 5 years who slept inside LLIN 68\.7%
36\.6% Z = 11\.05, P < 0\.05
Pregnant women who slept inside the LLIN 69\.3%
47\.9% Z = 7\.47, P < 0\.05
0% 20% 40% 60% 80% 100%
62\. The survey also discovered a statistically significant difference between the two groups in the percentage
of children under 5 years with fever who were treated with an effective antimalarial within 24 hours from onset of
symptoms (Figure 2), with the Project States reaching a higher rate (43%) than the Comparison States (30%)\.
Figure 2\. Percent of children under 5 years with fever who received a laboratory test and treated with ACT
within 24 hours of symptom onset
Project States (n=1,235 households)
Comparison States (n=361 households)
% who received ACT within 24 hours of symptom 43%
onset 30%
Z = 4\.37, P < 0\.05
0% 10% 20% 30% 40% 50%
63\. With regards to pregnant women, a significantly higher proportion in the Project States appear to have
received 2 or more doses of IPT (51%) than the Comparison States (41%), despite pregnant women in the both
groups equally receiving Antenatal Care (ANC) (Figure 3)\.
8 LQAS household survey that used Delta and Kaduna as Comparison States\.
18
Figure 3\. Percent of pregnant women who received ANC and who had 2+ doses of IPT
Project States (n=1,235 households)
Comparison States (n=361 households)
% of pregnat women who received ANC 87%
88%
% of pregnant women who received 2+doses of IPT 51%
41% Z = 3\.35, P < 0\.05
0% 20% 40% 60% 80% 100%
64\. Surpassing the PDO targets came about in part as a result of meeting the following IRIs: (i) percentage of
households with at least one ITN/LLIN (baseline: 2\.6; actual: 99\.6; target: 80); (ii) percentage of women with
children < 1 year of age who received ANC during the last pregnancy (baseline: 63; actual: 87\.5; target: 72); (iii)
number of RDTs distributed to health facilities (baseline: 0\.0; actual: 14,400,000; target: 12,000,000); (iv)
percentage of health facility using laboratory confirmation as the basis for treatment of fever in children < 5 years
of age (baseline: 5; actual: 31\.4; target: 30); v) percentage of aged 0-23 months with diarrhea in the last two
weeks who received oral rehydration solution and/or recommended home fluids (baseline: 25\.3;actual: 59\.4;
target: 50)\. Activities carried out under Component 2 of the Project (see Annex 2) bolstered the capacity of the
Project States, which in turn contributed to successfully implementing MPP of interventions\. A key activity
involved the CDI training in the States, with CDI interventions being implemented in all (but Akwa Ibom) States
through the NIFAA\. The training helped improve interpersonal BCC at the community level\. According to the
end-of-Project household survey (2015), 44\.6% of respondents in Project States heard malaria from worship
places compared to 19\.4% in Comparison States\. Moreover, knowledge about malaria did appear to have
surpassed or come close to meeting end-of-Project targets in areas with active CDI activities, as assessed by the
IE, such as the percentage of caregivers who knows at least two symptoms of malaria (baseline: 63\.3; actual: 85\.0;
target: 70) and percentage of mothers of children less than five years of age in CDI communities who know at
least two ways of preventing malaria (baseline: 0\.0; actual: 55\.5; target: 60)\. The BCC helped spread the message
within the Project States regarding the malaria treatment and preventive services, resulting in increased utilization
of such services, as compared to Comparison States\. The level of PMVsâ contribution to malaria control at the
community level, as measured by the proportion of PMVs that can identify primary methods of prevention and
treatment, increased from 42% (baseline IE 2013) to 60% (end stage IE 2015)\. In addition, the scale up of the
MNCH weeks could have boosted MPP intervention consumption as evident from results from both the May and
November 2014 MNCH week campaigns that showed an increased uptake of Vitamin A (greater than 80%) and
deworming (40%)\. MNCH contributed to increasing the utilization of malaria interventions due to the high level
of behavior communication messages and activities carried out during the MNCH campaign period\.
65\. Numerous surveys were conducted by other partners in Nigeria throughout the life of the Project, which
provided an independent gauge of how well the Project progressed in reaching its targets\. Despite the different
magnitude in point estimates found in the various surveys, that more likely reflected differences in the
methodology used in the assessments and this making direct comparison invalid, the results from all surveys
showed upward trends in the indicators monitored by the Project\. For example, the MIS 2011 corroborated the
findings of the 2010 mid-cycle household LQAS survey that showed an upward trend among Project States in the
uptake of preventive measures\. The MIS showed that the Project States fared much better than the country on
average\. Net utilization among children under five years of age and pregnant women increased from 3\.6% (LQAS
2006) to 44\.8% (LQAS 2010) and 74\.4% (LQAS 2015), and from 4\.1% (LQAS 2006) to 40\.4% (LQAS 2010) to
73\.4% (LQAS 2015) respectively\. The 2011 MIS found that 51% of children under five years and 53% of
pregnant women within Project States slept under nets; the national averages from the MIS were 29% and 34%,
respectively\. Similarly, the percentage of under five year old children who used effective anti-malaria medicine
within 24 hours of onset of fever in the Project States improved from 3\.7% (LQAS 2006) to 5\.8% (LQAS 2010)
19
to 45% (LQAS 2015)\. The 2011 MIS found this figure to be 38% within the Project States, while the national
average was 26%\. The findings of the MIS show that against national averages, the Project States did much better\.
66\. The results above showed vastly improved capacity of Project States to implement and deliver MPP, as
compared to Comparison States or the national average\. The Project contributed to the enhanced capability of the
Project States to use mass distribution campaigns to provide universal coverage of LLINs, selective use of ACTs
to treat malaria through laboratory technicians with better diagnostic skills as well as the training skills to
continue with increasing laboratory human capacity, and better understanding and integration of community BCC
strategies that incorporated NIFAA to capture both Christian and Muslim messaging media\.
67\. PDOII: To strengthen Federal and States ability to manage and oversee delivery of Malaria Plus
interventions\. Rating: Substantial\. While the Bank team dropped the PDO indicator target for the percentage of
States regularly using M&E data to manage malaria and MNCH programs due to its target being met early and
consistently (actual: 100; target: 80), the indicator substantiated the success the States had in managing and
overseeing the interventions through the coordinated work of the PIFs, M&E Agent, and Logistics Agent\. It
would have been worthwhile to have had other PDO indicators that focused on the overall management of the
Malaria Project by the FGON and the States, including critical areas as financial management and logistics\. As
such, rating PDO II, though compelling given the data, hinges mostly on achieving the IRIs targets\.
68\. The Federal level played a critical role in creating an enabling environmental for the implementation of
activities, coordination of partner programs, and providing oversight function to the States\. This included
procuring LLINs, ACTs, and RDTs at the Federal level that not only helped maximize economies of scale, but
aided the States in meeting the following IRI targets: (i) LLIN purchased and distributed (baseline: 0; actual:
51,392,304; target: 12,400,000); (ii) number of LLINs distributed in 22 additional States (actual: 32,592,304;
target: 20,700,000); and (iii) percentage of households sprayed with IRS in the last 12 months (baseline: 3; actual:
83; target: 80)\. In addition, the Project supported capacity building for malaria laboratories in the Project States
through a laboratory strengthening component\. This facilitated the development and review of tools (guidelines,
protocols, and implementing mechanisms) that supported the scale-up for both malaria microscopy and RDTs and
enhanced quality assurance for malaria laboratories\. The Project also engaged SMOHs in preparing for scaling up
their capacities to conduct microscopy and RDTs as described by the NMCP malaria laboratory diagnosis policy\.
69\. The Project procured microscopes, along with more than 14 million RDTs\. Accordingly, the number of
RDTs distributed to health facilities and the percentage of health facilities using laboratory confirmation as a basis
for treating fever both exceeded project targets\. The States not only benefitted from the improved capacities of
laboratory technicians in microscope diagnosis for malaria, but also in other tropical diseases\. With regard to
monitoring of drug and insecticide resistance, the Project aptly supported sixteen existing sentinel sites and
assisted in upgrading three new ones by building up the institutional and human capacities, improving operational
management, and establishing quality assurance mechanisms\.
70\. The Project facilitated the recruitment and hiring of commodity logisticians and pharmacists as needed,
and provided training for all malaria commodities and logistics staff\. With project support to strengthen medical
warehouses across the Project States, commodity quantification, drug availability in facilities, and reorder
processes improved\. For example, the logistics consultant worked closely with the NMCP and partners to refine
the national logistics plan, conduct training on micro-planning for Project States and assessed the readiness and
suitability of the warehouses in the States\. The Kano campaign was very successful and largely peaceful, with a
very high beneficiary turnout\. The end process assessment showed, among other things, that an average of 90-
95% of the targeted households received the nets and 60\.9% slept under the net on the night prior to the
assessment\. Such enhanced capacity contributed to accelerating the implementation of MPP interventions,
including LLIN purchased and distributed\.
20
71\. Thus, the Project made significant progress under PDO II despite the lack of good key indicators to
substantiate the achievements, much of which enhanced the capacity of Nigeria to undertake sole responsibility of
the management and delivery of Malaria Plus interventions\. This included, as illustrated above, the Federal
governmentâs ability to do large procurement of commodities, the capacity of States to employ microscopy and
RDT skills to confirm malaria and deliver malaria treatment through improved warehouses and clinics, and the
elevated level of the countryâs capacity in managing operations, logistics, and surveillance\. Without these strides
and coordinated efforts, the achievements documented under PDO I would not have been possible given their role
in making MPP available and accessible to the population\.
72\. IE on CDI and PMV in Gombe and Anambra\. Analysis of data from the IE study showed that the
targets for net use and receipt of treatment among children < 5 years of age and pregnant women in communities
with CDI were exceeded or nearly met as described earlier, providing some indication of their impact in
improving behavioral change\. Results were mixed however with regards to ensuring that CDIs and PMVs had
stocks of proper medications: i) percentage of sampled PMV that had ACTs in stock at the time of assessment
(actual: 73\.26; target: 80); and ii) percentage of sampled CDDs with no stock-outs in the last three months (actual:
39\.10; target: 80)\. The results indicated that stock-outs was a problem among CDD, making them an unreliable
source of drugs; the problem existed as well with PMV but less so\. However, the delay in conducting the baseline
IE (April 2013) resulted in a shortened timeframe from which to measure that impact of the interventions\. In
addition, the supply chain challenges as well as policies related to using RDTs by PMVs might have dampened
result findings (see Annex 11 for more detailed summary of IE)\. As such, the IE may not have captured a larger
impact had it benefited from a longer assessment period\. Given the Nigeriaâs emphasis on strengthening
community systems and involving the private sector, the findings illustrated that additional effort needs put in to
fully incorporate CDDs and PMVs in the fight against malaria\. As the first health sector IE linked to the Bankâs
portfolio in Nigeria, the MCBP IE was particularly important as a catalyst in stimulating broader interest within
the health sector in rigorous evaluation of health policies and programs for evidence-informed policymaking\.
Consequently, this IE was instrumental in launching further evaluation work including of Nigeria State Health
Program Investment Credit (NSHIP) and of programs that did not receive World Bank financing, such as the
Subsidy Reinvestment and Empowerment Programme Maternal and Child Health Project and the Quality
Improvement and Clinical Governance Initiative\.
Table 4\. Summary of Efficacy Rating
PDO PDO Rating Overall Efficacy Rating
PDO I: To ensure that the target population will have improved access to, and High
utilization of, a well-defined set of MPP Substantial
PDO II: To strengthen Federal and States ability to manage and oversee delivery of Substantial
Malaria Plus interventions
3\.3 Efficiency
73\. Rating: Substantial\. As indicated on Table 3 below, the Internal Rate of Return (IRR) and the Net
Present Value (NPV) were both very high indicating that the Project was economically viable\. The calculated
Cost Benefit ratio was also very low meaning that the project was highly cost effective or cost efficient (see
Annex 3 for assumptions applied to calculations)\.
Table 5\. Economic Analysis
Indicators Benefit Valuation Methods and Discount Rate Assumptions
GNI per capita, 6% discount rate GDP per capita, 6% discount rate
Present Value of benefits (billion US$) 3\.086 3\.892
Present value of cots (million US$) 192\.2 192\.2
Net Present Value (NPV, billion US$) 2\.89 3\.7
Internal Rate of Return (IRR, %) 65% 70\.5%
21
Cost Benefit Ratio 0\.06 0\.05
74\. Results from the 2015 LQAS showed increased access and utilization of malaria interventions\.
Vulnerable groups (women 15-49 years and children under 5 years) experienced exponential improvement in
health results in terms of the disease burden, deaths averted, and lives saved, an indication that these groups
benefitted from the interventions\. The 1,970,092 in total disability-adjusted life years (DALYs) averted
represented more than three times of that estimated at baseline (see Annex 3 for detailed calculation)\. The
foregoing analysis therefore shows that the MCBP was good for the people and beneficial to the country and in
most part achieved its objectives\. These interventions were effective in contributing to overall reduction of
malaria morbidity and mortality at the Project States\. The children under five gained the most positive results with
the various interventions\. According to the economic analysis conducted when the AF was proposed, reducing
bottlenecks or attaining coverage and utilization of 75% or more reduces mortality rate among children under 5
years of age and maternal mortality rate on average by 35% and 2\.0%, respectively\. PDO indicators made
significant strive towards reaching this mark in Project States (including Kano) that accounted for 25% of the
Nigerian population, especially for ITN use given role as an effective method of vector control\. Along with the
Projectâs impact compared to Comparison States as previously illustrated and the Projectâs support in distributing
LLINs to 22 non-Project States, the Project contributed to the improvements seen in the disease burden\.
75\. Programmatically, the Project financed both systems strengthening for capacity building in program
implementation and procurement of anti-malaria commodities including the design of malaria interventions\. The
Project scaled-up capacity building and implementation at both Federal and at State levels, and internalized the
use of annual project planning to guide on resource utilization and strengthened the project understanding of
procurement processes\. The Project was designed to ensure that adequate coverage of interventions was attained
for maximum impact, which the Project succeeded in achieving\. With regards to value for money, the Project
added value towards efficient planning for implementation, utilization of resources, and the high coverage of
interventions\. In particular, the Project helped improve implementation of interventions that increased coverage
and access to LLINs, increased availability of ACTs and RDTs in health facilities, and strengthened M&E and
fiduciary management practices, all of which contributed to reducing the overall impact of malaria in children
under five and pregnant women\. Although most other non-Project States had begun to receive equally as much
support from other partners as the Project States by 2010, the survey results exhibited that Project States were able
to add value to their support as evidenced by the increase in access /coverage and utilization rates when compared
to Comparison States\. The FGONâs capacity to successfully request additional funding after the initial 2007 IDA
exhibited its bolstered leadership and effective Malaria Program\. The cost effectiveness of the project and the
benefits on the target population make the case for continued intervention after the project phase and for future
sustainability\.
76\. The Project initially suffered initial delay due to capacity issues and need for the States to have PIFs on
board which took almost a year post effectiveness\. In addition, findings from the INT investigation resulted in
temporary expenditure suspensions and added level of scrutiny that protracted procurement processes\. All these
subsequently culminated to needing to extend the Project three times to ensure that the credit was fully utilized
and PDO objectives attained\. Despite these, the Project exceeded all PDO indicators and overall Project
disbursement reached 95% by Project closure on March 15, 2015\.
3\.4 Justification of Overall Outcome Rating
77\. Rating: Satisfactory\. The overall rating is based on the following sub-ratings: (i) Relevance of the
objectives and design/implementation â Substantial; (ii) Efficacy in Achieving the PDOs â Substantial; (iii)
Efficiency â Substantial\.
3\.5 Overarching Themes, Other Outcomes and Impacts
22
78\. Poverty Impacts, Gender Aspects, and Social Development\. The Project contributed to delivering life-
saving interventions and treatment to children < 5 years of age and pregnant women, groups who were most at-
risk of suffering complications due to malaria\. In addition, the comprehensive approach of the MPP meant that the
population reached by the Project also benefitted from other health outreach programs, such as receiving
immunization and deworming for children and general health promotion education for pregnant women\. The
success of the Project likely eased the burden of the government due to the economic cost of malaria treatment
and lost economic activity\. Given that the Project also played a role the net distribution in 22 non-Project Sates,
its impact goes beyond what had been originally planned\.
79\. Institutional Change/Strengthening\. The Project helped Nigeria build its government capacity and
develop solid foundation for implementing a comprehensive health initiative, as demonstrated in how the country
met and surpassed indicators mentioned in the previous sections\. The decision to incorporate staff from other
parts of the MOH into the PIUs strengthened the MOHâs overall human resource capacity by increasing the skills
set of many of its staff who had been seconded to the PIUs\. With the project now closed, key staff who return to
old posts within the MOH can now provide technical expert support to other parts of the MOH\. In addition,
critical infrastructure, such as a functioning M&E, has been put in place\. The staff experience and improved
infrastructure are anticipated to serve the national public/private partnership on malaria control, which has been
presented to the President for approval\. They also help contribute tremendously to the Banks ongoing SOML
Initiative\. In areas where additional support may still be needed, the NCMP has since 2007 gained experience in
establish deep connections within a broad partnership on malaria control, including the GFATM, USAID-PMI,
and DFID\.
80\. Other Unintended Outcomes and Impacts (positive or negative)
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
NA
4\. Assessment of Risk to Development Outcome
81\. Rating: Moderate\. Nigeria remains committed with continuing with the progress made under this
Project\. The current 2014-2020 NMSP emphasized ongoing universal access to prevention and treatment through
broad partnerships, including community organizations and the private sector\. Nigeria continues to work with
global partners who are assisting with enhanced capacity of the government\. Nigeria is in the process of
developing a public/private partnership on malaria control, which aims to sustain the gains made under this
Project\. Moreover, the country continues to be engaged with the World Bank through the SOML initiative
priority interventions that include malaria\. Although the Federal and State governments had contributed to the
Project through its own budget in various ways, the country now suffers from a fiscal crunch due to dampened oil
prices\. Also, any proposed initiative to undertake new projects needs still needs to be sustained through partner
commitments\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
82\. Rating: Moderately Satisfactory\. The Bank designed a project aligned with Nigeriaâs 2006-2010
Country Strategic Plan by focusing on a comprehensive, multisector approach\. This was clearly expressed in the
PDOs given the emphasis on MPP and coordination between the Federal and State governments\. The design also
23
considered the environmental impact of the Project by incorporating an IVMP as well as addressing healthcare
wastes as part of a medical waste management plan\. Furthermore, the Bank took advantage of existing structures
and government personnel from which to build the Project, such as using FMOH staff to fill positions within the
MCBP\. This, along with hiring technical experts as agents who could assist the project implementation, helped
with quickly setting up the Project at the ground level\.
83\. The Bank coordinated with the government, other development partners, private sector, and Non-
Governmental Organizations (NGOs) regarding the scope of the work\. For example, joint FMOF, FMOH, and
Bank missions conducted assessments to evaluate implementation capacity in the States\. And while the Bank
team could not have foreseen the shift in the countryâs priority towards universal access to malaria interventions
or the need to urgently provide support to development partners, such as distributing LLINs purchased by the
GFATM to 22 non-Project States, the Projectâs emphasis on a flexible design that integrated collaboration with
development partners allowed the Bank team to quickly and successfully respond to the changing needs\.
84\. Although the reviews of the Statesâ capacities called for joint missions with the Federal level, the process
could have benefitted from more involvement and input from the States\. As such, the States disputed the findings
as they related to the need for PIFs, which stalled the Project for several months due to the delay in releasing
funds to States to finance operational costs\. This resulted in the need to undertake a restructuring three years into
the Project before PIFs were finally hired in all States and in place to provide much needed implementation
support\. In addition, the RF could have benefitted from a more balanced set of PDO indicators, including those
that measured progress towards achieving PDO II\. A formal Quality at Entry Assessment was not conducted for
this Project\.
(b) Quality of Supervision
85\. Rating: Satisfactory\. The Projectâs Task Team Leader changed three times over the life of the Project\.
However, each one of the Team Leaders had experience in managing Bank-funded development projects\. Also,
there was no indication that these transitions had any negative effect on the supervision of the Project\. Throughout
the life of the project, the Bank task team remained proactive with its supervision and implementation support,
exhibited flexibility in the level and type of support it engaged in, and showed willingness to work with partners
and donor agencies\. A review of the Bankâs supervision budget (Annex 4) indicates that the Bank team remained
engaged in the Project, allocating 405 staff weeks and US$1,530,437 between FY08 to FY15 to supervise project
implementation that amounted to US$191,305 per year\.
86\. As evident from the Implementation Status Reports (ISRs), the team was candid in highlighting potential
obstacles and offering solutions on how they could be resolved, including hiring consultants to ensure on ground
follow up support\. This was enhanced through quarterly, focused support from the Bankâs Headquarters, as well
as tripartite meetings that involved relevant units within the Bank, NMEP, and FMOF to discuss project progress
and implementation challenges\. All missions involved both Federal and State reviews\. And as needed, the project
engaged in State visits to directly oversee implementation issues\. As an example, the mission conducted a
managersâ planning workshop in three States in 2012 to discuss program implementation progress and
prioritization for the remainder of the project\. Moreover, the Bank was responsive to the FGONâs five requests for
restructuring that were approved within months from receiving the written requests from the FGON\. The AF
allowed the FGON to scale up interventions and accommodate a new universal access strategy\. The team quickly
acted as well on an urgent request to reallocate funds to finance the cost of distributing LLINs to 22 States outside
of the original seven States selected for the Project\. The task team also conducted separate meetings with partners
including with DFIDâs Support to National Malaria Programme (SuNMaP), UNICEF, USAID, WHO, and SFH to
discuss issues of mutual collaboration in project activities\.
87\. The task team provided high-level advocacy and support\. In cases where the PIU team underwent
reorganization as a result of the INT findings, the mission helped facilitate a smooth transition by coordinating
24
with incumbent PIU teams, as well as providing necessary terms of references to reaffirm Project arrangements
and to guide in the recruitment of new team members\. The mission also provided training to new officers at the
Federal and State levels who came on board in the aftermath of the INT investigations\. Based on the INT report,
the task team fully engaged other units in the Bank early on to develop an action plan to mitigate the weaknesses
highlighted in the report\. In addition, the CMU played an active role in adeptly conveying the INT findings and
recommended corrective measures to the clients, and in keeping the Country and Sector Directors abreast with
updates\. The Project Team, Federal and State PIUs, and INT worked in concert, which led various client
constituencies to own the process\. Thus, despite the INT, the task team was not deterred, and worked on
increasing its vigilance and control on all high value procurement packages\. The Bankâs response to the INT
findings not only mitigated risks but enhanced/improved/strengthened project controls and oversight
management/arrangements among various internal and external stakeholders\.
(c) Justification of Rating for Overall Bank Performance
88\. Rating: Satisfactory\. The overall rating is based on the following sub-ratings: (i) Bank Performance at
Ensuring Quality at Entry â Moderately Satisfactory and (ii) Quality of Supervision â Satisfactory\.
5\.2 Borrower Performance
(a) Government Performance
89\. Rating: Moderately Satisfactory: The FGON continued to show its commitment to malaria control
evident in the development of the 2009-2013 NMSP, and a subsequent 2014-2020 NMSP in which the Federal
and State governments committed to covering 75% of the overall financing for the malaria program by 2015\.
Along with these, the FGON request for a US$100 million AF to undertake enhanced activities and a reallocation
of US$22 million to distribute LLINs demonstrated the governmentâs choice to take on additional IDA financing
to scale up interventions\. On the ground, the government displayed its mettle by coordinating with partners to
successfully provide over 60 million nets within a short period, a massive scale up that had never been done
anywhere else in the world\. Its success hinged on the capacity of States to undertake proper micro-planning of net
distribution, which facilitated in procuring millions of LLINs by through the Federal Government and their
eventual distribution by the States through state wide net distribution campaigns and routinely at antenatal clinics\.
Despite this, the Project experienced several challenges that stalled the Project\. For example, the Program
underwent two changes in leadership in a span of 8 months, including the Program Coordinator\. The changes
slowed down implementation, even as new management was put in place due to the time required to settle into
and learn the Program obligations\. In addition, the procurement capacity and poor financial internal control and
low regulatory compliance posed a challenge four years into the Project\. Procurement at the Federal and State
levels remained major challenges throughout the Project, creating major implications for the availability of high
value commodities such ACTs and RDTs at health facilities\. Moreover, there were instances where extant
guidelines for critical interventions were not developed or disseminated to the States, LGAs, and service delivery
points, resulting in deficit of much needed skills\. Also, the Federal government could have better supported States
and LGAs with consistent and adequate supervision and training\. Moreover, the Borrower itself noted the high
attrition rates of the few available trained staff\.
90\. The INT review revealed significant weaknesses in procurement and financial management at the Federal
and State levels\. Throughout the INT investigation, however, the FGON should be commended for working
collaboratively with the Bankâs Project Team and INT Unit to resolve the fraud and corruption identified in the
INT report\. The FGON took disciplinary actions on indicated staff and reconstituted the PIUs and PFMs\. In
addition, it ensured that the Program adhered strictly to the recommendations for remedial measures\. By the
closing of the Project, supervisory and monitoring functions of all program interventions were being done more
regularly with the NMCP taking the lead\.
25
(b) Justification of Rating for Overall Borrower Performance
91\. Rating: Moderately Satisfactory\. The overall rating is based on a Moderately Satisfactory rating for
Government Performance\.
6\. Lessons Learned
92\. Flexibility and ability to respond to changing environment\. Given the pace of research and
development of new knowledge about diseases and their management, Projects that assist countries in disease
control must be capable of responding to innovative and current changes to strategies\. In this case, the Project
quickly and promptly underwent additional financing to assist Nigeria in enhancing its activities in support of the
NMCP and in a reallocation of funds in order to provide universal access to LLINs\. This allowed the country to
be at the forefront of managing the malaria\.
93\. Utilizing a comprehensive Malaria Plus approach\. Although most malaria projects are single disease
vertical projects, the MCBP employed a Malaria Plus approach that situated malaria within the overall maternal
and child health landscape\. This clearly pushed the Bank and the government at both levels to engage broadly and
seek ways to strengthen the delivery of a comprehensive package of services, moving beyond the immediate
boundaries of just malaria\.
94\. Extensive use of surveys to understand implementation performance\. The LQAS survey, HFA
survey, and malaria indicator surveys were strong and credible survey methods that provided implementation
information for timely management decision making\. Incorporating these into the Projectâs monitoring system
was key in driving the wider Bank health portfolio to invest in M&E measures for other follow on Projects like
the SOML\.
95\. Enhanced coordination between the Federal Government and the States\. Because of the distinct roles
that the Federal and the States had in ensuring the Projectâs success, it was critical to ensure a coordinated effort
and unity between the two\. Among other things for example, greater involvement and feedback from the States at
the beginning might have resulted in more rapidly and smoothly incorporating PIFs into the Project\. This would
have prevented delays and boosted implementation from the outset as had been anticipated in the design\. Also, the
MCBP managed the lack of human resource and technical capacity at both levels of government, including across
different States, by seconding Federal staff to the State PIUs and with contracts to experts who could quickly
bring in skills at both levels and provide institutional training\.
96\. Addressing INT reviews proactively and collaboratively\. Taking actions early to address Project risks
provide the opportunity to engage clients and relevant partners proactively and collaboratively\. Unlike other
projects that would have normally suspended implementation, the Bankâs Project team consulted early with the
client and various units within the Bank on developing self-corrective measures\. The quick action showed the
Bankâs and the clientâs seriousness about dealing with problem\. Establishing remediation steps reduced the
negative impact of the INT findings, while continuing to implement the Project and providing benefits to the
target population\.
97\. Mitigating fiduciary risks in countries with non-existent or weak procurement systems\. While the
Bank normally undertakes a procurement assessment during Project preparation, this has often focused on large-
scale procurements\. The experience from this Project illustrated that the Bank needs to also needs to be alert to
Projects with numerous small scale procurements that all add up to a big amount\. Potential mitigating actions
include i) limiting travel/operating expenses and other small scale procurement, ii) contracting out training
components and employing performance based awards, iii) utilizing an e-procurement system that could help
26
monitor and flag questionable activities; and iv) incorporating an indicator in the RF that assessed fiduciary
compliance vis-Ã -vis procurement\.
98\. Benefits of global partnerships\. The Bankâs close association with other development partners helped
establish the groundwork for working together and created a more harmonized effort in controlling malaria\.
Because of this relationship, partners shared information with each other relevant to malaria control, which fed
into distinct projects within the partnership\. Such a relationship benefitted Nigeria as when Bank stepped in to
assist the GFATM with LLIN distribution\. More significantly, this information sharing was the basis that alerted
the Bank to the risks identified by GFATMâs Office of Inspector General, which led to the INT review\.
99\. Involvement of an inter-religious organization in a religiously diverse setting\. The involvement of
NIFAA contributed to increased BCC through mosques and churches that facilitated close community level
interpersonal messaging\. This helped create an inter-denominational harmony\. In addition, NIFAAâs efforts not
only provided an avenue to strengthen behavior change strategies for malaria, but also for other communicable
diseases and MPP related health interventions\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies\. See Annex 7
(b) Cofinanciers
(c) Other partners and stakeholders
27
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Strengthening leadership and
coordination capacity of the federal
86\.50 86\.50 100%
government to control malaria, original
Parent Project
Enhanced Health Systems
Strengthening through Additional 25\.40 25\.4 100%
Financing
Enhanced commodity procurement
37\.50 37\.5 100%
through Additional Financing
Strengthening the capacity of SMOHs
and LGAs to deliver MPP interventions
71\.50 71\.50 100%
at state and community levels in Project
States, original Parent Project
Enhanced Community System
Strengthening through Additional 7\.00 7\.0 100%
Financing
Enhanced communication and
outreach through Additional 10\.00 10\.0 100%
Financing
Total Baseline Cost 237\.90 237\.90 100%
Physical Contingencies
Through original Parent Project 22\.00 22\.00 100%
Through Additional Financing 20\.10 16\.23 80\.75%
Price Contingencies
0\.00 0\.00 0\.00
Total Project Costs 280\.00 276\.13 98\.62%
Front-end fee PPF 0\.00 0\.00 0\.00
Front-end fee IBRD 0\.00 0\.00 0\.00
Total Financing Required 280\.00 276\.13 98\.62%
(b) Financing
Appraisal Actual/Latest
Type of Percentage of
Source of Funds Estimate Estimate
Cofinancing Appraisal
(USD millions) (USD millions)
Borrower 80\.00 80\.00 100%
International Development Association
280\.00 276\.13 98\.62%
(IDA)
28
Annex 2\. Outputs by Component
Component 1: Strengthening leadership and coordination capacity of the federal government to control
malaria\.
To support the ability of the Federal Ministry of Health (FMOH) staff to undertake these essential functions, the
project supported and strengthened:
Procurement and logistics of commodities for accelerated implementation of the malaria plus interventions\.
ACTs, RDTs, LLINs were procured as part of the original Parent Project component as well as for the Additional
Financing\. Through Project support, 18\.4 million kits of RDTs were procured and distributed, resulting in 31\.4%
of facilities in the Project States having RDTs, compared to 20\.4% in Comparison States\. The Project embarked
on training for all malaria commodities and logistics staff and supported the strengthening of state medical
warehouses across the six states\. The strengthening improved commodity availability, quantification and reorder
processes\. Capacity building was conducted with support from USAID Deliver project\. Commodity logisticians
and pharmacists were recruited\. This improved the feedback on commodity quantification and drug availability in
facilities\. In addition, US$22\.5 million secured under the Additional Financing was used to support LLIN
distribution campaigns in 22 non Project States for LLINN procured by the Global Fund\. Moreover, the project
supported military hospitals with ACT as part of the federal responsibility for malaria control\.
National Monitoring and Evaluation for evidence-based management\. Both the Federal and State level benefitted
from establishing robust M&E units that supported monitoring of implementation and real time reporting of
malaria data at both Federal and State level\. At project development, none of the Project States were using M&E
data for managing malaria programs\. However, by end of project, all the Project States were using M&E data to
plan for their malaria interventions and were submitting M&E data on a quarterly basis to the federal level\. The
national level also developed a core group of M&E experts that developed the capacity to conduct LQAS without
much external assistance\. As a result, the national team led the process in conducting country malaria based
surveys such as Malaria Indicators surveys and guided the development of modules on malaria for demographic
health surveys\. By the Project closing date, the Project successfully implemented and completed an end-stage
survey and a Health Facility Assessment survey\. Through the Additional Financing to enhance Health System
Strengthening, the project was able to support institutional and human resource capacity building and the
establishment of integrated logistics management system for HIV, TB and malaria through contracting to a
Logistics implementing agent\.
Coordinating program activities at the national and state level and across programs\. The strengthened national
level not only provided coordination across the Project states but across the entire country\. At the State level, the
PIUs were strengthened over time to perform similar functions including supportive supervision\. The enhanced
capacity contributed to the outcomes of interest â the PDO and intermediate indicators and the following:
1\. Strengthening of advocacy and utilization of malaria interventions: Federal and State supported BCC
including the presence of NIFAA and other partners\. Through the Additional Financing that focused on
enhanced activities, BCC and advocacy were prioritized at both Federal and State levels, through NIFAA and
supported by State officers in each of the Project States\.
2\. Coordination of Maternal, Neonatal and Child Health weeks: Both the Federal and States contributed to the
States success in the implementation of MNCH weeks which were used as a major part of driving the Plus
component of the malaria plus package\. In particular, the distribution of Vitamin A to children under five was
essential to achieving a PDO indicator\. The last four rounds conducted across the Project States resulted in
15,065,138 children under five receiving Vitamin A, thus exceeding the target by 251%\. The table below for
example shows the number of children provided with Vitamin A during the MNCCH weeks and how the
Project contributed to the control of intestinal helminthes as part of the broader MPP strategy:
29
Data summary for MNCH weeks rounds of November 2013 and May 2014
Intervention and Indicator November May 2014 Comment
2013
Target population for Vit\. A in the 6 Total Booster States 5,667,937 5,841,789
Total no\. of children under 5 years administered Vit\. A in 5,012,321 5,277,948
the 6 Booster States
Coverage % for Vit\. A in the 6 Booster States 88\.4 90\.3 Target more than attained
Target population for deworming in the 6 Booster States 4,784,219 4,008,781
Total no\. of children under 5 years administered 2,201,826 1,590,445
deworming tablets in the 6 Booster
Coverage % for deworming tablets in the 6 Booster 46\.0 39\.6 Project contributing to
States malaria Plus interventions\.
3\. Increased supportive supervision from both Federal and State levels: There was increased support from the
Federal and States for supervision and monitoring, which was now being conducted more regularly on a
quarterly basis\.
4\. Strengthened Administrative units to manage program implementation: Both Federal and States had Project
implementation Units (PIU) with staff seconded by MOH as well as specifically recruited by the programs to
enhance implementation\. PIUs were established and staff were seconded from Ministry of Health or
specifically recruited by the project\. This allowed the creation of a robust team that was able to meet the
required demand of the malaria program\. The creation of effective and functional PIUs at State level was seen
as best practice and has been copied by Global Fund\.
5\. Strengthened coordination and management of partnerships for malaria control at both Federal and State
level\. By project Closure, the Federal and States programs were able to harness the potential of partners to
contribute towards the implementation of both Federal and state malaria strategic plans\.
6\. The Additional Financing allocated for Health Systems strengthening supported the scale up of malaria
laboratory diagnosis and improved the quality assurance for malaria diagnosis\. The Project provided capacity
building and supervision for malaria laboratory in the Project States, as well as engaged State MoH on
planning for scaling up diagnostic capacities through increasing the number of facilities able to conduct
microscopy and RDTs as described by the NMCP malaria laboratory diagnosis policy\. This facilitated in the
development /review of tools (guidelines, protocols, and implementing mechanisms) that supported the
scaling up for both malaria microscopy and RDTs and malaria laboratory quality assurance\.
7\. The monitoring of drug and insecticide resistance also improved as an outcome of the Additional Financing\.
The project was able to support the strengthening of sixteen existing sentinel sites and upgrading of three new
sites as well as provide institutional and human capacity building including operational enhancement and
establishment of quality assurance mechanisms\.
Component 2: Strengthening the capacity of SMOHs and LGAs to deliver MPP interventions at state and
community levels in Project States\.
The strengthening of the PIUs supported the expansion of the State Ministry of Health (SMOH) and the Local
Government Authorities (LGAs) in the target states capacities to rapidly expand the Malaria Plus services at both
the facility and the community levels\. The outcomes of interventions are described below:
LLIN Coverage/Access\. More than 24\.8 Million LLINs were procured and distributed through state wide net
distribution campaigns and routinely during antenatal clinics\. In order to meet the request of Government, the
Project used more than US$22 million of the credit to support distribution of LLINs in 22 states in collaboration
with the Global Fund for AIDS, TB and Malaria (GFATM)\. The results from the end stage LQAS 2015 survey
show that 99\.6% of the houses had at least one Insecticide Treated Net (ITN)\. The Project exhibited an upward
trend in ownership of ITN, from 2\.6% in 2006, then 81\.3% during midterm evaluation in 2010, and ending at
30
99\.6% by the end term review in 2015\. This represented an 18\.3% increase between 2010 and 2015\. The Project
exceeded the target for LLIN coverage/access\.
LLIN Utilization: Results from the ends stage LQAS 2015 revealed that the percentage of children under five who
slept under ITN during the previous night in Project States was 74\.4%\. This represented a 27\.8% increase from
the 2010 LQAS which showed 47\.5% utilization\. Comparison States, on the other hand, experienced a decrease in
utilization from 37\.1% in 2010 to 36\.2% in 2015\. Even though net coverage was similar, the fact that the Project
States had a systematic program support for BCC messaging through NIFAA might have helped increase the
uptake in utilization\. This same impact from BCC could also explain the increased LLIN utilization in pregnant
women in Project States, which showed the percentage of women sleeping under and LLIN the previous night
increasing from 40\.4% in 2010 to 69\.3% in 2015, a 28\.9% upswing\. The change in LLIN utilization among
pregnant women in Comparison States was less dramatic with an increase from 39\.0% in 2010 to 47\.9% in 2015,
an increase of 8\.9%\. The target for LLIN coverage has been exceeded\.
Use of ACTs: The utilization of Artemisinin Combination Therapy (ACT) by children under five reflected a
change in policy that took place during Project implementation\. The new policy required that ACT be given only
to children that had positive confirmation of malaria infection as indicated by Rapid Diagnostic Tests (RDTs) or
microscopy; the mere presence of fever did not qualify children to receive ACT as was initially designed at the
beginning of the Project\. Despite the change during the implementation phase, the end stage LQAS 2015
illustrated an increase in ACT utilization, from 3\.7% in 2006, 5\.4% in 2010 and to 45\.0% in 2015\. In addition to
the change in policy for who qualifies to receive ACT, the target for the percentage of children who received ACT
was revised downward from 80% to 15% during a Project restructuring in 2010\. Given the available evidence that
came to light at the time, the need to revise the target became apparent since i) no program had been able to attain
more that 20% ACT utilization among children under five years; ii) the global cost of ACTs remained very high;
and iii) the availability of ACT continued to be a challenge globally\. At a time when the Affordable Medicines
Facility-malaria (AMFm), a facility for subsidized malaria ACTs, had not yet been established, the Project team
considered the original target too ambitious based on these existing barriers\. Secondly, the shift in focus to
treating only confirmed malaria greatly improved rational ACT utilization and reduced the actual ACTs needed as
a result of cutting unwarranted treatment of children solely based on the presence of fever\. In the long term, the
focused treatment and limited use of ACT were anticipated to contribute to reducing artemisinin-resistant malaria
parasites\. The end line LQAS survey showed that the target for utilization of ACT in children with fever within
24 hours has been exceeded\.
Diagnostic treatment: Through the Project, more than 15 million RDTs were procured, which facilitated the
capacity of Project State to respond and comply with the new policy of treatment of only confirmed cases\. In
addition, Project funds helped in procuring microscopes, and in turn strengthening the skills of laboratory
technicians in microscope diagnosis and other tropical diseases\. By 2015, 27\.9% of children under five received
RDTs prior to treatment of fever, a stark jump from the zero level at project development\. In addition, the 31\.4%
of the health facilities in Project States had RDTs compared to 20\.4% in Comparison States\. This highlighted how
the Project States enhanced capacity for evidence based policy implementation\.
Behavior communication: The high level of behavior communication messages and activities carried out during
the MNCH campaign period supported and contributed to scaling up of the Malaria Plus Package of interventions\.
Results from both May and November 2014 MNCH week campaigns exhibited increased uptake of both
Vitamin A (greater than 80%) and deworming (40%)\. Through the Additional Financing, the Project engaged the
Nigeria Interfaith Action Association (NIFAA), strengthened the IEC/ BCC mechanism through use of interfaith
action as well as interpersonal communication at community level\.
Community System Strengthening: The project brought on board community level and facility level
initiatives\. The support of community interventions included strengthening the Role Model Mother approach,
which later transformed into a community health worker\. This intervention was delivered using the Community
31
Directed Interventions (CDI) approach derived from the past experience of treating onchocercaiasis under the
Oncho Eradication Program\. As part of the Additional Financing in 2009, the Project assessed demand side
interventions through CDIs and the private sector by way of Patent Medicine Vendors (PMVs) in rural and peri-
urban areas of two states (Anambra and Gombe)\. The CDIs expanded the delivery of a comprehensive package of
malaria control interventions, including training, educational materials, and commodities (LLINs and ACTs\.)\. The
level of PMVsâ contribution to malaria control at the community level, as measured by the proportion of PMVs
that can identify primary methods of prevention and treatment, increased from 40% (MIS 2010) to 42% (baseline
IE 2013) to 60% (end stage IE 2015)\.
32
Annex 3\. Economic and Financial Analysis
Economic analysis takes for granted that the project is technically sound and the institutional arrangement is effective at project implementation\. An
economic analysis leaves no doubt whether or not the project contributes to the countryâs welfare\. It defines the objective(s) of the projects:
improving the health status of Nigerian population; looking at alternative ways of reducing morbidity, and prolonging lives of target groups (women
and children)\. The analysis asks who are the winners and losers\. Who received the benefits and who bore the costs? Were the target groups adequately
attended to and deaths averted for pregnant women and children under 5 years? These are critical situations analyzed using different models\. A good
project contributes to the countryâs economic output and has potential to make everyone better off\.
Two methods of health sector valuation were applied for this analysis\. The first method used DALYs as a primary health indicator to evaluate the
efficiency and outcome of the Project\. One DALY represented one lost year of âhealthyâ life\. The sum of DALYs across a population, or the burden
of the disease, measured the gap between current health status and an ideal health situation where the entire population lived to an advanced age,
free of disease and disability\.
Calculation and Assumptions:
DALY = YLL + YLDâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\. (1)
DAYLaverted = DALYbaseline â DALYinterventionâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦\.â¦â¦â¦\.â¦\. (2)
YLL ï½ NCe( ra ) / ( B ï« r )2 ï©
ï«e
ï ( Bï«r )
ïï(b ï« r )(L ï« a) ï 1ï ï eï( Bï«r )a ïï(B ï« r )a ï 1ïï¹
ï»\.(3)
ï¬
ï¯ KCe /( B ï« r ) e
YLD ï½ IDW ï
( ra )
ï
2 ï ( B ï« r )( L ï« a )
ï
ïï ( B ï« r )( L ï« a) ï 1ï ï e ï( Bï«r ) a ïï ( B ï« r )a ï 1ï ï¼
ï¯
ï½\.(4)
ï¯ ï rL
ï®ï« (1 ï K )( L / r )(1 ï e ) ï¯
ï¾
YLL = years of life lost due to premature death,
K = age-weighting modulation constant (e\.g\. K=1), or not specified (K=0),
C = adjustment constant for age weights (GBD standard value is 0\.1658),
r = discount rate (GBD standard value is 0\.03), a = age of death (years)
β = age-weighting constant (GBD standard value is 0\.04),
L = standard life expectancy at age of death (years),
I=number of incident cases in the reference year, DW= is the disability weight\.
Average life expectancy in Nigeria is 54
GDP/Capita = 2970,
Maternal age category (15-49),
Child age category (< 5years)
The second employed a cost effectiveness analysis (cost benefit ratio) that entailed (i) comparing the baseline scenario before the Project intervention
with the cost benefits of the Project after discounting and (ii) calculating the cash flows, net present values (NPV) and the internal rate of return
(IRR)\.
33
Method One:
Between 2005 and 2010, DALYs due to malaria reduced from 26,020,035 DALYs to 25,002,226 DALYs (source: Global Burden of Disease Study)\.
This represented a little more than 1 million DALYs (1,017,814) per year, or 18,518 lives saved per year (with the greater reduction among children
under 5 years of age at about 783 thousand DALYS reduction per year, 14,500 lives saved per year) through all of the interventions (child
immunization, provision of LLINs/ITNs insecticide nets, antenatal cares and outpatient care in the entire population (Table 3\.1)\.
Table 3\.1\. Nigeria â DALYs due to Malaria (2005-2010)
2005 2010
<1m 1112520 852314
1 to 11 m 7423870 7227590
1 to 4 12929400 12603100
5 to 9 797527 874171
10 to 14 403325 380618
15 to 19 458971 405047
20 to 24 572165 511889
25 to 29 458861 432826
30 to 34 317578 306216
35 to 39 223866 209317
40 to 44 216866 189097
45 to 49 196976 173977
50 to 54 189779 174119
55 to 59 171625 161643
60 to 64 183781 162070
65 to 69 162877 147814
70 to 74 122271 116262
75 more 75772 72146
Total 26020035 25002226
The vulnerable groups (women 15-49 years and children under 5 years) were the winners especially the children under 5 years showing exponential
improvement in the health results in terms of the disease burden, deaths averted or lives saved with the interventions\. Total DALYs averted of
1,970,092 was more than three times estimated at baseline (Table 3\.2)\.
34
Table 3\.2\. Nigeriaâ DALYs due to Malaria By sex (Maternal and Child) at end of Project in 2015
2005 2010 2013
Child < 5 years DALYs 22,108,007 24,917,007 20,235,931
Total 22,108,007 24,917,260 20,235,931
Discounted Child 2,809,253 <4,681,329>
Females DALYs
15 to 19 96092 90491 73,438
20 to 24 109926 106327 87,455
25 to 29 95229 95159 78,278
30 to 34 68932 70493 59,058
35 to 39 50276 49098 40,378
40 to 44 38313 35734 29,772
45 to 49 31053 29232 23,426
Total Maternal DALYs 489,821 476534 391,805
Discounted Maternal DALYs <13287> <84729>
Total discounted Maternal and Child DALYs 2,795,966 <4,766,058>
Total DALYs averted Maternal & Child by end of Project 2015 <1,970,092>
Nigeria per capita GDP = USD 2970
Monetary Value of lives saved by end of Project 2015 USD 5,851,173,240
35
Method Two:
Table 3\.3\. Summary Results of the Economic Analysis
Indicators Benefit Valuation Methods and Discount Rate Assumptions
GNI Per Capita GDP Per capita
6% discount 12% discount rate 6% discount 12% discount rate
rate rate
Present Value of benefits (billion 3\.086 1\.686 3\.892 2\.12
US$)
Present value of cots (Million US$) 192\.2 142\.2 192\.2 142\.2
Net Present Value (NPV, Billion US$) 2\.89 1\.54 3\.7 1\.982
IRR (%) 65% 65% 70\.5% 70\.5%
C/B Ratio 0\.06 0\.08 0\.05 0\.07
Key assumptions:
1) Discount rate assumptions:
ï 6% or the new bank wide directive
ï 12% the discount rate used to be applied in the bank
2) Valuation of DALYs:
ï GNI per capita for 2014=2970 US$
ï GDP per capita projected to 2017 using 5\.04% annual growth rate
Cost distribution:
ï For parent project the costs were distributed using the disbursement curve
ï For additional financing the total actual cost was distributed equally over the 7 year implementation period (2009 to 2015)
Scenarios:
ï Table 3\.4 (figure 1 in the excel model) â Valuation of DALYs using the projected GDP per capita and discount rate of 6%
ï Table 3\.7 (figure 4 in the excel model) â Valuation of DALYs using the projected GDP per capita and discount rate of 12%
ï Table 3\.5 (figure 2 in the excel model) â Valuation of DALYs using GNI per capita and discount rate of 6%
ï Table 3\.6 (figure 3 in the excel model) â Valuation of DALYs using GNI per capita and discount rate of 12%
36
Table 3\.4\. Valuation of DALYs using the projected GDP per capita and discount rate of 6%
Costs (US$) Benefits
GDP
Additional Total per
Year Parent project Financing Total costs DALYs Capita Total Benefits Net Benefits
2007 0 0 0 0 1977 0 0
2008 12743329\.79 0 12743329\.79 0 2083 0 -12743329\.79
2009 9862116\.7 12,571,428\.60 22433545\.3 0 2196 0 -22433545\.3
2010 44297349\.6 12571428\.6 56868778\.2 0 2315 0 -56868778\.2
2011 20282654 12571428\.6 32854082\.6 0 2514 0 -32854082\.6
2012 13335615 12571428\.6 25907043\.6 0 2740 0 -25907043\.6
2013 21148934 12571428\.6 33720362\.6 0 2980 0 -33720362\.6
2014 52822788 12571428\.6 65394216\.6 0 3203 0 -65394216\.6
2015 5597178 12571428\.6 18168606\.6 0 3376 0 -18168606\.6
2016 0 0 0 0 3559 0 0
2017 0 0 0 1970092 3751 7389815092 7389815092
NPV $192,245,557\.27 $3,892,862,405\.42 $3,700,616,848\.15
IRR 71%
C/B $0\.05
Key assumptions
2010 2011 2012 2013
GDP per
capita 2315 2514\.1 2739\.9 2979\.8
Total averted thru course of project for 10 years is 1,970,092
GDP growth Rate 5\.40%
37
Table 3\.5\. Valuation of DALYs using the projected GDP per capita and discount rate of 12%
Costs (US$) Benefits
GDP
Additional Total per
Year Parent project Financing Total costs DALYs Capita Total Benefits Net Benefits
2007 0 0 0 0 1977 0 0
2008 12743329\.79 0 12743329\.79 0 2083 0 -12743329\.79
2009 9862116\.7 12,571,428\.60 22433545\.3 0 2196 0 -22433545\.3
2010 44297349\.6 12571428\.6 56868778\.2 0 2315 0 -56868778\.2
2011 20282654 12571428\.6 32854082\.6 0 2514 0 -32854082\.6
2012 13335615 12571428\.6 25907043\.6 0 2740 0 -25907043\.6
2013 21148934 12571428\.6 33720362\.6 0 2980 0 -33720362\.6
2014 52822788 12571428\.6 65394216\.6 0 3203 0 -65394216\.6
2015 5597178 12571428\.6 18168606\.6 0 3376 0 -18168606\.6
2016 0 0 0 0 3559 0 0
2017 0 0 0 1970092 3751 7389815092 7389815092
NPV $142,252,187\.43 $2,124,395,252\.66 $1,982,143,065\.23
IRR 71%
C/B $0\.07
Key assumptions
2010 2011 2012 2013
GDP per
capita 2315 2514\.1 2739\.9 2979\.8
Total averted thru course of project for 10 years is 1,970,092
GDP growth Rate 5\.40%
38
Table 3\.6\. Valuation of DALYs using GNI per capita and discount rate of 6%
Costs (US$) Benefits (US$)
GDP
Additional Total per
Year Parent project Financing Total costs DALYs Capita Total Benefits Net Benefits
2007 0 0 0 0 2970 0 0
2008 12743329\.79 0 12743329\.79 0 2970 0 -12743329\.79
2009 9862116\.7 12,571,428\.60 22433545\.3 0 2970 0 -22433545\.3
2010 44297349\.6 12571428\.6 56868778\.2 0 2970 0 -56868778\.2
2011 20282654 12571428\.6 32854082\.6 0 2970 0 -32854082\.6
2012 13335615 12571428\.6 25907043\.6 0 2970 0 -25907043\.6
2013 21148934 12571428\.6 33720362\.6 0 2970 0 -33720362\.6
2014 52822788 12571428\.6 65394216\.6 0 2970 0 -65394216\.6
2015 5597178 12571428\.6 18168606\.6 0 2970 0 -18168606\.6
2016 0 0 0 0 2970 0 0
2017 0 0 0 1970092 2970 5851173240 5851173240
NPV $192,245,557\.27 $3,082,325,071\.74 $2,890,079,514\.47
IRR 65%
C/B $0\.06
Key assumptions
2010 2011 2012 2013
GDP per
capita 2315 2514\.1 2739\.9 2979\.8
Total averted thru course of project for 10 years is 1,970,092
GDP growth Rate 5\.40%
39
Table 3\.7\. Valuation of DALYs using GNI per capita and discount rate of 12%
Costs (US$) Benefits (US$)
GDP
Additional Total per
Year Parent project Financing Total costs DALYs Capita Total Benefits Net Benefits
2007 0 0 0 0 2970 0 0
2008 12743329\.79 0 12743329\.79 0 2970 0 -12743329\.79
2009 9862116\.7 12,571,428\.60 22433545\.3 0 2970 0 -22433545\.3
2010 44297349\.6 12571428\.6 56868778\.2 0 2970 0 -56868778\.2
2011 20282654 12571428\.6 32854082\.6 0 2970 0 -32854082\.6
2012 13335615 12571428\.6 25907043\.6 0 2970 0 -25907043\.6
2013 21148934 12571428\.6 33720362\.6 0 2970 0 -33720362\.6
2014 52822788 12571428\.6 65394216\.6 0 2970 0 -65394216\.6
2015 5597178 12571428\.6 18168606\.6 0 2970 0 -18168606\.6
2016 0 0 0 0 2970 0 0
2017 0 0 0 1970092 2970 5851173240 5851173240
NPV $142,252,187\.43 $1,682,072,487\.44 $1,539,820,300\.01
IRR 65%
C/B $0\.08
Key assumptions
2010 2011 2012 2013
GDP per
capita 2315 2514\.1 2739\.9 2979\.8
Total averted thru course of project for 10 years is 1,970,092
GDP growth Rate 5\.40%
40
Table 3\.8\. Estimated Number of Beneficiaries in Malaria Control Booster States
Population Category Analysis of Beneficiaries Total Target Beneficiaries*
AKWA IBOM
Child<5yrs-20% 1,000,000 1,000,000
5 million Women of child bearing age-15% 750,000
Pregnant women-5% of women of child bearing age 37,500 37,500
ANAMBRA
Child<5years of age-20% 960,000 960,000
4\.8 million Women of childbearing age-15% 720,000 36,000
Pregnant women-5% of women child bearing age 36,000 36,000
BAUCHI
Child<5yrs-20% 1,100,000 1,100,000
5\.5 million Women of child bearing age-15% 825,000
Pregnant women-5% 41,250 41,250
GOMBE
Child< 5years-20% 560,000 560,000
2\.8 million Women of child-bearing age-15% 420,000
Pregnant women-5% 21,000 21,000
JIGAWA
5 million Child< 5years -20% 1,000,000 1,000,000
Women of child bearing age-15% 750,000
Pregnant women-5% 37,500 37,500
KANO
Child<5 years -20% 2, 200,000 2,200,000
11million Women of child-bearing age-15% 1,650,000
Pregnant women-5% women of childbearing age 82,500 82,500
RIVERS
Child<5 years-20% 1,200,000 1,200,000
6 million Women of child-bearing age-15% 900,000
Pregnant women 5% of women of childbearing age 45,000 42,500
TOTAL
40\.1 million (Total) 8,318,250
29\.1 million (w/o Kano) 6,035,750
*Target beneficiaries: Large estimate of target beneficiaries about 15 million benefited from project\.
41
Conclusion
The analysis clearly shows the Internal Rate of Return (IRR) and the Net Present Value (NPV) are both very high indicating that the Project was
economically viable\. The calculated Cost Benefit ratio is also very low meaning that the project was highly cost effective or cost efficient\.
The vulnerable groups (women 15-49 years and children under 5 years) are the winners especially the children under 5 years showing exponential
improvement in the health results in terms of the disease burden, deaths averted or lives saved with the interventions\. Total DALYs averted of
1,970,092 was more than three times estimated at baseline\.
The foregoing analysis therefore shows the Malaria Control Booster Project was good for the people and beneficial to the country and in most part
achieved its objectives\. The children under five gained the most positive results with the various interventions\. The cost effectiveness of the project
and the benefits on the target population make the case for continued intervention after the project phase and for future sustainability\.
42
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Richard Allan Consultant AFTH3 - HIS Consultant
Bayo Awosemusi Lead Procurement Specialist GGODR Procurement
Suprotik Basu Public Health Specialist AFTHE - HIS Public Health
Marcello Castillo Consultant Consultant
Maria Eugenia Bonilla-Chacin Sr\. Economist GHNDR Economy
Serigne Omar Fye Consultant GENDR Consultant
Ramesh Govindaraj Sr\. Health Specialist GHNDR TTL
Meri Helleranta Consultant Consultant
Eva Jarawan Lead Health Specialist GHNDR Health
Hisham Abdo Kahin Counsel LEGAF Counsel
Luc Lapointe Procurement Consultant GGODR Procurement
Marc Nene Consultant GHNDR Consultant
Chukwudi H\. Okafor Sr\. Social Development Specialist GSUSD Social Development
Africa Eshogba Olojoba Lead Environmental Specialist GENDR Environment
Adenike Sherifat Oyeyiola Sr\. Financial Management Specialist GGODR Financial Management
Chau-Ching Shen Sr\. Financial Officer LOAG2 Loan Officer
Therese Tshimanga Language Team Assistant AFTH3 - HIS Team Assistant
Joseph J\. Valadez Sr\. Monitoring & Evaluation AFTHD - HIS Monitoring & Evaluation
Gert Van der Linde Lead Financial Management Specialist GGOPS Financial Management
William Vargas Consultant Consultant
Liliane Vert Consultant AFTH3 - HIS Consultant
Supervision/ICR
Amos Abu Sr\. Environmental Specialist GENDR Environment
Sunday Achile Acheneje Procurement Specialist AFTPE - HIS Procurement
Adewunmi Cosmas Ameer Adekoya Sr\. Financial Management Specialist GGODR Financial Management
Akinrinmola Oyenuga Akinyele Sr\. Financial Management Specialist GGODR Financial Management
Mary Asanato-Adiwu Sr\. Procurement Specialist GGODR Procurement
Bayo Awosemusi Lead Procurement Specialist GGODR Procurement
Maria Eugenia Bonilla-Chacin Sr\. Economist GHNDR Economy
William R Brieger AFTHD - HIS
Noel Chisaka Sr\. Public Health Spec\. GHNDR TTL
Boubou Cisse Sr\. Human Development Economist AFTEW - HIS Human Development
Alain Daudrumez Consultant AFTHD - HIS Consultant
Abiodun Elufioye Program Assistant AFCW2 Program Assistant
Ramesh Govindaraj Sr\. Health Specialist GHNDR TTL
Ogo-Oluwa Oluwatoyin Jagha Sr\. Operations Officer OPSRE Operations
Benjamin P\. Loevinsohn Lead Public Health Specialist GHNDR Public Health
Ngozi Blessing Obi Malife Program Assistant GENDR Program Assistant
Dinesh Nair Sr\. Health Specialist GHNDR TTL
Ayodeji Oluwole Odutolu Sr\. Health Specialist GHNDR Health Specialist
Anne U\. Okigbo Consultant GHNDR Consultant
Adenike Sherifat Oyeyiola Sr\. Financial Management Specialist GGODR Financial Management
43
Mehmet Onur Ozlu Sr\. Urban Economist GSURR Urban Economy
F\. Brian Pascual Operations Officer GHNDR ICR Author
Jumana N\. Qamruddin Sr\. Health Specialist GHNDR Health
Joseph J\. Valadez Sr\. Monitoring & Evaluation AFTHD - HIS Monitoring & Evaluation
William Vargas HQ Consultant ST GHNDR Consultant
Mark Zeydler-Zborowski HQ Consultant ST GSURR Consultant
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY06 23 204\.74
FY07 36 232\.87
Total: 59 437\.61
Supervision/ICR
FY07 0 -0\.16
FY08 30 221\.47
FY09 58 500\.75
FY10 106 655\.33
FY11 61 382\.50
FY12 43 380\.83
FY13 43 375\.23
FY14 35 345\.02
FY15 28 203\.15
FY16 11 50\.18
Total: 415 3,114\.30
44
Annex 5\. Beneficiary Survey Results
(if any)
45
Annex 6\. Stakeholder Workshop Report and Results
(if any)
46
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
NIGERIA MALARIA CONTROL
BOOSTER PROJECT 2007-2015\.
10 PAGE SUMMARY FOR ICR
(ABSTRACTED FROM 31 PAGE REPORT FROM NMCP)
DREFT END OF PROJECT CYCLE REPORT
PREPARED & SUBMITTED BY
Dr\. John Onyeokoro\. MBBS, MPH\.
MD/CEO, Healthwatch Resources Ltd\.
www\.healthwatchresources\.org
47
Chapter 4: FINDINGS\.
4\.1\. Strengthened Capacity of the health System to deliver Malaria -Plus Packages in the States\.
It was intended that under this component, the project will help build the capacity of the
SMOHs and the LGAs in the target states in planning, implementation, coordination and
supervision of activities aimed at expanding the Malaria Plus Interventions Package\.
This capacity strengthening was to be undertaken by the FMOH and partners, and where needed,
contracted management entities, referred to as Project Implementation Facilitators (PIFs), the
selection of which was to be subjected to international competitive bidding\. Each state was
supposed to sign an individual service contract with the highest evaluated contractor and the
contract with the PIF will be financed through the project\.
The major findings in designated thematic areas were as follows:
4\.1\.1\. PROGRAMME MANAGEMENT\.
4\.1\.1\.1 Training:
This featured most prominently in the entire project States, as well as the Federal Level\. While
all the states varied on the choice of trainings conducted, there was no instance of pre-training
needs assessment in any of the States\.
While Anambra State spent about N138, 592,746\.00 training involving about 3,655 persons,
corresponding details like the type of trainings conducted, the duration and cost per head were
still being computed as at the time of report\.
Gombe State spent about N45, 406,572\.00 on the training of clearly identified persons, with
specific training costs, and location of training sessions both within and outside Nigeria\.
Though about 10,755 persons were reportedly trained by the Bauchi State project, there is no
breakdown of who were trained in any designated training exercise, nor the unit cost of such
exercise\.
Jigawa State trained over 5,275 persons including hospital and project staff, CDDs, Journalists,
Gunduma Council Directors, Community Volunteers used in IRS, etc\. Rivers State grouped the
trainings according to Departments and functional units of the project, as well as the type of
training conducted\. However, total or unit training costs were not yet accessed as of now\.
4\.1\.1\.1\. a\. IDENTIFIED TRAINING SCHEDULE- RIVERS STATE:
ï Training of Secretarial staff on Management of Secretarial Personnel\.
ï Training of admin staff on documentation & proper record keeping
ï Training of PFMU officers on Flexible Accounting
ï Advanced Management Course in ASCON
4\.1\.1\.1\. b\. IDENTIFIED TRAINING SCHEDULE- GOMBE STATE:
48
ï Acquisition of new skills on procurement of goods, works and services
ï Project Financial Planning & disbursement
ï Training on contemporary issues in project management and experience sharing
ï Financial management and disbursement training
ï Training on Guidance and counselling
ï Project Monitoring & Evaluation
ï Training on Auditing Procurement Process
ï TOT on Pharmacovigilance
ï TOT on FANC
ï Advanced Computer Training
ï Training on strategic planning and management\.
ï Training on Prudence and Accountability in Public Finance Management
ï Advanced Training of trainers
ï Training on strategic planning and management\.
ï workshop on Procurement management
ï Training on managing people in project
ï Study tour to Kenya on malaria prevention and control
ï Study tour to Zambia on IRS implementation
ï Use of computer for financial management
ï Defensive driving skills
ï Training on management of registry functions\.
ï Training on Project Monitoring and Evaluation
ï Computer application for secretarial studies
ï Advance management training course for health officers
ï Computer Record management course
ï Advanced Project Management Course
ï Management Course for Secretaries
ï Human Resource Management
ï Supply Chain Management
ï Training methods and presentation skills
ï Facility Maintenance
ï Project Management Course
ï Advance management Course
ï Training on Performance Management for Project Managers
The spotlight on training details provided by Gombe and Rivers States does not in any way suggest
that the other participating states did not conduct the requisite trainings as at when due\. It only
highlights the extra care taken by the states to clearly justify how, and when the trainings were
conducted, where applicable\.
Contribution of the project to local resource mobilization and partnerships were also variously
captured by the states\. Generally, it served as a catalyst for resource mobilization\. In Jigawa State,
the project was accommodated within the premises of the State Government facility; hence no
extra cost was incurred on accommodation/housing\.
49
Details of the contributions of the project to partnerships like the MNCH week, routine
immunization, polio eradication, high level advocacy, support to NHMIS, etc\. were varied across
the implementing states, and will be highlighted in the final report\.
4\.1\.2\. CASE MANAGEMENT\.
All participating States demonstrated that the project scaled up diagnostic, therapeutic and
preventive abilities of the recipients in their localities\.
The following key observations were made by the Head of Case Management of the Program, Dr\.
Ntadom:
ï¶ Vector control with Larvicidals was piloted in areas where was a preponderance of natural
water bodies, like Rivers State\.
ï¶ PPMVs were piloted in Gombe and Anambra States\.
ï¶ Some generalised drug therapeutic efficacy tests were carried out, with support from the
Bank\.
Activities undertaken in this thematic area include the distribution of ACTs, RDTs, LLIN, Vector
Control through IRs, and BCC activities to enhance uptake\.
The project brought about an increase in the number of health facilities providing ACTs from 398
in 2007, to 594 in 2014, an increase of 67%\. There was also an increase in the scope of indoor
residual spray in Anambra, and Gombe States\.
In Jigawa State, the coverage rate in 6 LGAs, involving over 300 structures was reported to be
between 82-92%\. Rivers State had an elaborate Vector Control Programme, details of which
included, but not limited to the following:
ï¼ Baseline data collection in preparation for IRS
ï¼ Training of spray operators, supervisors team leaders in Ikwerre LGA\.
ï¼ Training of 320 House hold enumerators and 32 supervisors\.
ï¼ Social mapping of Ikwerre & Etche LGAâs by GIS expert
ï¼ Training of 956 spray operators and 32 supervisors for IRS exercise
ï¼ Training of 32 waste managementâs and 6 coordinator
ï¼ Sitting of 32 soak pits in the 32 wards of Ikwerre and Etche LGA\.( To ensure that effluent
waste from IRS is not discharged into the environment)
ï¼ Deployment of IRS waste management coordinators during and after IRS
There was sufficient evidence in all states to show how the distribution of LLINs from the
project significantly increased the baseline figures at the onset of the project, and how this has
had an add on effect on other sources of LLINs, notable among which is from the Global Fund for
AIDS, Tuberculosis and Malaria over the past seven years of project implementation\.
4\.1\.3\. MONITORING & EVALUATION\.
The overarching goal of Monitoring and Evaluation is to contribute to the strengthening of the
health system through the project\.
50
The objective is to introduce the decentralized M&E system as results based management tool to
assess the status of the overall process and introduce program changes as needed\. Collection of
several types of information and tools are needed for management purpose that will be supported
by the project9:
(i) Process indicators (inputs, activities, and outputs)\.
(ii) Results indicators (primarily outcomes);
(iii) Logistic Management Information System (LMIS) data\.
(iv) Health Management Information System (HMIS) data\.
(v) Lot Quality Assurance Sampling systems (LQAS)\.
Primarily, this is achieved through to improved collection, quality and utilization of routine data
to monitor the implementation of malaria related interventions through the Health Management
Information System (HMIS)\.
Key activity Components of the State Level M&E include, but not limited to the following:
ï¼ Monthly Data Collection and dissemination meetings with FPs
ï¼ Quarterly Supportive Supervisory Visits\.
ï¼ House hold survey using LQAS\.
ï¼ Health facility (HFs) assessment survey\.
ï¼ Dissemination of LQAS hand tabulation report\.
ï¼ Capacity Building of MOH, FPs, LGA M & E Officers, DSNOs, Data Officer, PIU/PFMU on new
M&E data tools and supervisory checklist
ï¼ Collation & Sending of monthly surveillance and Prevention/ Treatment data to NMEP\.
ï¼ Key house hold practices (KHHP) Survey\.
ï¼ Quarterly data dissemination meetings with partners\.
Prior to the onset of the use of DHIS 2 as a platform for data collection, the programme was using,
and still uses the NMEP (Excel) as a platform for data collection and utilization\. The introduction
of the DHIS 2 resulted in certain modifications in the malaria data subset, such that some data
components were dropped to be able to accommodate more disease entities\. Consequently, the
process of migration from NMEP data base to DHIS 2 is still on-going\.
The M&E project focal person mentioned the following as some of the benefits of the project in his
unit{
ï¶ Improved data quality\.
9
World Bank Project Appraisal Document 2006
51
ï¶ Where supportive supervision and data quality assessment visits were undertaken, the staff
in visited states were put through various aspects of their work where deficiencies were noticed,
resulting in appreciable capacity building\. However, the states were not doing same to staff at
LGAs and facilities/service delivery points\. The SS and DQA visits resulted in improved rate of
data traffic to the Federal level from the States and SDPs\.
ï¶ The regular Programme Management Unit (PMU) meetings at the Federal Level, and the
Programme Implementation Unit (PIU) meetings at the state level have also served as training for a,
where the capacity of designated staff to fill forms have been tremendously built\. It is expected
that this will be cascaded down to the LGAs and facility levels for a more holistic capacity building
across board\.
4\.1\.4\. PROCUREMENT & SUPPLY CHAIN MANAGEMENT\.
The Procurement of commodities is the prerogative of the Federal Government, with the project
supporting and strengthening the procurement systems that ensures continuous supply of key
commodities like ACTs, IM Artemether, IPTs, LLIN, RDTS, etc\.
The over-arching objective, which is to strengthen logistics and supply chain management of
antimalarial medicines/commodities, was attained in various degrees in the participating States,
and the Federal Government\.
State level procurement is categorized into three broad headings:
4\.1\.4\.1\. Project Commodities:
These include, but not limited to the following;
a\. ITNs/LLINs
b\. ACTs
c\. SP
d\. RDTs
e\. IRS chemicals
f\. ORS Sachets
g\. Others like albendazole, cotrimoxazole, Amoxicillin, Paracetamol and Vit\. B complex
syrups, Fersolate and Folic Acid tins (tablets), etc\.
4\.1\.4\.2\. Consultancy Services\.
4\.1\.4\.3\. General Works and Services\.
It was observed that the Procurement Unit in all participating states, as well as the Federal level
gained considerable experience and capacity building through the adherence to the Bankâs
guidelines\.
52
It was also observed from the state reports that delays in project implementation arose from the
interference of Government in routine processes like engagement of firms, consultants and the
supply of goods\.
There were various reports indicating the use to which the monies received were put to use in
meeting the above needs by the participating states\.
4\.1\.5\. ADVOCACY, & COMMUNITY & SOCIAL MOBILIZATION\.
Advocacy, Community and Social mobilization activities are cross cutting, and usually impact on
all areas of programme delivery\.
To a great extent, all participating states found and utilized the need for targeted advocacy to
constituted authority to elicit the buy-in to the project\. This was seen as a veritable means of
engendering short term program success\. In addition, it was also seen as a means of ensuring
programme ownership and sustainability\. A detailed presentation of my findings will be made
later\.
4\.2\. Strengthened Leadership capacity of the Federal Government
This component is intended to enhance coordination and oversight of all administrative and
technical aspects of the project, including standardization of implementation capacity and
intervention delivery at state and local levels, and sharing experiences across states\. The Director
of the NMCP (NMEP) serves as the Project Coordinator and the Assistant NMCP Director is
Coordinator of the Federal component\.
Critical to achieving the core Leadership function by the National Malaria Elimination Programme
are the following:
Adequate coordination of project activities;
Timely identification and resolution of issues affecting or potentially affecting
implementation;
Adequate administrative support to the NMEP, SMoH, and implementing partners\.
Provision of project inputs in a timely and cost-effective manner; (v) appropriate
management of project resources in accordance with bank requirements for procurement and
financial management;
Effective monitoring and progress reporting\.
The National Programme has had a high turn- over of leadership over the duration of the project,
with the fourth National Coordinator currently at the helm of affairs\. While this may not have had
some considerable adverse effects on project delivery, its effect on institutionary memory in the
context of effective and efficient programming cannot be downplayed\.
In the opinion of the National Coordinator; Dr\. Mrs\. Nnenna Ezeigwe, the most critical challenges
faced by the project over its duration include, but are not limited to the following:
53
ï¶ Procurement- There was a perception by the private sector of exclusion in the award of
contracts\.
ï¶ Guidelines and SOPs-There were instances where extant guidelines for some critical
interventions, like IRS, etc\. were not developed\. In other cases, developed guidelines were not
disseminated to service delivery points, Local Governments and States\. This resulted in relative
skills deficit at service delivery points\.
Chapter 5: LESSONS LEARNT AND BEST PRACTICES\.
5\.1\. Lessons Learnt\.
ï There is increased awareness among the people of Nigeria about malaria and preventive
measures: People are now generally more conscious of the dynamics of malaria transmission and
the preventive measures individuals and groups can take to keep safe from malaria\.
ï The NMEP has adapted the Global Malaria Programme recommended strategies, most of which
are already enshrined in the national malaria policy; thereby leading to the institutionalization of
Global best Practices in Malaria Control & Prevention\.
ï Reduced Incidence and Prevalence: Before the year 2000, malaria prevalence was higher than
50%\. At the time the Malaria Indicator Survey (MIS) was conducted in 2010 this has dropped to 42%\.
Further, a recent mapping study jointly conducted by Glaxo-Welcome Trust at KEMRI and the NMEP
demonstrated a gradual shift from holo-endemicity to meso-endemicity of malaria\. By this more
than 80% of the population now reside in areas where the prevalence is between 5-10%\. This
corroborates empirical observation which indicates that malaria incidence has reduced\.
ï Enhanced the chance of attaining MDG 4: According to the 2013 NDHS, the under- 5 mortality
has declined by 31% and now stands at 128/1000 Live Births\. This is largely due to the impact of
various malaria interventions because in 2010, malaria was responsible for 30% of death in this age
group\. At the moment, this proportion has reduced to 25%\.
ï States where Booster Project was implemented did far better in the relevant malaria
indicators than the rest\. A major success story of this intervention is in Misau LGA, Bauchi State
where confirmed malaria cases dropped from 14,949 to 4,819(67\.8%) after application of IRS
ï State Programme Managersâ capacities were tremendously built by the project\. This cascaded
to other categories of project staff in the various participating states\. Consequently, greater
understanding of the project objectives and goal was demonstrated in all participating states
towards the end of the project cycle\.
ï There was little or inadequate opportunities for project monitoring and supportive
supervision in states and service delivery points\. Where supportive supervision was undertaken,
this was not sustained\.
54
5\.2\. BEST PRACTICES\.
ï Local innovations: The Booster project has provided opportunities for the development of
local innovative approaches that promote community participation in malaria case management and
control\. The involvement of Community Resource Personnel (CORPS) and the Nigeria Interfaith
Action Association (NIFAA) are cases in point\.
ï The Introduced, but short-lived Monthly Integration Committee meetings in Awka, Anambra
State worked very well initially collating reports on the various disease activities during the periodic
M&E visits\. Though this was not sustained, it is worth revisiting, since it is a step forward in the
Countryâs quest for integration of services at facility and other levels\.
Chapter 6: CONCLUSION
Suffice it to say that encouraged by the achievements of the Booster project and other
partner supported interventions, the Federal Ministry of Health refocused the programme towards
a malaria-free Nigeria and developed the new generation National Malaria Strategic Plan 2014-
2020\.
The goal of the NMSP is to reduce malaria burden to pre-elimination level of less than 5%
prevalence and bring malaria-related mortality to zero by 2020\. In line with this vision, the
national programme was renamed National Malaria Elimination Programme (NMEP) at the last
National Council on Health meeting in August 2013\.
The WBMCB Project provided the initial financial frontloading for the development of a robust
RBM partnership financing to scale up proven interventions in the implementing States and
strengthening capacity for malaria implementation at both State and Federal levels\.
It is hoped that the observed gains of the project could be scaled up through introduction in
other designated States in the Federation\.
However, it is not all good news\. Some while, States could have performed better, one or two
others spent so much money on capacity building, which they could not justifiably validate\. There
was also no capacity needs assessment by any of the States prior to the trainings\. The Monitoring
and Evaluation capacities of the states remain relatively weak, due partly to the high attrition rate
of the few available trained M&E staff in the LGAs\.
Chapter 7: RECOMMENDATIONS\.
ï§ The NMEP should undertake a capacity needs assessment prior to conducting any future
training for programme staff\. This should be done at Federal and State levels to identify and
prioritize the capacity needs of staff at various levels\.
55
ï§ A robust capacity building plan should be instituted and implemented after the capacity
needs assessment\. This plan will be shared to all stakeholders for implementation in different
government and partner supported projects\.
ï§ There should be regular project monitoring and supportive supervision to help build the
capacity of project staff in states and Service Delivery Points\.
ï§ There is a need for independent monitoring of Programme performance at National, State
and LGA levels\.
ï§ There should be closer linkage with similar projects like the Global Fund Malaria Project\.
ï§ National and State level Programme staff should be involved in future pre-project planning
meetings, with other relevant stakeholders or partners\.
56
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
57
Annex 9\. List of Supporting Documents
Federal Government of Nigeria\. 2006-2010 Country Strategic Plan\.
Federal Government of Nigeria\. Nigeriaâs 2004 National Health Policy
Federal Government of Nigeria\. Presidential Initiative for Accelerated Achievement of the
MDGs
Federal Government of Nigeria\. 2005 National Economic Empowerment and Development
Strategy (NEEDS)
Federal Government of Nigeria\. End of Project Malaria Household Survey in Nine States
of Nigeria, National Malaria Elimination Programme\. Federal Ministry of Health, Abuja,
March 2015\.
Federal Government of Nigeria\. Nigeria Health Facility Assessment 2009\. By Malaria
Booster Program, NMCP, FMPH\. UNDATED\.
Federal Government of Nigeria\. End of Project Health Facility Assessment in Nine States
of Nigeria\. By NMEP FMOH\. March 2015\.
IFC Marco and National Population Commission of Federal Republic of Nigeria\. Nigeria
Demographic and Health Survey 2008\. Abuja and Claverton\. November 2009\.
IFC Macro, NMCP-FGON, National Population Commission - FGON, and DHS IFC
International\. Nigeria Malaria Indicator Survey 2010 Final Report\. Abuja and Calverton\.
June 2014\.
IFC International and National Population Commission of Federal Republic of Nigeria\.
Nigeria Demographic and Health Survey 2013\. Calverton and Abuja\. June 2014\.
The World Bank and DFID\. Country Partnership Strategy for the Federal Republic of
Nigeria (2005-2009)\. Report No\. 32412-NG\. June 2, 2005\.
Federal Government of Nigeria\. 2009-2013 National Malaria Strategic Plan\.
Federal Government of Nigeria\. 2014-2020 National Malaria Strategic Plan\.
RBM Country Report on Nigeria (Progress and Impact Series, 2012)\.
UNICEF, Federal Government of Nigeria- National Bureau of Statistics\. Nigeria Multiple
Indicator Cluster Survey 2007 Final Report: Monitoring the Situation of Children and
Women\.
58
UNICEF, UNPF, DFID, Federal Government of Nigeria- National Bureau of Statistics\.
Nigeria Multiple Indicator Cluster Survey 2011 Main Report: Monitoring the Situation of
Children and Women\.
The World Bank Group and UK DFID\. Country Partnership Strategy for the Federal
Republic of Nigeria (2005-2009)\. June 2, 2005\.
The World Bank Group\. Project Appraisal Document on Proposed Credit to the Federal
Republic of Nigeria for a Malaria Control Booster Project\. November 14, 2006\.
The World Bank, UK DFID, USAID, and the African Development Bank\. International
Development Association Country Partnership Strategy for the Federal Republic of
Nigeria (2010-2013)\. July 2, 2009\.
The World Bank Group\. International Bank for Reconstruction and Development,
International Development Association, International Finance Corporation, and
Multilateral Investment Guarantee Agency â Country Partnership Strategy for the Federal
Republic of Nigeria for the Period FY2014-2017\. March 13, 2014\.
59
Annex 10\. Results Framework and Monitoring
Results Framework and Monitoring
NIGERIA: Malaria Booster Control Project Restructuring
Project Development Objective (PDO): The Project Development Objectives are: (i) to ensure that the target population will have improved access to, and utilization of, a
well-defined set of Malaria Plus Package interventions (MPP); and (ii) to strengthen Federal and States ability to manage and oversee delivery of malaria plus
interventions\.
Revised Project Development Objective (PDO): No change
Status Indicato
r type Introduction Comments
Final Indicator
F
Restructure
PDO Level Results Indicators A
Continue
Dropped
Revised
PAD
New
AF
PDO1 Indicator One: Percentage of children less than 5 years of age X Outcome X The target was revised from 80% to 15% to
with fever treated with an effective anti-malarial 10within 24 reflect a more realistic end target based on
hours from the onset of symptoms11 experiences from other countries with
ongoing artemisinin-based combination
therapies (ACTs) use, global availability of
ACTs, focused treatment intervention, and the
need to reduce artemisinin-resistant malaria
parasites\.
Indicator Two: Percent of infants aged 0-6 months who were X X Dropped since it did not align well with
fed breast milk only in the last 24 hours12 activities that support the Project\. Replaced
by indicator on Vitamin A supplementation
10
The specific anti-malarial is ACT\.
11
Target has been revised to be more realistic
12
No longer relevant as program will be using child health weeks to deliver MPP
60
PDO2 Indicator Three: Percentage of children < 5 years who slept X X
under an LLIN/ITN the night preceding the survey
PDO3 Indicator Four: Percentage of pregnant women who received X X
two or more doses of IPT
PDO4 Indicator Five: Percentage of pregnant women who slept under X X
an ITN the night preceding the survey
Indicator Six: Percentage of States using M&E data as a basis X X Dropped since the target had been
for preparing annual work plans for their malaria and MCH consistently met and maintained over time\.
Programs13
PDO5 Indicator seven: Number of under five children who received X X Replaced PDO indicator on breastfeeding\.
vitamin A supplementation New indicator better aligned with the
activities that support the Project\. However, a
timeframe was not included for this indicator\.
PDO6 Indicator Eight: Direct Project Beneficiaries, Of which female14 X X Core indicator
Intermediate Results
Intermediate Result (Component One):
Original Credit: Strengthen the Capacity of the Federal Government to Provide Malaria Control Leadership and Coordination over the Medium and Long-Term\.
Additional Financing: Health Systems Strengthening for Improved Program Implementation and Better Outcomes for the Malaria Plus Package
Intermediate Result Indicator One: Number of ACT doses X
distributed (disaggregated by under 5 and over 5)
Intermediate Result Indicator Two: Number of distribution sites X
for pediatric ACT per 10,000 population and percentage of
distribution sites with no pediatric ACT stock-outs in the last
three months prior to the HFA
Intermediate Result Indicator Three: Number of LLIN and X
doses of SP distributed to LG distribution sites per 10,000
population by service type (public and private)
IRI1 Intermediate Result Indicator Four: Number of LLIN X
distributed per year
IRI2 Intermediate Result Indicator Five: Number of LLIN X
distributed in 22 additional states
13
Target achieved consistently and adding limited value
14
This is a mandatory core indicator\. Beneficiaries will include pregnant women receiving IPT and children under five sleeping under bednets and those treated with effective anti-malarial\.
61
Intermediate Result Indicator Six: Data validation system in X
place for M&E data collection and utilization\.
Intermediate Result Indicator Seven: X
Population-based surveys and HFAs carried out\. NMCP with the
assistance of the M&E agent, triangulate the information from
population-based studies and HFA for national level policy
making\.
Intermediate Result Indicator Eight: M&E data used at least X
annually to modify and improve annual work plans for the
National Malaria Control Program\.
Intermediate Result Indicator Nine: Annual reports of project X
attainments are produced and submitted to donor and
collaborating agencies\.
Intermediate Result Indicator Ten: Percentage of distribution X
sites with no SP, LLINs, and pediatric and adult ACT stock-outs
in last 3 months prior to the HFA\.
Intermediate Result Indicator Eleven: Percentage of service X
delivery points providing regular information to update the LMIS
on drug use, balances and orders\.
Intermediate Result Indicator Twelve: LMIS print-outs X
produced quarterly\.
IRI3 Intermediate Result Indicator Thirteen: Percentage of health X
facilities using laboratory confirmation as the basis for treatment
of fever in children\.
IRI4 Intermediate Result Indicator Fourteen: Percentage of X
households sprayed with IRS in last 12 months
Intermediate Result (Component Two):
Original Credit: Strengthen the Health System to Improve Delivery of the Malaria Plus Interventions in the Target States
Additional Financing: Health System Delivery through Community System Strengthening, and Communications for Advocacy, Program Implementation, and Results
IRI5 Intermediate Result Indicator One: Percentage of households X
with at least one ITN/LLIN
Intermediate Result Indicator Two: Percent of children aged 0- X
23 months with cough and fast/difficult breathing in the last 2
weeks who were taken to a health facility or received antibiotics
from an alternative source\.
62
IRI6 Intermediate Result Indicator Three: Percentage of children X
aged 0-23 months with diarrhea in the last two weeks who
received oral rehydration solution (ORS) and/or any home fluid\.
Intermediate Result Indicator Four: Percentage of children 12- X
23 months that are vaccinated with the DTP3 and measles
vaccines\.
Intermediate Result Indicator Five: Percentage of women with X
children12 â 23 months who received an ITN/LLIN during last
pregnancy\.
Intermediate Result Indicator Six: Percent of pregnant women X
who received two or more doses of IPT\.
IRI7 Intermediate Result Indicator Seven: Percentage of women with X
children <1 year of age who received ANC care during last
pregnancy\.
Intermediate Result Indicator Eight: Percentage of children less X
than 5 years of age with fever treated with an effective anti-
malarial within 24 hours from the onset of symptoms\.
Intermediate Result Indicator Nine: Percentage of health X
facilities that treated children < 5 with febrile disease with an
effective anti-malarial using the IMCI protocol by type of service
(public and private)\.
Intermediate Result Indicator Ten: Percent of mothers who X
recognize signs of severe illness in children and know when and
where to obtain help\.
Intermediate Result Indicator Eleven: Percentage of children X
with fast or difficult breathing or chest in-drawing who were
treated for pneumonia\.
Intermediate Result Indicator Twelve: Percentage of caretakers X
of under-5 children able to mention two danger signs that would
require them to take the child to the health facility\.
Intermediate Result Indicator Thirteen: M&E data used at least X
annually to analyze and to improve annual work plans for the
SMOH, including State and LGA implementing partners and
PIFs\.
63
Intermediate Result Indicator Fourteen: Percentage of children X
less than 5 years of age with fever treated with an effective anti-
IRI8
malarial within 24 hours from the onset of symptoms in
communities piloting CDI\.
Intermediate Result Indicator Fifteen: Percentage of X
households with at least one ITN/LLIN the previous night in
communities piloting CDI\.
IRI9 Intermediate Result Indicator Sixteen: Percentage of sampled X
CDDs with no stock-outs in the last three months15
Intermediate Result Indicator Seventeen: Percentage of targeted X
PMVs in peri-urban and urban areas providing authorized and
effective anti-malarials\.
IRI10 Intermediate Result Indicator Eighteen: Percentage of sampled X
PMVs that had ACT in stock at the time of assessment\.
Intermediate Result Indicator Nineteen: Percentage of mothers X
of children < 5 years of age in CDI communities exposed to mass
media IEC messages aimed to increase use of ACT, LLINs and
IPT\.
IRI11 Intermediate Result Indicator Twenty: Percentage of PMVs X
knowing the correct dose of ACT for under-5 children\.
IRI12 Intermediate Result Indicator Twenty-One: Number of RDTs X
distributed to health facilities\.
Intermediate Result Twenty-Two: Percentage of children less X
than 5 years of age diagnosed as fever or malaria receiving a
prescription of ACT, as observed at the public health facility
Intermediate Indicator Twenty-Three: Percentage of public X
health facilities which prescribed ACT to at least one child less
than 5 years old diagnosed as fever or malaria, as observed
during the facility assessment\.
IRI13 Intermediate Result Indicator Twenty-Four: Percentage of X
caregivers who knows at least two symptoms of malaria\.
Intermediate Result Indicator Twenty-Five: Percent change in X
client populationâs behaviors following introduction of key BCC
and IEC messages\.
15
This will be a new module in the Household Survey\. IE data will also be available in three States\.
64
IRI14 Intermediate Result Indicator Twenty-Six: Percentage of X
mothers of children < 5 years of age in CDI communities who
knows at least two ways of preventing malaria
65
Annex 11\. Impact Evaluation Summary
IMPACT EVALUATION SUMMARY FOR THE IMPLEMENTATION
COMPLETION REPORT
The impact evaluation (IE) integrated into the Malaria Control Booster Project focused on the Community Systems
Strengthening component of the Additional Financing (AF) and, specifically, on the delivery of publicly-funded
malaria prevention, diagnosis, and treatment services through Community Direct Distributors (volunteers) and private
sector Patent Medicine Vendors (PMVs), which together accounted for US$4 million of the Projectâs resources
allocated during the AF in 2009\. The IE was conducted in Anambra State and Gombe State to test these two pilot
interventions, which were implemented between April 2013 and March 2015\. The objective of the IE was to test the
impact of these two novel service delivery channels on health and other malaria-related outcomes in the population\.
The IE results show that the MCBP in Anambra and Gombe States was successful in engaging community-level
providers with sufficient knowledge of malaria prevention and treatment to provide effective malaria-related health
services\. There is some evidence that the interventions improved elements of household-level knowledge of malaria
prevention and treatment, though this does not appear to have translated into improved malaria-related health and other
outcomes\. There are several potential reasons why, overall, the CDD and PMV interventions did not produce positive
impacts, each of which contains important policy lessons that can be categorized as follows: (i) operational design and
implementation (e\.g\. the scale, length and intensity of implementation; integration of operational research
into program implementation; more emphasis on consumer education; mechanism to ensure subsidy pass-
through to the consumer; complementarity of PMVs and CDDs and strengthened referral links, etc\.); (ii)
health system constraints (supply chain challenges); and (iii) policy context (e\.g\., policy regarding RDT use by PMVs;
targeting the 5-12 age group; and using OR as well as economic evaluation to complement effectiveness analysis)
(please see Annex 11\.1 and Annex 11\.2 for the policy conclusions of Anambra and Gombe States)\.
Although IE implementation did not start until late 2012 with the collection of the baseline survey, discussions on its
design were first held in 2007 and the IE concept note was approved in 2009\. As the first health sector IE linked to the
Bankâs portfolio in Nigeria, the MCBP IE was particularly important as a catalyst in stimulating broader interest within
the health sector in rigorous evaluation of health policies and programs for evidence-informed policymaking\.
Consequently, this IE was instrumental in launching further evaluation work including of Nigeria State Health Program
Investment Credit (NSHIP) and of programs that did not receive World Bank financing, such as the Subsidy
Reinvestment and Empowerment Programme Maternal and Child Health Project and the Quality Improvement and
Clinical Governance Initiative\.
The MCBP IE experience also contains important lessons for future evaluations, particularly of World Bank-assisted
projects\. In particular, IE should be complementary to standard project M&E and operational research activities, but
for this to be the case the latter may need reinforcing\. Second, to maximize the value of the IE for informing policies
and operations, interventions that are the subject of an IE should begin implementation as early as possible in the
project cycle\. Ideally, the IE will be included in project design documents, at least in preliminary form\. Third, TA for
IE-type activities should be integrated into overall project supervision and capacity building for project implementation\.
66
ANNEX 11\.1: ANAMBRA STATE
MALARIA CONTROL BOOSTER
COMMUNITY SYSTEMS STRENGTHENING INTERVENTIONS
Conclusion and Policy Recommendations
ï Project Context\. The US$180 million World Bank-assisted Malaria Control Booster Project
(MCBP) became effective in May 2007\. US$100 million Additional Financing (AF) was approved in
June 2009 to respond to the then recently updated National Malaria Strategy\.16 The AF focused on moving
towards universal coverage of the population with key malaria prevention and treatment interventions and
put greater emphasis on diagnostics and health systems development\. 17 The Community Systems
Strengthening (CSS, US$7 million) Component of the Additional Financing included pilots for two novel
service-delivery channels to complement the delivery of publicly-funded malaria-related services through
public primary healthcare facilities\. Under the Community-Directed Interventions (US$2 million)
Community-Directed Distributors (CDDs) were trained to provide malaria control services to members of
their extended families\. Under the Patent Medicine Vendors (PMVs) pilot (US$2 million) private drug
retailers were trained in the clinical diagnosis of malaria and the appropriate sale of subsidized artemisinin
combination therapies (ACTs)\. The CDD and PMV interventions were implemented from April 2013 to
March 2015\.
ï Evaluation Design\. The Malaria Control Booster Project Community Systems Strengthening Impact
Evaluation was designed to test the effectiveness of the CDD and PMV interventions, together and in
isolation, in improving malaria-related health and other outcomes\. The study uses a randomized controlled
trial design\. Balance tests carried out following the baseline survey confirm that the randomization was
successful in creating groups of households that were, on average, equal across outcomes and therefore
provide a valid basis for estimating the impacts of the CDD and PMV interventions on household and
individual-level outcomes\.
ï Within wards receiving one or both treatments, the selection of PMVs and CDDs was non-random, and
selection mechanisms likely favored better connected, more knowledgeable persons\. This is particularly true
for PMVs\. In the case of CDDs, this cadre of health workers was largely created through the intervention,
and so there is no control group to compare to in terms of provider-level outcomes\. For this reason, the IE
is not able to directly test the impact of the CDD and PMV interventions on outcomes at the CDD or PMV
level\.
ï Results â Provider Level\. With this important caveat, the IE survey results show that it is possible to
engage a set of community-level providers with high levels of knowledge in basic malaria prevention and
treatment\. This is likely due both to the selection mechanisms and to training provided through the project\.
ï Results â Household Level\. There is some evidence that the interventions improved elements of
household-level knowledge of malaria and treatment-seeking behavior, though this does not appear to have
translated into improved malaria-related health and other outcomes\. When accounting for the fact that we
expect to observe some statistically significant differences between treatment and control groups by chance
when looking across a range of variables, we cannot reject the hypothesis that the CDD and PMV
interventions did not produce any household-level impacts\.
16 Federal Ministry of Health, Nigeria, 2008\.
17 The Malaria Control Booster Project closed in March 2015\.
67
ï Key Findings Related to the Causal Pathway\. There are several potential reasons for the lack of
conclusive evidence that the CDD and PMV interventions produced positive impacts, each of which contains
important policy lessons, which fall under three main groups: (1) operational design and implementation;
(2) broader health system constraints; and (3) policy context\.
1\. Operational Design & Implementation
ï First, the scale of implementation of both interventions may not have been sufficient to generate
broader population-level outcomes\. On average, 7 PMVs and 30 CDDs were trained per health facility
catchment area, to serve an average population of 18,81318\. PMVs were found to be the second-most popular
place to seek care for malaria, after public health facilities, but this does not necessarily mean that care was
sought at a PMV trained under the MCBP (34% of fever cases in the four weeks preceding the survey that
sought care for their disease reported doing so from a PMV)\. Only a very small portion of fever cases (3%)
reported seeking care for malaria from community health workers (including CDDs)\.
ï Second, it may be that the length and intensity of implementation was not sufficient for the intervention
to take root and produce household-level outcomes\. The intervention was rolled out over a period of two
years, with limited supervision and support to CDDs beyond initial training, and limited monitoring for
compliance (to ensure, for example, that PMVs pass ACT subsidies through to consumers)\. Similar future
initiatives should be accompanied by a stronger process of ongoing monitoring and operational
research, where feasible, to assess implementation problems and likelihood of success as part of the
intervention\. In particular, operational research, including impact evaluation, should be considered in the
early stages of the project so that these experiences can inform mid-course corrections and later phases of
the project, in addition to future policies\. Sufficient time should also be factored in for the interventions to
take root and for their full functioning prior to evaluating impact\. In the case of the IE of the PMV and CDD
interventions, this was not possible due to the closing of the Malaria Control Booster Project\.
ï Third, there is a break in the causal pathway between knowledge and behavior\. High levels of household-
level knowledge on malaria prevention does not translate into high-levels of net use\.
Furthermore, only one out of every three households recognize ACT as the best treatment for
malaria, and among those fever/malaria cases reported in the household survey who took some form of
medicine for treatment, only 30% could confirm that they were treated with ACT\. In both cases, this suggests
further consumer education efforts are needed and underscores the importance of appropriate
diagnostic, prescriptive, and patient education practices by healthcare providers, including community
agents such as PMVs and CDDs (among those fever cases that were confirmed malaria positive using
microscopy or RDTs and that took medication to treat their illness, only 46% could confirm that they were
in fact treated with ACT)\.
ï Fourth, in seeking to make ACT more accessible and affordable, one important potential challenge that
requires further investigation is in ensuring that the subsidy offered to PMVs (or any other healthcare
provider) for the purchase of ACT is passed on to consumers\. Solutions may include unique labeling,
and perhaps the use of SMS technology to validate retail price (and quality)\. This would require further
education of consumers, however\.
ï Fifth, the results of the study suggest PMVs and CDDs should be seen as complementary\. PMVs are
expected to be relatively more motivated by profit, while CDDs are expected to be relatively more
intrinsically motivated\. This is demonstrated, for example, by the fact that about one in three CDDs reported
carrying out prevention-related activities (promoting net use; net-hanging assistance) in the two weeks
preceding the survey, whereas the proportion of PMVs doing these activities is close to zero\. On the other
18 This number is based on the total population in the catchment area reported by each primary health facility in Anambra State\.
68
hand, PMVs are a preferred source of treatments, with 34% of fever cases in the four weeks preceding the
survey seeking care at a PMV versus only 3% at a community health worker (including CDDs)\. It may be
worth considering whether CDDs could be incentivized to do more promotion (two out of three did not
report any such activities in the past two weeks) with PMVs focusing on diagnosis with RDTs and treatment\.
This relationship could be formalized through referral links, including linkage between the CDDs and
PMV, and their relationship with the public sector to better address the existing service delivery constraints
based on the respective comparative advantage of each platform/agent\.
2\. Health System Constraints
ï Both CDDs and PMVs suffered from high rates of stock-outs of ACTs and, for CDDs, of RDTs\. Supply chain
failures are a well-documented issue within the Nigerian health system, and impact evaluation survey
results show that 41% of public primary healthcare facilities in study wards experienced an ACT stock-out
in the past three months\. PMVs experienced relatively fewer stock-outs than did CDDs as they were not fully
reliant for ACTs on the public distribution system\. Still, ACTs procured from markets habitually used by
PMVs would not be subject to the subsidy offered through the project and so are not necessarily a perfect
substitute for ACTs procured and distributed through the MCBP\. For any intervention aiming to use local
actors to improve access to malaria or other health services, resolving higher-level issues in the supply chain
is critical\.
Â
3\. Policy Context
ï First, at the time the project was conceived national policy did not permit PMVs to use RDTs for
malaria diagnosis (this restriction remains in place, though the latest version of the National Strategic
Plan suggests that lifting this restriction should be considered)\. Instead, PMVs were trained in clinical
diagnosis of malaria\. Household survey results show that clinical diagnosis is more likely to lead to
presumptive treatment: 60% of those diagnosed through microscopy or RDT were confirmed malaria
positive, whereas as 92% of those diagnosed clinically took some form of medication\. As an important
community-level provider of health services, strategies should be developed to train and incentivize PMVs
to use RDTs (the fact that current policy considers allowing PMVs to use RDTs is an important first step)\.
For optimal care continuum, a referral system between CDDs and PMVs could be considered\.
Consumer education campaigns may also be needed to encourage patients/customers to
demand an RDT test prior to purchasing medication\. Using ACTs to treat only confirmed cases of
malaria is important both in terms of efficient use of public (and private) funding, correct treatment for
patients not suffering from malaria, and reducing the risk of drug resistance\.
ï§ Second, the results show highest malaria prevalence among children between 5 and 12, the
group not prioritized by the intervention\. Traditionally, most interventions related to malaria focus on
children under five and pregnant women as they are the most vulnerable groups to malaria\. The relatively
high percentage of malaria prevalence among children between 5 and 12 suggests, however, that efforts to
address malaria in this population group, which may have developed some immunity and therefore be
asymptomatic, remain important\. In particular, there is evidence showing that untreated malaria infections
can negatively affect childrenâs health and cognitive function which could impact education achievement
and the development of human capital\. Also, asymptomatic individuals can act as reservoirs of malaria,
complicating the push towards malaria elimination\.19
19 Halliday, Katherine, Georgeo Okello, Elizabeth Turner, Kiambo Njagi, Carlos Mcharo, Juddy Kengo, Elizabeth Allen, Margaret
Dubeck, Matthew Jukes, and Simon Brooker\. 2014\. Impact of intermittent screening and treatment for malaria among school
children in Kenya: a cluster randomised trial\. PLoS Med\.
69
ï Future Implications for Operations & Research\. The results of this study suggest that significant
improvements to the design of the CDD and PMV interventions need to be made if these are to be effective,
and that further piloting and testing are needed prior to any scale-up\. Furthermore, any such programs
should be accompanied by regular supportive supervision and monitoring and operational research to
provide ongoing guidance to the community-level providers and identify critical issues (such as lack of
commodities) early\.
ï A greater emphasis on collecting reliable cost/expenditure data is needed to understand the eventual cost-
effectiveness of any such redesigned intervention\.
ï Further research carried out as part of the MCBP IE will explore variation in treatment effects depending
on the distance of the household from a trained provider and on household socioeconomic status\.
70
ANNEX 11\.2: GOMBE STATE
MALARIA CONTROL BOOSTER
COMMUNITY SYSTEMS STRENGTHENING INTERVENTIONS
Conclusion and Policy Recommendations
ï§ Project Context\. The US$180 million World Bank-assisted Malaria Control Booster Project
(MCBP) became effective in May 2007\. US$100 million Additional Financing (AF) was approved in
June 2009 to respond to the then recently updated National Malaria Strategy\.20 The AF focused on moving
towards universal coverage of the population with key malaria prevention and treatment interventions and
put greater emphasis on diagnostics and health systems development\. 21 The Community Systems
Strengthening (CSS, US$7 million) Component of the Additional Financing included pilots for two novel
service-delivery channels to complement the delivery of publicly-funded malaria-related services through
public primary healthcare facilities\. Under the Community-Directed Interventions (US$2 million)
Community-Directed Distributors (CDDs) were trained to provide malaria control services to members of
their extended families\. Under the Patent Medicine Vendors (PMVs) pilot (US$2 million) private drug
retailers were trained in the clinical diagnosis of malaria and the appropriate sale of subsidized artemisinin
combination therapies (ACTs)\. The CDD and PMV interventions were implemented from April 2013 to
March 2015\.
ï§ Evaluation Design\. The Malaria Control Booster Project Community Systems Strengthening Impact
Evaluation was designed to test the effectiveness of the CDD and PMV interventions, together and in
isolation, in improving malaria-related health and other outcomes\. The study uses a randomized controlled
trial design\. Balance tests carried out following the baseline survey confirm that the randomization was
successful in creating groups of households that were, on average, equal across outcomes and therefore
provide a valid basis for estimating the impacts of the CDD and PMV interventions on household and
individual-level outcomes\.
ï§ Within wards receiving one or both treatments, the selection of PMVs and CDDs was non-random, and
selection mechanisms likely favored better connected, more knowledgeable persons\. This is particularly true
for PMVs\. In the case of CDDs, this cadre of health workers was largely created through the intervention,
and so there is no control group to compare to in terms of provider-level outcomes\. For this reason, the IE
is not able to directly test the impact of the CDD and PMV interventions on outcomes at the CDD or PMV
level\.
ï§ Results â Provider Level\. With this important caveat, the IE survey results show that it is possible to
engage a set of community-level providers with high levels of knowledge in basic malaria prevention and
treatment\. This is likely due both to the selection mechanisms and to training provided through the project\.
ï§ Results â Household Level\. There is some evidence that the interventions improved elements of
household-level knowledge of malaria and treatment-seeking behavior, though this does not appear to have
translated into improved malaria-related health and other outcomes\.22 When accounting for the fact that we
expect to observe some statistically significant differences between treatment and control groups by chance
when looking across a range of variables, we cannot reject the hypothesis that the CDD and PMV
interventions did not produce any household-level impacts\.
20 Federal Ministry of Health, Nigeria, 2008\.
21 The Malaria Control Booster Project closed in March 2015\.
22 There are some exceptions, such as the observed improved result for self-reported malaria by pregnant women under the joint
treatment arm\.
71
ï§ Key Findings Related to the Causal Pathway\. There are several potential reasons for the lack of
conclusive evidence that the CDD and PMV interventions produced positive impacts, each of which contains
important policy lessons, which fall under three main groups: (1) operational design and implementation;
(2) broader health system constraints; and (3) policy context\.
1\. Operational Design & Implementation
ï§ First, the scale of implementation of both interventions may not have been sufficient to generate broader
population-level outcomes\. On average, 7 PMVs and 22 CDDs were trained per health facility catchment
area, to serve an average population of 10,17023\. PMVs were found to be the second-most popular place to
seek care for malaria, after public health facilities, but this does not necessarily mean that care was sought
at a PMV trained under the MCBP (22% of fever cases in the four weeks preceding the survey that sought
care for their disease reported doing so from a PMV)\. Only a very small portion of fever cases (6%) reported
seeking care for malaria from community health workers (including CDDs), and the fact that Community
Health Workers (which includes CDDs) were the least accessible category of health worker suggests the
intervention may have suffered from insufficient scale\.
ï§ Second, it may be that the length and intensity of implementation was not sufficient for the intervention
to take root and produce household-level outcomes\. The intervention was rolled out over a period of two
years, with limited supervision and support to CDDs beyond initial training, and limited monitoring for
compliance (to ensure, for example, that PMVs pass ACT subsidies through to consumers)\. Similar future
initiatives should be accompanied by a stronger process of ongoing monitoring and operational
research, where feasible, to assess implementation problems and likelihood of success as part of the
intervention\. In particular, operational research, including impact evaluation, should be considered in the
early stages of the project so that these experiences can inform mid-course corrections and later phases of
the project, in addition to future policies\. Sufficient time should also be factored in for the interventions to
take root and for their full functioning prior to evaluating impact\. In the case of the IE of the PMV and CDD
interventions, this was not possible due to the closing of the Malaria Control Booster Project\.
ï§ Third, there is a break in the causal pathway between knowledge and behavior\. High levels of household-
level knowledge on malaria prevention do not translate into high-levels of net use\. Furthermore,
less than half of households recognize ACT as the best treatment for malaria, and among those
fever/malaria cases reported in the household survey who took some form of medicine for treatment, only
40% could confirm that they were treated with ACT\. In both cases, this suggests further consumer
education efforts are needed and underscores the importance of appropriate diagnostic, prescriptive,
and patient education practices by healthcare providers, including community agents such as PMVs and
CDDs (among those who took ACT to treat their fever, only 40% could confirm that they were treated with
ACT)\.
ï§ Fourth, in seeking to make ACT more accessible and affordable, one important potential challenge that
requires further investigation is in ensuring that the subsidy offered to PMVs (or any other healthcare
provider) for the purchase of ACT is passed on to consumers\. Solutions may include unique labeling,
and perhaps the use of SMS technology to validate retail price (and quality)\. This would require further
education of consumers, however\.
ï§ Fifth, the results of the study suggest PMVs and CDDs should be seen as complementary\. PMVs are
expected to be relatively more motivated by profit, while CDDs are expected to be relatively more
intrinsically motivated\. This is demonstrated, for example, by the fact that about one in three CDDs reported
23 This number is based on the total population in the catchment area reported by each primary health facility in Gombe State\.
72
carrying out prevention-related activities (promoting net use; net-hanging assistance) in the two weeks
preceding the survey, whereas the proportion of PMVs doing these activities is less than one in ten\. On the
other hand, PMVs are a preferred source of treatments, with 22% of fever cases in the four weeks preceding
the survey seeking care at a PMV versus only 6% at a community health worker (including CDDs)\. It may be
worth considering whether CDDs could be incentivized to do more promotion (two out of three did not
report any such activities in the past two weeks) with PMVs focusing on diagnosis with RDTs and treatment\.
This relationship could be formalized through referral links, including linkage between the CDDs and
PMV, and their relationship with the public sector to better address the existing service delivery constraints
based on the respective comparative advantage of each platform/agent\.
2\. Health System Constraints
ï§ Both CDDs and PMVs suffered from high rates of stock-outs of ACTs and, for CDDs, of RDTs\. Supply chain
failures are a well-documented issue within the Nigerian health system, and impact evaluation survey
results show that 27% of public primary healthcare facilities in study wards experienced an ACT stock-out
in the past three months\. PMVs experienced relatively fewer stock-outs than did CDDs as they were not fully
reliant for ACTs on the public distribution system\. Still, ACTs procured from markets habitually used by
PMVs would not be subject to the subsidy offered through the project and so are not necessarily a perfect
substitute for ACTs procured and distributed through the MCBP\. For any intervention aiming to use local
actors to improve access to malaria or other health services, resolving higher-level issues in the supply chain
is critical\.
3\. Policy Context
ï§ First, at the time the project was conceived national policy did not permit PMVs to use RDTs for
malaria diagnosis (this restriction remains in place, though the latest version of the National Strategic
Plan suggests that lifting this restriction should be considered)\. Instead, PMVs were trained in clinical
diagnosis of malaria\. Household survey results show that clinical diagnosis is more likely to lead to
presumptive treatment: 66% of those diagnosed through microscopy or RDT were confirmed malaria
positive, whereas as 87% of those diagnosed clinically took some form of medication\. As an important
community-level provider of health services, strategies should be developed to train and incentivize PMVs
to use RDTs (the fact that current policy considers allowing PMVs to use RDTs is an important first step)\.
For optimal care continuum, a referral system between CDDs and PMVs could be considered\.
Consumer education campaigns may also be needed to encourage patients/customers to
demand an RDT test prior to purchasing medication\. Using ACTs to treat only confirmed cases of
malaria is important both in terms of efficient use of public (and private) funding, correct treatment for
patients not suffering from malaria, and reducing the risk of drug resistance\.
ï§ Second, the results show highest malaria prevalence among children between 5 and 12, the
group not prioritized by the intervention\. Traditionally, most interventions related to malaria focus on
children under five and pregnant women as they are the most vulnerable groups to malaria\. The relatively
high percentage of malaria prevalence among children between 5 and 12 suggests, however, that efforts to
address malaria in this population group, which may have developed some immunity and therefore be
asymptomatic, remain important\. In particular, there is evidence showing that untreated malaria infections
can negatively affect childrenâs health and cognitive function which could impact education achievement
73
and the development of human capital\. Also, asymptomatic individuals can act as reservoirs of malaria,
complicating the push towards malaria elimination\.24
ï§ Future Implications for Operations & Research\. The results of this study suggest that significant
improvements to the design of the CDD and PMV interventions need to be made if these are to be effective,
and that further piloting and testing are needed prior to any scale-up\. Furthermore, any such programs
should be accompanied by regular supportive supervision and monitoring and operational research to
provide ongoing guidance to the community-level providers and identify critical issues (such as lack of
commodities) early (approximately one in five CDDs noted that stock-outs of RDT and ACT resulted from a
lack of planning and/or unexpected demand)\.
ï§ A greater emphasis on collecting reliable cost/expenditure data is also needed to understand the eventual
cost-effectiveness of any such redesigned intervention\.
ï§ Further research carried out as part of the MCBP IE will explore variation in treatment effects depending
on the distance of the household from a trained provider and on household socioeconomic status\.
24 Halliday, Katherine, Georgeo Okello, Elizabeth Turner, Kiambo Njagi, Carlos Mcharo, Juddy Kengo, Elizabeth Allen, Margaret
Dubeck, Matthew Jukes, and Simon Brooker\. 2014\. Impact of intermittent screening and treatment for malaria among school
children in Kenya: a cluster randomised trial\. PLoS Med\.
74
MAP
  Â
75 | REVIEW |
P064924 |  Document of
The World Bank
Report No: ICR00001100
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-45660 TF-24121)
ON A
LOAN
IN THE AMOUNT OF US$ 349 MILLION
AND A
GLOBAL ENVIRONMENT FACILITY GRANT
IN THE AMOUNT OF SDR 18\.9 MILLION (US$ 25 MILLION EQUIVALENT)
TO THE
PEOPLEâS REPUBLIC OF CHINA
FOR A
SECOND BEIJING ENVIRONMENT PROJECT
September 25, 2011
China and Mongolia Sustainable Development Unit
Sustainable Development Department
East Asia and Pacific Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective: May 1, 2011)
Currency Unit = Renminbi Yuan
Renminbi Yuan 1\.00 = US$ 0\.15
US$ 1\.00 = Renminbi Yuan 6\.50
FISCAL YEAR
[January 1 â December 31]
ABBREVIATIONS AND ACRONYMS
AQMDSS Air Quality Monitoring GEF Global Environment Facility
Decision Support System GEO Global Environment Objective
BCIC Beijing Comprehensive GHG Green House Gases
Investment Company GIS Geographic Information System
BDA Beijing Economic- HECC Heating Energy Conservation
Technological Development Center
Area ICB International Competitive Bidding
BDC Beijing Drainage Company ICR Implementation Completion &
BDG Beijing Drainage Group Results (Report)
BDRC Beijing Development and IEG Independent Evaluation Group
Reform Commission ISR Implementation Status And Results
BEPB Beijing Environmental Report
Protection Bureau JBIC Japan Bank of International
BMEC Beijing Municipal Cooperation
Engineering Corporation KPI Key Performance Indicators
BMFB Beijing Municipal Finance MoC Ministry of Commerce
Bureau MoF Ministry of Finance
BMG Beijing Municipal M&E Monitoring and Evaluation
BMWAB Government NDRC National Development & Reform
Beijing Municipal Water Commission
Affairs Bureau NH3-N Ammonia Nitrogen
BOD Biological Oxygen Demand NOx Nitrogen Oxide
BPMO Beijing Project Management O&M Operation and Maintenance
Office PAD Project Appraisal Document
CAS Country Assistance Strategy PDO Project Development Objective
CCHP Combined Cooling, Heating PIU Project Implementing Unit
and Power (Plant) QEA Quality at Entry Assessment
COD Chemical Oxygen Demand QSA Quality of Supervision Assessment
CO2 Carbon Dioxide RAP Resettlement Action Plan
CPS Country Partnership Strategy RCR Resettlement Completion Report
DO Dissolved Oxygen SEPA State Environmental Protection
EA Environmental Assessment Agency
EIRR Economic Internal Rate of SO2 Sulfur Dioxide
Return WAB Water Affairs Bureau
EMP Environnemental WWTP Wastewater Treatment Plant
Management Plan SJET Shihuan Jietian Energy Technology
EPB Environnemental Protection Corporation\. Ltd\.
Bureau TP Total Phosphorus
GDP Gross Domestic Product TSP Total Suspended Particulates
WHO World Health Organization
Vice President: Mr\. James W\. Adams, EAPVP
Country Director: Mr\. Klaus Rohland, EACCF
Mr\. Ede Jorge Ijjasz-Vasquez, EASCS/ Mr\.
Sector Manager:
Vijay Jagannathan, EASIN
Project Team Leader: Ms\. Chongwu Sun, EASCS
ICR Team Leader: Ms\. Chongwu Sun, EASCS
CHINA
SECOND BEIJING ENVIRONMENT PROJECT
DATA SHEET \. I
A\. Basic Information\. I
B\. Key Dates \. I
C\. Ratings Summary \. I
D\. Sector and Theme Codes \. II
E\. Bank Staff \. III
F\. Results Framework Analysis \. IV
G\. Ratings of Project Performance in ISRs \. VIII
H\. Restructuring (if any) \. VIII
I\. Disbursement Profile \. IX
1\. PROJECT CONTEXT, DEVELOPMENT AND GLOBAL ENVIRONMENT OBJECTIVES
DESIGN\. 1
2\. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES \. 6
3\. ASSESSMENT OF OUTCOMES \. 11
4\. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME AND GLOBAL ENVIRONMENT
OUTCOME \.16
5\. ASSESSMENT OF BANK AND BORROWER PERFORMANCE \.16
6\. LESSONS LEARNED\.20
7\. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING AGENCIES/PARTNER
\.21
ANNEX 1\. ADDITIONAL INDICATORS OF PROJECT OUTCOME \.22
ANNEX 2\. PROJECT COSTS AND FINANCING \.24
ANNEX 3\. OUTPUTS BY COMPONENT \.26
ANNEX 4\. ECONOMIC AND FINANCIAL ANALYSIS \.32
ANNEX 5\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES36
ANNEX 6\. RESETTLEMENT IMPLEMENTATION \.39
ANNEX 7\. SUMMARY OF BORROWER'S ICR AND/OR COMMENTS ON DRAFT ICR \.43
ANNEX 8\. LIST OF SUPPORTING DOCUMENTS \.58
MAP #30782R1
DATA SHEET
A\. Basic Information
Second Beijing
Country: China Project Name:
Environment Project
Project ID: P042109,P064924 L/C/TF Number(s): IBRD-45660,TF-24121
ICR Date: 09/25/2011 ICR Type: Core ICR
PEOPLE'S REPUBLIC
Lending Instrument: SIL Borrower:
OF CHINA
Original Total USD 349\.0M,USD USD 319\.03M,USD
Disbursed Amount:
Commitment: 25\.0M 24\.8M
Environmental Category: A Focal Area:
Implementing Agencies:
Beijing Municipal Government
Cofinanciers and Other External Partners:
B\. Key Dates
Second Beijing Environment Project - P042109
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 11/02/1998 Effectiveness: 05/11/2001
Appraisal: 04/17/2000 Restructuring(s): 11/02/2006
Approval: 06/20/2000 Mid-term Review: 11/08/2003
Closing: 12/31/2006 03/31/2009
Second Beijing Environment Project â GEF Component - P064924
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 11/02/1998 Effectiveness: 05/11/2001
Appraisal: 04/17/2000 Restructuring(s):
Approval: 06/20/2000 Mid-term Review: 11/08/2003
Closing: 12/31/2006 01/31/2011
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes Satisfactory
I
GEO Outcomes Satisfactory
Risk to Development Outcome Low
Risk to GEO Outcome Low
Bank Performance Satisfactory
Borrower Performance Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government Satisfactory
Quality of Supervision Satisfactory Implementing Satisfactory
Agency/Agencies
Overall Bank Satisfactory Overall Borrower Satisfactory
Performance Performance
C\.3 Quality at Entry and Implementation Performance Indicators
Second Beijing Environment Project - P042109
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No) (QEA)
Problem Project at any Quality of
No None
time (Yes/No) Supervision (QSA)
DO rating before
Satisfactory
Closing/Inactive status
Second Beijing Environment Project â GEF Component - P064924
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No) (QEA)
Problem Project at any Quality of
No None
time (Yes/No) Supervision (QSA)
GEO rating before
Satisfactory
Closing/Inactive Status
D\. Sector and Theme Codes
Second Beijing Environment Project - P042109
Original Actual
Sector Code (as % of total Bank financing)
District heating and energy efficiency services 48 6
II
Other industry 2 0
Sewerage 49 93
Sub-national government administration 1 1
Theme Code (as % of total Bank financing)
Climate change 20 6
Environmental policies and institutions 20 20
Other urban development 20 20
Pollution management and environmental health 20 20
Water resource management 20 34
Second Beijing Environment Project - GEF Component - P064924
Original Actual
Sector Code (as % of total Bank financing)
District heating and energy efficiency services 100 100
Theme Code (as % of total Bank financing)
Climate change 29 6
Other urban development 28 34
Pollution management and environmental health 29 46
Technology diffusion 14 14
E\. Bank Staff
Second Beijing Environment Project - P042109
Positions At ICR At Approval
Vice President James W\. Adams Jemal-ud-din Kassum
Country Director Klaus Rohland Yukon Huang
Sector Manager Ede Jorge Ijjasz-Vasquez Keshav Varma
Project Team Leader Chongwu Sun Songsu Choi
ICR Team Leader Chongwu Sun
ICR Primary Author Chandra Godavitarne/Eddie Hum
III
Second Beijing Environment Project - GEF Component - P064924
Positions At ICR At Approval
Vice President James W\. Adams Jemal-ud-din Kassum
Country Director Klaus Rohland Yukon Huang
Sector Manager Ede Jorge Ijjasz-Vasquez Keshav Varma
Project Team Leader Chongwu Sun Songsu Choi
ICR Team Leader Chongwu Sun
ICR Primary Author Chandra Godavitarne /Eddie Hum
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
Visible and sustained alleviation of air and water pollution in Beijing by helping to: (a) convert
scattered coal-fired boilers to natural gas boilers; (b) promote energy conservation in heating
systems; (c) construct key wastewater trunk interceptors and associated treatment facilities; and
(d) strengthen environmental management institutions of Beijing\.
Revised Project Development Objectives (as approved by original approving authority)
Not applicable
Global Environment Objectives (from Project Appraisal Document)
The GEF-financed components support activities (a) and (b) above, by helping to establish viable
models and markets of natural gas usage and heating energy conservation\. In addition to the
direct and significant reduction of greenhouse gas (GHG) emissions, these will make an effective
demonstration of GHG reduction measures for China as a whole and thus help to decrease the risk
of global climate change significantly\.
Revised Global Environment and Development Objectives (as approved by original
approving authority and Bank Management)
Not applicable
(a) PDO Indicator(s)
Indicators 1 and 2 below, though not directly attributable to the project, were used to monitor air
quality improvements for which the projectâs air quality-related components served as a catalyst\.
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Indicator 1: Ambient concentration of major pollutants
Value
(quantitative or SO2: 120ug/m3 60ug/m3 36ug/m3
qualitative)
Date achieved 12/31/1998 03/31/2008 12/31/2009
Comments SO2 concentration reduction targets significantly exceeded due to (a) the results
(incl\. % of the Bank project, and (b) the substantial impact of Government actions in the
achievement) context of the Beijing Olympics\.
Indicator 2: Number of days a year with air quality worse than Class II in Beijing
IV
Value
(quantitative or 265 91 80
qualitative)
Date achieved 12/31/1998 03/31/2008 03/31/2009
Comments
This indicator was added during project implementation to monitor air quality
(incl\. %
improvements, and was exceeded due to the reasons indicated above\.
achievement)
Concentration of major pollutants downstream of the Xiaohongmen WWTP
Indicator 3:
(COD, OD, NH3-N) and the rate of wastewater treatment in the Liangshui River
COD: 68\.8 mg/l
COD: 236\.67 mg/l
Value BOD: 19\.5 mg/l
BOD: 88\.89 mg/l COD: 100 mg/l
(quantitative or Wastewater
Wastewater treatment BOD: 20 mg/l
qualitative) treatment rate:
rate: zero
100%
Date achieved 12/31/1998 12/31/2009
Comments
(incl\. % All targets were met or exceeded\.
achievement)
(b) GEO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Indicator 1 : Carbon dioxide released from heating systems
Value
Metric tons of CO2
(quantitative or Deleted
equivalent
qualitative)
Date achieved 12/31/1998
Comments
This indicator was deleted because it was not a parameter in the environmental
(incl\. %
monitoring protocol in China, and no data was available\.
achievement)
(c) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Indicator 1 : Coal consumption for heating
Value
(quantitative or 2\.403 million t/yr Deleted
qualitative)
Date achieved 12/31/1998
Comments This proposed indicator was not measurable because it was not possible to
(incl\. % disaggregate coal used for heating from coal used for other purposes, e\.g\., power
achievement) generation, etc\.
V
Indicator 2 : Costs of gas boilers, services, and operations
Value
(quantitative or 100 (index) Deleted
qualitative)
Date achieved 12/31/1998
Comments
This indicator was deleted because an adequate methodology was not available
(incl\. %
for measurement\.
achievement)
Indicator 3 : Emissions from heating boilers
Value
Dust: 7,200 t/yr
(quantitative or Deleted
SO2: 21,634 t/yr
qualitative)
Date achieved 12/31/1998
Comments
This indicator was deleted because emissions from heating boilers cannot be
(incl\. %
distinguished from emissions from other sources\.
achievement)
Indicator 4 : Quality and timeliness of air quality data and analysis, regulatory responses
Eight automatic air
10 monitoring
quality monitoring To add 10
Value stations established
stations, performing automatic air
(quantitative or and provide air
continuous real-time air quality monitoring
Qualitative) quality data on a
quality monitoring within stations
real time basis\.
national guidelines
Date achieved 12/31/1998 03/31/2008 03/31/2009
Comments
Beijing has expanded air quality monitoring in the entire city using non-project
(incl\. %
funding sources\.
achievement)
Indicator 5 : Treated wastewater volume and quality in the Liangshui River
Three WWTPs
Value 780,000 m3/day
with total
(quantitative or Zero Water quality:
treatment capacity
qualitative) Class IV
880,000 m3/day
Date achieved 12/31/1998 03/31/2008 03/31/2009
During implementation, the capacity of the Luogouqiao WWTP was adjusted
Comments from 200,000 m3/day to 100,000 m3/day mainly due to the relocation of key
(incl\. % industries, which were the major wastewater dischargers in the Liangshui River
achievement) area\. By project completion, 100% of the wastewater generated was collected
and treated\.
Indicator 6 : Cost per volume of wastewater collected and treated, operating cash flow
Value
(quantitative or No data available 0\.99 RMB/m3
qualitative)
Date achieved 12/31/1998 03/31/2009
Comments
Wastewater tariff was increased three times during project implementation, and
(incl\. %
BDG receives adequate funding from BMG to meet its costs\.
achievement)
Indicator 7 : Number and capacity of natural gas boilers installed
Value Zero 700 boilers with the
VI
(quantitative or capacity of 2,000
Qualitative) tons of steam per
hour
Date achieved 12/31/1998 03/31/2009
Comments
In addition to project-financed gas boilers, there was substantial funding from the
(incl\. %
BMG to support boiler conversions from coal to natural gas\.
achievement)
Indicator 8 : MIS and GIS systems installed and staff trained for BDG
Set up complete
MIS and GIS to
provide support in MIS and GIS
Value
decision-making\. system is
(quantitative or Zero
Recruit 10 functioning, and 60
qualitative)
additional mgmt staff was trained\.
staff\. Procure all
equipment
Date achieved 12/31/1998 03/31/2008 03/31/2009
Comments
MIS and GIS systems have helped BDG manage all its assets, including WWTPs
(incl\. %
and networks, effectively and efficiently\.
achievement)
Length of sewers and capacity of sewage treatment installed in the Liangshui
Indicator 9 :
River
45 km of sewers 45 km of sewers
Value
and 880,000 and 780,000 m3/day
(quantitative or Zero 3
m /day treatment treatment capacity
qualitative)
capacity installed
Date achieved 06/30/2000 03/31/2008 03/31/2009
Comments
(incl\. % See comments under Indicator 5 above\.
achievement)
Indicator 10 : Length of interceptors built in the Qing River
Value
(quantitative or Zero 26 km 26 km
Qualitative)
Date achieved 06/30/2000 03/31/2008 03/31/2009
Comments
(incl\. %
achievement)
Indicator 11 : Staff-months of studies and training; equipment procured
Value
(quantitative or Zero 1,500 staff months
Qualitative)
Date achieved 06/30/2000 03/31/2008 03/31/2009
Comments Beijing EPBs capacity for data analysis and air quality monitoring has improved\.
(incl\. % BDG capacity for project management, and treatment plant operation and
achievement) maintenance has improved\.
Additional indicators of the projectsâ outcomes are provided in Annex 1\.
VII
G\. Ratings of Project Performance in ISRs
-
Actual
Date ISR Disbursements
No\. DO GEO IP (USD millions)
Archived
Project 1 Project 2
1 12/28/2000 S S S 0\.00 0\.00
2 06/22/2001 S S S 13\.49 0\.00
3 12/27/2001 S S S 13\.49 1\.30
4 06/21/2002 S S S 20\.23 1\.30
5 12/26/2002 S S S 29\.04 1\.33
6 06/23/2003 S S S 43\.16 1\.49
7 09/25/2003 S S S 43\.16 1\.61
8 06/24/2004 S S S 62\.46 1\.68
9 12/30/2004 S S S 76\.74 2\.19
10 06/23/2005 S S S 92\.72 2\.33
11 06/07/2006 S S S 108\.90 3\.31
12 06/29/2007 S MS S 154\.13 5\.10
13 06/28/2008 S MS S 228\.33 8\.96
14 06/29/2009 S S S 311\.61 15\.94
15 06/28/2010 S S S 319\.03 22\.89
16 11/08/2010 S S S 319\.03 24\.80
H\. Restructuring (if any)
Amount Disbursed
ISR Ratings at
Board Approved at Restructuring in Reason for
Restructuring Restructuring
USD millions Restructuring & Key
Date(s)
PDO GEO Changes Made
DO GEO IP Project1 Project 2
Change Change
11/02/2006 S S 114\.89
VIII
I\. Disbursement Profile
P042109
P064924
IX
1\. Project Context, Development and Global Environment Objectives Design
1\.1 Context at Appraisal
The two most critical environmental issues in Beijing municipality, at project appraisal, were its
rapidly deteriorating water and air quality\. Due to relatively scarce water resources, accelerating
urban construction, economic development, and escalating population growth, water quality was
a long-standing, major environmental issue for Beijing\. At the time of project preparation, the
total volume of municipal wastewater generated from Beijingâs inner city and city fringe areas
(i\.e\., about 1,370 km2) was about 2\.5 million m3/d of which only about a quarter was treated\. The
Liangshui River catchment, which received more than 40% of the municipal wastewater
discharges, had no wastewater treatment facilities\. As a result, the cityâs natural streams had little
capacity to dilute pollutants from the large volume of wastewater discharges\. Downstream flows
of urban streams were not suitable even for economic uses such as industrial cooling or irrigation\.
To address these concerns, the Beijing Municipal Government (BMG) began a major
environmental improvement program to expand wastewater and solid waste management
capacities\.
In 1998 Beijingâs air quality was continuing to deteriorate\. The average annual ambient
concentrations of particulates and nitrates exceeded the daily healthy limit for residential areas
(Chinese standard Class II, similar to World Health Organization (WHO) standards) due to
increasing pollution emissions\. During the heating season, sulfur dioxide (SO2) and nitrogen
oxide levels posed acute health risks, as they exceeded the limits allowed even for industrial areas
(Class III)\. At appraisal, approximately 5\.3 million Beijing residents in the urban central area
were exposed to more than 150 micrograms of sulfur dioxide (China Air Quality Standards of one
hour average in residential areas) for more than 60 days a year\.
At that time, the main source of air pollution in Beijing was coal combustion, which was the
cityâs dominant source of energy for heating and power supply (about 75%), and which
contributed most of the sulfur dioxide and a major share of other pollutants\. Industrial boilers,
power plants, and scattered heating boilers, i\.e\., those with a capacity of less than 20 tons of
steam per hour (capable of heating up to 160,000 m2 of floor space) with chimneys lower than 35
meters, were the main sources of Beijingâs air pollution\. The BMG strategy for air pollution
control was to: convert coal-fired boilers to natural gas boilers; strengthen regulatory and pricing
systems; invest heavily in natural gas supply infrastructure; strengthen emission control; and
close or relocate an increasing number of highly polluting industries out of the city\. About 20%
of the Beijing urban area was designated as âCoal-free Zonesâ? (also known as smoke-controlled
areas and mainly located in the city urban center) where no coal-burning devices under 20 tons
per hour were permitted after 1999\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
The project development objective (PDO) was to achieve visible and sustained alleviation of air
and water pollution in Beijing by helping to: (a) convert scattered coal-fired boilers to natural gas
boilers; (b) promote energy conservation in heating systems; (c) construct key wastewater trunk
interceptors and associated treatment facilities; and (d) strengthen environmental management
institutions of Beijing\.
Related key performance indicators agreed were: Beijingâs population exposed to air quality
(based on SO2 and NOx levels) worse than Class III over 60 days a year; carbon emission from
heating in Beijing; COD discharged to the Liangshui River; and net internal cash flow of Beijing
Drainage Company (see Annex 1)\.
1
1\.3 Original Global Environment Objectives (GEO) and Key Indicators (as approved)
The global environment objective, which was consistent with the PDO, was to support activities
(a) and (b) above, by improving efficiency, enhancing productivity, and promoting best practices
in natural gas utilization through the provision of international expertise, training, and
demonstration projects\. The GEF support was designed to help: (a) establish viable models and
markets for the conversion of scattered coal-fired boilers to natural gas boilers; (b) set best-
practice models, standards and markets for the promotion of energy conversion in heating
systems; (c) achieve direct and significant reduction of greenhouse gas (GHG) emissions; and (d)
make effective demonstration of GHG reduction measures for China as a whole\.
Carbon dioxide released from heating systems was the agreed key performance indicator to
measure air pollution reduction\.
1\.4 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
The PDO remained unchanged during implementation\. Since carbon dioxide is not a parameter in
Chinaâs monitoring protocol, monitoring data on carbon dioxide emissions was not available\.
While it was possible to compute total carbon dioxide emissions based on coal utilization, carbon
emission attributable to heating alone could only be estimated\. Two new indicators were
substituted instead to monitor air quality improvements for which the project's air quality-related
components served as a catalyst, namely: (i) annual average concentration of major pollutantâ
SO2 only; and (ii) number of days Beijingâs population exposed to air quality worse than Class II\.
No additional water-related indicator was introduced during the project implementation, despite
the addition of seven subcomponents at project restructuring\.
1\.5 Revised GEO (as approved by original approving authority) and Key Indicators, and
reasons/justification
The global environment objective remained unchanged during project implementation\. As stated
in Section 1\.4 above, the sole GEO indicator relating to carbon emissions deleted because it was
not possible to separate coal consumption in heating systems from that used in industry and
power generation\.
1\.6 Main Beneficiaries
The main beneficiaries of wastewater pollution abatement and air quality improvement, at project
start in 2000, were 3\.2 million residents in the Liangshui River and Qing River drainage
catchments, and about 5\.3 million residents in the urban central area of Beijing, respectively\. In
addition, people living downstream of the river catchments in Hebei Province and Tianjin
Municipality, were also expected to benefit from the investments\.
1\.7 Original Components (as approved)
As summarized below, the project addressed the two main pollution issues of Beijing: wastewater
management and air pollution\.
Wastewater Management (Appraisal cost: US$ 332\.85 million): (Component outputs intended
to reduce pollution discharges, and improve surface water quality in river systems)
⢠Liangshui River Sewers (US$ 88\.21million)\. Construction of about 48 kilometers of
trunk sewers to intercept wastewater discharging to watercourses in the Liangshui River
drainage catchment
2
⢠Liangshui River System Wastewater Treatment (US$ 185\.06 million)\. Construction of
three secondary wastewater treatment plants (WWTP) with a total capacity of 880,000
m3/d
⢠Qing River System Sewers (US$ 53\.44 million)\. Construction of about 26 kilometers of
trunk interceptor sewers
⢠Beijing Drainage Company Institutional Development (US$ 6\.14 million)\.
Comprehensive institutional development including policy actions, technical assistance
and training to improve technical and project management support
Air Pollution Control (Appraisal cost: US$ 458\.87 million): (Component outputs were
intended to improve air quality, promote efficient use of natural gas and improve heating energy
conservation)
⢠Boiler Conversion (US$ 417\.37million)\. Conversion of about 2,000-2,500 small and
medium-sized coal-fired boilers, (1 ton/hour-10 ton/hour), by providing financing
(US$ 165 million of Loan) to import gas boilers for sale to boiler house owners
⢠GEF-supported Gas Boiler Market and Technology Development (US$ 27\.14 million)\.
Support for technology development, capacity building, market development, and
demonstrations to overcome major barriers to conversion to natural gas (about US$ 16
million of Grant)
⢠GEF-supported Heating Energy Conservation (US$ 11\.17 million)\. Support for
activities for general overall sustained energy efficiency improvements in heating
systems, and specifically in the remaining large coal-fired boilers (about US$ 9 million of
Grant)
⢠Air Quality Monitoring and Decision Support (US$ 3\.19 million)\. Assistance to
improve the ability of BMG to acquire, analyze and use information on air quality and
pollution sources for timely policy and planning, by financing equipment, software for
monitoring, analysis, simulation, evaluation and training
1\.8 Revised Components
By the 2003 mid-term review, Loan savings of about US$ 150 million had accumulated mainly
due to policy adjustment, financial incentives and availability of various funding sources/channels
for boiler conversions, after Beijing was selected to host 2008 Olympic Games\. Project
components were revised through amendment of legal agreements in August 2006, as described
below\.
Wastewater and Water Environment Improvement Components\. Seven new water environment
improvement subcomponents, estimated to cost US$ 366\.06 million, were added, with the aim of
improving the water environment and water quality of the relevant river sections by at least one
level of the Chinese water quality standard\. The new subcomponents were consistent with the
PDO, and were appraised by the Bank during project implementation after the mid-term review,
and no new indicators were added\. The seven subcomponents were:
⢠River Rehabilitation: three water environment rehabilitation subcomponents in: (i) the
North Moat and the northern reaches of the Liangma River; (ii) the lower reaches of the
Qing River; and (iii) the Liangshui River section (Dahongmen Sluice Gate-BDA No\. 1
Dam), including automatic water quality monitoring, studies and project management
(US$ 164\.50 million) (Subcomponent output intended to enhance the PDO)
3
⢠Chaoyang District Water Environment Rehabilitation: the Two-lake Connection Canal;
rehabilitation of the Ba River, the Beixiao River and the Xiaotaihou River; and institutional
strengthening (US$ 139\.91 million) (Subcomponent output intended to enhance the PDO)
⢠Xinfeng River Rehabilitation in Daxing District: rehabilitation of the Xinfeng River,
including flow regulation, automatic water quality monitoring, associated works and
project management support (US$ 23\.79 million) (Subcomponent output intended to
enhance the PDO)
⢠Water Re-use Project: a reclaimed water treatment plant of 20,000 m3/d capacity to supply
water to industries in the Beijing Economic-Technological Development Area (BDA)
(US$ 17\.00 million) (Subcomponent output intended to conserve water resources in a
sustainable manner)
⢠Reconstruction of a Solid Waste Transfer Station: reconstruction of the Datun solid waste
transfer station with capacity of 1,800 tons/day (US$ 20\.86 million) (Subcomponent output
intended to improve the operational efficiency of solid waste service and prevent ground
water contamination)
Boiler Conversion Component\. The boiler conversion component was scaled down to 700
boilers from the originally planned 2,000; the total cost of the air pollution control component
reduced from US$ 417\.37 million to US$ 37\.36 million, and the loan allocation was reduced from
US$ 165 million to US$ 16\.79 million\.
1\.9 Other significant changes
2008 Olympic Games\. Beijing was selected to host the 2008 Olympic Games, three months after
Board approval of the project\. Consequently, new government policy and changed priorities
necessitated accelerated construction of new facilities which, inter alia, required acceleration of
the boiler conversion program using new funding channels that were made available; and
improvement of facilities and water environment in the Games Village areas\. The project was
restructured in 2003, to utilize the large amount of loan savings accrued, through expanding the
wastewater and river improvement component\. Formal restructuring took place in 2006, after
receipt of the Borrowerâs request\.
Amendments to the Loan Agreements\. The necessary amendments for the restructuring were
approved by the Board on August 24, 2006, on a âno-objectionâ basis\. The amendments: (i)
significantly reduced the air pollution component; (ii) substantially increased the wastewater
component, adding the seven new subcomponents described above; (iii) increased the
disbursement percentage for civil works from 40% to 75%; (iv) deleted the covenant that allowed
the Beijing Drainage Company (BDC) to retain wastewater revenues; (v) canceled US$ 26\.51
million of the Loan; (vi) extended the Loan and Grant closing dates to March 31, 2009; and (vii)
reallocated Loan and Grant savings\.
In November 2007, the Borrower requested more amendments to the Loan and Project
Agreements to: (i) reallocate the Loan proceeds among the categories of eligible expenditures and
increase the disbursement rate of categories (1) (a), (1) (b) and (1) (c) in paragraph 1 of Schedule
1 to the Loan Agreement to 100%; and (ii) cancel US$ 1\.509 million of loan savings\.
Amendments to the GEF Grant Agreement\. The Grant agreement was amended on December 31,
2008 to: (i) to further extend the Grant closing date to January 31, 2010; (ii) enable completion of
the largest contract-the tri-generation of combined cooling, heating and power plant, intended to
demonstrate efficient and rational use of natural gas resources; and (iii) reallocate grant proceeds\.
4
The Grant agreement was amended again in 2009 to: (i) utilize grant savings of US$ 2\.3 million
to allow BMG to carry out a study and analysis of sustainable climate change mitigation models
and low-carbon economy development approaches to deal with the new challenges facing
Beijing; and (ii) extend the Grant closing date by a further year to January 31, 2011\.
Reconstitution of Beijing Drainage Company (BDC)\. At appraisal, a traditional integrated
wastewater utility was envisaged with responsibility for this service in the urban area of BMG\.
This was to be confirmed by an institutional study to be carried out under the project, and
implementation details were to be specified\. BMG reviewed the results of the study, and proposed
to retain overall responsibility for the sector directly at the municipal level, with BDC
reconstituted as the Beijing Drainage Group (BDG), assigned limited responsibilities as one of
the operators in the sector (private companies operate some of the other facilities, e\.g\., wastewater
treatment plants), for a fee\. The Bank accepted this alternative institutional arrangement as BMG,
a financially strong municipal government, would be better able to ensure the provision of high
quality wastewater services (compared to BDC) by making up any gaps between service
provision costs (both capital and O&M costs) and revenues from wastewater charges\.
The Board-approved restructurings comprised: (i) corrective restructuring to reduce SJETâs role
in the project due to its poor performance, delete some indicators and add new indicators; and (ii)
adaptive restructuring to reduce the size of the boiler conversion program, due to the new
Government policies and market forces, described in Section 2\.2 (b)\.
Summary of Revised* Indicators
Original Indicators in the PAD Revised Indicators, and Reasons for Change
DEVELOPMENT OBJECTIVE
INDICATORS
1\. Carbon dioxide released from heating Deleted, because CO2 from heating cannot be separated from
systems (metric tons of CO2 equivalent CO2 emissions from other coal users\.
(GEO Indicator)\. Change Process: Board approval
2\. Ambient concentration of major Deleted, because a methodology for collecting this data not
pollutants (SO2 ug/m3) (PDO Indicator) available\.
Change Process: Board approval
3\. Concentration of major pollutants No change
downstream of the Xiaohongmen WWTP
(COD, OD, NH3-N) and the rate of
wastewater treatment in the Liangshui
River (PDO Indicator)
New Added Indicator\. Annual average concentration of
major pollutantâSO2 only
Change Process: Management approval, and borrower
consultations
New Added Indicator\. Number of days a year with air
quality worse than Class II in Beijing\.â
Change Process: Management approval, and borrower
consultations
PERFORMANCE INDICATORS
1\. Coal consumption for heating (million Deleted because coal consumption for heating cannot be
tons/yr) separated from other coal users\.
Change Process: Board approval
2\. Costs of gas boilers, services, and Deleted because there was no way to collect this data
operations (Index) Change Process: Management approval, and borrower
consultations
3\. Emissions from heating boilers (Dust: Deleted because a methodology to collect this data was not
5
tons/yr; SO2: tons/yr available\.
Change Process: Board approval
4\. Quality and timeliness of air quality data No change
and analysis, regulatory responses
5\. Treated wastewater volume and quality Amended Treated wastewater volume and quality in the
in the Liangshui River (880,000 m3/day of Liangshui River (780,000 m3/day of wastewater collected and
wastewater collected and treated) treated)\. Change resulted from downsizing one WWTP\.
Change Process: Management approval, and borrower
consultations
6\. Cost per volume of wastewater collected Amended O&M cost/cubic meter of wastewater collected and
and treated, operating cash flow (No treated\. This excludes debt service which was assumed by
baseline data indicated) BMG\.
Change Process: Management approval, and borrower
consultations
7\. Number and capacity of natural gas Amended Number and capacity of natural gas boilers
boilers installed (2000 boilers up to 20 installed (700 boilers up to 20 tons/hr steam capacity)
tons/hr steam capacity) Change Process: Board approval
8\. Technical documents, pilot boilers, No change
conversion assisted, personnel trained
9\. MIS and GIS systems installed and staff No change
trained for BDG (Item)
10\. Length of sewers and capacity of No change:
sewage treatment installed in the Liangshui
River (km of sewers, and m3/d treatment
capacity installed)
11\. Length of interceptors built in the Qing No change
River (km) :
12\. Staff-months of studies and training; No change:
equipment procured (Staff months trained)
* Represents indicators set out in the amended legal agreement dated October 10, 2000 (Supplemental Letter
No\. 2), and those amended with approval of Bank management and borrower discussions\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
The PDO and scope were consistent with BMGâs plans at the time and were also in line with the
emerging priorities to address Beijingâs water quality and air pollution issues\. The project
supported some of the core objectives of the Country Assistance Strategy (CAS), including
infrastructure, human resource development, environmental protection and rural development\. In
addition, the project was consistent with the GEF Operational Program #5, promoting the
removal of barriers to energy efficiency and energy conservation\.
Wastewater Management\. Project design addressed the serious environmental issues of untreated
wastewater discharges and surface water quality in the river systems, which received nearly 40%
of the untreated municipal wastewater generated\. It focused on the priority development areas in
the Liangshui River and the Qing River drainage catchments, which had high wastewater
discharges and low coverage of wastewater collection and treatment\. Project design established
clear priorities and cost effective options to improve water quality in the city, and broader city-
wide water pollution abatement programs\.
6
Project design also addressed institutional reform and sustainability through measures to
significantly enhance the autonomy of the BDC through consolidation of all wastewater assets
under its ownership, and full control and use of wastewater tariff revenues (see section 2\.2)\.
Air Pollution Control\. The air pollution control component was highly innovative, and addressed
a critical issue that faced Beijing\. The project incorporated pioneering and essential inputs of gas
boiler technology, coal-to-gas conversion design, heating system efficiency, heating conservation
and energy audits to facilitate the emerging natural gas market\. The scale of the commercial
operation was necessary in the absence of an existing market for natural gas boilers, even though
it carried significant risks\. With the impending availability of natural gas in 1999, the Bank and
BMG agreed on an investment plan for coal-to-natural gas boiler conversion in 40 coal-free zones
within the third ring road and Shijingshan District\. Project design addressed the key constraints of
launching a large fuel conversion program, including: (i) the small market size and industry
capacity; (ii) under-developed technical models and capacity; (iii) technical risks and technology
information gap; (iv) high operating costs; and (v) capital cost and funding constraints\. The
project also addressed major constraints to: (i) promoting heating energy conservation; (ii)
developing the local energy efficiency market, through the introduction of energy audits, studies
and training to improve the data base, policy and institutional frameworks, demonstration
projects; and (iii) developing policy and strategies for air pollution control through developing an
adequate air quality monitoring and analytical capacity\.
Institutional Model for Air Pollution Control\. Lack of existing dealerships for natural
gas boilers and reluctance of the private sector to venture into the unknown territory led to the
decision to establish a government-owned project company - Shihuan Jietian Energy Technology
Corporation\. Ltd\. (SJET), to manage the commercial venture of boiler conversions and to
implement associated technical assistance, supported by the GEF grant\. The project company was
to be the focal point to promote gas technology, heating conservation, market development, and
support implementation of the city and district regulations to discourage coal burning\. The
foreseeable risks were mitigated with international management support to SJET, and a
significant amount of technical assistance on natural gas boiler technology and efficient natural
gas utilization\.
M&E Framework\. The design of the M&E framework and indicators were appropriate\. Some
indicators for air quality improvements had to be deleted or amended to better reflect prevailing
conditions and feasibility of data collection\.
Risks and Mitigation Measures Identified at Appraisal
Anticipated risks of the wastewater management component were assessed satisfactorily at
appraisal and appropriate mitigation measures were built into the project\. The risks of rapid
growth of wastewater discharges outpacing treatment capacity, and delays in construction of
wastewater facilities due to counterpart financing or resettlement bottlenecks, were correctly
assessed as substantial, and were mitigated appropriately through development of realistic
financing and resettlement plans, with the assistance of international consultants, and support
from BMG leaders\.
The principal risks of the air pollution control component were correctly identified\.
Technological and financial risks associated with the developing gas boiler market were mitigated
through substantial technical assistance for gas boiler technology demonstration projects, capacity
building for local design institutes, and marketing\. However, the risk of delay in boiler
conversions due to insufficient capacity or incentives for implementing agencies, though assessed
7
as substantial, was not mitigated, but proved to be inadequate to meet the expectations of the
private boiler houses\. The challenges for a new company (SJET) to meet the challenges of its role
were not adequately recognized\.
The key development that could not have been foreseen at project appraisal was the onset of
government campaigns to convert coal-fired boilers following the selection of Beijing, on August
29, 2000, as a candidate host for the 2008 Olympic Games i\.e\., three months after Board
presentation, followed by Beijingâs selection on July 13, 2001 to host the Games\. BMG expanded
the scope of the boiler conversions to cover both a much larger geographical area, as well as
larger capacity coal-fired boilers\. This accelerated and binding schedule overrode the gradual
boiler conversion process envisaged at appraisal, and resulted in the boiler conversion component
of the project to be substantially reduced as the private sector took over this massive time bound
task\.
The risk that a different institutional model for BDC could emerge was not expected due to prior
agreements on the development of the sector\. However, since the institutional study for
organizing wastewater services was to be carried out during project implementation, financial
performance covenants should have been developed for the sector as a whole, rather than for
BDC only\.
2\.2 Implementation
(a) Wastewater Management
Expansion of Wastewater and River Improvement Investments\. Strong support from
government leaders, flexible implementing policies, and effective project management of the
wastewater component enabled the original wastewater activities to be implemented efficiently
and to achieve the targeted outcomes, thus allowing this component to be significantly expanded
at restructuring\. A key factor was the good coordination among the different departments and
agencies; close and continuous consultations with the project affected persons, which
satisfactorily addressed grievances regarding compensation; and timely implementation of land
acquisition and resettlement\.
BDC Institutional Development\. Following the institutional study in April 2002, BMG
reconstituted BDC as the Beijing Drainage Group (BDG)\. BDG has demonstrated strong capacity
and high productivity in its business operations, and is considered a replicable model for China\.
(b) Boiler Conversions
The 2008 Olympic Games\. Selection of Beijing to host the 2008 Olympic Games was a catalyst
for the accelerated construction of infrastructure, and improvements to the environment and air
quality-all crucial to the success of the Olympic Games\. Multiple measures and actions were
taken to improve air quality, including accelerated coal-to-gas boiler conversions, rehabilitation
of coal-fired boilers, relocation and closure of polluting industries, controls on vehicular traffic
movement, promotion of public transport, etc\. The central government and BMG appropriated
additional funds to implement these measures and actions\.
Favorable Financing Options and Simpler Procedures\. Attractive financing and simplified
procedures became available for boiler conversions, to complete the conversions in preparation
for the Games\. The certainty and large size of the market, the incentives and simplified approval
procedures generated significant interest among commercial boiler vendors, and an active market
for boiler conversions emerged quickly\. The result was a significant drop in demand for project
financing for boiler conversions\. Project and the non-project vendors completed 700 and 16,000
8
sets of boiler conversions, respectively, before the opening of the Olympic Games\. Only about a
tenth of the loan allocated for boiler conversion was utilized\.
Inadequate Capacity of SJET\. SJET, a newly-established and under-resourced company, was not
able to meet the challenges of the task, or compete in the environment of the expanded and
accelerated boiler conversion market and the highly active private sector operating under more
favorable conditions\. In the final analysis, SJETâs capacity to market natural gas was not a
significant factor for the project outcome because the project intervention in marketing boilers
had reduced to about 10% of the project cost\. The projectâs grant technical assistance
implemented by HECC after transfer from SJET, however, was the dominant contribution to
project outcomes due to its highly catalytic role for the entire boiler conversion program of BMG\.
Air Quality in Beijing\. Air quality emerged as a priority to assure the success of the Games and
BMG made additional investments outside the project to complement project activities on air
quality monitoring, i\.e\., the establishment of ten automatic air quality monitoring stations, and the
Air Quality Monitoring and Decision Support System (AQMDSS), financed under the project\.
(c) GEF Grant-supported Components
Gas Boiler Technology and Market Development\. As SJET was not effective in implementation
of the project technical assistance, at the mid-term review in 2003, the Heating Energy
Conservation Center (HECC) was made responsible for implementation of the remaining
technical assistance activities for gas boiler market, technology development and heating
conservation\. Some delay in implementation occurred as: (i) HECC was not familiar with the
Bankâs ICB procurement procedures, (ii) the complex design and bid document preparation, and
(iii) the time-consuming domestic approval procedures\.
Heating Energy Conservation\. At the mid-term review, this component was adjusted to: (i)
address issues in the whole heating system, from heat sources to buildings; and (ii) change the
focus of the pilot and demonstration project from small and medium coal-fired boilers to large
coal-fired and gas heating systems, and enlarge pilot and demonstration schemes\. At the second
amendment to the Grant agreement, the tri-generation combined cooling, heating and power plant
was added to demonstrate efficient and rational use of natural gas resources\.
Climate Change and Low Carbon Economy Study\. With the agreement of the Bank and GEF, a
study on climate change and low carbon economy development was carried out using Grant
savings available at the end of 2009\.
Grant Utilization\. The grant was almost fully utilized\. The unutilized balance of US$ 200,000
was canceled at grant closure\.
Compliance with Financial Covenants
(a) SJET\. A project covenant required SJET âto sell natural gas boiler equipment at prices and
installments terms that could cover all reasonable expenses it incurred for sale and installment,
including the cost of equipment, transportation insurance, management, all financing
expenses, as well as reasonable provision for bad debts and profitsâ?\. This covenant was
deleted at project restructuring with the substantial reduction in the boiler conversion
component\.
(b) Beijing Drainage Group\. Based on the Borrowerâs request, the Bank deleted, on February 4,
2008, the project covenant that required wastewater tariff revenues to be retained by BDG\.
9
The wastewater sector in Beijing has been, and continues to be, financially sustainable, taking
into account revenues from wastewater tariffs and funding provided by BMG\. Financial
covenants applicable to BDG on cost recovery and debt service coverage ratio became no
longer relevant under the institutional arrangements in place\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
The M&E framework was well designed to capture the projectâs impact on air and water quality,
incorporating highly appropriate and sufficient indicators, such as: SO2 concentration; number of
days Beijing population was exposed to air quality worse than Class II standard; COD discharges
to the Liangshui River; progress in physical and financial expenditures by component; and
resettlement implementation\. Monitoring and evaluation was to be carried out primarily through
monitoring the agreed outcome and output performance indicators, which were reported in the
semi-annual progress reports, prepared by the Beijing Project Management Office (BPMO) in
collaboration with the implementing agencies and the Beijing EPB\.
Some monitoring indicators, selected at appraisal, could not be measured satisfactorily because of
way information is collected in Chinaâs monitoring protocol\. Data on coal consumption for
heating and other uses was not available disaggregated\. Moreover, a methodology was not
available to measure fuel consumption per heating area\. The task team realized these difficulties
early in the project, and more appropriate and practical performance indicators (KPI) were
adopted in a timely manner\.
The air quality monitoring system developed under the project helped to monitor the impact of
the air pollution control interventions and provide BMG and the public daily air quality
information and health advisories, as necessary\. The monitoring information was utilized to:
support policy and actions to enhance air pollution reduction measures; make investment plans to
further reduce pollution discharges to the river system; and accelerate project implementation and
management\.
2\.4 Safeguard and Fiduciary Compliance
(a) Social Safeguards\. Resettlement activities were carried out satisfactorily in accordance with
Chinese regulations and World Bank policies\. External monitoring of safeguards implementation
was carried out in accordance with the legal agreements\. Annual safeguards compliance reports
prepared by the project implementing units were submitted regularly\. The comprehensive
Resettlement Completion Report (RCR), submitted at the end of 2008, concluded that:
resettlement implementation was successfully completed with the full participation of the affected
persons; their standards of living had improved; and there were no outstanding resettlement issues
at project closure\. See Annex 6 for more details\.
(b) Environmental Safeguards\. The project was correctly assessed as a Category âAâ? project,
and a comprehensive environmental assessment was carried out in accordance with the policies
and procedures of China and the World Bank\. All the implementing agencies established
independent environmental management teams that were responsible for implementation,
supervision and monitoring of the Environmental Management Plans (EMP)\. Emergency
response plans for environmental pollution were also prepared to guarantee environment
protection at the construction sites\. Specific environmental protection measures adopted were
adequate, and included staffing and training, dust control, noise control, and disposal of sludge\.
During supervision, the Bank specialists recommended further improvements to environmental
standards on a case-by-case basis, particularly, the management of sediment from river dredging\.
Internal and external environmental monitoring results have confirmed that through efficient
implementation of the EMPs, the adverse environmental impacts resulting from the project
10
construction were mitigated and controlled to acceptable levels\. There were no complaints on
environment issues throughout the project implementation period\.
(c) Financial Management\. Appropriate financial management arrangements were put in place
to ensure proper use and accounting of project funds\. Financial management was carried out
satisfactorily, and no significant issues arose during implementation\.
(d) Procurement\. Procurement activities were carried out satisfactorily by all agencies\. BPMO
and PIUs improved their procurement capacity progressively during project implementation\.
Some useful lessons emerged, e\.g\., the need for improved quality of detailed designs and bidding
documents, and the need for closer communication among the project PIUs, the Ministry of
Commerce (MoC) and the Bank task team, to avoid delays in bid evaluations for ICB
procurement of equipment\.
2\.5 Post-completion Operation/Next Phase
With the availability of increased volumes of natural gas, the coal-to-gas boiler conversion has
continued since Loan closing and is expected to proceed further with private and government
funding\. HECC plans to expand energy audits, and conduct training programs on gas technology,
energy audits, and heating energy conservation, at the training center set up with GEF support\.
HECC has a core of competent professionals, and will continue to be adequately funded by an
annual operating budget from BMG\. It will play a key role as a resource center and provide
available information on gas boiler technology, technical support for boiler conversion design,
heating energy conservation, and energy audits and efficiency improvements\.
BDG is well managed, staffed, and is assured of financial support from BMG, as necessary\. BDG
expects to increase the collection and treatment rate of wastewater generated from about 22
million people (both citizens and transient populations) in Beijing, and to improve the operational
efficiency of the wastewater facilities through the use of the Geographic Information System-
based management information system installed under the project\. BDG will make further efforts
to fully utilize the treated wastewater, through contracts with industries and other potential users\.
The Beijing Municipal Water Affairs Bureau and the District Water Affairs Bureaus are expected
to enhance their monitoring of water quality as stipulated by the national standards and
management capacities to maintain water quality, flows and flood control, primarily during the
rainy season\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
Rating: Satisfactory
The PDO and GEO were fully consistent with national and municipal priorities for improving
water quality and flows in the major rivers and streams, improving air quality, and reducing
greenhouse gas emissions in Beijing\. The PDO was also consistent with the World Bankâs
Country Assistance Strategy (CAS) of 2000, with respect to safeguarding the environment and
reducing infrastructure bottlenecks\. Eleven years later, the PDO remained highly relevant with
the Country Partnership Strategy (CPS) of 2006, especially with respect to pillar three, on
managing environmental challenges\.
During project implementation, the focus of the PDO shifted significantly from reducing air
pollution to alleviation of water pollution, when the boiler conversion component was down-sized
11
at the project restructuring early in the project\. Expansion of the wastewater and river
improvement investments utilizing loan savings contributed to a higher removal rate of COD per
year, and helped improve surface water quality in the rivers by one level, from worse than Class
V or Class V to Class IV and Class III, in most of the river sections\.
The GEF grant-financed technical assistance was highly relevant to enhance the PDO through: (i)
support for boiler conversions, and transfer of technology for boiler conversion and efficient
heating conservation; (ii) demonstration of efficient and rational use of natural gas in combined
cooling, heating and power generation; and (iii) development of policy, strategies and action
plans to address climate change, and low carbon economy development\.
The relevance of the PDO, project design and implementation arrangements, complemented with
GEF technical assistance, contributed to the satisfactory achievement of the PDO and GEO\.
3\.2 Achievement of Project Development Objectives and Global Environment Objectives
Rating: Satisfactory
PDO Achievements
Air Quality\. The project set the stage for the private sector to take over the emerging market for
delivery of small and medium size natural gas boiler conversions\. Despite the project not
achieving the target of 2,000 natural gas boiler conversions, PDO achievement is rated
satisfactory based on the visible improvement in air quality, residentâs appreciation of the
improvements, the 70% reduction of SO2 emissions from 1998 to 2009 (120 ug/ m3 to 36 ug/ m3),
and the recorded 285 days per year with good air quality of Class II standard or better, in 2009,
compared to 265 days/year when the population was exposed to air quality worse than Class III in
1998\.
Wastewater\. Achievement of the PDO for the wastewater component under the original
wastewater component was satisfactory: untreated wastewater discharges of 780,000 m3 /day to
the Liangshui River were stopped; and COD discharged to the Liangshui River was reduced from
72,000 tons/year in 2000 to 26,000 tons/year in 2009\. Surface water quality of the upper reaches
of the Laingshui and Qing Rivers improved from worse than Class V to Class III/IV in most
sections\.
Pictures below illustrate conditions in the North Moat, before and after project:
12
Outcomes of the new added subcomponents for water environment improvements (in Liangma
River, lower reaches of the Liangshui and Qing Rivers, Ba River, Beixiao, Xiaotaihou and
Xinfeng River) were: reduced pollution discharges to the rivers, improvement of river water
quality from Class V or worse than Class V, to Class III in some sections, and to Class IV in
others; and reduced flood damage through river channel improvements; and environment
improvements resulting in improved amenities and enhanced land prices\. Specifically, outcomes
for the Ba River and the Beixiao River in Chaoyang District were: reduction of wastewater
pollution from about three million m3 per year of wastewater that would have otherwise entered
the rivers; avoided flood damage to nearly 270,000 people through increase of the flood
protection standard from 1:10 years to 1:20 years and 1:50 years in some sections of the rivers;
and improved amenities along the rivers, and enhanced land prices\.
Additional achievements in protection and sustainable use of water resources were: the increased
supply of treated wastewater to industry through the construction of a 20,000 m3/day water re-use
plant; and protection of groundwater through improvements in solid waste management\.
GEO Achievements
Outcomes of the Grant were satisfactory and opportune, coming at the time when natural gas
utilization was expanding, and there was a vast technology gap on gas boiler technology; and
coal-to-gas boiler conversion was adopted as the strategy to address the deteriorating air quality
in Beijing\. Achievements of the Grant support comprised efficiency improvements, enhanced
productivity and best practices in natural gas utilization, including: (i) demonstrations for boiler
market development; (ii) introduction of viable models for the emerging boiler conversion
market; (iii) introduction of best practices in gas technology, coal-to-gas boiler conversion design,
including training; (iv) introduction of heating energy conservation as an essential element of the
rational and efficient use of natural gas, and energy audits; (v) development and financing of an
efficient combined cooling, heating and power plant (CCHP) in collaboration with a private
entity; and (vi) establishment of a training center for gas boiler technology and design, energy
audits, and best practices in heating conservation\.
Institutional Achievements
The project succeeded in strengthening the capacity of: (i) BDG, for project design and
management, operation and maintenance of the entire wastewater system, use of a GIS-based
operation and management information system, and operation as a fee based service provider to
BMG; (ii) HECC, as a resource center for all aspects of gas boilers, energy audits and a training
center for the boiler industry; (iii) Beijing EPB, for air quality monitoring, data analysis,
projections, and health warnings, using a state-of-the art Air Quality Monitoring and Decision
Support System; and (iv) five design institutes with expertise in gas boiler conversion design\.
Other Achievements
Sustainable Water Re-use\. The project contributed to water resource conservation in a
sustainable manner through financing a water re-use plant for supply to industry\.
Climate Change, and Energy and Environment Studies\. Technical assistance studies provided
BMG: (i) options for managing the long-term municipal energy demand and supply, and address
environmental impact of high energy consumption; and (ii) policy and strategies for low carbon
economy development for key urban infrastructure sectors, demonstrations and specific actions\.
13
Timely Project Restructuring\. The need for a major project restructuring was identified in a
timely manner, following the mid-term review in 2003, when it became clear that the air quality
component would have substantial loan savings\. The restructuring was completed after a
comprehensive appraisal of the new investments proposed by Government\.
Achievements of the PDO and GEO were measured through the following key performance
indicators agreed at project appraisal, and those that were adjusted during the project
implementation\. See Data Sheet and Annex 1 (Additional Indicators of Project Outcome)\.
3\.3\. Efficiency
Economic Analysis
Rating: Satisfactory
Cost-benefit analysis was conducted at appraisal for both boiler conversion and wastewater
components\. However, it was not possible to compare the appraisal assessment with the end of
project assessment because: (i) the major restructuring of August 2006 significantly altered the
projectâs composition and impact; and (ii) it is extremely difficult to quantitatively separate and
assess the contributions of the project to the significant economic and environmental benefits
achieved in Beijing from other environmental improvements undertaken by BMG\.
Boiler conversion\. As the total number of 700 gas-fired boilers procured to replace coal-fired
boilers through the project was lower than the appraisal target of 2,000, the overall emission
reduction and air quality improvement directly attributable to the project is well below original
estimates\. However, the overall air quality improvement in Beijing as a result of the heating fuel
switching program undertaken by government during the life of the project is substantial and the
public health benefit is very significant\. The overall cost and benefit of the air quality
improvement can be assessed, but is beyond the scope of the ICR\.
Wastewater\. Wastewater treatment and river rehabilitation subcomponents brought economic
benefits including flood control, environment and health improvements, as well as amenity and
land value increases\. The river rehabilitation investments in the Ba River and the Beixiao River in
Chaoyang District significantly improved the water quality by intercepting 3 million m3 of
wastewater each year\. They also raised the flood control standard from 1:10 years to 1:20 to 1:50
years, depending on river sections, protected 270,000 local residents, and avoided potential flood
damage of up to RMB 50 billion (US$ 7\.7 billion) per flood event\. The project improved the
amenity value along the rivers and increased land and property values; e\.g\., the price of real estate
in Dongba Jiayuan (a residential neighborhood of Chaoyang District) increased from RMB
2,800/m2 (US$ 431/m2) before the project to RMB 8,500/m2 (US$ 1,308/m2) after the completion
of the river rehabilitation subcomponent\. Excluding the price impact of other factors, it is
estimated that the river rehabilitation works contributed to an increase in property values of a
minimum of RMB 2,000/m2 (US$ 308/ m2)\.
Implementation Efficiency\. Taking into account the complexity of the project, and the major
restructuring that became necessary at the time of the mid-term review due to external reasons,
implementation efficiency is considered satisfactory\. The original wastewater components were
completed by the mid-term review in 2003, when the boiler conversion component was scaled
down\. The seven new subcomponents added in 2006, were completed by late 2009\. The
combined cooling, heating and power generation plant, agreed in 2008, was completed at the end
14
of 2010; and the Study of Climate Change and Low Carbon Economy Development was
completed during the last one-year extension of the Grant\.
Financial Analysis
BMG increased wastewater tariffs several times during project implementation, most recently in
December 2009\. At project appraisal, the wastewater tariff for residential consumers in Beijing
was RMB 0\.30/m3\. This tariff was increased to RMB 0\.90 m3 (US$ 0\.14/m3) and RMB 1\.04/ m3
(US$ 0\.16/ m3) in December 2008 and December 2009, respectively\. BMG intends to increase
wastewater tariffs to meet the full cost of wastewater collection and treatment in a phased manner\.
BMFB allocates funds to BDG as a treatment fee to cover the cost of O&M of the network and
wastewater treatment, based on the volume of wastewater treated, and retains responsibility for
all sector debt service obligations, including loans from the World Bank, JBIC, and the Asian
Development Bank\. The current new institutional and financial arrangements have made the loan
financial covenants (that BDC generate revenue from wastewater and drainage operations
sufficient to cover operation expenses and the greater of either depreciation charges or debt
service payments) irrelevant\.
Table below summarizes the funds flow for the operation of wastewater treatment by BDG\.
Fund Flows for O&M of Wastewater Collection and Treatment by BDG (RMB million)
2005 2006 2007 2008 2009
Total Wastewater Collection and Treatment Fee 318 339 365 445 600
Allocated by BMFB to BDG
Subsidies from BMFB 126 165 165
Operating Cost of Wastewater Collection and 273 438 537 608 715
Treatment by BDC
Payments of Debt Service (now paid by BMG) - - - - -
Cost Recovery Ratio (Including Subsidies) 1\.16 0\.77 0\.86 1\.00 1\.07
3\.4 Justification of Overall Outcome and Global Environment Outcome Rating
Rating: Satisfactory
Air Pollution Control\. Even though the number of natural gas boilers marketed through the
project was only about a third of what was planned, a âsatisfactoryâ rating is justified because the
project was a pioneer intervention in promoting coal-to-gas boiler conversion, providing gas
boiler technology, and contributing to the initial development of the gas boiler market through
information campaigns and providing market reference prices through ICB procurement\.
Assistance to build Beijingâs heating energy conservation capacity through HECC was also
fruitful, since HECC became a designated branch of the government in 2004\. The project
developed best practice technologies for heating energy conservation; supported demonstration of
efficient gas boilers and more efficient tri-generation technology; enhanced the capacity of design
institutes for boiler conversion design, introduced energy audit demonstrations; and raised public
awareness\. Based on data available on reduction in the use of coal for heating boilers, SO2
emission and increased number of days with satisfactory air quality, the PDO and GEO were
substantially achieved\.
Water Quality Improvement\. Water quality and management in the main rivers were improved
by expanding the collection and treatment of wastewater, controlling river flows and installing
flood control measures, and generally, improving the water environment\. Water quality standard
15
in the rivers was increased by one level, in most river sections from Class V to Class IV\. The
institutional model adopted for BDG has enabled the achievement of sector development
objectives i\.e\., to ensure a satisfactory quality of service at the lowest cost, and recover full costs
in the long-term, in a phased manner through periodic tariff increases\.
3\.5 Overarching Themes, Other Outcomes and Impacts
Not applicable
(a) Poverty Impacts, Gender Aspects, and Social Development
The project did not contain specific poverty alleviation, gender or social development initiatives\.
(b) Institutional Change/Strengthening
Overall responsibility for the wastewater service rests with BMG, with BDG and other operators
each operating and maintaining a part of the Beijing wastewater facilities for a fee from BMG
based on wastewater volume treated\. This institutional model is working satisfactorily, and
service provision is satisfactory (see also section 1\.9)\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
None
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
Not applicable
4\. Assessment of Risk to Development Outcome and Global Environment Outcome
Rating: Low or Negligible
China has a made a strong national commitment to improve the environment, as reflected in the
five year plans\. Efforts to improve air quality in Beijing are therefore certain to continue, and the
risk that air quality in Beijing will deteriorate is low\. The central government and BMG are
expected to: continue programs to reduce pollution emissions from industries; expand the use of
natural gas in Beijing through continuation of the coal-to-natural gas boiler conversions; improve
efficiency in the remaining coal-fired heating units; introduce measures to control automobile
emissions: and mainstream experience from the boiler conversions and heating energy
conservation demonstration pilots\.
With the high priority and financial support given to improving water quality by BMG, the risk
that water quality will deteriorate is also low\. BMG is expected to continue cost recovery for
wastewater services in a phased manner, and ensure that BDG delivers quality service at the least
cost\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
16
Rating: Satisfactory
Quality at entry of this complex and ambitious project was satisfactory despite the challenges and
risks\. The PDO and interventions were consistent with BMGâs priorities, the Country Partnership
Strategy (CPS), and the GEF Operational Program #5, promoting the removal of barriers to
energy efficiency and energy conservation\.
For the wastewater sector, project design incorporated expansion of wastewater collection and
treatment in Beijing, continuation of the institutional reform to improve the autonomy of BDC,
improvements in utility management, and long-term sustainability of the wastewater sector\. For
air pollution reduction, the project incorporated: a manageable segment of the potential market
for boiler conversions; crucial financing to address a key constraint facing boiler houses at the
time; comprehensive grant-financed technology transfer and demonstrations necessary to support
the emerging coal-to-natural gas boiler conversion program; a novel mechanism to procure and
market natural gas boilers; and capacity enhancement for air quality monitoring and projection\.
To support BMGâs âclean air programâ?, which focused on converting small scattered coal boilers
to cleaner fuels, the Bank selected a manageable segment of the boiler market that was relatively
stable and mature, and the project addressed about a third of the potential market for boiler
conversions\. Recognizing the enormity of the challenge, the Bank included a significant degree of
technical assistance from a GEF grant to provide the necessary technological expertise\. Project
design addressed the key technology void that existed in the expanding program of natural gas
utilization through: introduction of best practices in gas technology; heating energy conservation
technologies; training in coal-to-gas boiler conversion design for domestic design institutes; and
in-the-field demonstration of coal-to-gas conversions, heating systems efficiency improvements;
and energy audits\.
In the absence of an established institutional model, the Bank took an innovative approach at a
time of serious need to assist Beijing, despite the challenges of launching a large commercial
operation using a new state-owned company\. Even though a seasoned international consultant
was hired at the start of the project to help develop SJET management capacity and business
planning, this calculated risk did not pay off, and SJET was very slow to develop the necessary
skills and the requisite competitive mentality and management capacity\. In the end, SJETâs
performance in marketing natural gas boilers had little impact on project outcomes because of the
small intervention resulting from the changed conditions\.
The institutional model adopted for marketing natural gas boilers using a new and untested
company was a risky venture\. However, with the scaled down boiler conversion component
(about 10% of total project cost) and BMGâs acceleration of boiler conversions in the run up to
the Olympic Games, the institutional model was not a key factor in achieving project outcomes\.
The design of the key performance indicators was weak, but was amended appropriately during
project implementation\.
The project design incorporated many innovative, appropriate and positive features that addressed
all the critical issues\. Project design of the grant technical assistance played a catalytic role for the
emerging natural gas utilization through introduction of gas boiler technology, boiler conversion
design, heating efficiency, heating energy conservation and energy audits\. Despite weaknesses in
the implementation arrangements for the boiler conversions, on balance, Bank performance in
ensuring quality at entry is rated satisfactory overall, in view of the many positive outcomes of
project design\.
17
(b) Quality of Supervision
Rating: Satisfactory
Overall, the supervision performance of the Bank was satisfactory\. Supervision missions
identified and highlighted weaknesses in project management, contract management and
institutional development\. The Bank was flexible in accommodating SJET requests for variations
in the boiler conversion market to spur increased sales of natural gas boilers\. Despite
discouraging progress in the early years, the task team diligently pursued the implementation of
the GEF-financed technical assistance which was essential to promote gas boiler technology and
heating energy conservation, and support SJETâs activities\. The Bank added further value by
agreeing to include the combined cooling, heating and power generation demonstration project in
2006\. At the same time, the Bank strongly advocated improvements in detailed designs,
construction management and implementation, utility management and compliance with financial
performance covenants in the wastewater sector\.
The Bank identified the need to restructure the project at the mid-term review\. The task team and
Bank management responded favorably to the Borrowerâs request to restructure the project when
large loan savings accumulated, and agreed to add seven new subcomponents that enhanced
achievement of the PDO and maintained the projectâs relevance during a time of rapid change\.
The Bank supported BMGâs choice of institutional reform for the wastewater sector that resulted
in BMG purchasing wastewater services from BDG, which changed BDC to a service provider\.
The slow progress in the implementation of the GEF technical assistance diminished some of the
impact of the support for boiler conversions and gas technology development\. Nevertheless,
implementation progress was rated satisfactory until 2007, when it was finally downgraded to
Moderately Satisfactory for a short time\. However, the perseverance and flexibility of the task
team made it possible to use the GEF Grant to demonstrate technology for heating energy
efficiency and conservation through financing of the tri-generation cooling, heating and power
plant with grant savings using an innovative public-private partnership\.
The task team leader was based in Washington until early 2008, and the task team comprised
relevant national and international experts from Beijing and Washington\. Task team leadership
was transferred to a Beijing based staff thereafter\. The location of several key members
(procurement, financial management, environment, and social) in Beijing throughout facilitated
frequent contacts between the Bank and the BPMO, and resolution of issues in a timely manner\.
Safeguards compliance\. Specialists of the task team from the Beijing office satisfactorily
supervised implementation of safeguard issues\. The team carried out adequate field visits to
review progress and ensured the submission of the external monitorâs report on safeguard
implementation\. Resettlement reporting was reviewed, and commented on as necessary\.
Fiduciary Compliance\. Oversight of financial management and procurement activities was
carried out satisfactorily by members of the task team from the Beijing office, ensuring
compliance with audit requirements and procurement procedures\. Timely, and at times,
immediate responses were provided to the clientsâ requests for clarification and guidance on
procurement matters\.
Justification of Rating of Overall Performance
Rating: Satisfactory
18
Design addressed the critical issue of poor air quality in Beijing, with an innovative project
design featuring the much needed technology transfers for efficient natural gas utilization\. Project
design of the institutional model for marketing natural gas boiler fell short of expectation, but had
little impact on project outcomes\. The grant technical assistance on boiler technology and
utilization, however, was highly effective to support the entire boiler conversion program of
Beijing that was implemented on an accelerated pace before the Olympic Games\.
Based on the projectâs overall performance, the Bankâs value addition to improving air and water
quality, satisfactory quality at entry, the high quality of supervision provided, timeliness of
project restructuring, effective communications maintained with implementing units and other
stakeholders, and achievement of the PDO and the GEO, the overall performance of the Bank is
judged satisfactory\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
The Beijing Municipal Governmentâs (BMG) performance in achieving the air quality targets
before the start of the Beijing Olympic Games was an exceptional achievement\. This achievement
occurred with limited project funding, but with significant and urgently needed technical
assistance provided through the GEF Grant\. BMG was fully supportive of the GEF-funded
technical assistance for gas technology and heating energy conservation, and made every effort to
accelerate implementation\. BMG supported the establishment of HECC which has developed into
an important resource center with a critical future role for the promotion of gas technology and
heating energy conservation\. A permanent training facility has also been established to provide
continuing training\.
BMG carried out a review of the institutional arrangements for the wastewater sector, and has
established the current institutional arrangements after considerable discussion, including with the
Bank\. With BMGâs strong commitment and financial support, these arrangements are sustainable
in the medium-term, and assure provision of high quality service at the lowest cost to achieve the
desired environmental improvements\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
The Beijing Project Management Office (BPMO) provided good coordination, and performed
well in project monitoring, and in resolving difficulties as they arose\. It provided strong
leadership that remained unchanged throughout the project\. BPMO has consolidated its position
as a strong and permanent agency to provide support to BMG to manage foreign funding and to
coordinate implementation\.
Beijing Drainage Group (BDG)\. Consistent with its long experience and stature as a lead
wastewater sector agency, BDG performed well in implementing the project components\. All
activities, including procurement of works, goods and services, were executed in a highly
satisfactory manner\. Management systems for wastewater facility management were introduced
through the GIS-based information management system\.
Beijing Environmental Protection Bureau (EPB)\. The EPBâs capacity to monitor air quality,
analyze data and make projections was enhanced\. The EPB manages a number of monitoring
19
stations covering the entire city, and developed a state-of-the-art air quality monitoring and
decision support system (AQMDSS) to enhance its monitoring and analytical capacity\. EPB
provides daily reports of air quality and health advisories, as necessary\.
Shihuan Jietian Energy Technology Corporation (SJET) did not possess the attributes necessary
to lead a major commercial activity\. SJET staff, drawn mainly from the Beijing Gas Development
Company (which was formerly a department of BMG) was not prepared for a commercially-
oriented operation, and proactive marketing and competition\. In a gradual growth scenario, which
was originally envisioned by the Bank and BGDC, SJET might have had a chance to become
better at selling gas boilers over time\. But the acceleration of boiler conversions soon after the
launch of the project quickly stretched SJETâs capability\. SJETâs role in the project diminished
due to the reduction in the boiler conversion component, and the transfer of the grant technical
assistance to HECC early in the project, during the mid-term review\.
Heating Energy Conservation Center (HECC) assumed a greater role in the project when
implementation of the grant technical assistance was transferred from SJET\. HECC implemented
all the technical assistance components satisfactorily, albeit with some delays\. HECC has
developed into a repository of a wealth of information on boiler conversions, heating energy
conservation and new technology for efficient natural gas use for cooling, heating and power
generation\. HECC has a major future role in natural gas use, energy auditing, heating energy
conservation and training\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
Despite the weaker performance in implementing the GEF technical assistance component, the
overall performance of the Borrower is rated satisfactory\.
6\. Lessons Learned
Wastewater Sector Institutional Reform\. The Bank should adopt a flexible approach to the
institutional model for the sector, and in particular consider the country conditions, instead of
advocating the traditional utility model as the default option\. The arrangements in place in
Beijing assure sustainable service provision, which rely on a combination of politically feasible
tariffs and regular confirmed resource transfers from the municipal government\. However, such
an arrangement is only feasible where the city can: (i) ensure service provision at low cost; (ii)
take on responsibility for servicing debt; and (iii) provide timely cash transfers to meet shortfalls,
especially in relation to new investments\.
Water Re-use\. Water re-use in water scarce areas is sound policy\. Beijing has performed well to
achieve a 50% rate of water reuse, by addressing the key issues relating to water re-use: (i)
reclaimed water quality and reliability; (ii) price of reclaimed water; and (iii) cost and benefit of
using water supplied through the system and reclaimed water\. This should serve as an example
for other Chinese cities\.
Strong Leadership Commitment\. The boiler conversion program faced not only major technical,
environmental and economic issues, but also significant coordination and political issues\. The
ambitious targets set for conversion to natural gas-fired boilers were only achieved (albeit mostly
outside the project) because of strong leadership, both at central and municipal government levels\.
Participation of International Experts and Sharing of Knowledge\. The use of international
consultants, in the case of gas boiler technology transfer and heating conservation, was highly
20
valuable and necessary in China, because use of natural gas for heating at the current scale has
started only recently\. The substantial knowledge gains in efficient design and operations were
reflected in heating energy conversion, gas boiler systems, and air quality management\.
Technologies developed under the project would be very useful to other cities that are
contemplating the transition from coal-fired heating to cleaner fuels\.
Intervention in Commercial Operations\. In areas involving significant commercial operations
(such as boiler conversions), newly established municipal entities with no commercial expertise
are not likely to succeed\. It might have been more appropriate for the government to have
partnered with a truly commercial company, or the boiler conversions might have been left
entirely to market forces with some incentives to end-users\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
See Summary of Borrowerâs Implementation Completion & Results Report attached as Annex 7\.
(b) Co financiers
Not applicable\.
(c) Other partners and stakeholders
Not applicable\.
21
Annex 1\. Additional Indicators of Project Outcome
CHINA: Second Beijing Environment Project
Indicator At Project At Project Close
Start
1\. Capacity for air quality monitoring and None Daily air quality reports and health
predictions advisories now issued
2\. Water quality improvements in new Class IV or Class III and Class IV in most sections
rivers* added at project restructuring worse than of the rivers
Class V
3\. Improved flood protection in new rivers* 1: 10 years 1:20 years to 1:50 years in some river
added at project restructuring (average) sections
4\. Improved wastewater collection in 15\.0 km of interceptor sewers
catchments of the new rivers* added at
project restructuring
5\. Improved water reuse and conservation in 40% 50%
Beijing
6\. Introduction of best practices in gas None (i) Eight coal-to-gas conversion
technology, coal-to-gas boiler conversion demonstrations
design, including training; (ii) 29 heating system efficiency
improvement demonstrations
7\. Comprehensive utilization of energy None (i) Five design institutes trained in
conservation technologies and equipment boiler conversion designs
(ii) Combined heating, cooling and
power generation plant demonstration
(iii) 140 energy audits for
demonstration
(iv) HECC capacity enhanced
(v) Training center established and
functioning
8\. Low carbon energy economy development None (i) Policy and strategies developed
(ii) Project under preparation for IBRD
funding\.
* Ba River, the Beixiao River, Xiaotaihou River, Xingfeng River and, Liangma River)
2009 Air Quality of Beijing (Published by Beijing EPB)
No Month of 2009 Number of Number of Number of Number of
Days Days Days Days
Meeting Meeting Meeting Meeting
Class I Class II Class III Class III and
Standards Standards Standards Better
Standards
1 January 5 19 7 31
2 February 1 23 3 27
3 March 2 23 5 30
22
4 April 3 20 0 23
5 May 2 23 0 25
6 June 4 21 0 25
7 July 5 20 6 31
8 August 2 26 3 31
9 September 3 19 0 22
10 October 5 19 0 24
11 November 8 10 10 28
12 December 7 15 8 30
Total 47 238 42 327
23
Annex 2\. Project Costs and Financing
CHINA: Second Beijing Environment Project
Project Cost by Component (in USD Million equivalent)
Second Beijing Environment Project - P042109
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
AIR POLLUTION
458\.87 64\.10 14%
REDUCTION
Boiler Conversion 417\.37 37\.36 9%
Air Quality Monitoring and
3\.19 3\.85 120%
Decision Support System
Gas Boiler Market and
27\.14 17\.68 65%
Technology Development (GEF)
Heating Energy Conservation
11\.17 7\.12 64%
(GEF)
WASTEWATER
332\.85 466\.34 140%*
MANAGEMENT
Liangshui River Sewers 88\.21 142\.67\. 162%
Liangshui River Wastewater
185\.06 231\.00 125%
Treatment
Qing River Sewers 53\.44 86\.67 162%
BDC Institutional Development 6\.14 6\.00 98%
LAND AQUISITION AND
250\.82 303\.00 121%
RESETTLEMENT
Sub-Total Original Components 1,042\.54 833\.44 80%
ADDITIONAL
- 366\.06 -
COMPONENTS*
River Rehabilitation (by
- 164\.50 -
BMWAB)
River Rehabilitation in Chaoyang
- 139\.91 -
District
Xinfeng River rehabilitation in
- 23\.79 -
Daxing District
Datun Solid Waste Transfer
- 20\.86 -
Station Upgrading
Reclaimed Water Plant in BDA - 17\.00 -
Total Baseline Cost 1,042\.54
Physical Contingencies 132\.85 -
Price Contingencies 76\.12 - -
Total Project Costs 1,251\.51 1,199\.48 96%
Front-end fee IBRD 3\.49
Total Financing Required 1,255\.00
Second Beijing Environment Project â GEF Component - P064924
24
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Gas Boiler Market and
Technology Development
27\.14 27\.68 101%
(including GEF Supported Energy
and Environment Study)
Heating Energy Conservation
(including GEF supported Beijing 11\.17 11\.17 100%
Low-Carbon Development Study)
Total Financing 38\.31 38\.85 101%
Appraisal Actual/Latest
Type of Estimate Estimate Percentage of
Source of Funds
Financing (USD (USD Appraisal
millions) millions)
Global Environment Facility (GEF) 25\.00 24\.80 99%
International Bank for Reconstruction
349\.00 319\.03 91%
and Development
Borrower 877\.51 894\.50 102%
Total Financing 1,251\.51 1,238\.33 99%
25
Annex 3\. Outputs by Component
CHINA: Second Beijing Environment Project
Overview of Outputs
Loan Project Outputs: Original Components
Subcomponent Planned at Appraisal Actual Achieved
Wastewater treatment 800,000 m3/d capacity 780,000 m3/d capacity
plants
Interceptor and trunk 70 km 71 km
sewers
Conversion of coal-fired 2,000 No\. 700 No\.
heating boilers to natural
gas boilers
Air quality monitoring 10 No\. 10 No\.
stations
Capacity improvement To establish an air quality Air quality monitoring decision support system
for air quality monitoring monitoring system for (AQMDSS) established with trained personnel
study Beijing
BDC institutional reform To increase the autonomy Recommendations for restructuring BDC as a
of BDC service provider
Beijing Drainage To improve operation and GIS-based operations management system
Operations Management management of the entire established and operating,
System wastewater service
Beijing Water To improve management Recommendations for water environment
Environment of the water environment planning and management
Management Study
Loan Project Outputs: Additional Components (Water Environment Improvement)
Rehabilitation of the Rehabilitation of about 11\.0 km North Moat (5\.927 km)
North Moat and the of North Moat and Liangma 2 check sluices, 2 navigation locks, 2
Liangma River River diversion sluices, 1 culvert sluice and 5
Interceptor sewers docks
Flow regulation structures 2 bridges
River bank improvements 2 new wharfs
Landscaping Liangma River (5\.251 km):
Associated facilities 3 new rubber dams
3 bridges
2 docks, 2 wharfs & one escape sluice
575 meters of interceptor sewers
Rehabilitation of Lower Rehabilitation of about 8 km of 8\.4 km of river channel dredging
Reaches of the Liangshui Liangma River 70 storm water inlets
River River channel clean up including Sluice gate
dredging Two bridges
Flow regulation structures and 13\.85 km of embankment roads
equipment 241,300 m2 of landscaping
River bank improvements, One artificial wetland (2,800 m2)
Landscaping
Associated facilities
Rehabilitation of the Rehabilitation of about 13 km of 13\.4 km of river channel dredging
Lower Reaches of the Qing River Three sluice gates
Qing River River channel clean up including Two bridges
dredging Two flood retention basins
Flow regulation structures and One artificial wetland
equipment One flood diversion sluice, one escape
26
River bank improvements, sluice and one check sluice
Landscaping Embankment roads
Associated facilities 43 storm water and wastewater inlets,
Landscaping
Automatic monitoring and control system\.
Two-lake Connection Two-lake Connection 1\.82 km long connecting canal,
Connecting canal New ship lock and new culvert,
River bank improvements, 10 bridges,
Landscaping 17 storm water inlets,
Associated facilities 40,000 m2 of landscaping
69,000 m2 of improved water surface
Ba River Rehabilitation Rehabilitation of about 11 km of 10\.65 km river course rehabilitation:
Ba River New sluice gate & two new rubber dams
River channel clean up including 4 bridges
dredging 43 storm water inlets
River bank improvements, 20\.3 km of riverside roads
Landscaping 343,000 m2 of landscaping
Associated facilities 1,894,000 m2 of improved water surface
Beixiao River Rehabilitation of about 12 km of
Rehabilitation Beixiao River 3 sluice gates & 2 rubber dams
River channel clean up 6 bridges
Flow regulation structures and 110 storm water inlets
equipment 17\.2 km of riverside roads
River bank improvements, 3\.8 km of sewers
Landscaping 210,000 m2 of landscaping
Associated facilities 606,000 m2 of improved water surface\.
Xiaotaihou River Rehabilitation of about 8\.0 km
Rehabilitation of Xiaotaihou River 3 sluice gates, & one rubber dam
Interceptor sewers 11 bridges
Flow regulation structures and 65 storm water inlets
equipment 13\.2 km riverside roads
River bank improvements, 11\.2 km of sewers
Landscaping 38,000 m2 landscaping
Associated facilities 274,000 m2 of improved water surface
Xinfeng River Rehabilitation of about 10 km of River channel dredging and clean up
Rehabilitation Xingfeng River 10,293 m of interceptor sewers
River channel clean up including Water pump station and pipelines
dredging 10\.35 km of river bank landscaping
Flow regulation structures and Flow diversion structures, and sluice gate
equipment with traffic bridge
River bank improvements,
Landscaping
Associated facilities
Solid Waste Improved solid waste transfer A modern solid waste transfer station of
Management operation 1,800 tons/day capacity, and 40 vehicles of
20 ton capacity
Water Re-use 20,000 m3/d reclaimed water 20,000 m3/d WTP with double membrane
treatment plant (WTP) process, and 13 km of distribution network
Grant Project Outputs
Gas technology transfer Technical assistance through Eight coal-to-gas boiler house conversion
and market development international consultant services projects completed to support gas
technology and market development in
Beijing by demonstrating improved
conversion design and practices, boiler
27
operational management, and environment
protection\.
Demonstration of Technical assistance through Twenty nine heating systems renovated to
comprehensive international consultant services demonstrate comprehensive utilization of
utilization of energy energy conservation technologies and
conservation equipment\.
technologies and
equipment
Heating energy Technical assistance through 140 energy audits done for demonstration,
conservation international consultant services and manual on energy audits, and heating
technologies energy conservation technologies
developed\.
Capacity building for gas Technical assistance through HECC capacity as a resource center for all
technology, heating international consultant services aspects of gas boilers, energy audits and a
conservation and training training center for the boiler industry
Demonstration of a tri- Added at Grant restructuring Tri-generation combined cooling, heating
generation combined Technical assistance through and power plant constructed in
cooling, heating and international consultant services collaboration with the private sector to
power plant demonstrate rational and efficient gas
utilization
Low-carbon economy Added at Grant restructuring Policy, strategies and action plan for Low-
development Domestic consultant services carbon Economy Development
Description of Outputs of the Loan Components
(a) Wastewater Management and Water Environment Improvement
Original Component
Wastewater Collection and Treatment\. Trunk sewers 71km in length have been laid in the Qing
River and Liangshui River basins, and three wastewater treatment plants (Wujiacun WWTP,
Lugouqiao WWTP and Xiaohongmen WWTP) have been constructed with a total capacity of
780,000 tons/day\. This has significantly lowered the level of pollution in the Liangshui River\.
Additional Components of Water Environment Improvement
(a) River Rehabilitation by the BMWAB
The works included the North-ring waterways, the lower reaches of the Liangshui River and the
lower reaches of the Qing River\. The outputs are as follows:
(i) Rehabilitation of the North Moat and the Liangma River\. Rehabilitation of 11\.6 km of river,
including: (a) 5\.927 km of the North Moat, the reconstruction of two check sluices, two navigation
locks, two diversion sluices (reconstruction), one culvert sluice and five docks, two bridges, (one
new and one reconstruction), two new environmental sanitary wharfs and associated facilities; and
(b) 5\.251 km of the Liangma River, three new rubber dams and three bridges (two new and one
reconstruction), one bridge reconstruction, as well as two new docks, two environmental sanitary
wharfs, one escape sluice and 575 meters of new interceptors\.
(ii) Rehabilitation of Lower Reaches of the Liangshui River\. Rehabilitation of 8\.4 km of river,
including dredging river channel, reconstruction of 70 storm water inlets, the Dahongmen sluice
gate, fencing, two bridges (reconstruction), 13\.85 km of riverside roads, 241,300 m2 of
landscaping, and one artificial wetland of area 2,800 m2\.
28
(iii) Rehabilitation of the Lower Reaches of the Qing River\. Rehabilitation of 13\.4 km of river,
including channel dredging and rehabilitation, three sluice gates (reconstruction), two bridges,
two flood retention basins (Shenjiafen and Shaziying), one artificial wetland, one flood diversion
sluice, one escape sluice at Shenjiafen and one check sluice at Shaziying, four management
stations, riverside roads, road widening (by 5 meters), 32 storm water and wastewater inlets
(reconstruction), 11 new storm water inlets, lighting system and scenery facilities, landscaping
along the river, and automatic monitoring and control system\.
(iv) Technical Assistance Outputs: Comprised: (i) policy recommendations to BMWAB on
water environment improvement, management of urban rainwater and flood control, and wetlands
protection, etc\.; and (ii) training, including a six-person study tour to Finland and Sweden to learn
about wetland protection and utilization (10 days duration); a six-person study tour to the United
States and Canada to learn about water environment improvement and related policies (10 days
duration); a 20-day 15-person training tour to the United States for training on project
management; and a 20-day, 15-person study tour to Denmark for project management training\.
(b) Water Environment Rehabilitation in Chaoyang District
(i) Two-lake Connection\. Construction and expansion of a 1\.82 km long connecting canal, with a
new ship lock, a new culvert, reconstruction and new construction of ten bridges, 17 storm water
inlets, 40,000 m2 of landscaping, and an expanded and improved water surface of 69,000 m2\.
(ii) Ba River Rehabilitation\. Rehabilitation of 10\.65 km of river including: river course
rehabilitation, a new sluice gate, two new rubber dams, four bridges (reconstruction), 43 storm
water inlets, 20\.3 km of riverside roads, 343,000 m2 of landscaping,, and an expanded and improved
water surface of 1,894,000 m2\.
(iii) Beixiao River Rehabilitation\. Rehabilitation of 11\.75 km of river including: river course
rehabilitation, three new sluice gates, two new rubber dams, six bridges (reconstruction), 110 storm
water inlets, 17\.2 km of riverside roads, 3\.8 km of sewers, 210,000 m2 of landscaping, and an
expanded and improved water surface of 606,000 m2\.
(iv) Xiaotaihou River Rehabilitation\. Rehabilitation of 7\.6 km of river including: rehabilitation of
river course, three new sluice gates, one new rubber dam, 11 bridges, 65 storm water inlets, 13\.2 km
riverside roads, 11\.2 km of sewers, 38,000 m2 of landscaping, and an expanded and improved water
surface of 274,000 m2\.
(v) Technical Assistance Outputs\. Comprised: (i) institutional capacity strengthened through the
improved institutional and implementation capacity of the Chaoyang WAB; and establishment of
a storm water logging model and early warning system, and outline planning designs for the eight
rivers in the Chaoyang District; and (ii) a 10-day six-person study tour to the United States and
Canada to learn about water tariffs, water environment improvement, water resources
management; a 26-day domestic study tour of 43 people in three groups, visiting Shanghai,
Zhengzhou, Wuxi, Xi'an and other cities; and a training seminar of 6 days in Beijing regarding
the outputs of the technical assistance services, with 160 people participating in five sessions\.
(c) Xinfeng River Rehabilitation in Daxing District
(i) River Channel Construction consisting of dredging of the river course and cleaning up of the
river banks; riverside roads and culverts; hydrophytes plantations; and ecological purification of
water through submersible pumps and aerators to reduce COD and BOD concentrations and to
improve water quality\.
29
(ii) Wastewater Interception consisting of 10,293 meters of interceptor sewers\.
(iii) Environmental water resource consisting of a water pump station and pipelines\.
(iv) Ecological landscaping consisting of landscaping along 10\.35 km of riverbanks\.
(v) Flow diversion consisting of wastewater from the upper reaches of the Xinfeng River being
diverted to municipal sewers, and eventually to the WWTP\.
(vi) Sluice gate and traffic bridge consisting of reconstructed sluice gate and traffic bridge at
Suncun\.
Solid Waste Management\. The Datun Solid Waste Transfer Station has been renovated and
reconstructed as a station with relatively advanced technologies compared with other stations in
China, and with a daily treatment capacity of 1,800 tons, reaching a maximum of 2,400 tons\. The
component also included 40 transfer vehicles each with a loading capacity of 20 tons\.
Water Re-use\. A reclaimed Water Treatment Plant of 20,000 m3/d capacity has been constructed
and put into operation, including 13 km of distribution network\. This plant uses the effluent of
secondary treatment from the BDA WWTP as the source water and applies the âdouble
membraneâ? technology (Micro Filtration + Reverse Osmosis) to produce high quality reclaimed
water to supply industries in the BDA\.
Beijing Water Environment Management Study\. This provides recommendations on
technologies, policies, and water environment improvement\.
Water Environment Improvement Study for the Xinfeng River in Daxing District\. This provides
recommendations for overall planning, rehabilitation planning, and water environmental impacts\.
Beijing Wastewater Sector Reform Study\. Recommendations for restructuring BDC\.
Water Environment Management Institutional Study\. Recommendations for capacity building
in Chaoyang District\.
Beijing Drainage Operations Management System\. This comprises a state-of-the-art online
monitoring of drainage facilities including a GIS-based sewer network monitoring, customer
service hotline, emergency response, video conferencing, comprehensive database, and an
information network platform and data storage management platform that connects all the core
business units of BDG\.
(b) Air Pollution Reduction
(i) Air quality monitoring equipment in 10 (out of 27) air quality monitoring stations\.
(ii) About 700 new small and medium-range natural gas boilers procured and sold to government
agencies and private boiler houses\.
(iii) Development and operation of an Air Quality Monitoring Decision Support System
(AQMDSS)\. The AQMDSS is a Multimedia Integrated Modeling System (MIMS), incorporating
the following: (a) Models-3/Community Multi-scale Air Quality (CMAQ) model (to simulate
chemical interactions of PM, NO² and O3); (b) Sparse Matrix Operator Kernel Emissions
(SMOKE) Modeling System (to process emissions from a number of regional air quality
modeling applications); (c) AQMDSS emissions Database (RDBMS); (d) AMS/EPA Regulatory
Model (AERMOD) Modeling System (incorporates the state-of-the-art technologies of the EPAâs
air quality models); and (e) Package for Analysis and Visualization for Environmental (PAVE)
(to visualize multivariate gridded environmental datasets, suitable to display simulation results of
the models to the public)\.
Description of Outputs of GEF Grant Component
30
(a) Expanded use of natural gas, and reduction in the use of coal-fired boilers\.
(b) Eight coal-to-gas boiler house conversion projects to support gas technology and market
development and demonstrate improved conversion design and practices, boiler operational
management, and environment protection\.
(c) Twenty nine heating systems renovations to demonstrate comprehensive utilization of energy
conservation technologies and equipment\.
(d) Beijing Energy and Environment Study recommendations on clean energy, heat tariff,
renewable energy, transportation management, etc\.
(e) Demonstration, through physical construction of a tri-generation combined cooling, heating
and power plant, in collaboration with the private sector\.
(f) A strengthened Heating Energy Conservation Center, and a training center\.
(g) Energy auditing methodologies, over 140 energy audits for demonstration, manual on energy
audits, and heating energy conservation technologies\.
(h) Policy, strategic options and action plan for Low-carbon Economy Development in Beijing\.
31
Annex 4\. Economic and Financial Analysis
CHINA: Second Beijing Environment Project
Economic Analysis
The development objectives of the project were to improve the ambient air quality of the Beijing
area; decrease carbon emissions to the global environment; and protect surface and ground water
quality in Beijing and downstream\. There were no changes in the PDO since appraisal\. Economic
benefits identified at appraisal included energy saving, land saving, environmental health
improvement and medical cost saving, groundwater saving, and agricultural benefits\. These also
remained unchanged\. At appraisal, the global environmental benefits were not included\.
Beijing has improved air and water quality and reduced carbon and air emissions intensity since
project appraisal\. For example, the ambient concentration of SO2 has been significantly lowered
from 120 µg/m3 in 1998 to 47 µg/m3 by the end of the project, i\.e\. 2009, while the number of days
a year with air quality worse than Class II Standard has been reduced from 265 days to 80 days\.
SO2 emissions from heating boilers were reduced from 21,634 tons in 1998 to 10,800 tons in
2007\. The wastewater treatment rate in the Liangshui River increased from 0% to 100% during
the same period\. The overall rate of wastewater treatment in Beijing has reached 94% from 33%
at project appraisal, with 50% of treated wastewater reused\.
Cost-benefit analysis was conducted at appraisal on both boiler conversion and wastewater
components\. However, a comparison of projections at appraisal and at the end of the project was
not possible due to the following reasons\.
(i) Due to major restructuring undertaken during project implementation (i\.e\., significant
reduction in the investment of the boiler conversion component and addition of a number of new
investments in river rehabilitation and wastewater treatment), the actual project composition and
impacts are significantly different from those detailed in the PAD\.
(ii) It is difficult to quantitatively separate and assess the contribution of the project to the
significant economic and environmental benefits achieved in Beijing from other environmental
improvement efforts undertaken by the Beijing Municipal Government itself (for the purpose of
hosting 2008 Summer Olympic Games) during the project period\.
The ICR stage analysis showed that a comparison of the EIRR for the wastewater component
would not have been possible because of a computing error\. The net present value of wastewater
investments, in the PAD, was incorrectly converted, i\.e\., the negative (RMB -1,032 million, was
converted to positive US$ 123 million, and an EIRR of 8\.7% was projected, instead of a negative
value (paragraph 22 on page 68)\. There was no document trail of the detailed calculations
available for review at the ICR stage\.
Although the recent significant environmental improvement in Beijing may be largely attributable
to other investments driven by the government and the public sector as a result of the selection of
Beijing as the venue of the 2008 Summer Olympic Games, the Bank-financed project has
contributed significantly to the remarkable achievements\. The Bank project helped to improve the
wastewater collection and treatment situation, river and water environmental conditions, and
sanitation and amenity in its specific project areas through its investment in wastewater collection
and treatment and river rehabilitation along the Liangshui River, the Qing River, the Xiaotaihou
River, and the Xinfeng River\. Although the amount of the project investment in boiler conversion
was scaled down, the project, together with the GEF technical assistance, provided technology
transfer, market development, and capacity building for boiler conversion, the introduction of
32
energy audits, heating conservation, and the demonstration of the largest CCHP generation\.
Clearly, it contributed to the air emissions reduction and air quality improvement in Beijing\.
However, as indicated above, it is not possible to quantify and assess the contribution of the
project to economic and environmental improvements made in Beijing, and compare them with
estimated values at appraisal\. Economic benefits at completion have been analyzed through two
case studies (one for boiler and one for river rehabilitation) to illustrate the economic
achievement quantitatively\.
Boiler Conversion\. Beijing successfully converted from coal to gas all the boilers (about 16,000
sets) with a capacity under 20 tons in its central urban districts by the end of 2007\. The
percentage of natural gas in the total energy consumption has increased from 0\.4 to 7% over the
same time frame\. As a result, Beijing was able to reduce coal consumption by 6 million tons per
year and help reduce air pollution emissions and achieve the air quality improvement target of the
city\. From the perspective of emission reduction per ton of coal consumed, the conversion has
proved to be successful\. For example, Beijing Lishida Pharmaceutical Company upgraded its
boiler house by replacing the old ones with two new gas boilers (2t and 4t each)\. The project
directly saved land of 1,000 m2 and reduced SO2 and PM10 emissions by 589 kg and 846 kg per
year, respectively\. While fuel costs for coal or gas are almost the same, operating cost saving and
other direct benefits are estimated at RMB 69,000 per year, excluding environmental and health
benefits, which are difficult to quantify\. Economic benefits of boiler conversion are obvious\. As
already noted above, the GEF TA contributed significantly to technology transfer and market
development of clean gas boilers which in turn contributed to air quality improvement of the city\.
Wastewater Treatment and River Rehabilitation\. This group of investments has provided the
following economic benefits: flood control, environment and health improvement, and amenity
and land value increase\. For example, the river rehabilitation investment in the Ba River and the
Beixiao River in Chaoyang District significantly improved the water quality (as shown in the
table below) by intercepting and collecting three million m3 of sewerage water each year\. It raised
the flood control standard from one in ten years to one in 20 to 50 years depending on river
sections, protected 270,000 local residents, and avoided potential flood damage up to RMB 50
billion\. The project improved amenities along the rivers and increased land and property values\.
For example, the sales price of real estate in Dongba Jiayuan (a residential neighborhood)
increased from RMB 2,800/m2 before the project to RMB 8,500/m2 after the completion of the
river rehabilitation project\. Excluding the price impact of other factors, it is estimated that the
river rehabilitation contributed to an increase of property value of RMB 2,000/m2\. Environmental
improvement also helped attract investment and boosted local economic development in these
areas\. Since the completion of the Ba River project in 2007, the high-tech park along the river has
successfully attracted over 400 international companies (such as Motorola, Ericsson, Sony, and
Samsung), as well as domestic companies\. Foreign investments totaled US$ 86 million in 2007,
with an annual increase of 79% in 2007\. The project also helped preserve several historical relic
sites, enhanced the historical and cultural identity and pride of the areas and promoted the concept
of integrated river basin management\.
33
River Rehabilitation in Chaoyang District
Lianghu Lake Ba River Beixiao River Xiaotaihou River
2004 2007 2004 2008 2004 2008 2004 2008
PH 7\.86 8\.6 7\.2 7\.8 7\.6 7\.8 7\.3 7\.9
CODCr 97 67\.2 103\.5 47\.6 198\.5 45\.3 187\.5 118\.8
BOD5 32\.4 6\.9 38\.6 11 61\.4 10\.1 80\.5 25\.3
DO 10\.0 13\.0 4\.6 3\.9 4\.2 2\.6 2\.4 2\.8
NH3-N 7\.9 1\.43 24\.5 16 17 28\.1 44\.4 23\.6
TP 0\.93 0\.47 3\.62 1\.93 5\.74 2\.4 4\.72 2\.16
Visibility 0\.25 0\.35 0\.08 0\.2 0\.12 0\.3 0\.05 0\.15
Odor* 2 0 3 1 4 1 5 2
Note*: 0 - no smell; 5 - very bad smell\. The measurement unit for COD, BOD, NH3-N and TP is
mg/L\.
In summary, the project objectives have been largely achieved and project implementation is
satisfactory\.
Financial Analysis
Institutional Development\. Beijing Drainage Company (BDC) was established in December
1999 during the implementation of the Beijing Environmental Project and was restructured in
April 2002 as Beijing Drainage Group Co\. Ltd\. (BDG)\. BDG currently operates 11 medium- and
large-size wastewater treatment plants with a total capacity of 2\.8 million m3 per day\. 95% of
wastewater generated in the downtown area of Beijing is treated by BDG\. In addition to the
wastewater treatment plants, BDG also operates 70 pumping stations and about 4,000 km of
sewer networks in the urban area of Beijing\. However, BDG is not an autonomous enterprise
since it has no powers to receive and manage wastewater revenues or to manage its debt service
obligations\. According to the terms of restructuring, all wastewater systems (assets) have been
transferred to BDG\. BMG provides funds to BDG for operation and maintenance of treatment
plants and sewer networks, based on a fee determined by the volume of wastewater treated and
BMG assumes responsibility for debt service obligations of BDG\. These institutional
arrangements are different from the institutional model envisaged at project appraisal, which
required BMG to constitute BDG as an autonomous enterprise with the full autonomy to retain
and dispose of all sewerage tariffs and ownership of and responsibility for all sewerage and
drainage facilities in the Beijing urban districts\.
Wastewater Tariff\. To meet the cost of operating and maintaining wastewater facilities in Beijing,
BMG increased the wastewater tariff from RMB 0\.30/m3 in 1999 to RMB 1\.04/m3 in 2009\. The
following table lists the changes in wastewater tariffs in Beijing from 1999 to 2009\.
Wastewater Tariff in Beijing from 1999 to 2009 (RMB/m3)
Before 1999 2001 2002 2003 2004 2009
Nov\.1 - Feb\.1 Jan\.20 Aug\.1 Dec\.22
Resident 0\.10 0\.30 0\.40 0\.50 0\.60 0\.90 1\.04
Non-resident 0\.30 0\.50 0\.80 1\.00 1\.20 1\.50 1\.68
34
Unlike water tariffs, the wastewater tariff in Beijing is treated as an administrative charge and is
placed under the administration of BMFB\. Currently the wastewater tariff in Beijing is collected
by the Beijing Waterworks Group Co\. Ltd\. and then transferred to BMFB as one of its off-budget
revenues\. BMFB allocates funds to BDG as a treatment fee to cover the cost of O&M of network
and wastewater treatment, based on the volume of wastewater treated\. BMFB also subsidies the
difference between the treatment fee and the operating cost\. However, the debt service
obligations of BDG, including loans from the World Bank, JBIC, and foreign governments, are
paid by BMFB\. These financial arrangements do not comply with the financial covenant for BDG
agreed at appraisal which required BMG to cause BDG to generate revenues from wastewater and
drainage operations sufficient to cover current operational expenses and depreciation charges or
debt service payments, whichever is greater, even though the Bank agreed to BMGâs request to
delete the requirement for transferring wastewater tariff revenues to BDG\.
Financial Performance\. Financial statements from 2005 to 2008 were provided by BDG\. The
following table summarizes the operating revenues and costs relating to wastewater treatment\.
Summary of BDGâs Operating Revenues and Costs
(RMB million)
2005 2006 2007 2008
Operating Revenue 318 339 365 445
Operating Cost 273 438 537 608
Cost of Sales - 3 1 1
Administrative Expenses 42 45 59 102
Financial Charges 3 3 -32 -7
Operating profit 0 -150 -200 -259
Other profits (net) 251 95 32 96
Subsidy from BMFB 0 0 126 165
Total Profit 251 -55 42 2
The financial covenant for BDG agreed at appraisal required BDC to generate total revenues each
fiscal year equivalent to not less than the sum of its total operating expenses and the amount by
which debt service requirements exceeds the provision for depreciation\. The status of compliance
with the financial covenant as calculated is illustrated in the table below:
(RMB million)
2005 2006 2007 2008 2009
Total Wastewater Tariff Collected by Beijing - - - - -
Waterworks Group and transferred to BMFB
Total Wastewater Collection and Treatment Fee 318 339 365 445 600
Allocated by BMFB to BDG
Subsidies from BMFB - - 126 165 165
Operating Cost of Wastewater Collection and 273 438 537 608 715
Treatment by BDC
Payments of Debt Service - - - - -
Cost Recovery Ratio (Including Subsidies) 1\.16 0\.77 0\.86 1\.00 1\.07
35
Annex 5\. Bank Lending and Implementation Support/Supervision Processes
CHINA: Second Beijing Environment Project
(a) Task Team members
Names Title Unit Responsibility/Specialty
Lending
Songsu Choi Senior Economist EAP Urban Unit TTL/Economic Analysis
Sr\. Environmental Industry Pollution
Roger Heath EAP Urban Unit
Specialist Control
Dawn Vermilia Financial Analyst EAP Urban Unit Financial Analysis
Procurement
Bertrand L\. Ah-Sue WBOB Procurement
Coordinator
Sr\. Environmental
Chongwu Sun WBOB Environment
Specialist
Sr\. Procurement
Zhentu Liu WBOB Procurement
Specialist
Sr\. Resettlement
Youlan Zou WBOB Resettlement
Specialist
Shunong Hu Sr\. Water Engineer WBOB Water Engineering
Margaret Png Legal Counsel WBOB Legal
Jae Hyang So Financial Analyst EAP Urban Unit Financial Analyst
Financial Management Financial Management
Nancy Chen WBOB
Specialist Specialist
Financial Management Financial Management
Youhua Yu WBOB
Specialist Specialist
Team Assistant/ Team Assistant/
Louisa Huang WBOB
Financial Analyst Financial Analyst
L\. Kathleen Financial Analyst/ Financial Analyst/
-
Stephenson Peer Reviewer Peer Reviewer
Sr\. Environmental
Environmental
Jack Fritz Specialist/ Peer -
Specialist/ Peer Reviewer
Reviewer
Water Treatment
George P\. Taylor Consultant Wastewater Treatment
Specialist
Eduard Motte Sr\. Municipal Engineer EAP Urban Unit Wastewater Treatment
Martin OâDell Municipal Engineer Consultant Municipal Engineering
Eddie K S Hum Sanitary Engineer Consultant Sanitary Engineering
Supervision/ICR
Songsu Choi Lead Urban Economist EAP Urban Unit TTL/Economic Analysis
Lead Management TTL/Institutional
Raja Iyer EAP Urban Unit
Specialist Analysis
Chongwu Sun Sr\. Environmental WBOB TTL/Environment
36
Specialist
Sr\. Procurement
Zhentu Liu WBOB Procurement
Specialist
Sr\. Social
Youlan Zou Development WBOB/Consultant Resettlement
Specialist
Sr\. Financial
David I WBOB Financial Management
Management Specialist
Sr\. Procurement
Xiaowei Guo WBOB Sociology
Specialist
Feng Liu Sr\. Energy Specialist Headquarters Energy Specialist
Sr\. Environmental
Jian Xie Headquarters Economic Analysis
Specialist
Water Resources
Shunong Hu Sr\. Water Engineer WBOB
Engineer
Zhang Hao Sanitary Engineer WBOB Sanitary Engineer
Sr\. Financial
Yi Geng WBOB Financial Management
Management Specialist
Margaret Png Legal Counsel EAP Legal Legal
Xuemei Guo Program Assistant EACCF Project Support
Hongwei Zhao Program Assistant EACCF Project support
Xin Chen Program Assistant EACCF Project Support
Chandra Godavitarne Municipal Engineer Consultant Municipal Engineering
Ning Wu Financial Analyst Consultant Financial Analyst
Eddie K S Hum Municipal Engineer Consultant Municipal Engineering
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY98 N/A 151\.63
FY99 N/A 145\.21
FY00 77 255\.94
Total: 77 552\.78
Supervision/ICR
FY00 0 0\.00
FY01 21 59\.21
FY02 18 55\.56
FY03 19 81\.10
FY04 17 85\.48
FY05 29 119\.55
FY06 17 50\.35
FY07 17 0\.43
FY08 11 26\.63
37
FY09 7 32\.37
FY10 3 18\.38
FY11 0 0
Total: 153 529\.06
38
Annex 6\. Resettlement Implementation
CHINA: Second Beijing Environment Project
1\. Resettlement Implementation
All land acquisition and resettlement in the project was related to the wastewater component\. A
Resettlement Action Plan (RAP) was prepared by the Borrower in accordance with the national
laws, regulations and standards as well as the Bankâs policy\. During implementation of the
original component and the new components added in the project restructuring, the resettlement
activities were carried out in line with the RAP\.
The rehabilitation of the Qing and Liangma Rivers was part of the original components\. In 2004,
seven additional rehabilitation subcomponents were included for financing using loan savings\.
They consisted of further works in downstream sections of the Qing and Liangma Rivers\. All
resettlement activities were fully completed by loan closure in 2009\. The key indicators during
the planning and implementation stages are summarized in the table below\.
Indicators Original Additional Works Total
Components (Loan savings)
1\. Land acquisition (ha)
Planned 83\.7 106\.7 190\.4
Actual 112\.2 28\.7 140\.9
Changes +34% -73% -26%
2\. House demolition (m2)
Planned 229,334 67,681 297,015
Actual 226,421 25,666 252,087
Changes -1% -62% -15%
3\. Affected Households and
Non-residential units
(number)
Planned: (a) Households 1,839 183 2,022
(b) Non-residential units 345 165 510
Actual: (a) Households 733 70 803
(b) Non-residential units 375 171 546
Changes: (a) Households -60% -62% -60%
(b) Non-residential units +9% +4% +7%
4\. Resettlement cost (RMB
million)
Planned 2,066 658 2,724
Actual 1,660 392 2,052
Changes -20% -40% -25%
Total project cost 3,520 1886 5406
Resettlement cost 1,654 396 2,051
Resettlement cost as 47% 21% 38%
proportion of total project
cost (%)
39
Details of the resettlement impacts
Two-lake Beixiao Xiaotaihou
Ba River
No\. Index Unit Connection River River Total
Project
Canal Project Project Project
Land
1 Ha 6\.05 20\.92 29\.38 8\.27 64\.62
Acquired
Houses
2 m2 0 3,654 13,179\.3 6,660\.7 23,494\.0
Demolished
Trees
3 No\. 0 10,037 8,550 2,846 21,433
Removed
Graves
4 No\. 0 333 462 39 834
Removed
Summary Resettlement Information
Indicators Original New Total
Components Components
(added at project
restructuring)
1\. Land acquisition (ha) 112\.2 28\.7 140\.9
2\. House demolition (m2) 226,421 25,666 252,087
3\. Affected households/non- 733/375 70/171 803/546
residential units (number)
4\. Resettlement cost (RMB 1,660 392 2,052
million)
Total project cost 3,520 1,886 5,406
% of resettlement cost to total 47% 21% 38%
project cost
2\. Comparison between Planning and Implementation
For the original components, the quantity of land acquisition for roads and land around the three
new wastewater treatment plants was increased by 34% from original estimates\. However, since
the number of houses to be demolished was significantly reduced, the total resettlement cost
decreased by 20%\. For the new subcomponents added following project restructuring, both land
acquisition and house demolitions were greatly reduced, but the resettlement cost did not decrease
correspondently, illustrating that resettlement has become increasingly costly and difficult\. The
high cost of resettlement is due to the increase in compensation rates for land expropriated and
houses demolished\. Difficulties were caused by prolonged negotiations between the project
entities and affected people\. Land compensation included not only the loss of income from the
land, but also rehabilitation of the land owners, including their employment and social security\.
Compensation for houses included not only the cost of the demolished houses, but also acceptable
replacement houses, the costs of which fluctuate due to the rapidly growing housing market in
Beijing\.
During project implementation, the project entities continuously searched for ways to consider
how to increase the resettlement budget and reduce the scale of resettlement\. To reduce the scale
of resettlement, viable alternative designs were developed in the project, such as reducing the
management area of the river course from 12 meters to 5 meters or 8 meters along both sides of
40
the rivers in Chaoyang District\. Two flood detention basins were not built and instead a wetland
was opened by making use of the barren low-lying land, and an embankment was established for
flood control at the lower reaches of the Qing River\.
3\. Experience and Lessons
Resettlement preparation was adequately carried out\. However the resettlement difficulties were
not adequately foreseen and no analysis of resettlement risks was undertaken during the planning
stage\. Resettlement implementation took longer than expected for the negotiation of
compensation rates and finding additional funds for the largely increased resettlement budget\.
The civil works of an open channel at the beginning of the Liangma River were delayed due to
the slow progress of resettlement implementation\. Overall, however, resettlement implementation
for all the subprojects was completed successfully within the project period\.
Resettlement capacity was well developed in implementing agencies\. All resettlement staff was
trained and familiar with the World Bank and the local resettlement policies\. Each executing
agency had one or more staff in charge of coordinating resettlement implementation\. Companies
with extensive and sound experience in resettlement implementation were contracted for physical
work at the locations\. A few complaints were received relating to non-restoration of the affected
enterprises on temporarily used land, insufficient house compensation, and inadequate
participation in land compensation\. These complaints were resolved satisfactorily\.
BMG revised its resettlement policies and compensation rates twice in the nine years from 2000
to 2008, but barely managed to meet the fast growing needs of the affected people\. Local
governments devoted more efforts to coordination and funding during resettlement
implementation\. However, it was more important to work on policy issues to guide resettlement
implementation, with respect to timely updating of the compensation principles and rates, taking
the initiative in providing suitable apartments for the relocated households, as well as paying
favorable and appropriate compensation to the enterprises demolished on temporarily used land
which faced difficulties in restoration due to the modern urban planning requirements in Beijing\.
4\. Internal and External Monitoring
Professors from Beijing University were entrusted with the external monitoring work\. Reports
were received in a timely manner\. The monitors were satisfied, with the resettlement activities
and especially, with the actions taken for livelihood restoration\. Their reports were used as
models for other urban and transport projects\. The internal monitoring system which was
established and improved was of significant assistance for the Bankâs supervision missions\.
Major findings through external monitoring are summarized below\.
⢠Resettlement implementation followed all the requirements set out in the RAPs and was
successful;
⢠Relocation of the households improved the livelihood of the affected people\. However,
some elderly people needed more time to become accustomed to their new living
environment, while some young people required more time to reach their work places
from their new houses\. Also, a few people who were able to lease their houses before
relocation needed to use a portion of their compensation funds to cover their income
losses;
⢠By project closure, production and businesses of the relocated enterprises had been
restored, although it took about two years for some enterprises to achieve full restoration\.
It has been difficult to provide or find other jobs for those working in enterprises that
41
were closed due to the relocation and which could not be reconstructed due to the
updated urban planning requirements\. The external monitor proposed strengthening of
professional training or job training for those affected by the project;
⢠Even though some affected persons were not satisfied with the relocation itself, they were
satisfied with the resettlement staff who acted in a professional and diligent manner; and
⢠The government should update resettlement policies to guide physical implementation in
the field in a timely manner\.
5\. Conclusions
The outcome of the resettlement assessment illustrated that the resettlement implementation was
successfully completed with the full participation of the affected persons whose livelihoods and
standards of living were all subsequently restored or improved\. No unresolved resettlement issues
remained at project closure\.
42
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
CHINA: Second Beijing Environment Project
I\. OBJECTIVES AND DESIGN
Original Project Objective: The development objective was to improve the ambient air quality of
the Beijing area; decrease the amount of carbon emissions in the global environment; and protect
surface and ground water quality in Beijing as well as in areas downstream\.
Amended Project Objective: The project development objective remained unchanged during the
implementation period\.
Original Components: The original components are described in the main text of the World
Bank ICR and the PAD\.
II\. PROJECT RESTRUCTURING
A number of changes were made during project implementation including the addition of new
components; changes in project management organization; changes in component numbers and
scope; the implementation period; and loan disbursement ratio\. All these adjustments were
confirmed in the three amendments to the Legal Agreements\.
(a) Adjustments to Loan Components
(i) Project Restructuring and Loan Cancellations\. In July 2001, during the project
implementation, Beijing won the bid to host the 2008 Summer Olympic Games\. To expedite the
process of meeting air quality targets for the Games, BMG strengthened the policy support to the
coal-to-gas boiler conversion program, which in turn spurred the rapid development of Beijingâs
gas-fired boiler market by non-project vendors\. At the same time, the competitive bidding
procedures introduced by the Bank had also led to loan savings in the project\. Thus restructuring
of the project loan was agreed in 2006 and the Legal Agreements were amended on November 2,
2006 to include additional components for river rehabilitation, a reclaimed water plant, sludge
section in the Xiaohongmen WWTP, and O&M and GIS construction for drainage facilities\.
These additional components were financed using loan savings\.
Five new implementing agencies were added for the new components\. These were the Beijing
Municipal Water Affairs Bureau (BMWAB); Chaoyang District Water Affairs Bureau (Chaoyang
WAB); Daxing District Water Affairs Bureau (Daxing WAB); Beijing Economic-Technological
Investment and Development Corporation; and Beijing Siqing Sanitation Engineering Group Co\.,
Ltd\.
The World Bank loans of US$ 26,512,600 and US$ 1,509,784 were cancelled on April 14, 2006
and November 20, 2007, respectively, and the total loan amount was reduced from the original
US$ 349,000,000 to US$ 320,977,616\.
(ii) Extension of the Loan and Grant Closing Date\. The loan and grant closing date was
extended from December 31, 2006 to March 31, 2009, by an amendment dated November 2,
2006\. The grant closing date was finally extended to January 31, 2011 to enable completion of the
combined cooling, heating and power plant demonstration contract\.
(iii) Adjustment of Disbursement Percentage\. The 2006 amendment increased the disbursement
percentage for the civil works from 40% to 75%\. In a second amendment on February 4, 2008,
the disbursement percentage for all remaining civil works was increased to 100%\.
43
(iv) Adjustment of Procurement Methods\. To provide more flexibility to SJET to deal with the
boiler market changes, the World Bank agreed, in 2004, to adopt National Shopping Procedures
for boiler procurement\. Additionally, International Shopping Procedures were added, and the total
allowance for Shopping was increased in the 2006 amendment\.
(v) Revision of Conditions of the Subsidiary Loan Agreement with BDC\. As the original
arrangement of transferring the sewerage tariff revenue to BDC was not a practical option for
Beijingâs wastewater sector reform, BMG decided to pay BDC for the services it provided to
Beijing to cover its operational costs\. Since 2006, based on the actual amount of services
provided by BDC and the reviewed and agreed rate, BMG has paid BDC the operational costs\.
The source of funds is mainly from sewerage tariff and supplementary government subsidies\.
After these arrangements were implemented, the financial situation of BDC substantially
improved, as BDC has achieved sustainability both in institutional development and financial
balance\. As a result, the second legal agreement amendments in 2008, deleted item (ii) âfinancial
independence to retain and use revenues from sewerage tariffsâ? of Article 9, Section II, Schedule
3 of the Project Agreement\.
(b) GEF Grant Financed Components Restructuring
(i) Adjustments to the Contents of the Components\. Two changes to the scope of the grant of
technical assistance were made during implementation, as described below, and incorporated in
the amendments to the legal agreements in 2006:
In 2004 and 2005, the BMG and the World Bank agreed on the amended implementation plan
and adjustment of the focuses of the Gas Boiler Market and Technology Development component,
which was divided into three packages: the Technical model and capacity development of coal-to-
gas conversion; the Energy efficient gas-based technologies promotion; and the Marketing and
sales support of coal-to-gas conversion\.
(ii) Revised Energy Efficient Gas-based Technologies Promotion\. This is an extension of the
original activities and one focus of GEF financing after restructuring, for which 40% of the total
GEF grant was allocated\. The objective of this package was to promote combined cooling,
heating and power generation (CCHP) and other efficient gas energy technologies through
technical assistance and demonstration\. This would provide a highly efficient gas utilization
mode for Beijing, and facilitate the more efficient and rational use of natural gas resources\.
(iii) Expanded Scope of the Energy and Environment Study\. To make the outputs of the Study
more specific and to combine it with the demands of BMGâs work more closely, BMG further
expanded the scope of the component through addition of âBeijing Renewable Energy
Development Strategy Studyâ? and âBeijing Transportation Demand Management (TDM)
Measures Study on the Basis of Sustainable Developmentâ?\.
(iv) Changes to Project Implementing Agencies\. There were two changes of agencies
implementing the grant of technical assistance\. These were (a) the Implementation of the âEnergy
and Environment Studyâ?, which was originally planned to be implemented jointly by BEPB and
HECC, but was transferred to the Beijing Agenda 21 Office which had more experience in policy
studies and research; and (b) the transfer in 2005 of the implementation of the Gas Boiler Market
and Technology Development to HECC\. With the approval of the World Bank, HECC selected a
company experienced in World Bank projects to execute the project, which was to assist HECC
in specific implementation management of part of the component\.
(v) Adjustments to Procurement Methods\. Quality-based selection (QBS) and selection based on
consultantâs qualifications (LCS) procedures were added for GEF components to meet the
implementation requirements of the project\.
44
(vi) Extension of the GEF Grant Closing Date\. At the end of 2008, the World Bank officially
approved the extension of the Grant closing date to January 31, 2010, to complete construction,
monitoring and evaluation of the CCHP demonstration project to fully achieve the project
objectives\. A further extension of the GEF Grant closing date, to January 31, 2011, was agreed to
utilize the Grant savings (of US$ 2\.77 million) to prepare a project based on low-carbon economy,
for financing by the World Bank, which is not part of this ICR\.
III\. PROJECT OUTPUTS
Outputs of Original Project Components
(a) Wastewater Management
By the closing date, 18 civil works contracts, 13 goods contracts and 9 consulting service
contracts had been completed\. All items of the original component were completed\.
Sewers Construction\. About 71 km of sewers were successfully completed in 2005 consisting of:
(i) 26 km along the Qing River, including trunk and secondary sewers along the north bank of the
Qing River and the east bank of the Xiaoyue River and (ii) 45 km along the Liangshui River\.
Wastewater Treatment Plants (WWTPs)\. The three WWTPs have been put into service and the
total treatment capacity has reached 780,000 m3/per day\. Civil works and equipment for these
plants were procured under separate contracts\.
Drainage Operations Monitoring Center & GIS for Sewer Network\. A GIS-based sewerage
network; online monitoring of WWTPs; customer service hotline center; videoconference system;
and a comprehensive database, were installed to upgrade the operation and management of the
Beijing drainage facilities, and raise customer services and emergency response and decision-
making to a higher level\.
Sewer O&M and Laboratory Equipment\. All the sewer O&M and Laboratory equipment was
delivered in 2008 and were put into operation immediately following testing and acceptance\.
Consulting Services\. The following technical assistance services were satisfactorily completed:
(i) Package A â Technical and Technological Assistance; (ii) Package B - Sector Reform and
Entity Transformation; and (iii) Package C â Institutional Capacity Strengthening\.
(b) Air Pollution Control Component
(b\.1) Boiler Conversion and Gas Technology Development
(i) Boiler Conversions under the Project\. During the period 2000 to 2008, SJET
satisfactorily converted 591 coal-fired boilers to gas boilers\.
(ii) Parallel Boiler Conversion outside the Project\. With BMG support, along with other
financing, including private financing, the conversion of all coal-fired boilers under 20 tons/hr in
Beijing within the prescribed area was completed by 2008\.
(iii) Project Contributions to Air Quality Improvement Program\. The project made a significant
contribution to the coal-to gas boiler conversion program and subsequent improvement of air
quality control in Beijing\.
45
(b\.2) Upgrading Air Quality Monitoring
(i) Upgrading Monitoring Capacity\. The project constructed and upgraded five new and five
existing air quality monitoring stations\. These 10 monitoring stations measure multi-
parameters including SO2, NOx, CO, O3, PM10, temperature, humidity, wind direction, wind
speed etc\. Data from the monitoring stations are provided to the general public via the
television media\.
Outputs of Additional Project Components
(a) River Rehabilitation by the BMWAB
The works included the North-ring waterways, the lower reaches of the Liangshui River and the
lower reaches of the Qing River\. The outputs are as follows:
(i) Rehabilitation of the North Moat and the Liangma River\. River rehabilitation of a total length
of 11\.6 km, including: (a) 5\.927 km of the North Moat, the reconstruction of two check sluices, two
navigation locks, two diversion sluices (reconstruction), one culvert sluice and five docks, two
bridges, (one new and one reconstruction), two new environmental sanitary wharfs and associated
facilities; and (b) 5\.251 km of the Liangma River, three new rubber dams and three bridges (two
new and one reconstruction), one bridge reconstruction, as well as two new docks, two
environmental sanitary wharfs, one escape sluice and 575 meters of new interceptors\.
(ii) Rehabilitation of Lower Reaches of the Liangshui River\. This consisted of dredging the
river course of 8\.4 km, reconstruction of 70 storm water inlets, Dahongmen sluice gate, fencing,
two bridges (reconstruction), 13\.85 km of riverside roads, 241,300 m2 of landscaping, and one
artificial wetland of area 2,800 m2\.
(iii) Rehabilitation of the Lower Reaches of the Qing River\. 13\.4 km of river channel dredging
and rehabilitation, thee sluice gates (reconstruction), two bridges, two flood retention basins
(Shenjiafen and Shaziying), one artificial wetland, one flood diversion sluice, one escape sluice at
Shenjiafen and one check sluice at Shaziying, four management stations, riverside roads, road
widening (by 5 meters), 32 storm water and wastewater inlets (reconstruction), 11 new storm
water inlets, lighting system and scenery facilities, landscaping along the river and automatic
monitoring and control system\.
(iv) Technical Assistance Outputs\. This involved (a) constructive policy recommendations to
BMWAB on water environment improvement, management of urban rainwater and flood control,
and wetlands protection, etc\., which will serve as a reliable basis for future policy making by
BMWAB; and (b) training: a six-person study tour to Finland and Sweden to learn about wetland
protection and utilization (10 days duration); a six-person study tour to the United States and
Canada to learn about water environment improvement and related policies (10 days duration); a
20-day 15-person training tour to the United States for training on project management; and a 20-
day, 15-person study tour to Denmark for project management training\.
46
(b) Water Environment Rehabilitation in Chaoyang District
This component included four sub-components and technical assistance\. All of the sub-components
were graded as âgood qualityâ? when completed in 2008, and the Ba River rehabilitation project was
awarded the âGreat Wall Cupâ? of Beijing and the honorary title of âHigh Quality Projectâ? in Beijing
water affairs system\. Outputs of the component include:
(i) Two-lake Connection\. Construction and expansion of a 1\.82 km long connecting canal, with a
new ship lock, a new culvert, reconstruction and new construction of ten bridges, 17 storm water
inlets, 40,000 m2 of landscaping, and an expanded and improved water surface of 69,000 m2\.
(ii) Ba River Rehabilitation\. 10\.65 km long rehabilitated river course, a new sluice gate, two new
rubber dams, four bridges (reconstruction), 43 storm water inlets, 20\.3 km of riverside roads,
343,000 m2 of landscaping, and an expanded and improved water surface of 1,894,000 m2\.
(iii) Beixiao River Rehabilitation\. 11\.75 km of rehabilitated river course, three new sluice gates,
two new rubber dams, six bridges (reconstruction), 110 storm water inlets, 17\.2 km of riverside
roads, 3\.8 km of sewers, landscaping of 210,000 m2, and an expanded and improved water surface
of 606,000 m2\.
(iv) Xiaotaihou River Rehabilitation\. 7\.6 km of rehabilitated river course, three new sluice gates,
one new rubber dam, 11 bridges, 65 storm water inlets, 13\.2 km riverside roads, 11\.2 km of sewers,
landscaping of 38,000 m2, and an expanded and improved water surface of 274,000 m2\.
(v) Technical Assistance Outputs\. (a) institutional capacity strengthened through the improved
institutional and implementation capacity of the Chaoyang WAB; and establishment of a storm
water logging model and early warning system, and outline planning designs for the eight rivers
in the Chaoyang District; and (b) a 10-day six-person study tour to the United States and Canada
to learn about water tariffs, water environment improvement, water resources management; a 26-
day domestic study tour of 43 people in three groups, visiting Shanghai, Zhengzhou, Wuxi, Xi'an
and other cities; and a training seminar of 6 days in Beijing regarding the outputs of the technical
assistance services, with 160 people participating in five sessions\.
(c) Xinfeng River Rehabilitation in Daxing District
The component included the following outputs:
(i) River Channel Construction consisting of dredging of the river course and cleaning up of the
river banks; riverside roads and culverts; hydrophyte plantations; and ecological purification of
water through submersible pumps and aerators to reduce COD and BOD concentrations and to
improve water quality\.
(ii) Wastewater Interception consisting of 10,293 meters of interceptor sewers\.
(iii) Environmental water resource consisting of a water pump station and pipelines\.
(iv) Ecological landscaping consisting of landscaping along 10\.35 km of riverbanks\.
(v) Flow diversion consisting of wastewater from the upper reaches of the Xinfeng River being
diverted to municipal sewers, and eventually to the WWTP\.
(vi) Sluice gate and traffic bridge consisting of reconstructed sluice gate and traffic bridge at
Suncun\.
(vii) Technical Assistance Outputs: Investigation and studies of the status and problems of the
river and lake system and water conservation facilities in Daxing District, the current situation of
47
the Xinfeng River, and monitoring data of water quality of the Xinfeng River\. The consultant
completed the following reports: Final Report of the Water System Master Plan of Daxing
District; the Engineering Plan of the Feng River Rehabilitation; and the Final Report of the Study
on the Environmental Impacts of Water Reuse Project of the Xinfeng River\.
(d) The BDA Reclaimed Water Plant
The plant was put into operation in July 2008\. The treated effluent water quality meets the
designed effluent quality, and is acceptable to enterprises in BDA\. The output is a water re-use
plant with capacity of 20,000 m3/d and has a distribution network of 13 km\.
(e) Reconstruction of the Datun Solid Waste Transfer Station
Output of the component is a modern transfer station capable of handling up to 2,400 tons/d of
solid waste\. Waste is compacted and transferred to the landfill using 40 new compactor vehicles
each with a capacity of 20 tons\.
IV\. PROJECT OUTCOMES
The second BEP improved the air quality of Beijing and the water environment of the Liangshui
River, the Wenyu River and the Qing River basins\. The project accomplished all the targeted
objectives and achieved remarkable overall outcomes\. It also played an active role in Beijingâs
fulfillment of its commitments of âGreen Olympicsâ? in 2008\.
(a) Outcomes of the Wastewater Management and River Rehabilitation Components
The project boosted further development of Beijingâs drainage system and made important
contributions to reduce pollution discharges and increase Beijingâs wastewater treatment capacity\.
The treatment ratio increased from 25% in 1999 to 93% in 2008, with the total wastewater
treatment capacity increasing from 1\.08 million m3/day to 2\.52 million m3/day, including the
capacity of 780,000 m3/day of three WWTPs funded by the Bank loan under this project\.
The rehabilitation of the North Moat and the lower reaches of the Qing, Liangshui, Ba, Beixiao,
Xiaotaihou and Xingfeng rivers, along with enhanced flood control and drainage capacity of the
rivers, improved the river water quality, served as a demonstration for the overall river
environment improvement in Beijing, and provided water environment and water security
assurance for the Beijing Olympic Games as well as contributing to economic and social
development\.
The Beijing Drainage Operations Management System and GIS for sewer network provided BDG
with a state-of-the-art, efficient tool to manage the large drainage network and facilities in Beijing\.
The upgraded solid waste transfer station improved the efficiency of solid waste management in
Beijing\. The new waste transfer vehicles solved the secondary pollution problems and completely
eliminated surface and groundwater pollution and leachate spills at the transfer station\.
The reclaimed water plant conserved water resources, reduced wastewater discharge, and
generated energy savings\.
(b) Outcomes in Air Pollution Reduction Component
Beijingâs air quality has been significantly improved and the coal firing related pollutants have
been reduced enormously\. This has improved the living environment of the citizens and protected
their health\. Compared to 1998, the 2006 yearly average concentrations of sulfur dioxide and
carbon monoxide have both declined, by 55% and 36%, respectively\. Coal consumption is
estimated to have been reduced by 6 million tons/year, greenhouse gas and pollutant emissions
48
have also been reduced, and there has been a corresponding significant improvement in air
quality\.
The component became the driving force for the coal-to-gas conversion program, which was in
its infancy in Beijing\. The project helped to improve awareness and promote policies, develop the
gas boiler market, introduce and promote efficient gas boilers, reduce boiler prices, and introduce
coal-to-gas conversion technology and improve service standards\. The component prepared the
foundations for the acceleration of the implementation of the clean fuel program that occurred in
later years, spurred by the impending Olympic Gamesâa program that was essential for the air
quality improvement of Beijing\.
The capacity of BMG for air quality management, including monitoring, analysis and prediction,
was enhanced through the increased number of updated monitoring stations, and the development
of the state-of-the-art Air Quality Monitoring and Decision Support System (AQMDSS)\.
The project has greatly raised the awareness of the relevant departments of BMG to alleviate air
pollution, leading to the 11th Five-Year Energy Plan attaching increased importance to clean
energy utilization, as well as providing important support for BMGâs issuing of the Regulation
for Renewable Energy Utilization Management\.
V\. ENVIRONMENTAL, SOCIAL AND ECONOMIC BENEFITS
(a) Environmental Benefits
With the operation of the three WWTPs, the environment of the Liangshui River basin as well as
the southern part of Beijing city has been improved significantly\. Wastewater interception has
significantly reduced the source of pollution to the river, decreased the discharge of wastewater to
natural water bodies and to the groundwater in neighboring areas, and greatly abated the organic
pollutant load in the water environment\. As a result, the water environment and landscapes,
especially the surface water environment, have been improved\. Pollution in the river has been
dramatically reduced, aquatic life has gradually recovered, and the river has again become a
habitat of wild birds\. Through rehabilitation projects of the eight main river sections in urban
districts of Beijing (including the lower reaches of the Liangshui River, lower reaches of the Qing
River, North Moat and the Liangma River, the Ba River, the Beixiao River, the Xiaotaihou River,
the canal connecting the Honglingjin Lake and the Shuizhui Lake, and the Xinfeng River), the
water quality and the regional water environment of the rivers have improved overall,
landscaping on the river banks and in surrounding areas have been provided, and the river
ecosystems have been effectively restored and improved\. The implementation of the coal-to-gas
boiler conversion component in turn accelerated the conversion of coal-fired boiler to gas-fired
boilerâcontributing significantly to cleaner air in Beijing\. The newly constructed Datun Solid
Waste Transfer Station has not only expanded its waste treatment and transfer capacity, but also
updated its technology and management by adopting a closed transfer workshop, along with
advanced dust and odor control systems and wastewater collecting and treatment facilities, which
have eliminated the problems encountered by the affected communities of secondary pollution
that previously emanated from the old station caused by leachate, dust, odor and white pollution
to the streets\.
(b) Social benefits
The dredging and widening of the eight river channels in the city area of Beijing have greatly
relieved the pressure of flood control in Beijing\.
The completion of the wastewater management and river rehabilitation projects has improved the
living environment of the catchment areas, and serves as relaxing and peaceful recreational areas
49
for people living in the city\.
Seven million tons of reclaimed water will be produced and supplied to the enterprises and
residents of BDA thus reducing the total water supply of BDA by 40% annually\. This component
has assisted the BDA to achieve the objective of saving energy, reducing emission and
developing a recycling economy\.
The wastewater treatment project has played an important role in enhancing water re-use,
increasing irrigation efficiency, conserving ground water resources, preventing ground water
overexploitation and improving the ecological environment in neighboring areas\.
According to available partial statistics, the operation of the three WWTPs and the Reclaimed
Water Plant has created up to 284 jobs\.
The project outputs have become platforms of environment protection education for the local
citizens\. Activities such as community education, interaction with the residents and the selection
of supervision volunteers have greatly raised the public awareness of water conservation and
resources protection\.
The ICB procurement activities under the World Bank project have not only facilitated operation
and management experience exchange and technological optimization in the gas boiler market of
Beijing, but have also promoted price stabilization and the healthy development of the gas boiler
market, and citizens have displayed a greater willingness to use clean energy\.
The construction and upgrading of the ten air quality monitoring stations has effectively
improved Beijingâs management capacity of air quality monitoring\. The environment monitoring
data are released to the public via Beijing Television Station in a timely mannerâa development
viewed favorably by the local citizens\.
The AQMDSS developed and established under the project has enhanced BMGâs capacity for air
quality projection and assessment and has provided crucial technical assistance to enhance the
governmentâs capability of strategic decision-making on air pollution control measures\. As part
of the data integration system of air quality forecast, the AQMDSS played an important role in air
quality forecasting during the Olympic Games in 2008\. The system is operated efficiently by
BEPBâs computing cluster, and provides a daily service of air quality forecast to the public\.
(c) Economic benefits
With smooth implementation and completion of the project, the social and the environmental
benefits have been emerging gradually, resulting in the following indirect regional economic
benefits:
(i) The improvement of the basin area environment of the eight rivers resulting from the
rehabilitation works and wastewater management under the project has promoted economic
development in these areas\. This has attracted more investment, both domestic and foreign, and
has especially spurred the development of the real estate industry\. The environmental
improvement of the project has stimulated regional economic growth, increased local
governmentsâ revenues, and brought significant indirect economic benefits to local people and
organizations\.
(ii) The river rehabilitation projects have provided clean water for agricultural irrigation, which
has reduced groundwater exploitation and the waste of clean water resources, leading to an
indirect increase in farmersâ incomes\. For example, the Liangfeng irrigation channel with a total
length of 1\.91 km has been built to carry treated water to the Nanhongmen agricultural irrigation
area in Daxing District, while about 300,000 m3 of secondary effluent from the Xiaohongmen
WWTP (annually 100,000,000 m3) can be delivered to the area for agricultural irrigation of
50
13,333 ha (200,000 mu)\. The actual water delivered was about 5,200,000 m3 in 2008, which
means irrigation costs of RMB 54,600,000 [RMB 1\.1/m3âRMB 0\.05/ m3)Ã52,000,000 m3, RMB
1\.10/m3 for ground water and RMB0\.05/ m3 for secondary effluent]\. The channel can also reduce
the exploitation of ground water by 60,000,000 m3 annually, which yields enormous economic
benefits\.
(iii) The Xiaohongmen Sludge Digestion System can save electricity energy of 27,000 kwh/day,
equivalent to RMB 6,696,500/year [RMB 0\.6795/kwh (the electric power price for industrial
use)Ã27,000 kwh/dayÃ365 days]\. The system can also save 2,000 m3 of gas each day, and
conserve 300,000 m3 of gas in each heating season, which will save about RMB 1,534,000 each
year\. The calculation is as follows: RMB 1\.95/m3Ã[2,000 m3Ã365 daysÃ(12ï¼?4)/12 + 300,000
m3]\. RMB 1\.95/m3 is the current gas price for industrial use, and a four-month heating season is
considered\. In total, the Xiaohongmen WWTP can directly save energy costs of approximately
RMB 8,230,500 per year\.
VI\. MAJOR FACTORS AFFECTING PROJECT IMPLEMENTATION AND
OUTCOMES
(a) Factors outside the Control of Government or Implementing Agencies
(i) Boiler procurement was adversely affected by the SARS outbreak in 2003, and
implementation was delayed by about six months\.
(ii) The depreciation of the U\.S\. dollar imposed difficulties due the increased counterpart funding
requirements\.
(iii) The global financial crisis caused a sharp drop in the demands for the re-use water from the
BDA Reclaimed Water Plant\.
(iv) The selection of Beijing as the venue for the 2008 Olympic Games had a major impact on the
implementation of the boiler conversion component\. To achieve acceptable air quality during the
Games, BMG issued a series of preferential policies, designed to accelerate the overall boiler
conversion program, which resulted in the scaling down of the boiler conversion component of
the project\.
(v) In 2004 and 2005, Beijing temporarily experienced a shortage of natural gas which affected
the gas boiler sales, and the boiler conversion component was forced to slow down\.
(b) Factors under the Control of the Government
There were both positive and negative impacts of historical events to this project\. These included:
(i) Fluctuation of prices and supplies affected project implementation costs as various supporting
policies issued by the government facilitated the progress of resettlement under the project and
thus expedited the construction works in general, while some of the civil works had to be
suspended due to some special requirements of the government\.
(ii) The dramatic surge in real estate development of Beijing since 2005 caused a significant
increase in the compensation rates for resettlement\. The lack of a revised policy for compensation
standards of resettlement in the downtown area created difficulties for project implementation\.
(iii) Some of the related public facilities were not constructed according to plan\. This meant that
the pollution control effects of the project were affected\. For example the Dongba and Fatou
WWTPs were not constructed, and as a result the planned improvement in water quality in the Ba
River and Xiaotaihou River under the project was not fully realized\.
51
(iv) During the project implementation period (2001â2008) Beijing experienced rapid economic
growth, making it difficult to accurately estimate project costs at appraisal, which led to
adjustments to the overall cost estimation of the project and the need for amendments to the
project\. As the rapid growth of the clean energy and gas boiler market could not be projected, the
appraisal cost estimates for gas boilers were significantly over estimated\. Additionally, the target
to finance 2,000 gas boiler was overly optimistic and varied markedly from the actual
achievement (591 sets), which resulted in a large amount of loan savings\.
(c) Factors under the Control of Implementing Agencies
(i) The additional river rehabilitation works were implemented under a very tight schedule that
required bidding before designs were fully completed, resulting in a number of contract variations\.
(ii) Removal or relocation of municipal infrastructure facilities, and coordination with
agencies responsible for traffic and power caused delays in construction\.
(iii) There were difficulties in implementation because new agencies included in the additional
works lacked experience in World Bank procedures and also lacked adequate project
management experience\.
VII\. SUSTAINABILITY OF THE PROJECT
The Second Beijing Environment Project is sustainable, according to the evaluations of this
project, in the following three aspects:
(i) There are adequately experienced staff and organizational arrangements;
(ii) Management systems and sufficient capacity exist for operation and maintenance of the
constructed facilities\.
(iii) Adequate financial resources and commitment are available\.
In addition, the operation costs of the sewerage network, pumping stations and WWTPs are
covered by the sewerage tariff and government subsidies\. The rate of the wastewater treatment
fee agreed by the BDG, BMWAB and BMFB is RMB 0\.743 m3 and the rate for sewerage
network is RMB 98\.34 per meter\. This mechanism ensures that BDGâs fund demands for
business operation and equipment maintenance can be satisfied\. The funds for repayment of the
World Bank loan are appropriated by the BFB\. Thus, the financial sustainability of this
component is satisfactory\.
Beijing Economic & Technological Investment Development Corporation (BETIDC) is
responsible for the operation and maintenance costs of the BDA Reclaimed Water Plant, and the
World Bank loan repayment is guaranteed by the BDA Finance Bureau\. The global financial
crisis has caused the market to shrink and subsequently adversely affected the source water
quality\. As a result it is predicted that the Plant will be in deficit from 2009 to 2011\. BETIDC and
the Boda Water Affair Co\. Ltd\. are actively taking measures to achieve normal operating as soon
as possible\.
VIII\. PERFORMANCE OF THE BANK AND THE BORROWER
(a) The Bankâs Performance\. The Bankâs performance was rated satisfactory for the
following reasons:
(i) The project was well prepared and addressed two key environmental issues of Beijing: water
pollution and air pollution\. The outputs of the project have met the urgent needs of Beijing to
52
improve the air and water quality\. The Second Beijing Environment Project component package
has expedited the recent improvement of Beijingâs environment\.
(ii) The World Bank has been flexible, pragmatic and cooperative, giving patient guidance and
effective assistance to the Borrower throughout the project cycle, and has provided policy
assurance for smooth project implementation\.
(iii) During project appraisal, the World Bank fully respected BMGâs actual needs, assisted in
establishing project objectives, and in making implementation plans\. In addition the Project
Appraisal Document was completed promptly\.
(iv) During project implementation, the World Bank provided timely and adequate guidance and
assistance in procurement and implementation\. With regard to issues that arose during project
implementation, the World Bank task team conducted deep and detailed investigations in a timely
manner and actively sought practical solutions and measures, so as to resolve the issues smoothly\.
(v) In the later stage of project implementation, the World Bank further enhanced the
management by local experts in the project task team and granted more authority to the Beijing
office\. Following the appointment of a staff member from the World Bank Beijing Office as task
team leader, the efficiency of communication and project management improved due to her
understanding of Chinaâs situation and government policies\.
(vi) The World Bank is highly attentive to the integrated outcomes and benefits of the project\.
For example, the World Bank loan supported not only the construction of WWTPs, but also the
development and construction of associated facilities such as sewerage networks, sludge disposal
systems, river rehabilitation and wastewater reuse facilities, and the Bank also emphasized and
suggested reforms and innovation of related management institutions\. This has advanced the
integrated economic benefits of water environment improvement project and realized the
maximum environmental and social benefits of the project\.
(vii) The World Bank projects focus on not only the investment in hardware, but also the
enhancement and improvement of technical, financial and management capacities of the project
implementing agencies and the optimization of the sector system design\. Under this project the
World Bank loan has been utilized to procure a significant amount of advanced equipment and
facilities\. Meanwhile, the technical and management capacities of all the implementing agencies
and the whole project team have been strengthened through technical assistance, training and
management consulting services\.
Suggestions\. The following suggestions could be considered for improvements to future projects:
(i) The World Bank projects could combine the overall design and management mode with
specific local situations and needs\.
(ii) The World Bank headquarters could grant more authority to country offices and provide more
favorable conditions for project implementation\. The Bank should confer more power to the
implementing agencies when they have the adequate capacity of project management and
implementation\. This could lead to the achievement of improved project management results and
effects in procurement and disbursement\. For example, changes could be made in terms of the
disbursement ratio for the category âCivil Works,â? the thresholds for the procurement methods
âICBâ? and âNCBâ? and prior-review and post-review\.
(iii) It is also hoped that the Bankâs team be maintained in a more stable and consistent form\.
This project had a succession of three task team leaders, and the composition of team members
also changed several times\. This affected the project progress in certain stages to some extent\.
53
(b) Performance of the Borrower
The Borrowerâs performance was in general satisfactory\. A project management team with good
management qualities that are adequate to the management requirements has been assembled\.
Led by the BPMO, the implementation agencies worked rigorously and pragmatically and
developed a set of rules and regulations adapted to the project management requirements\.
Successful completion of the project mainly depended on the following factors:
(i) In the initial stage of the project, BMG set up a leading group specifically for this project,
headed by the relevant mayors\. Under this group was a project management office (BPMO) with
proper staffing and ensured financial support\. Based on stable organization and staff with a
strong sense of responsibility, the BPMO has established a set of rules and institutions suitable for
professional management of World Bank projects\.
(ii) According to the needs of the components, the implementation agencies set up different
departments such as the project operation department, the procurement management department,
the construction engineering department, the resettlement department, financial department, the
archives department, etc\. The departments of most implementing agencies have properly
designed positions and professional and stable teams, which allowed communication with the
BPMO and the World Bank to be conducted in a timely and effective way and ensured smooth
project implementation\.
(iii) The counterpart funds were appropriated in time\. The World Bank fully understood and
supported the project restructuring as well as some contract variations, all of which contributed to
the final completion of the project\.
(iv) Through bidding procedures the implementation agencies selected and hired qualified
professional design institutes and supervision companies to be responsible for engineering design
and construction supervision\. This ensured high quality technical services for the project\.
(v) Foreign and domestic experts provided effective technical assistance and consulting services
through international consultancy projects\.
(vi) BPMO organized many project management training sessions regarding bidding and
procurement, disbursement, contract management and other subjects to improve the professional
capabilities of all the PMO staff, to enable them to solve problems in a timely fashion\. This has
provided a comprehensive operational basis to ensure smooth project implementation\.
(vii) The engineering documents and materials have been collected and filed in time with the
progression of the project and they reflect the actual construction situations and project progress\.
Each stage and section of the construction has undergone appropriate examination and checking
procedures\.
Issues of concern
(i) Due to the fact that the time for the project preparation was limited, especially for the loan
saving components, many projects used preliminary design drawings in the bidding\. This caused
some of the bidding documents to be not specific or sufficiently complete, and in some cases
items were missing or were of unreasonable design\. This led to many contract variations and
noticeable changes in the contract amounts during project implementation\. This occurred to the
civil works contracts such as the Qing River, the Ba River and the Xiaotaihou River\.
(ii) During project preparation, the resettlement risks analysis was not adequate and the
difficulties in land acquisition were underestimated\. This resulted in a delay of about one year of
the completion of the civil works of the 435 meter section in the Liangma River\.
54
IX\. EXPERIENCES, LESSONS LEARNED AND SUGGESTIONS
The Second Beijing Environment Project, which was implemented over 10 years, made important
contributions to the water and air pollution abatement and prevention in Beijing, as well as
institutional reform and enhancement of knowledge and skill\. The Beijing PMO and the PIUs has
gained valuable experiences and learned lessons as discussed below:
(i) Set-up project management office with all staff trained for the project preparation and
implementation\.
(ii) Avoid underestimating project risks\. China is a developing country and its capital city,
Beijing has been experiencing tremendously rapid development\. The scaling-down of the boiler
conversion component was to a large extent the result of external changes outside the project\.
The Second Beijing Environment Project commenced at a time when Beijingâs economy and
society was developing very rapidly with various systems and mechanisms being reformed\. The
project appraisal underestimated the speed of development of the clean energy promotion and gas
boiler market in Beijing and also overestimated the potential market for SJET\. This illustrates
that when a large-scale project with a long time-span is to be carried out in a fast growing city
like Beijing, risks caused by potential changes in policy, market, technology and society must be
fully anticipated, and only with flexible implementation modes in project organization,
procurement management and other aspects, which can rapidly be adapted to external changes,
can damages or loss be mitigated\.
In the initial stage of project implementation, due to very limited experience of the implementing
agency in World Bank loan project management, there was a noticeable deficiency in overall
progress planning and risk assessment\. For example, risk analysis was inadequate for the land
acquisition and resettlement at the 435 meter section of the Liangma River, causing the civil
works to fall behind schedule\. As a result, the actual implementation period was one year longer
than originally planned\.
Due to insufficient analysis on related conditions and project risks during the initial stage of the
project, both the quality and quantity of the source water for the BDA Reclaimed Water Plant are
problematic\. This has affected the achievement of expected project outcomes\. Although the
implementing agency is remedying the situation, the project costs have been increased\.
In addition, the risks associated with fluctuating exchange rates over the course of the long
project implementation period have also been underestimated\.
(iii) Adequate solutions to complaint issues should be implemented as early as possible\. It is
unavoidable that complaints will occur during project implementation due to various reasons, but
they must be addressed as early as possible\. For example, a complaint was received during the
bidding process of vehicle procurement under the component of the Datun Solid Waste Transfer
Station reconstruction and the implementing agency, lacking the necessary experience, did not
respond in an adequate or timely manner\. Consequently, the vehicle procurement was prolonged
and the component completion was delayed to some extent\.
(iv) Ensuring that local counterpart funds are made available in time\. For certain components,
management levels and the procedures of local counterpart funds were so complicated that the
funds failed to be in place promptly, which to some degree affected the smooth progress of the
project\.
Suggestions
55
(i) More prudent design of market-oriented approaches\.
During the project design of the Second Beijing Environment Project, it was recommended that
both the components of boiler conversion and wastewater management were to be aimed at fully
market-oriented modes of sector management\. However, over the last eight years, it is evident
that the good progress of boiler coal-to-gas conversion in Beijing can be mainly attributed to the
assistance of the government\. Therefore, the implementation arrangements of the boiler
conversion component have vacillated between administrative and market-oriented approaches\.
The inherent inner contradiction in the institutional setting-up of SJET has become increasingly
apparent\. Inevitably, many specific problems occurred in aspects of coordination between the
government and the Beijing Gas Group, and SJETâs operation and project implementation, which
has hindered the smooth progress of the component\. Meanwhile, although the reform of
Beijingâs drainage sector has made significant progress, the current BDG operation mode differs
from how it was originally conceived, and the facts have proved that this mode is effective and
suitable for the specific situation of Beijing\.
This shows that environment protection projects for development of public utilities are essentially
inherently for the public interest, and the characteristics unique to China have determined that the
development approaches in all sectors would inevitably differ from those in western countries\.
Therefore, for future World Bank designs projects in different countries, it is likely to be
beneficial to ascertain the optimal arrangements for project implementation, how to fit the
specific local conditions and what kind of market-oriented approach should be selected\.
(ii) More authority and flexibility granted to the implementing agencies\.
As the Chinese economy is developing rapidly, it is difficult to make at the time of project
appraisal an accurate estimate of project costs\. Therefore, it is likely that the overall project
budget will require noticeable adjustments, often undertaken through complicated procedures\.
Furthermore, some important historical events (such as the Beijing Olympic Games) are likely to
influence market prices and supplies, and this will in turn have a direct impact on the costs of
project implementation\.
As a result it is suggested that (a) implementing agencies be granted more authority and
flexibility to deal with necessary adjustments during project restructuring, and (b) the period for
price adjustment (180 days) in Special Conditional of Contract (SCC) should be shortened
moderately\.
(iii) More communication and coordination between the World Bank and local government
regulators of bidding and procurement\.
In order to ensure a smooth bidding process (especially the ICB), it is necessary for the World
Bank to further coordinate with the Ministry of Commerce and other related agencies to make the
World Bankâs âProcurement Guidelinesâ? more practical in China and reduce difficulties for the
implementation agencies\.
(iv) More effective measures needed for handling complaints from unsuccessful bidders
More pro-active and effective measures would be of assistance in solving issues of complaints
from unsuccessful ICB bidders\. Otherwise, should a complainer intend to cause delay, the
current process may lead to tremendous risks of bidding failure and result in severe delay of
project progress\. It may be beneficial if the World Bank set up or coordinated with concerned
domestic agencies to co-establish an arbitration agency for complaint issues\.
(v) International consulting companies expected to promote localization\.
56
The World Bank attaches great importance to contributions made by international consulting
companies in providing technical assistance\. However, due to differences in culture and
management styles between countries, problems sometimes occur when the international
companyâs working mode is not compatible with the clientâs requirements or in cases where the
outputs are not as satisfactory as expected\. In such cases the World Bank could encourage
international consultants enhance localization to better meet the clientsâ demands\.
(vi) More local employees in the World Bank teams\.
The experiences with the Second Beijing Environment Project have shown that it is very
important to have excellent local experts in the World Bank project teams to improve project
management efficiency, in particular for solving complex problems\. To further enhance the
World Bank management it may be useful to consider using more local staff to achieve more
effective communication and higher efficiency in project management\.
(vii) More authority granted to the World Bank Office in Beijing (WBOB)\.
The project progress of the Second Beijing Environment Project has been more efficient since
2004 when the World Bank began to gradually transfer more power to the WBOB\. If the World
Bank continues to simplify review procedures and shorten processing time the efficiency of
project management is likely to further improve\.
57
Annex 8\. List of Supporting Documents
CHINA: Second Beijing Environment Project
1\. Project feasibility studies and project proposal
2\. Project Appraisal Document
3\. Loan Agreement
4\. Project Agreement
5\. Mission Aide Memoires and Back-to- Office reports
6\. Project Status Reports and Implementation Status Reports
7\. Semi-annual Project Progress Reports
58
IBRD 30782R1
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This map was produced by the China
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GUIZHOU FUJIAN
denominations and any other NATIONAL CAPITAL
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information shown on this map do TAIWAN
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XINFENG To Tianjin territory, or any endorsement or BOUNDARIES LAO VIETNAM
acceptance of such boundaries\. PHILIPPINES
RIVER P\.D\.R\. HAINAN
JULY 2011 | REVIEW |
P004175 |  ICRR 11498
Report Number : ICRR11498
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 05/28/2003
PROJ ID : P004175 Appraisal Actual
Project Name : Kr-pusan Urb Transport Project Costs 365\.4 202\.0
US$M )
(US$M)
Country : South Korea Loan/ US$M ) 100\.0
Loan /Credit (US$M) 92\.0
Sector (s): Board: TR - General Cofinancing
transportation sector US$M )
(US$M)
(90%), Sub-national
government administration
(9%), Central government
administration (1%)
L/C Number : L3828
Board Approval 94
FY )
(FY)
Partners involved : Closing Date 06/30/2000 06/30/2002
Prepared by : Reviewed by : Group Manager : Group :
Lourdes N\. Pagaran Madhur Gautam Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The project's overall objective was to promote the effectiveness of urban rail transit system in Pusan City \. The
specific objectives of the project were :
1) Increase ridership and cost recovery of the subway network through an integrated strategy of transport demand
management (TDM), construction of intermodal facilities, and expansion of the transit system \.
2) Enhance Pusan Urban Transport Authority's (PUTA) subway capacity to accommodate future growth and serve as
an alternative to auto use\.
3) Strengthen the institutions' capacity to plan and program urban transport investments \.
b\. Components
The project had three components :
1) Congestion Management ($29\. 29 \.4 million ): (i)TDM measures (parking management, construction of
modal-integration facilities at Nopo and Tongnae ); (ii) Transport System Management (TSM) strategies for East-West
Bus Lane, and (iii) a 5-year TDM/TSM program\.
2) Expansion of Pusan Urban Transport System Capacity ($171\. 171 \.0 million ), through investments for additional 310
subway cars by 1999, of which 258 cars were for Line 2 (Phase 1) and 52 cars for Line 1\.
3) Institutional Development ($1\.6 million ) : (i) training program for the Ministry of Transportation (MOT) staff at local
and national levels in transport planning, transport economics and finance, investment planning and project
appraisal, project management and monitoring and public transport operations; (ii) technical assistance for Pusan
City Government (PCG) to identify, evaluate and implement TDM and TSM strategies; supervise the project and
consultants engaged by the city to implement the 5-year TDM/TSM program; and provide support and training in the
sector; and, (iii) Studies: Pusan Transit Fare Structure Study, Alternative Long -Term Financing Strategies for PUTA,
and 5-year TDM and TSM program study\.
c\. Comments on Project Cost, Financing and Dates
Total project cost was $ 202 million (including physical and price contingencies ) compared to the appraisal estimate
of $365\.4 million\. Bank loan was $ 92\.1 million compared to the appraisal estimate of $ 100 million\. Counterpart
financing was $110 million compared to the appraisal estimate of $ 265\.4 million\. A loan amount of $7\.9 million was
cancelled in November 2001, per request by the government \.
Actual project cost is lower than appraised estimates as a result of lower bid price for train cars, and the
depreciation of the Won\.
Loan agreement was amended on March 22, 1999 to allow for the purchase of additional subway cars from
savings generated from the depreciation of the Won \.
The project's closing was extended twice to June 30, 2002\.
3\. Achievement of Relevant Objectives:
1) Increase ridership and cost recovery of the subway network through an integrated strategy of transport
demand management (TDM) TDM ), construction of intermodal facilities, and expansion of the transit system \. This
objective was not achieved \. Overall metro ridership has declined and cost recovery targets were not met (although
transit system capacity expanded with the opening of Line 2, TDM measures and TSM strategies implemented, and
inter-modal facilities constructed and made operational )\.
2) Enhance Pusan Urban Transport Authority's (PUTA)PUTA ) subway capacity to accommodate future growth and serve
as an alternative to auto use \. This objective was achieved with only minor shortcomings \.Subway capacity of PUTA
has been enhanced with the purchase of a total number of 336 subway cars, 26 more than the targetted 310, for
Lines 2 (Phase 1) and Line 1\. Completion of Line 2 (Phase 1), however, experienced delays of one and a half years \.
3) Strengthen the institutions' capacity to plan and program urban transport investment \.This objective was
achieved\. MOT carried out the training program, as planned, through short -and long-term training courses,
workshops, and overseas training programs \. Studies, including the Transit Fare Structure Study and the Subway
Financing Study were also carried out, as planned \. The TA component, however, was not undertaken \. Instead,
Pusan Development Institute, a semi -autonomous body created in 1995, provided the analytical support to the city
government, and together with the city's Transportation Planning Division, continued to develop TDM /TSM measures
initiated under the project\.
An Environmental Impact Assessment was prepared in compliance with the Basic Environmental Policy Law of
Korea\.
4\. Significant Outcomes/Impacts:
Tariff setting for public transport, which used to be a central government function, was decentralized to local
governments\.
Pusan Development Institute was established, which together with the city's Transportation Planning Division,
coordinated the implementation of the TDM /TSM measures within and outside the project \.
Recommendations of the Transit Fare Structure study were used as basis for adjusting tariff levels for metro and
bus transport\.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
The 1997 economic and financial crisis, increased auto ownership, suburbanization, and inadequate inter -modal
integration severely affected metro ridership \.
Lack of a debt management strategy to address PUTA's precarious financial position \.
Network expansion focused on addressing future growth without first responding to current demand contributed
to PUTA's high cost structure and low revenue streams \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Satisfactory Although the project achieved its physical
targets, the objective that underpins the
operational and financial viability of PUTA
(increase ridership and cost recovery )
was not achieved\.
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Unlikely PUTA's financial position had deteriorated
over 1994-2001\. It remains a highly
indebted company (its total debt exceeds
or is equal to total assets since 1997, and
75 percent of its debt have maturity of 3-5
years)\. PUTA continues to rely on central
and local government subsidies, along
with short term debt financing, to meet its
current debt service and capital
investment requirements\. A debt
management strategy has yet to be
articulated by central government to
address PUTA's debt problems\.
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
1) Increasing capacity and access to public transport are necessary but not sufficient conditions for increasing metro
ridership\. Income levels, settlement patterns, and the relative price of private transport to public transport are other
factors that need to be considered when designing projects that promote greater metro use \.
2) Improving the financial performance of public transport requires central government support in setting the
framework and an enabling environment for prudent debt management, including providing appropriate
debt-instruments for capital investments \.
8\. Assessment Recommended? Yes No
9\. Comments on Quality of ICR:
The quality of the ICR is rated as Satisfactory \. The ICR, however, could have been further improved in the following
areas: (i) internal consistency, particularly in its discussion of PUTA's financial performance and sustainability; (ii)
accounting for compliance with agreements reached during the negotiation, including implementation of
environmental mitigation measures; (ii) selectivity in the quantity of data presented in the main text, of which some
could be presented as Annexes; and (iv) consistency of Annex 2 (Project Costs and Financing) with the SAR\. | REVIEW |
P003563 |  ICRR 11356
Report Number : ICRR11356
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 08/14/2002
PROJ ID : P003563 Appraisal Actual
Project Name : Animal Feed Project Costs 310\.3 52\.73
US$M )
(US$M)
Country : China Loan/ US$M ) 150
Loan /Credit (US$M) 22\.42
Sector (s): Board: RDV - Animal Cofinancing NA NA
production (97%), US$M )
(US$M)
Agricultural marketing and
trade (3%)
L/C Number : L4001
Board Approval 96
FY)
(FY)
Partners involved : none Closing Date 12/31/2002 12/31/2001
Prepared by : Reviewed by : Group Manager : Group :
Nalini B\. Kumar John R\. Heath Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The major rationale for the project was to support and facilitate the modernization and expansion of China's animal
feed industry\. The project had four objectives : " (a) the alleviation of supply constraints of critical feed ingredients;
(b) improving and expanding the utilization of agro -industrial by-products for use as high-quality livestock feeds; (c)
improving the organizational efficiency of the feed sector through specialization and integration, and (d) the
restructuring of project enterprises to effect greater corporate efficiency and commercialization \." (SAR page 14\.) The
project objectives were based on the findings of a major World Bank study on the animal feed sector that preceded
project identification\. At the time of the study and at the onset of project preparation modernization was expected to
be based on Ministry of Agriculture initiatives \. At appraisal when the project was redesigned from a directed loan
operation to a demand driven financing operation the loan size was left unchanged \. This and other critical issues
were then addressed when the Agricultural Bank of China (ABC) was made the financial intermediary in 1998\. The
project was renegotiated and presented to the Board on a no objection basis in 1998\. The original objectives
remained unchanged despite the change of the implementing agency \.
b\. Components
The original project included 7 components: integrated feed and livestock production, feed additive manufacture,
feed processing equipment, enhanced protein feed product synthesis, integrated protein feed crop production, feed
commodity wholesale marketing and feed sector strengthening \. The first six components comprised a number of
enterprises while the seventh component supported the establishment of the Ministry of Agriculture Feed Industry
Center\. After re-negotiation the project enterprises were grouped into 3 components\. During the mid term review
(MTR) the project scope was expanded to finance not only feed production but also procurement of livestock by
vertically integrating project enterprises \.
c\. Comments on Project Cost, Financing and Dates
The project was identified in April 1993 and appraised in February 1995\. The MTR took place in October 1999\. The
project was to close on December 31 2002 but closed one year before schedule on December 31 2001\. Original
project costs were estimated to be US $ 310\.3 million of which the IBRD loan was to be US $ 150 million\. However
after re-negotiation the project costs were re -estimated at US$ 60\.7 million of which the IBRD loan was to be US $
25\.2 million\. Two loan cancellations totaling US $ 127\.5 million were made\. Actual total project cost was US $ 52\.7
million with IBRD financing at US $ 22\.4 million (43 percent of total cost)\.
3\. Achievement of Relevant Objectives:
Despite the disbursement of only 15 percent of the original loan amount the project was successful in achieving the
qualitative objective of sector modernization \. In addition, quantitative targets set at MTR were achieved \. The rate of
return for the project as a whole at the ICR stage is estimated at 28 percent\. \.
4\. Significant Outcomes/Impacts:
The project promoted private sector participation in the animal feed sector in China;
It facilitated the development of a regulatory and policy framework for the feed sector at the central level and
provided technical support to the sector through the national feed industry center;
The project also promoted qualitative structural change in the sector;
It improved the access of livestock owners to improved feeds and aquaculture production and eased critical
supply shortages;
The project has acted as a model for other domestic producers in terms of its quality products and corporate
management;
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Poor quality at entry\. The original loan size did not reflect the lack of demand for high quality feed nor the risk from
switching from a directed loan operation to a financial intermediation operation \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory The ES rates outcome as satisfactory
since the project was successful in
meeting the qualitative objectives of
sector strengthening and modernization
set at the appraisal stage and the
quantitative targets at MTR\. However this
was a difficult call on the basis of a desk
review since it is hard to establish an
equivalency between the qualitative
indicators presented in the SAR (Annex
3\.2) and the ICR\. The ICR guidelines
clearly note that if a project is restructured
because of a faulty project design, the
assessment of outcome should be related
to the original objectives\.
Institutional Dev \.: High High
Sustainability : Likely Likely
Bank Performance : Satisfactory Unsatisfactory Bank performance is rated unsatisfactory
because of the unrealistic quality at entry
and poor choice of the financial
intermediary\. The loan size did not reflect
the lack of demand for high quality feed
nor the riskiness of switching to a financial
intermediary operation\.
Borrower Perf \.: Satisfactory Satisfactory Borrower performance is rated
satisfactory but this is a marginal call \. The
quality at entry and
choice of the financial intermediary was
poor\. On the other hand ABC adopted a
sustained and positive approach
throughout the project period and
displayed substantial project ownership \.
Quality of ICR : Unsatisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
The lessons identified by the ICR are important \. Two lessons from the ICR are repeated here (i) Evaluate
competitiveness of foreign currency denominated loans for sub -borrowers : This is especially true when the major
investment items (equipment and works) are locally available and major project outputs are destined for the domestic
market\. Under such circumstances, foreign exchange risk and more competitive local currency loans make the use of
dollar denominated loans inappropriate \. Moreover, given the volatility of the financial market, project implementation
delays may reduce project viability drastically \. (ii) Chose the financial intermediary based on their local knowledge
and, if developing a new relationship, do your due -diligence : Due diligence should cover the intermediary âs prior
sector and regional experience \. If possible, evaluate the quality of the staff in the intermediary who would be involved
in selecting the sub-borrowers\. Staff assigned for sub-borrower development may have excellent understanding in
one sector but be deficient in a specialized sector such as the animal feed sector \. ABCâs prior experience in
implementing four Bank-supported rural credit projects and its improved loan appraisal criteria and risk management
skills made the project viable after a disastrous start \.
The ES adds another lesson : In time cancellation of a large percentage of the loan amount in response to country
conditions can avoid significant wastage of resources while contributing to reduced debt burden \. In the case of the
China Animal Feed project, the Agriculture Bank of China acted wisely in requesting cancellation of the major loan
amount\.
8\. Assessment Recommended? Yes No
Why? For two reasons: (i) To verify the outcome, institutional development and sustainability impact \. (ii)
to verify whether the project was able to achieve the qualitative objectives set out at the appraisal stage \.
9\. Comments on Quality of ICR:
ICR guidelines clearly note that if a project is restructured because of a faulty project design, the assessment of outcome should be
related to the original objective\. The ICR for the Animal Feed project notes that the rating of the achievement of objective is based
on the project achieving the SAR qualitative objective of sector modernization and the quantitative targets set at MTR\. However the
SAR objective of modernization and expansion of the animal feed industry is general enough to support a wide range of qualitative
targets\. The ICR (i) fails to meaningfully explain how the qualitative achievements of the project at the ICR stage are related with
the modernization objectives as they were set out at the SAR stage; and (ii) it fails to establish an equivalency between the
qualitative indicators presented in the SAR (Annex 3\.2) and the ICR\. Hence the ICR is rated unsatisfactory because it fails to give a
complete picture of project performance\. | REVIEW |
P100311 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 143566-SB
IMPLEMENTATION COMPLETION AND RESULTS REPORT
IDA-H4150, IDA-H9130
ON
GRANTS
IN THE AMOUNT OF SDR 3\.9 MILLION
(US$6\.0 MILLION EQUIVALENT)
AND
IDA-53790
ON
A CREDIT
IN THE AMOUNT OF SDR 7\.2 MILLION
(US$11\.0 MILLION EQUIVALENT)
TO THE
SOLOMON ISLANDS
FOR THE
SOLOMON ISLANDS SUSTAINABLE ENERGY ( P100311 ) PROJECT
November 11, 2019
Energy and Extractives Global Practice
East Asia And Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 31, 2019)
Currency Unit = Solomon Islands Dollars (SBD)
SBD 8\.21 = US$1
US$1\.38 = SDR 1
FISCAL YEAR
July 1 â June 30
ABBREVIATIONS AND ACRONYMS
AF Additional Financing
ADB Asian Development Bank
BP Business Procedure
CAPEX Capital Expenditure
CPF Country Partnership Framework
CSO Community Service Obligation
EIRR Economic Internal Rate of Return
ESMAP Energy Sector Management Assistance Program
FEA Fiji Electric Authority
FIRR Financial Internal Rate of Return
FM Financial Management
FNPV Financial Net Present Value
GDP Gross Domestic Product
HIES Household Income and Expenditure Survey
ICB International Competitive Bidding
IFI International Financial Institution
ISR Implementation Status and Results Report
KPI Key Performance Indicator
MTDP Medium-Term Development Plan
MTR Midterm Review
MTS Medium-Term Strategy
M&E Monitoring and Evaluation
NCB National Competitive Bidding
NDS National Development Strategy
NPV Net Present Value
O&M Operations and Maintenance
PAD Project Appraisal Document
PDO Project Development Objective
PV Photovoltaic
RAMSI Regional Assistance Mission to the Solomon Islands
SAIDI System Average Interruption Duration Index
SAIFI System Average Interruption Frequency Index
SCD Systematic Country Diagnostic
SEFP Sustainable Energy Financing Project
SIEA Solomon Islands Electricity Authority
SIEAREEP Solomon Islands Electricity Access and Renewable Energy Expansion
SIG Solomon Islands Government
SISEP Solomon Islands Sustainable Energy Project
SIWA Solomon Islands Water Authority
SOE State-owned Enterprise
TRHDP Tina River Hydropower Development Project
TTL Task Team Leader
WACC Weighted Average Cost of Capital
Regional Vice President: Victoria Kwakwa
Country Director: Michel Kerf
Regional Practice Director: Ranjit Lamech
Practice Manager: Jie Tang
Task Team Leader(s): Maria Isabel A\. S\. Neto
ICR Main Contributor: Leena Chaukulkar
TABLE OF CONTENTS
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 6
A\. CONTEXT AT APPRAISAL \.6
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \. 13
II\. OUTCOME \. 17
A\. RELEVANCE OF PDOs \. 17
B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 19
C\. EFFICIENCY \. 25
D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 28
E\. OTHER OUTCOMES AND IMPACTS (IF ANY) \. 30
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 33
A\. KEY FACTORS DURING PREPARATION \. 33
B\. KEY FACTORS DURING IMPLEMENTATION \. 34
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 35
A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 35
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 38
C\. BANK PERFORMANCE \. 40
D\. RISK TO DEVELOPMENT OUTCOME \. 41
V\. LESSONS AND RECOMMENDATIONS \. 42
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 44
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 53
ANNEX 3\. PROJECT COST BY COMPONENT \. 55
ANNEX 4\. EFFICIENCY ANALYSIS \. 56
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 69
ANNEX 6\. SUPPORTING DOCUMENTS (IF ANY) \. 94
LIST OF TABLES
Table 1\. Outcome Indicators Mapped to Relevant Project Objectives\. 12
Table 2\. Key Changes to SISEP during Implementation \. 14
Table 3\. Project Costs at Approval and after Approval of AF and Each Restructuring \. 16
Table 4\. Energy-related CPF Objectives in the Solomon Islandsâ Current CPF Program\. 18
Table 5\. Changes in Indicator Targets and Relevance for Split ratings \. 20
Table 6\. Efficacy Ratings for Each Outcome of the PDO Based on Achievement Ratio \. 25
Table 7\. Summary of Economic Benefits and Costs \. 25
Table 8\. Summary of Economic Benefits and Costs \. 26
Table 9\. Benchmarking of Pacific Island SOEs \. 29
Table 10\. SISEP Final Outcome Ratings \. 30
LIST OF FIGURES
Figure 1\. SISEP Theory of Change Diagram \. 10
Figure 2\. Cost and Revenues Per kWh Generated \. 23
Figure 3\. Profitability Per kWh Generated (SBD) \. 24
Figure
l 4\. SISEP and MFD Approach Used in the TIna River Hydro Development Project \. 32
The World Bank
Solomon Islands Sustainable Energy ( P100311 )
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
P100311 Solomon Islands Sustainable Energy
Country Financing Instrument
Solomon Islands Investment Project Financing
Original EA Category Revised EA Category
Not Required (C) Partial Assessment (B)
Organizations
Borrower Implementing Agency
Ministry of Finance and Treasury Solomon Islands Electricity Authority
Project Development Objective (PDO)
Original PDO
The objective of the project is to improve operational efficiency, system reliability and financial sustainability of
SIEA through: improved financial and operational management, reduction of losses, and increased revenue
collection\.
Revised PDO
The objective of the project is to improve operational efficiency, system reliability and financial sustainability of
SIEA\.
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
World Bank Financing
4,000,000 3,999,894 3,834,859
IDA-H4150
11,000,000 6,741,699 5,925,941
IDA-53790
2,000,000 1,994,522 1,948,784
IDA-H9130
Total 17,000,000 12,736,115 11,709,584
Non-World Bank Financing
0 0 0
Borrower/Recipient 6,900,000 8,200,000 8,200,000
Total 6,900,000 8,200,000 8,200,000
Total Project Cost 23,900,000 20,936,114 19,909,584
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing
08-Jul-2008 25-Jun-2009 30-Dec-2012 31-Mar-2019
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
22-Mar-2012 2\.06 Change in Results Framework
Change in Components and Cost
Change in Loan Closing Date(s)
Change in Financing Plan
Change in Implementation Schedule
13-Feb-2014 3\.69 Additional Financing
Change in Project Development Objectives
Change in Results Framework
Change in Components and Cost
Change in Loan Closing Date(s)
Change in Financing Plan
01-May-2017 5\.15 Change in Results Framework
Change in Components and Cost
Change in Loan Closing Date(s)
Change in Financing Plan
Change in Implementation Schedule
10-Apr-2018 7\.30 Change in Results Framework
Change in Components and Cost
Cancellation of Financing
Reallocation between Disbursement Categories
KEY RATINGS
Outcome Bank Performance M&E Quality
Satisfactory Moderately Satisfactory Modest
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
Moderately
01 23-Jun-2009 Moderately Unsatisfactory 0
Unsatisfactory
02 28-Nov-2009 Moderately Satisfactory Moderately Satisfactory \.11
03 11-Dec-2010 Moderately Satisfactory Moderately Satisfactory 1\.09
Moderately
04 01-Mar-2012 Moderately Unsatisfactory 1\.97
Unsatisfactory
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Solomon Islands Sustainable Energy ( P100311 )
05 24-Nov-2012 Moderately Satisfactory Moderately Satisfactory 2\.47
06 01-Oct-2013 Moderately Satisfactory Moderately Satisfactory 3\.23
07 07-Jul-2014 Moderately Satisfactory Moderately Satisfactory 3\.83
08 20-Jan-2015 Moderately Satisfactory Moderately Satisfactory 3\.64
09 02-Oct-2015 Moderately Satisfactory Moderately Unsatisfactory 3\.81
10 02-Jun-2016 Moderately Satisfactory Moderately Unsatisfactory 3\.86
11 04-Dec-2016 Moderately Satisfactory Moderately Satisfactory 4\.62
12 17-May-2017 Moderately Satisfactory Moderately Satisfactory 5\.15
13 22-Nov-2017 Moderately Satisfactory Moderately Satisfactory 6\.54
14 16-May-2018 Moderately Satisfactory Moderately Satisfactory 7\.94
15 02-Nov-2018 Moderately Satisfactory Moderately Satisfactory 9\.34
16 02-Apr-2019 Moderately Satisfactory Moderately Satisfactory 11\.37
SECTORS AND THEMES
Sectors
Major Sector/Sector (%)
Energy and Extractives 100
Other Energy and Extractives 100
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Public Sector Management 33
Public Administration 33
Transparency, Accountability and Good
33
Governance
Urban and Rural Development 67
Urban Development 67
Services and Housing for the Poor 67
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
ADM STAFF
Role At Approval At ICR
Regional Vice President: James W\. Adams Victoria Kwakwa
Country Director: Nigel Charles Emil Roberts Michel Kerf
Director: Christian Delvoie Ranjit J\. Lamech
Practice Manager: Junhui Wu Jie Tang
Task Team Leader(s): Antonie De Wilde Maria Isabel A\. S\. Neto
ICR Contributing Author: Leena Chaukulkar
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A\. CONTEXT AT APPRAISAL
Context
1\. The Solomon Islands, at the time of appraisal in 2008, had emerged from a period of political
turmoil and civil unrest\. Over the period from 1998 to 2002, real gross domestic product (GDP) had fallen
around 24 percent, exports had declined drastically, and external debt levels had soared\. After ethnic
tension ended in 2003, the economy started a strong recovery and recorded growth rates ranging from 8
percent in 2004 to 10 percent in 2007\. The recovery was attributed to the return of business investment
and an increase in export receipts and was supported by the arrival of a Regional Assistance Mission to
the Solomon Islands (RAMSI)\. Budget surpluses were consistently observed from 2003 to 2007 due to
higher government revenues and better expenditure management\.
2\. However, the economy of the Solomon Islands faced a number of challenges\. Less than a quarter
of the population was involved in any paid work and the majority was involved in subsistence or cash crop
agriculture\. Exports were commodity based and included timber, cocoa, and copra\. Economic growth in
recent years was deemed to be unsustainable as it was based on post conflict recovery and unsustainable
growth of the logging sector\. A reliable and cost-efficient power supply, a key ingredient for private sector
growth, needed to be built\.
3\. High costs and poor electricity system reliability were significant issues in the energy sector \. The
high cost of power could be attributed to two main factors:
(a) High cost of petroleum which was due to rising international oil prices and the costly logistics
of supplying it to the Solomon Islands\. Diesel-fueled power generation accounted for 98
percent of the total\. Electricity tariffs which incorporated automatic fuel price adjustments
rose to a point where electricity became too costly for an average family using 250 W for 8
hours a day\. This usage translated to a need to pay US$1 per day, which was unsustainable
in a country where total GDP per capita amounted to US$690 per year\.
(b) Power network losses with ad hoc maintenance and unsystematic operational practices
added to unsustainably high costs\. At appraisal, power network losses had reached 21
percent\. During the period of ethnic tension, power generating capacity in Honiara declined
as generator maintenance programs were neglected\. Overdue maintenance needs on the
distribution network were causing outages of approximately 72 hours per week\.
4\. Access to electricity was low\. Less than 10 percent of the population had access to electricity\.
The Solomon Islands Electricity Authority (SIEA), a government-owned statutory body responsible for
power supply and distribution, was unable to connect new customers and customers were unable to pay
the high costs of electricity\. The number of disconnections was increasing\. The rural population, existing
primarily on subsistence agriculture and fishing, relied on kerosene for home lighting and wood for
cooking\.
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
5\. SIEA was in financial distress\. Operating losses had increased from SBD 12 million in 2005 to
approximately SBD 45 million in 2007, equivalent to about 30 percent of total operating revenue\. More
than 70 percent of the operating loss was interest due on past debt\. A crucial factor in the remaining
operating losses was the rising price of oil\. Only 95 percent of the oil price increases were allowed to be
recovered through electricity price increases\. Further worsening SIEAâs financial health was a decline in
its bill collection efficiency which had declined to 72 percent in 2007\. A significant factor was unpaid
electricity bills by other state-owned enterprises (SOEs)\. Total SOE arrears were SBD 27 million at the end
of 2007\.
6\. Two main issues in the energy sector that needed to be addressed were reducing electricity
costs and improving reliability and increasing access in rural areas and outer islands\. If both issues
needed to be addressed satisfactorily, a prerequisite condition was a strengthened SIEA in terms of both
financial health and operational capacity\.
(a) Reducing electricity costs and improving reliability\. In the near term, relatively simple
measures to reduce costs such as reducing technical losses, improving maintenance and
repairs, and improving operational practices were feasible\. However, over the medium term,
the development of a far lower-cost renewable power generation was considered critical to
mitigate the impact of rising oil prices\. In this context, opportunities for the development of
hydropower generation were identified with a potential 22 MW run-of-the-river
hydropower project at Ngalimbiu related to the development of the Gold Ridge mine\. After
meeting the demand of the Gold Ridge mine, the balance of power from the proposed
hydropower project would be sufficient to meet load in Honiara with a potentially dramatic
drop in overall electricity supply cost\. International financial institutions (IFIs) such as the
European Investment Bank expressed an interest in participating in the project\. However,
this meant that SIEA, which would play a critical role in this project, needed to be
strengthened\. In particular, issues that needed to be strengthened were the development
of power purchase agreements, meeting compliance with safeguards such as compensation
for land users and landowners, and regulatory issues\.
(b) Increasing access in rural areas and outer islands\. At the time of appraisal in 2008, the
Global Environment Facility-supported Sustainable Energy Financing Project (SEFP) was
under implementation\. The SEFP was designed to make the purchase of basic solar
photovoltaic (PV) energy affordable and accessible with low interest loans to purchase,
install, and maintain solar PV kits\. The SEFP also supported the purchase of small generators
running on coconut oil\. However, a long-term effort was needed to scale up rural
electrification work\. At a minimum, this included the completion of a Rural Electrification
Master Plan to identify best options for rural villages, putting in place a transparent legal and
regulatory framework for small-scale independent power production and determining
associated pricing and possible capital subsidies\.
7\. SIEA was central to achieving improvements in the energy sector \. It was critical that SIEA
perform as a strong and capable institution to address the abovementioned energy sector issues\. The
objective was that SIEA be strengthened and in a position to lead the sector from a high-cost, oil-based
system primarily centering only on Honiara to a more balanced, less-costly, and stable sector providing
energy services throughout the Solomon Islands\.
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
8\. The project was aligned with the World Bankâs strategy for the Solomon Islands as stated in the
Regional Engagement Framework FY2006â2009 for Pacific Islands\.1 The project directly contributed to
the two broad areas identified as areas of engagement\. In the first area, the engagement strategy
specified that the World Bank would assist the Government and other donors on public expenditure
management issues to improve the delivery of basic services to communities and provide broader sector
policy advice\. In the second area, the World Bank would target specific initiatives to improve the climate
for the private sector such as reforms to the energy sector, telecommunications, financial sector
management, and foreign investment legislation\. In addition, the World Bank was to contribute to long-
term capacity building and make contributions to the productive sectors, recognizing that rural
communities needed to benefit directly\. The project contributed directly to two strategic pillars and focus
areas: Improving the public expenditure management of infrastructure assets and Reducing the costs of
doing business\.
9\. The project responded to a recommendation from an Operations Evaluation Department (now
the Independent Evaluation Group) evaluation2 that found that the World Bank had not been able to make
a satisfactory contribution toward fueling economic growth in the region\. The evaluationâs
recommendations included improving expenditure management and removing bottlenecks to private
activity\.
10\. The project directly responded to a request from the Solomon Islands Government (SIG)\. In the
Pacific Forum of the Finance Ministers of the Pacific Islands held in Washington, DC in 2005, several Pacific
Island countries requested urgent World Bank support to expand sustainable energy use and energy
efficiency to offset the increased price of oil\. The SIG requested financing for additional investments
including restoration of networks, expansion of electricity access, and development of new renewable
energy-based electricity generation capacity\. However, under the Honiara Club agreements that were
then under effect, the SIG could not borrow for these investments\. The SIG realized that before these
investments could be made, SIEA needed to be strengthened\. The commercialization and strengthening
of SIEA therefore became the highest priority\.
Theory of Change (Results Chain)
11\. Solomon Islands Sustainable Energy Project (SISEP) was designed to be the vehicle that would
lay the foundation for future efforts to develop the energy sector\. Any effort to steady the sector, enable
more reliable energy to be provided to customers at lower cost, expand access to rural areas, and partner
with private entities and IFIs to develop the sector required building capacity in management, financial,
and operational areas\. Building this capacity is reflected in SISEPâs development objectives of improving
operational efficiency, system reliability, and financial sustainability\. SISEPâs three components, namely,
strengthening management, financial operations, and technical operations, each supported all three
aspects of the development objective\. Strengthening management, for example, would be instrumental
in improving operational efficiency, system reliability, and financial sustainability, as would technical and
financial operations\.
1Regional Engagement Strategy FY2006â2009 for Pacific Islands, Report No: 32261-EAP\.
2Evaluation of World Bank Assistance to Pacific Member Countries, 1992â2002, Operations Evaluation Department, Report No:
31940\.
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
12\. Figure 1 shows the Theory of Change, including a link to longer-term outcomes that SISEP would
contribute to beyond its closing date\. Project activities were designed with the assumption that there
would continue to be political commitment to the SOE Act; that government intervention would be
required in resolving SIEAâs debt, in particular from its largest government debtors; and that SIEA would
be compensated for its community service obligations\.
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
Figure 1\. SISEP Theory of Change Diagram
Outputs Intermediate Long term
Issues Activities PDOs/Outcomes
Outcomes Outcomes
Component 1: Strengthening Key staff hired (Technical General
Management : Manager, Commercialization
⢠Engagement of two professional manager, Independent Board
utility line managers (General director 1
Manager and Commercialization
Manager)
⢠Adding a professional Director to Training provided (Finance,
the Board Engineering) Improved decision
⢠SIEA in financial ⢠Training of key management making,
distress leading staff management Improved Improved Improved
to Technical assistance provided for structure, and operational system ability of
underinvestment improved financial management,
capacity efficiency reliability SIEA to
in network Component 2: Financial accounting, procurement
infrastructure Operations processes of SIEA of SIEA achieve
⢠Commercialization program for energy
Reduction in
⢠High costs and the Finance Department Studies conducted on tariff sector goals
network outages in
poor electricity ⢠Financial and billing system review, asset valuation, PPAs Improved such as
implementation frequency and
reliability financial expanding
⢠Preparation and duration
sustainability energy
Implementation of a Finance Reduction of non-technical access,
⢠Access to of SIEA
Accounting model losses, improved collections , new affordable
electricity is low ⢠Staff training program
(only 10% of IT system installed Improved cash-flow energy, etc\.
households) position
Component 3: Technical Rehabilitation of Generation
Operations infrastructure
⢠Loss reduction program
⢠Maintenance program for 2
Honiara Rehabilitation of transmission
⢠Distribution reinforcement and distribution infrastructure
program
⢠Consultancy services Critical Assumptions: 1: Continued political commitment to
⢠Technical training program for Support to Ownerâs Engineer â the SOE act of 2007, SOE regulation of 2010; 2: Managing
engineering staff supervision of distribution, debt burden, particularly from largest government debtors,
⢠Partnership with the Fiji Electric rehabilitation, and generation would require government intervention and resolution
Authority upgrades
Note: PPA = Power Purchase Agreement\.
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The World Bank
Solomon Islands Sustainable Energy ( P100311 )
Project Development Objectives (PDOs)
13\. The PDO, as stated in the Project Appraisal Document (PAD) and in the Financing Agreement of
SISEP (or âthe projectâ), was to improve operational efficiency, system reliability and financial sustainability
of SIEA through: improved financial and operational management, reduction of losses, improved
generator and distribution system reliability and increased revenue collection\.
Key Expected Outcomes and Outcome Indicators
14\. The project was intended to be the foundational investment for an ambitious program of
support for the energy sector in the Solomon Islands\. As the first in a series of necessary steps to achieve
a sustainable and affordable energy supply for the Solomon Islands, the planned project outcome was to
restore SIEA to financial and operational health and build capacity so that it could play a central role in
meeting energy sector goals\. A strong and capable SIEA was a precondition for the SIG to undertake
concerted action on a variety of fronts including developing new generation sources, working in
partnership with IFIs to implement projects to further energy sector goals, and providing a reliable and
stable foundation in energy access necessary for economic growth\.
15\. Assessment of the outcomes is organized in terms of the three outcomes of the PDO\. They were
(a) Outcome I: To improve the operational efficiency of SIEA, (b) Outcome II: To improve system reliability
of SIEA, and (c) Outcome III: To improve financial sustainability of SIEA\. While each of the outcomes
contributed to improving SIEA, the PADâs arrangements for results monitoring lists one project outcome
indicator, namely, that SIEA will operate profitably\. This is consistent with the overarching goal of
improving SIEAâs capacity to meet energy sector goals\. Each outcome and associated intermediate
outcomes contribute to other outcomes supported by the project, with SIEA being able to operate
profitably being an overarching goal for SISEP\.
16\. The Results Framework in the Implementation Status and Results Reports (ISRs) is used to
evaluate SISEPâs outcomes\. SISEPâs PAD listed four key indicators against which project achievements
were to be assessed\. The indicators in the PAD were largely reflected in ISRs but insufficient to measure
all three parts of the PDO\. On the other hand, the ISRâs Results Framework included additional indicators
which were relevant to measuring project outcomes and were necessary and sufficient in measuring
achievements of the three components of the PDO\. The PDO indicators in ISRs and those in the PAD were
largely aligned, had no material discrepancy, and partially overlapped\. Eight of nine PDO-level indicators
in the ISR are used to evaluate achievement of outcomes\. One indicator, the collection ratio, was found
to have significant methodological errors which disqualified it from being an appropriate indicator and
was not used in this assessment\. Further information is available in the Monitoring and Evaluation section\.
In addition, one intermediate outcome indicator was used as an outcome indicator as it was more
reflective of a PDO outcome\.
17\. For the Implementation Completion and Results Report (ICR), the Results Framework was
revisited to best reflect achievement of outcomes\. As mentioned, the ISRâs Results Framework was used
in evaluating achievement of outcomes\. However, to align indicators with objectives, a reorganization of
indicators and mapping to the three subobjectives of the PDO was necessary\. Success in achieving
Outcome I, namely, improving operational efficiency of SIEA, is assessed in part by evaluating SIEAâs
success in implementing a commercialization program\. While ISRs did not mention the commercialization
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Solomon Islands Sustainable Energy ( P100311 )
program, three indicators present in ISRs were appropriate measures to assess the commercialization
programâs achievements\. The list of the indicators used to assess outcomes is shown in table 1\.
Table 1\. Outcome Indicators Mapped to Relevant Project Objectives
Outcome Relevant Outcome Indicators from the Results Frameworka
Improved operational
I\.A\. System Losses (Baseline: 27 percent; Target: 18 percent)
efficiency of SIEA
I\.B\. Average number of debtor days to collect billed revenue (Baseline: 360 days;
Target: 35 days)
I\.C\. Number of days between due date of tariff and if not paid notice of arrears
(Baseline: 360 days; Target: 15 days)
I\.D\. Quarterly financial management reports and rolling projections for SIEA
performance within 14 days at the end of each quarter (Baseline: No Reports
produced; Target: Reports produced)
Improved system II\.A\. System Average Interruption Duration Index (SAIDI) (Baseline: 51840; Target:
reliability of SIEA 2000)
II\.B\. System Average Interruption Frequency Index (SAIFI) (Baseline: 816; Target: 85)
Improved financial III\.A\. Revenue per kWh generated (Baseline: SBD 1\.39/kWh; Target: SBD 4\.5/kWh)
sustainability of SIEA
III\.B SIEA profitability (Baseline: Loss SBD 44 million; Target: Profit SBD 98 million)
Note: a\. Targets after last restructuring expected at the end of project life\.
Components
18\. The project had three components:
(a) Strengthening Management (IDA: US$4\.0 million, US$3\.69 disbursed; SIG:3 US$5\.4
million)\. Engagement of two professional utility line managers (a general manager with a
technical background and a commercialization manager) and a professional director to the
Board, and training of key management staff
(b) Financial Operations (IDA: US$0\.7 million, US$0\.64 disbursed; SIG: US$0\.8 million)\.
Implementation of a commercialization program for the Finance Department, including new
financial management (FM) and billing systems and preparation and implementation of a
new Finance Accounting Manual with a staff training program\.
(c) Technical Operations (IDA: US$8\.0 million, US$7\.37 disbursed; SIG: US$2\.0 million)\.
Implementation of a loss reduction program, a planned maintenance program for Honiara,
and a distribution reinforcement program to increase the availability of existing generation
and improve system reliability\. Technical project implementation support to SIEA was also
to be provided with consultancy services, a technical training program for engineering staff,
and establishment of a partnership with the Fiji Electricity Authority (FEA)\.
3 SIG contribution and estimation of project components costs are equal to actual component costs\.
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Solomon Islands Sustainable Energy ( P100311 )
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets
19\. The PDO remained essentially unchanged during project implementation\. The original PDO was
to improve operational efficiency, system reliability and financial sustainability of SIEA through: improved
financial and operational management, reduction of losses, improved generator and distribution system
reliability and increased revenue collection\. A minor change to the PDO was the deletion of the part of
the PDO that described project activities, leaving the core PDO unchanged\. The revised PDO of the project
was to improve operational efficiency, system reliability and financial sustainability of SIEA\. It remained
in effect until the project closed in March 2019\.
20\. SISEPâs outcome indicator targets were revised several times during project implementation\.
The purpose of revising targets was primarily to make them consistent with the objectives of restructuring
or to make adjustments consistent with increased ambition such as with the additional financing (AF)
approved in 2014\. SISEP was restructured four times during implementation\. With each restructuring, the
project attempted to either increase the ambition of outcomes to be consistent with increased financing
or to adjust to be more realistic in setting appropriate goals in achieving project outcomes without
compromising the objective\. Outcome targets that were revised are noted below along with a brief
explanation of the reason for revision:
(a) SAIDI and SAIFI indicators\. The target value was adjusted downwards at the time of approval
of the AF to account for outcomes expected to accrue from activities that were financed\.
This included capital investments to strengthen the largest power grid (Honiara) and
improve the efficiency and reliability of power supplies, a desirable outcome that would be
measurable through SAIDI and SAIFI indicators\.
(b) System losses\. The target for system losses was revised at three of the four restructurings
of the project\. At the first restructuring in FY2011, the target for system losses was made
more stringent, going from 16 percent to 12 percent\. In the next restructuring in 2017, the
target was increased to 14 percent, and further increased to 18 percent\. The final target of
18 percent was arrived at by considering a realistic reach, that is, setting the target to one
that is achievable due to project activities, but without compromising on the ambition of the
outcome to be achieved\.
(c) Collection ratio\. The target for collection ratio was lowered from 90 percent to 70 percent
in the final restructuring in 2018\. This ICR finds that there were several issues with this
indicator (discussed in the Monitoring and Evaluation section), one of which was that an
unrealistic target was set at appraisal with the appropriate level of ambition being
overstated\.
(d) Number of days between due date of tariff and, if not paid, notice of arrears and average
number of debtor days to collect billed revenue\. The outcome targets for both indicators
were made more stringent at the time of AF approval, as the team expected the increased
investment to result in incremental improvements by the new closing date\. However,
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subsequent restructurings reverted the targets to ones that were more relevant and
reflected appropriate goals\.
21\. As mentioned, SISEP was restructured four times during implementation\. Table 2 summarizes key
changes made to the project\.
Table 2\. Key Changes to SISEP during Implementation
Restructuring Changes
Closing
No\. Date PDO PDO Indicators PDO Targets Other
Date
1 March 2012 Revised to Extended
reflect new to June
closing date 2014
2 February Revised to 3 indicators Revised to Extended Capital investments in the
2014 delete dropped account for to June 30, Honiara power grid and
(including description of (revenue per incremental 2017 strengthening of project
AF) project kWh, prepaid improvement management
activities meters installed, with increased
and SIEA AF investments
profitability)
3 April 2017 Targets for 3 Extended ⢠Change in components and
indicators to March cost
revised to 31, 2019 ⢠Change in loan Closing
rectify date(s)
overstated ⢠Change in financing plan
targets (system ⢠Change in implementation
losses and schedule
number of
debtor days to
collect revenue,
days between
due date of
tariff and notice
of arrears)
4 April 2018 Dropped Collection ratio Cancelled US$3\.3 million
indicator related target lowered because of project savings
to generators and number of
debtor days to
collect billed
revenue
increased\. Both
indicators were
adjusted to
reflect a
feasible but
sufficiently
ambitious goal\.
Two indicators
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Restructuring Changes
Closing
No\. Date PDO PDO Indicators PDO Targets Other
Date
were
reinstated\.
Revised PDO Indicators
22\. During project implementation, two PDO-level indicators were dropped\. Separately, two other
indicators were dropped and reinstated:
(a) Number of prepaid meters installed\. This indicator was dropped when the AF was approved
and SISEP was restructured\. At the time, the installation of prepayment meters across all
households in Honiara had been completed and SIEA had a policy in place requiring all new
meters and meter replacements for household customers to be prepayment meters\. This
indicator does not qualify for assessing PDO-level objectives and would not have been used
to assess outcomes\.
(b) Generator efficiency improved\. This indicator became obsolete and was dropped when the
project was restructured in 2018\. At appraisal, the plan was to track the efficiency of three
specific generators\. However, almost 10 years after project approval, two of the generators
were old and new generators had been purchased by SIEA without the support of project
funds to compensate for deficiency of the old generators\. SIEA had measures in place to
ensure that overall efficiency of generators was adequate\. The overall efficiency exceeded
90 percent at the time of restructuring when the indicator was dropped (target for all three
generators was 85 percent)\. Reliability could also be gauged by the System Losses indicator\.
(c) The PDO indicator âRevenue generated per kWhâ was dropped in error after the 2014
restructuring as it was deemed that this was already captured through the collection ratio
and loss reduction ratio and Component 2 had closed\. The intermediate outcome indicator
âNet profit before taxâ was also dropped because of the consideration that an absolute profit
figure is not very meaningful\. The indicators were reinstated to measure the financial
sustainability of SIEA for evaluating the project at completion\.
Revised Components
23\. Revisions were made to Components 1 and 3 by the addition of the following activities financed
by the AF approved in February 2014:
⢠Component 1: Strengthening Management\. Technical assistance and training on dispatch
and control, system planning, and integration of renewable and independent power
producers; support to ownerâs engineer; funding for the Capital Projects Manager 2014â
2017; finance and due diligence technical assistance (legal officer, finance officer, and
procurement officer for PPAs); additional support for training in project management and
technical assistance for strengthening project management; and preparation of feasibility
engineering services and safeguard studies for renewable energy activities\.
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⢠Component 3: Technical Operations\. Upgrade of transformer capacity with an additional 5
MVA 33 kV/11 kV transformer, addition of a second 33 kV switchboard, and a new system
control room and dispatch at Ranadi; a 12\.5 MVA transformer and upgrade of switching
arrangements at Lungga Power Station; New Zone substation for transforming 33 kV/11 kV,
with wa 7\.5 MVA transformer at Kolaâa Ridge; and relocation of the second power circuit to
supply the residential area to the south of Honiara Airport (Feeder 12 area) by building a
new overhead power line and an underground circuit around the airport that links to the
East Honiara Substation to the Feeder 12 area\.
Other Changes
24\. US$3\.3 million was canceled from the IDA credit during the fourth restructuring in April 2018\.
Cost savings were achieved under Components 1 and 3 mostly because several contracts were less than
the original estimates\. SIEA also decided to fund installation of the Lungga transformer from its own funds\.
These funds were reallocated to another project with SIEA which was approved in July 2018\.4
25\. Change in project costs\. Table 3 shows changes in project costs (US$ million) as a result of the AF
and cancellation\.
Table 3\. Project Costs at Approval and after Approval of AF and each Restructuring
Rationale for Changes and Their Implication on the Original Theory of Change
26\. While SISEP was restructured four times, the most substantial change occurred when the AF
along with restructuring was approved in 2014\. The original project had been successful in improving
commercial sustainability\. As a next step, SIEA needed to undertake long-overdue investments in the
generation, transmission, and distribution infrastructure to improve service to customers\. With its
financial position being relatively secure, SIEA was in a position to invest in infrastructure rehabilitation
and maintenance\. US$13 million was approved in the AF, of which US$10\.3 million was allocated to
technical operations\. These involved improving the reliability of electricity supplies in Honiara which is
4 GEF Electricity Access and Renewable Energy Expansion Project (P162902)\.
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both the political and commercial capital and where 90 percent of the electricity is generated and
consumed\. Not only was this critically important for economic growth, but the weight of Honiara in
determining a national uniform tariff was expected to have a large impact on the affordability of power
across the Solomon Islands\.
27\. There was no impact on the original Theory of Change\. The PDO was essentially unchanged
except for the deletion of the portion of the PDO that described how the objectives were to be achieved\.
Other changes included the addition of activities as a result of the AF being approved, which strengthened
existing components (1 and 3) of the project but did not have an impact on the results chain\. Finally, PDO
indicators and targets were revised during implementation\. Their revisions had a marginal impact on
indicator targets and were not material in the measurement of PDO outcomes\.
II\. OUTCOME
A\. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
28\. SISEPâs PDO remains highly relevant to the development needs of the Solomon Islands\. The
Systematic Country Diagnostic (SCD) for the Solomon Islands,5 the Country Partnership Framework (CPF)
for the Solomon Islands FY2018âFY2023,6 the SIGâs own program (National Development Strategy [NDS]
2016â2035 and Medium-Term Development Plan 2016â2020), explicitly state the need to further
progress on development objectives supported by this project\.
29\. The current CPF 2018â2023 as well as the Engagement Framework7 at the time of project
approval identify building government capacity for service delivery as a priority\. SISEPâs development
objectives were to improve operational efficiency, system reliability, and financial sustainability of SIEA\.
The Country Engagement Framework at the time of project approval identified reducing the cost of doing
business through utility regulation and reform and improving rural access to energy as objectives for the
energy sector\. The current CPF 2018â2023 states that the previous Country Partnership Strategy program
faced implementation challenges in reaching some objectives in several areas, one of which is reducing
energy losses\. In addition, service delivery in remote rural areas and outer islands was stated to be
challenging\. The current CPF is organized among three focus areas: (a) strengthening the foundations of
well-being, (b) promoting inclusive and sustainable growth, and (c) managing uneven development\. The
development objectives of SISEP support all three focus areas\. Support to two of the three focus areas
directly translate to energy-related CPF objectives, as shown in table 4\.
5 Solomon Islands Systematic Country Diagnostic, Priorities for Supporting Poverty Reduction and Promoting Shared Prosperity,
Report No\. 115425-SB, World Bank Group, June 2017\.
6 Country Partnership Framework for Solomon Islands for the Period FY2018âFY2023, Report No\. 122600-SB, World Bank
Group, June 2018\.
7 Regional Engagement Framework for the Pacific Islands FY2006âFY2009, Report No\. 32261-EAP, World Bank, May 2005\.
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Table 4\. Energy-related CPF Objectives in the Solomon Islandsâ Current CPF Program
CPF Focus Areas Relevant to SISEP Objectives CPF Objectives
Strengthening the foundations of well-being Improve renewable power generation and access to
electricity
Managing uneven development Improve connectivity
Improve access to service delivery in underserved
communities
30\. It is evident that SISEPâs objectives are highly relevant to the CPF objectives, as shown in table 4\.
The CPF further elaborates that limited access to affordable and reliable power supply in the Solomon
Islands constrains economic growth in urban areas and contributes to poverty in rural areas\. Improving
access to affordable and reliable power was deemed an essential ingredient in not only helping ensure
that future growth is sustained but also lasting peace and stability is secured\. SISEPâs objective of
improving operational efficiency, financial sustainability, and system reliability of SIEA was a key step in
the project improving access to electricity and to service delivery\.
31\. The SCD identified access to energy as a Tier 3 priority\. Included in Tier 3 priorities were areas
where the World Bank Group already had a successful engagement\. The SCD noted that energy utilities,
along with water, waste disposal, and sanitation, were largely absent beyond urban areas\. It deemed
connective infrastructure as critical to facilitate access to the state and its services\. One priority identified
was full coverage of essential services in Honiara which would support essential service provision in
smaller centers and beyond by lowering the unit cost of these services\. The functioning and connectivity
of Honiara was considered critical to security because private sector activity in the urban service economy
could be a key channel for the redistribution of natural resource rents in the broader economy\. Access to
electricity for lighting in Honiara was 72 percent and 42 percent in provinces not including Honiara\. The
total access rate of electricity for lighting in the Solomon Islands was 45 percent\. SISEPâs objectives of
making SIEA a viable and healthy utility continue to be relevant in improving access to service delivery in
rural and provincial communities\.
32\. SISEP is well aligned with the Governmentâs own NDS 2016â2035 and Medium-Term
Development Plan (MTDP) 2016â2020\. The NDS goals are (a) sustained and inclusive economic growth;
(b) poverty alleviated across the whole of the Solomon Islands, basic needs addressed, and food security
improved, with the benefits of development more equitably distributed; (c) access for all Solomon
Islanders to good-quality social services, including education and health; (d) resilient and environmentally
sustainable development with effective disaster risk management; and (e) a unified nation with stable
and effective governance and public order\. The NDS stresses the importance of good governance and
public sector reforms as fundamental conditions for private sector growth\. The MTDP maps the NDSâs
long-term development objectives into 15 medium-term strategies (MTSs)\. Listed below are relevant
MTSs that are supported by SISEP:
⢠MTS2: Improve the environment for private sector development and increase investment
opportunities for all Solomon Islanders
⢠MTS3: Expand and upgrade weather-resilient infrastructure and utilities focused on access
to productive resources and markets to essential services
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⢠MTS5: Alleviate poverty, improve provision of basic needs, and increase food security
33\. Rating\. At the time of project completion, the PDO remained very relevant\. As described, it is
evident that SISEPâs PDO was relevant to the World Bank Groupâs current country strategy, as well as the
Governmentâs own national development plans\. The PDO is directly in line with the development needs
of the Solomon Islands\.
34\. The relevance of the PDO is therefore rated as High\.
B\. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
35\. SISEP met or exceeded relevant and attributable indicators for all three outcomes associated
with the PDO\. Outcomes are assessed for the entirety of the implementation period, rather than with
split ratings for any restructuring for reasons described further in the following paragraphs\. Achievement
of the PDO, to improve operational efficiency, system reliability, and financial sustainability of SIEA, is
evaluated by assessing each of the three components of the PDO\. Since restructurings made adjustments
to the Results Framework, a split rating by each restructuring period was considered and rejected for the
following reasons: (a) there were no changes to the PDOâs key expected outcomes; the change in PDO
only removed reference to specific means for achieving the respective outcomes, and (b) the
restructurings did not introduce substantial and/or material change to key outcome indicators, project
scope, and the associated level of ambition\.
36\. Table 5 lists relevant indicators used in the outcome analysis where there was a change in targets,
with comments showing why the level of ambition did not change materially, thereby disposing of the
need for a split rating\.
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Table 5\. Changes in Indicator Targets and Relevance for Split ratings
37\. An analysis of each element of the PDO is provided in the following paragraphs\.
Outcome I: Improve Operational Efficiency
38\. The improved operational efficiency aspect, including both technical and nontechnical
components of operational efficiency, is measured by the following indicators:
⢠I\.A: System losses
⢠I\.B: Average number of debtor days to collect billed revenue
⢠I\.C: Number of days between due date of tariff and, if not paid, notice of arrears
⢠I\.D: Quarterly financial management reports and rolling projections for SIEA performance
within 14 days at the end of each quarter
39\. At the end of project implementation, all four indicators had exceeded their targets with
outcomes fully attributable to SISEPâs interventions\. System losses were 17\.3 percent at project close
relative to 27 percent at the start of the project, surpassing the end-project target of 18 percent\. The
commercialization program had been implemented successfully\. Several management procedures had
been instituted by new board members who were hired and funded by SISEP\. These included, for example,
the preparation of detailed reports for management before regular board meetings which were important
for improving transparency and decision making\. SIEA had produced quarterly FM reports and rolling
projections for SIEA performance within 14 days after the end of each quarter since 2012\. The average
number of debtor days to collect billed revenue was 33\.61 days relative to the target of 35 days and a
baseline of 360 days\. Customers were provided with invoices that clearly showed the current monthâs
charges as well as previous monthsâ charges with the notification that previous monthsâ balances were
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due immediately\. The invoice containing the due date of the tariff, notification of when the account would
be in arrears (15 days after the due date of the tariff), and amounts in arrears was sent each month, thus
meeting the indicator target of 15 days\.
40\. Achieving the objective of operational efficiency can be substantially attributed to activities
financed by a component of SISEP which financed strengthening management and building capacity of
key staff\. The component financed key management positions: a technical general manager, a
commercialization manager, and an external board director\. Infusion of professional management staff
who introduced new initiativesâcorporate planning workshops, strengthened board meetings including
relevant reports, key performance indicators (KPIs), and company rulesârevitalized SIEA\. The
management launched customer surveys, reviewed debtor accounts, and made examples of intransigent
customers (including government ministries) by cutting off service\. Board directors were provided training
and bonuses were linked to performance\. SIEA was restructured organizationally after a human resources
review\. Management strengthening activities funded by SISEP had a direct bearing on the improvement
in operational efficiency\.
41\. Covenants included in SISEP were key in contributing to the success of the management
strengthening component\. Management strengthening was considered a fundamental aspect in
achieving SISEPâs goal which was to ensure the viability of SIEA by improving operational efficiency, system
reliability, and financial sustainability\. At appraisal, the project team considered management
strengthening critical to SIEA and included the following covenants to ensure SIEA health\. The covenants
directly corresponded to outcome indicators that measured operational efficiency\.
⢠SIEA shall appoint a general manager and professional external board member each with
qualifications and on terms acceptable to IDA\.
⢠SIEA shall ensure that (a) its annual bill collection from SOEs and other government entities
will be at least 75 percent of what is due and (b) arrears owed to it by SOEs and other
government entities will not exceed more than 120 days\.
⢠SIEA shall no later than November 30 of each year of project implementation prepare an
annual rolling business plan with financial forecasts covering at least 7 years and have such
plans discussed among the project implementing entityâs Board, management, and IDA\.
42\. Covenants were fully or partially complied with throughout project implementation\. Efficacy
rating for improving SIEAâs operational efficiency is rated as High\.
Outcome II: Improve System Reliability
43\. SISEP included substantial investments to improve system reliability\. Two indicators measured
the aspect of improving system reliability:
⢠II\.A: System Average Interruption Duration Index (SAIDI)
⢠II\.B: System Average Interruption Frequency Index (SAIFI)
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44\. Targets were met and exceeded at project closing with SAIDI and SAIFI indicators showing
dramatic improvements compared to the baseline\. SAIDI and SAIFI expected outcomes and targets as
described in the PADâs arrangements for results monitoring were modified in the first ISR and measured
accordingly throughout the project\. The change was in the way that the outcomes were communicated
and did not indicate a decrease in ambition\. The methodology used to determine SAIDI and SAIFI
outcomes was consistent from the start of the project to its end, providing a robust measure of system
reliability\.
45\. SIEAâs poor financial position had precluded it from making capital investments in generation,
transmission, and distribution infrastructure and denied it access to commercial financing\. With SISEPâs
support, SIEA had demonstrated early noticeable improvements to system reliability by 2014\. The SAIDI
had improved from 51,840 at approval to 4,767, and the SAIFI had improved from 816 to 46\.2\. However,
increased demand and insufficient investment had made power supply unreliable\.
46\. The World Bank provided support by approving the AF of US$10\.3 million from an IDA credit to
directly address reliability and efficiency of electricity supplies to Honiara, the largest city in the Solomon
Islands and its commercial center\. At project closure, the SAIDI index was 1,757\.6, exceeding the target of
2,000\. The SAIFI index was 17\.5 versus the target of 85\. There is a direct line of sight between
improvements in system reliability and the World Bankâs support as the World Bank and SIEA were the
only two entities active in this area\. AF funds made it possible for SIEA to undertake long overdue
investments to improve service to customers\. Four network investment subprojects financed by the AF
addressed critical weaknesses in the Honiara distribution network\. In doing so, it improved the reliability
of supply on the Guadalcanal grid\. The improvement of reliability can also be attributed to the
professional/competent technical management of the utility, which had benefited from SISEPâs
operational efficiency component\. The efficacy rating for improving SIEAâs system reliability is High\.
Outcome III: Improve Financial Sustainability
47\. The improved financial sustainability aspect of the PDO is measured by two indicators:
⢠III\.A: Revenue per kWh generated
⢠III\.B: SIEA profitability
48\. Both indicators were mistakenly dropped from ISRs after the project was restructured in April
2014 (along with AF approval) even though annex 1 in the AF paper lists the indicator âSIEA will operate
profitablyâ as a PDO indicator and âRevenue per kWh generatedâ as an intermediate outcome indicator\.
However, the indicators measuring revenue per kWh and SIEA profitability were reintroduced at the
fourth restructuring to facilitate tracking of this outcome at closing\.
49\. The achievement of both indicators is in the substantial to high range\. At project close, SIEAâs
profitability was SBD 80\.1 million against a target of SBD 98\.0 million, achieving 82 percent of the intended
outcome\. Revenue per kWh generated was SBD 4\.64 per kWh versus a target of SBD 4\.5 per kWh,
achieving 103 percent of the intended outcome\. When viewed in conjunction with revenue per kWh, costs
per kWh generated is an additional metric to reflect SIEAâs financial sustainability\. Figure 2 shows costs
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and revenues per kWh since 2013 (data are not available for previous years)\. From 2013 onward, revenues
are substantially higher than costs, which bodes well for SIEAâs financial sustainability\.
Figure 2\. Cost and Revenues Per kWh Generated
6\.0 5\.5
5\.2 5\.2 5\.0
5\.0 4\.7 4\.8
4\.5
4\.0
3\.3
2\.8
3\.0
2\.3
2\.0 2\.1
2\.0 1\.8 1\.8
1\.0
0\.0
2013 2014 2015 2016 2017 2018 2019 (April)
Cost per kWh generated Revenue per kWh generated
Source: ICR team analysis of data provided by SIEA and from SIEA Annual Reports 2013-2018
50\. In addition to the indicators mentioned, additional relevant data are available to demonstrate
SISEPâs success in putting SIEA on a sound financial footing\. Profit per kWh can be considered an additional
metric to confirm the success of this outcome\. Having made a profit for the past eight years in a row (the
previous operating loss was in 2010), SIEAâs performance in profitability was strong\. Figure 3 shows an
increasing trend in profit per kWh for 2011â2018\. While the overall trend is positive, the chart shows a
smaller level of profitability in 2017 and 2018\. This too, can be considered a success because it meant that
SIEA had the resources to make investments in infrastructure from its own funds\.
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Figure 3\. Profitability Per kWh Generated (SBD)
2\.00
1\.46
1\.50
1\.24
1\.08 1\.14
1\.00 0\.88 0\.85 0\.81
0\.63 0\.57
0\.50
0\.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(April)
-0\.50
-1\.00 -0\.84
Source: ICR team analysis of data provided by SIEA and from SIEA Annual Reports 2010-2018
51\. SISEP had a direct role in improving financial sustainability through its support of the
commercialization program\. The SIG agreement to resolve SIEAâs debt was a condition of effectiveness
for SISEP\. In 2011, SIEA was in financial crisis and close to insolvency with severe cash flow problems and
with poor and inconsistent information available to management\. SIEAâs fuel supplier issued a threat to
restrict deliveries which created the risk of power rationing across the capital city and the entire country\.
However, by 2013, SIEA effected a dramatic turnaround in financial position and improved its cash flow
position by concentrating on key aspects of the commercialization program that was supported by SISEP\.
The Ministry of Finance brokered an agreement between SIEA and the Solomon Islands Water Authority
(SIWA), which was SIEAâs largest customer and debtor\. The agreement entailed having 100 percent of
SIWAâs debt to be paid\. SIEA implemented improved financial controls and replaced the General Ledger
System and addressed metering fraud at large commercial/industrial customers\. A stronger financial
performance also meant that SIEA was in a position to plan and seek capital investments\. Commercial
financiers began expressing interest in debt financing of SIEAâs capital investments\. SISEP had served its
purpose of strengthening SIEA such that it could contribute to energy sector development\. The efficacy
rating for improving SIEAâs financial sustainability is Substantial\.
Justification of Overall Efficacy Rating
52\. The overall efficacy rating is High based on high efficacy in improving SIEAâs operational
efficiency, high efficacy in improving SIEAâs system reliability, and substantial efficacy in improving
SIEAâs financial sustainability\.
53\. Table 6 shows efficacy ratings for each aspect of the PDO based on the achievement ratio\.
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Table 6\. Efficacy Ratings for Each Outcome of the PDO Based on Achievement Ratio
C\. EFFICIENCY
Assessment of Efficiency and Rating
Economic Analysis of SISEP
54\. The project has achieved the key outcomes with high efficiency based on an economic analysis
as described herein, which is conservative and robust to sensitivity analysis\.
55\. The economic analysis at completion was conducted at project level considering that major
economic benefits are the joint result of implementing all three project components\. The same cost-
benefit approach was applied: economic benefits considered and quantified are avoided fuel cost and
reduced outage cost while economic costs focused on capital investment and operations and
maintenance (O&M) cost\. In sum, at completion, the project has a net present value (NPV) of US$7\.12
million (at a 10 percent discount rate) while the economic internal rate of return (EIRR) stands at 24\.3
percent, which indicates good economic returns from the project\. Considering environmental benefits,
the NPV increased to US$13\.31 million and the EIRR improved to 27\.1 percent\.
Table 7\. Summary of Economic Benefits and Costs (US$)
ECONOMIC BENEFITS
Avoided Fuel Cost 304,770
Reduced Outage Cost 13,063,619
ECONOMIC COSTS
Capital Investment 5,879,352
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O&M 366,066
NET ECONOMIC BENEFIT 7,122,971
EIRR 24\.3%
Avoided Green Gas Emission 6,182,994
NET ECONOMIC BENEFIT (incl\. environmental benefits) 13,305,965
EIRR (envir\. benefit adjusted) 27\.1%
56\. Other economic benefits, such as customer saving through reduced requirement for auto-
generation backup systems, reduced O&M costs, better voltage profile, better power harmonics, and
more system stability, are evident but not included for the following two reasons: (a) to keep the same
economic analysis framework used at appraisal and at AF appraisal and (b) to avoid a disproportional level
of data collection and modeling efforts to quantify these benefits\. For these reasons, the analysis is
conservative in underestimating project benefits\. Also, the conclusions are robust to sensitivity analysis if
(a) O&M cost increases by 100 percent or 200 percent and (b) the discount rate was determined as about
7 percent using new âDiscounting Costs and Benefits in Economic Analysis of World Bank Projects (2016)â\.
57\. Harmonized8 total ex ante NPV is roughly estimated at US$18\.1 million\. In comparison, ex post
NPV is lower at US$7\.12 million\. Two driving factors are the lower-than-expected oil price and reduction
of capital investment from US$17\.0 million to US$11\.7 million\. Harmonized ex ante EIRR has not been
calculated due to methodological constraints and lack of sufficient supporting data\. However, the EIRR
calculated at completion demonstrates comparable economic viability of the project broadly consistent
with expectations at appraisal and at the stage of the AF\.
Financial Analysis
58\. The project is also financially viable and attractive thanks to its positive financial net present value
(FNPV) as well as a financial internal rate of return (FIRR) of 21\.8 percent, which far exceeds the weighted
average cost of capital (WACC)\.
59\. An ex post financial analysis of the project (not the Solomon Power as an SOE or sector) was also
carried out using a âcost-benefit analysisâ with the same discount rate of 10 percent\. In sum, at completion,
the project has an FNPV of US$5\.63 million while the FIRR stands at 21\.8 percent, which far exceeds the
estimated project (WACC) of 3\.6 percent\. A summary of the results, assumptions, and detailed analysis is
presented in following sections\.
Table 8\. Summary of Financial Benefits and Costs (US$)
FINANCIAL BENEFITS
Incremental revenue from reduction of loss 6,793,190
Incremental revenue from reduction of outage 12,520,779
8Economic analysis at appraisal only quantified the net economic benefit from avoided fuel cost while the economic analysis at
AF appraisal focused on reduced outage cost\. Therefore, to compare ex ante and ex post net economic return, the two ex ante
analyses need to be harmonized to the same base year\.
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FINANCIAL COSTS
Capital Investment 9,991,496
Incremental Fuel & Oil Consumption 3,072,026
O&M 622,100
NET FINANCIAL BENEFIT 5,628,347
FIRR 21\.8%
60\. The main financial benefits considered in this analysis are tariff revenue from incremental power
consumptions by the customers due to reduction of energy losses and reduction of outage, which is in
line with the two economic benefits examined in economic analysis\. However, it is important to point out
that financial benefit from reduction of nontechnical losses is included here because it is a transfer
payment from the customers to SIEA\.
61\. On the other hand, three main financial costs contributed to achieve the abovementioned
financial benefits: total project capital investment, fuel and oil cost for the incremental power
consumption, and the O&M cost\. Here the capital investment included the IDA grant, IDA credit, and the
US$8\.20 million equity invested by SIEA\.
62\. Sensitivity analysis has been performed against annual project O&M cost as well as the discount
rate\. In both cases, the FNPV is resilient to the changes\.
Financial Sustainability Analysis of SIEA
63\. Following SIEAâs implementation of its capital expenditure (CAPEX) program, which included its
equity investment of US$8\.2 million in SISEP and a further SBD 350\.0 million (US$47\.6 million) entirely
from its own equity for other priority projects (the construction of a new powerhouse at Lungga Power
Station and installation of four 2\.5 MW diesel generators), the projected financial performance of SIEA
shows that the CAPEX program has had a positive impact on SIEAâs performance\. Throughout the future
life of the program, total revenues, operating income, and net profit are projected to increase\. Liquidity
is expected to remain high with a current ratio well above 1 (lowest point is 8\.5 in 2019)\. The debt-to-
equity ratio is not expected to approach 30:70, given SIEAâs aversion to debt, peaking at just 18:82 in 2018,
before falling over the remainder of the program\. The profitability of SIEA is projected to increase
gradually over the life of the program, with net profit margins increasing from 17 percent in 2013 to 44\.9
percent in 2033 and an average annual net profit of 37\.0 percent over 20 years\.
Implementation Efficiency
64\. Overall, the project achieved a modest level of implementation efficiency due to implementation
delays but significant cost savings\.
65\. The project closing date was extended from June 30, 2017, to March 31, 2019, due to a significant
delay in the implementation of Procurement Plans and contracts\. The main contributors were SIEAâs
inadequate capacity to conduct procurement in adherence to the World Bankâs Procurement Guidelines,
delayed recruitment to critical roles (such as procurement specialist and ownerâs engineer), and SIEAâs
inability to source qualified and skilled contractors to carry out the works\. On the other hand, US$3\.3
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million saving in project cost was achieved\. The saving mainly came from (a) savings in several capital work
contracts and (b) SIEAâs decision to install a transformer in Lungga by itself using its in-house capacity\.
66\. Efficiency ratings for the project are noted in the following paragraphs\.
Overall Efficiency Rating: Substantial
67\. The justification of overall efficiency rating is as follows:
⢠High economic efficiency demonstrated by a sound NPV of US$7\.12 million and a positive EIRR
of 24\.3 percent
⢠High financial efficiency of the project with an attractive FIRR of 27\.5 percent compared to
WACC at 2\.0 percent
⢠High financial sustainability of SIEA with average annual net profit of 37\.0 percent over 20
years
⢠Modest implementation efficiency due to a 21-month closing date extension but significant
saving of US$3\.3 million
D\. JUSTIFICATION OF OVERALL OUTCOME RATING
Overall Outcome Rating: Satisfactory based on High Relevance, High Efficacy, and Substantial Efficiency
68\. SISEP was designed, appraised, and approved at a critical time for SIEA and for the Solomon
Islands in the electricity sector\. The Government faced a range of issues in the sector, including restoration
of transmission and distribution networks which had been damaged in previous yearsâ riots; expansion of
electricity access: less than 16 percent of households had access to electricity at the time, with rural access
at only 10 percent; and development of new renewable energy-based generation capacity\. Prohibition of
the SIG to borrow for these investments under the Honiara Club agreements meant that strengthening
SIEA became not only a desired outcome but a core requirement, essentially a prerequisite, both for basic
operations and for further sector development\.
69\. The following is a list of issues faced by SIEA at project start and their status today\. SISEPâs
contribution in addressing these issues is also stated here:
(a) At the end of 2007, system reliability was poor\. Customers had power interruptions at least
twice a day and the power disruptions were endured for approximately 2\.5 hours a day\. At
the end of SISEPâs implementation, there was a dramatic improvement in system reliability\.
SIEAâs 2018 annual report states that the SAIFI index (measuring the number of times a
customerâs service is interrupted in one year) showed that customers were interrupted 1\.45
times a year in 2018\. SISEPâs investments in system reliability contributed to this
improvement\.
(b) SIEA had serious inefficiencies and was in crisis\. In 2011, SIEA faced severe cash flow
problems and was close to insolvency\. However, at project close, SIEAâs financial position is
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sound\. A 2016 Asian Development Bank (ADB) report9 that benchmarked the performance
of SOEs in Pacific Island countries noted that the Solomon Islandsâ SOE portfolio was the
most profitable portfolio in the Pacific\. The report further noted that SIEA represented 47
percent of the profit and 83 percent of the profit in the SOE portfolio and had contributed
an average of 70 percent of the portfolioâs net profit since 2010\.
Table 8 is a snippet from the ADB report showing benchmarking of Pacific Island SOEs with
the Solomon Islands at the top of the list\.
Table 9\. Benchmarking of Pacific Island SOEs
Source: ADB\.
Improvements to SIEAâs financial position are attributed to SISEPâs successful
implementation of the commercialization program along with other measures undertaken
(e\.g\., restructuring of SIEAâs debts)\. SIEAâs financial position now allows it to pay dividends,
which it has been paying since 2016\. In 2018, SIEA invested SBD 30 million in SIG Domestic
Development Bonds\. In addition, SIEA also began a program of capital investment in
generation, transmission, and distribution infrastructure, which was previously not possible
because of its poor financial position\.
(c) SIEA held a central role in advancing objectives in the energy sector but needed additional
capacity and know-how\. At SISEPâs start, there were no other development partners
participating in the energy sector\. Their involvement required a strong and capable SIEA with
capacity to partner with them in developing energy sector projects and implementing them\.
At SISEPâs close, a substantial number of international partners are involved in the energy
sector\. SIEAâs 2018 Annual Report10 names the ADB, Japan International Cooperation
Agency, the New Zealand Government, and the United Arab Emirates Government as
partners in operations\. SISEPâs component which strengthened management played a
9 ADB (Asian Development Bank)\. 2016\. Finding Balance 2016: Benchmarking the Performance of State-owned Enterprises in
Island Countries\. https://www\.adb\.org/sites/default/files/publication/192946/finding-balance-2016-soe\.pdf\.
10 http://solomonpower\.com\.sb/sites/default/files/Reports/Solomon%20Power%20Annual%20Report%202018\.pdf\.
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significant role in building capacity\. By 2014, newspaper articles were reporting on SIEAâs
turnaround, specifically citing World Bankâs support in providing technical assistance and
expertise\.
70\. In summary, this ICR assesses that SISEP was highly successful in meeting its objectives\. SIEA is
now in a strong position to implement each element of the Governmentâs planned energy sector
development program\. Management has been strengthened, the commercialization program has become
entrenched, and SIEA has invested to further improve system performance\.
Table 10\. SISEP Final Outcome Ratings
Outcome Ratings
Relevance High
Efficacy
I\. Operational Efficiency High
II\. System Reliability High
III\. Financial Sustainability Substantial
Overall Efficacy High
Efficiency Substantial
Overall Outcome Rating Satisfactory
71\. The overall outcome rating is rated as Satisfactory\.
E\. OTHER OUTCOMES AND IMPACTS (IF ANY)
Gender
72\. Gender inequality is generally high in the Solomon Islands\. The country ranks 156th on the
gender inequality index\.11 In the energy sector, gender inequality is noticeable\. Most positions within the
energy sector are technical roles, and traditionally, majority of women have not considered these types
of roles as viable career paths nor have they been encouraged to pursue these roles by their employers\.
The Pacific Power Association benchmarking 2017 (2015 data) reports that 21\.3 percent of the total
workforce employed in Pacific power utilities are women, with 4 percent of female representation at
technical levels\. SIEA has 21 percent female employee base and 6 percent female employees at technical
level\. This places the organization at the top of Pacific regional statistics\. However, SIEA is committed to
improving gender equality within the power sector\.
73\. SISEP was prepared in 2008 when design and documentation of gender tag related aspects in
projects was not required\. However, at the time of AF approval, the project explicitly considered the
relationship between improvements in access to reliable, efficient, and affordable electricity and the
empowerment of women by reducing their time and labor burdens and providing opportunities for
enterprise and capacity building\. Consultations with the Solomon Islands Women in Business Association
were carried out, which identified issues relating to the quality of power supply and the performance of
SIEA\. The design of the AF addressed these issues\. The provision of reliable and more economical
11 United Nations Development Programme, Human Development Report 2016\.
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electricity services through upgrades to the power network, as supported by the AF, was in several ways
also gender neutralâbecause âlights staying onâ benefits all consumers\.
74\. Strengthened management capacity has meant that SIEA is now committed to tackling gender
inequality within its organizational structure\. The World Bank supports SIEAâs commitment to improving
gender equality through energy sector operations approved after SISEP\. In particular, the Solomon Islands
Electricity Access and Renewable Energy Expansion Project (SIEAREEP) supports the transformation of
womenâs employment in three ways: (a) implementation of a program to employ rural women in
maintaining solar panels and sites, (b) assessment of the main barriers for women to take technical and
managerial roles and designing measures to address these, and (c) support to SIEA to implement gender-
based violence policies and to develop respectful and supportive workplaces\.
Institutional Strengthening
75\. SISEP was designed as a project to strengthen management, increase financial sustainability,
and improve reliability, which was especially important in an environment of low capacity \. As such, the
entire project was expected and proceeded to strengthen SIEA\. SISEP financed several senior staff
positions in SIEA, including expatriate specialists who infused their knowledge into SIEA operations\. Some
positions were required to have candidates with relevant experienceâthe commercialization manager,
for example, was expected to be experienced in World Bank procedures\. There were also many local staff
with excellent and deep knowledge of their country and SIEA operations\. The combination of local
knowledge with international know-how greatly enhanced project operations\. Project components also
included training in technical and financial topics to increase capacity of staff where needed\.
Mobilizing Private Sector Financing
76\. As mentioned earlier, SISEP was approved in 2008 at a time when SIEAâs financial position was
precarious\. This had led to chronic underinvestment in generation, transmission, and distribution
infrastructure\. Therefore, network reliability was inadequate and access to electricity among households
was extremely low\. Investment needs were high and private sector solutions needed to be catalyzed to
bridge the investment gap\. However, there was limited private sector interest\. Private entities required a
counterpart that could partner with them to design and implement energy sector projects, a role that
SIEA found difficult to play at the time of approval\.
77\. SISEP was instrumental in improving the financial and operational performance of SIEA\.
Regulations and pricing were analyzed by a tariff review study supported by the project\. Gains brought
about by SISEP made partnering with private entities feasible\. A case that demonstrates SIEAâs success in
partnering and implementing such projects is the Tina River Hydropower Development Project (TRHDP)
which is expected to generate 15 MW of electricity and significantly reduce the countryâs dependency on
diesel and improve the reliability of power supply\. The TRHDP, cofinanced with Australia, the Republic of
Koreaâs Economic Development Cooperation Fund, the Green Climate Fund, the Joint Abu Dhabi Fund for
Development and International Renewable Energy Agency, and the ADB, is a good example of the
maximizing finance for development (MFD) approach\. The financing package was optimized with the
private sector providing the majority of the equity and the SIG, multilateral development banks, and
donors providing the rest of the equity and all the debt\. This structure has helped achieve the lowest-
possible electric tariff considering the high cost of the project\. SISEP created the appropriate environment
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for private sector involvement\. Figure 412 shows the MFD approach for the TRHDP and SISEPâs role in
making it feasible\.
Figure 4\. SISEP and MFD Approach Used in the TIna River Hydro Development Project
Poverty Reduction and Shared Prosperity
78\. Poverty analysis\. The most recent poverty assessment13 showed that based on the Household
Income and Expenditure Survey, 12\.7 percent of the population in the Solomon Islands lives below a
Solomon Islands-specific poverty line and are classified as âpoorâ\. This poverty line is defined as the
minimum expenditures needed to obtain basic food and non-food goods considering prevailing
consumption patterns in the country\. Honiara had the highest basic needs poverty line: meeting basic
needs cost twice as much money in Honiara as in most other provinces due to the higher cost of both food
and non-food goods\.
79\. A major obstacle in promoting economic development and expanding the use of electricity is the
high average retail electricity tariff of approximately US$0\.65 per kWh which is the highest in the Pacific
region and among the highest in the world\. The Solomon Islands is almost entirely dependent on imported
refined petroleum fuels for national energy needs for electricity generation, transport, and lighting\.
Electricity is supplied to urban centers through diesel generators\. In rural areas, the wide distribution of
population and low densities make capital costs of connecting consumers very high relative to revenue
generation\. The problem had been further exacerbated by the distorted tariff methodology which did not
benefit end-users appropriately when global oil prices were lower\. At the end of 2016, SIEA revised the
12 Source: Country Partnership Framework for Solomon Islands for FY2018âFY2023, Report No\. 122600-SB, World Bank Group,
2018\.
13 Solomon Islandsâ poverty profile based on the 2012/13 HIES, World Bank, 2015;
http://documents\.worldbank\.org/curated/en/922811528186449003/pdf/Solomon-Islands-Poverty-Assessment\.pdf\.
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tariff methodology so that the benefit of lower generation cost will be adequately passed on to electricity
users\.
80\. To reduce exposure to volatile global oil prices and to enhance energy security, the SIG aims to
increase the share of renewable energy to 50 percent of total installed capacity by 2020\. The SIEAREEP
will facilitate access to additional people to electricity networks while improving sustainability and
affordability through the replacement of diesel generation with more affordable sources of power\. The
SIEAREEPâs economic analysis identified that the project will avoid over US$21\.6 million in diesel-related
costs which will facilitate tariff reduction by reducing the level of diesel dependency, generating clean and
sustainable energy and subsidizing connections to over 1,500 low income families, schools and health
centers\.
81\. The initial cost to connect to the power system in the Solomon Islands is extremely high\. The
World Bank approved the US$2\.5 million Electricity Access Expansion Project supported by the Global
Partnership for Output Based Aid in July 2016 to provide targeted subsidies to low-income households to
help new customers pay the initial connection fee and basic in-house wiring for low-income households
which is a major impediment to increasing the electrification rate\. In 2017, SIEA advised the World Bank
that the gazettal of the tariff regulation, which enacted a new retail tariff based on the cost of service
study and tariff review, had occurred with new tariffs effective in January 2017\. The tariff regulation
resulted in a 20 percent decrease in tariff for large commercial customers and between a 4 percent and
10 percent decrease in tariff for residential customers\. In addition, the tariff regulation benefited low-
consumption users by introducing a low-consumption tariff (a baseline tariff) which was lower than the
prevailing tariff rate\.
Other Unintended Outcomes and Impacts
82\. No unintended outcomes or impacts were recorded by SISEP\.
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A\. KEY FACTORS DURING PREPARATION
83\. A primary objective of SISEP was the reform of SIEA, specifically strengthening of management as
a prerequisite to achieving the SIGâs energy sector goals\. There were several options that could have
supported the objective of strengthening management\. They included (a) award of one or more electricity
supply and/or distribution concessions to private companies, (b) award of a utility management contract
to an outside firm for a specified period with specific performance requirements, or (c) engagement of
external senior managers and/or expert staff to support utility management and operation for a specified
period and help further train local utility managers and staff\.
84\. Each of the three options for improving management and operational efficiency in SIEA was
considered\. An initial concept was to make arrangements for the electricity and Honiara water utility
(SIWA) together, especially because SIWA was the largest debtor to SIEA\. However, SIWA did not
participate, and the management contract concept was developed for SIEA alone\. Over 30 potentially
interested companies were surveyed regarding their interest in purchasing these franchises, but none
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expressed interest in submitting bids\. Five companies did express some potential interest in bidding on a
management contract if suitable government guarantees were in place\.
85\. However, as time proceeded, the market for a potential electricity management contract
tightened, with prices for these services increasing sharply, and guarantee requirements over and above
what the Solomon Islands would be able to provide under the Honiara Club agreements\. In the meantime,
the experience of the FEA, which had opted to appoint five expatriate managers as part of its own
reorganization in 2002, continued to show strong performance\. In light of the emerging FEA experience
and the increasingly less-favorable results with management contracts, the SIG and the World Bank
designed a package of reforms which included the hiring of several senior staff in key positions\. The
proposal also included a twinning arrangement between SIEA and FEA\.
86\. Partnership arrangements\. The World Bank worked in close collaboration with partners to
provide support in improving the performance of SOEs in the Solomon Islands\. While there was limited
interest from commercial entities to participate in the energy sector, SIEA partnered with a few
development partners to further energy sector goals\. RAMSI/Australian Aid supported the electricity
pricing and regulation study as well as the Rural Electrification Master Plan\. A study to establish the legal
framework for rural electrification was also planned\. The World Bank and other partner agencies worked
in a complementary fashion to further development\.
B\. KEY FACTORS DURING IMPLEMENTATION
87\. SISEPâs initial focus on strengthening management, that is, hiring of key senior staff, produced
early gains which were key to achieving successful outcomes\. These early gains are attributed to improved
corporate governance, with appointments to the SIEA board being carried out under the SOE regulations
of 2010 and improved FM and internal audit functions within SIEA\. The success of the commercialization
program was crucial in producing a virtuous cycle with regard to objectivesâimproved financial health
allowed SIEA to invest in capital expenditure to improve service and increase revenue, which in turn led
to a healthier balance sheet\. During 2012 and 2013, the SIEA board approved a corporate restructuring
that established an internal audit group focused on meter reading, billing reconciliation, and reducing
theft/meter bypass and created a capital projects management team charged with the planning,
oversight, and delivery of new projects\.
88\. SIEAâs measures in implementing the commercialization program were necessary but not
sufficient to put its finances on a sustainable trajectory\. An important factor was the restructuring of
SIEAâs debt which was long-standing and needed government intervention without which it was unlikely
that SIEAâs financial recovery could be maintained\. As mentioned earlier, SIWA was SIEAâs largest debtor\.
The SIG had restructured SIWAâs debt to SIEA in 2008 and it was a condition to IDAâs financing of SISEP\.
However, this debt settlement agreement was not successful\. SIWA continued to operate
noncommercially, did not have the capacity to pay its power bills, and had accumulated the SBD 36\.7
million debt to SIEA in the 50-month period between January 2008 and February 2012\. It was only in early
2011 that the SIG committed to reforming SIWA, recognizing that without reform at SIWA, SIEAâs largest
customer, attempts to improve the financial sustainability of SIEA were unlikely to succeed\. This had an
impact on the development of the Tina River Hydropower Scheme which required SIEA as the power
offtaker to be financially healthy\.
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89\. In May 2012, a second SIWA-SIEA debt settlement agreement was signed between the SIG
(Minister of Finance and Treasury and Minister of Mines, Energy, and Rural Electrification); SIEA; and
SIWA\. Full settlement of SIWAâs SBD 36\.7 million was structured in a way that combined SBD 20 million in
government capital injection into SIWA for onward payment to SIEA, SIEA providing SBD 7\.5 million
interest-free loan to SIWA to be repaid over 8 years, and SIEA writing off SBD 9\.2 million of SIWAâs debt\.
Importantly, unlike the 2008 debt settlement, the one in 2012 worked because SIWA was financially
restructured to operate on a commercial and sustainable basis\. SIWAâs tariffs were adjusted so that it
could cover its costs, including for electricity\. The agreement increased SIWAâs tariffs over the next three
years, established a mechanism for SIWAâs tariffs to be adjusted quarterly in line with increases in SIEAâs
tariffs, and established a mechanism for SIWAâs tariffs to be adjusted annually in line with the consumer
price index\.
90\. As mentioned, SIEA was substantially dependent on imported refined petroleum fuels for national
energy needs\. An improved financial position meant that SIEA could initiate a fuel procurement tender in
2012\. High fuel costs were a critical strategic issue for SIEA as fuel purchases accounted for around 60
percent of SIEAâs operating expenditure\. Past financial crises at SIEA had been related to cash flow issues
relating to payment of fuel bills\. A new fuel contract was negotiated for long-term supply, delivery, and
management of SIEAâs fuel stocks and maintenance and replacement of fuel storage tanks at SIEA power
stations\. The contract provided SIEA with a price that was a significant discount on regulated fuel price\.
91\. The fiscal position of SIEA continues to be strong\. SIEA started declaring dividends to the SIG in
2016 and has done so each year thereafter\. Dividends of approximately SBD 4 million are declared each
year\. In 2018, SIEA invested SBD 30 million in SIG domestic development bonds\. SIEAâs annual expenditure
on infrastructure investments totaled SBD 140 million\. The Solomon Islandsâ current electricity utility is a
vastly different operation than the utility of 2008 when SISEP was approved\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A\. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
92\. SISEPâs objectives were clearly defined and directly responded to critical issues that SIEA was
facing\. At approval, the PDO was complex in that it also described the activities to achieve the PDO in
addition to the PDO itself\. This was corrected during implementation\. SISEPâs Theory of Change was logical
and could demonstrate the results chain that led from SISEPâs activities leading to intermediate outcomes
progressing on to PDO outcomes\. SISEPâs objectives responded directly to the issue identified which was
that energy sector goals of increasing access and affordability could not be addressed until SIEA was a
viable and financially healthy entity\.
93\. At project design, there was inconsistency in describing PDO-level indicators and intermediate
outcome indicators\. The inconsistency appeared in different sections of the PAD, leaving an impression
that the Results Framework was not well thought through\. As an example, the PDO-level indicators
described in the project description section in the main body of the PAD were not consistent with the
PDO-level indicators described in annex 3 or in the Results Framework\. In addition, inconsistencies were
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apparent between the PDO results indicators in annex 3 and the table describing arrangements for results
monitoring which contained only one PDO indicator (SIEA will operate profitably and with PDO indicators
listed as intermediate indicators)\.
94\. The PDO-level indicators were adequate to measure progress and achievement of the projectâs
three-part development objective of improving operational efficiency, financial sustainability, and system
reliability of SIEA\. The indicators were relevant and time bound\. M&E arrangements were made for the
project management team in SIEA to be responsible for M&E\.
M&E Implementation
95\. There was considerable variability in the structure of the Results Framework throughout
implementation\. The intermediate outcome indicators in the PADâs Annex 3: Arrangements for Results
Monitoring were elevated to PDO-level indicators in the first ISR\. However, four indicators were also
retained as intermediate indicators leading to the same indicators being at the PDO level as well as the
intermediate outcome indicator level: (a) SAIDI, (b) SAIFI, (c) revenue generated per kWh, and (d) net
profit before tax\. There was no indication that a formal restructuring was conducted to effect these
changes in the ISR\.
96\. The first ISR after AF approval reflected changes brought about by AF investments\. The Results
Framework was amended to include new intermediate outcome indicators which corresponded to
investments that were to be made for network improvements (for example, âCommissioning of
switchboard at Ranadiâ and Kolaâa ridge substation commissionedâ) and the indicators for revenue
generated per kWh and net profit before tax were deleted at PDO and intermediate outcome levels
However, SAIDI and SAIFI remained at both the PDO level and intermediate outcome level\. The indicator
âNumber of pre-paid meters installedâ was dropped\.
97\. The Results Framework was further refined during the third and fourth restructuring\. At the
third restructuring, the Results Framework was amended and the duplication of SAIDI and SAIFI was
removed\. After the fourth restructuring, the Results Framework was amended once again with the
âRevenue generated per kWhâ and âNet profit before taxâ indicators being reinstated, the latter as an
intermediate outcome indicator\. The indicator that measured generator efficiency was dropped\.
98\. Targets for individual indicators also varied during implementation\. At times, targets were made
more stringent with the desire to be accountable for increased investments\. The more stringent targets
made sense for some indicators, for example, SAIDI and SAIFI, where one could expect an improvement
in these indexes if additional investments were being made to improve reliability\. At other times, a more
stringent target was not advisable such as the increase in ambition from 16 percent to 12 percent at the
first restructuring\. An Energy Sector Management Assistance Program study14 suggests that system loss
reductions measured as a combination of technical (for example, heat or copper losses, magnetic losses,
and transformation losses) and nontechnical losses (for example, commercial losses, metering failures
and theft) are difficult to separate\. In SIEAâs case, technical losses of approximately 11 percent have been
assumed\. A residual target of 1 percent for nontechnical losses was practically not feasible for SISEP\. Some
14Tallapragada, P\., M\. Shkaratan, A\. Izaguirre, J\. Helleranta, S\. Rahman, and S\. Bergman\. 2009\. Monitoring Performance of
Electric Utilities: Indicators and Benchmarking in Sub-Saharan Africa\. , World Bank\.
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restructurings were conducted with short interval periods with indicator targets amended frequently\.
Considering that the change in targets was not material to the projectâs outcome, frequent changes in
targets was inefficient\.
99\. SISEPâs data was collected and analyzed in a methodologically sound manner\. The methodology
for most indicators was consistent from the first ISR to the end of the project\. However, the methodology
for the collection ratio indicator was not consistent from before project approval and continuing through
project implementation\. At the end of project implementation, the collection ratio was 60 percent, lower
than the baseline figure of 72 percent at project approval\. The ICR team could not verify that the collection
ratio at the start of the project and at the end of the project was measuring what it purported to measure\.
There was substantial variation in collection ratio measurement leading to a situation which made
comparisons at project start and end not possible, leading to the indicator being unusable\. A possible
explanation was that newer IT systems for billing installed as part of SISEP may have contributed to this
mismatch\. Systems that did the billing were not the same at project start and at project close\. It would
have been beneficial to revisit this target earlier in project implementation rather than at a later stage\.
The collection ratio was therefore not used in assessment of outcomes\.
100\. There were instances where the project team took proactive action to correct the stated target
to one that is more appropriate and achievable due to project activities, but without compromising on
the ambition of the outcome to be achieved\. These actions are evident in the indicators âAverage number
of debtor days to collect billed revenueâ and âNumber of days between due date of tariff and, if not paid,
notice of arrearsâ\. These increases show that the project team was aware that there were shortcomings
in the estimation of an appropriate target and level of ambition and took action to correct it\.
101\. At first, the project team required assistance to conduct effective M&E implementation\. ISRs
reported that an increase in the quality and detail of reporting on the progress toward the projectâs
Results Framework indicators was required\. This was to be expected with the World Bank and SIEA
working together for the first time\. By project close, however, M&E functions were being implemented in
a sound manner and processes are likely to be sustained after project closing\.
M&E Utilization
102\. The project management team at SIEA produced monthly reports which reported on progress
toward indicators\. In addition, specific performance indicators were added to the contracts of the two
professional utility managers\. SIEA reported on their progress on a quarterly basis\. An arrears report was
mandated for each Board meeting to monitor non-paying SOEs and government entities\. The general
manager reported monthly to SIEAâs board on the type of routine generation and network maintenance
activities carried out, including system outages and analysis and estimated costs\.
103\. In addition to M&E conducted to inform its operations and report to its board, SIEA also gathered
information from customers through a customer survey which allowed it to recalibrate its services based
on consumer demand\. Customer surveys are held regularly, with the most recent being held in 2018\. One
example of using consumer opinion to retool its services was provided to the ICR team by project
counterparts\. One request that came from customers was that more information on the mobile top up
system was desirable\. SIEA responded by conducting an information campaign\. In addition to activities at
its headquarters in Ranadi, areas with heavy foot traffic were targeted, for example, at Hyundai Mall\.
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Justification of Overall Rating of Quality of M&E
104\. SISEP was successful in being able to monitor progress and providing evidence that development
objectives as planned for at project start had been met\. In addition to requirements for reporting to IDA,
SIEA had instituted its own processes of reporting to its board, members of which were avid consumers
of data provided\. However, there were substantial shortcomings in the design of M&E before approval as
described\. Opportunities during implementation to re-examine the Results Framework were not used\.
The overall quality of M&E is rated as Modest\.
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
105\. Procurement\. At SISEPâs approval in 2008, assessment of SIEAâs capacity to implement
procurement actions for the project rated the risk as High\. SIEAâs structure and capacity was deemed
insufficient and expenditure control was taking place in a fragmented arrangement\. The legal and
regulatory framework lacked the operational detail necessary for efficient procurement implementation\.
There was an absence of procurement planning and procedural tools and the limited number of local
contractors increased the possibility of saturation, collusion, and nepotism\.
106\. Project design included a specific action to mitigate the above risks and support SIEA which until
then had no experience with implementing World Bank procurement procedures\. The action plan
included (a) appointment of a commercialization manager with World Bank procurement experience; (b)
strengthening of the National Competitive Bidding (NCB) process with the first NCB packages; (c)
implementation of a procurement planning cycle and the development and implementation of a
procurement filing system; (d) finalization and implementation of audit procedures; and (e) training for
SIEA staff on World Bank procurement procedures\.
107\. By 2014, at AF approval, several lessons were learned, particularly from past International
Competitive Bidding (ICB) contracts, and were incorporated into the AF project design\. Lessons included
the following: (a) qualification requirements need to be appropriate to the size and complexity of the
work; (b) suitable packaging of contracts into works of sufficient scale is required to attract more
international bidders to a small, unfamiliar, and remote location like the Solomon Islands; and (c) cost
estimates need to be more carefully prepared and procurement planning and execution needs to be
carried out in a more timely manner\.
108\. The World Bank conducted a post review of signed contracts in January 2019 (two months
before project closure)\. The review included contracts for the manager contracts, procurement specialist,
and environment and social safeguards specialist\. The review showed that the agreed procedures were
followed, the relevant documents on the selection process were on file, and the selected consultants were
all on the ground with services ongoing at the time of the review\. It was recommended that SIEA should
improve the filing system where procurement activities and documents are stored to make documents
immediately available\.
109\. FM\. The FM assessment at SISEPâs approval in 2008 rated the risk as Moderate considering the
total financial commitment to the program, the capacity of SIEA and the structure and complexity of the
project\. FM arrangements were assessed as adequate\. The assessment flagged that government capacity
was dependent on expatriate support but that the accountant general and auditor general were
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increasingly effective\. SIEA had no experience in the delivery of World Bank projects\. To mitigate this risk,
project design included funding for finance training\. The SIG hired a professional accounting firm to assist
SIEA to put in place all required financial reporting systems for this project\.
110\. During implementation, the FM assessment conducted at the time of AF approval noted that
there had been significant improvements in SIEAâs FM processes and systems which were reflected in (a)
an unqualified entity audit in 2012, (b) the 2012 entity audit being completed within the statutory time
period after the end of the fiscal year, and (c) SIEA implementing a new and more robust billing and ledger
system, effective January 1, 2014\.
111\. An FM implementation review was conducted in March 2018\. FM performance was then
reassessed to Moderately Satisfactory because while accounts were well maintained, improvement was
required in managing the commitments register on active projects\. The commitments register is an
important management tool to monitor all committed funds versus project-available funds and help
identify project funds that remain uncommitted and is an effective way of monitoring contract payments\.
SIEA is tasked with updating the commitments register to monitor active projects\. At project closing, no
material issues are evident in the FM area\.
112\. One year before project closure, US$3\.3 million was canceled as SIEA, now financially on its feet,
decided to fund some of SISEPâs activities from its own funds\. At SISEPâs closing, approximately US$0\.9
million is expected to remain undisbursed\. On one hand, this can be viewed as a positive developmentâ
SISEP had met its objectives to make SIEA financially sound and could now fund its own capital
expenditures\. On the other hand, project funds remaining undisbursed at the end of the project is likely
due to inexact estimates of funds needed at the time of cancellation\.
113\. Safeguards\. At SISEPâs approval in 2008, the projectâs environmental category was rated as C,
which reflected the fact that proposed investments were essentially replacement of distribution feeders,
upgrading of other network distribution elements including transformers to reduce network losses, and
replacement of existing meters with prepaid meters\. Existing generation facilities were being provided
with the necessary spare parts to improve the reliability and efficiency\. SISEPâs focus was on institutional
strengthening, technical assistance, and commercialization through improved FM, improved accounting
systems, and operational IT support\. Hence, no environmental or safeguard policies were triggered by
investments proposed in the loan approved in 2008\.
114\. The environment category for SISEP changed from Category C under the original project to
Category B under the AF as new activities that were being financed triggered OP/BP 4\.01 (Environmental
Assessment)\. Activities financed by the AF took place within the confines of existing facilities on land
leased by SIEA\. There was no land acquisition or involuntary resettlement arising from AF activities\. SISEP
had an urban context and no indigenous peoples as defined under OP 4\.10 (Indigenous Peoples) were
located in the projectâs area of influence\. The projectâs ESMF stated that the proposed new subprojects
would cause no major social or environmental impacts and that minor impacts could be readily mitigated
and resolved\.
115\. During implementation of AF activities, SIEAâs contractor managed environment and social
matters during construction of capital works with oversight by SIEA\. As part of the capital works, SIEA
managed the planned temporary closure of a Honiara road for approximately one week\. The closure of
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an approximate 60 m section of road (30 m on either side of the site of work) restricted the entrance to
several houses and canteens\. SIEA and the contractor notified residents and maintained pedestrian access
during the majority of construction so as to minimize disruption\. The details of any compensation of the
businesses along the section of road were shared with the World Bank before construction\.
C\. BANK PERFORMANCE
Quality at Entry
Rating: Satisfactory
116\. SISEP was conceptualized, designed, and approved at a time that was critical for SIEA\. The agency
was close to insolvency and had difficulty in obtaining fuel to maintain its operations\. Strengthening SIEA
in operational, financial, and quality of service areas was critically important for SIEA to perform basic
functions of a power utility\. SISEP was the first financial engagement undertaken by the World Bank in the
energy sector in the Solomon Islands\. Emerging from conflict, needs were huge, but no financiers would
partner with SIEA as they needed a viable and healthy power utility to do business with\. An IDA grant to
restore the health of SIEA was the right choice\. SISEP was therefore highly suited to support SIEA at that
point in time\.
117\. While SISEP was the World Bankâs first financing package in the Solomon Islands, support in the
form of technical assistance and expertise had been ongoing since 2005\. The initial World Bank
engagement in 2005â2007 involved conducting diagnostics on both the power and water utilities and
providing expertise on financial recovery plans for SIWA and SIEA\. This made sense because the
performance of both utilities had a substantial impact on each other\. One proposed reform was a
management contract/concession covering both SIWA and SIEA in 2007 which was not supported\. A
power management contract was tendered in 2007, but there was not enough interest\. Regarding
restructuring SIWA, there was no political or board or management support in 2007\. Reform efforts then
focused on SIEA and SISEP was approved with IDA financing in 2008\.
118\. SISEP was designed to place the energy sector of the Solomon Islands on a sustainable footing\.
Key operating aspects that helped neighboring Pacific Island states, for example, the FEA, achieve success
were considered and largely incorporated in the design of SISEP\. These included (a) the adoption of a
strong FM system, with a focus on collection, with customers who are late in paying their tariffs receiving
notices within 2 to 3 days after missed payments; (b) the introduction of prepaid meters, for which prepaid
cards could be bought through local retail stores; (c) commitment from the Government to exercise due
diligence in payment collections and, if necessary, cut off non-paying customers including SOEs; (d)
outsourcing of maintenance and repair services while inspecting the level of services provided by their
contractors; and (e) an active long-term human resource planning methodology, focusing on on-the-job
training for both management and operators\.
119\. At approval, SISEP met readiness criteria for implementation\. Procurement Plans had been
formulated for the first 18 months and a General Procurement Notice was published\. Advertisements and
Expressions of Interest notices had been placed to procurement of the commercialization component\.
Procurement packages for IT systems had been defined and a Request for Expressions of Interest was
ready to be published as soon as the project had been approved by the Board\.
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120\. Project design acknowledged and mitigated for critical risks\. Two substantial risks were identified\.
The first included a lack of capacity in the Government which was mitigated by making sure that the
commercialization manager was appointed with qualifications acceptable to IDA\. This was a condition of
effectiveness\. A second significant risk was a highly volatile political environment and the lack of
commitment in commercializing SIEA\. To mitigate this risk, the SIG agreed to restructure SIEAâs debt
before negotiations commenced for SISEP\.
Quality of Supervision
Rating: Moderately Satisfactory
121\. Project supervision was substantial after project effectiveness\. Supervision missions were carried
out regularly, averaging every four months, including field visits and physical checks of investments\. The
projectâs task team leaders were based in the Sydney office during the entire life of the project\. This
resulted in well-facilitated client engagement\. The World Bank office in Honiara also provided support as
needed\. Critical issues were identified early and collaborative solutions were found with SIEA\. The project
record shows evidence of detailed ISRs and Aide Memoires\.
122\. Project teams were sensitive to needs that arose during implementation and accordingly
restructured as needed\. This ICR could not find evidence of a midterm review (MTR) though it is likely that
frequent restructuring played the same role as would an MTR\. The project was restructured four times,
one of which also included the AF\. The last two restructurings were at the tail end of the projectâone
and two years before closure\. It could have been useful to consolidate these two restructurings\. The
project was extended thrice, which provided time needed for completion of activities without
compromising the projectâs performance\.
Justification of Overall Rating of Bank Performance
Overall Rating of Bank Performance: Moderately Satisfactory
123\. The quality of entry and quality of supervision aspects have been assessed to be Satisfactory and
Moderately Satisfactory, respectively\. A few shortcomings as described above were not sufficiently severe
to compromise the project\. The World Bank team and government counterparts worked to keep the
project on track and brought the project to a satisfactory closure\.
D\. RISK TO DEVELOPMENT OUTCOME
124\. The main risk to a sustainable development outcome is government commitment to the SOE
Act of 2007 and regulation of 2010\. However, it is important to note that SIEAâs performance in turning
things around was strongly predicated on using provisions in the SOE Law\. Improved corporate
governance followed from appointments to the SIEA Board being carried out under the SOE Law\. SIEAâs
road to financial sustainability was helped by the SOE Law which required SOEs to operate profitably\. SIEA
was able to disconnect non-paying consumers, including government agencies\. Today government
commitment to the SOE Act appears to be firm\. If the governmentâs commitment wavers, the risk of
utilities falling back into insolvency is real\.
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125\. There is also a risk that affordability and access goals will remain a challenge\. The risk to their
alleviation is mitigated by the fact that ongoing efforts by the SIG and other development partners are
directly tackling these issues, including the World Bank through its SIEAREEP project\. SISEP has achieved
its objective in strengthening SIEAâs position to contribute to holistic sector development\. It is likely that
financial sustainability will persist despite investments in improving access and affordability based on
financial projections\. SIEA is now in a better position to strike and maintain the right balance of the
different sector objectives embodied in Sustainable Development Goal 7 (Ensure access to affordable,
reliable, sustainable and modern energy for all)\.
V\. LESSONS AND RECOMMENDATIONS
126\. A robust regulatory environment is vital to successful reform of SOEs\. The SOE Act of 2007 and
2010 SOE regulations provided a robust framework for SOE governance accountability and performance\.
The law required SIEA to operate profitably, a consequence of which is that SIEA operated as a private
firm to the extent possible\. The law set down corporate reporting requirements\. The process to select and
appoint directors needed to follow the law with members selected on the basis of technical and
professional expertise rather than political appointments\. The financing of community service obligations
was required to be transparent following an equally open planning and costing process\. The SOE law was
the backbone of the effort to turn around SIEA, without which it is doubtful that the project could have
succeeded\.
127\. Political commitment is an essential ingredient to success in turning around SOEs\. The crisis at
SIEA prompted sufficient government commitment to enable reforms to proceed\. The Ministry of Finance
had a large role to play in removing debt from SIEAâs accounts\. A deal was brokered to have SIWAâs debts,
which had accumulated from 2008, paid to SIEA\. Electricity bills of other government entities were also
paid on time with the Ministry of Finance and Treasury making them on behalf of other ministries\.
Reforms were implemented at SIWA and were instrumental in improving the situation at SIEA\. The
Government did not continue financing poorly performing SOEs but actively worked toward finding and
implementing a sustainable solution\. Without this intervention, infusion of financing either the
government, IFIs, donors, and so on would not have been sufficient\.
128\. Technical assistance and expertise are critical components to SOE reform\. SISEP provided both
technical assistance/expertise as well as financing to SIEA\. However, the technical assistance component
played a crucial part in SISEPâs success\. The component that addressed management strengthening was
key in providing a foundation for SIEAâs success\. Subsequent achievements in financial operations or
technical improvements were dependent on having a strong and capable management structure\. Building
institutional capacity should be a required component of any financing that is provided to entities with
low capacity as it is the only way to ensure the achievements are sustainable\.
129\. Targeted assistance in low capacity environments can be essential to successful project
implementation\. As noted, the project experienced delays in implementing its Procurement Plan
notwithstanding the World Bank providing close supervision and support to procurement activities\.
Project or procurement officers with experience in implementing World Bank/donor projects would have
been beneficial to SISEP\. The lack of a project management team was remedied in the World Bankâs
follow-on SIEAREEP where key project management positions were identifiedâprocurement officer,
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gender specialist, solar engineer, manager construction, and manager projects\. The project management
team is expected to address capacity constraints\. In terms of procurement, a positive impact on timely
submission and quality of bidding documents for large works contracts is expected, thereby contributing
to project success\.
\.
\.
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ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: A\. To improve operational efficiency of SIEA
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
System losses Percentage 27\.00 16\.00 18\.00 17\.30
31-Dec-2007 31-Dec-2011 31-Mar-2019 29-Jun-2018
Comments (achievements against targets):
Indicator achieved at 104 percent\. System losses as measured by technical and non-technical losses demonstrated a steady decline through the project
implementation period\. Losses had declined by 6 percentage points at the time Additional Finance was approved (from 27 percent at project start to 21
percent in 2014), and 17\.3 percent at project close\. Project activities directly responded to the outcome of system loss reduction
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Average number of debtor Days 360\.00 30\.00 35\.00 33\.61
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days to collect billed revenue 31-Dec-2007 31-Dec-2011 31-Mar-2019 31-Mar-2019
Comments (achievements against targets):
Substantial improvement in average number of debtor days to collect billed revenue with an achievement ratio of 104 percent\. Project interventions,
especially in areas of management strengthening, are directly relevant in achievement of this outcome\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Number of days between due Days 365\.00 15\.00 15\.00
date of customer bill, and if
not paid, notice of arrears 31-Dec-2007 31-Dec-2011 31-Mar-2019
Comments (achievements against targets):
Indicator achieved with an achievement ratio of 100 percent\. Customer is provided with a bill at the end of a billing period with a due date of 15 days after
the billing period\. Included in the bill is a table indicating that the bill will be in arrears (called aged debts) 30 days after the billing period, i\.e\., 15 days after
the due date\. When the bill is in arrears (15 days after the due date), the customer is put on the disconnection list\. The bill indicates that no further notice
is provided\. Therefore, notice that the bill would be in arrears is provided at the end of the billing cycle (0 days) and the customer has been given 15 days
between the bill due date and being in arrears\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Quarterly financial Text N Y Y
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management reports, and 31-Dec-2007 29-Jun-2018 31-Mar-2019
rolling projections for SIEA
performance within 14 days
after end of each quarter
Comments (achievements against targets):
Indicator was achieved at achievement ratio of 100 percent and can be directly attributed to project supported activities of strengthening
management\. New management instituted new procedures and company rules which had a direct bearing on the production of quarterly financial
management reports and projections within 14 days after the end of each quarter\.
Objective/Outcome: B\. To improve system reliability of SIEA
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
System Average Interruption Minutes 51840\.00 848\.70 2000\.00 1757\.60
Duration Index (SAIDI)
31-Dec-2007 29-Jun-2018 31-Mar-2019 29-Jun-2018
Comments (achievements against targets):
Indicator was achieved with an achievement ratio of 112 percent\. SISEP's financing of the system reliability component directly contributed towards
achieving this indicator\.
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
System Average Interruption Minutes 816\.00 150\.00 85\.00 17\.50
Frequency Index (SAIFI)
31-Dec-2007 31-Dec-2011 31-Mar-2019 31-Mar-2019
Comments (achievements against targets):
Indicator achieved with an achievement ratio of 179 percent\. SISEP's financing of the system reliability component directly contributed towards achieving
this indicator\.
Objective/Outcome: C\. To improve financial sustainability of SIEA
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Collection ratio Percentage 72\.00 90\.00 70\.00 60\.00
31-Dec-2007 31-Dec-2011 31-Mar-2019 29-Jun-2018
Comments (achievements against targets):
The collection ratio indicator was deemed to contain significant methodological errors which precluded it from being a viable measure of improved
collections and was therefore not included in the ICR's analysis\. However, SIEA's net profitability, an intermediate indicator in ISRs was deemed adequate
to substantiate the PDO and was elevated to a PDO level indicator for purposes of this ICR's assessment\.
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Revenue per Kwh generated Text SB$ 1\.39/KWh SB$ 3\.00/KWh SB$ 4\.5/KWH SB$ 4\.64/KWh
30-Jun-2008 31-Dec-2011 31-Mar-2019 29-Jun-2018
Comments (achievements against targets):
Indicator achieved with an achievement ratio of 103 percent\. Achievement of this indicator can be directly attributed to SIEA's commercialization program
supported by SISEP\.
A\.2 Intermediate Results Indicators
Component: Component 1 - Strengthening Management
Component: Component 2 - Financial Operations
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Net Profit before tax Text Loss SB$ 44M Profit SB$ 25M Profit SB$ 98M SB$ 80\.1M
30-Jun-2008 31-Dec-2011 31-Dec-2018 31-Dec-2018
Comments (achievements against targets):
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Component: Component 3 - Technical Operations
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Commissioning of one Text N Y N
12MVA transformer at
Lungga Power Station 13-Feb-2014 31-Mar-2019 15-Jan-2018
Comments (achievements against targets):
Works for commissioning of the 12MVA transformer at Lungga Power Station are complete\. SIEA is awaiting completion of works (not included in SISEP)
for commissioning the plant as it would be more cost-effective on a system-wide basis\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Commissioning of 5MVA Text N Y N
33kV/11kV transformer and
a second 33 kV switchboard 13-Feb-2014 15-Jan-2018 15-Jan-2018
at Ranadi
Comments (achievements against targets):
Works for commissioning of 5MVA 33kV/11kV transformer and a second 33 kV switchboard at Ranadi are complete\. SIEA is awaiting completion of works
(not included in SISEP) for commissioning the plant as it would be more cost-effective on a system-wide basis\.
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Kola'a Ridge 33/11kV Text N Y N
substation commissioned
with one 7\.5MVA 13-Feb-2014 31-Mar-2019 15-Jan-2018
transformer
Comments (achievements against targets):
Works for commissioning of the 33/11kV substation at Kola'a Ridge with one 7\.5MVA are complete\. SIEA is awaiting completion of works (not included in
SISEP) for commissioning as it would be more cost-effective on a system-wide basis\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Feeder 12 load relocated Text N Y Y
from Lungga 11kV generation
bus to East Honiara 13-Feb-2014 31-Mar-2019 31-Dec-2018
Substation
Comments (achievements against targets):
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B\. KEY OUTPUTS BY COMPONENT
Objective/Outcome I: To improve the operational efficiency of SIEA
I\.A System Losses
I\.B Average number of debtor days to collect billed revenue
I\.C Number of days between due date of tariff and if not paid notice
Outcome Indicators of arrears
I\.D Quarterly financial management reports and rolling projections of
SIEA performance within 14 days at the end of each quarter
I\.a Improved support for decision making â regular reports on key
performance indicators used to make investment decisions
Intermediate Results Indicators I\.b Improved capacity to manage SIEA operations â regular Board
meetings and decisions made for SIEA strategy and operations
1\. Key staff hired (Technical General Manager, Commercialization
manager, Independent Board director)
Key Outputs by Component
2\. Training provided (Finance, Engineering)
(linked to the achievement of the Objective/Outcome I)
3\. Studies conducted on tariff review, asset valuation, PPAs
Objective/Outcome II: To improve system reliability of SIEA
II\.A System Average Interruption Duration Index (SAIDI)
Outcome Indicators II\.B System Average Interruption Frequency Index (SAIFI)
II\.a Commissioning of one 12MVA transformer at Lungga Power
Intermediate Results Indicators
Station
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II\.b Commissioning of 5MVA 33kV/11kV transformer and a second
33kV switchboard at Ranadi
II\.c Kolaâa Ridge 33/11kV substation commissioned with one 7\.5MVA
transformer
II\.d Feeder 12 load relocated from Lungga 11kV generation bus to
East Honiara Substation
1\. Rehabilitation of Generation infrastructure
2\. Rehabilitation of transmission and distribution infrastructure
Key Outputs by Component
3\. Support to Ownerâs Engineer â supervision of distribution,
(linked to the achievement of the Objective/Outcome II)
rehabilitation, and generation upgrades
Objective/Outcome III: To improve the financial sustainability of SIEA
Outcome Indicators III\.A Revenue per kWh generated
III\.B SIEA profitability
Intermediate Results Indicators III\.a Improved cash flow position as evidenced through unqualified
financial audits
Key Outputs by Component 1\. Key staff hired (Technical General Manager, Commercialization
(linked to the achievement of the Objective/Outcome III) manager, Independent Board director)
2\. Training provided (Finance, Engineering)
3\. Technical assistance provided for improved financial management,
accounting, procurement processes
4\. Reduction of non-technical losses, improved collections, new IT
system installed
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ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A\. TASK TEAM MEMBERS
Name Role
Preparation
Supervision/ICR
Maria Isabel A\. S\. Neto Task Team Leader(s)
Zhentu Liu Procurement Specialist(s)
Stephen Paul Hartung Financial Management Specialist
Jennifer Appo Team Member
Janet Funa Team Member
Renee Berthome Team Member
Kim Dagmar Baverstock Team Member
Ross James Butler Safeguards Advisor
B\. STAFF TIME AND COST
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY06 1\.650 41,970\.77
FY07 8\.965 133,501\.71
FY08 25\.629 727,988\.01
FY09 0 84,703\.30
FY10 0 12,168\.30
FY16 0 4,892\.24
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Total 36\.24 1,005,224\.33
Supervision/ICR
FY09 15\.481 100,033\.65
FY10 8\.712 46,782\.75
FY11 13\.176 45,198\.67
FY12 17\.605 55,666\.62
FY13 13\.977 69,339\.32
FY14 18\.368 87,115\.05
FY15 17\.009 58,555\.33
FY16 22\.267 93,859\.50
FY17 19\.165 96,021\.42
FY18 7\.575 75,861\.32
FY19 12\.371 97,049\.89
FY20 5\.367 39,066\.50
Total 171\.07 864,550\.02
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ANNEX 3\. PROJECT COST BY COMPONENT
Amount at Approval15 Actual at Project Percentage of Approval
Components
(US$M) Closing (US$M) (US$M)
Strengthening Management 4\.00 3\.69 92\.3
Financial Operations 0\.7 0\.64 91\.4
Technical Operations 8\.0 7\.37 92\.1
Contingency 0 0 0
Total 12\.7 11\.7 92\.1
15Amounts at Approval indicate amounts that were approved at project approval\. It includes amounts added during approval of
additional financing and accounts for exchange rate movements and amounts that were cancelled at project restructuring\.
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ANNEX 4\. EFFICIENCY ANALYSIS
ECONOMIC AND FINANCIAL ANALYSIS OF SOLOMON
ISLANDS SUSTAINABLE ENERGY PROJECT
1\. The project has achieved the key outcomes with high efficiency based on economic analysis and
financial analysis (project level) as described herein, which is conservative and robust to
sensitivity analysis\.
ECONOMIC ANALYSIS
2\. The economic analysis at completion was conducted at project level considering that major
economic benefits are the joint result of implementing all project components\. In sum, at
completion, the project has an NPV of US$7\.12 million (at a 10 percent discount rate) while
Economic Internal Rate of Return (EIRR) stands at 24\.3 percent, which indicates great Value for
Money from the project\. Taking environmental benefits into consideration, the NPV increased to
US$13\.31 million and the EIRR improved to 27\.1%\. A summary of the results, assumptions and
detailed analysis is presented in following sections\.
Table A4\.1\. Summary of Economic Benefits and Costs (US$)
ECONOMIC BENEFITS
Avoided Fuel Cost 304,770
Reduced Outage Cost 13,063,619
ECONOMIC COSTS
Capital Investment 5,879,352
O&M 366,066
NET ECONOMIC BENEFIT 7,122,971
EIRR 24\.3%
Avoided Green Gas Emission 6,182,994
NET ECONOMIC BENEFIT (incl\. environmental benefits) 13,305,965
EIRR (envir\. benefit adjusted) 27\.1%
3\. Two economic benefits considered and quantified in this ex-post economic analysis are avoided
fuel cost and reduced outage cost\. This is in line with the analytical framework established at
project appraisal and additional financing appraisal\. The first direct benefit of implementing this
project is to reduce energy losses, which enables the delivery of same services from less fuel
consumption\. By comparing actual annual power generation to electricity sales in SIEAâs audited
annual report, it was evident that incremental reduction of energy losses is achieved with the
project implementation\. The other key benefit is increased system reliability, in the form of
reduced outage and in customer saving through reduced requirement for auto-generation back-
up systems\. In this ex-post exercise, the reduced outage cost was estimated by using the actual
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outage data as well as annual average retail tariff figures\. However, no information is available
on the reduced back-up generation systems due to better system reliability, hence the benefit
is unable to be quantified\. In addition, there are several secondary economic benefits from the
implementation of the project, including reduced operation and maintenance (O&M) costs,
better voltage profile, better power harmonics, and more system stability\. They are
nevertheless less significant compared to avoided fuel cost and reduction of outage\. A
disproportional level of data collection and modeling efforts are requested to quantify these
benefits\. For these reasons, the analysis is conservative in underestimating project benefits\.
4\. Avoided Fuel Cost\. Economic Benefit from Avoided Fuel Cost is only US$0\.3 million compared to
projected US$9\.0 million at appraisal\. Two main reasons:
⢠Much lower-than-expected crude oil price after 2008 financial crisis leads to less saving
in fuel cost\.
⢠More importantly, our best educated estimation of non-technical losses is much higher
than the baseline in the original economic analysis\. Among total system losses, it was
widely accepted that reduction of non-technical loss cannot be counted as economic
benefit because they are mainly transfer of benefits between entities within an
economy\. And reduction of technical losses is the only source of avoided fuel cost in this
project\. However, as pointed out by Sinclair Knight Merz in its âSolomon Islands
Electricity Authority - Loss Reduction Study for the Honiara Network (2011)â, in practice
it is difficult to determine the balance between the technical and non-technical losses
without precise measurement\. Therefore, the key to calculate benefit here is to best
estimate: 1) actual technical losses during the period of project implementation, and 2)
the baseline of technical losses at the start of the project\. Unfortunately, neither piece
of information was clear\.
⢠The alternative approach is to determine 1) actual non-technical losses during the
period of project implementation, and 2) the baseline of non-technical losses at the start
of the project\. Then the difference between total losses and non-technical losses is the
technical losses\.
⢠Actual non-technical losses during the period of project implementation was able to be
estimated based on datapoints provided in SIEAâs report\.
⢠However, there were three different sources on baseline of non-technical losses at the
start of the project\. As shown in the scenario analysis below, economic NPV of avoided
fuel cost is very sensitive to the baseline of non-technical losses at the start of the
project\. And it was clear that, if 6% as implied at appraisal is used, the NPV becomes
significantly larger\.
Table A4\.2\. NPV Scenario Analysis: Avoided Fuel Cost to Non-Technical Loss Baseline
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Economic NPV Scenario Analysis: Feul Saving to Non-Technical Loss Baseline
Non-Technical Loss Rate Baseline in 2010 304,770
Implied At Apraisal 6\.0% 8,324,863\.14
SIEA management estimate - Lower Range 10\.0% 2,978,134\.62
SIEA management estimate -Higher Range 12\.0% 304,770\.37
SKM estimate 15\.0% (3,705,276\.02)
⢠After careful examination, 12% was selected as the best-estimated non-technical loss
rate baseline in 2010 because all other options are not sensible\. As per SIEAâs annual
report, the non-technical loss rate in 2012 is 12%, itâs reasonable to argue that the non-
technical loss rates in 2011 and 2010 are unlikely lower than 12%\. Also, if 15% was
adopted, it would leave the technical loss baseline at 6\.92%, which is not practical
considering the average technical loss during project implementation (2010-2018) is at
a much higher level of 10\.42%\.
⢠In conclusion, with a baseline non-technical loss of 12%, NPV of avoided fuel cost was
US$0\.30 million\.
5\. Reduced Outage Cost\. The estimated economic benefit from reduced outage cost is also lower
than expected\. Itâs worth pointing out that annual retail tariff (customerâs willingness to pay,
âWTPâ hereinafter) is used to gauge the cost of outage since there is no known estimate of
outage costs available for the Solomon Islands\. Average annual retail tariff is US$0\.76/kwh,
which is lower than the assumption of US$1/kwh in the additional financing appraisal document\.
This can largely explain why estimated economic benefit of US$13\.06 million from reduced
outage cost is lower than the projected benefit of US$20\.06 million at additional financing
appraisal\. In addition, during project implementation, SIEA installed several generators using its
own capital and findings from ADB and other sources\. However, itâs hardly possible to
distinguish what percentage of reduced outage results from our project or generator addition\.
Also, one important reason that SIEA was able to deploy its own funds and attract new external
funding in growing its generation capacity is the implementation of this project, which put SIEA
in sound financial footing and better operational efficiency\.
Table A4\.3\. Customerâs Willingness to Pay (WTP) Estimate
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WTP Estimate US$/Kwh
2009 -
2010 0\.515
2011 0\.675
2012 0\.807
2013 0\.870
2014 0\.927
2015 0\.894
2016 0\.786
2017 0\.786
2018 0\.747
2019 0\.720
2020 0\.703
2021 0\.710
2022 0\.717
2023 0\.724
6\. Data is based on actual IDA grant and credit disbursement as well as operating data reported by
SIEA from 2010 to 2018\. Key assumptions are listed below\.
⢠Total capital investment was US$11\.72 million, 68\.94% of planned original and additional
financing\.
⢠10% discount rate\.
⢠Operation and maintenance (O&M) costs are estimated at 1% of investment costs considering
improvement of efficiency after project implementation\.
⢠Load factor at 62%\.
⢠Grid emission factor for the Solomon Islands is 0\.31 tCO2 per KWh per UNDP data\.16
⢠Price for Carbon at 30 USD/tCO2\.
7\. Base case results\.
⢠As detailed in the table below, SIEA experienced substantial growth of both power generation
and sales\. Thanks to the reduction of system losses, SIEA achieved high sales growth (19%)
with lower generation growth (14%)\.
16https://www\.undp\.org/content/dam/philippines/docs/Operations/UNDP%20Environmental%20Performance%20Reporting%
20tool_Philippine%20CO\.xlsx?download
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Table A4\.4 System Generation, Losses, and Sales Comparison
WITHOUT PROJECT WITH PROJECT
System Losses Total System Losses Total
Year
Generation (incl\. auxiliary use) Sales Generation (incl\. auxiliary use) Sales
kWh kWh % kWh Year kWh kWh % kWh
2008 2008
2009 2009 78,152,447 n\.a\.
2010 83,623,118 20,063,519 23\.99% 63,559,599 2010 83,623,118 20,063,519\.0 23\.99% 63,559,599
2011 83,867,254 20,122,094 23\.99% 63,745,160 2011 83,752,049 20,006,889\.0 23\.89% 63,745,160
2012 83,558,695 20,048,062 23\.99% 63,510,633 2012 84,565,616 21,054,983\.2 24\.90% 63,510,633
2013 82,267,333 19,738,228 23\.99% 62,529,105 2013 81,101,391 18,572,286\.0 22\.90% 62,529,105
2014 86,620,779 20,782,742 23\.99% 65,838,038 2014 84,911,433 19,073,395\.3 22\.46% 65,838,038
2015 88,283,458 21,181,664 23\.99% 67,101,793 2015 86,840,961 19,739,167\.6 22\.73% 67,101,793
2016 93,634,068 22,465,425 23\.99% 71,168,643 2016 92,687,032 21,518,390\.0 23\.22% 71,168,643
2017 97,751,965 23,453,424 23\.99% 74,298,541 2017 94,282,936 19,984,395\.0 21\.20% 74,298,541
2018 99,617,534 23,901,026 23\.99% 75,716,508 2018 94,979,593 19,263,084\.9 20\.28% 75,716,508
2019 105,257,578 25,254,229 23\.99% 80,003,348 2019 99,176,436 19,173,087\.9 19\.33% 80,003,348
2020 111,872,781 26,841,401 23\.99% 85,031,380 2020 104,170,008 19,138,628\.5 18\.37% 85,031,380
2021 118,867,113 28,519,537 23\.99% 90,347,577 2021 109,398,442 19,050,865\.3 17\.41% 90,347,577
2022 122,723,551 29,444,804 23\.99% 93,278,747 2022 111,686,028 18,407,280\.5 16\.48% 93,278,747
2023 126,089,325 30,252,347 23\.99% 95,836,978 2023 113,457,655 17,620,676\.8 15\.53% 95,836,978
⢠As discussed at project appraisal, the main economic benefit to be quantified is the fuel saving
from reduction of system technical losses and increased reliability from reduction of outage\.
Below is a detailed table to shown economic benefits and costs year by year\.
Table A4\.5\. Project Net Economic Benefit Evaluation
INCREMENTAL ECONOMIC BENEFITS ECONOMIC COSTS Net
Fuel Total Capital Non-Fuel Total Economic
Year Generation Consumption WTP Savings Benefit Investment O&M Cost Benfit
KWh KWh US$ US$ US$ US$ US$ US$ US$
(1) (2) (3) (4) (5) (6) (7) (8) (9)
2009 - - - - - 165,429 1,654 167,083 (167,083)
2010 - - - - - 992,093 11,575 1,003,668 (1,003,668)
2011 (677,377) - - 232,670 232,670 764,002 19,215 783,217 (550,547)
2012 369,290 - - (132,186) (132,186) 543,934 24,655 568,588 (700,774)
2013 (1,104,409) (11,114,013) (9,674,206) 386,725 (9,287,481) 1,229,067 36,945 1,266,012 (10,553,493)
2014 (132,847) 4,644,712 4,307,657 45,227 4,352,884 (57,539) 36,370 (21,170) 4,374,053
2015 1,119,844 7,099,887 6,344,283 (249,319) 6,094,964 220,323 38,573 258,896 5,836,068
2016 2,312,335 3,749,470 2,948,506 (420,963) 2,527,543 762,836 46,201 809,037 1,718,505
2017 1,217,917 7,817,071 6,144,952 (221,641) 5,923,312 2,065,368 66,855 2,132,223 3,791,088
2018 1,283,483 7,059,596 5,274,538 (315,859) 4,958,679 3,482,464 101,680 3,584,144 1,374,536
2019 362,568 7,059,596 5,080,146 (82,604) 4,997,542 1,556,003 117,240 1,673,243 3,324,299
2020 (649,393) 7,059,596 4,960,296 143,477 5,103,773 117,240 117,240 4,986,534
2021 (1,762,897) 7,059,596 5,010,852 377,770 5,388,622 117,240 117,240 5,271,383
2022 (2,872,801) 7,059,596 5,059,408 614,209 5,673,617 117,240 117,240 5,556,377
2023 (4,028,822) 7,059,596 5,110,479 863,679 5,974,158 117,240 117,240 5,856,918
2024 (5,174,304) 1,114,396 1,114,396 117,240 117,240 997,156
NPV @
10% 13,063,619 304,770 13,368,389 5,879,352 366,066 6,245,418 7,122,971
Economic Rate of Return 24\.3%
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8\. Base Case with Environmental Benefit\. Below is the breakdown of costs and benefits with
environmental benefits\.
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Table A4\.6\. Project Net Economic Benefit Evaluation (Including Environmental Benefit)
INCREMENTAL ECONOMIC BENEFITS ECONOMIC COSTS Net
Year Fuel Environmental Total Capital Non-Fuel Total Economic
Generation Consumption WTP Savings Benefits Benefit Investment O&M Cost Benfit
KWh KWh US$ US$ US$ US$ US$ US$ US$ US$
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
2009 - - - - - - 165,429 1,654 167,083 (167,083)
2010 - - - - - - 992,093 11,575 1,003,668 (1,003,668)
2011 (677,377) - - 232,670 6,306,092 6,538,762 764,002 19,215 783,217 5,755,545
2012 369,290 - - (132,186) (3,437,929) (3,570,115) 543,934 24,655 568,588 (4,138,703)
2013 (1,104,409) (11,114,013) (9,674,206) 386,725 10,281,571 994,090 1,229,067 36,945 1,266,012 (271,922)
2014 (132,847) 4,644,712 4,307,657 45,227 1,236,749 5,589,632 (57,539) 36,370 (21,170) 5,610,802
2015 1,119,844 7,099,887 6,344,283 (249,319) (10,425,267) (4,330,303) 220,323 38,573 258,896 (4,589,199)
2016 2,312,335 3,749,470 2,948,506 (420,963) (21,526,841) (18,999,299) 762,836 46,201 809,037 (19,808,336)
2017 1,217,917 7,817,071 6,144,952 (221,641) (11,338,280) (5,414,969) 2,065,368 66,855 2,132,223 (7,547,192)
2018 1,283,483 7,059,596 5,274,538 (315,859) (11,948,677) (6,989,997) 3,482,464 101,680 3,584,144 (10,574,141)
2019 362,568 7,059,596 5,080,146 (82,604) (3,375,352) 1,622,190 1,556,003 117,240 1,673,243 (51,053)
2020 (649,393) 7,059,596 4,960,296 143,477 6,045,566 11,149,340 117,240 117,240 11,032,100
2021 (1,762,897) 7,059,596 5,010,852 377,770 16,411,812 21,800,434 117,240 117,240 21,683,194
2022 (2,872,801) 7,059,596 5,059,408 614,209 26,744,543 32,418,160 117,240 117,240 32,300,920
2023 (4,028,822) 7,059,596 5,110,479 863,679 37,506,601 43,480,759 117,240 117,240 43,363,519
2024 (5,174,304) 1,114,396 1,114,396 1,030,064 1,030,064 84,331
NPV @
10% 13,063,619 304,770 6,182,994 19,551,383 5,879,352 366,066 6,245,418 13,305,965
Economic Rate of Return 27\.1%
9\. Base case comparison\. Itâs very important to point out that the economic analysis at appraisal
only quantified the net economic benefit from avoided fuel cost while the economic analysis at
additional financing appraisal only focused on reduced outage cost\. Therefore, in order to
compare ex-ante and ex-post net economic analysis, the two ex-ante analyses need to be
harmonized and consolidated\. Harmonized total ex-ante NPV is roughly estimated at US$18\.07
million\. In comparison, ex-post NPV is lower at US$7\.12 million\. Two driving factors are the
lower-than-expected oil price and reduction of capital investment from US$17\.00 million to
US$11\.72 million\. Harmonized ex-ante ERR has not been calculated due to methodological
constraints and lack of sufficient supporting data\. However, the EIRR calculated at completion
nevertheless demonstrates comparable economic viability of the project broadly consistent
with expectations at appraisal and at the stage of additional financing\.
Table A4\.7\. Comparison of NPV and EIRR
Appraisal AF Appraisal Harmonized ICR
Ex-ante Total
Excluding environmental benefits
EIRR (%) 34\.80% 17\.60% n/a 24\.30%
NPV at 10% DR (US$M) 5\.61 20\.06 18\.07 7\.12
Including environmental benefits
EIRR (%) 27\.10%
NPV at 10% DR (US$M) 13\.31
10\. Sensitivity analysis\.
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⢠A sensitivity analysis has been performed on annual project O&M cost, in order to evaluate
the impact of variation in O&M on economic viability of the project\. The results are presented
in the table below and it shows that the economic rate of return of the project is resilient to
future changes in the generation facilities\.
Table A4\.8\. Sensitivity Analysis
Scenario
NPV (US$M) EIRR (%)
O&M Costs (as percent of capital cost)
Base case 1% 7\.12 24\.3%
200% of base case 2% 6\.76 23\.6%
300% of base case 3% 6\.39 22\.9%
⢠Another sensitivity analysis has been performed on the discount rate\. 10% was used according
to the old guidance note on âDiscounting Costs and Benefits in Economic Analysis of World
Bank Projectsâ\. However, according to the new guidance note (2016), a discount rate of 2
times the GDP growth rate is recommended\. Therefore, the GDP growth rate of the Solomon
Islands in 2018 and geometric mean of the past 10 years are used as the other cases\. It also
indicates that the economic rate of return of the project is resilient to the discount rate used\.
Table A4\.9\. Sensitivity Analysis
Scenario NPV (US$M)
Discount Rate
2*GDP Growth Rate 2018 6\.78% 11\.38
2*GDP Growth Rate (Geo-mean 2009-2018) 7\.43% 10\.37
DR used originally 10\.00% 7\.12
FINANCIAL ANALYSIS
11\. An ex-post financial analysis of the project (not the Solomon Power as an enterprise or a sector)
was also carried out using the same method of evaluation âcost-benefit analysisâ with the same
discount rate of 10%\. In sum, at completion, the project has a Financial NPV of US$5\.63 million
while Financial Internal Rate of Return (FIRR) stands at 21\.8 percent, which far exceeds the
estimated project Weighted Average Cost of Capital (WACC) of 3\.6%\. A summary of the results,
assumptions and detailed analysis is presented in the following sections\.
Table A4\.10\. Summary of Financial Benefits and Costs (US$)
FINANCIAL BENEFITS
Incremental revenue from reduction of loss 6,793,190
Incremental revenue from reduction of outage 12,520,779
FINANCIAL COSTS
Capital Investment 9,991,496
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Incremental Fuel & Oil Consumption 3,072,026
O&M 622,100
NET FINANCIAL BENEFIT 5,628,347
FIRR 21\.8%
12\. The main financial benefits considered in this analysis are tariff revenue from incremental power
consumptions by the customers due to reduction of energy losses and reduction of outage, which
is in line with the two economic benefits examined in economic analysis\. However, itâs important
to point out that financial benefit from reduction of non-technical losses is included here since itâs
the transfer payment from the customers to SIEA\.
13\. On the other hand, three main financial costs contributed to achieve the above-mentioned
financial benefits: total project capital investment, fuel and oil cost for the incremental power
consumption, and the extra O&M cost\. Here the capital investment included the IDA grant, IDA
credit, and the US$8\.20 million equity invested by SIEA\. Since the year-by-year breakdown of SIEA
equity invested to different components of the project is not available, it was proportionally
pegged to the actual disbursement by the World Bank\. In addition, only incremental revenue from
reduction of outage will result in incremental fuel & oil consumption\.
14\. Key assumptions are listed below\.
⢠Total World Bank capital investment was US$11\.72 million, 68\.94% of planned original and
additional financing\.
⢠10% discount rate\.
⢠Operation and maintenance costs are estimated at 1% of investment costs considering
improvement of efficiency after project implementation\.
⢠Load factor at 62%\.
⢠0% corporate income tax per Electricity Act 1969\.
15\. Below please find the year-by-year breakdown of the financial analysis\.
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Table A4\.11\. Detailed Financial Benefits and Costs
INCREMENTAL
CUSTOMER FINANCIAL BENEFITS FINANCIAL COSTS Net
CONSUMPTION
Year Energy Energy Total Capital Incremental Non-Fuel Total Financial
Outage Outage
Loss Loss
Reduction Reduction Benefit Investment Fuel&Oil O&M Cost Benfit
Reduction Reduction
KWh KWh US$ US$ US$ US$ US$ US$ US$ US$
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
2009 - - - - - 281,134 - 2,811 283,945 (283,945)
2010 - - - - - 1,685,983 - 19,671 1,705,654 (1,705,654)
2011 784,834 - 530,072 - 530,072 1,298,361 - 32,655 1,331,015 (800,943)
2012 (443,692) - (358,217) - (358,217) 924,372 - 41,898 966,271 (1,324,488)
2013 2,640,224 (11,619,937) 2,298,186 (10,114,588) (7,816,402) 2,088,702 (3,998,492) 62,786 (1,847,004) (5,969,398)
2014 1,626,512 4,486,594 1,508,480 4,161,013 5,669,493 (97,784) 1,499,995 61,808 1,464,019 4,205,474
2015 847,908 6,939,924 757,670 6,201,344 6,959,014 374,421 1,562,977 65,552 2,002,950 4,956,064
2016 (411,889) 3,496,193 (323,901) 2,749,334 2,425,433 1,296,380 630,630 78,516 2,005,525 419,908
2017 1,299,818 8,097,635 1,021,779 6,365,502 7,387,281 3,509,931 1,472,008 113,615 5,095,554 2,291,728
2018 2,036,450 6,664,223 1,521,522 4,979,138 6,500,660 5,918,173 1,669,814 172,797 7,760,784 (1,260,124)
2019 2,280,349 7,059,596 1,640,959 5,080,146 6,721,105 2,644,304 1,669,222 199,240 4,512,766 2,208,339
2020 2,488,333 7,059,596 1,748,382 4,960,296 6,708,678 1,618,605 199,240 1,817,845 4,890,833
2021 2,758,330 7,059,596 1,957,844 5,010,852 6,968,696 1,569,761 199,240 1,769,001 5,199,695
2022 3,475,872 7,059,596 2,491,057 5,059,408 7,550,465 1,566,054 199,240 1,765,294 5,785,171
2023 4,317,098 7,059,596 3,125,170 5,110,479 8,235,649 1,570,120 199,240 1,769,360 6,466,289
- 199,240 199,240 (199,240)
FNPV @
10% 6,793,190 12,520,779 19,313,969 9,991,496 3,072,026 622,100 13,685,622 5,628,347
Financial Rate of Return 21\.8%
16\. Base case comparison\. Itâs clear that the project generated a positive FNPV of US$5\.63 million,
which indicates that the project is financially viable\. Also, FIRR far exceeds the WACC of 3\.6%\.
17\. In order to calculate WACC, the cost of IDA grant, credit and SIEA equity are all needed\.
However, cost of equity of SIEA is not available nor disclosed in SIEAâs annual report\. There are
several ways to estimate such cost of equity\. Since SIEA is a 100% SOE of SIG, 6\.5%17 interest
rate of the $150 million Domestic Development Bonds issued by SIG to the Solomon Islands
National Provident Fund Board (SINPFB) in 2017 could be used as a benchmark, resulting in a
WACC of 3\.6%\. On the other hand, if we use the SIG long-term government bond yield of
3\.24%18, the WACC will further decrease to 2\.3%\. In either case, FIRR is far larger than the WACC,
which made the project financially viable and attractive\. Detailed calculation of WACC is
illustrated in Table A4\.11\.
Table A4\.11\. SISEP - Weighted Average Cost of Capital (WACC)
17 https://www\.solomontimes\.com/news/sig-sinpf-sign-domestic-development-bonds-agreement/8711
18 https://www\.economy\.com/solomon-islands/average-long-term-government-bond
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Grant Credit SIEA Equity Total
A\. Amount (USD million) 5\.8 5\.9 8\.2 19\.9
B\. Weighting (%) 29% 30% 41% 100%
C\. Nominal Cost (%) 0\.0% 3\.2% 6\.5%
D\. Tax rate 0\.0% 0\.0% 0\.0%
E\. Tax-adjusted nominal cost [C*(1-D)] 0\.0% 3\.2% 6\.5%
F\. Inflation Rate (%) 0\.0% 0\.0% 0\.0%
G\. Real Cost [(1+E)/(1+F)-1)] 0\.0% 3\.2% 6\.5%
H\. Weighted component of WACC 0\.0% 0\.9% 2\.7%
Weighted Average Cost fo Capital (Real) 3\.6%
18\. Sensitivity analysis\.
⢠A sensitivity analysis has been performed on annual project O&M cost, in order to evaluate
the impact of variation in O&M on financial viability of the project\. The results are presented
in the table below and it shows that the financial rate of return of the project is resilient to
future changes in the O&M cost\.
Table A4\.12\. Sensitivity Analysis against O&M Cost
Scenario
NPV (US$) FIRR (%)
O&M Costs (as percent of capital cost)
Base case 1\.00% 5,628,346\.58 21\.8%
200% of base case 2\.00% 5,006,246\.21 20\.5%
300% of base case 3\.00% 4,384,145\.83 19\.3%
⢠Another sensitivity analysis has been performed on the discount rate\. 10% was used according
to the old guidance note on âDiscounting Costs and Benefits in Economic Analysis of World
Bank Projectsâ\. However, according to the new guidance note (2016), a discount rate of 2
times the GDP growth rate is recommended\. Therefore, the GDP growth rate of the Solomon
Islands in 2018 and geometric mean of the past 10 years are used as the other cases\. It also
indicates that the financial rate of return of the project is resilient to the discount rate used\.
Table A4\.9\. Sensitivity Analysis against Discount Rate
Scenario
NPV (US$)
Discount Rate
2*GDP Growth Rate 2018 6\.78% 9,335,677\.98
2*GDP Growth Rate (Geo-mean 2009-2018) 7\.43% 8,451,320\.15
DR used originally 10\.00% 5,628,346\.58
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Financial Sustainability Analysis of Solomon Islands
Electricity Authority (SIEA)
Financial Performance and Sustainability
1\. SIEA financial performance has considerably improved since 2006, becoming profitable in 2011\. The
SIEA incurred losses of SBD13 million and SBD37 million, in 2006 and 2007 respectively\. In April 2008
when losses were SBD17 million, the Government agreed to a debt restructuring scheme through
which approximately SBD200 million owed by the SIEA to the Government was written off\. In return,
the SIEA wrote off SBD32 million owed to SIEA by other government entities in 2009\. This was the
main contributor to the loss of SBD9 million that year\. In 2010, losses were SBD70 million because the
escalation of the outstanding receivables from government entities, mainly Solomon Islands Water
Authority (SIWA), resulted in SIEA making a provision for bad debts of SBD57 million\. In May 2012, a
debt settlement agreement was signed between the two parties for SIEA to convert SBD7\.5 million of
outstanding dues into a loan to be repaid by SIWA over a period of eight years commencing 1 January
2013 at an interest rate of 0%\. SIEA turned profitable in 2011 with a reported profit of SBD53 million\.
At the same time, the Solomon Islands Government (SIG) committed to reform and restructure SIWA,
to place it on more commercial footing, and allow its water prices to be adjusted for changes in the
electricity prices\. This reform of SIWA, strongly supported by the SIG, the new SIWA Board and
Management team â with financial support from Australia and Japan, is what was missing when the
2008 debt restructure was implemented\. The reforms to SIWA have been crucial to the improved
performance of SIEA since SIWA is SIEAs largest single customer\. This was a condition precedent for
the IDA Grant that established SISEP (P100311)\. This debt restructure followed years of payment
difficulties between SOEs in the Solomon Islands, with several SOEs, particularly SIWA, owing
considerable debts to SIEA\. In 2012, the SIEA had an operating income of SBD414 million, net profit
of SBD68 million, and had an asset base of SBD516 million\.
2\. By 2018, the SIEA had an operating income of SBD469 million, net profit of SBD80\.1 million, and had
an asset base of SBD1292 million\.
3\. The projected financial performance of the SIEA following the implementation of the SISEP (detailed
in Table 1) shows that the project has a positive impact on SIEAâs performance\. Throughout the life of
the project and beyond, total revenues, operating income and net profit are projected to increase\.
Liquidity remains high with a current ratio well above 1 (lowest point is 8\.5 in 2019)\. The debt to equity
ratio never approaches 30:70, given the SIEAâs aversion to debt, peaking at just 18:82 in 2018, before
falling over the remainder of the project\. The profitability of the SIEA is projected to increase gradually
over the life of the project, with net profit margins increasing from 17% in 2013 to 44\.9% in 2033 and
an average annual net profit of 37\.0% over 20 years\.
Conclusion
4\. This analysis concludes that the SIEA is more than capable of servicing its current level of debt, which
comprises just the US$6\.0 million IDA Credit\. Furthermore, the profitability of the SIEA is projected to
increase significantly over the life of the program\.
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5\. Based on the current financial projections, it appears that there is scope for SIEA to take on additional
debt to finance its current capital expenditure program, including SISEP and other priority projects
(the construction of a new powerhouse at Lungga Power Station and installation of four 2\.5 MW diesel
generators) worthy SBD350\.0 million (US$47\.6 million)\. There also appears to be scope for the SIEA
to further extend the size of its capital expenditure program, and further expand access to electricity
services across the Solomon Islands\.
6\. It is understood that a further tariff review is planned, which will take into account future investment
requirements to increase access to electricity, improve reliability and quality of supply, and reduce
operating costs by increasing the use of renewables in the power generation (i\.e\., solar, hydro) and
reduce the heavy reliance on diesel-fired generation\. That review should ensure the tariff
methodology is set to more affordable levels over time\.
Table 1 â Projected financial performance of the SIEA, including CAPEX projects to be funded through ID
Audited Projected
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2030 2035 2040 2045 2050 2053
A Average Retail Tariff
Residential (SBD per unit) - 5\.7 6\.4 6\.8 6\.6 6\.2 6\.3 6\.2 5\.6 5\.6 5\.7 5\.7 6\.4 6\.9 7\.4 8\.0 8\.6 9\.0
Industrial (SBD per unit) - 6\.2 6\.4 6\.8 6\.6 6\.2 6\.3 6\.2 5\.6 5\.6 5\.7 5\.7 6\.4 6\.9 7\.4 8\.0 8\.6 9\.0
Commercial (SBD per unit) - 6\.0 6\.4 6\.8 6\.6 6\.2 6\.3 6\.2 5\.6 5\.6 5\.7 5\.7 6\.4 6\.9 7\.4 8\.0 8\.6 9\.0
B Income Statements
Net Revenue 550,598 418,943 484,987 463,955 532,547 535,818 440,979 469,038 476,588 512,220 550,988 592,517 829,489 978,690 1,154,798 1,362,669 1,608,040 1,776,031
Operating Expenses 326,683 350,339 379,815 370,829 341,502 330,655 363,364 389,090 404,639 411,963 420,613 428,700 475,146 509,222 536,300 595,739 658,391 700,792
Interest Expense - - - 1,097 - - 389 30 373 381 388 396 1,761 1,394 1,027 660 293 73
Other Expenses 14 903 (5,236) 614 1,057 4,416 (424) (162) - - - - - - - - - -
Net Profit 223,901 67,701 110,408 91,415 189,988 200,747 77,649 80,080 71,576 99,877 129,986 163,420 352,582 468,075 617,471 766,270 949,356 1,075,165
C Balance Sheets
Assets
Current Assets 97,320 191,136 212,612 254,520 279,051 361,406 341,445 401,498 511,041 661,576 843,914 1,060,788 3,659,130 5,918,589 8,772,940 12,351,479 16,797,374 19,953,611
Non-Current Assets 328,611 294,230 356,444 475,068 849,436 1,102,258 1,348,704 1,825,837 1,815,444 1,841,670 1,865,370 1,889,120 2,067,007 2,195,878 2,331,448 2,489,088 2,607,838 2,679,088
Total Assets 425,931 485,366 569,057 729,588 1,128,486 1,463,664 1,690,148 2,227,335 2,326,485 2,503,246 2,709,284 2,949,908 5,726,137 8,114,467 11,104,388 14,840,567 19,405,212 22,632,698
- - - - - - - - - - - - - - - - - -
Liabilities and Equity
Liabilities 11,004 26,155 52,933 105,665 113,369 157,168 141,145 202,745 110,668 112,788 115,126 117,402 112,541 108,417 103,256 102,887 102,994 103,770
Equity 414,928 489,890 571,168 662,584 769,271 970,334 1,043,983 1,139,069 1,210,646 1,310,913 1,440,899 1,604,319 3,877,260 5,953,937 8,746,838 12,269,435 16,641,974 19,738,486
Total Liabilities and Equity 425,931 516,045 624,101 768,249 882,640 1,127,503 1,185,128 1,341,814 1,321,313 1,423,701 1,556,025 1,721,721 3,989,801 6,062,353 8,850,094 12,372,322 16,744,968 19,842,256
D Cash Flow Statements
Cash flows from:
Operating Activities 14,048 92,759 92,760 134,592 172,609 164,941 100,410 151,973 146,740 170,832 202,622 236,801 415,208 518,659 647,929 801,682 986,915 1,115,651
Investing Activities (7,496) (12,395) (72,252) (192,249) (101,391) (150,379) (85,561) (107,518) (24,436) (24,990) (25,388) (25,396) (28,595) (28,228) (27,861) (27,494) (27,128) (26,907)
Net Cash Flow 12,907 19,459 99,823 129,368 75,411 150,836 201,187 221,808 303,524 425,829 571,671 748,904 3,140,832 5,276,824 7,978,347 11,375,393 15,603,375 18,608,534
Cash Balance 19,459 99,823 129,368 75,411 150,836 201,187 221,808 303,524 425,829 571,671 748,904 960,309 3,527,445 5,767,256 8,598,416 12,149,581 16,563,163 19,697,278
E Key Financial Indicators
Net Profit Margin (%) 59% 16% 26% 20% 42% 45% 18% 17% 15% 19% 24% 28% 43% 48% 53% 56% 59% 61%
Return on Equity (%) 54% 14% 19% 14% 25% 21% 7% 7% 6% 8% 9% 10% 9% 8% 7% 6% 6% 5%
Current Ratio 9\.2 7\.3 7\.9 9\.0 7\.7 6\.8 8\.2 7\.0 8\.5 10\.8 13\.5 16\.7 52\.0 78\.5 110\.5 140\.0 172\.3 192\.3
F Covenant Compliance
Debt Service Coverage Ratio N/A N/A N/A N/A N/A N/A N/A N/A 190\.9 261\.4 333\.7 411\.3 97\.6 144\.6 215\.5 306\.9 446\.1 563\.6
Debt to Equity Ratio 3% 5% 9% 16% 15% 16% 14% 18% 9% 9% 8% 7% 3% 2% 1% 1% 1% 1%
G DMAC Assessment Requirements
Rate of Return on Net Fixed Assets109\.3
in Service 134\.3 121\.4 94\.6 55\.4 39\.9 31\.2 25\.4 26\.2 27\.6 29\.3 31\.1 40\.0 44\.4 49\.3 54\.5 61\.4 66\.0
Operating Ratio 87\.0 24\.0 27\.8 17\.8 18\.4 18\.7 31\.0 15\.0 13\.1 11\.4 9\.8 8\.5 5\.5 4\.9 4\.3 3\.8 3\.4 3\.2
Self-financing Ratio N/A N/A N/A 1\.33 1\.15 1\.93 0\.93 6\.22 5\.87 6\.73 7\.98 9\.32 14\.56 18\.42 23\.32 29\.24 36\.48 N/A
Quick Ratio 8\.2 7\.0 7\.6 8\.7 7\.4 6\.5 7\.7 6\.6 8\.2 10\.5 13\.2 16\.4 51\.7 78\.2 110\.2 139\.8 172\.1 192\.1
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ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
SOLOMON ISLANDS ELECTRICITY AUTHORITY (trading as Solomon Power)
SOLOMON ISLANDS SUSTAINABLE ENERGY PROJECT
IMPLEMENTATION COMPLETION REPORT
Prepared by: Pradip Verma, Chief Executive Officer
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Table of Contents
1\. OVERVIEW\. 71
2\. PROJECT STAKEHOLDERS \. 71
2\.1 SIEA (Implementing Agency): \. 71
2\.2 SIG (Recipient) \. 71
3\. AGREEMENTS \. 72
4\. PROJECT DEVELOPMENT OBJECTIVE AND KEY INDICATORS \. 72
5\. ORIGINAL GRANT\. 72
6\. ADDITIONAL GRANT AND CREDIT FUNDS \. 73
Component 1 \. 74
Component 3 \. 74
7\. ASSESSMENT OF OUTCOMES: \. 74
7\.1 Background \. 74
7\.2 Transitioning of SIEA \. 74
7\.2\.1 Governance: \. 74
7\.2\.2 Management \. 75
7\.2\.3 Financial/External Financial Annual Audits \. 76
7\.2\.4 Training \. 76
7\.2\.5 Capital Infrastructure Development\. 77
7\.2\.6 Reduction of losses \. 83
7\.2\.7 Debtors\. 84
8\. SIEA TODAY \. 84
9\. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES: \. 85
10\. LEARNINGS AND PROPOSED ACTIONS TO IMPROVE \. 86
11\. SUSTAINABILITY \. 87
12\. CANCELLATION AND REALLOCATION OF FUNDS \. 88
APPENDIX 1 \. 88
APPENDIX 2 \. 90
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1\. Overview
SIEA was in financial crisis and close to insolvency with severe cash-flow problems in 2007-2009 due to
the âtensionâ, large outstanding receivables, non-revenue losses, rising oil prices, large debt levels, and a
depreciating Solomon Islands Dollar (SBD)\. In 2009 the Solomon Islands Sustainable Energy Project (SISEP-
P100311) commenced with support provided by the World Bank with the project development objective
to improve operational efficiency, system reliability and financial sustainability of SIEA\.
The total project cost was US$19\.4 million (US$ 6\.4 million- SIEA funding; US$13\.0 million IDA grant and
credits)\. The original IDA (US$4\.0 million) became effective June 2009\. Additional IDA Grant and Credit funds
(US$ 13\.0 million) became effective 26 June 2014\. The Project Closed on 31 March 2019\.
Together with support provided through SISEP, SIEAâs financial performance has improved dramatically
from making losses until 2010 to a net profit of SBD68 million, SBD110m, SBD91m, SBD107, SBD120m,
SBD80m and SBD80m respectively in 2012, 2013, 2014, 2015, 2016, 2017 and 2018 respectively\. Electricity
sales revenues increased from SBD351\.5 million in 2011 to SBD455 million in 2018\. Additionally, the
reliability indices SAIDI, SAIFI in Honiara have both shown significant improvement\. Furthermore, the non-
technical losses have shown a steady reduction from 16% in 2009 to 6% in 2018\.
SIEA is well placed to invest significantly in capital projects\. The organisation has successfully delivered
capital projects over the financial years 2013-2018\. SIEA has a strong cash position and is now planning a
capital investment program of SBD1 billion in total over the period 2019-2022\.
2\. Project Stakeholders
The stakeholders are Solomon Islands Government (the recipient), Solomon Islands Electricity Authority (the
implementing agency) and The International Development Association (IDA)\.
Broadly, the roles of the stakeholders were as follows:
2\.1\. SIEA (Implementing Agency):
SIEA was responsible for implementing the project including: (i) Carrying out, with the assistance
of adequately qualified consultants, the technical aspects of the Project (ii) carrying out fiduciary
aspects (procurement, financial management, disbursement and audit functions) of the Project
(iii) preparing, and submitting to the Association, quarterly and annual progress reports; and (iv)
carrying out monitoring and evaluation functions under the Project\.
SIEA was also responsible to ensure that the Project is carried out in accordance with the
provisions of the Anti-Corruption Guidelines\.
2\.2\. SIG (Recipient)
To facilitate the carrying out of the Project the Recipient has made available the proceeds of the
grant and credit/loan funds to the Implementation entity under subsidiary agreements between
the Recipient and the Implementing Agency\.
The Recipient also provided oversight of the Project by monitoring and evaluating the progress
of the project\.
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The Recipient also ensured that the Project implementation agency maintained a Financial
Management system in accordance with provisions of the General Conditions in the Project
Agreement\.
Additionally, the Recipient ensured that the Project Implementation Entityâs financial statements
are audited in accordance with the General Conditions of the Project Agreement and also
ensured that the audited statements are forwarded to the Association within the stipulated
period as per the general conditions of the Project Agreement\.
3\. Agreements
The Project Agreement between IDA and SIG
The Subsidiary agreements between IDA and SIEA
4\. Project Development Objective and key indicators
The development objective is to improve operational efficiency, system reliability and financial
sustainability of SIEA through improved financial and operational management, reduction of losses,
improved generator and distribution system reliability and improved revenue collection\.
Key indicators against which project progress has been monitored (see appendix 1 and 2 for details)
include:
Reduction in the frequency and duration of outages
Increases in the collection of electricity bills
Improvement of SIEAâs retained revenue for each generated kWh; and
An upturn in SIEAâs profitability
5\. Original grant
The funding under this grant was utilised to improve the governance, strengthen management
capacity at the highest level, improve reliability of power supply, reduce losses and improve
generation efficiency\. The original grant commenced on 26th June 2009 and it closed on 30th June
2017 with a total disbursement of US$3\.83 million\.
Under the original grant, SISEP supported the funding of the following roles in SIEA:
External Director (David Laurie from April 2010 to September 2016)
General Manager (Norman Nichols from March 2010 to November 2014)\. His remuneration
was paid under SISEP only up to November 2013\.
Commercialisation Manager (Richard Scott from July 2009 to February 2011)
Chief Financial Officer (Mike Payne from February 2011 to November 2012)
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Chief Financial Officer (Phill OâReilly from March 2013 to July 2016)\. His remuneration was paid
under SISEP only up to November 2013\.
General Manager Capital Works (Mark Greenaway from December 2014 to July 2017)
General Manager Capital Works (Hemant Kumar from November 2017 until 31 March 2019)
The grant supported/funded the following activities:
⢠Strengthening management and governance
o Engagement of two line managers (General Manager and Commercialisation Manager)
o Engagement of an overseas director to the Board
o Training of key management staff
⢠Financial operations
o Implementation of a commercialisation program for the Finance Department
o New financial management and billing system
o Staff training
o New accounting manual
⢠Technical operations
⢠Implementation of a loss reduction program
⢠A planned maintenance program for generation facilities in Honiara
⢠A distribution reinforcement program
⢠Improvement in system reliability
⢠Technical project implementation support
⢠Technical training program for engineering staff
Improving the cooling system of generators at Lungga\.
Loss reduction studies
Replacement of the 11 kV switchboard at Honiara Power Station
Design, procurement, installation and commissioning of a new 33 kV, 3 core cable from Lungga to Ranadi
Substation
Ownerâs Engineer
Strengthen management
6\. Additional grant and credit funds
This component became effective 26th June 2014\.
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The funding under this grant and credit was utilised to fund support for strengthening of management,
Tina River Hydropower project, project management support, strengthening the distribution network,
The additional grant and credit supported/funded the following activities:
Component 1
o Technical Assistance and Training on dispatch and control, system planning, integration of
renewables and IPPs
o Tina River Hydropower project connection study
o Cost of service and tariff review
o SCADA design
o Ownerâs engineer
o General Manager Capital Works
o Financial modelling for Tina River Hydropower Project
Component 3
o Upgrade of transformer capacity and new 33 kV and 11 kV switchboards at Ranadi Substation
o 12\.5 MVA 11/33 kV transformer at Lungga Power Station
o New zone substation at Kolaâ Ridge with one 33kV/11 kV 12\.5 MVA transformer
o Relocation of feeder 12 from Lungga Power Station to East Honiara Substation
o Stream Gauging for Tina River Hydropower Project
o Procurement of Ring Main Units
7\. Assessment of Outcomes:
7\.1 Background
SIEA has made a remarkable turnaround from 2007 from being in a very poor financial situation,
poor governance and lack of proper management to now in 2019 humming with activity, with
strong financials, strong governance, excellent management and excellent growth\. Much of this
transformation is as a result of two key initiatives of the Solomon Islands Government, the
Shareholders of SIEA\. These are:
The SOEs reform\. SIG partnered with ADB to put in place the SOE Act 2007 and SOE Regulations in
2010\.
SIG and World Bank partnering in a project to revive SIEA, the SISEP
To the World Bank and ADB we are indeed indebted\. We would also like to acknowledge and
celebrate the support provided by our Shareholders, SIG\.
7\.2 Transitioning of SIEA
7\.2\.1 Governance:
The Board is responsible for charting the Companyâs strategic direction, for the setting of
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objectives, policy guidelines, goals management, and for monitoring the achievement of these
matters\. The Board is also responsible for reviewing the Business Plan, Corporate Plan and
Statement of Corporate Objectives, and approves the Operating and Capital Budgets each year\.
The Board also reviews matters of a major or unusual nature, which are not in the ordinary
course of business\.
The Board appointments were strengthened under the SOE Act and associated Regulations\. An
independent international expert was appointed to the Board in April 2010 under funding from
SISEP\. Further impetus to governance was provided by the appointed to the Board of a new
Chairman with wide ranging experience in the private sector\. Additionally, governance was further
strengthened by the appointment of independent directors with expertise in financial
management, risk management, technical skills, human resources and strategy setting\.
These Directors brought in experience and expertise in strategy setting, finance, legal, governance,
engineering and provided the necessary support and guidance to Management\. The Independent
international expert on the board provided mentoring to management on a regular basis
throughout his term of six years\. The cost of his services were all funded under SISEP\.
The Board made a number of resolutions to improve procurement policy and procedures, HR
policies, internal audit\. In addition to this three board Sub-Committees (Audit and Finance, HR and
Technical) were established with their charters and were made responsible for deliberating
detailed issues and making suitable recommendations to the Board\.
The Board also established an Internal Audit Department with Manager Internal Audit reporting
directly to the Chairman of the Audit and Finance Sub-Committee of the Board\. The department
under guidance of the Sub-Committee carries out audits in accordance with an approved Annual
Audit Plan\. The outcomes of all audits were reported to the Audit and Finance Committee (now
Audit, Finance, Risk and Governance) Sub-Committee\. All actions were followed up and tracked
until completion\.
Since 2012 on an average the Board has had 9 board meetings annually\. All these meetings are
properly minuted in a timely manner and resolutions and actions tracked and reported by
Management\. Furthermore, the Board Sub-Committee also meet on an average at least three
time annually providing the necessary support and guidance to Management and to the Board
to make decisions\.
All of the above would not be possible without the funding from SISEP\. Furthermore, the
missions from the World Bank during the term of the SISEP provided a monitoring, scrutiny and
reporting role on the efficacy of the project and this further improved the focus of the
Management and Board of SIEA\.
7\.2\.2 Management
Under funding from SISEP, (mostly under the original IDA funding of USD4\.0million) SIEA appointed
a General Manager, a Commercialisation Manager, a Chief Financial Officer and a General
Manager Capital Works\. These appointments strengthened management\.
The new management established a Procurement Policy and associated procedures, Human
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Resources Policy and Procedures Manual\. Both of these were approved by the Board\.
SISEP contributed to improve SIEAâs financial position during 2011-2014 which meant that the
organisation could start funding some of these roles from end November 2014\.
In November 2014, an expat was appointed as CEO and he replaced the outgoing General
Manager\. In addition, three expats were appointed in 2015 as Planning Engineer, Electrical
Engineer and Manager Generation & Outstations\. All these roles have been paid for by SIEA\.
7\.2\.3 Financial/External Financial Annual Audits
SIEA has achieved financial stability\. 2018 marks the 8th year in which the Authority has made a
profit\. Furthermore, the last 7 yearâs statutory accounts have been unqualified, and signed off
by the Auditor General before the mandated date of 31st March each year\.
7\.2\.4 Training
SISEP funded many training programmes during its term of over 10 years\.
The following training courses have been conducted in SIEA, some of which were funded by
SISEP:
Linemanâs training courses commenced in 2013 (for the first time since 2003)
Power Station Operator Training for all Operators
First Aid training
Defensive Driving training
Training in Cable Jointing
Project Management Training
Meter Technician training
Training for accreditation of electricians
Training in DigSilent
Training in Homer
Attendance at conferences/seminars
University education in accounting, finance, engineering, commerce
Apprenticeship programme
Graduate programme
Line Mechanic training programme
Training in asset management system
Training in contract management
Leadership training
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APTC training
7\.2\.5 Capital Infrastructure Development
SISEP contributed to improve SIEAâs financial sustainability which meant that the company
was able to conduct a program of investment on its own\. Also improvements in SIEAâs
governance and operational efficiency meant other donor partners such as JICA, ADB, Abu
Dhabi Government, MFAT (NZ Government) were ready and felt confident enough to
develop additional projects- so it created a conducive environment and enabled further
investments\.
We provide below a commentary on the projects totally funded by SIEA, projects funded
under SISEP and other projects funded by donors\.
From 2013 to 2018 SIEA has utilised its own funds to carry out the following projects:
Design, procurement and installation of 4X2\.5 MW diesel generators plus associated
equipment, new building, new workshop, one new 11/33 kV 10/12\.5 MVA power
transformer at Lungga Power Station at a total cost of SBD130m\.
New generators, associated buildings and switchgear at Outstations Auki, Gizo, Munda,
Noro and Tulagi\.
Hybrid (solar, battery storage and back-up diesel generators) generation systems and
associated distribution networks at Seghe and Taro at a total cost of SBD33 million\.
Design, procurement and installation of two new 33/11 kV 10/12\.5 MVA transformers at
Honiara Power Station\.
Business as usual projects
SIEAâs headquarters building at Ranadi refurbished and extended
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Integrated Business Management System
Two 1\.5 MW generators commissioned in Honiara Power Station in 2013 (the first
investment in generation by SIEA since 1993)
Vehicle monitoring system installed on all vehicles to improve efficiencies
Network extension
Hybrid station at Taro (Choiseul Province)
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New building housing the 4, 2\.5 MW machines- in foreground- Lungga P\.S\.
Gizo power station with new generators
Under SISEP, SIEA completed the following projects during 2013-2018
New building and new 11 kV switchgear at Honiara Substation
Relocation of feeder 12 from Lungga Power Station to East Honiara Substation
Upgrade of Ranadi Substation
New 33/11 kV Substation at Kolaâa Ridge
Improved cooling systems on the generators at Lungga Power Station
Design, procurement, installation and commissioning of a new 33 kV 3 core cable from Lungga to Ranadi
Substation
Design, procurement, installation and commissioning of a new 33 kV, 3 core cable from Lungga to Ranadi
Substation
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Ranadi Substation before upgrade
Ranadi Substation after upgrade
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Kolaâa Ridge before upgrade
Kolaâa Ridge Substation after upgrade
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11 kV switchboard at Honiara Power Station
11 kV feeder 12
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Other projects funded by donors (2014-2018)
Hybrid stations at Kirakira, Lata, Maluâu, Munda and Tulagi- in progress (Asian Development Bank)
1 MW Solar Farm at Henderson commissioned in May 2016 (UAE and NZ Governments)
Output based aid program- in progress (World Bank)
50 kW solar on Ranadi carport roof- commissioned August 2014 (JICA)
Staff training on the Electricity Tariff
7\.2\.6 Reduction of losses
The decline in SIEAâs financial situation in the period 2003-2010 appeared to be strongly
correlated to the increase in the SIEAâs total losses\. This was considered unacceptable for any
power utility and the level of losses was one of the main factors in the SIEA being close to failing\.
It was considered imperative in 2011 that urgent action is required by the Board, management
and staff of SIEA to manage and reduce the losses\.
SISEP funded a loss reduction study/program in the Honiara network\.
The study determined that the non-technical losses of 16% are exceptionally high and are
resulting in lost revenue that is leading to financial stress\. The study found that there are two
main causes of the non-technical losses:
The metering and billing system are far below an acceptable standard with a significant amount
of energy delivered not billed\.
At the line staff level, the losses are generally accepted as âbusiness as usualâ and there is no
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focus on reducing the non-technical losses\.
Under SISEP a program was put in place and implemented to improve the cooling system of the
generators at Lungga Power Station which lead to improvement in their efficiencies and output\.
SISEP also funded training and to increase focus of management to reduce losses\.
The installation of more pre-payment (Cashpower meters), the replacement of current
transformers and associated meters, testing the accuracy of meters utilising the state of art
meter testing bench newly purchased from Itron, Spain; Inspection of all meters on an annual
basis and ensuring all meters are properly registered in the billing system has led to a steady
reduction of non-technical losses from 16% in 2008 to 6% in 2018\.
7\.2\.7 Debtors
SISEP funded training initiatives which improved reporting at the Executive Management and
the Board level\. Special focus was put on reporting on debtors more than 30 days, more than 60
days and more than 90 days\.
Billing and collection of debt functions were part of the Finance Division up to 2011\. SISEP
funding boosted and strengthened Management and increased Governance as a result of which
the management with the support of the Board re-structured the organization to create a new
Customer Services Division which assumed the responsibility for all customer issues, from
community awareness through its Public Relations Section, to receiving, processing and
registration of customer applications for new customer connections, customer enquiries,
cashiering, administering billing and customer accounts, protection of revenue meters and
revenue collection\.
The Management with the support of the Board has carried out mass disconnections of some
key customers for non-payment of bills\.
The above concerted efforts have resulted in better debt collection\.
8\. SIEA today
The SISEP has made a remarkable impact on SIEA\. SIEA is fundamentally different from what it
was 10 years ago and has been for a number of years at the forefront of the commercialisation
initiative of Solomon Islands Government (SIG)\.
SISEP contributed by financing the management and a director on the board that affected these
changes, also through direct capital investment programs\. As SIEA started improving its financial
position and capacity and capability to deliver better outcomes other donors also stepped in to
assist SIEA\.
SIEA was rated as one of the best performing SOEs in a benchmarking study conducted by the
Asian Development Bank in 2014 which included 8 Pacific participating countries, Mauritius and
Jamaica\.
Over 2012-2018 years a significant improvement in the commercial sustainability of SP has been
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achieved\. Prudent management has resulted in a situation where SP has been able to commit
to a SBD 1 billion capital investment plan for the period 2019-2022\.
The annual capital injection in financial years 2014- 2017 has been on an average SBD120 million\.
In addition to delivering the projects for the relocation of feeder 12 from Lungga Power Station
to East Honiara Substation, Upgrade of Ranadi Substation and design, procurement and
construction and commissioning of a new substation at Kolaâa Ridge, SIEA has also replaced old
generators and switchboards and distribution systems at 5 outstations, installed a
commissioned 4 new 2\.5 MW generators at Lungga Power Station, installed and commissioned
2 new outstations (Seghe and Taro) and other capital infrastructure projects\.
The reliability indices SAIDI and SAIFI have shown remarkable improvement from 2007 to 2018
and also the system losses have steadily dropped from a figure of 27% in 2007 and now at the
end of 2018 it was at 17%\.
The Net Profit after tax has shown a remarkable improvement from a loss of SBD44m in 2007 to
SBD80m profit in 2018\.
The revenue per kWh generated has increased from SBD1\.39 per kWh in 2007 to SBD4\.70 per
kWh in December 2018\.
SIEA purchased and implemented an Integrated Business Management System and a new Billing
system in 2013
The organisation also developed a suite of policies and procedures with input from staff and
these have been successfully implemented with awareness training being provided\.
Furthermore, the average number of debtor days to collect billed revenue has dropped from
360 days to 30 days in 2018, a remarkable achievement\. SIEAâs Customer Services has been very
vigilant in follow up with Debtors especially the big debtors and therefore the recoveries have
been very good\. SIEA has developed policies and procedures to handle non-payment of dues\.
SIEA opened in 2013 the first âdrive thruâ for Cashpower top ups with extended hours at it s
Headquarters\. In the same year SIEA also started cashpower top ups through mobile phone
banking\.
The penetration of Cashpower pre-paid meters exceed more than 80% of its customer base and
this has assisted in cash flows\. The monthly pre-paid sale is now over SBD10m (approximately
25% of the monthly electricity revenue)\.
The organisation has transitioned from a position of insolvency to a vibrant, fully compliant SOE\.
All the above has been possible due to very sound governance from the Board of Directors and a
highly focused, well qualified, skilled, dedicated and an experienced Management team\. One
important catalyst for this remarkable turnaround is SISEP\.
9\. Key Factors affecting implementation and outcomes:
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The implementation of the project suffered and one of the factors contributing to delays was
weaknesses in procurement which included delays in evaluation and non-timely submission of no-
objections to the World Bank\. During 2014-2015 SIEAâs capacity to conduct procurement in
adherence to the Bankâs procurement guidelines were limited and this had an impact on the
delivery of the components of SISEP\.
Delayed recruitment to critical roles (example procurement specialist, owners engineer)
impacted the implementation of the SISEP\. Additionally, on a number of instances
disbursements/application for disbursements were delayed due to absence of signatories\. The
project also suffered because SIEA was unable to arrange work permits, visas and resident permits
in a timely manner for new appointments\.
Another factor that contributed to the delays in implementation was SIEAâs inability to source
qualified and skilled contractors to carry out the works\. The highly skilled contracting market in
Solomon Islands is very limited and therefore we have to source design and construct
contractors for electricity substation, feeder, transformer upgrade/replacement work from the
international market\. Given the dis-economies of scale, risk factors associated with the Pacific
region and tyranny of distance and lack of logistics SIEA has struggled to attract, engage and
retain qualified contractors\.
Lack of capacity, experienced personnel in SIEA was another factor which resulted in SIEA not
been able to submit the SISEP quarterly reports in a timely manner\.
Delayed acquisition of land, easements have also impacted on the implementation of SISEP\.
10\. Learnings and proposed actions to improve
The key learnings from the implementation of the SISEP is the following:
⢠In the first instance for all future projects we should recruit to the role of the Procurement
Specialist
⢠SIEA should be well equipped in terms of personnel who are skilled, experienced and well qualified
⢠Expedite arrangement of work permits, visas and resident permits for all new appointments in a
timely manner
⢠Better liaison with MMERE, MOFT and other Ministries in the Solomon Islands with a view to
educate them on the donor funded projects and how they could assist SIEA
⢠Develop strong professional relationship with the contractors with the aim to improve retention
⢠Restructure the Capital Works & Planning area with a view to empower young personnel
The role of Procurement Specialist is pivotal in preparing scopes, TORs and assisting and expediting the
recruitment to other roles and for the procurement of consultants and contractors (EPC, Design and
construct and others)\. SIEA has already made an excellent beginning in his aspect on the Solomon Islands
Electricity Access and Renewable Energy Expansion Project (SIEAREEP)\. This new project commenced in
October 2018 and we have on board since January 2019 a Procurement Specialist\.
SIEA has already initiated action to set up meetings with representatives of Ministry of Labour, Industry,
Commerce and Immigration\. Also a number of meetings have already been held with the Commissioner
of Lands with the purpose to resolve issues to expeditiously acquire land for the proposed solar farms and
easements for transmission/distribution lines\.
Page 86 of 94
SIEA is also having regular meetings with Senior representatives from the Seventh Day Adventist Church
to acquire the easement for the proposed 66 kV transmission from Tina River Hydropower site to Lungga
Power Station and also for land for the proposed grid connect solar projects at Lungga\. It is pleasing to
note that this close engagement with the Executive of SDA Church is already bearing fruits\.
Representatives from SIEAâs corporate services division are having regular catch up meetings with the key
personnel in the Ministry of Labour, Industry, Commerce and Immigration (MLICI)\. Corporate Services
Division has already in-sourced the function of arranging work permits, visas and resident permits for
expats\. This direct close liaison and relationship with the Ministry will assist SIEA to acquire work permits,
visas, resident permits in a timely manner for the new appointments and for the renewal of the existing
permits\.
Since early 2018 SIEA has been developing a young engineer in the Capital Works team and he has been
entrusted the responsibility to prepare the quarterly reports for SISEP\. The quality of the reports being
prepared by him during the last three quarters have shown improvement\. Also late last year the Capital
Works and Planning areas have been re-structured\. In the new structure four managerial roles have been
assigned to four young local upcoming engineers\. This empowerment has already shown that they are
willing to take more responsibility and accept accountability\. We will therefore see further improvements
in the execution of SIEAREEP\.
SIEA has also commenced an Apprenticeship Program and a Line Mechanic Trainee Program\. The
organization also has strengthened the existing Graduate Training program\. Furthermore, SIEA has also
put in place a Talent Pool Development and Succession Plan\. All these will enable SIEA in the development
and sustenance of human capital\.
All of the above will place SIEA in good stead to progress all future projects in a timely manner\.
11\. Sustainability
The structure of the project was designed to ensure all achievements made during its lifetime are
sustainable\. Instead of recruiting short-term Consultants fly in fly out for the key roles the SISEP was
designed in Consultation with the Ministry of Finance and Treasury and the Board of SIEA for long term
engagements such that sustainability could be maintained in the long term\.
The General Manager, Commercialisation Manager, Chief Financial Officer and General Manager Capital
Works were all recruited each for a term of 3 years\. For some of these roles an extension of up to 18
months was also provided\.
Additionally, the International Board Director was on the Board of SIEA for approximately 6 years\.
These long term contracts all funded under SISEP provided continuity of employment/engagement to all
the above executive personnel who could then make appropriate changes, policy decisions, enhancing
and strengthening reporting at the executive level and the Board level for the long term which started
bearing fruits for SIEA and have been sustainable over the last 6 years\.
The International Board Director provided mentoring and training to the management and also
improved the strategy and policy setting and reporting on generation statistics, the losses, debtors, cash
flows, debt recovery\. The International Board Director departed in August 2016 and since then there has
been no replacement\.
Despite this SIEA has continued to perform very well financially and has met all its mandatory statutory
obligations in a timely manner\. The organization has continued to generate healthy profits, has a strong
balance sheet, healthy cash flows and has managed to deliver an extensive capital infrastructure
investment program\. Furthermore, the key performance indicators in SISEP have shown improvement
and sustainability\.
SIEA has matured over the last seven years and is now in a position to sustain an ambitious capital
investment plan to achieve two key objectives which are:
⢠Improve affordability
Page 87 of 94
⢠Improve accessibility
The sustainability could not have been achieved if SISEP had taken a short term view\.
12\. Cancellation and reallocation of Funds
In the second half of 2017 it was realized that there would be project cost savings\. This was due
to savings obtained in the Capital Works contract and to a change in plans as with regards to
installation of a transformer in Lungga, as it was decided that it would be more cost efficient for
SIEA to purchase the transformer through the project but perform its installation in-house\.
At that stage it was estimated that there would be US$2\.5million of unallocated funds under the
project\. In March 2018 this estimate was revised upwards to USD3\.3 million\.
In light of the above, and given the impending closing date of 31 March 2019, SIEA , through the
Ministry of Finance and Treasury, approached the World Bank and requested that a total of
US$3\.3 million equivalent originally allocated towards IDA credit IDA-53790 be cancelled from
the project and reallocated to the Solomon Islands Electricity Access and Renewable Energy
Expansion Project (P162902)\.
The cancellation and re-allocation of funds was approved by the World Bank in March 2018\.
However, it needs to be acknowledged that SIEA underestimated in March 2018 the cancellation
and re-allocation amount\. As a result of this, as at 31 March 2019 the undisbursed amount is
USD 0\.90 million\.
Appendix 1
PROJECT RESULTS FRAMEWORK
ORIGINAL GRANT
Project Development Objectives
The objective of the project is to improve operational efficiency, system reliability and financial
sustainability of SIEA\.
INDICATOR UNIT OF DETAILS ACTIONS COMMENTS
NAME MEASURE
PDO INDICATOR
STRENGTHENING TEXT Appointment of Commercialisation Completed
MANAGEMENT Commercialisation Manager appointed
Manager June 2009
General Manager GM Appointed Completed
Page 88 of 94
March 2010
International International Completed
Director Director appointed
May 10
Appointment of CFO appointed Completed
Chief Financial February 2011
Officer
Appointment of GM GM Capital Works Completed
Capital Works appointed in
December 2014
FINANCIAL TEXT Fuel and lubricant New fuel and Completed
OPERATIONS contract through lubricant contract
tender sourced through a
competitive
process providing
cost savings-
contract signed in
April 2010
New General Installation, Completed
Ledger and Billing integration and
System commissioning of
new General Ledger
and Billing System
completed in
August 2010
Installation and More prepayment End 2018 the count is
commissioning of meters were 14817 prepay meters
prepayment meters installed and (87% of all meters)
commissioned
Corporate Planning In accordance with Completed
process- to produce the SOE Act the
a 5 year strategic Statement of
plan including Corporate
capital investment Objectives were
plan for the Board prepared and
delivered to the
Accountable
Ministers
RELIABILITY TEXT SAIDI Target 2000
Page 89 of 94
minutes annual 1757\.6 minutes in March
2019
SAIFI Target 85 times 17\.5 times in March 2019
Loss reduction Reduced from 27% in
2007 to 17\.3% in 2019
Maintenance of All generators are
generators maintained/overhauled
as required on the
number of hours of
operation\. A
maintenance schedule
has been established and
adhered to\.
Cooling system Generator Water cooling
improvements system at Lungga Power
Station upgraded\. This
has improved the
efficiency of the
generators in the Old
Power House\.
Technical Training Training for operators,
Linemen training-
ongoing
Appendix 2
REVISED PROJECT RESULTS FRAMEWORK
Project Development Objectives
The objective of the project is to improve operational efficiency, system reliability and financial
sustainability of SIEA\.
Indicator Name Unit of Baseline End Target Comments
Measure
As at 31
March 2019
PDO Indicator
Quarterly financial Text December 2007 Yes (SIEA Progressive
management should improvements over the
No\. The 14 days
reports, and rolling achieve the years\. Achieved
target was not
projections for 14 days
Page 90 of 94
SIEA performance achieved\. target)
within 14 days
after end of each
quarter
Number of days 365 days in 2008 15 days Progressive
between due date improvements over the
of customer bill, years\. Achieved
and if not paid,
notice of arrears
System Average Minutes 51840 2000 minutes SAIDI = Sum of
Interruption annual (interruption duration
Duration Index in minutes * number of
(SAIDI) customers affected)
divided by the Total
number of customers
served\.
In financial year 2017 it
was measured as 1920
minutes
In financial 2018 it was
measured as 2213
minutes\.
For the first quarter of
2019 it was measured
as 1757\.6\. Achieved\.
System Average Times 816 85 times SAIFI = Total number of
Interruption interruptions divided
Frequency Index by Total number of
(SAIFI) customers served\.
In financial year 2017 it
was measured as 21\.6
times\.
In financial 2018 it was
measured as 17\.4
times\.
For the first quarter of
2019 it was measured
as 17\.5\. Achieved\.
Page 91 of 94
System losses % December 2007 at 18% System losses have
27% steadily decreased over
the years and now are
at 17%\.
In financial year 2018 it
was 17%
At the end of March
2019 it was 17\.3%\.
ACHIEVED
Average number of Days December 2007 35 days Achieved 33\.61 days
debtor days to
360 days
collect billed
revenue
Collection ratio Percentage 72 70 60
Revenue per kWh Text SBD1\.39/kWh SBD 4\.5/kWh Achieved SBD
generated $4\.64/kWh
Intermediate Indicators
Commissioning of Text 31 March Achieved on 31 March
2 Nos\. 10/12\.5 2019 2019
MVA 33kV/11kV
transformers and a
second 33 kV
switchboard and a
second 11 kV
switchboard and
associated
equipment at
Ranadi Substation
New Kola'a Ridge Text 31 March Achieved on 10 March
33/11kV 2019 2019
Substation
commissioned with
one 10/12\.5MVA
transformer, 33 kV
and 11 kV
switchboards and
Page 92 of 94
associated
equipment
Feeder 12 load Text 31 March Achieved on 30
relocated from 2019 November 2018
Lungga 11kV
generation bus to
East Honiara
Substation
Procurement of Text 31 March Achieved in September
one 12\.5/15MVA 2019 2018
11/33kV
transformer at
Lungga Power
Station
Net Profit before Text SBD44 million SBD98 million Achieved SBD91million,
Tax SBD107 million,SBD120
million, SBD80million
and SBD80million in
2014,2015,2016,2017
and 2018 financial
years respectively
Page 93 of 94
ANNEX 6\. SUPPORTING DOCUMENTS (IF ANY)
1\. SISEP Project Appraisal Document (P100311, Report No: 43120-SB, June 12, 2008)
2\. SISEP Restructuring Project Paper (Report No: 67646 v2, January 22, 2012)
3\. SISEP Additional Financing and Restructuring Project Paper (Report No: 84643-SB, February 13,
2014)
4\. SISEP Restructuring Project Paper (Report No: RES31408, April 2018)
5\. Financing Agreements for SISEP on file
6\. Project Agreements on file
7\. Regional Engagement Framework FY2006-2009 for Pacific Islands (Report no: 32261-EAP, May 3,
2005)
8\. Interim Strategy Note for the Solomon Islands for the period FY10-FY11 (Report No: 53496-SB,
March 12, 2010)
9\. Solomon Islands Systematic Country Diagnostic Priorities for Supporting Poverty Reduction and
Promoting Shared Prosperity (Report No: 115425-SB, June 1, 2017)
10\. Country Partnership Framework for Solomon Islands for the period FY2018-FY2023 (Report no:
122600-SB, June 26, 2018)
11\. Finding Balance 2016, Benchmarking the performance of state-owned enterprises in island
countries, Asian Development Bank, ISBN 978-92-9257-581-6 (Print), 978-92-9257-582-3 (e-
ISBN)
Page 94 of 94 | REVIEW |
P076702 |  ICRR 14357
Report Number : ICRR14357
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 06/30/2014
Country : Sri Lanka
Project ID : P076702 Appraisal Actual
Project Name : Renewable Energy US$M ):
Project Costs (US$M): 231\.9 253\.9
For Rural Economic
Development
L/C Number : C3673 Loan/ US$M):
Loan /Credit (US$M): 115\.0 120\.7
Sector Board : Energy and Mining Cofinancing (US$M):
US$M ): 8\.0 7\.9
Cofinanciers : GEF Board Approval Date : 06/20/2002
Closing Date : 06/30/2008 12/31/2011
Sector (s): Renewable energy (99%); Energy efficiency in power sector (1%)
Theme (s): Infrastructure services for private sector development (23% - P); Climate change (22% - P);
Rural services and infrastructure (22% - P); Participation and civic engagement (22% - P);
Other financial and private sector development (11% - S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Ramachandra Jammi Christopher David Christopher David IEGPS1
Nelson Nelson
2\. Project Objectives and Components:
a\. Objectives:
According to the Project Credit Agreement (June 12, 2002), the project development objectives were to (i) improve
the quality of rural life by utilizing off -grid renewable energy technologies to provide energy services to remote
communities; and (ii) promote private sector power generation from renewable energy resources for the main grid \.
The global environment objective as stated in the Project Appraisal Document was to reduce atmospheric carbon
emission by removing barriers and reducing implementation costs for renewable energy and removing barriers to
energy efficiency\. There is no statement of the global environment objective either in the Project Credit Agreement
or the GEF Project Agreement documents \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
Component 1\. Grid-Connected Renewable Energy Power Generation (At appraisal: US$150\.3 million; At
completion: US$204\.9 million): Continuation of refinancing support for mini -hydro projects provided under the
preceding Energy Services Delivery Project, and support for two other commercially available renewable energy
sources - wind and biomass, to result in an increase of nearly 85 MW of grid-connected small-scale renewable
energy capacity\.
Mini Hydro Projects: In addition to a pipeline of eight projects, totaling 39 MW, in an advanced stage of
development, an additional 20-25 MW\.
Wind Projects: Commercialization and up-scaling of wind development, including exploring the possibility of
off-shore development\. Technical assistance would be provided for business development, feasibility studies,
and off-shore resource assessment \.
Biomass: Support the marketing of viable grid -connected biomass projects \. Focus initially on small-scale
co-generation/gasification projects in the coconut and tea -industry and on larger scale projects with potential
biomass plantations\. Technical assistance for business development, feasibility studies, and regional trade
shows, as well as longer term financing for developers through the Participating Credit Institutions (PCIs)\.
Additional support for pilot biomass gasification investments was to be determined and implemented during the
life of the project\. Subprojects anticipated were one 8 MW project (coconut-based) and about 4-5 smaller
biomass generators in the range of 1-2 MW based on wood waste (from saw mills) and/or new plantations\.
Component 2\. Solar PV Investments (At appraisal: US$63\.7 million; At completion: US$43\.7 million): Credit and
grant support for solar PV investments for household, commercial, and institutional use to enable the market to
become fully commercial\. In particular, the Project's proposed refinance, grant, and technical assistance support
would seek to solidify the existing middle -range solar home system market and expand service to other applications
such as: (i) smaller systems accessible to poor households; and (ii) community applications for health clinics,
schools, street lighting, etc \. Further capacity building would be provided in respect of micro -finance institutions and
other household financing organizations serving limited communities to expand credit access \. These measures
would enable Sri Lanka to achieve the indicated target of 85,000 solar systems\.
Component 3\. Independent Grid Systems (At appraisal: US$5\.3 million; At completion: US$2\.6 million): Support
further commercialization of village hydro and other community -based independent grid systems through refinancing
and grant support for investments and project preparation support \. Additionally, technical assistance would address
such issues as daytime electricity use for income generation activities and mechanisms for disposal of assets once
an area served by an independent grid is connected to the national system (stranded assets)\. The status of
independent grids within the sector reform agenda would also be emphasized in the broader sector technical
assistance\. The indicative target was access for 15,000 new households and enterprises through independent grids -
village hydro projects, as well as projects based on biomass and other technologies, where feasible \.
Component 4\. Energy Efficiency and Demand Side Management (DSM) (At appraisal: US$2\.0 million; At
completion: US$0\.3 million): Provide TA and limited credit support for further private sector development for provision
of energy efficiency services, including a framework for integrating sustainable implementation of such programs into
sector reforms\. It was envisioned that responsibility for energy efficiency /demand-side management (DSM)-related
policy and regulatory issues, as well as implementation of public -policy type DSM programs would rest with the
Government, regulator, or utility, while private sector enterprises such as Energy Service Companies (ESCOs) would
implement commercially viable energy efficiency projects \.
Component 5\. Cross-sectoral Energy Applications (At appraisal: US$4\.9 million; At completion: US$0\.04 million):
Provide rural enterprises credit support for larger systems \. Provide TA to service institutions for the development of
energy, and standardized energy packages to create awareness and to integrate energy provision into improved
service delivery\. In addition, co-financing support would be provided for investments in selected areas \.
Commercial/institutional support would include TA aimed at mainstreaming productive applications in off -grid
systems\. The project sought to connect at least 1,000 institutional and commercial systems, spurring interventions
that are critically important in restoring economic development in the country's northern and eastern areas \.
Component 6\. Technical Assistance (At appraisal: US$5\.7 million; At completion: US$2\.3 million): In addition to the
component-specific assistance described above, technical assistance under the Project was projected for the
following activities: project administration/ promotion; subproject promotion/development support; technology / market
introduction/ promotion/capacity building related to renewable energy and energy efficiency; cross -sectoral energy
applications; sustainability; and monitoring and evaluation \.
Additional financing: Following a mid-term review in 2005, which noted an increase in demand for independent power
projects, an additional financing of US$ 40 million was approved by IDA in 2007\.
Project Restructuring: The first restructuring (level 2, implying that project objectives were not changed ), which was
carried out on October 18, 2010, revised the end-of-project target for component 2 (âoff-grid renewables) from
161,000 households, small and medium enterprises and public institutions to 113,500 as recommended by the
Ministry of Power and Energy\. The Bank considered the reduced target was appropriate given the faster than
anticipated pace of grid expansion, which reduced the demand for off -grid renewable solutions\. A second
restructuring (level 2; June 16, 2011) extended the closing date by 6 months\. This was necessary to enable ongoing
investments to be completed and to make up for the delay in effectiveness of the Additional Financing credit \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The project cost at completion was US$ 254 million, about 10 percent higher than the planned US$ 232 million\. The
increase resulted from revised output targets during implementation, and also due to exchange rate variations \.
Almost all of the additional financing of US$ 40 million was provided to the grid-connected renewable generation and
solar PV components\. The two components accounted for about 97\.5% of total expenditures\. The grid connected
hydro and wind power investments incurred about 36% more total costs and corresponding allocation than was
envisaged at appraisal\.
The independent grid systems component was relatively small in terms of expenditures (approximately 1 percent)\.
The expenditures under the remaining components were far lower than estimates \. The component on cross-sectoral
energy applications was not implemented as the greater than expected grid expansion during the project
implementation period made these activities either less useful or unnecessary \.
The project was approved on June 20, 2002 and became effective as scheduled on October 7, 2002\. The project
was implemented through an Administrative Unit (AU) located in the DFCC Bank, a commercial entity, which
continued the role that it had played under the prior Bank âs Energy Services Delivery project \. The project was
ultimately extended by three and a half years and closed on December 31, 2011\.
A mid-term review was carried out in September 2005, which noted that the grid-connected renewable energy effort
(component 1) was behind schedule, and that the independent grid systems (component 3) were facing constraints\.
The delays related to dealing with sub -stations that had reached their maximum capacities, obtaining required
approvals from the Central Environmental Authority and other agencies, and acquiring land \. The mid-term review
made recommendations to overcome these constraints, which required the cooperation of the Ceylon Electricity
Board and Central Environmental Authority \.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Relevance of the project development objectives is rated High \. The objectives of the project were highly relevant
to Sri Lankaâs priorities, the Bankâs partnership strategy, and global energy and climate concerns, both at the time of
project appraisal and project completion \.
The grid-connected renewable energy development under the project is in line with the Government âs October 2006â
National Energy Policy and Strategies of Sri Lanka â which sought to: (i) provide basic energy needs; (ii) improve
energy security; and (iii) use indigenous resources for these purposes \. It is also consistent with the Government âs
âMahinda Chinthanaya â Vision for the Futureâ which commits to increasing generation from renewable energy
(excluding large hydro) to 20 percent of total generation by 2020 corresponding to about 4,000 GWh/year (or
approximately 1300 MW in installed capacity)\. The off-grid effort under the project remains highly relevant to the
Governmentâs priorities: to achieve a 100 percent electrification goal, the Government has been investing
significantly in network expansion, including off -grid means to electrify roughly 40,000 customers who are âbeyond
the last mile,â? and adding new generation capacity \.
While the foundations had been laid for sustainable growth of the renewable energy industry in Sri Lanka â to which
the Bankâs earlier Energy Services Delivery project had contributed significantly â critical barriers still needed to be
addressed to maintain the momentum: the relatively small size of the market; lack of a level -playing field for private
sector participants; limited access to long term financing with domestic fund mobilization being mainly short term;
integrating renewable energy in the country âs overall electrification strategy; and establishing a sustainable and
transparent basis for subsidies for rural electrification \.
The project continues to be relevant to the latest Country Partnership Strategy (FY2013-16) that supports sustained
private and public investment; and improving living and standards and social inclusion \. The project was also
consistent with the World Bank âs Country Assistance Strategy (FY97-99) which included promotion of sustainable
private-sector led growth; increasing efficiency in delivery of infrastructure, especially in rural areas; preserving the
environment; and working closely with communities and non -Governmental Organizations (NGOs) to generate
development solutions\. The project objectives were also aligned with the GEF Operational Program 6 which covers
promoting renewable energy by removing barriers and reducing implementation costs \. The development of
grid-connected renewables responds to the 2009 Country Assistance Strategy goals of improving infrastructure
provision, improving the business environment for stronger entrepreneurship and knowledge -based economy, and
improving economic opportunities in North and East of the country \.
b\. Relevance of Design:
Relevance of project design is rated Substantial \. The Project had two distinct objectives, the first to improve the
quality of life in rural areas through provision of off -grid electricity, and the other to augment generation capacity for
the grid through promoting private sector involvement in renewable energy resources for the main grid \. Both the
objectives were united by the focus on renewable energy, and on augmenting the available generation capacity in
the country\. The global development objective of decreasing Greenhouse Gas (GHG) emissions derived from the
use of renewable energy to displace fossil fuels \.
In tracing the results chain, provision of off -grid rural electrification was an appropriate choice based on the
assessment â at appraisal â of the speed at which the grid was expanding to rural areas \. The provision of off-grid
electricity would give a jump-start to the rural areas distant from the grid, to experience the expected social and
economic benefits from rural electrification \. In retrospect, the pace of grid expansion turned out to be much faster
than anticipated due to greatly increased emphasis on grid expansion by the Ceylon Electricity Board with the
support of Government The AU pointed out that national integration was an important goal pursued by the
Government, which also helped faster grid expansion \. e\.g\. during 2008-12, the access increased by nearly 20%
(from 75% to 94% of households) during the project implementation period \.
Given the limited options for expanding generation capacity (Sri Lanka has low indigenous fossil fuel resources and
has exploited most of its large hydro potential ) the choice or pursuing new renewable sources (Mini-hydro, Solar,
Wind, Biomass) to feed the grid was appropriate, as these would help replace higher cost liquid fuel based power
plants\. Also, because of the distributed nature of such resources, the potential for local development and savings in
GHG emissions was significant\.
The inclusion of energy efficiency as a small component was expected to help consumers through reduced
consumption and bills, and the utility by rationalizing load management and supply \. In retrospect, this component did
not fit into the overall design and objective, although a more broad -based intervention would still be necessary to
effectively address the issues, institutions and processes for orienting consumer behavior towards energy efficiency,
which is also borne out from experience with other Bank projects \.
4\. Achievement of Objectives (Efficacy):
Objective 1: Improve The Quality Of Rural Life By Utilizing Off -Grid Renewable Energy Technologies To Provide
Energy Services To Remote Communities \. Rated Substantial \.
Outputs
The original target formulated at appraisal was to provide 161,000 households, rural small and medium enterprises
and public institutions access to electricity services through off -grid renewable energy schemes \. In the following
years, a greatly increased emphasis on grid expansion by the Government resulted in an increase of grid connected
domestic customers from 2\.82 million in 2004 to 3\.96 million by 2010 â an increase of 1\.14 million\. Presently, grid
electrification now serves 94 percent of households making off -grid less relevant than originally anticipated at Project
Appraisal\. In response to these developments, the target was reduced to 113,500 based on the forecast demand for
off-grid electrification\. The final accounting for off-grid electrification showed that the project had provided access to
electricity to 110,575 households through the sales of SHS while 6,220 households were electrified through
independent grid systems, mainly village hydro \. In total the project provided 116,795 households access to
electricity, which exceeded the revised target by a small margin \.
Of the 110,575 SHS sold to rural households an estimated 20,000 had to be repossessed because households
defaulted on their loans\. In general, the Participating Credit Institutions only repossessed the modules which were
deemed as their only collateral\. The value of the repossessed modules was insufficient to recover the outstanding
balance\. Further, a small number of SHS and village hydro systems are no longer used because the households
have since been connected to the electricity grid \. On the other hand, while several village systems have now been
connected to the grid, under a net -metering scheme similar to a Standardized Power Purchase Agreement but for
smaller systems, the off-grid village systems connected to the grid can now sell power to the utility at an agreed tariff \.
This is a win-win situation for the village-communities who have invested money and sweat equity into their off -grid
systems as they can now benefit from the reliability of the national grid, while continuing to earn revenues from the
sale of electricity generated by their village hydro schemes back to the utility at an agreed tariff \. Following the pilot
scheme adopted by a village hydro (21 kW at Athuraliya village in Ratnapura ), net metering spurred the growth of
distributed renewable energy projects \.
Outcomes
Feedback to the IEG mission from beneficiaries in the field confirms that access to electricity for the first time â both
from SHS and the grid â has had a transforming effect on their lives \. The more significant impacts on the quality of
life appear to have come from better lighting and use of television, even though newly electrified households and
small businesses activities have indicated little improvements in income \.
The Bank team attempted to capture outcome data for the project during implementation through surveying 1,500
households, small/medium enterprises and public institutions targeted for electrification from the original IDA Credit
(1,000) and the Additional Financing (500)\. The results of the surveys are summarized in the "Completion Report"
which reports on achievements in the period September 2004 to September 2008\. Resources Development
Consultants (Pvt) Ltd\.: Monitoring and Evaluation of the Renewable Energy for Rural Development Project \.
September 2004 - September 2008\. Completion Report submitted to RERED AU\.
The surveys had found that even in small quantities, electricity consumption brings about significant lifestyle changes
in families, mainly by making home life more convenient and housework easier \. One finding from the surveys, which
was confirmed by this missionâs conversations with beneficiaries, is that while access to electricity does not reduce
the overall work load of women, it makes their work easier \. Off-grid electricity is also extensively used for watching
television, leading to more awareness of the outside world, in addition to providing entertainment \. This is considered
the next highest benefit of electricity as it serves to bring remote rural communities closer to the outside world \.
Further, the level of social interaction within households and communities increase with electricity, which contributes
in numerous ways to social capital development \. Men spent more time with the family (80 percent of the respondents
in surveys) and reduced time spent outside of the house including alcohol consumption in the evening (20 percent of
respondents)\.
One home owner conveyed that the lighting has given a feeling of safety for her and her children \. This point was also
found in the survey when villagers reported that they feel safer (60 â 87 percent of the respondents of different
surveys) and an increase in socio-cultural activities resulting from the presence of electricity at religious places in the
villages (80 percent of the respondents )\. The use of computers was also observed in a few houses electrified by
village hydro schemes\.
Contrary to expectation, the availability of electricity did not stimulate the development of new enterprises \. However,
it improved operation of existing enterprises \. According to reports from Participating Credit Institutions and
consultants, access to electricity improved economic activities of 742 (household) enterprises or 0\.6% of total
number of electrified households \. Economic activities that benefited from access to electricity include grocery shops,
bakeries, battery-charging stations, communication centers, computer training centers, grinding /rice milling and
cinnamon processing\.
Not all rural households using off -grid schemes have benefitted from the expansion of the national grid as
approximately 40,000 households are expected to still remain without access to the national grid (including some
who are on small islands\.) This is in addition to thousands who are still using off -grid schemes or other means such
as kerosene for lighting today \. However, for those who have benefitted from faster than anticipated grid expansion
this was a positive development as it provides a higher level of services and is more affordable for households \.
Off-grid electricity supply provided access to electricity several years before the arrival of the grid to their
communities, and for those households who have yet to receive grid power; the off -grid schemes are still very much
valued\. On the whole, off-grid installations under the project have demonstrated that SHS and /or independent mini
grids are a viable option for rural areas where the cost of grid extension would be prohibitive for the utility \.
Objective 2: Promote private sector power generation from renewable energy resources for the main grid \. Rated
High \.
High\.
Outputs
The target for this objective was the installation of 135 MW of small-scale renewable grid-connected power
generation capacity (85 MW at appraisal and 50 MW added under the Additional Financing )\. At completion, the
project had supported the installation of about 185\.3 MW grid-connected renewable energy sub -projects\. This
included 2 wind projects (19\.8 MW total capacity), 1 biomass project (1 MW capacity) and 68 mini hydro projects
(164\.5 MW of total capacity)\. All of these projects are reported to be functioning with the exception of the lone
biomass project which stopped operations due to difficulties with fuel supply \. All these projects were promoted by
private sector developers, using loans provided by commercial banks participating in RERED \. The Participating
Credit Institutions extended loans totaling US$ 122 million (LKR 12\.84 billion), which is on average 59\.5% of total
project cost\. The total investment was about US$ 205 million (LKR 21\.55 billion)\.
As of end-2013, there were 146 non-conventional renewable energy projects commissioned \. The total installed
capacity from those was 367\.3 MW of which about 271 MW (~74%) were mini hydropower based\. In addition, there
is a pipeline of about 73 projects for which a Standardized Power Purchase Agreement has been signed between
private developers and the Ceylon Electricity Board, and are expected to add about 246 MW when completed\. The
total energy generated during 2013 from non-conventional renewable energy capacity was 1169 GWh, which is
about 9\.6% of total generation\. Please see Annex C for details \.
Outcomes
Since the close of the project, investments in new projects have continued as evidenced by the pipeline of projects \.
Developers have shown a continued desire to undertake private investment in renewable energy generation even
after support from the project has ceased, since commercial banks continue to finance these investments \. Sources of
funds include private equity, funds raised through stock markets, foreign equity investors and support from a small
IFC loan guarantee facility\. The Participating Credit Institutions and IFC indicated to the mission that the project had
helped create the momentum for non -conventional renewable energy projects in the country and that there is now
competition among banks and investors to invest in these projects \.
Feedback to the mission from government officials, Participating Credit Institutions and developers suggests that the
project was instrumental in developing a vibrant renewable energy industry in Sri Lanka \. Greater demand for support
services is noted, including project development, technical design, construction, equipment manufacturing, and
financing, though no specific data was available in this regard \. The project has contributed to the formation of
several developer associations, including for solar, wind, village hydro and small hydropower \. The IEG mission met
with select developer associations that continue to be active today and play an important role in representing their
industry in government, regulatory and other consultations \. The collective feedback from government officials,
Participating Credit Institutions and developers supports the claim that Sri Lanka now has a viable renewable energy
industry\. A significant number of developers, manufacturers, and financiers are venturing abroad to undertake
investments in renewable energy projects in other countries in Asia and Africa \. A few examples include: five Sri
Lankan mini hydro developers are now active in East Asia; Lanka Ventures, an equity financier, is investing in mini
hydro projects in East Africa; VS Hydro undertakes its own contracting and manufacturing of turbines in Sri Lanka
and has investments in Uganda, Tanzania and Kenya \. An 18 MW plant in Uganda uses three 6 MW turbines
manufactured in Sri Lanka\.
The AU and the Sustainable Energy Authority noted the value added from several technical assistance initiatives
under the project\. The regulatory agency (Public Utilities Commission of Sri Lanka) noted that the project had
enabled a better understanding of structuring Power Purchase Agreements \. Across the stakeholder groups, the
project is credited to have enabled knowledge sharing through periodic consultative meetings, which were reported
to have helped many project sponsors and Participating Credit Institutions to fine tune their activities and
interventions\. One independent consultant and energy expert noted that this was effective because of the relatively
higher level of skills and absorption capacity among institutions in Sri Lanka \.
As a result of increased renewable energy activity, rural communities have benefitted from both temporary and
long-term employment opportunities from construction and operations of the sub -projects and overall improved
infrastructure as Government has undertaken construction of new roads and /or repair of existing ones to facilitate the
construction activities for some of these sub -projects\. A number of villages benefitted from piped water supply,
construction of houses, school facilities, community centers and improved facilities at places of worship \. Developers
carried out these improvements mainly to create goodwill among the villagers, while some were done as
compensation payments to the villagers \.
Global Environmental Objective
Global Environmental Objective : To reduce atmospheric carbon emission by removing barriers and reducing
implementation costs for renewable energy and removing barriers to energy efficiency \.
The indicators for achieving the global environmental objective were : (i) avoiding emissions of 1\.25 million tons of
CO2; and (ii) promotion of the adoption of renewable energy by removing market barriers and reducing
implementation cost\.
The teamâs estimates of CO2 avoidance are straightforward and credible \. Assuming an average carbon emission
coefficient for Sri Lanka of 0\.8 kgCO2/kWh This value is for marginal power plants which are diesel and fuel oil
based, and can be displaced by the new renewables financed under the project \. , the resulting avoided emissions of
sub-projects commissioned to date is 1\.84 million tons CO2; surpassing the target of 1\.25 million tons of CO2 by 47
percent (the quantifiable indicator was not increased with the additional financing )\. By estimating the total expected
generation from all plants commissioned in 2012 or those expected to be commissioned by year âs end, the volume of
avoided CO2 emissions would be 2\.15 million\. The avoided emissions are calculated from the actual renewable
electricity production and conservative estimates for the total annual electricity generation over the lifetime of the
sub-projects\. The resulting reduction in carbon emissions can also be attributed to the off -grid schemes as well,
though these are far smaller in volume than emissions avoided from the grid -connected sub- projects\. The
coefficients used for estimates of CO 2 evidence at appraisal continue to be valid at present \. Ongoing activity in
grid-connected renewables and off -grid renewables following project completion continues to add proportionately to
CO2 avoidance\.
The design of the project also included an engagement on energy efficiency through a small component; however,
the limited resources allocated for energy efficiency and demand -side management (DSM) (US$ 2 million equivalent
or 0\.9% of the total financing) made a significant impact unlikely \. Moreover, a low interest credit line for energy
efficiency extended by the Japan International Cooperation Agency (JICA) made RERED funds far less attractive \.
The project therefore did not result in any direct CO 2 reductions from the energy efficiency and DSM component \.
The removal of market barriers is evident from the additional installed capacity of grid -connected renewable energy,
improved all-round sector capacity, and viable private sector activity in this area as describe in the discussion under
objective 2 above\. In contrast to the situation prior to the project there is now far greater familiarity and willingness to
lend by commercial banks for grid -connected renewable energy projects and the Ceylon Electricity Board is far more
oriented to purchasing electricity from grid -connected renewable energy plants \.
5\. Efficiency:
The efficiency of the project in meeting its objectives is rated Substantial \. The economic and financial analysis
was based on representative stylized sub -projects from the feasibility study at appraisal, compared with actual
projectsâ data at close\. Under the financial intermediary mode followed by this project, the verification of the financial
viability of the sub-projects within the feed-in tariff regime was the responsibility of the lending commercial banks
which also bore the full credit risk of the sub -projects\.
Mini-hydropower plants\. Grid-connected mini- and micro-hydropower plants were the dominant investment in the
âgrid-tiedâ? component\. A mini hydro sub-project was used as a representative project for the economic and financial
analyses\. Post completion, the Economic Internal Rate of Return (EIRR) was 46 percent for a representative 2\.5 MW
mini hydro plant with an investment cost of US$ 1,445/kW, a plant factor of 38 percent and an avoided cost of
US$0\.252/kWh based on Short-Run Marginal Cost (SRMC) of highest cost thermal plants offset by the mini hydro
generation\. The economic analysis at Appraisal for a 1\.5 MW mini hydro plant showed an EIRR of 24 percent\. The
higher EIRR is attributed to the higher avoided cost even though plant factor was lower and investment cost higher
than at appraisal\.
Solar Home Systems \. Households using a SHS save on kerosene for lighting and batteries and receive far superior
and safer lighting services from electric lighting compared to kerosene lighting \. Based on a 40 Wp SHS for a
representative analysis, the ICR estimated the EIRR at 88 percent when consumer surplus (attributed to the far
superior electric lighting) is considered and 13 percent if consumer surplus is disregarded \. There was no EIRR
calculated at appraisal for this component \. However, since about 20,000 SHSs were not used by beneficiaries (which
is about 18% of all SHSs), spreading the cost of these over the remainder of the SHSs should reduce the EIRR \.
Village hydro plants \. A village hydro plant saves kerosene for lighting and batteries as well as providing far superior
and safer electric lighting services compared to kerosene lighting \. Beyond meeting householdsâ basic electricity
needs, they have the potential to meet other electricity needs in the community such as ironing, water pumping, and
power for small enterprises\. The EIRR of a representative sub -project was calculated taking into account only
savings due to avoided kerosene and battery use as well as consumer surplus gained from using superior electric
lighting\. The EIRR for a representative sub -project with a capacity of 8 kW and serving 30 households is 54 percent
when consumer surplus is considered and 9 percent if consumer surplus was not considered \. In comparison, the
EIRR of a typical village hydro sub -project was reported as 12 percent at Appraisal\.
The project cost increase of 10 percent (US$254 million vs\. the original estimate of US$232 million) is in line with the
significant upward revision and achievement of targets for grid -connected renewable energy, while noting the
decrease in targets and achievements for SHS \. The time overrun of three and a half years on top of the originally
planned six and a half years implementation period was due to the increased targets and achievements, and the
adjustments that were appropriately made in response to intervening political, financial and market conditions \. As
noted in the mid-term review, there were also delays in activities relating to overloaded substations on the part of the
Ceylon Electricity Board and granting required approvals by the Sustainable Energy Authority that also contributed to
the delay\. Taking all these factors into consideration, efficiency is rated substantial \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 46% 80%
ICR estimate Yes 24% 80%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Overall project development outcome is rated Satisfactory \. Relevance of the project development objective is
rated high because of Sri Lankaâ priority and the Bankâs supportive strategy to contribute to rural well -being through
improved provision of electricity access and to reduce dependence on imported fossil fuels as a source of electricity \.
Relevance of the projectâs design is rated high because of its logical approach of leveraging renewable energy
sources for both off-grid and grid-connected provision of electricity to improve access and therefore positively impact
beneficiaries, especially in rural areas, while displacing the use of fossil fuels \. The Efficacy of the first objective of
improving the quality of rural life through off -grid renewable technologies is rated substantial due to significant
outcomes from the spread of SHS in unserved rural areas, though this process was overtaken to some extent by the
parallel advance of the electricity grid \. The second objective of promoting private sector power generation from
renewable energy resources is rated high from the higher greater than expected achievements from various
renewable energy sources\. Efficiency of the project is rated substantial (rather than high) mainly due to the
avoidable causes that contributed to the significant time overrun, even though the economic rate of returns are very
favorable\. Overall Development Outcome of the project is rated satisfactory based on the ratings for relevance,
efficacy and efficiency\.
Global environment outcome \. CO2 emission reductions were greater than expected due the significant lowering of
market barriers to renewable energy development and the overall achievement of renewable energy under the
project being greater than originally planned \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The risk to the improved quality of life from utilizing off -grid renewable energy technologies to bring electricity to
remote communities is considered low \. Also, the risk of communities no longer using the off -grid renewable energy
technologies for reasons other than the arrival of the grid is low \. Once the users have experienced the benefits of
off-grid electrification they are seen to make considerable efforts to maintain this service \. In many cases, the off-grid
options may be maintained as a back -up or to reduce the grid electricity bill \.
At Appraisal, the Governmentsâ rural electrification policy envisaged that 20 percent of the population would remain
reliant on off-grid electricity supply\. At present, the Government expects to achieve full electrification by 2016, of
which a relatively low number of 40,000 households would have to be served by off -grid means\. The Government
also targets a share in generation capacity for non -conventional renewable of 15 percent by 2015 and 20 percent by
2020\. By 2013, the generation from non-conventional renewable energy sources had reached about 9\.6 percent\.
Apart from the numerical targets, further addition of non -conventional renewable energy is critical for managing the
peak load demand as well as replacing expensive oil -based power plants, thereby lowering the average costs of
generation\. Hence the sustainability of the project âs outputs and outcomes are very important to the sector âs
developmental priorities\.
Role and support of Ceylon Electricity Board
Stakeholders expressed mixed views to the mission about the Ceylon Electricity Board âs active support for
grid-connected renewable energy, mainly attributing this to a lack of consensus among its key constituents and
management\. However, there are signs that the Ceylon Electricity Board has emerged from its earlier reluctance
towards grid-connected renewable energy \. For instance, the Ceylon Electricity Board has acknowledged that power
purchased from small renewable energy plants had saved the utility LKR 2 billion in electricity generation costs in
2010 through reduced expenditure on imported heavy fuel oil and other fossil fuels \. Following the April 2013 tariff
adjustments, the Ceylon Electricity Board estimates show that its average selling price could exceed the average
purchase cost of energy from non -conventional renewable energy \. Ceylon Electricity Boardâs projections indicate that
non-conventional renewable energy would be a viable option to pursue in supply cost reduction \. Please see Annex C
for details\. Project developers and the Ceylon Electricity Board both have a mutual interest in maximizing renewable
energy production, particularly to minimize use of imported fossil fuel as the alternative for electricity generation \.
Continuing financing for NCRE projects
One major criterion for measuring the impact of this project is the continued lending for renewable energy projects by
commercial banks and the initial findings post project completion are very encouraging \. About 73 new projects are
in the pipeline and would add another 246 MW to non-conventional renewable energy capacity in the country \.
Small hydro development is now considered a commercially viable activity by Participating Credit Institutions and
developers\. Sufficient technical expertise for this purpose exists within the country \. All this is borne out by the large
number of mini hydro projects in the pipeline \. However, development of village hydro without the type of support
provided by this project is unlikely while the need is also declining due to rapid grid expansion \. Developers active in
village hydro have moved to other areas and some are now providing consultancy services in India and Africa \.
Biomass generation, and to a lesser extent wind and solar power generation, are still facing a number of barriers and
support to overcome these barriers would be useful \. These barriers include technical (integration with grid issues),
regulatory (feed-in-tariffs) and financing (suitable terms) barriers\. The Asian Development Bank is providing technical
assistance support in this regard, and indicated its readiness to follow with financial support for investments \.
The demand for SHS systems can be positively impacted by the net metering regulations introduced by the regulator
(Public Utilities Commission of Sri Lanka) that allow individual SHS customers to offset their payments to the utility
with electricity generated from their SHS systems at the retail tariffs \. A few of these schemes (limited to 42 kWp per
facility) are now in operation as residential tariffs have recently been increased to as much as LKR 50\.4/kWh
(including fuel adjustment surcharge for higher consumption category; currently about US$ 0\.38/kWh)\. As the Ceylon
Electricity Board and the Public Utilities Commission of Sri Lanka continue to fine tune the net -metering regulations,
they need to ensure that the boost these have provided to the SHS industry is sustained \.
In respect of SHS, only two vendors are currently active out of the fourteen at the peak of sales \. Some of the
technicians trained under the Energy Services Delivery and the RERED projects are providing independent after
sales services in their areas and the remaining SHS vendors depend on their services to fulfill their obligations \. One
vendor (Wisdom Solar) has shown resilience by marketing solar street lamps to municipalities, and capturing
business in some remote areas in the northern part of the country, and indicated that their firm is well placed to
implement the SHSs and off-grid solutions to the 40,000 homes identified by the Ceylon Electricity Board \.
Power plant operating risks
There is a risk that some of the grid -connected renewable energy sub -projects might stop operating (mainly for
projects where power purchase agreements will be expiring and the tariff offered might be too low to sustain
operations)\. For instance, a 1\.8 MW mini hydropower plant Daily Mirror, Sri Lanka, March 13, 2014, page A16
âPrivate Hydropower Plant Closed Without Notice â? commissioned in 1989 was reported to have shut down from being
unable to meet operating costs due to low tariffs \. The Public Utilities Commission of Sri Lanka showed
understanding in this situation and resolved this issue, after considering the impact it could have on the whole
non-conventional renewable energy segment \. The risk that the private sector ceases to seek and develop new
projects is considered low unless tariffs decline substantially to the point where the economics become unviable \. The
Government has indicated its commitment to the participation of the private sector in electricity generation, especially
from renewable resources\. These projects are financially viable and commercial banks are continuing to lend, even
without refinancing\.
Role and support of the Government
Sub-projects refinanced by the project would continue to comply with the Government âs environmental requirements,
including the required monitoring\. Some stakeholders from private sector and industry association however
expressed reservations, but also the desire that the Sustainable Energy Authority needs to step up its efforts to meet
the challenges, streamline bureaucratic requirements, and actually assist project developers to realize their projects
and also contribute to national priorities of promoting non -conventional renewable energy \. The Governmentâs further
endorsement of non-conventional renewable energy and support for its development should be sufficient incentives
for the Sustainable Energy Authority, though its ability to attract skills remains an issue as market pay scales are far
higher\.
The activities supported by the project have transitioned from the AU to the Sustainable Energy Authority which will
provide continuity for facilitating investments in the sector \. Sustainable Energy Authority officials indicated to the
mission that they are now maintaining documentation from the project, which includes a wealth of analysis, data and
information on the subject of renewable energy and related initiatives in the developing country context \.
Based on the overall assessment of the key issues, the risk to sustainability of overall project development
outcome is rated Negligible to Low \.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
a\. Quality at entry:
The design of this project is rate satisfactory \. It benefited from the Bankâs experience with the earlier Energy
Services Delivery project â which received a satisfactory outcome rating â as well as rural and renewable energy
projects in South and East Asia and Sub -Saharan Africa\. The guiding principles that emerged from the Energy
Services Delivery project and other Bank projects were : (i) necessity of providing consumer choice; (ii) ensuring
pricing which is cost-reflective; (iii) overcoming high start-up costs; (iv) encouraging local participation, tapping
into private sector and civil society capabilities and potential; and (v) implementing sound sector policies \.
Design features of the project that derived from the above lessons contributed to effective project implementation,
including: third-party administration of the credit and grant facility and overall project management; involvement of
industry associations and advocacy groups in guiding industry growth and directions; the adoption of a
standardized power purchasing agreement and ensuring tariff certainty; a bankable legal framework that assured
availability of long term financing; and the importance of participation and commitment of the entire community on
off-grid village electrification schemes for ensuring long term sustainability of these schemes, as well as adequate
after sales service\.
In retrospect, the project design underestimated the pace at which the electricity grid would expand in the
country\. At the project preparation stage, the Bank in consultation with the Ceylon Electricity Board, estimated
that existing technical and financial constraints would limit the coverage of the grid to 80 percent of the population
leaving about 20 percent (or about 1 million households) reliant on off grid systems\. Subsequently, the
Government moved aggressively to increase generation (2,483 MW to 3,312 MW during 2003-12) and expand
the grid, with the result that only 40,000 households remained to be covered through off -grid options by 2013\. As
the development of major hydro has remained stagnant at 1,207 MW since 2003, the growth in generation came
mainly from an increase in thermal power (51%) as well as renewable energy (48%), the latter comprising small
hydro, wind and biomass\. The faster than anticipated growth of the grid, while a welcome development,
necessitated changes in strategy and targets for off -grid electrification\.
The overall risk rating for the project at appraisal was substantial \. This is reasonable for the type and scale of
interventions proposed under the project \. The demand for refinancing of loans for grid -connected renewable
energy projects depends on a number of macroeconomic factors that are beyond the control of the project \. For
example, when interest rates were substantially higher at certain periods during the implementation period â most
notably at the height of the military conflict â the demand for refinancing loans reduced significantly \. Demand grew
once more when interest rates dropped again \. On the other hand, the risk of an insufficient market for SHS was
identified and considered moderate \. The impact of a saturated market for SHS or accelerated grid expansion was
not analyzed in sufficient detail, which could have anticipated some of the challenges faced during
implementation\. This is an important lesson for other countries that are undertaking or planning aggressive
off-grid electrification schemes\.
Again in retrospect, the inclusion of two relatively small components for energy efficiency /demand-side
management and cross-sectoral energy applications did not fit well into the major thrust of the project \. These
components did not yield expected results, and may even have diverted some focus and effort from the larger
project components\.
at -Entry Rating :
Quality -at- Satisfactory
b\. Quality of supervision:
he Bank âs quality of supervision during the project is rated Moderately Satisfactory \. The Bankâs
The
supervision was characterized by a strategic management role rather than day to day handholding of the
implementing agencyâs activities\. This was possible because of AU âs capacity and competence, and contributed
greatly to its sense of ownership of the project for both AU and the Government \. Feedback from the AU and the
Government suggests that the Bank responded adequately and in a timely manner to requests for clearances
and participated regularly in meetings with all project stakeholders \. Both AU The AU noted that despite the
value-added of such an approach, other financiers like the European Investment Bank had not included technical
assistance in their ongoing projects and financing \. and other stakeholders credited the participatory approach
and its approach to the Bank and the project \.
The role of the Bank was highly valued as indicated by the feedback survey conducted at the end of the project \.
This was confirmed by the mission from the feedback it received from the Government, AU, Participating Credit
Institutions and other stakeholders \. Most respondents recognize the Bank as a key catalyst for grid -connected
and off-grid renewable energy and energy efficiency interventions \. The Bankâs involvement increased the
confidence of the Participating Credit Institutions to continue to provide long -term loans to private developers of
renewable energy projects\. This was of particular importance because increasing the access to energy services
from renewable energy was at the heart of the RERED design \.
However, the Bank was less responsive in dealing with the implementation issues with solar PV, cross -sectoral
energy applications and energy efficiency & demand side management components \. Despite the early onset of
problems from 2006 onwards, it was not until late-2010 when Bank revised output targets for solar PV
component, and also it is unclear if the Bank proactively examined the implications of potential risks of
non-payment by SHS customers on the vendors, creditors and the refinancing by the project \. It is also unclear if
the Bank enabled dialogue with Ceylon Electricity Board and the Government on these issues and possible
coordination of grid expansion with off -grid options during this period\. Similar lack of proactivity is apparent
concerning the other two components, as also noted by the absence of such discussion in the additional
financing documents\.
The Bank could have done more to encourage and assist the AU in making active use of the technical assistance
component rather than relying on requests from the industry, beneficiaries, or other stakeholders \. The Bank
could also have insisted on better transition arrangements from the AU to Sustainable Energy Authority including
the digitizing and transfer of documentation \.
Some stakeholders also pointed to the sometimes passive role of the Bank in critical issues (e\.g\. The Ceylon
Electricity Boardâs least cost development plan and implications for non -conventional renewable energy ); while
most expressed that the Bank seemed to have exited the sector too soon since many policies formulated and
adopted during the project period were showing signs of stress and the absence of the Bank âs lead and
convening forte was conspicuous \. Interestingly, the Public Utilities Commission of Sri Lanka shared the view that
local economic gains from non-conventional renewable energy projects could now be integrated into a broader
theme of rural economic development, and that the Bank âs presence could have facilitated this effectively \.
Overall Bank Performance is rated Moderately Satisfactory \.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The government âs performance is rated Satisfactory \. The Government showed consistent support to the
project objectives throughout appraisal and implementation \. During the project implementation period, in October
2007, the Government established the Sri Lanka Sustainable Energy Authority as an apex institution responsible
promoting sustainability in energy generation and use through increasing the use of indigenous renewable energy
resources and improving energy efficiency \. This underlined the commitment of the Government to renewable
energy and complemented the activities of the project \.
The Government ensured continuity in the implementation arrangements from the earlier Energy Services
Delivery project by working through the same AU located in the DFCC Bank \. The Government also appropriately
took a hands-off approach to the day-to-day implementation of the project and generally limited its own role to
creating an enabling environment and providing counterpart funding \. It facilitated the implementation of the
project by providing the required policy and regulatory support, and approving investments by the utility for
upgrading substations\. The Government also provided considerable grant support for renewable energy through
the Ceylon Electricity Board, directly to beneficiaries for SHS, and through provincial councils for village hydro
schemes\. It established attractive tariffs for selling renewable electricity to the national grid and ensured that the
Standardized Power Purchase Agreement terms and conditions were adhered to by all parties \. The Government
was very responsive to the routine refinance -linked disbursement requests from the AU and was supportive in
addressing problems that arose during the process \. The mid-term review noted that there were delays in some
cases in granting necessary approvals on the part of the Central Environmental Authority (CEA), and in dealing
with overloaded substations on the part of the Ceylon Electricity Board \. On balance, the Governmentâs
performance is rated Satisfactory \.
Government Performance Rating Satisfactory
b\. Implementing Agency Performance:
Implementing agency performance during the project is rated Highly Satisfactory \. The AU situated in the
DFCC Bank was the implementing agency for the project \. The AU was well placed to work with the Participating
Credit Institutions and private developers and administer the refinancing mechanism due to its experience in
commercial banking transactions \.
The AU displayed strong commitment and professionalism to the objectives of the project, and coordinated well
with all major stakeholder groups including Participating Credit Institutions, MFIs, developers, SHS vendors,
village hydro developers, industry associations, village electricity consumer societies, the Ceylon Electricity
Board and other Government organizations \. In coordinating with stakeholders, the AU consolidated the
consultative process that had been developed under the Energy Services Delivery project \. Feedback to the
mission from stakeholders suggests that they generally hold favorable views about the AU and its helpful role
during their interactions\. Some developers were very complimentary of the neutral role played by the AU;
especially as it is also one among peer Banks and Participating Credit Institutions \. Other Participating Credit
Institutions indicated that the AU was professionally staffed and managed \.
The AU was administratively separated from the lending arm of DFCC Bank to minimize conflict of interest in the
eyes of the other Participating Credit Institutions that were competing with DFCC Bank for refinancing of their
loans\. Procedures were documented well in the AU, and detailed records of sub -projects were maintained well\.
In retrospect, the AU could have done better in identifying more opportunities for technical assistance activities to
support the various components, and in planning for a smoother transition after project completion, especially in
the development of Sustainable Energy Authority âs readiness\.
Overall, Borrower performance is rated Satisfactory \.
Implementing Agency Performance Rating : Satisfactory
Overall Borrower Performance Rating : Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Monitoring & Evaluation Design \. The M&E framework employed appropriate outcome and output indicators that
were well-defined and largely measurable\. The responsibility for collecting the M&E indicators lay mainly with the
AU\. The objective of improving the quality of rural life by utilizing off -grid renewable energy technologies was to be
measured through: (i) increase in income generating activities in communities that gain access to electricity; and (ii)
increased electricity connections to households, rural small /medium enterprises and public institutions \. The number
of households, small and medium enterprises and public institutions electrified was to be obtained from regular
reporting under the project\. The increase in income generating activities would be assessed through surveys, though
it was noted that attribution to the use of renewable energy technologies might be difficult \.
The objective of promoting private sector power generation from renewable energy resources for the main grid would
be measured by additional MW of small -scale renewable grid-connected power generation capacity \. The global
environmental objective would be tracked through reduction of greenhouse gas emissions and the adoption of
renewable energy and the trend in implementation cost as proxies for reducing market barriers \. The indicators were
adequate to assess achievement of this objective \.
b\. M&E Implementation:
M&E Implementation \. The AU contracted a consultant to monitor progress towards achieving objectives and
meeting indicators\. M&E reports were submitted initially every quarter and bi -annually from 2006 onwards\. The AU
collected the required information as part of its routine administration work and progress was monitored throughout
the sub-project lifecycle\. The task team reports that the information provided was current and reliable \. The Bank also
hired an expert consultant to help review the progress and issues with solar PV component, which was helpful in
examining options to resuscitate this component \.
c\. M&E Utilization:
M&E Utilization \. The M&E process helped in proposing and pursuing the various corrective actions that emerged
during implementation\. The AU also conveyed that it had replicated the M&E processes for this project in other
ongoing donor supported projects \.
M&E Quality Rating : High
11\. Other Issues
a\. Safeguards:
Safeguards \. The project was placed in Category B under the Bank âs environmental and social safeguard policies \.
The proposed project was expected to yield net positive environmental effects \. The off-grid electrification
sub-projects would reduce use of kerosene and lead -acid automotive batteries\. No significant negative impacts were
expected from the run-of-river village-hydro projects, as demonstrated by the 20 existing village hydro projects \.
Because of their small size, the grid -connected mini-hydro sub-projects were also unlikely to cause significant
environmental damage\. No resettlement was envisioned because the project did not involve land acquisition with
settlements\.
IDA had required prior review of: (i) all biomass projects; (ii) mini-hydro projects with a capacity of more than 5 MW;
(iii) wind projects with a capacity of more than 10 MW; (iv) all projects involving land acquisition and /or resettlement;
and (v) the first two environmental assessments of each Participating Credit Institution for mini hydro, biomass and
wind power projects\. Mini-hydro subprojects would be reviewed by the Central Environment Authority for
compliance with environmental policies \. Participating credit institutions would ensure that project sponsors obtain
GOSL and IDA-mandated environmental clearances, where necessary \.
Discussions with the projectâs task team during the PPAR mission confirm that the AU followed these procedures
diligently\. In addition, the AU contracted consultants to conduct environmental and social assessments of every grid
connected sub-project before approval, and on a sample basis after commissioning, which also included site visits \.
Based on these assessments, two projects were denied refinancing because of non -compliance with environmental
safeguards\. An environmental review for a Pilot Wind Farm confirmed that it would have minimal environmental
impacts, entailed no relocation of local population and would be located more than one mile outside the Bundala and
Yala wildlife reserves\. Overall, the task team reports that the project was in compliance with the Bank âs
environmental and social safeguards requirements \.
The discussions with the Participating Credit Institutions indicated that the project had enabled their institutions to
develop knowledge, skills and approach to handling safeguards issues in energy projects \. One wind project sponsor
felt that the paper work involved due to specific requirements of World Bank over and above the government
regulations and requirements was excessive \.
b\. Fiduciary Compliance:
Financial Management \. The AU had well-established procedures for approval of disbursements of loan and grant
resources and adequate financial management (FM) staff with sufficient capacity to undertake those responsibilities \.
Participating credit institutions were required to submit refinancing application packages comprising a complete set of
documents\. The Refinance disbursements were made only after providing proof that Participating Credit Institutions
had already disbursed their loans to developers and such funds were utilized for the stated purpose \. Co-financing
grants were disbursed on submission of proof of installation \. Other grant payments were generally based on reaching
specified verifiable milestones\. Verification of installation of SHS was carried out on a sample basis \. The Task team
reports that these verifications did not find any indication of unjustified payment requests \. The AU kept detailed
records on all payments made\. To ensure adequate fiduciary controls, IDA reviewed : (i) the first two refinancing
requests, irrespective of size, submitted by each Participating Credit Institution; (ii) refinancing applications above
US$ 3\.5 million; (iii) each Participating Credit Institution âs first solar home system refinancing request; (iv) each
Participating Credit Institutionâs first grid-connected hydro, wind and biomass refinancing request; and (v) each
Participating Credit Institutionâs first village based hydro, wind and biomass refinancing request \. The task team
confirmed that there were no qualified audits \.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Negligible to Low Negligible to Low
Outcome :
Bank Performance : Satisfactory Moderately The Bank could have been more
Satisfactory responsive in dealing with the
implementation issues with solar PV,
cross-sectoral energy applications and
energy efficiency & demand side
management components\.
Borrower Performance : Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
Local participation and involvement, suitably incentivized, is crucial to promoting distributed power generation
activities \. Active local participation drove the momentum and successful implementation of the 68 mini hydro
projects and the 173 community-based micro hydro projects supported by the project \. The participation came in
the form of local political support and the newly -formed village level electricity consumer societies, which were
incentivized by opportunities for selling a part of the generation to the grid through ânet meteringâ\.
Involving the private sector effectively in a decentralized developmental effort requires flexibility in
implementation arrangements and space for adapting to market conditions \. In spite of past lessons informing the
design of the project, almost all major aspects â financing and disbursement parameters, procurement policies and
approach, SHS business model â had to undergo modifications to keep up the pace of implementation \. Without
such adjustments, the project would likely have stalled /failed\.
in -tariffs policy and its consistent and transparent application are crucial to spur growth of
An appropriate feed -in-
small scale and non -conventional renewable energy generation \. The low transaction costs enabled by attractive
feed-in-tariffs crowded in project developers and investors, as well as commercial /investment banks to develop
and invest in a variety of distributed generation projects \. Market confidence was enhanced by consistent and
transparent application of the policy by the regulator / government\.
Investments in off -grid electrification could be underutilized or even abandoned in the event of a faster than
expected arrival of the electricity grid \. To mitigate this, the expansion of the grid should be coordinated with
off-grid investments, and, where warranted, the off -grid facilities should be made grid -compatible to ensure
off-
their continued utility \. In Sri Lanka, as the electricity grid expanded faster than expected, the decreasing
necessity and relevance of off -grid electrification was not foreseen early enough, resulting in some off -grid facilities
falling into disuse or neglect\. This experience points to the need for planning ahead for a coordinated access
rollout, and making policy and technical provision for making the off -grid facilities grid-compatible and economically
viable\.
14\. Assessment Recommended? Yes No
Why? This ICRR reflects the Project Assessment conducted in March 2014 and published in June 201 as cited
below:
World Bank\. 2014\. Sri Lanka - Renewable Energy for Rural Economic Development \. Washington, DC ; World Bank
Group\. Report No\. 88547\.
15\. Comments on Quality of ICR:
The ICR is written in a clear, analytical manner and provides adequate evidence of outputs and outcomes \. The risk
to development outcome section in particular is well argued \. The lessons follow logically from the project's
institutional and implementation experience \. The ICR document is concise, and well supported by more detailed
information in the annexes\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P087735 | IEG
Report Number: ICRR14665
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 06/24/2015
Country: Armenia
Project ID: P115486 Appraisal Actual
Project Name: Lifeline Roads Project Costs (US$M): 30\.40 126\.07
Improvement Project
L/C Number: C4549; L7751 Loan/Credit (US$M): 25\.00 101\.49
Sector Board: Transport Cofinancing (US$M):
Cofinanciers: Board Approval Date : 02/24/2009
Closing Date: 12/31/2010 12/31/2013
Sector(s): Roads and highways (98%); Public administration- Transportation (2%)
Theme(s): Rural services and infrastructure (100% - P)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Ranga Rajan Midori Makino Christopher David IEGPS1
Krishnamani Nelson
2\. Project Objectives and Components:
a\. Objectives:
The project development objective as stated in the Financing Agreement (Schedule 1, page 4) and in the Emergency
Project Paper (page 5) prepared in lieu of the Project Appraisal Document (PAD) was "to upgrade selected sections of
the lifeline road network and create temporary employment in road construction"\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives/key associated outcome targets?
Yes
Date of Board Approval: 08/27/2009
c\. Components:
Component One\. Rehabilitation of the Lifeline Road Network (appraisal estimate US$30\.00 million and actual cost
$123\.99 million)\. This component planned to rehabilitate about 1OO km of the lifeline road network (defined as roads
that connected rural communities to an interstate road) located in seven Marzes (administrative divisions)\. Activities
included; (i) civil works for road rehabilitation; (ii) consultancy services for the construction and supervision and
technical auditing of rehabilitation works; (iii) updating of the original Millennium Challenge Corporation (MCC)
financed 2007 designs and environmental documents; and (iv) project implementation expenses including funding
project audits, incremental operational implementation costs and additional costs for intensified project supervision\.
The scope of this component was expanded (discussed below) through two additional financing in the amount of
$42\.12 million (2009) and $45\.80 million (2010)\.
Component Two\. Technical Assistance (appraisal estimate US$0\.40 million and actual cost US$1\.88 million)\. This
component aimed at technical assistance for strengthening of the Armenian Roads Directorate (ARD)\. Activities
included; (i) financing a study to review low cost pavement options for Armenia which was to explore options for
different pavement types and ways to increase labor based activities; (ii) updating of designs for about 100 km of
lifeline roads for a potential project; and (iii) vehicle for supervision and related training\. The scope of this component
was expanded (discussed below) through two additional financing in the amount of for $0\.87 million (2009) and $0\.62
million (2010)\.
Through the two additional financing that were approved within the first two years of project effectiveness the following
changes were made to the project components and indicators (ICR, page 4)\.
At the first additional financing on August 27, 2009:
ïThe number of roads to be rehabilitated was increased by an additional 140 km (from 100 km to 240 km)\.
ïA "safe village" program was to be implemented for supporting rural communities in implementing road safety
measures, recommended by road safety audits and by the National Road Safety Strategy\.
ïAdditional indicators were incorporated for monitoring the total classified roads and the share of rural population with
access to all season road\.
At the second additional financing on July 15, 2010:
ïThe number of roads to be rehabilitated was increased by an additional 190 km (from 240 km to 430 km)\.
ïTechnical assistance component was to include development of new road geometric standards, feasibility studies,
designs of future investments and procurement of road data collection equipment\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Costs: The original appraisal cost (including costs of contingencies and front end fee) was US$30\.40 million\.
With the first and the second additional financing which took place on August 27, 2009 and July 15, 2010, the cost
estimates went up to US$76\.12 million and then to US$126\.10 million\. The actual cost at completion was US$126\.07
million\.
Project Financing: At appraisal, the Bank's contribution was through an US$25\.00 million IDA grant\. The Bank's
subsequent additional financings were through IBRD loans of US$36\.60 million and US$40\.00 million\. With these, the
total Bank financing was estimated at US$101\.60 million\. At closure, the Bank's actual contribution was US$101\.51
million\. There were no co-financiers\.
Borrower's Contribution: At appraisal, the borrower contribution was estimated at US$5\.40 million\. Their contribution
increased by an additional US$9\.12 million following the first additional financing, and by an additional US$9\.98
million with the second additional financing totaling $24\.50 million\. At closure their actual contribution was US$ 24\.58
million\.
Dates: With the first additional financing, the project closing date was extended by one year from December 31, 2010
to December 31, 2011, and with the second additional financing, by two more years to December 31, 2013\. The
project closed on December 31, 2013\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Relevance of Objective : High\.
The objective was relevant to the Government's Lifeline Road Development Program launched in 2008, which
identified a priority network for providing at least one access road to Armeniaâs 960 communities\. The objective
continued to be relevant to the current Government Strategy\. The Armenia: Transport Sector Development Strategy
2020, included an investment plan for the road sector, and identified priority investments on the interstate and rural
road network for the 2010-2020 period\.
At appraisal the Country Assistance Strategy (CAS) for the fiscal years 2004-2008 identified the need for promoting
private sector growth by reducing infrastructure bottlenecks, and this CAS and Progress report specifically mentions
improving road transport infrastructure as a key outcome indicator\. The Country Partnership Strategy (CPS) for the
fiscal years 2014-2017 period, highlighted the need " for strengthening competitiveness and supporting job creation\."
The CPS for the fiscal years 2009-2013 period, highlighted the need for continued investments in lifeline road
rehabilitation, for building the foundations for competitiveness and medium term growth (PAD, page 8)\.
b\. Relevance of Design:
Relevance of Design: Substantial\.
The statement of the project objective is clear, and the causal chain between the project activities, outputs, and
outcomes are logical\. Upgrading of the selected sections of the lifeline road network could be expected to improve
their conditions\. The institutional dimension of the project, in areas such as implementing road safety measures,
developing new road geometric design standards, and establishing a data collection management unit, can be
expected to improve the capacity of the Armenian Roads Directorate (ARD)'s to manage the lifeline road assets of
the country\. The civil works associated with road rehabilitation could be expected to create temporary employment in
road construction\.
4\. Achievement of Objectives (Efficacy):
Both the first objective, to upgrade selected sections of the lifeline road network, and the second objective of
creating temporary employment in road construction, were rated substantial\. Since the first objective was output
focused and the second objective was outcome focused, they are assessed together below\.
Output:
ï 446 km of lifeline roads were upgraded at the project closure stage as compared to the target of 430 km\. The
average roughness of the project roads measured by the International Roughness Index (IRI) reduced from 11\.1,
m/km to 3\.1 IR (ICR, page 17)\.
ï According to the independent technical auditors, 51\.5% of the lifeline road network was reported to be in good or
good condition at the project closure stage, as compared to 32\.2% before the project (ICR, page 44)\.
ï A Road Safety Audit Manual was developed in 2010 as targeted\. The staff of the Ministry of Transport and
Communication, Armenian Roads Directorate, the Project Implementation Unit, traffic police and design consultants
were trained in the principles of road safety audit by an international consultant (ICR, page 28)\.
ï The Armenia's Road Safety Secretariat was established with support from a grant from the Bank administered
Global Road Safety Facility (GRSF), with a director and full time staff (ICR, page 11)\.
ï A data collection unit was established in the Armenian Road Directorate as targeted (ICR, page iv)\.
ï A Double Bituminous Treatment (DBST) pavements contract (including for rehabilitation works and routine and
winter maintenance was piloted on two sections covering 16\.5 km of roads\. The ICR (page 12) reports that this
pavement standard was relatively inexpensive, as compared to the traditional asphalt concrete standards and
pavement layers\.
ï One Pilot "safe village" program was implemented as targeted for supporting rural communities to implement road
safety measures\. The program supported the villages in installing road safety measures, by making them eligible for
funding, only if they had prepared and implemented road safety awareness campaigns\. (ICR, page 6)\.
ï The new road geometric design standards which was included at second additional financing was cancelled\.
Outcome:
ï 39,855 person day/month of temporary construction jobs were created as compared to the target of 36,650 person
day/month\. Of these 60-70% went to people from local villages and 70% of them were unskilled, Since on average
US$ 500 per month was paid to the workers, this represented a direct income transfer of approximately US$5\.0 million
to workers (ICR, page 17)\. Nine of the 23 contractors chosen did not have any other contracts than those offered
under the stimulus package provided to mitigate the impact of the global financial package, and rural roads contracts
accounted for 22 to 27% of the gross revenue of the contractors\. (ICR, page 5)\.
ï The travel time on the rehabilitated roads decreased by 58\.5% as compared to the target of 20%\.
ï Transport costs, measured using the Highway Development and Management Model (HDM) indicated that these
costs decreased by 25\.8% as compared to the target of 20%\.
ï 51\.5% of the rural population had access to all season roads at project closure although the baseline data was not
available\.
ï According to the statistics provided by the team, in 2013 the number of fatal casualties as a result of road accidents
was 316 as compared to 315 in 2012 and 327 in 2011\. Although the decrease does not seem to be significant, the
team leader clarified that more crashes were being reported as a result of the introduction of a compulsory motor
vehicle insurance for supporting insurance claims\. The team also reported that road crashes were recorded by video
cameras (90% of which were installed in Yerevan as part of the project), and that the number of fatal crashes was 29
between January - March 2014, as compared to 39 between January- March 2013\. ï A qualitative social assessment
survey was conducted at project closure on 48 focus group in eight rural communities in eight regions\. (ICR, page
36-38)\. The methodology was to compare peopleâs views in the regions that benefited from the projects and those of
the regions that did not benefit from the project\. While 51% of the former group reported the roads to be in good or
excellent condition, as compared to 12% of the latter group\. 41% of the former reported the transportation services in
the rehabilitated roads to be good or excellent as compared to 22% of the latter\. 91% of the former group reported
improvement in market access as compared to 71% of the latter group\. 88% of the former group reported that the
rehabilitated roads facilitated their visits to shops and other purposes as compared to 72% of the comparison group\.
5\. Efficiency:
An economic analysis was done using the Highway Development and Management Model (HDM-4) on
approximately 153 km of lifeline roads both at appraisal and at completion\. The main economic benefits were
assumed to come through vehicle operating costs and travel time savings\. The ex post Economic Rate of Return was
18\.1%, very close to the ex-ante EIRR of 18\.4%\. The unit transport costs trucks computed using the HDM for the ex
post valuation were US$ 0\.40 per vehicle Km for with the project, as compared to US$ 0\.54 for without the project\.
This represented a 25\.8% reduction in transport cost for medium trucks as compared to the target of 20% (ICR, page
17)\. There were no cost overruns, and although the project closing date was extended by three years, this extension
was for completing the expanded scope of the project, and therefore did not affect the efficiency of the project\.
Efficiency is rated Substantial\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 18\.4% 44%
ICR estimate Yes 18\.1% 44%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Overall outcome is rated as Satisfactory\. The relevance of the objective is high and relevance of design is
Substantial\. Both efficacy and efficiency are rated as Substantial\.
Although the outcome targets were revised twice during implementation, the split rating method was not applied
because this did not affect the overall outcome rating\.
a\. Outcome Rating: Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
There is a risk that the project development objective may not be sustained due to inadequate allocation of funds
for routine and periodic maintenance of the rehabilitated roads\. Although the Ministry of Transport and
Communication has been increasing its budgetary resource allocation, it is not clear whether the amount allocated
would be sufficient for both routine and periodic maintenance needs since in 2012 the amount allocated was
insufficient for covering routine maintenance, let alone periodic maintenance\.
Also, although there have been positive steps taken on addressing road safety issues (such as approval of a National
Road Safety strategy, adoption of a five year plan etc\.) it is not clear if these activities would be implemented in view
of the weak institutional arrangement, such as the under funding and under staffing of the Road Safety Secretariat
(ICR, page 21)\.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
a\. Quality at entry:
Quality at entry is rated as Satisfactory\. Since the original project had to be prepared fairly quickly in response
to the urgent request from the Government in the wake of the global financial crisis, it required an experienced
team\. The project preparation which was initiated in late 2008, and approved by the Board on February 24, 2009,
became effective about two months later on April 20, 2009\. The project roads to be rehabilitated had already been
identified by the Millennium Challenge Corporation (MCC) as priorities and were in areas facing increasing
unemployment\. Road designs prepared by MCC were adapted to current road conditions and traffic surveys, and
revised to conform to the standards of European roads (ICR, page 8)\.
Appropriate risk mitigation measures were incorporated through a covenant included in the loan agreement- such
as requiring the government to deposit 20% of the counterpart funding within two weeks after the ratification of the
Loan Agreement, to address the possibility of delays associated with counterpart funding (ICR, page 11)\. The
World Bank ensured project readiness by having an implementing agency which was experienced in managing
World Bank and other transport projects financed by International Financial Institutions (ICR, page 9)\.
According to the ICR the Safeguard policies were adequately addressed at the appraisal stage (discussed in
section 10a)\.
Quality-at-Entry Rating: Satisfactory
b\. Quality of supervision:
Quality of supervision is rated as Satisfactory\. Since it was IDA Fast Track Facility operation requiring fast
disbursements, supervision was intensive and the project was closely monitored during the project implementation
phase (ICR, page 8)\. While the initial road rehabilitation activities responded to the emergency needs of creating
temporary employment in the wake of global crisis, the supervision team helped in expanding project scope to
include road safety and institutional strengthening dimension through two successive additional financing in a
short time (ICR, page 8)\.
The supervision team was fully engaged with the client during the implementation phase\. In keeping with the
emergency nature of the original project, supervision missions were more frequent in 2009 (about three missions)\.
Missions since then were on average twice a year, The supervision team addressed the implementation problems
in a proactive manner (ICR, page 22) but they could have engaged more with the Government to ensure the
sustainability of the roads through provision of adequate maintenance funds\.
The supervision team had as many as five task team leaders which affected continuity and the Bank could have
reduced the processing burden by combining the two additional financing in a single operation (ICR, page 22)\.
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
Government Performance is rated as Moderately Satisfactory \. The Government was highly committed to the
project development objective right from the preparatory phase\. This enabled the project to be prepared and
approved by the Board within two months\. Since the government had already adopted a Rural Infrastructure
Strategy and Action Plan and had identified the priority lifeline rural roads for rehabilitation, the project could be
implemented immediately after effectiveness\. During implementation, when counterpart funds were delayed due
to the quicker than anticipated implementation of civil works, the Government resolved the issue through larger
counterpart allocations\. The government commitment was further evidenced by their request for a follow up project
to further rehabilitate 170 km of lifeline roads that was approved by the Board on January 31, 2013 (ICR, page 10)\.
The Government however was not able to make available adequate budgetary resources for road maintenance as
stipulated in the legal covenant (ICR, page 10)\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
Implementing Agency Performance is rated as Satisfactory\. Although the Ministry of Transport and
Communication (MoTC) had the overall responsibility for implementing the project, the Ministry had delegated the
responsibility to a Transport Project Implementation Unit\. This institution had experience in implementing both
externally financed projects and transport projects executed with local financing (ICR, page 9)\. The unit was
headed by an experienced engineer with knowledge of both Bank and Armenian procedures\. The implementing
agency handled the safeguard and fiduciary issues with no major problems (discussed in section 11)\.
During the implementation phase when unit became overburdened with additional responsibilities (unrelated to
Bank funded projects) and hence could not respond expeditiously to the Bank requests, the unit resolved the issue
through hiring additional staff (ICR, page 11)\.
Implementing Agency Performance Rating : Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Responsibility for the M&E rested with the Transport Project Implementation Unit\. The M&E design which included
specific and appropriate indicators for both the physical works component and the institutional strengthening were
fairly simple and easy to collect\.
Two sector indicators were introduced in 2009 as per Bank requirements (roads in good or fair condition as a share of
total classified roads and share of rural population with access to an all season road)\. (ICR, page 13)\. The M&E did
not include any indicators related to providing for road maintenance\.
b\. M&E Implementation:
The only details provided in the ICR on M&E implementation were quarterly and semiannual reports on
implementation progress submitted to the Bank\.
c\. M&E Utilization:
While the ICR does not provide details on M&E utilization, the task team clarified that the data collection unit
established by the Armenian Roads Directorate continues to collect and monitor data on the condition of road
networks\.
M&E Quality Rating: Modest
11\. Other Issues
a\. Safeguards:
The project was classified as Category B for Environmental Assessment purposes (OP/BP 4\.01), and partial
assessment was required\. In addition, one safeguard policy was triggered: Involuntary Resettlement (OP/BP 4\.12)\.
The ICR (page 14) reports that an Environmental Management Plan (EMP) was developed at the project preparation
stage, and site-specific EMPs were discussed with local communities residing close to road sections to be
rehabilitated, and appropriate features were incorporated in the project design\.
There was an incident in 2009 when some shortfalls in the compliance of the EMP in the quality of arranging drainage
infrastructure and sidewalks but the issue was adequately addressed\. The ICR (page 14) reports that there was no
resettlement or land acquisition\.
b\. Fiduciary Compliance:
Financial Management : According to the ICR (page 15), the implementing agency's financial management
performance was deemed to be adequate\. Annual financial audits were unqualified\. The government provided the
counterpart funding for the most part in a timely fashion, except in 2010 when there were some delays due to the
delayed approval of the budget\.
Procurement: Arrangements: According to the ICR (page 15), all procurement activities related to works contracts
were deemed to be satisfactory and there was no case of misprocurement\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Satisfactory Satisfactory
Risk to Development Significant Significant
Outcome:
Bank Performance: Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
\.The ICR draws the following lessons:
ï¬ Project readiness could enable quick implementation of civil works and thereby contribute to providing
temporary employment and quick economic support to rural areas hit by financial crisis\.
ï¬ Incremental improvements can be made during project implementation (such as incorporating road safety
features) by adjusting to changing conditions\.
ï¬ Road safety audits can be successfully incorporated with road construction and rehabilitation works when there
is government ownership\. And support for road safety programs can be obtained from communities, which
consider road safety a major problem\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR systematically reported both outputs and outcomes of the project, and its assessment of the achievement of
the project development outcome was evidence based\. The ICR was also concise and consistent with the guidelines\.
However, there are areas where the ICR could have provided more details, for instance, the important road safety
features of the project which was very brief\. The overall quality of the ICR is rated as Satisfactory\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P106216 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BD: Higher Education Quality Enhancement (P106216)
Report Number: ICRR0021744
1\. Project Data
Project ID Project Name
P106216 BD: Higher Education Quality Enhancement
Country Practice Area(Lead)
Bangladesh Education
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IDA-45440,IDA-53320 31-Dec-2013 191,938,252\.75
Bank Approval Date Closing Date (Actual)
17-Mar-2009 31-Dec-2018
IBRD/IDA (USD) Grants (USD)
Original Commitment 81,000,000\.00 0\.00
Revised Commitment 205,812,964\.42 0\.00
Actual 196,426,533\.23 0\.00
Prepared by Reviewed by ICR Review Coordinator Group
Judith Hahn Gaubatz Judyth L\. Twigg Joy Behrens IEGHC (Unit 2)
2\. Project Objectives and Components
DEVOBJ_TBL
a\. Objectives
According to the Project Appraisal Document (PAD, page 4) and the Financing Agreement (page 5), the
project objectives were as follows:
ï To improve the quality and relevance of the teaching and research environment in higher
education institutions, through encouraging innovation and accountability within universities
and by enhancing the technical and institutional capacity of the higher education sector\.
Page 1 of 15
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BD: Higher Education Quality Enhancement (P106216)
The project objectives remained the same throughout the project period, although key outcome targets were
briefly revised downward during a January 2013 project restructuring, due to slow implementation
progress\. However, the targets were subsequently revised upward at the time of Additional Financing (AF,
within one year), and therefore a split rating is not applied\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
Yes
Did the Board approve the revised objectives/key associated outcome targets?
Yes
Date of Board Approval
03-Dec-2013
c\. Will a split evaluation be undertaken?
No
d\. Components
1\. Promoting Academic Innovation (Appraisal: US$ 50\.2 million; AF: US$ 48\.7 million; Actual: US$ 116\.1
million): This component aimed to introduce a demand-driven funding mechanism to allocate public funds to
higher education institutions, with an emphasis on innovation and accountability\. An Academic Innovation
Fund (AIF) was to provide grants to eligible public and private universities on a competitive basis, according
to clearly identified selection criteria and procedures\. The three funding windows were as follows:
improvement of teaching and learning; enhancement of research capabilities; and university-wide
innovations\. The overall aims of the AIF were to improve the quality of academic activities and outcomes,
promote voluntary self-assessments, and strengthen universities' linkages with national development
efforts\.
2\. Building Institutional Capacity (Appraisal: US$ 4\.4 million; AF: US$ 4\.6 million; Actual: US$ 6\.8 million):
This component aimed to reinforce the strategic and institutional capacity of the higher education sector,
both at the central level and at the institutional level\. Activities were to support both the University Grants
Commission (UGC) and individual universities, and included the following: capacity building for strategic
planning and management; development of a Higher Education Management Information System (HEMIS);
communication campaigns about the AIF; and technical assistance in preparing subprojects for the AIF\.
3\. Raising the Connectivity Capacity of the Higher Education Sector (Appraisal: US$ 34\.0 million; AF: US$
44\.2 million; Actual: US$ 45\.9 million): This component aimed to integrate universities with the global
knowledge community\. Activities included: establishment of the Bangladesh Research and Education
Network (BdREN); and establishment of a digital library network\.
4\. Project Management, Communication and Monitoring and Evaluation (Appraisal: US$ 3\.2 million; AF:
US$ 11\.6 million; Actual: US$ 16\.4 million): This component was to support project management through
the Project Management Unit (PMU)\.
AF was approved to scale up activities, as well as to meet the financing gap for AIF\. The project objectives
were unchanged, while the original components were scaled up and one new component was added\.
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According to the Interim Impact Assessment conducted in June 2013, the project was on track to achieve its
development objectives despite initial delays, including achieving targets for satisfaction levels of
stakeholders\. The study recommended areas of support to scale up impact, including conducting an
awareness-raising campaign to increase utilization of facilities and digital services, developing university-
industry linkages, and establishing a separate entity to oversee quality assurance\. The following additions
were made to the components:
1\. Promoting Academic Innovation: A third round of grants from the AIF was created, with a new window
named the "Innovation Fund" to support stronger university-industry linkages\.
5\. Establishment of Quality Assurance Mechanism (AF: US$ 37\.0 million; Actual: US$ 15\.8 million): This
component aimed to ensure quality of higher education through the establishment of quality assurance
mechanisms\. Activities included: institutional strengthening of the Quality Assurance Unit in the UGC; and
establishment of quality assurance cells at selected higher education institutions\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project cost
ï The original project was appraised at US$ 91\.8 million\. With the approval of AF, the total appraised
cost was US$ 216\.5 million, and the actual total cost was US$ 216\.8 million\.
ï Funds were reallocated to Component 3 (Raising Connective Capacity) from other components to
meeting additional funding needs for the BdREN\.
Financing
ï The original project was financed largely by an International Development Association Credit of
US$81\.0 million\.
ï AF in the amount of US$ 125\.0 million was approved in December 2013, in order to scale up
activities and to meet the financing gap for uncompleted activities\.
Borrower contribution
ï At appraisal, the Borrower contribution was expected to be US$ 10\.5 million\. Following project
restructuring, the total Borrower contribution was appraised at US$ 21\.3 million\. The actual amount
was US$20\.4 million\.
Dates
ï January 2013: The project was restructured to streamline activities and modify the results framework
(including key outcome targets) due to the slow pace of implementation\. The closing date was
extended from December 2013 to October 2015\. At the time, US$54\.5 million of the Credit, or
67\.3%, had disbursed\.
ï December 2013: Following the January 2013 project restructuring, the pace of implementation
improved significantly and all funds under the original Credit were disbursed\. Additional Financing in
the amount of US$ 125\.0 million was approved to build on the reforms and programs initiated during
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the original project period\. At the time, US$ 76\.0 million, or 93\.8%, had disbursed\. The closing date
was extended to December 2018\.
3\. Relevance of Objectives
Rationale
Bangladesh has made notable progress in poverty reduction and improved human capital outcomes in
recent decades, particularly in comparison to countries at similar per capita income levels\. In education,
primary and secondary enrollments have increased significantly, along with gender parity\. At the time of
project appraisal, the higher education sector included 81 universities, of which 30 were public and 51 were
private, accounting for 17% of total enrollments in the higher education sector (colleges accounted for 75%,
and Open University accounted for the remaining 8%)\. The Ministry of Education (MOE) is responsible for
policy, strategy, and budgeting for public funding\. Within the MOE, the UGC was created in 1973 as the
oversight apex body, serving as the intermediary between the government and universities\. However, the
sub-sector is marked by low quality, limited access, low level of research, inadequate governance, and
weak institutional capacity\. These challenges have been a significant impediment to economic growth and
favorable investment climate\.
The Government's Higher Education Strategic Plan for 2006-26 was prepared with participation of multiple
stakeholders and was viewed as a significant shift by the government to commit to investing in higher
education and addressing long-term challenges\. The Bank's Country Partnership Strategy for FY16-20
identified quality improvement in education, including increasing relevance of higher education to respond
to labor needs, as a priority area\.
Rating Relevance TBL
Rating
High
4\. Achievement of Objectives (Efficacy)
EFFICACY_TBL
OBJECTIVE 1
Objective
To improve the QUALITY of the TEACHING environment in higher education institutions
Rationale
According to the project's theory of change, the provision of grant funding to schools through a competitive
grant mechanism, the networking of institutions through a research network and digital library, and the
introduction of a quality assurance framework, all supported by institutional strengthening activities, were
likely to contribute to the outcomes of improved quality and relevance\. The emphasis on demand driven
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activities (Academic Innovation Fund), in particular, was likely to have immediate impact on relevance, as
strong demand indicates the areas of most need or interest\. With regard to quality, project activities
(Academic Innovation Fund and capacity building) were also likely to improve quality in the short term for
teaching and research environment/conditions and for promoting innovation and accountability\.
Outputs
Academic Innovation Fund
Provision of financing to 439 subprojects in 38 private and public universities through the AIF\. The AIF used a
transparent competitive funding mechanism, which the post-evaluation found had 100% of fund allocations
adhering to the transparent procedures and judged by "renowned experts and competent authority\." The
subprojects led to the following improvements: upgraded labs and education infrastructure, increased
connectivity to high speed internet, enhanced teaching capacity and tools, and modernized
curricula\. Specifically, the ICR reported the following outputs:
ï 27,051 students and staff trained in academically-oriented areas such as research methodologies,
proposal writing, statistics, technical knowledge for specialized equipment, curriculum development,
and pedagogy
ï 15,350 pieces of information and communications technology equipment for teaching installed across
38 universities
ï 41,184 books and journals procured for offices/libraries
ï 1,653 classrooms/labs/offices renovated
ï 12,012 faculty members faculty receiving additional training in various disciplines
ï 618 Masters degree students enrolled
ï 9 libraries modernized and automated with modern library management system
ï 103 curricula updated
Digital Connectivity
ï Digital library platform with subscriptions to over 3,000 e-journals
ï Establishment of the BdREN, connecting 40 universities (target: 60)
ï Establishment of the HEMIS, with annual statistical yearbooks being produced
Quality Assurance
ï Creation of Quality Assurance Unit within the UGC to promote good practices and governance
ï Establishment of 69 Institutional Quality Assurance Cells (IQAC) at 28 public and 41 private
universities (target: 15), producing 810 self-assessment reports, which set the benchmark on quality
and propose strategies for attaining those quality goals\.
ï Drafting of a National Qualifications Framework, which provides the foundation of an accreditation
process
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Outcomes
ï The mean satisfaction level among students* increased on the five-point Likert scale from 3\.3
in March 2009 to 3\.7 in December 2018\. This fell short of the revised target of 4\.0\. The ICR (page 20)
suggested that the shortfall was due to the fact that student cohorts sampled were, by nature of the
survey, always new cohorts who have had only a few years in university and thus can only make
relatively short-term comparisons about improvements in the learning environment\. As such, their
satisfaction levels are more likely to be modest compared to faculty members and employers who
tend to base their perception on longer-term comparisons\. Furthermore, it is also possible that
undergraduate students have limited research activities and thus did not directly benefit from
improvements in the research environment where much of the project investments were directed\.
ï The mean satisfaction level among faculty increased on the five-point Likert scale from 2\.9 in March
2009 to 4\.0 in December 2018\. This achieved the revised target of 4\.0\. The ICR (page 18) cited
particularly high levels of satisfaction regarding access to online journals and e-resources, quality of
internet, and availability of modern lab equipment and facilities\. Annex 8 of the ICR presented
evidence, largely qualitative, from the Final Round Satisfaction Survey, Graduate Tracking Survey,
and Final Impact Assessment\. The findings included the following: the AIF-financed technology
improved the learning environment for students and enhanced faculty's ability to teach more advanced
concepts\. Faculty members in AIF departments had higher satisfaction levels than the control group of
faculty from non-AIF departments, owing to the improved quality of infrastructure and
materials\. However, one finding was that "students in AIF departments did not survey higher survey
satisfaction across a number of common indicators of pedagogy (such as quality of instruction), but
AIF departments were found to more effectively use technology in instruction" (ICR, page 64)\.
ï 17 institutions submitted institutional improvement plans, in addition to the 810 self-assessment
reports produced by the 69 institutional quality assurance cells, which led to the implementation of a
range of quality improvement activities\.
ï The Bangladesh Accreditation Council Act was passed by National Parliament in 2017, establishing a
statutory autonomous entity for accreditation of universities and programs\. The project team confirmed
that the Endowment Fund for the Council has been established to provide operating budget and that
the Council is now operational and preparing for the initiation of the accreditation procedure\.
* The survey methodology was described in ICR Annex 8; this description included numbers of departments
and individuals surveyed but lacked specific information on response rates (or on actual numbers or
responses received either through the survey or in focus groups)\.
Achievement is rated Substantial\. There was improved satisfaction of faculty and the delivery of numerous
outputs that likely improved the quality of the teaching and learning environment\. Although there were
moderate shortcomings in the implementation of national quality assurance framework, quality improvements
were still carried out at the institutional level\.
Rating
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Substantial
OBJECTIVE 2
Objective
To improve the RELEVANCE of the TEACHING environment in higher education institutions
Rationale
Outputs
See outputs reported above on subprojects approved through the AIF and digital connectivity\.
Outcomes
ï The mean satisfaction level among employers increased on the five-point Likert scale from 3\.0
in March 2009 to 4\.1 in December 2018\. This nearly achieved the revised target of 4\.2\. Employers
noted satisfaction with customer service skills, critical thinking and analytical skills, communication in
English, advanced computer skills, and willingness to learn\. The graduate tracer survey reported that
AIF projects were effective in improving skills, job search prospects, and employability;
however, "students from AIF-supported institutions reported a high rate of unemployment (38%)
among all university graduates in Bangladesh" (ICR, page 66)\.
ï However, there was a "considerable lack of academia-private industry collaboration\. Less than half of
surveyed employers maintain collaboration with universities and even less in any sort of sustained
way\. However, from the academic institution side, most mentioned maintaining some kind of
relationship with industries" (ICR, page 67)\.
Achievement is rated Substantial due to improved employer satisfaction and increased utilization of digital
resources, although a minor shortcoming is noted in the limited academia-industry collaboration\.
Rating
Substantial
OBJECTIVE 3
Objective
To improve the QUALITY of the RESEARCH environment in higher education institutions
Rationale
Outputs
See outputs reported above on subprojects approved through the AIF and digital connectivity\.
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Outcomes
ï As reported above, the mean satisfaction level among faculty increased on the five-point Likert scale
from 2\.9 in March 2009 to 4\.0 in December 2018\. This achieved the revised target of 4\.0\. The ICR
(page 18) cited particularly high levels of satisfaction regarding access to online journals and e-
resources, quality of internet, and availability of modern lab equipment and facilities\. Annex 8 of the
ICR presented evidence, largely qualitative, from the Final Round Satisfaction Survey, Graduate
Tracking Survey, and Final Impact Assessment\. The findings included the following: the AIF-financed
technology invigorated the research environment for faculty and provided researchers with greater
capacity to conduct research and disseminate findings\. Faculty members in AIF departments had
higher satisfaction levels than the control group of faculty from non-AIF departments, owing to
the improved quality of infrastructure and materials\.
ï The original indicator on the percentage of students and faculty with access to advanced internet
connectivity was dropped\. Instead, the project reported that the monthly average volume of inbound
education/research data traffic in BdREN increased from 10 terabytes in 2013 to 1,362 terabytes in
2018\.
ï 778 academic publications were produced through AIF support, of which 181 were papers published
on conference proceedings\. This surpassed the target of 150\.
ï The number of doctoral level enrollments increased by 368% to 170 students, surpassing the target of
100%\.
Achievement is rated Substantial due to increased satisfaction among faculty, as well as other evidence of
increased volume and productivity in research\.
Rating
Substantial
OBJECTIVE 4
Objective
To improve the RELEVANCE of the RESEARCH environment in higher education institutions
Rationale
Outputs
See outputs reported above on subprojects approved through the AIF and digital connectivity\.
Outcomes
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See outcomes reported above for Objectives 2 and 3\.
Achievement is rated Substantial due to increased satisfaction among faculty and among employers as well
as other evidence of increased volume and productivity in research\. A minor shortcoming is noted in the
limited industry-academia collaboration\.
Rating
Substantial
OVERALL EFF TBL
OBJ_TBL
OVERALL EFFICACY
Rationale
Achievement of the objective to improve QUALITY of the teaching environment is rated Modest\. Achievement
of the remaining three objectives to improve RELEVANCE of the teaching environment and the QUALITY and
RELEVANCE of the research environment is rated Substantial due to evidence of improved faculty and
employer satisfaction\. Overall Efficacy is therefore rated Substantial\.
Overall Efficacy Rating
Substantial
5\. Efficiency
At appraisal (PAD, Annex 9), a cost-benefit analysis was conducted to compare the expected stream of
incremental wage gains for project beneficiaries with the project costs\. The estimated internal rate of return,
under the base case scenario, was 17\.9% for the AIF component\. A cost efficiency analysis was also conducted
for the BdREN activity, with the BdREN providing high-speed and high-performance connectivity to institutions
at a significant cost savings compared to the current spending by the institutions on the current system (US$ 9-
10 million for 50 Mbps vs\. US$ 4 million for 100 Mbps through BdrEN)\.
The ICR (Annex 4) updated the cost-benefit analysis, under the assumption that 20% of total eligible university
graduates had benefited from the project\. Benefits were identified as: additional wage premiums for university
graduates (the wage differential in entry-level salaries) alongside growth in university enrollments\. The net
present value was calculated at US$ 728\.0 million, and an internal rate of return of 52\.8%\. However, there was
limited evidence on the extent to which the project actually improved the skills of the graduates that were to
have led to improved job prospects and increased wages\.
Other indications of efficiency in the use of project resources were suggested: the use of specialized expertise
(for technical work in the digital network, quality assurance, and intellectual property) contributed to project
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efficiency\. In comments on the draft ICR Review, the project team reported that 2\.7% of total project costs was
used for technical assistance and that the ambitious reforms supported by the project would have likely
experienced setbacks (and hence further implementation delays) had this specialized expertise not been
available; and the digitization of annual data collection from universities replaced time-consuming manual data
collection\. Also, despite a project closing date extension of almost two years for the original project period, US$
76\.0 million of the original credit (94%) had been utilized at the time of the original closing date\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
54\.70
Appraisal ï¼ 17\.90
ï¨ Not Applicable
100\.00
ICR Estimate ï¼ 52\.80
ï¨ Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Relevance of the project objectives is High due to strong alignment with country conditions and Bank and
country strategies\. Overall Efficacy is rated Substantial due to evidence of improvements in quality and
relevance of the teaching and research environment\. Efficiency is rated Substantial\. Therefore, overall
outcome is rated Satisfactory\.
a\. Outcome Rating
Satisfactory
7\. Risk to Development Outcome
The two primary risks to development outcome are institutional capacity and financial sustainability\. With
regard to institutional capacity, the skills to implement the innovation fund and develop quality assurance
mechanisms have been introduced into the MOE and UGC, although it is unclear whether quality assurance,
despite the passage of the Accreditation Act, will be carried out by the individual tertiary institutions without
continued support\. With regard to financial sustainability of the numerous activities funded by the AIF, each
entity was supposed to create a maintenance plan for equipment and facilities to ensure sustainability,
although the final surveys highlighted the beneficiaries' concern for continued financing to sustain benefits of
the project\. Endowments were created for the BdREN and Accreditation Commission, as well as a dedicated
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budget line for quality assurance activities at publicly funded universities\. Lastly, a follow-up operation, the
Higher Education Acceleration and Transformation project (P168961), is currently under preparation and
aims to support similar outcomes\.
8\. Assessment of Bank Performance
a\. Quality-at-Entry
This project represented the first Bank operation in the higher education sub-sector in Bangladesh, a sub-
sector in which few other development partners had interest and/or capacity to provide effective
support\. Despite being the first operation of its kind in the country, the Bank drew upon
its significant experience in other countries, particularly in establishing innovation funds to promote
research and innovation\. As noted in the ICR (page 6), the project objectives and design were
intentionally designed to be a "low reform-intensive project avoiding controversial measures\. it was
anticipated that opportunities and consensus for pursuing reforms in higher education will arise" once
sufficient wins and strong engagement were demonstrated under this project\. Therefore, government and
higher education institution commitment was strong throughout the project period, although some time
was needed to develop support for the demand-driven funding approach\. The risk assessment was
candid and realistic, identifying capacity constraints as the main risk\.
The results framework was overall satisfactory, with opportunities for improvement in terms of more
specific and explicit outcomes/indicators for "innovation" and "accountability" rather than the more
general outcome of "improved quality\."
Quality-at-Entry Rating
Satisfactory
b\. Quality of supervision
The project experienced significant implementation delays at the start, due to the need to shift the mindset
of key stakeholders from supply-driven to demand-driven funding mechanisms\. There was also significant
learning-by-doing once the new demand-driven approach was established, such as selecting competitive
grantees\. Also, there were numerous technical and logistical difficulties in establishing the BdREN across
multiple institutions\. Implementation Supervision Report ratings during this period, however, appeared to
lack some candor, as "Implementation Progress" was rated in the satisfactory range in all but one
supervision report\. However, proactive supervision support helped to improve the pace
of implementation, and AF was secured to significantly scale up the project's activities and impact\. The first
project restructuring (October 2013) revised targets that were unlikely to be achieved due to the slow start
and also revised indicators themselves to make them more measurable\. The second
restructuring/additional financing accounted for the improved performance and adjusted targets upward
again\. Initial fiduciary challenges were addressed sufficiently to ensure delivery of outputs and project
completion, although some shortcomings remained\.
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Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Satisfactory
9\. M&E Design, Implementation, & Utilization
a\. M&E Design
The ICR (page 18) noted that the results framework opted to use satisfaction ratings to track improvements
in quality and relevance to "overcome inherent difficulties of measurement of quality of higher education
services\. Assessing quality and relevance of higher education directly is known to be difficult due to the
complex and diverse nature of higher education institutions and programs\. High-level cognitive skills
development of students is also extremely difficult to capture quantitatively\." Opportunities for improvement
remained in terms of identifying more specific and explicit outcomes/indicators for the aspects of
"innovation" and "accountability\. Also, baseline data was not established until two years into the project
period\. Notably, the M&E design included establishing an M&E Unit to support M&E implementation, which
was critical for oversight given the newly introduced innovation fund mechanism\.
b\. M&E Implementation
The M&E Unit conducted project monitoring activities (with regular reporting on project progress,
implementation issues, and possible solutions), carried out validation surveys of AIF sub-projects, and
completed three rounds of satisfaction surveys\. There were initial delays and inadequate documentation,
which led to a downgrade in the M&E rating\. However, these challenges were subsequently addressed\.
Restructurings were used to enhance the results framework to make targets realistic and indicators more
measurable\. For example, one of the original key outcome indicators - "Number of universities (public
and private) connected to BdREN" - was revised to "Monthly average volume of inbound
education/research data traffic in BdREN" to better measure impact\. Six evaluative studies were also
conducted, including the three rounds of the satisfaction surveys, interim impact assessment, university
graduate tracer study, and project impact assessment\.
c\. M&E Utilization
The ICR (page 29-30) reported the following examples of M&E utilization: regular M&E reports were
used to support implementation supervision missions by identifying key issues, and evaluative studies
informed the MOE's strategic plan for the sector and design of a follow-up operation\. The National
HEMIS developed under the project produced data to inform areas of interest such as enrollment,
teacher numbers, and budgeting\.
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M&E Quality Rating
Substantial
10\. Other Issues
a\. Safeguards
The project was classified as an Environmental Category "B" project due to minor civil
works/rehabilitation\. Under the AF, the safeguard policy on Indigenous Peoples (OP/BP 4\.10) was also
triggered due to the potential for ethnic minorities to participate in project interventions (as beneficiaries)\. A
Social Management Framework was prepared accordingly\.
At the time of the AF, environmental safeguards compliance was rated Satisfactory\. There is no further
information in the ICR about the level of compliance with the environmental and indigenous peoples
safeguards and whether they remained satisfactory by project closing, although the project team
subsequently confirmed that the project was in full compliance as of the final supervision mission\.
b\. Fiduciary Compliance
Financial management: There were challenges in financial management performance throughout the
project period, including delayed, inaccurate, and ineligible financial reporting, ineligible expenditures, a
resurfacing of hiring needs, and a slowdown in field-level fiduciary support\. According to the ICR, although
these fiduciary issues were never fully mitigated, they were addressed sufficiently that financial
management performance was rated moderately satisfactory by project closing\.
Procurement: Procurement performance was generally satisfactory, although there were some delays in
procurement actions and staffing\. In 2015, episodes of civil unrest disrupted procurement for AIF
subprojects as well as for the BdREN\. Specific challenges included: an outdated procurement plan; and
delayed procurement of key items due to the failure to hire requisite procurement specialists and
necessary staff in the UGC to implement the HEMIS and BdREN, thereby delaying overall implementation
of the BdREN, the campus network, and the digital library\. Actions were undertaken to strengthen
procurement capacity, and performance improved by project closing\.
c\. Unintended impacts (Positive or Negative)
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None reported\.
d\. Other
---
11\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory
Bank Performance Satisfactory Satisfactory
Quality of M&E Substantial Substantial
Quality of ICR --- Modest
12\. Lessons
Lessons drawn by IEG:
ï Difficulties in measuring higher education sector outcomes (i\.e\. improved skills of university
graduates) can be addressed through multiple evaluative sources\. In the case of this project,
the M&E plan employed student, faculty, and employer satisfaction surveys (three rounds),
supplemented by findings from a tracer study and an impact assessment\.
ï Introducing a competitive grant mechanism can be an effective first step to engaging
autonomous institutions, prior to attempting more complex sector reforms\. In the case of this
project, the grants aimed to spur innovation and accountability, while deeper quality
assurance mechanisms (drafting of national qualifications framework and creation of quality
assurance cells in each participating higher education institution) were introduced at a later
stage\.
13\. Assessment Recommended?
Yes
ASSESSMENT_TABLE
Please Explain
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This project would make a good candidate for further project assessment, given the use of a innovative
approaches -- in particular the AIF and the quality assurance mechanisms\. In addition, a project assessment
would provide an opportunity to observe any future impacts on the quality and relevance of tertiary education\.
14\. Comments on Quality of ICR
The ICR presented a range of evidence, although the results framework created challenges for providing
a clear analysis of the outputs and outcomes at different points on the results chain\. Output achievements were
clearly reported\. Assessment of outcome achievements was based on "improved satisfaction" as a proxy of
improved quality\. The Efficiency analysis would have been strengthened with a stronger evidence base,
specifically impact on wages for university graduates to verify benefits\. Also, there were some negative findings
reported in Annex 8 that were not reported in the main text but had a bearing on Efficacy: Annex 8
reported survey findings on university-industry collaboration that indicate less engagement from industries
compared to universities, and less satisfaction from students regarding quality of instruction\. In comments on
the draft ICR Review, the project team noted that historically there was zero collaboration and therefore any
level of engagement should be viewed as a positive improvement\. There was also a lack of candor about
missing baseline data, which ISRs reported were not established until two years into the project period\.
Lessons were presented as recommendations, without drawing out the specifics of what was learned from the
project experience\. Given the shortcomings noted (inconsistent findings in annexes not explained in the ICR,
lack of candor about missing baseline data, and weak articulation of lessons), ICR Quality is rated Modest\.
a\. Quality of ICR Rating
Modest
Page 15 of 15 | REVIEW |
P004594 | Document of
The Av'ir}i i3anh
FOR OFFICIAL UJSE ONLY
Report No\. 1603
IMPLEMENTATION CONIPLETVION IREPORT
PHI LII PIN FS
EARTHQUAKE RECONSTRIU TION O'K()\.II:(T
LOAN 3263-PIU)
Mav 2? '\. 1(9)7
Infi-astructure Operations Division
Country Department I
East Asia and Pacific Region
This document has a restricted distribution and n-mjy b)e used by recipients only in the!
performance of their official duties\. Its contents may riot othervwise be disclosed without i
World Bank authorization\.
CURRENCY AND EQUIVALENTS
Currency Unit= Philippine P'eso (P)
(monthly average values)
2/90 US$ 1\.00 = P22\.600
2/91 UJS$1\.00 = P28\.125
2/92 US$1\.00 = P26\.i00
2/93 US$ 1\.00 = P25\.2'50
2/94 US$1 \.00 P27\.700
2/95 lJS$1 \.00 = P`5\.700
2/96 US$1\.00 = P26\.205
2/97 UJS$1\.00 = I'26\.')35
UNITS OF MEASUJREMENT
Systeme Internationale
ACRONYMS AND ABBREVIATIONS
ADB - Asian Development Bank
COA - Commission on Audit
DBM - Department of BLudget and Management
DILG - Department of Interior and Local Government
DOF - Department of Finance
DOH - Department of Health
DPWH - Department ol Public Works and Highways
DSWD - Department of Social Welfare and Development
GOP - Government of Philippines
ICR - Implementation Completion Report
NAMRIA - National Mapping and Resource Information Authority
NlIA - National Housing Authority
NIA - National Irrigation Administration
PCR - Project Completion Report
PHIVOLCS - Philippine Institute ot Volcanology and Seismology
GOVERNMENT'S FISCAL YEAR
January I to December 31
Vice President : Jean-Michel Severino, EAP
Director : Javad Khalilzadeh-Shirazi\. EAI
Division Chief I\. Shivakumar, EA I IN
Task Manager : Kevin Page, EAI DR
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
PHILIPPINES
EARTHQUAKE RECONSTRUCTION PROJECT
(LOAN 3263-PH)
Table of Contents Page No\.
Preface \.i
Evaluation Summary \. ii
Implementation Assessment
A\. Statement/Evaluation of Objectives \.
B\. Achievement of Objectives \.2
C\. Major Factors Affecting the Project \.4
D\. Project Sustainability \.5
E\. Bank Performance \.6
F\. Borrower Performance \.6
G\. Assessment of Overall Outcome \.7
H\. Future Operations \.7
I\. Key Lessons Learned \.8
Tables
Table 1: Summary of Assessments \.9
Table 2: Related Bank Loans \. 10
Table 3: Project Timetable \. 10
Table 4: Cumulative Disbursements: Planned v\. Actual \. 11
Table 5: Key Indicators for Project Implementation \. 12
Table 6: Key Indicators for Project Operation \. 12
Table 7: Studies Included in the Project \. 12
Table 8A: Project Costs \. \.13
Table 8B: Project Financing \. \. 13
Table 9: Economic Costs and Benefits \. 13
Table 10: Status of Legal Covenants \. 14
Table 11: Compliance with Operational Manual Statements \. 14
Table 12: Bank Resources: Staff Inputs \. 14
Table 13: Bank Resources: Missions \. 15
Appendixes:
A\. Borrower's Contribution \. 16
B\. ICR Mission's Aide Memoire \. 30
C\. Maps(IBRDNos\.22617,22618, andc22619) \. 32
This document has a restricted distribution and may be used by recipients only in the
perforrnance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
i
IMPLEMENTATION COMPLETION REPORT
PHILIPPINES
EARTHQUAKE RECONSTRUCTION PROJECT
(LOAN 3263-PH)
Preface
This is the Implementation Completion Report (ICR) for the Earthquake
Reconstruction Project in the Philippines, for which Loan 3263-PH in the amount of
US$125 million equivalent was approved on October 9, 1990 and made effective on
December 12, 1990\.
The loan was closed on December 31, 1996, compared with the original closing
date of March 31, 1995\. The final disbursement took place on May 13, 1997, at which time
the balance of US$15,694,374\.13 equivalent was canceled\.
The ICR was prepared by Messrs\. Peter Long, Highway Engineer, EAlIN, and
Kevin Page, Operations Officer, EAlDR, and was reviewed by Messrs\. J\. Shivakumar,
Chief, EAIIN; and Walter Schwermer, Projects Advisor, EAIDR\.
Preparation of this ICR was begun during the Bank's final supervision mission\. It is
based on material in the project file, site visits by the ICR mission, and the comprehensive
Project Completion Reports provided by the four implementing agencies, Department of
Public Works and Highways, Department of Health, National Irrigation Administration,
and National Housing Authority, during the ICR mission which took place between March
4 - 14, 1997\. The Borrower's Executive Summary of these four Completion Reports is
attached as Appendix A\. The final draft of this ICR was provided to the Borrower for
comment, and comments received were incorporated into the final report\.
ii
IMPLEMENTATION COMPLETION REPORT
PHILIPPINES
EARTHQUAKE RECONSTRUCTION PROJECT
(LOAN 3263-PH)
Evaluation Summarv
Background
i\. In July 1990, an earthquake registering 7\.7 on the Richter scale shook Luzon
causing high loss of life and wide ranging destruction ot' intrastructure\. The Government
and the international donor community reacted quicklv to assess and respond to the
disaster\. The Government's emergency response opened roads and established emergency
housing and health care arrangements within days of the earthquake; the Bank loan of
US$125 million equivalent was identified\. prepared\. appraised and negotiated within two
months of the earthquake and began financing longer-terin reconstruction within six
months of the earthquake\. A similar Asian Development Bank (ADB) loan was also made
available, and although no formal linkage betweeln the B3anks' loans existed, their
implementation was marked by close and effective collabioration, particularly in the
highway sector\.
ii\. In June 1991, Mount Pinatubo erupted causing exen greater damage\. The Bank loan
was amended and also used to mitigate some of the pressing problems created by this
second natural disaster, including retargeting the housing component assistance and
funding some civil works and consultancy from the Department of Public Works and
Highways component\. The project closing date was extenided to March 31, 1996 and
subsequently to December 31 1 1996 to permit the compIction of the Pinatubo works and
consultancy\.
Project Objectives
iii\. The objectives of the multisectoral pro jectL as amended, were to: (i) minimize the
adverse economic impact of the July 1990 earthquake and the Pinatubo eruption by
assisting in the reconstruction of essential infrastructure and other facilities to promptly
restore economic activity in the affected area; and (ii) introduce measures to reduce the
negative impact of future disasters\. These objectives and the Bank's intervention strategy
were consistent with the Bank's Operational Directive 8 50 of November 28, 1989\. and
were appropriate in this case\.
iv\. The OD 8\.50 called for the following project desrgn considerations: (i) early
involvement of Bank staff; (ii) prior working relationship with the country and sector
agencies; (iii) strong government commitment to recovery, and access by the emergency
coordination unit to the highest levels of government; (iv) limited objectives and realistic
time schedule; (v) rapid agreement with the government on the strategy and scope of the
overall recovery program; (vi) conditionalities linked directly to the emergency, rather than
to long-term macroeconomic policies; (vii) commitment to restoration of standard cost
recovery practices; (viii) simple implementation arrangements and full use of existing
iii
institutions, including sector agencies, NGOs, and community groups; (ix) use of disaster-
resilient reconstruction design standards; and (x) inclusion of measures for preventing and
mitigating the impact of future disasters\.
v\. Each of these criteria was included in the project design\. Bank staff were on the
scene the day after the earthquake in 1990\. The Bank-financed components were selected
on the basis of ongoing working relationships with the sector agencies\. A Presidential Task
Force in the Philippines was responsible for coordination of the international reconstruction
efforts\. The Project had limited objectives and a planned implementation schedule of 3\.75
years, which was extended 1\.75 years to accommodate activities related to the Pinatubo
disaster that occurred a year after the earthquake\. Agreement on the overall scope was
reached with the Government within two months of the earthquake, and specific
interventions were defined during implementation\. Conditionalities were limited and linked
to the emergency; they also encompassed standard cost recovery for the appropriate sectors\.
Implementation arrangements, though somewhat complicated by the number of agencies,
were straight-forward\. The use of disaster-resistant designs was introduced during
implementation and had significant institutional impact which should mitigate future
earthquake damage\.
Implementation Experience and Results
vi\. Implementation experience was very positive overall and the results satisfactory\. In
general, works carried out under thousands of small contracts were completed on or ahead
of schedule and to an acceptable level of quality\. A US$25 million component to supply
retroactive financing of critical construction materials and commodities was also
successfully completed\. Work was largely carried out as planned in three sectors,
highways, irrigation and health with some small reallocations made to respond to the
Pinatubo eruption\. The description of the fourth component for housing was amended after
the eruption of Pinatubo\. Instead of providing housing finance to earthquake victims, the
loan was amended to allow for the creation of resettlement sites for some of the thousands
of families dislocated by the lahar flows\. While the results were generally good, one aspect
of implementation that was not fully satisfactory was the delay in submission of withdrawal
applications that was one of the main reasons for the cancellation of US$15\.7 million from
the Bank loan and the government's financing of a higher-than-planned portion of the
reconstruction effort\.
Summary of Findings, Future Operations, and Key Lessons Learned
vii\. The project met its development objectives\. The works and materials financed by
the Bank allowed for the rapid economic restoration that occurred in Luzon, despite the
Pinatubo eruption a year later\. In addition, the Bank financed important technical assistance
that has introduced and disseminated more sustainable earthquake-resistant designs for
roads, bridges, hospitals, and other structures subject to seismic failure as well as better
defining seismic hazard zones\. These designs and other awareness-raising activities have
improved the chances that newer and retrofitted structures will survive future seismic
events\. Since much of the work was rebuilt to a higher standard and is being maintained,
sustainability of the Project benefits is considered to be likely\.
iv
viii\. The project design, although complicated by the number of implementing agencies
and the large number of contracts, was essentially quite simple\. This simplicity, along with
clear Borrower ownership, were key elements of the Project's success\.
ix\. The Bank was able to react quickly, with negotiations completed within two months
of the earthquake\. In spite of this fast-tracking the performance of the Borrower and the
Bank in project implementation was at least as good or better than most projects prepared
and appraised in a conventional manner and time frame\.
x\. Lessons Learned:
(a) The project design criteria established in the Bank's Operational Directive
8\.50 were appropriate and successful in this project\. This reinforces the
suitability of OD8\.50 (since replaced by Operational Policy/Bank Procedure
8\.50) for future emergency operations (paras\. 2 - 4\.)
(b) For emergency projects, which are generally prepared quickly, a substantial
project review should be conducted after one year of implementation\. This
may also be appropriate for non-emergency lending operations (para\. 28\.)
(c) The disbursement system needs to be improved to assure smooth
implementation of future emergency projects in the Philippines (paras\. 30 -
32\.)
I
IMPLEMENTATION COMPLETION REPORT
PHILIPPINES
EARTHQUAKE RECONSTRUCTION PROJECT
(LOAN 3263-PH)
IMPLEMENTATION ASSESSMENT
Statement/Evaluation of Objectives
I\. The objectives of the project were to: (i) minimize the adverse economic impact of
the July 1990 earthquake by assisting in the reconstruction of essential infrastructure and
other facilities to promptly restore economic activity in the affected area; and (ii) introduce
measures to reduce the negative impact of future earthquakes\. These were amended as of
March 8, 1992 to include the Pinatubo eruption\.
2\. The objectives of this multisectoral, emergency operation were consistent with the
Bank's OD8\.50 (dated November 28, 1989) and, most important for the success of the
project, those of the Borrower\. Further, the project's intervention strategy of reconstruction
of infrastructure and quick disbursing budget support for a positive list of imports (needed at
a time of budget constraint in the Philippines) was well thought through, appropriate, and
timely\.
3\. The OD 8\.50 called for the following project design considerations: "(i) early
involvement of Bank staff; (ii) prior working relationship with the country and sector
agencies; (iii) strong government commitment to recovery, and access by the emergency
coordination unit to the highest levels of government; (iv) limited objectives and realistic
time schedule; (v) rapid agreement with the government on the strategy and scope of the
overall recovery program; (vi) conditionalities linked directly to the emergency, rather than
to long-term macroeconomic policies; (vii) commitment to restoration of standard cost
recovery practices; (viii) simple implementation arrangements and full use of existing
institutions, including sector agencies, NGOs, and community groups; (ix) use of disaster-
resilient reconstruction design standards; and (x) inclusion of measures for preventing and
mitigating the impact of future disasters\."
4\. Each of these criteria was included in the project design\. Bank staff were on the scene
the day after the earthquake in 1990\. The Bank components were selected on the basis of
ongoing working relationships with the sector agencies\. A Presidential Task Force in the
Philippines was responsible for coordination of the international reconstruction efforts\. The
Bank-assisted Earthquake Reconstruction Project had limited objectives and a realistic time
schedule\. Agreement on the overall scope was reached with the Government within two
months of the disaster, although specific interventions were defined during implementation\.
Conditionalities were limited and linked to the emergency; they also encompassed standard
cost recovery for the appropriate sectors\. Implementation arrangements, though somewhat
complicated by the number of agencies, were straight-forward\. The use of disaster-resistant
designs was introduced during implementation and had significant institutional impact which
should mitigate future earthquake damage\.
2
Achievement of Objectives
5\. The objectives were achieved\. The works and materials financed by the Bank allowed
for the rapid economic restoration that occurred in Luzon, despite the Pinatubo eruption a
year later\. The influx of ODA, including the Bank loan, was critical in allowing the
Government to finance the restoration of the areas and people affected by those disasters\.
Without Bank assistance, the Government's emergency reconstruction efforts would have
been very difficult to sustain due to lack of funds, with less satisfactory medium- and long-
term results for the affected population\. In addition to aiding in the restoration of critical
transportation, health, housing, and irrigation infrastructure, the Bank loan injected needed
capital into the devastated region during the economic downturn following the disasters,
helping to reduce the economic dislocation\.
6\. The Bank and the ADB Earthquake Loans financed important technical assistance
that has introduced and disseminated earthquake-resistant designs for roads, bridges,
hospitals, and other structures subject to seismic failure\. These designs and other awareness-
raising activities have improved the chances that newer and retrofitted structures will survive
future seismic events\. The achievement of the objectives is described in more detail, by
component, below\.
7\. Department of Public Works and Highways (DPWH)\. Damage was widespread and
reconstruction sub-projects were implemented in six regions\. A total of 1,164 civil works
sub-projects were implemented under the IBRD-assisted project, for a total value of Pesos
2\.2 billion\. Scheduled at appraisal to be completed by mid-1994, these sub-projects were
substantially completed by the end of 1993, and have significantly contributed to the
objective of minimizing the adverse economic impact of the earthquake\.
8\. The objective of future mitigation was pursued in several ways\. Buildings, water
supply facilities and retaining walls were rebuilt to higher standards, new bridges were
designed to current international seismic codes, and other bridges strengthened\. DPWH
Standard Designs for bridges, retaining walls, school buildings, other public buildings and
elevated water tanks were revised and updated\. Some forty seminars and workshops on
earthquake related topics were held\. Three specialized Bridge Inspection Vehicles were
procured to assist with bridge inspection, repair and maintenance\. Soon after the earthquake a
private firm had flown a Synthetic Aperture Radar (SAR) survey of the affected area\. The
data imagery from this survey was procured and, under a separate consulting assignment, this
was interpreted to produce geologic and regional and urban hazard intensity maps\. Training
and equipment was provided under the project to the Philippine Institute of Volcanology and
Seismology and to the National Mapping and Resource Information Authority to give these
agencies the capability to continue to make such analyses for other areas of the Philippines\.
9\. Another technology introduced as part of the Earthquake Reconstruction Project was
the use of Vetiver grass for slope stabilization\. The use of this special grass to inhibit slope
erosion has been shown in other parts of the world to be an environmentally sound mitigative
measure\. It is also often less expensive than building rip rap and other retaining structures,
themselves subject to failure during a seismic event\. The DPWH Bureau of Maintenance,
with assistance from the Project Management Office of the National Irrigation
Administration's Irrigation Watershed Management Project, is pursuing pilot projects in the
3
Philippines to introduce Vetiver and to assess its value as part of an ongoing maintenance
program\. Two pilot projects are underway, on the Famy-Infanta and Nueva Vizaya -
Benguet roads\. DPWH has established two Vetiver nurseries and has had several expressions
of interest from local farmers willing to grow seedlings for sale to the Government and
contractors\.
10\. National Housing Authority (NHA)\. The original purpose of this component, to
provide housing finance to earthquake victims, was amended to allow use of the original
funds to develop resettlement sites for people displaced by the eruption of Mount Pinatubo\.
The funds were used to finance horizontal and vertical infrastructure for ten upland and two
lowland sites, as well as to finance building materials which were provided directly to
displaced families\. The sites were completed in the third quarter of 1993, earlier than had
been programmed for the original housing component\. The quick dex'elopment of the sites
helped to alleviate the significant suffering of displaced families that had been temporarily
relocated from the deadly slopes of Mount Pinatubo to highly concentrated and disease-prone
emergency camps\.
11\. The upland sites were specifically developed for habitation by indigenous Aeta
families that had lived on the slopes of Mount Pinatubo, and were prepared taking into
account the customs and preferences of the affected tribes\. Ultimately, permanent relocation
has been voluntary, with some 4,200 of 9,300 families evidently having chosen to move
elsewhere, either back to dangerous areas around Pinatubo or to lowland settlements\. For the
5,100 families that remain in the upland sites, there is excellent access to education, health
facilities, water supply and job opportunities other than those offered by subsistence farming\.
The infrastructure appears to be in good shape, but funds and training for maintenance and
operation of the water supply systems, in particular, appear to be lacking\. Sustainability,
however, in terms of utilization of the sites appears to be good four years after the
establishment of these communities\.
12\. The two lowland sites outside of Angeles City cater to 3,236 families affected by the
Pinatubo eruption\. The sites' horizontal infrastructure was built to very high standards and
appears to be maintained regularly by the responsible Local Government Unit\. Vertical
infrastructure, such as schools and water supply, fall within the responsibility of various
agencies and the city and appear to maintained to a satisfactory standard\. The families
resettled after the Pinatubo eruption suffered from a loss of livelihood, exacerbated by the
general economic downturn in the Angeles area after the closure of Clark Air Force Base\.
However, economic activity has picked up in recent years with the introduction of a Clark
duty free and industrial zone\. While inhabitants of the two resettlement sites may have lower-
than-average incomes, they enjoy better-than-average facilities and appear to be thriving
communities\.
13\. It is worth noting that the original housing finance scheme, while consistent with
housing finance policies agreed between the Bank and the Borrower, was complicated and
suffered from initial delays due to difficulties in obtaining full agreement with the Borrower
as to the precise terms and conditions to be placed on the funds to ensure the appropriate
targeting of beneficiaries\. It appears likely that the use of funds to mitigate the effects of the
Pinatubo disaster speeded the implementation of the component and may have led to a more
successful outcome in terms of rapidly improving conditions for disaster-affected people\.
4
14\. National Irrigation Administration (NIA)\. Reconstruction activities were successful,
covering 19 national and 567 communal irrigation schemes and restoring over 127,000
hectares of land to full productivity\. The implementation schedule slipped about two years
due to insufficient counterpart budget allocations, despite the availability of loan funds and
higher disbursement percentages after September 1990\. While implementation was delayed,
final disbursement performance was superior to that of the other components, which failed to
fully utilize their respective portions of the loan proceeds despite some degree of
overprogramming\. Maintenance of the works appears to be satisfactory\.
15\. To mitigate against future earthquake damage, NIA undertook efforts to improve
slope stability, including piloting the use of Vetiver grass\. As a large part of the damage
caused by the earthquake involved siltation, stabilization of slopes should mitigate the need
for future dredging\.
16\. Department of Health (DOH)\. Initial implementation of civil works under this
component went well, with 85 percent completed by December 1992\. However,
disbursement performance lagged severely, a problem which was compounded by a three-
year suspension of disbursements due to DOH's failure to comply with audit covenants\. By
the closing date of December 31, 1996, only US$4 million had been utilized from the loan
proceeds out of the US$ 10\.1 million envisioned at appraisal\. Of the remaining 15 percent of
civil works, most had been completed by loan closing, with the remainder to be completed by
the end of 1997\. The delays resulted from three primary factors, namely: (i) inadequate local
funds to complete the works without Bank funding; (ii) delays caused by difficulty in
acquiring the land for relocating facilities, which resulted in cost increases; and (iii) the
devolution of hospitals in 1993 to the LGUs, which changed the funding arrangements\.
17\. In terms of sustainabilty and mitigation of future risk, the reconstructed hospitals
were inspected by engineers and in many cases were retrofitted to improve seismic
resistance\. Many newer hospitals have benefited from earthquake-resistant improved designs
including, in some cases, relocation to areas less prone to severe earthquake damage based on
studies carried out under the Earthquake Reconstruction Project\.
18\. Department of Finance (DOF)\. A US$25 million component was included for import
of critical construction materials and commodities from a positive list including cement,
lime, ingots, iron, steel, roof sheets, pipes, pipe fittings, timber and critical commodities
(petroleum)\. The Department of Finance handled the procurement of the commodities
according to procedures agreed with the Bank\. Disbursements proceeded very quickly for this
component, with $20 million disbursed within a week of loan effectiveness and the
remaining $5 million disbursed within the first year of implementation\. The component
provided important budget support soon after the earthquake and helped to achieve the
objective of rapidly restoring economic activity to Luzon\.
Major Factors Affecting the Project
19\. The largest factor affecting the Project was the eruption of Mount Pinatubo in June
1991\. The Pinatubo disaster was of even greater scope than that of the 1990 earthquake, and
continues to affect vast areas of Luzon\. In response to Pinatubo, the Earthquake
Reconstruction Loan Agreement was amended to redirect the funds intended to develop
5
housing for earthquake victims toward the development of resettlement sites for thousands of
families dislocated by the eruption\. The eruption generated billions of cubic meters of lahar, a
mud/ash slurry with a high specific gravity\. When mobilized by the annual monsoons, lahar
moves quickly like very dense water, and has washed away infrastructure and buried large
areas around the Pinatubo volcano\. The redirected loan funds helped the Government to
move more quickly to relocate some families whose towns had been (or were in imminent
danger of being) completely destroyed\.
20\. In addition to the changes in the housing component, the Government requested and
the Bank agreed to reallocate part of the project funds to consultancy services and civil works
for the eruption-affected area\. The reallocated funds were managed by the Mt\. Pinatubo
Reconstruction Project Management Office\. The project closing date was extended to March
31, 1996 and subsequently to December 31, 1996 to permit completion of the Pinatubo works
and consultancy\.
21\. Other factors that affected the project were lack of counterpart funding and
disruptions caused by the Persian Gulf War\. The Philippines portfolio generally suffered
from a shortage of counterpart funds in the early 1 990s due to macroeconomic conditions that
were exacerbated by the onset of the Gulf War and increased prices for oil\. In recognition of
the hardships posed by the war, the Bank raised the disbursement percentages for several
projects in the Philippine portfolio, including the Earthquake Reconstruction Project\. Despite
the increased disbursement percentages and a somewhat overprogrammed rehabilitation
program, problems with collecting documentation for reimbursement from Local
Government Units and national departments' regional offices led to failure to fully utilize the
loan proceeds\.
Project Sustainability
22\. None of the physical components of the project were revenue-generating\. The
sustainability of the project therefore rests on the maintenance of the works produced\. Most
of the works financed by the project consisted of rehabilitation or reconstruction of
previously existing infrastructure which was already part of the regular maintenance
program\. The works are being maintained to the standards set by the various Departments,
which is in most cases adequate\.
23\. An exception to the above situation was the development of resettlement sites under
the Pinatubo housing component\. Responsibility for maintenance of the lowland sites has
been assigned to the relevant LGU and appears to be taking place\. However, while
maintenance responsibility has also been assigned for upland sites, concern was expressed to
the mission that inconsistent funding and training has led to a suboptimal level of
maintenance\. Additional training was requested, particularly for maintenance of the water
systems\. The mission agreed to explore the possibility of addressing these issues as part of
the Indigenous People Development Plans being generated under the Second Subic Bay
Freeport Project\.
24\. Supervision missions by both the Bank and ADB in 1991 identified problems with
the quality of the implementation of some of the civil works under the project\. As a result,
DPWH produced an action plan to address these issues, one element of which was the
6
approval of all works under the project by the international consultants before being accepted
for funding under the project\. As a result, works approved for Bank financing have generally
been of adequate quality\.
25\. Except for the housing component infrastructure, the assets reconstructed under the
project were already part of the overall Philippine assets managed by the various agencies\.
Maintenance and operation are therefore covered under the annual maintenance programs, to
a similar standard as the rest of the assets managed by each agency\. Responsibility for
maintenance of the housing assets have generally been assumed by the local governments
and, in some cases, by national agencies\. As reconstructed facilities are built to higher
standards of seismic resistance than the original works, the sustainability in the event of a
future seismic event has been enhanced\.
Bank Performance
26\. Bank performance during identification, preparation, appraisal and negotiations was
highly satisfactory\. Project negotiations were completed less than two months after the
earthquake\. The Project became effective less than six months after the disaster\. The project
design, developed closely with the Government and other donors, was sound and met
immediate needs\. The design and preparation were also consistent with the OD8\.50, dated
November 28, 1989, Emergency Recovery Assistance\. One exception was that while the OD
called for projects to be completed within a limited period, normally three years, the
Earthquake Reconstruction Project was scheduled to be substantially completed within 3 1/2
years, with disbursements completed within 4 3/4 years\. As it turned out, the bulk of the
project's civil works were substantially completed within 3 1/2 years, with disbursements
lagging by a greater degree\. The project was extended to allow for completion of the
Pinatubo component (not anticipated at appraisal) and to complete longer-term technical
assistance to mitigate against future earthquakes\.
27\. Supervision performance was satisfactory\. Because the diverse components of the
project involved four different agencies, supervision of each component was generally
carried out by independent sectoral missions, the findings of which were consolidated into an
overall annual project review by the task manager\. The Bank proved to be flexible during
implementation, allowing not only for reallocation and formal amendments of project
description to accommodate the Pinatubo eruption, but also the problems caused by events in
the Middle East\.
28\. At the end of the first year of implementation, after the international consultants were
in place, there were concerns about the quality of some of the civil works carried out in the
first year\. Together with ADB, the Bank organized a review of this problem which resulted in
an action plan by DPWH to improve the quality of works\. This action plan was supervised
carefully, and resulted in appreciable quality improvements and rejection of Bank financing
for poor quality work\. Although some instances of substandard work continue to appear, the
awareness of the Bureau of Maintenance in DPWH to such problems has been raised and is
increasingly being addressed\. Given the compressed preparation schedule for the project, the
thorough supervision review at the end of the first year of implementation proved to be
highly useful, both in keeping the project on track and in providing an opportunity for
7
enhanced institutional development\. This type of review after the first year should be
incorporated into other project designs\.
Borrower Performance
29\. Borrower performance during preparation was highly satisfactory\. The Presidential
Task Force on Rehabilitation in conjunction with the respective agencies' Regional and
District Offices did an excellent job of generating, validating, and summarizing proposed
reconstruction proposals\. The implementation performance varied by agency, but was
satisfactory overall\. The projects were mostly completed on time and within budget\. One area
in which all the agencies, except NIA, needed improvement was in obtaining the necessary
documentation for reimbursement under the loan, which slowed disbursements\.
30\. Slow disbursements resulted from several factors\. First, local governments and
regional offices of the national agencies received direct budget allocations from Department
of Budget and Management to perform the work under the project\. Assembling the
documentation needed to submit for reimbursement under the SOE procure was not clearly
understood and proved time-consuming\. Additionally, since the Bank's reimbursement was
made to the Department of Finance, and not the LGUs and regional offices, this received low
priority at these levels\. As a result, loan proceeds remained unliquidated at the close of the
project due to the fact that many activities eligible for Bank financing were not submitted for
reimbursement\.
31\. To rectify this situation in future emergency operations, the Bank, working closely
with Commission on Audit (COA), at project launch (or before) should produce a brief and
specific set of guidelines, tailored to the Philippines, detailing the documentary requirements
for reimbursement\. These guidelines must be understandable by local authorities with no
previous experience with Bank procurement\. Further, some mechanism should be in place to
create an incentive for regional offices and LGUs to submit SOE withdrawal applications\.
32\. A further problem, which hampered disbursements, were the audits of the project
expenditures by COA, which was unable to certify some project expenditures due to lack of
documentation\. Partly because the headquarters COA auditors waited to receive audits for the
regional COA auditors, audits were invariably presented to the Bank well after the covenant
time limit of six months after the close of each fiscal year\. This was a particular problem with
the DOH audits, which remained unresolved for three years during which time disbursements
were suspended\. Resolution only occurred after staff had changed and a general Audit
Action Plan was agreed between COA and the Bank\. However, problems were also
experienced with the DPWH audits and the Bank suspended processing of SOE withdrawal
applications for ten months in 1993/4 until the 1992 audit report was submitted\.
Assessment of Overall Outcome
33\. The overall outcome was satisfactory\. The project met the two major development
objectives of helping to rapidly restore economic activity and introducing measures to
mitigate future earthquake damage\. Infrastructure was reconstructed under the project in a
timely manner\. A significant degree of technology transfer took place, with the development
of seismic resistant designs and of updated Philippine building codes\.
8
Future Operations
34\. Future operation is a matter of continued maintenance of the works and procedures
established under the project\. Maintenance is ongoing and satisfactory\. The institutional
developments under the project, such as promulgation of updated designs, SAR mapping, and
use of Vetiver grass for slope stabilization should continue to be promoted and integrated
into planning\. As noted above, maintenance and operation are covered under the general
annual maintenance programs, to a similar standard as the rest of the assets in stock\.
35\. Two studies carried out under the project were of particular interest for future
operations\. The first was the review of Philippine bridge design standards in the light of
updated methods recently developed in California, which showed that most bridges in the
Philippines, even recently constructed ones, need retrofitting to strengthen them to withstand
seismic events\. A pilot program for this was started in the earthquake affected area under the
parallel ADB project\. This program should be extended to cover the whole country\.
36\. The second was the Bank financed hazard zonation mapping\. This showed that a
large area of the town of Dagupan is built on soils susceptible to liquefaction under seismic
events with the consequent danger of collapse of buildings\. This awareness has led to efforts
to improve location and design of facilities to withstand earthquakes\. Other cities in the
Philippines (for example in Mindanao) are thought to have similar problems, and it is highly
desirable to extend the hazard zonation type of analysis to other areas in order to guide future
decisions on urban planning and zoning, and on building codes to be applied in such areas\.
Key Lessons Learned
37\. The primary lessons that emerge:
(a) The project design criteria established in the Bank's Operational Directive
8\.50 were appropriate and successful in this project\. This reinforces the
suitability of OD8\.50 (since replaced by Operational Policy/Bank Procedure
8\.50) for future emergency operations (paras\. 2 - 4\.)
(b) For emergency projects, which are generally prepared quickly, a substantial
project review should be conducted after one year of implementation\. This
may also be appropriate for non-emergency lending operations (para\. 28\.)
(c) The disbursement system needs to be improved to assure smooth
implementation of future emergency projects in the Philippines (paras\. 30 -
32\.)
9
Table 1: Summary of Assessments
A\. Achievement of objectives Substantial Partial Negligible Not applicable
Macro policies /
Sector Policies V
Financial objectives /
Institutional development V
Physical objectives /
Poverty reduction V
Gender issues V
Other social objectives V
Environmental objectives V
Public sector management V
Private sector development /
Other (specify) /
B\. Project sustainability Likely Unlikely Uncertain
V/
C\. Bank performance Highly satisfactory Satisfactory Deficient
Identification V
Preparation assistance V
Appraisal V
Supervision
D\. Borrower performance Highly satisfactory Satisfactory Deficient
Preparation V
Implementation V
Covenant compliance V
Operation (if applicable) V
Highly Highly
E\. Assessment of outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactory
v
10
Table 2: Related Bank Loans
There were no previous emergency loans made to the Philippines\.
Table 3: Project Timetable
Steps in project cycle Date planned Date actual
First mention in files 07/17/90
Identification 08/09/90
Appraisal 08/09/90
Negotiations 09/12/90
Board presentation 10/09/90
Signing 11/8/90
Effectiveness 12/12/90
Project completion 9/30/94 12/31/96
Loan closing 03/31/95 12/31/96
11
Table 4: Cumulative Disbursements (Planned v\. Actual)
(US$ Million Equivalent)
FYI Cumulative Disbursements
Semester Planned Revised /1 Actual
1991
December, 1990 25\.00 19\.98 19\.98
June, 1991 35\.00 25\.39 25\.39
1992
December, 1991 40\.00 29\.64 29\.64
June, 1992 49\.00 36\.24 36\.24
1993
December, 1992 64\.00 54\.50 54\.50
June, 1993 78\.00 75\.27 75\.27
1994
December, 1993 93\.50 86\.75 86\.75
June, 1994 107\.50 87\.66 88\.07
1995
December, 1994 117\.70 95\.00 96\.75
June,1995 125\.00 105\.00 100\.15
1996
December, 1995 125\.00 115\.00 102\.06
June, 1996 125\.00 121\.00 105\.17
1997
December, 1996 125\.00 125\.00 107\.57
April 30, 1997 125\.00 125\.00 109\.31
140
120
80
60
40 - X ' , - cc l l
I r , nr s \.- -s 'd \.p \.- r: fo Pi
1/ There were no formal revisions made to the disbursement schedule, despite the restructuring for Pinatubo\.
12
Table 5: Key Indicators for Project Implementation
No implementation indicators were required or developed for the project\.
Table 6: Key Indicators for Project Operation
No operations phase indicators were required or developed for the project\.
Table 7: Studies Included in the Project
Study Name Purpose as defined at Status Impact of Study
Appraisal/redefined
Geologic The work was Complete SAR data has been collected and
Interpretation of undefined at appraisal, interpreted for all Luzon and is
Synthetic Aperture but was designed to available for design and policy
Radar Data for Luzon provide maps detailing consideration\. It has been used, for
and Preparation of seismic risk for policy example, by the Bridge Retrofit
Seismic Hazard Maps (zoning) and design Program and to relocate several
consideration\. hospitals under the Project\.
Environmental Undefined at Complete The guidelines handbook was
Guidelines and appraisal; a handbook completed and multiple seminars
Proposals for Post- for environmental and briefings held to disseminate
Earthquake considerations in results\. Copies of the guidelines are
Infrastructure Projects infrastructure projects widely held and used in design and
implementation\.
Reconstruction Proposals upon which Complete As anticipated at appraisal, the
Proposals (Baguio the selection of World Reconstruction Proposals provided
City, Dagupan City, Bank-financed the basis for selection of projects
and Agoo) reconstruction projects eligible for Bank financing\.
would be based\.
Hydrogeological and To update information Complete The studies' methodologies and
Structural Survey of on the hydrogeological conclusions were questioned by the
Masiway and nature of the Bank's irrigation specialist\.
Pantabangan Dams watersheds and to
assess the extent of
damage to the dams
caused by the
earthquake\.
13
Table 8A: Project Costs
(US$ Millions)
Local Foreign Total
SAR Actual SAR Actual SAR Actual
Roads and Bridges 35\.7 37\.5 47\.0 49\.3 82\.7 86\.8
Housing /I 9\.4 8\.8 4\.2 4\.0 13\.6 12\.8
Medical Facilities 5\.2 5\.3 6\.4 6\.5 11\.6 11\.7
Irrigation Systems 9\.7 11\.3 6\.5 7\.6 16\.2 18\.9
Critical Construction
Materials and Commodities - - 25\.0 25\.0 25\.0 25\.0
Technical Assistance 2\.0 1\.5 6\.5 4\.7 8\.5 6\.2
Physical Contingencies 6\.0 - 6\.5 - 12\.5 -
Price Contingencies 8\.4 - 4\.2 - 12\.6
Total Project Cost 76\.4 64\.4 1 06\.3 97\.1 182\.7 161\.5
Table 8B: Project Financing
(US$ Millions)
Local Foreign Total
SAR Actual SAR Actual SAR A Actual
Government 57\.7 52\.2 - - 57\.7 52\.2
IBRD 18\.7 12\.2 106\.3 97\.1 125\.0 109\.3
Total Financing 76\.4 64\.4 106\.3 " 97\.1 182\.7 161\.5
Table 9: Economic Costs and Benefits
The economic costs and benefits of this Emergency Lending Operation were not required to be
calculated during appraisal and have not, therefore, been calculated for the ICR\.
14
Table 10: Status of Legal Covenants
Section Covenant Description Status Comments
3\.01 (b) Borrower shall relend a NA This covenant was made
portion of the proceeds to unnecessary by the Pinatubo
NHMFC under a amendment\.
subsidiary loan agreement
3\.01 (d) NHMFC shall onlend the NA This covenant was made
proceeds of the subsidiary unnecessary by the Pinatubo
loan to the housing entity amendment\.
as construction loans and
then to mortgage loans to
the beneficiaries
4\.01 Borrower shall submit NC While audits were ultimately
audited financial received and acceptable, they
statements for the project were consistently very late,
accounts, including the necessitating suspension of
special account, as well as disbursements, in some cases
a separate opinion on for up to 2 1/2 years\.
SOEs by June 30 of each
year
Schedule 5 Borrower shall prepare C Proposals offered by the
reconstruction proposals implementing agencies were
for the affected area by acceptable to the Bank\.
3/31/91 and submit them
for review by a panel of
experts _
KEY: NA = Not Applicable; NC = Not Complied; C Complied
Table 11: Compliance with Operational Manual Statements
There was no significant lack of compliance with the Operational Directives, which were
followed quite closely during project design\.
Table 12: Bank Resources: Staff Inputs
Project Stage Staffweeks Dollars
Preparation 13\.9 40,800
Appraisal 13\.2 37,000
Negotiation/Board 7\.4 24,900
Supervision 99\.1 312,500
ICR 7\.0 23,600
Total 140\.6 438,800
Source: Staff Use and Schedule (Product View) Report COSR20
15
Table 13: Bank Resources: Missions
Mission Type Mission Dates Mission Personnel
Initial Assessment 7/17/90 Resident Representative, highway engineer, port
consultant
Appraisal/Negot\. 8/9 - 9/14/90 Financial analyst (TM), seismic engineer,
housing specialist, urban planner/engineer,
water engineer, highway engineer, lawyer
Supervision I 11/5 - 11/9/90 Financial analyst (TM), housing specialist
Supervision II 12/90 Sr\. Architect, health facility expert
Supervision III 1/27 - 2/1/91 Irrigation specialist
Supervision IV 5/20 - 5/26/91 Financial Analyst (TM)
Supervision V 7/91 Sr\. Architect, health facility expert
Supervision VI 9/12/91 Highway engineer
Supervision VII 11/5 - 11/15/91 Financial Analyst (TM), housing specialist,
geographical information systems specialist
Supervision VIII 2/3 - 2/5/92 Sr\. Architect
Supervision IX 3/23 - 3/27/92 Highway engineer
Supervision X 3/1 - 3/16/92 Housing specialist
Supervision XI 5/1 - 5/8/92 Irrigation specialist
Supervision XII 9/7 - 9/11/92 Financial analyst (TM)
Supervision XIII 10/12 - 10/19/92 Sr\. Architect
Supervision XIV 10/19 - 10/30/92 Housing specialist
Supervision XV 6/17 - 6/22/93 Sr\. Architect, housing specialist
Supervision XVI 5/18 - 5/27/94 Financial analyst (TM), highway engineer
Supervision XVII 11/14 - 11/18/94 Financial analyst (TM)
Supervision XVIII 3/1 - 3/3/95 Sr\. Economist (irrigation expert), 2 consultants
Supervision XIX 11/1 - 11/21/95 Highway engineer (TM)
Supervision XX 3/20 - 3/22/96 Highway engineer (TM)
ICR Mission 3/4 - 14/97 Highway engineer (TM), Operations Officer
16 Appendix A
PHILIPPINES
EARTHQUAKE RECONSTRUCTION PROJECT (LN\. 3263-PH)
IMPLEMENTATION COMPLETION REPORT
BORROWER'S PCR EXECUTIVE SUMMARY
FOREWORD
This Executive Summary presents an overall review of the Earthquake
Reconstruction Project (ERP) - its objectives, scope, costs, financing arrangements,
implementation, compliance with Loan covenants, an assessment of the benefits and
beneficiaries, and conclusions, lessons learned and recommendations\. The Project was
supported by ADB Loan No\. 1053-PHI(SF) ($100\.0 million) and IBRD Loan No\. 3263-PH
($125\.0 million)\. The Summary draws on the individual Projects Completion Reports
(PCRs) prepared by the four Implementing Agencies - the Department of Public Works and
Highways (DPWH), the Department of Health (DOH), the National Housing Authority
(NHA) and the National Irrigation Administration (NIA); these PCRs are attached in full as
Annexes\. The ADB loan was administered solely by DPWH; all four Agencies were
assisted by the IBRD loan\.
The IBRD loan closed on December 31, 1996; the ADB loan will close on June 30,
1997\. This Executive Summary and the DPWH PCR present the status of the Project as of
December 31, 1996; these Reports will be updated after the closure of the ADB loan\.
A\. Project Description
1\. Objectives
The main objective of the multisectoral project was to minimize the adverse
economic and social impact of the magnitude 7\.7 earthquake which struck Luzon on
July 16, 1990, affecting an area of about 100,000 sq\. km\., by reconstruction of
essential public infrastructure including roads, bridges, Governmnent buildings,
schools, hospitals, health centers, housing and water supply, flood control and
irrigation systems\. These measures were intended to ensure that normal economic
and social activities could resume promptly in the affected areas\. The total cost of
repairing the damage sustained by public facilities was estimated at 15\.0 billion,
(about $600 million)\.
In addition, steps were to be taken to reconstruct the damaged facilities to a
condition at which risk of future damage by natural disasters would be minimized,
and to strengthen existing structural codes and their enforcement\. Training and
transfer of technology from international experts to the Government Agencies, local
consultants and contractors were also prime objectives of the project\.
17 Appendix A
2\. Official Development Assistance
In August, 1990 the Government of the Philippines (GOP) allocated 10\.0
billion (about $400 million) for the public infrastructure rehabilitation and relief
effort; this sum was to be financed from GOP sources and foreign loans and grants\.
The principal loans received were from the Asian Development Bank ($ 100\.0
million) and the World Bank ($125\.0 million)\. Assistance was also provided by
Denmark, the European Union, Germany, Japan, Switzerland, the USA (through
USAID) and the United Kingdom\. The ERP, the subject of this Report, was assisted
by the World Bank/IBRD and ADB loans\. A portion of the Government's
counterpart funds was sourced from OECF Emergency Commodity Loan PH-CI5\.
3\. Executing Agencies and Project Components
Four Executing Agencies were involved in the implementation of the Project:-
(i) the Department of Public Works and Highways (DPWH) (ADB and IBRD
assisted) with responsibility for the rehabilitation of roads, bridges, schools,
colleges, water supply and flood control systems and a limited number of
ports, wharves and Government buildings\.
DPWH (together with Local Government Units LGUs) implemented:
a) 1,760 (ADB 596, IBRD 1,164) road and bridge projects
Repair of settled areas, damaged asphalt and concrete pavements;
reshaping of cut and fill slopes; repair of longitudinal and cross
drainage; removal of slipped materials from carriageways; construction
of stone masonry and gabion retaining walls\. Replacements of bridge
bearings, repair of bridge decks, handrails, steel trusses, replacement of
Bailey panels; in certain cases, construction of new, replacement
bridges, temporary road detours and temporary bridges\. Repair and up-
grading of bridge foundations, piers and abutments, and associated scour
protection works\.
b) 57 flood control projects (ADB-assisted)
Reconstruction of failed spur dikes, river banks, bunds; construction of
new river training works\. Clearing of channels filled with loose debris
from unstable slopes\.
c) 84 water supply projects (ADB-assisted)
Cleaning, redrilling, repairing shallow and deep hand wells\. Repair of
water tanks, reservoirs, water treatment plants, storage and distribution
systems, including pipe-work\.
18 Appendix A
d) 2,203 school and college building projects (ADB-assisted)
Repair and strengthening of foundations, footings, floor slabs, beams,
columns, ceilings, roofs, drainage, windows, internal and external walls,
electrical, mechanical, water and sewerage systems\.
e) 62 other infrastructure projects (ADB-assisted)
Repairs to public buildings and markets, health centers, ports and
wharves\.
In addition, with ADB assistance, 96 important bridges in Luzon,
including 23 in Metro Manila, were seismically retrofitted under the
Bridge Retrofitting Program (BRP) and consulting services, equipment
and incremental DPWH costs were financed\. IBRD assisted in financing
limited civil works for the Mount Pinatubo Rehabilitation Project, in
consulting services, equipment procurement, hazard mapping and
training\.
(ii) the Department of Health (DOH) (IBRD assisted), which handled the repair
and reconstruction of hospitals and health centers\. Eighty-three hospitals,
three DOH Offices, 120 Main Health Centers and 314 Barangay Health
Stations were repaired or reconstructed\. In the case of seven of the hospitals,
temporary facilities were provided to allow these hospitals to maintain their
operational capability\. NHA assisted DOH in the provision of the temporary
facilities\. A total of seven hospitals had to be relocated as the original
buildings were situated in areas of seismic risk\. In additional, medical
equipment was procured to replace equipment destroyed by the earthquake\.
(iii) the National Housing Authority (NHA) (IBRD assisted); the original housing
component was programmed to reconstruct or repair homes destroyed or
damaged by the earthquake in seven urban areas\. However, at the request of
the Government, the loan proceeds were reallocated to assist in the
resettlement of the victims of the Mount Pinatubo volcanic eruption of June,
1991, and the component became the Mount Pinatubo Housing Component,
under the administration of the Presidential Task Force for Rehabilitation
(Mount Pinatubo)\. Despite the revised use of the loan proceeds, the
component remained within the ERP, and the Implementing Agency was
NHA\. NHA constructed ten upland resettlement sites for indigenous tribes
people who had lived on the slopes of Mt\. Pinatubo, and two lowland
resettlement sites, for people displaced by ashfall and lahar destruction in the
areas surrounding the volcano\.
The works for the upland settlements included site development, roads
drainage, and provision of materials and tools to the beneficiaries to allow
them to construct their own houses, to approved standard plans\. The loan
proceeds financed site development, horizontal infrastructure, communal
19 Appendix A
facilities including health clinics, toilet facilities, school buildings and
markets, and housing construction materials and carpentry tools\. For the two
lowland settlement areas NHA provided and prepared sites for basic
communal facilities such as school buildings, health centers and markets,
together with concrete roads, drainage, elevated water tanks sourced by deep
wells and individual house water connections\.
(iv) the National Irrigation Administration (NIA) (IBRD assisted), which
implemented the reconstruction of 19 damaged national and 567 communal
irrigation systems including canals, canal structures, diversion works and
roads; 127,080 has\. of affected service area were restored\. NIA also procured
cranes equipped with draglines, and portable pumps, to desilt canals and
provide temporary water supplies for irrigation respectively\. The IBRD loan
also financed technical assistance for the hydro-geological and structural
evaluation of two major dams, including the procurement and installation of
seismological instruments to established a seismic monitoring network\.
(v) $25\.0 million was allocated by IBRD for the importation of essential
construction materials required for the Project; this procurement was handled
by the Department of Finance (DOF)\. Materials imported included cement,
steel, and fuel\.
With the agreement of the GOP and ADB, 110 Metro Manila school building
projects in the DPWH program were implemented by the Department of Education,
Culture and Sports (DECS); similarly, certain DPWH water supply projects outside
Manila were undertaken by the Local Water Utilities Administration (LWUA)\.
LWUA's project scope of 52 projects included rehabilitation of intake structures,
pipelines, reservoirs, pumping equipment, pumphouses, power lines, chlorinating
facilities, generator sets, service connections, drilling of new wells and demolition
of old concrete reservoirs and other structures\. Close technical coordination was
maintained between DPWH and these Agencies, and their withdrawal applications
to ADB were checked and finalized in the DPWH Project Implementation Unit
(PIU)\.
The total programmed allocations per Agency (after two reallocations of
IBRD loan proceeds in 1992 and 1993) were:
Agency Loan Proceeds: $m GOP input: $m Totals: $m
equivalent
IBRD ADB
DOF 25\.00 - 25\.00
DPWH 64\.80 100\.00 64\.72 229\.52
DOH 10\.10 - 3\.78 13\.88
NHA 10\.60 4\.49 15\.09
NIA 14\.50 - 7\.75 22\.25
Total 125\.00 100\.00 80\.74 305\.74
20 Appendix A
4\. Changes in Project Components
For the IBRD-assisted components, the main changes were the reallocation of
the Housing loan proceeds to the Mt\. Pinatubo resettlement areas, handled by NHA,
and realignment of $4\.92 million dollars from the roads/bridges and equipment
categories to finance consultants and civil works associated with the rehabilitation
following the Mt\. Pinatubo eruption\. The Mt\. Pinatubo consultancy and civil works
were under the purview of the DPWH Mt\. Pinatubo Rehabilitation Project
Management Office; this Office had the administrative and technical responsibility,
and prepared and sent withdrawal applications directly to IBRD\.
IBRD-financed Synthetic Aperture Radar (SAR) imagery was procured for the
whole of Luzon (excluding the Bicol Region) and seismic hazard maps were
prepared for the same area by international consultants\. The provision of strong-
motion equipment was deleted from the original project scope, as this was provided
under a separate Japanese-assisted project\. A slope stabilization program using
vegetation (vetiver grass) was initiated and three bridge inspection vehicles were
procured, all of which had not been originally foreseen\.
For the ADB-assisted components, DPWH and the Bank agreed to implement
a Bridge Seismic Retrofitting Program (BRP) under which 300 bridges in Luzon
were studied and 96 seismically retrofitted\. The DOH and NIA components had no
major changes in scope\.
B\. Project Implementation
1\. Implementation Schedules, Planned and Actual
Appendix A shows how the actual implementation schedules compared with
those planned at appraisal of the two loans in 1990\. The ADB loan closing date was
rescheduled from December 31, 1994 to June 30, 1997 in three stages\. The IBRD
loan closing date was revised from March 31, 1995 to December 31, 1996 in two
steps\. In the case of DPWH, the ADB-assisted components (apart from the BRP
activities, which are expected to be completed in June, 1997) were finished by the
end of 1993, as envisaged at appraisal\. The IBRD-assisted civil works components
were also completed by the target date of December, 1994, although the seismic
mapping project and bridge inspection vehicle procurement, (not envisaged
originally), were completed in April, 1995 and December, 1996 respectively\.
NHA's implementation proceeded smoothly, and the civil works for both
upland and lowland resettlement areas were completed in the third quarter of 1993,
earlier than had been programmed for the original housing project component\.
NIA's target completion date was December 31, 1993\. However, due to inadequate
budgetary allocations, NIA continued with minor works on its final irrigation
projects until December, 1996, although the bulk of the NIA civil works had been
completed by late 1995\. Consultants' services for flood prediction training and
21 Appendix A
software procurement were only partly completed by the revised loan closing date,
due to time constraints\.
The major part (85%) of the DOH civil works were completed by December,
1992\. Thereafter limited civil works continued intermittently until the loan closing
date, on specific hospitals in Metro Manila, Baguio City and Kayapa (Nueva
Viscaya), but at a slow pace, due to difficulties experienced in acquiring new sites
for relocated facilities, and funding problems due to the suspension by the Bank of
SOE reimbursements\. Completion of the last projects is expected by the end of
1997\.
2\. Implementation Methods Used
A Presidential Task Force on Rehabilitation (PTFR) was created in August,
1990 to oversee, coordinate, monitor and report on the rehabilitation activities\.
DPWH, DOH, NHA and NIA implemented their respective components
independently; DPWH was responsible through its Project Coordination Unit
(PCU) for overall monitoring and reporting to the Banks on the implementation of
the ERP by the four Agencies concerned, on a quarterly basis\.
Immediately after the earthquake, each Agency's Regional and District staff,
assisted by LGUs identified, listed and summarized the damage to individual public
infrastructure facilities\. These lists were sent to PTFR in Manila, which
consolidated them\. Specialized facilities such as airports were handled by the
Department of Transportation and Communications (DOTC), and were not included
in the Bank-assisted ERP\.
Each of the four ERP Agencies engaged local consultants as necessary, who
assisted in the validation of projects, designs, bidding, and supervision of
construction\. International experts were recruited by DPWH to provide advice not
only to DPWH but to the other Agencies, in fields such as earthquake engineering,
slope stability, building reconstruction, environmental aspects and road and bridge
reconstruction and project implementation\. These experts supervised and assisted
the local consultants as well as assisting the Agencies\. Project Implementation Units
(PIUs) were established in the Central Office of each Agency, which handled the
day-to-day technical and administrative activities\. Civil works were carried out by
local contractors after competitive bidding procedures, by the Agencies themselves
(NHA and LWUA) and partly by beneficiaries (NIA and NHA)\. Simplified bidding
procedures and negotiated contracts were permitted only until February, 1991;
thereafter normal bidding procedures were followed rigidly\. Both Banks agree that
LGUs could implement DPWH projects within their technical and financial
capabilities, provided that appropriate standards and procedures were followed and
that DPWH retained overall responsibility\.
NIA implemented its project using a participatory approach in which farmers
were involved in the actual rehabilitation works\. Works such as desilting of canals
and repair of minor structures were assigned to groups of farmers on a small
22 Appendix A
contract basis\. Major works were undertaken either by NIA itself or by contractors\.
NIA utilized its Regional Offices in Regions 1, 2, 3, and CAR as direct
implementors\.
NHA staff designed the civil works, awarded the contracts though simplified
bidding procedures and supervised construction\. Resettled beneficiaries constructed
the upland area housing themselves, with materials and tools furnished by NHA\.
DOH's Health Infrastructure Services (INFRA) was designated to act as the
DOH PIU, and INFRA was responsible for planning, design, bidding and award,
construction supervision and submission of withdrawal applications to the Bank\. In
the design phase DOH utilized its in-house capabilities, DPWH services, and
consultants; the last also provided supervision services\. DOH Regional Offices
awarded and administered contracts within their delegated authority limits\. The
Hospital Operations and Management Services of DOH handled the procurement of
the medical equipment\.
3\. Costs and Financing Arrangements
The GOP fully financed all DPWH original ERP civil works and DPWH
claimed reimbursement from both Banks as documents for completed projects
became available\. The BRP and Mt\. Pinatubo contractors were paid directly by the
Banks\. DOH, NHA and NIA also used the reimbursement procedure\. Seven local
consulting firms recruited by DPWH were initially financed from GOP sources and
reimbursement claimed later from the ADB loan\. The BRP local consultants were
paid directly by ADB; all international consultants were paid directly by ADB,
except the Program Advisors, financed from the IBRD loan\.
The importation of construction materials, the procurement of the bridge
inspection vehicles and consulting services were paid directly by IBRD\.
The Department of Budget and Management (DBM) initially disbursed ERP
funds directly to certain LGUs and DPWH Regional and District Offices\. Such
direct allocations led to problems for the DPWH Central Office, PCU (and later
PIU) in keeping track of the allocation and utilization of ERP funds\.
The total costs presented in this Report are the sum of the total costs of all
subprojects or individual contracts to which the Bank(s) made some financial
contribution\. Works 100% financed by the GOP and for which no reimbursement
was made by the Banks have been excluded, since such projects generally had
unacceptable technical or contractual features, or insufficient documentation,
rendering them ineligible for Bank financing\.
The DPWH had available from the ADB loan $100\.0 million, and from the
IBRD loan $64\.8 million\. DPWH completed 1,760 road and bridge projects (P3\.954
billion), 57 flood control projects (P147 million), 84 water supply projects (P54
million), 2,203 school building repairs (P765 million), 62 other infrastructure
23 Appendix A
projects (P144 million) and the bridge retrofitting civil works are expected to cost
P516 million\. The Pinatubo consultants' and civil works' costs totalled P127
million\. Consultants' fees and expenses, procurements and the ADB service charge
accounted for the balance of the two loans utilized\. However, $9\.88 million of the
IBRD loan is scheduled to be cancelled, principally as a result of the non-
availability of acceptable documents to allow any further claims for reimbursement
of civil works costs to be made by DPWH\.
NHA's share of the IBRD loan was $10\.6 million and this (less $1\.65 million
to be cancelled) was used to finance P321\.0 million worth of civil works for the
resettlement areas\. NIA utilized $14\.63 million of loan proceeds and $0\.520 million
reallocated from IBRD Loan No\. 2948-PH Irrigation Operations Support Project
(ISOP)\. On the ERP, total costs were $0\.6 million higher than programmed, but
$0\.52 million of this was financed from Loan No\. 2948-PH\.
DOH was not able to use all the $ 10\.1 million available from the IBRD loan
due to funding problems (partly the result of IBRD's suspension of loan
disbursements from August 1993 to December 1996\. $6\.0 million of the DOH
allocation is expected to be cancelled\.
As of December 31, 1996, the total cost of the ERP is estimated at $282\.77
million, of which $192\.20 million (68\.0%) was financed by the Bank loans, and
$90\.57 million equivalent (32\.0%) by the Government\. Details of the project costs
and sources of financing are presented in Appendix B\. $17\.43 million (13\.9%) of
the IBRD loan is scheduled for cancellation\.
4\. Consultants and Training
In late 1990 DPWH recruited seven local consulting firms for the ERP civil
works, and subsequently a total of 15 international consultants (7 from firms, 8 as
individuals)\. The international experts served for periods ranging from 2 months to
6<« years as Program Adviser (1), Program Coordinator (1), Technical Specialists (9)
and Implementation Specialists (4)\. Consulting firms (international) were engaged
for the acquisition of SAR data and the hazard mapping component; for the design
and supervision of the BRP, a local firm was recruited\.
DOH utilized local consultants for design and supervision of the large hospital
projects, while NHA relied almost exclusively on in-house staff for design and
implementation\. NIA engaged two international consulting organizations for
hydrogeological evaluation and structural evaluation of major dams respectively\.
The hydrogeological aspects included a review of the Upper Parnpanga Basin and
activities comprised predicting design storms, reviewing flood forecasting
procedures, providing advice on possible flood damage due to dam breaching and
training of NIA staff in flood forecasting and risk assessment\. Two major dams in
Luzon were studied for safety when subjected to seismic forces, and
recommendations made for rehabilitation works\.
24 Appendix A
During the ERP implementation period the international consultants attached
to DPWH participated in 40 earthquake-related workshops, training sessions and
seminars (some conducted outside Manila), and usually as resource persons\.
During the hazard mapping contract implementation, two specialized courses
were conducted by the consulting firm concerned on interpretation of radar imagery\.
The internatioi\.al consulting team after completion of the hazard mapping
component made presentations of the results to the Philippine Institute of Civil
Engineers, and to senior staff of DPWH, other Agencies and academics\.
5\. Procurement, and Recruitment of Consultants
The essential construction materials ($25 million) comprising cement, steel,
gasoline and diesel were procured as commodities from overseas by DOF\. The three
bridge inspection units were procured through ICB\. NIA procured cranes, portable
pumps and seismological instruments\.
The original seven local consulting firms were appointed directly by DPWH,
with the approval of ADB\. The acquisition of SAR data for Luzon was
implemented on a sole-source basis, with the agreement of IBRD, while the
DPWH/IBRD-financed seismic mapping consultants were engaged following
international competitive recruitment\. The BRP local consultants were selected
competitively, while all international individual consultants were selected following
requests for and submission of bio-data by firms and individuals, and evaluation by
DPWH\. The Banks concurred with the evaluations\. DPWH civil works contracts
were generally awarded following LCB procedures acceptable to both Banks\.
NHA engaged their contractors through LCB, as did DOH and NIA\. Local
consultants were recruited through comparison of technical proposals and
international experts mainly on the basis of experience as demonstrated in their bio-
data, following IBRD guidelines\. NHA implementation did not utilize any
consulting services\. DOH's local consultants were engaged following the
Government's procedures\.
6\. Loan Covenants
All four Implementing Agencies complied with most of the loan covenants,
which were not onerous, given the emergency nature of the Project\. However,
DPWH, DOH, and NHA all had difficulty in meeting the deadlines for annual
submission of audited projects accounts and financial statements, and at various
times IBRD suspended processing of withdrawal applications\. Submission to the
Banks of audit reports with qualifications also resulted in queries from the Banks\.
Apart from Audit Reports, the only delayed compliance was the late submission to
the Banks by DPWH of Reconstruction Proposals for the affected areas\. Given the
speed of repair and rehabilitation, and the delayed recruitment of international
consultants, it was not practicable for the Government to prepare in time detailed
proposals for every major urban area in Luzon affected by the earthquake;
25 Appendix A
eventually detailed proposals were submitted by DPWH to the Banks for only
Agoo, Baguio City and Dagupan City, and the Banks raised no objections\.
7\. Environmental Impacts
The pre-earthquake environment in Luzon was very seriously affected by the
earthquake and its aftershocks\. In particular, landslides devastated hillsides, roads
and river systems\. Debris from steep slopes found its way into the rivers and the bed
levels aggraded\. Vegetation was destroyed, irrigation, flood control and water
supply systems destroyed or damaged, and the earthquake had devastating impacts
on the lives and well-being of millions of people in Luzon\.
Most of the infrastructure repair was directed at the restoration of the pre-
earthquake facilities, with strengthening where practicable\. But the reforestation and
vegetation of barren slopes and removal of debris from rivers will take many years
to complete\. DPWH and NIA have started to use vetiver grass to stabilize hill
slopes and river and canal banks\. To the extent possible, the civil works were
carried out to repair as much of the environmental damage as possible without
causing further problems\. But depositing surplus material over cliff edges and
undercutting already steep slopes along hill roads was often the only way to reopen
blocked roads providing access to remote communities\. An Environmental
Specialist visited all parts of Luzon advising Government officers, consultants and
contractors on the main environmental issues\. He drafted new Environmental
Guidelines which were distributed throughout the country, and he prepared five
reports, each dealing with the environmental problems and proposed rehabilitation
in a particular Region of Luzon\.
C\. Initial Operations
1\. Initial Operations Following Rehabilitation
The Government reacted very quickly to the extensive damage to
infrastructure resulting from the earthquake, and, with the Banks' assistance, roads
were reopened, dangerous buildings condemned, temporary repairs to schools and
hospitals effected and plans put in place for the longer term repair or reconstruction\.
Basic communications were re established within one week, but devastating
typhoons later in 1990 and in 1991, and the eruption of Mt\. Pinatubo in June, 1991
further aggravated the already precarious infrastructure fabric of Luzon\.
Nonetheless, life returned rapidly to niormal and initial operation are considered to
have been satisfactory, with roads and bridges reopened (or detours built), schools
reopened and temporary classrooms organized, and makeshift water supply and
health care facilities organized quickly\.
Plans were made at an early stage for the medium and long-term rehabilitation
works required, and overall the initial responses to the earthquake are considered to
have been above expectations; the longer term measures are now also mostly in
place\. However, it is considered that the engagement of the international experts at
26 Appendix A
an earlier stage (they did not commence work until February, 1991, 6<< moths after
the earthquake) would have provided expert advice at the time it was most needed\.
2\. Maintenance and Sustainability
Since most of the damaged facilities were already part of the Government
stock, they were included in annual maintenance programs\. Accordingly, after
repair, the facilities have continued to be maintained with annual budgetary funding\.
On the advice of both Banks maintenance procedures (in DPWH) are being
reviewed and revised, and features such as maintenance by contract rather than by
administration have already been implemented\. Maintenance of damaged facilities
is now more focussed, since local engineers responsible appreciate the need for
regular maintenance, and understand better the mechanism of and potentials for
failure under natural calamities\. The introduction of vegetation (vetiver grass) for
stabilization of slopes, now utilized by DPWH and NIA, is another sound
development, as is the use of flexible gabion-based structures for earth-retaining
walls, training works and bridge foundation protection, rather than the traditional
rigid and brittle rubble masonry\.
The bridge seismic retrofitting program has lessened the potential for major
failures of 96 bridges in Luzon during an eartlhquake\.
3\. Benefits and Beneficiaries
The Project achieved its main objective of assisting the Government to restore
quickly infrastructure damaged by the earthquake\. Although the Government itself
initially financed the ERP civil works, the Bank loans ensured early reimbursement
of eligible expenditures\. The Banks had envisaged at appraisal that the
reconstruction works would be completed by the end of 1993, and this was
substantially achieved, (except for the seismic retrofitting of bridges which was
implemented under a later component, commenicing in July, 1994)\.
Buildings, water supply facilities and earth-retaining structures were rebuilt to
higher standards, improving their capabilities to withstand future natural disasters\.
New bridges were designed to current internationally accepted seismic codes, and
the bridges requiring retrofitting were strengthened to current seismic standards\.
Major bridges and flyovers in Metro Manila and bridges on the North and South
Expressways were checked under the BRP; some of the major bridges in Metro
Manila were retrofitted\. DPWH Standard Drawings for bridges, school buildings
from one to four stories, gymnasia, public market buildings, other public buildings
and elevated steel water tanks were revised and updated\.
Simple environmental guidelines for infrastructure projects were prepared and
distributed\. A program for environmental stabilization of river banks and roadside
slopes through planting of vetiver grass was formulated under the ERP\. A Unit
within the DPWH Bureau of Research and Standards was strengthened to provide
27 Appendix A
geotechnical and geological advice to Government designers and supervisors, based
on the results of the hazard mapping work for Luzon carried out under the Project\.
NHA were able to develop 10 Upland Settlement areas which were occupied
by about 5,129 families\. 380 has\. were developed for residential purposes while
3,000 has\. were reserved for communal farming\. 3,236 residential plots were
prepared in the two lowland sites\.
NIA benefitted from the work of international consultants on hydrogeological
and structural aspects of dam safety\.
The SAR and Mapping Projects for Luzon brought the Philippines into the
forefront in geologic mapping and lhazard risk assessment\. This will enable
planners, designers and contractors in the future to introduce appropriate hazard risk
mitigation measures into infrastructure projects\.
Technology transfer was achieved through interaction between the
international consultants and Government and LGU officers, local consultants, and
contractors\. Philippine structural codes were revised on the basis of up-to-date
information, largely obtained by the international consultants\. With the assistance
(in part) of UNCRD, over forty separate seminars and workshops on earthquake-
related topics were held, with the international consultants usually being the chief
resource persons\. Throughout the country a very much wider appreciation of the
need to design, construct and strengtlheni facilities to withstand future earthquakes
and other natural disasters has been developed\.
No financial or economic justifications for this emergency project were
prepared by the Banks at appraisal; consequenitly no quantified benefit data are
presented in this Report\. The civil work packages were all carried out by local
contractors, generating employment for both skilled and unskilled labor at a time
employment was needed most; in the case of the civil works, most materials were
procured locally\. The economic benefits, although not quantified, were substantial
and are considered to have reached the targeted beneficiaries, and normal economic
activities in the affected areas resumed quickly\.
D\. Conclusions, Lessons Learned and Recommendations
1\. Conclusions
It is concluded by the four Agencies concerned that the project was generally
successful\. Infrastructure damaged and destroyed by the earthquake was repaired or
replaced in a timely manner\. Normal social and economic life in the affected areas
resumed quickly\. Technology transfer and upgrading of Government standard
designs and specifications were implemented and the larger structures repaired
during the later stages of the project had adequate seismic-resistant features
incorporated\. Government officers in Manila and the Regions, consultants and
contractors were exposed to up-to-date seismic design and construction techniques\.
28 Appendix A
National building codes were updated and state-of-the-art geologic and seismic
hazard maps prepared for the whole of Luzon\. The use of local labor and materials
in the reconstruction measures aided the recovery of economic activity in the areas
affected\.
Considerable experience was gained by the Agencies in the implementation of
large foreign-assisted projects, and data bases and computer techniques were
developed which are now proving useful in the implementation of regular projects\.
However, all Agencies stressed the need for rapid and full release of funds by
DBM; delays in the release of funds prevented timely completion of rehabilitation
works\.
2\. Lessons Learned
The Principal lessons learned were:
i) it is essential that systems are established in Government Agencies so that
they can implement at short notice large emergency projects: data bases
should be set up, staff trained in disaster-related activities and a record-
keeping system set in place so that a sudden expansion of the work-loan can
be accommodated;
ii) if international technical assistance is required, experts should be recruited
quickly, since their most useful advice can be given at the commencement of
rehabilitation efforts\. A data base of international consultants (individuals and
firms) experienced in disaster-related projects should be set up in concerned
Government Agencies;
iii) the early allocation of adequate ftnds is vital to the implementation of disaster
relief efforts\. However, direct disbursement of Government funds to Regions
and LGUs may not be the best procedure\. Allocation to the Agency's central
office, with subsequent reallocation to the Regional Offices of the Agency,
allows close central control and monitoring of scarce resources;
iv) after ODA loans have been approved, the Government's budgetary allocations
to the Agencies concerned should be revised to take account of the newly
available (and additional) funds;
v) it is important that the lessons learned from the Luzon earthquake be
promulgated throughout the Government and to Agency Regional Offices,
since a similar intensity earthquake (or other national calamity) could occur at
any time in any part of the country; and
vi) NHA considered that its close and focussed project supervision was a crucial
factor in the timely completion of this component; delegation of authority to
the project supervisor and clear delineation of responsibilities facilitated
appropriate responses\.
29 Appendix A
3\. Recommendations
i) the Bridge (Seismic) Retrofitting Program should be extended to all parts of
the country;
ii) the geological and seismic hazard mapping completed for Luzon should be
expanded to cover the whole of the Philippines;
iii) the relevant national building and structural codes should be revised whenever
new seismic data become available and thereafter the revised versions should
be disseminated to all Government Agencies concerned;
iv) the vetiver grass slope and bank stabilization pilot project should be expanded,
and the use of vetiver encouraged;
v) flexible gabion retaining walls, dikes and river training works should become
standard, rather than the traditional rubble masonry structures;
vi) in emergency projects the early recruitment of international experts should be
a priority; their most useful input can be made immediately after the disaster;
vii) a network of instruments to measure and record strong seismic motions should
be set up throughout the country;
viii) a Housing Program for families affected by national disasters should be
formulated dealing with various disaster scenarios; in this way the correct
response to a particular calamity can be quickly identified;
ix) NHA recommends the decentralization of its activities and delegation of
authority to its offices in the Regions;
x) Government fund allocation procedures should ensure that immediately after
ODA loans become available following a disaster, information on the fund
allocations is passed to the Agencies concerned;
xi) the Banks should prepare jointly a brief and specific set of guidelines detailing
the documentary requirements for reimbursement purposes on multi-contract
emergency projects; and
xii) COA should be requested to prepare a similar handbook detailing the
requirements for preparation of annual project Audit Reports on large-scale,
multi-contract, emergency projects\.
30 Appendix B
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
EARTHQUAKE RECONSTRUCTION PROJECT (LN\. 3263-PH)
FINAL AIDE MEMOIRE
OF THE
IMPLEMENTATION COMPLETION REPORT (ICR) MISSION
UNDERTAKEN DURING THE PERIOD MARCH 4 -14,1997\.
1\. A completion mission of the International Bank for Reconstruction and
Development (the Bank), comprising Messrs\. Peter Long, Highway Engineer and Kevin
Page, Operations Officer, visited the Philippines from March 4 - 14, 1997 to review the
implementation of the Earthquake Reconstruction Project (Ln\. 3263-PH) and to prepare the
Implementation Completion Report (ICR) to be submitted to the Bank's Board of Directors
no later than June 30, 1997\.
2\. The mission would like to thank the officials of the four implementing agencies for
the courtesies extended and their excellent cooperation in reviewing and compiling the data
for the ICR\. The mission's findings are subject to clearance by Bank Management in
Washington, DC\.
Implementation Results
3\. The mission has thoroughly reviewed the four PCRs produced by the various
implementing agencies, reviewed the Project with counterpart staff, and undertaken a two-
day site inspection of representative work accomplished under the Project\. Based on its
findings, the mission recommends that the ICR include an overall satisfactory rating for the
outcome of the project\. The implementation results would have been highly satisfactory
except for some of the early delays related to lack of counterpart funding and the overall
failure to liquidate the full loan despite the need for the funds\.
Main Lessons Learned
4\. Three primary lessons that emerge:
(a) The project design criteria established in the Bank's Operational Directive
8\.50 were appropriate and successful in this project\. This reinforces the
suitability of OD8\.50 (since replaced by Operational Policy/Bank Procedure
8\.50) for future emergency operations\.
(b) The disbursement system needs to be improved to assure smooth
implementation of future emergency projects in the Philippines\.
31 Appendix B
(c) For emergency projects, which are generally prepared quickly, a substantial
project review should be conducted after one year of implementation\. This
may also be appropriate for non-emergency lending operations\.
Further Actions
5\. Copies of the Draft ICR were left with the respective implementing agencies for
comment prior to finalization of the ICR\. Comments were received and incorporated\. The
Bank will send the final ICR to the respective agencies after it is printed\.
IBRD 22617
21~~~~~~~~~~~~~~~~~'
PHILIPPINES 1220
EARTHQUAKE
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SEISMIC INTENSITY OF ® Laoag -
JULY 16, 1990 EARTHQUAKE
180
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SEPTEMBER 1 990
I
IMAGING
Report No\.: 18803
Type: ICR | REVIEW |
P105311 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
IN: WB Minor Irrigation Project (P105311)
Report Number: ICRR0022353
1\. Project Data
Project ID Project Name
P105311 IN: WB Minor Irrigation Project
Country Practice Area(Lead)
India Water
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-80900,IDA-50140 31-Dec-2017 130,785,908\.63
Bank Approval Date Closing Date (Actual)
04-Oct-2011 20-Dec-2019
IBRD/IDA (USD) Grants (USD)
Original Commitment 250,000,000\.00 0\.00
Revised Commitment 145,193,004\.28 0\.00
Actual 130,785,908\.63 0\.00
Prepared by Reviewed by ICR Review Coordinator Group
Hassan Wally John R\. Eriksson Ramachandra Jammi IEGSD (Unit 4)
2\. Project Objectives and Components
DEVOBJ_TBL
a\. Objectives
The Project Development Objective (PDO) of the West Bengal Accelerated Development of Minor Irrigation
Project (ADMIP) as articulated in the Project Appraisal Document (PAD, paragraph 16) was identical to that in
the Financing Agreement (page 4) and aimed to:
"enhance agricultural production of small and marginal farmers in the project area\."
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Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
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This would be achieved through accelerated development of minor irrigation schemes, strengthening
community-based irrigation management, operation and maintenance, and support to agricultural
development, including provision of agricultural services, encouraging crop diversification and use of new
technologies, and creating income generating opportunities\.
The total area to be developed under the project was about 139,000 ha, benefiting an estimated 166,000 farm
families in the Indian state of West Bengal\.
The outcome of this project will be assessed based on a split evaluation because the projectâs scope and
ambition decreased through a downward revision of PDO targets and a corresponding reduction in
commitments\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
Yes
Did the Board approve the revised objectives/key associated outcome targets?
No
c\. Will a split evaluation be undertaken?
Yes
d\. Components
The PDO was supported by the following four components:
1\. Strengthening Community-based Institutions (appraisal cost: US$8\.10 million, actual cost:
US$5\.18 million)\. This component aimed to enable community-based institutions, mainly Water User
Associations (WUAs), to assume responsibilities for management, operation (MOM), and maintenance of
the minor irrigation schemes to be constructed under the project\. The development of WUAs would be
achieved by their formation and strengthening through various training and support activities\. The support to
WUAs would mainly focus on training and capacity building in key areas such as preparation and
implementation of MOM plans; setting and collection of irrigation service fees; maintenance of records and
accounts; improved and equitable water-sharing and utilization; and participatory monitoring, learning, and
evaluation (MLE)
2\. Irrigation System Development (appraisal cost: US$235\.00 million, actual cost:
US$110\.77 million)\. This substantial reduction between appraised and actual cost (US$124 million or 53%)
was due to the cancellation of US$95 million of the IBRD loan and the downward revision of outcome
targets\. This component aimed to improve availability of water for agriculture and fisheries by developing
new minor surface and ground water irrigation schemes on areas that were cultivated under rainfed
conditions\. The activities would include construction of about 2,400 minor surface flow irrigation systems
(command area varying from 5 to 50 ha), comprising river lift schemes, gravity-fed schemes, and detention
structures, and construction of about 2,260 minor ground water irrigation schemes (command area varying
from 20 to 36 ha), comprising shallow tube wells, light and medium duty tube wells, and pump dug wells\.
The total area to be developed under the project was about 139,000 ha, benefiting an estimated 166,000
Page 2 of 23
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
IN: WB Minor Irrigation Project (P105311)
farm families\. The component would also introduce, through pilots and demonstrations in close cooperation
between the Department of Water Resources Investigations and Development (DWRID) and the
Departments of Agriculture and Food Processing Industries & Horticulture, water saving technologies and
would expand on the ground water monitoring program in project areas\.
3\. Agricultural Support Services (ASS) (appraisal cost: US$22\.10 million, actual cost:
US$14\.75 million)\. The component aimed to enhance agriculture-based rural livelihoods by increasing
production of agriculture, horticulture, and fisheries\. This would be achieved through adoption of improved
production technologies and water management practices and more efficient and effective delivery of key
support services\. The project would finance improvement of production and post-harvest technologies, field
demonstrations of modern agricultural technologies and practices, and more effective farm advisory
services\.
4\. Project Management (appraisal cost: US$34\.80 million, actual cost: US$22\.43 million)\. This
component would support a State Project Management Unit and District Project Management Units to take
charge of coordination and management of the implementation of all project activities including M&E related
activities\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost\. The total project cost was estimated at US$300 million\. This amount was revised down to
US$175\.19 million\. The actual cost according to the ICR Data Sheet (page 2) was US$153\.16 million (87%
of the revised amount)\. Reasons for the downward revisions are indicated in the next section\.
Financing\. The project was financed through a mix of IBRD loan and IDA credit of US$125 million each
(83% of the project costs)\. The split between IDA and IBRD was requested by the Department of Economic
Affairs (DEA) as part of its efforts to promote sustainable irrigation
development in less performing states (PAD, paragraph 14)\. According to the ICR Data Sheet (page 2) the
IBRD amount was revised down to US$20\.19 million\. This downward revision was a part of the 2016
restructuring where US$95 million form the IBRD loan proceeds were cancelled following a request of the
Department of Economic Affairs\. "The objective of the partial loan cancellation was to adjust the project
funding to the capacity of the project management team and the state institutions (ICR, paragraph 15)\." The
actual amounts disbursed were us$20\.19 million and US$110\.59 million for the IBRD loan and IDA credit,
respectively\. The total disbursed amount was US$130\.79 million compared to a revised amount of
US$145\.19 million (90%)\. An undisbursed balance of US$9\.8 million was cancelled from IBRD loan as of
June 26, 2020 (ICR, Annex 3)\. The ICR attributed the cancellation to exceptional circumstances created by
COVID-19 situation in the country which made processing expenditures to document the spending of part of
the US$9\.8 million to the IBRD loan challenging\.
Borrower Contribution\. The Government of West Bengal was expected to provide US$50 million of
counterpart funds\. This amount was revised down to US$30 million\. The actual amount was US$22\.30
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Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
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million (ICR Data Sheet, page 2)\. The ICR did not provide an explanation/reasons for the downward
revision\.
Dates\. The project was approved on October 4, 2011 and became effective five months later on March 19,
2012\. The mid-term review (MTR) was conducted on August 18, 2014 compared to an expected date on
March 1, 2014\. The project closed on December 20, 2019, two years after the original closing date on
December 31, 2017\. The project was restructured three times (all level 2) as follows:
1\. On February 18, 2016, when the amount disbursed was US$38\.09 million, in order to change
components and costs, cancel US$95 million form the IBRD loan proceeds, and revise the
project's financing plan\.
2\. On June 30, 2017, when the amount disbursed was US$72\.95 million, in order to revise the results
framework (RF)\.
3\. On November 10, 2017, when the amount disbursed was US$72\.95 million, in order to introduce changes
to the implementing agency, revise the results framework, extend the Loan Closing Date to December 20,
2019, and revise the implementation schedule\.
According to the ICR (paragraph 17) "the Changes in the indicators and their targets were justified by the
need to simplify the Result Framework considering the capacity of the state and the reduced financing\. The
closing date was extended to allow completion of ongoing activities (ICR, paragraph 17)\." The ICR
(paragraph 18) also stated that "the restructurings did not affect the theory of change\." This review agrees
with the afore-mentioned rationale for changes which were logical and needed\.
3\. Relevance of Objectives
Rationale
Context at Appraisal\. Agriculture accounted for about 20% of West Bengalâs Gross Domestic Product
(GDP) and provided employment to over 55% of workers in the state\. Since agriculture was the backbone
of the rural economy, it was evident that broad-based rural growth and reduction of poverty cannot be
achieved without increasing the income generating potential of the agriculture sector\. Over 25% of the
stateâs population lives below the poverty line\. This population belonged primarily to the rural agricultural
sector\. The main constraints to alleviation of their poverty were small land holdings and uncertainties of
rainfall, including periodic occurrence of long dry spells, but also heavy cyclones and floods during the
monsoon season\. Agriculture was hardly possible during the non-monsoon season without irrigation
facilities\.
Previous Sector Experience\. The Bank has a long history in supporting irrigation developments that have
promoted stakeholder involvement in rural infrastructure development and transferred improved agricultural
technologies to farmers\. The Bank has been an important partner in India with support to large-scale
irrigation rehabilitation/modernization programs and broad-based water sector reform in various states\. The
Bank also funded community-based rural development projects focusing on small irrigation structures and
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Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
IN: WB Minor Irrigation Project (P105311)
agricultural technologies for improvement of irrigated agriculture in such states as Assam, Karnataka,
Andhra Pradesh, and Orissa\. ADMIP was a continuation of this initiative to expand such programs to other
states, in this case West Bengal\.
Relevance to Government Strategies\. At appraisal, the PAD did not include information on the relevance
of objectives to the Government of India nor the state of West Bengal\. Also, at completion the ICR did not
discuss relevance of objectives with regards to the priorities of the Government of India and the state of
West Bengal\.
Relevance to Bank Assistance Strategies\. At appraisal, the PDO was in line with the Bank's Country
Assistance Strategy (CAS, FY09-FY12) for the Republic of India, which focused on the development of
infrastructure, including water resources, and support for the poorer states\. The PDO was in line with the
priorities of the CAS by supporting the development of irrigation infrastructure and increasing agricultural
productivity in one of Indiaâs economically weaker states\. The PDO was also in line with the strategic
principles underlying the Bankâs work in India by supporting reforms and by bringing in the best international
knowledge for project development and implementation\. The PDO was also in line with the Bankâs water
resources strategy that recognized: (a) water resources management and development are central to
sustainable growth and poverty
reduction; (b) the Bank needs to assist countries in developing and maintaining appropriate stocks of well-
performing hydraulic infrastructure; and (c) the Bankâs water assistance must be tailored to a countryâs
specific circumstances and be consistent with the overarching country strategy\.
At completion, objectives continued to be in line with the current Bankâs Country Partnership Framework
(CPF, FY18âFY22) for India\. Specifically, the PDO was in line with focus areas âResource Efficient Growthâ
and âEnhancing Competitiveness and Enabling Job Creationâ\. Under the focus area âResource Efficiency
Growthâ, the project contributed to âpromote more resource efficient, inclusive and diversified growth in rural
sectorâ by enhancing agricultural productivity and supporting diversification of income sources through
various income-generating activities including
horticulture and aquaculture\. The project also ensured inclusiveness by targeting women, poor, and tribal
communities\. It promoted the efficient use of water resources through multiple channels: (a) different
productive activities undertaken in conjunction with the same water resources resulting in more value per
volume; (b) promotion of water-efficient technologies and management systems including drip, sprinkler,
and system of rice intensification; (c) formation and trainings of WUAs in advanced water management
approaches including water resources assessment and irrigation water budgeting; (d) promotion of less
water-intensive and high-value horticultural crops in the project areas\. Under the focus area âEnhancing
Competitiveness and Enabling Job Creationâ, the project contributed to âIncrease access to market-relevant
skill developmentâ by emphasizing market-driven agricultural diversification and generating good practices
and innovations that were being institutionalized by the state\. Good practices and innovations included
included Short Message Service (SMS)-based advisory systems to enable access to day-to-day market
information, especially crop prices and WUA-to-WUA services\.
Overall, Relevance of Objectives is rated Substantial\. The statement of objectives was clear, outcome
oriented and focused\. However, it lacked a connection to higher level objectives, namely, sustainable
economic growth and reduction of poverty\. Also, there was no information on the relevance of the PDO with
regards to the Government priorities at both the country and state levels\.
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Rating Relevance TBL
Rating
Substantial
4\. Achievement of Objectives (Efficacy)
EFFICACY_TBL
OBJECTIVE 1
Objective
Pre-Restructuring: To enhance agricultural production of small and marginal farmers in the project area\.
Rationale
Theory of Change (ToC)\. To achieve the stated objective (to enhance agricultural production of small and
marginal farmers in the project area) through the development of minor irrigation (MI) schemes, strengthening
of community-based irrigation management, and support
to agricultural development, including provision of agricultural services and use of new technologies,
encouraging crop diversification, and creating income generating opportunities\. Supporting these activities
was expected to increase the area under irrigation, yields of main agricultural crops, WUAs would become
operational and sustaining schemes, and farmers would have increased knowledge of water management
and agricultural technologies and products\. The expected outcome would be enhanced agricultural
production\. Anticipated longer term outcome was increased rural incomes increased; and improved food
security\.
Key Assumptions\. According to the ICR (paragraph 5) the achievement of the PDO was underpinned by the
following assumptions: "communities are willing to participate in water user associations (WUAs) and follow
established guidelines and protocols including pay fees on time and in full; WUAs successfully maintain new
schemes, damage from natural disasters (droughts, floods) and pests is minimized; and farmers use
knowledge gained through the project to enhance production\."
Overall, the ToC reflected clear links between the project activities, outputs and expected outcomes\. The key
assumptions were logical and reflected realties on the ground (see table below for a comparison between
original and revised indicators, end targets and achievements)\.
Outputs
The following outputs were reported by the ICR (Annex 1) unless referenced otherwise\.
ï 67,594 ha of irrigated land were developed (revised target: 75,000 ha, achievement rate: 90%)\.
ï 202,800,000 cubic meters of water were harnessed with new/improved irrigation services (revised
target: 250,000,000 cubic meters, achievement rate 81%)\.
ï Cropping intensity in areas provided with new/improved irrigation services reached 192% compared to
a baseline of 122% and a revised target of 170% (target exceeded)\.
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ï 2,277 WUAs were formed and 1,657 formally registered (original target: 4,200; revised target: 2,000,
target exceeded)\.
ï 111,203 members of the WUAs were provided with new irrigation services (original target: 166,000,
revised target: 100,000, target exceeded)\.
ï 22,336 women members of WUAs formed and 17,099 were formally registered (original target:
30,000, revised target: 12,000, target exceeded)\.
ï 4,000 beneficiaries of development of orchards\.
ï Guidelines for the construction of tube wells and the construction of water detention structures in
place\.
ï Guidelines for implementation of small-size schemes by WUAs established\.
ï Online tools including remote sensing-based MIS and GIS\.
ï 7,068 ha of demonstration area for agriculture (original target: 5,040 ha, target exceeded)\.
ï 2,841 ha of demonstration area for horticulture (original target: 252 ha, target exceeded)\.
ï 1,151 ha of demonstration area for fisheries (original target: 600 ha, target exceeded)\.
ï 98 plastic greenhouses with drip irrigation to 50 WUAs and 110 users (no target provided)\.
ï 40 ha of direct seeded rice in 40 ha (no target provided)\.
ï 270 ha of hybrid rice promotion and system of rice intensification (no target provided)\.
ï Bio-village program implemented in 48 villages of 8 districts covering 372 ha (no target provided)\.
Outcome
The PDO (to enhance agricultural production of small and marginal farmers in the project area) was achieved
through three main elements: (a) the development of minor irrigation (MI) schemes, (b) strengthening
community based irrigation management, and (c) support to agricultural development, including provision of
agricultural services, encouraging crop diversification and use of new technologies, and creating income
generating opportunities\. The project reached 124,700 beneficiaries, out of whom 111,203 (89%) were small
and marginal farmers and sharecroppers, compared to an original target of 166,00 (target not achieved by
25%)\.
(a) Development of minor irrigation (MI) schemes\. The project enhanced access to irrigation water by
supporting the development of different types of water retention infrastructure in diverse terrains of the state,
ranging from coastal lands to hilly areas The water harvesting structures installed by the project included
ponds, check dams, and excavated creeks\. However, there was no account provided by the ICR on the
number and breakdown of these water harvesting structures\. In a further communication, the project team
explained that "the broader project M&E system did track all the water harvesting structures both
quantitatively and spatially through the GIS mapping\." The team also shared with IEG a summary of the
structures built under project financing\.
The project developed 2,291 irrigation schemes\. By project completion, the area provided with new/improved
irrigation or drainage services reached 67,594 hectares (ha) compared to an original target of 139,000 (about
49% achievement)\. Water users provided with new/improved irrigation and drainage services (PDO outcome
indicator #3) reached 111,203 (67% of the original target value of 166,00, target not achieved)\. The project
developed 2,291 irrigation schemes\. According to the ICR (Annex 4) the gross cropping areas before and
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after the project for the 19 districts showed a 27% increase in cropped area for treatment farmers compared
to 17% for control farmers\. Also, the treatment farmers experienced a 35\.5% increase in cropping intensity
while the control farmers saw a 21\.5% increase in cropping intensity\. The better access to irrigation water had
a positive impact on the yield of main agricultural crops where rice yield reached 4\.3 metric ton per hectare
(MT/ha) compared to an original target of 4\.2 MT/ha, and oilseed yield reached 1\.4 MT/ha compared to
original target of 0\.9 MT/ha\. However, vegetable yields achieved 14\.6 MT/ha slightly lower than the end target
of 15\.3 MT/ha\. While these yield improvements were encouraging, there was no baseline data and no control
areas reported in the ICR\.
(b) Strengthening community-based irrigation management\. The project supported the creation and/or
strengthening of 2,277 operational WUAs (54% of original target value of 4,200) throughout the project area
to carry out O&M of irrigation infrastructure (PDO outcome indicator #1)\. WUA performance was assessed
against a management system which involves ratings based on different sets of criteria governance,
representativity, and adoption of appropriate water and agricultural management practices (ICR,
paragraph 25)\. According to the ICR (paragraph 23) "more than 50%of the WUAs have been operational for
more than three years and have performed well in managing delivery of irrigation water to their
members\." Also, 73% of the WUAs (target 70%, barely exceeded) were generating at least 80% of resources
required to manage, operate, and maintain the developed schemes\. The WUAs created under the project
were inclusive organizations with women membership exceeding target (17,099 against a target value of
12,000), tribal farmers represented 12% of water users almost achieving its target value of 13%, and the
majority of members (about 90%) were small and marginal farmers (ICR, paragraph 25)\.
(c) Support to agricultural development, including provision of agricultural services, encouraging
crop diversification and use of new technologies, and creating income generating opportunities\. By
project completion resources generated by user groups to manage, operate, and maintain the developed
schemes (as percentage of required resources, PDO outcome indicator #4) reached 62% compared to an
original target of 90% (69% achieved)\. The ICR (paragraph 25) stated that "agricultural support services
contributed to set up more than 20,000 small-scale demonstrations to promote crop diversification and
adoption of new technologies\." However, the ICR did not discuss how the project provided agricultural
services, encouraged crop diversification and promoted the use of new technologies, and created income
generating opportunities, and most importantly how these activities contributed to enhancing agricultural
production of small and marginal farmers\. There was no information on the number of technologies adopted
or the adoption rate\. The ICR (footnote #27) briefly mentioned that different technologies demonstrated on
more than 6,000 ha by the project included drip irrigation, greenhouses, sprinklers\. The ICR (paragraph 27)
also stated that "the provision of agricultural services in the form of improved seeds, access to mechanization,
and access to markets boosted production beyond initial expectations\." However, there was no record in the
ICR on the amount of seeds provided, the number of beneficiaries who benefitted from mechanization, and
how access to markets was improved\. This creates an attribution problem since the claims reported in the
ICR could not be attributed to the project activities without evidence\. In a further communication, the project
team explained that "agricultural support services contributed to set up more than 20,000 small-scale
technology demonstrations to promote crop diversification and adoption of new technologies" and " high-
value crops including vegetables (for example, eggplant or brinjal, potato, cauliflower); oilseeds; and pulses
now represent a significantly larger portion of cropped area\." Regarding fisheries, the team explained that the
"impact assessment found that increased support for fisheries under the project was associated with
increased production and greater income through various channels including increase in fish variety, increase
in area under fisheries, modern practices, and improved access to markets\." While for market access, the
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team explained that the ICR "did not include this as attribution of this outcome to the project intervention as it
proved to be particularly complex and did not provide a robust basis for inclusion in the ICR\."
Overall, the efficacy of achieving this outcome is rated Modest\. The project fell short on several PDO outcome
targets, most notable, the area provided with new/improved irrigation or drainage services reached 67,594
hectare (ha) compared to an original target of 139,000 (about 49% achievement)\. There were also attribution
concerns as claims reported in the ICR regarding provision of agricultural services and their impact on
boosting production were not supported by evidence\.
Rating
Modest
OBJECTIVE 1 REVISION 1
Revised Objective
Post Restructuring\. To enhance agricultural production of small and marginal farmers in the project area\.
Revised Rationale
Theory of Change (ToC)\. The same rationale applies since the PDO was not revised only the outcome
targets were revised and new indicators introduced to the RF\.
Outputs
The same outputs mentioned above pertain to the post restructuring objective\.
Outcome
The following table reflects the project achievements against the original and revised PDO indicators:
Original PDO End Actual % Revised PDO End Actual %
Indicators Target values Achieved Indicators Target values Achieved
Relative change
in
value of outputs
Increase in
measured as
yield of main
ratio 140 282 201
agricultural
between post to
crops (MT/ha)
pre-project
values
(percentage)
Rice 4\.2 4\.3 102 Rice 95,000 85,696 90
Oilseeds 0\.9 1\.4 156 Oilseeds 8,800 14,406 164
Vegetable 15\.3 14\.6 95 Vegetables 2,500 2,970 119
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Operational
Operational WUAs
WUAs 4,200 2,277 54 created and/or 2,00 2,277 114
created strengthened
(number)
Number of
Water users
female and
provided
male water
with
users (defined
new/improved
as member of 166,000 106,963 64 100,000 111,203 107
irrigation and
the WUA)
drainage
provided with
services
water delivery
(number)
services
Water user
Resources
associations that
generated by
are
user groups
generating at
to
least 80%
manage,
of resources
operate, and
90 62 69 required 70 73 104
maintain the
to manage,
developed
operate
schemes (as
and maintain the
percentage of
developed
required
schemes
resources)
(percentage)
As shown in the table above the project met or exceed most of its PDO outcome indicator targets post-
restructuring, including those for the revised indicators\. The project reached 124,700 beneficiaries, out of
whom 111,203 (89%) were small and marginal farmers and sharecroppers, exceeding the revised target of
100,000\. The project also contributed to yield improvements for major crops, improvement in cropping
intensity (192% against a target value of 170% and a baseline of 122%), and diversification in favor of higher-
value crops\. While the project fell short on achieving the target for the area with improved irrigation/drainage
services which reached 67,584 ha compared to a revised target of 75,000 ha, the target was 90%
achieved\. Based on this information the efficacy of achieving the project development outcome post
restructuring is rated Substantial\.
Revised Rating
Substantial
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OVERALL EFF TBL
OBJ_TBL
OVERALL EFFICACY
Rationale
Overall efficacy pre-restructuring is rated Modest\. The project fell short on several PDO outcome targets,
most notably, the area provided with new/improved irrigation or drainage services reached 67,594 hectare
(ha) compared to an original target of 139,000 (about 49% achievement)\. Also, the operational WUAs
reached only 54% of the original target (2,227 compared to 4,200)\. There were also attribution concerns as
claims reported in the ICR regarding provision of agricultural services and their impact on boosting production
were not supported by evidence
Overall Efficacy Rating Primary Reason
Modest Low achievement
OBJR1_TBL
OVERALL EFFICACY REVISION 1
Overall Efficacy Revision 1 Rationale
Overall efficacy post restructuring is rated Substantial\. The evidence provided in the ICR showed that the
project met or exceed most of its PDO outcome indicator targets post-restructuring, including those for the
revised indicators\. The project also contributed yields improvements for major crops, improvement in cropping
intensity (192% against a target value of 170% and a baseline of 122%), and diversification in favor of higher-
value crops\. Based on this information the efficacy of the achieving the outcome post restructuring is rated
Substantial despite falling short on achieving the target for the area with improved irrigation/drainage service\.
Overall Efficacy Revision 1 Rating
Substantial
5\. Efficiency
Economic and Financial Efficiency
ex-ante
ï Economic rate of return (ERR) analysis for the project as a whole revealed that irrigated area expansion
alone produced an ERR of 13\.5% which goes up to 25\.1% with the inclusion of benefits from other
sources like diversification with crops and fisheries, and efficient water management\. Financial rate of
return (FRR) for the project as a whole was 21\.6%\.
ï Quantified benefits\. Expected benefits from irrigated area expansion and intensification as the project led
investments in minor irrigation (MI) schemes were estimated to develop additional irrigated area of about
139,000 ha, with a cropping intensity of around 200%, benefits from diversification and high value crops
on 19% of the newly developed area, benefits from fisheries development in an estimated 1,270 ha of
water spread area; and benefits from the adoption of efficient resource use technologies covering 10% of
the irrigated area\.
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ï Sensitivity Analysis\. The analysis considered key risk variables like reduced developed irrigated area,
institutional inefficiencies, cost escalation, and implementation delays\. Simulated ERR, by considering
jointly 25% increase in costs and 25% decrease in benefits on the
relevant risk variables, based on multiple runs, ranged from 12\.7 to 22\.6% with a coefficient of variation
of 9%\.
ex-post
ï The ex post economic and financial analysis (EFA) closely followed the appraisal methodology while
accounting for the closing date extension of nearly 24 months, the actual project benefits, and the
cancellation of funds (US$95 million)\. Benefits were estimated over 15 years and a 10% discount rate
was used in the analysis\.
ï The economic analysis showed that the project generated an economic internal rate of return (EIRR) of
22\.8% and an ENPV of US$52\.7 million at a discount rate of 10%\. The benefit-to-cost ratio was
estimated at 4\.26\. The Financial internal rate of return (FIRR) was estimated at 20\.5% and the FNPV
estimated at US$46\.8 million at a discount rate of 10%\. Benefit-to-cost ratio was estimated at 4\.12\.
ï Sensitivity Analysis\. A sensitivity analysis was performed on key variables, including cropping intensity
in the project areas\. The EIRR was estimated when a decrease in benefits ranged from 10% to 50%, the
EIRR ranged between 21\.3% and 13\.6%\. The economic results were robust to changes in the cropping
intensity (or overall benefits)\. The project remained economically justified (at 13\.6%) even for a cropping
intensity reduced by 50%\.
ï The costs of project management represented about 14% of total project costs, which was relatively
high\. The ICR (footnote 28) explained that the reason for higher costs was due to capacity building for
the whole Water Department that included more than 600 staff\.
ï The ex-post EFA was robust and reflected logical assumptions and the estimated rates of return were
reasonable for the project's investments\.
Administrative and Institutional Efficiency
The project experienced implementation delays and slow disbursement\. At MTR disbursement was only 6%
(ICR, footnote #43)\. To accommodate implementation delays and allow time to complete activities, the closing
date was extended by twenty four months beyond the original closing date\. Delays started after effectiveness
when the project experienced difficulties in human resources and organizational capacity\. This resulted in
implementation lags in delivering irrigation schemes to the farmers (ICR, paragraph 16)\. According to the ICR
(paragraph 37) "the project experienced various capacity challenges, which resulted in slow implementation,
particularly in processing procurement and financial reporting\." There were delays related to the approval
procedures for bids which resulted in delays in scheme implementation (ICR, paragraph 54)\. There were also
delays in the submission of interim unaudited financial reports\. This affected the projectâs ability to draw down on
the loan/credit on a timely basis (ICR, paragraph 74)\. The project had an undisbursed amount of about US$9\.8
million because of technical difficulties in filing financial records due to COVID-19 (ICR, footnote#29)\.
Overall, efficiency is rated Substantial, despite implementation delays\. While the ex-post ERR was slightly lower
than the appraisal ERR (22\.8% compared to the maximum ex-ante estimate of 25\.1%), it was still significantly
higher than the discount rate at 10%\.
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Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
100\.00
Appraisal ï¼ 25\.10
ï¨ Not Applicable
100\.00
ICR Estimate ï¼ 22\.80
ï¨ Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Pre-Restructuring
Relevance of Objectives was rated Substantial\. Overall efficacy was rated Modest\. The project fell short on
several PDO outcome targets, most notable, the area provided with new/improved irrigation or drainage
services reached 67,594 hectare (ha) compared to an original target of 139,000 (about 49% achievement)\. Also,
the operational WUAs reached only 54% of the original target (2,227 compared to 4,200)\. Efficiency was rated
Substantial\. The ex-post ERR was slightly lower than the appraisal ERR (22\.8% compared to 25\.1%), yet it was
still significantly higher than the discount rate at 10%\.
With a Substantial rating for both Relevance of Objectives and Efficiency and a Modest rating for Efficacy,
Outcome is rated Moderately Unsatisfactory\.
Post-Restructuring (the second restructuring on June 30, 2017)
Relevance of Objectives was rated Substantial\. Overall efficacy was rated Substantial\. The evidence provided in
the ICR showed that the project met or exceed most of its PDO outcome indicator targets post-restructuring,
including those for the revised indicators\. The project also contributed yields improvements for major crops,
improvement in cropping intensity (192% against a target value of 170% and a baseline of 122%), and
diversification in favor of higher-value crops\. Efficiency was rated Substantial\.
With a Substantial rating for the three criteria (Relevance of Objectives, Efficacy and Efficiency), Outcome is
rated Satisfactory\.
Split Rating:
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At the same time as resource commitments to the project were reduced, some post-second restructuring targets
were decreased as compared with pre-restructuring targets (see table in Efficacy section)\. These changes
indicate that the restructuring resulted in a reduction in the level of ambition of the project\. Therefore, per the
IEG Guidelines, a split rating was applied at the major second restructuring, which resulted in a substantial
reduction in resource commitments and changes in PDO targets and indicators (IEG Evaluator Guidelines (p\.
49)\. Note that the ICR also split the Outcome rating at the same juncture (pp\.18-20)\.
Against Revised
PDO
Against Original PDO
Targets after the
Targets
second
restructuring
Relevance of
Substantial Substantial
objective
Efficiency Substantial Substantial
Efficacy Modest Substantial
Moderately
Outcome ratings Satisfactory
Unsatisfactory
Numerical value of
the outcome ratings 3 5
on a 1 to 6 scale
Disbursement US$72\.95 million US$57\.84 million
Weight (%
55\.78%
disbursed 44\.22%
(US$72\.95/US$130\.79)
before/after change)
Weighted value of
0\.56 X 3 = 1\.68 0\.44 X 5 = 2\.20
the outcome rating
Moderately
Moderately Satisfactory
Final outcome Satisfactory
(1\.68 + 2\.20 = 3\.88
rating (1\.68 + 2\.20 = 3\.88
rounding to 4\.0)
rounding to 4\.0)
a\. Outcome Rating
Moderately Satisfactory
7\. Risk to Development Outcome
The ICR discussed three main risks that could potentially impact the development outcome\.
1\. The risk that the project-supported activities are unsustainable\. The risk associated with activities
continuity remained Low at the project completion for the following reasons: (a) the beneficiaries largely took
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ownership of the various activities promoted by the project, (b) the communities were able to adopt favorable
business models which allowed them to reap the full benefits of the water storage options, and (c) the
diversification of activities and crops offered the opportunity for greater adaptation in the face of changes in
market conditions (ICR, paragraph 83)\.
2\. The risk relating to the sustainability of institutions\. According to the ICR (paragraph 84) this risk was
Moderate\. Community-based institutions were strengthened and benefited from convergence with other
agencies and government departments\. While the project continues to enjoy high support of government and
grassroot stakeholders, Water User Associations (WUAs) are new institutions that need support and hand
holding\. WUAs were expected to benefit from Government support\. According to the ICR (paragraph 84) "at
completion, staff remained deployed at the district level to ensure extension services to irrigation schemes\."
3\. The Risk to sustainability of infrastructure\. According to the ICR (paragraph 85) this risk was
Moderate\. The sustainability of infrastructure is largely a factor of proper and regular O&M\. The project
supported adequate provision for O&M using a flexible approach that considered the need of communities\.
Communities are in control of the O&M of small-scale storage facilities including ponds\. According to the ICR
(paragraph 85) preliminary evidence showed that farmers could also maintain larger infrastructure such as
check dams to some extent\.
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The project objective was aligned with the Bankâs Country Assistance Strategy (CAS) for the Republic of
India (FY09âFY12) which focused, among others, on development of infrastructure, including water
resources, and support for poorer states (see section 3 for more details)\. It was the first Bank-financed
project in West Bengal that brought together three line departments: Department of Agriculture, Food
Processing Industries, and Horticulture and Fisheries to work closely with the Department of Water
Resources Investigations and Development (DWRID) (ICR, paragraph 46)\.
The project design featured the integration of structural measures (minor irrigation system development)
and innovative non-structural solutions (institutional strengthening and agricultural support services)\. The
project design benefited from the experience and lessons of Bank financed projects in India,
namely, Assam Agricultural Competitiveness Project, Karnataka Community- Based Tank Management
Project, and Maharashtra Water Sector Improvement Project\. Notable lessons reflected in the design
included: WUA empowerment, meaningful community participation, strong agricultural support services,
concurrent and independent evaluation, and implementation arrangements built on multilevel Project
Management Units (ICR, paragraph 47)\. Design featured new concepts to the State of West Bengal such
as community-level irrigation management, efficient irrigation technologies including drip and sprinkler
systems, and crop diversification\. However, implementation capacity was a concern as DWRID lacked
the specific expertise needed to operationalize the proposed concepts\. The project also faced readiness
issues resulting in implementation delays\. Implementation could have benefited from intensive capacity
development during the preparation stage,-given the level of ambition of the original project (ICR,
paragraph 75)\.
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Ten risks were identified at appraisal with an overall Moderate rating\. While low capacity of implementing
agencies was identified as moderate risk, it proved to be substantial and could have benefited from more
substantive mitigation measures (ICR, paragraph 52)\. Finally, M&E design lacked relevant indicators to
track project activities, notably, there were no indicators to track the physical infrastructure developed
under the project\. Also, the large geographical spread of project activities over several districts made
coordination and monitoring a challenge (ICR, paragraph 49)\.
Based on the above-mentioned assessment, Quality at Entry suffered from significant shortcomings
including an overly optimistic assessment of the implementation capacity, readiness issues, and M&E
design shortcomings\. Therefore, Quality at Entry is rated Moderately Unsatisfactory\.
Quality-at-Entry Rating
Moderately Unsatisfactory
b\. Quality of supervision
The project experienced start-up delays due to readiness issues\. According to the ICR (paragraph 80)
Bank supervision "offered regular, demand responsive, and thematic technical assistance besides regular
missions\." The Bank teams were multidisciplinary with expertise in procurement, financial management
and project evaluation, among others\. The ICR did not report on the number of supervision missions
conducted by the Bank over the implementation period\. The outcome of the project was positively
influenced by three supervision inputs, first, the standardization of the design of specific types of schemes,
second, preparation of protocols for quality assurance and quality control, and third, the use of modern
survey and design techniques for more cost-effective and successful schemes (ICR, paragraph 80)\. The
Bank also provided implementation support for fiduciary and safeguard aspects\. The mid-term review
(MTR, 2014) provided useful insights on the the challenges that faced the project\. The MTR recommended
three corrective actions to achieve the PDO, first to increase the emphasis on poorer areas in western
districts, second, to shift from scattered implementation to cluster-based approach, and to adopt a
scheme development management plan (ICR, paragraph 77)\. According to the ICR (paragraph 79) "the
Bank team, through its recommendations, oriented the project to establish partnership between farmers
and private companies that created substantial network and social capital for farmer and fishery groups\."
However, restructuring the project required lengthy negotiations between different levels of
government\. M&E design weaknesses could have benefitted from earlier intervention by the Bank to better
track the project achievements\. Despite three restructurings, M&E design continued to suffer from
weaknesses (see section 9 a for more details)\.
Overall, Quality of Supervision is rated Satisfactory\. Supervision took proactive steps to put the project on
the right track and delays were beyond the control of the Bank\.
Based on the above-mentioned assessment of Quality at Entry and Quality of Supervision, Bank
performance is rated Moderately Satisfactory\.
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Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. M&E Design, Implementation, & Utilization
a\. M&E Design
The project appraisal document (PAD) did not include a Theory of Change (ToC) as it was not mandated at
appraisal\. Nonetheless, the ICR (page 8) included one which reflected the relation between the planned
project activities, its outputs, outcomes and long-term impacts\. The ToC in the ICR also reflected the critical
assumptions that underpinned the achievement of the stated objective\.
The M&E design featured collecting data through the implementing agencies (line departments, field level
project staff, service providers contracted by the project)\. Also, an external M&E agency would collect
primary data about project implementation and impact\. The overall coordination of M&E activities would be
under the State Project Management Unit (SPMU)\. These implementation arrangements were complex and
proved to be challenging-given staffing issues and inexperience of the project team (ICR, paragraph 63)\.
To assess the achievement of the PDO (to enhance agricultural production of small and marginal farmers
in the project area), the Results Framework (RF) included four PDO outcome indicators: #1\. Increase in
yield of main agricultural crops (rice, oil seeds, and vegetables, measured in MT/ha, with increases starting
two years from the year of construction; #2\. Operational water users associations created (cumulative,
measured in number), #3\. Resources generated by user groups to manage, operate, and maintain the
developed schemes, and #4\. Number of female and male water users (defined as member of the WUA)
provided with water delivery services\. Of these four PDO level outcome indicators, only indicator #1 was
directly linked to the PDO and it was measurable, and had clear baseline data\. Indicators #2 and # 3 and #
4 related to the water user associations created under the project and were indirectly linked to the PDO,
since the WUAs played a critical role in managing and sustaining the micro-irrigation schemes supported
by the project\. These indicators were measurable, and included baseline data\.
The RF also included five intermediate outcome indicators to track the different activities supported by the
project\. This included an intermediate outcome indicator to measure adoption of improved production
technologies, and another outcome indicator to measure the rice area under the System for Rice
Improvement (SRI)\. These two intermediate level outcome indicators were relevant as they link directly to
the PDO\. All the five intermediate outcome indicators were measurable, and relevant to assess the
supported activities\.
However, the RF was deficient as it lacked indicators to assess the project's support to horticulture,
fisheries and market creation\. The RF also did not track the physical infrastructure investments related to
irrigation schemes that the project supported\.
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M&E design was mixed, on one hand it included relevant measurable PDO level indicators with reasonable
targets, but on the other hand, design reflected complex implementation arrangements and the RF lacked
relevant indicators to track some activities\.
b\. M&E Implementation
According to the ICR (paragraph 63) "M&E implementation faced start-up challenges due to staffing
issues and inexperience of the project team\." Following the MTR, M&E implementation benefited from the
introduction of different M&E tools such as GIS and remote sensing tools to monitor the visible impact on
project implementation\. The project monitoring also benefited from a web-based MIS, GPS-based
photographs, and real-time updates using mobile-based applications (paragraph 63)\. WUAs supported
the M&E team through the determination of crop types and cropped areas\.
Restructuring and changes to the RF\. The MTR mission (August 2014) recommended revising the
targets of a few indicators in view of the time remaining for project implementation\. These revisions did
not affect the theory of change (ICR, paragraph 18)\. The 2017 restructuring saw the revision of four PDO
outcome indicators with the reduction of the target values to three of them due to the cancellation of
US$95 million of the project funding\.
M&E implementation improved especially following the MTR recommendations\.
c\. M&E Utilization
According to the ICR (paragraph 65) "the M&E system was highly useful during the evaluation as it
allowed the capture of a vast amount of data thanks to the remote sensing technology combined with
ground-truthing data\." The system also integrated planning, design, and implementation with operation
and service delivery\. Transparency of investments was enhanced through the usage of Geotagging\.
Project management benefited from a synchronized M&E system with MIS and GIS support (ICR,
paragraph 64)\. This facilitated management of various aspects of the project including: contract
management, disbursements, financial management (FM), tracking of implementation status, and the
implementation of safeguard instruments (ICR, paragraph 64)\. The usage of GIS technology allowed the
project to focus on the poorer areas of the state that suffered from irrigation constraints\. Preparation of
the ICR benefited from the project's M&E data and evaluation studies (ICR, paragraph 64)\.
M&E utilization was adequate and informed the project management\.
Overall, M&E Quality is rated Modest\. This rating reflects design shortcomings, most notable the lack of
indicators to track the physical investments and the project's support to some activities\. Despite
restructuring the project three times, these weaknesses were not addressed\. Implementation of the M&E
system started slowly, but improved, and utilization was adequate\.
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M&E Quality Rating
Modest
10\. Other Issues
a\. Safeguards
The Environmental Category for ADMIP was A (Full Assessment)\. The following six safeguard policies were
triggered: Environmental Assessment OP 4\.01; Pest Management OP 4\.09; Indigenous People OP 4\.10;
Physical Cultural Resources OP 4\.11; Safety of Dams OP 4\.37; and Projects on International Waterways
OP 7\.50\. The major sources of potential negative impacts that could potentially result from the project
activities included: construction activities impacting flora; stream or riverside construction accelerating
erosion of stream banks; increasing command areas resulting in conversion of unprotected natural habitats
and wildlife corridors; lack of drainage, salinity increase, and health impacts of inundation; enhanced use of
chemical and synthetic fertilizers and pesticides; and possibility of using industrial wastewater for irrigation
in urban fringes\. An Environmental Management Plan (EMP) was developed\. It contained a set of
procedures for environmental management that would be used during implementation\. Overall, the
environmental impact of the project was assessed as low to moderate, assuming that the environmental
safeguard measures were implemented (PAD, paragraph 87)\.
Environmental Assessment (OP 4\.01)\. Mitigation measures included: the avoidance of areas where
groundwater abstraction was critical, the avoidance of contaminated areas, and assessment of water
resources adaptability for irrigation\. Environmental provisions were included in construction contracts and
strictly monitored by the full-time Safeguards Unit\. According to the ICR (paragraph 67) "mitigation
measures were adequately implemented and progress reports regularly submitted for World Bank review\.
OP 4\.01 was rigorously complied with\."
Pest Management (OP 4\.09)\. While the project did not procure or promote the use of pesticide, additional
irrigation capacity could result in higher incremental use of pesticides\. A pest management plan was
therefore developed and integrated into the EMP to ensure compliance with this policy\. According to the
ICR (paragraph 68) "pest management plans were implemented in a satisfactory manner\. OP 4\.09 was
complied with\."
Indigenous Peoples (OP 4\.10)\. A Tribal Development Plan was prepared\. The project prepared a block-
wise list of tribal dominated villages for all the districts of the state\. Additionally, the project set aside up to
13% of the total financial envelope for tribal people, and 11% of the project beneficiaries were tribal farmers\.
According to the ICR (paragraph 69) "the project complied with OP 4\.10\."
Physical Cultural Resources (OP 4\.11)\. While the project was not expected to affect any archaeological
or protected sites, OP 4\.11 was triggered as a precaution since an impact on physical cultural resources
could not be ruled out\. According to the ICR (paragraph 70) "no prominent physical cultural resources were
discovered during implementation\."
Safety of Dams (OP 4\.37)\. While the project did not build any dam higher than 15 m, about 117 surface
schemes in three districts were anticipated to include the construction of a bund\. Structures followed
state design standards and guidelines\. Compliance was ensured through the assignment of an executive
engineer of Department of Water Resources Investigations and Development (DWRID) and a qualified
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design engineer at the State Project Management Unit (SPMU) with experience in implementing safety
norms during design and construction of dams\. According to the ICR (paragraph 71) "the project complied
with OP 4\.37\."
Projects on International Waterways (OP 7\.50)\. The project supported water development activities in
sub-basins that could be classified as international waterways shared with Bangladesh, Bhutan, and India\.
The project design ensured that incremental water abstraction from any of the eight rivers was negligible\. It
also anticipated water abstraction in the Ganga River basin\. According to the ICR (paragraph 72) "OP 7\.50
was complied with\."
b\. Fiduciary Compliance
Financial Management (FM)\. FM arrangements were mainstreamed into the stateâs own accounting,
internal controls, and financial reporting systems\. Submission of interim unaudited financial reports were
initially submitted with delays, which affected the projectâs ability to draw down on the loan/credit on a
timely basis\. The submission of annual audit reports was also delayed, except in the last two years and
resulted in the application of World Bank remedies by way of discontinuation of disbursements\. FM
performance benefited from simplifications and consistent implementation support\. However, financial
planning remained a challenge through completion, leading to an undisbursed amount of about US$9\.8
million (ICR, paragraph 74)\. The project audit reports were qualified during the first years of
implementation\. By project completion, the FM capacity improved and audit reports and interim unaudited
financial reports were timely submitted\. According to the ICR (paragraph 74) "the project largely complied
with World Bank FM policies albeit with difficulties\."
Procurement\. The State Project Management Unit (SPMU) was responsible for the overall procurement
system while the District Project Management Unit (DPMUs) were in charge of procurement coordination
and review at district levels using a procurement manual developed following Bank guidelines\.
Procurement benefited from trainings to familiarize staff with the Bank's procurement procedures\. Starting
from 2013, the SPMU had a permanent procurement specialist who submitted procurement plans to
the Bank to reflect implementation\. As the project team built their experience, procurement efficiency
improved\. According to the ICR (paragraph 73) "procurement policies were satisfactorily complied with\."
c\. Unintended impacts (Positive or Negative)
---
d\. Other
According to the ICR (paragraph 45) "the project facilitated the generation of socioeconomic and
sociocultural impacts that span beyond outcomes captured by the projectâs Result Framework\. With
improved access to water and diversification of activities, anecdotal evidence suggests that the overall
resilience of socioecological systems increased\. The wide range of vegetables, pulses, and fisheries
contributed to increased access to diet diversity not only to direct beneficiaries but also to other villagers in
the western districts\. Additionally, innovative models have emerged among fishery communities including
fee-based recreational angling targeting urban dwellers\. The project contributed to improve the self-
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confidence of communities who are now more inclined to engage in innovative undertakings\. Emerging
impacts include improved nutrition and education for children because families can afford school fees\.
Almost 82 percent of the members reported that, after the introduction of Accelerated Development of Minor
Irrigation Project (ADMIP), their income improved which discouraged migration among their family
members\. Additionally, case studies in selected villages indicate increased expenditures on their childrenâs
education as reflected by improved school supplies and greater roles for private tutors\."
11\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Moderately
Outcome Moderately Satisfactory
Satisfactory
Moderately
Bank Performance Moderately Satisfactory
Satisfactory
M&E suffered from several
design weaknesses that were
Quality of M&E Substantial Modest
unaddressed despite three
restructurings\.
Quality of ICR --- Substantial
12\. Lessons
The ICR included five lessons\. The following three are emphasized with some adaptation of
language:
1\. To ensure a successful outcome for an irrigated agriculture project, an integrated design
of structural measures (irrigation infrastructure), and nonstructural measures (management
institution development and agricultural support) is essential\. While the project invested in
infrastructure to improve water availability, agricultural support services and institution building were
cornerstones of the project outcomes\. These âsoft componentsâ were absent in state-supported I&D
programs and constituted major value added for ADMIP\. Finding the right incentive mechanisms for
WUAs through both agricultural service support and performance monitoring was a key
nonstructural innovation\. Such mechanisms that require multidisciplinary teams are showing results
on the ground and can contribute to sustainability\.
2\. Complex projects that include many sub-projects scattered over large areas require active
learning and adaptive change management with innovations\. The first phases of project
implementation allowed stakeholders to accumulate knowledge which proved crucial during
successive phases\. The experience enabled adjustments which contributed to the turnaround of the
project\. Owing to flexible approaches, the project capitalized on innovations such as MIS integrated
into the GIS, the introduction of a cluster-based approach, and the adoption of an integrated
landscape management model\. Also, the project adopted a flexible approach by involving
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communities to express concerns and derive suitable solutions\. This approach boosted beneficiary
satisfaction and improved poverty targeting\.
3\. Developing and implementing a sound human resources development strategy is a
cornerstone of successful project implementation\. While an adequate capacity assessment is a
crucial step in project preparation, human resources development strategy should also include risks
to appropriate staffing level and skills, staff retention, and bureaucratic hurdles\. Adopting the right
type of incentives to ensure staff motivation can substantially reduce detrimental and frequent
turnover\. In hindsight, a full-fledged strategy developed with key stakeholders and accounting for the
constraints and risks could have limited the impact of human resources challenges that the project
faced\.
13\. Assessment Recommended?
No
14\. Comments on Quality of ICR
Quality of Evidence\. M&E suffered from design weaknesses related the lack of indicators to track some project
activities\. Overall, the M&E system was successful in collecting data on the main PDO indicators\. However, it
was not clear why the PDO indicator on yields was changed in 2017\. Also, the methodology for calculating the
new indicator was not clearly reported in the ICR\. Annex 7 in the ICR provided important information and
evidence on the impacts of the project, especially the inclusion of an illustration of impact of the project
intervention through change in cropping area and cropping intensity\.
Quality of Analysis\. The ICR provided clear linking between evidence and findings and provided convincing
arguments under the different sections, including the discussion on outcomes\.
Lessons\. Lessons reflected the project experience and were based on evidence and analysis\.
Results Orientation\. The ICR included a good discussion on the achievement of the outcome\. The discussion
was well balanced between reporting on the achievement of the outcomes in relation to the indicators and what
the project actually achieved on the ground\. However, discussing the project's support to agricultural
development was deficient due to the absence of relevant indicators to assess the supported activities\.
Internal Consistency\. Various parts of the ICR were internally consistent and logically linked and integrated\.
Consistency with guidelines\. The ICR successfully used the available data to justify the assigned ratings\.
Discussion of outcomes was comprehensive, and the efficiency analysis was robust\.
Conciseness\. The ICR provided comprehensive coverage of the implementation experience and candidly
reported on shortcomings\. There was enough clarity in the reportâs messaging\. Discussion of safeguards was
thorough, but the sections on M&E design and implementation could have benefited from more detail\. Also, the
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information regarding quality at entry was reported under different sections of the ICR and could have been
consolidated under the designated section to discuss this topic\. Finally, the ICR did not report on the relevance
of objectives with regards to the Government and state priorities\.
Overall, the Quality of the ICR is rated Substantial despite some shortcomings\.
a\. Quality of ICR Rating
Substantial
Page 23 of 23 | REVIEW |
P005542 |  Third education project
Report No: ; Type: Report/Evaluation Memorandum ; Country: Oman; Region: Middle East And North Africa; Sector: Other Education; Major
Sector: Education; ProjectID: P005542
Oman: Education III (Loan 2799-OMA)
The Oman Education III project supported by Loan 2799-OMA for US$13\.8 million was approved in FY87\. The
Loan was closed as scheduled on December 31, 1994, and the balance of US$0\.8 million was canceled\. The
Implementation Completion Report (ICR) was prepared by the Middle East and North Africa Regional Office and
provides a clear and comprehensive account of the implementation of the project\. The borrower's full report on
the implementation and achievements of the project is included as Annex 3\.
The project was designed to help meet the government's education priorities, including development of a formal
education system, improving the quality of existing education programs, and establishing effective monitoring
and review procedures\. Specific objectives of the project were to (a) develop management, planning, and
curricula in the Ministry of Education (MOE); (b) train and upgrade teachers; and (c) increase access to education,
particularly for girls and children of the rural poor\. To carry out these objectives, the project provided: (a)
construction, equipment, and furniture for three teacher training colleges, five secondary schools, and 30 primary
schools; (b) specialist services and fellowship training for institutional development of personnel in the MOE in
planning, instructional supervision, curriculum development, and educational technology\.
The project was well implemented by the borrower, and the hardware component was completed three years
ahead of schedule\. Costs were significantly below appraisal estimates due to efficient bulk procurement\. Women
particularly benefited; 63 percent of the students in project-supported schools were female\. On the other hand,
technical assistance, which was subcontracted to the United Nations Educational Scientific and Cultural
Organization, was underutilized and delayed, in part due to a limited local capacity to utilize international experts
effectively\. Significant technical assistance was finally provided only on educational television productions\.
In accordance with the ICR, the Operations Evaluation Department (OED) rates institutional development as
substantial, and sustainability as likely, given the government's commitment to the education of women and the
rural poor\. However, OED rates project outcome and Bank performance as satisfactory, rather than highly
satisfactory, because technical assistance was not carried out to the extent planned\.
The project highlights the need for technical assistance to match local capacity\. The value added can be
significant only if borrowers find it worthwhile and are willing to borrow for it\.
Overall, the ICR is satisfactory\. No audit is planned\. | REVIEW |
P003594 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR0000515
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-40280; IDA-28700)
ON
A LOAN
IN THE AMOUNT OF US$60 MILLION
AND
A CREDIT
IN THE AMOUNT OF SDR 61\.8 MILLION
(US$90 MILLION EQUIVALENT)
TO
THE PEOPLE'S REPUBLIC OF CHINA
FOR
THE GANSU HEXI CORRIDOR PROJECT
June 27, 2007
Rural Development, Natural Resources and Environment Sector Unit
Sustainable Development Department
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 30, 2007)
Currency Unit = Yuan (CNY)
CNY 1\.00 = US$0\.12955
US$1\.00 = CNY 7\.719
FISCAL YEAR
July 1-June 30
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
CPS Country Partnership Strategy
DID Difference in Difference
DO Development Objective
ERR Economic Rate of Return
GDP Gross Domestic Product
ha Hectare
ICR Implementation Completion Report
ID Irrigation District
IDA International Development Association
IP Implementation Progress
ISR Implementation Supervision Report
Kg Kilogram
M&E Monitoring and Evaluation
MIS Management Information System
MTR Mid-Term Review
NPV Net Present Value
PDO Project Development Objective
PMO Project Management Office
QEA Quality at Entry
QAG Quality Assurance Group
QSA Quality of Supervision
SAR Staff Appraisal Report
SARS Severe Acute Respiratory Syndrome
SRBWRMB Shule River Basin Water Resource Management Bureau
WBOB World Bank Office, Beijing
WTO World Trade Organization
WUA Water User Association
Vice President Jim Adams
Country Director David Dollar
Sector Manager Rahul Raturi
Project Team Leader Sari Söderström
ICR Team Leader Sari Söderström
The People's Republic of China
The Gansu Hexi Corridor Project
Implementation Completion and Results Report
Contents
Page no\.
Data Sheet
1\. Project Context, Development Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes\. 4
3\. Assessment of Outcomes \. 11
4\. Assessment of Risk to Development Outcome\. 16
5\. Assessment of Bank and Borrower Performance\. 17
6\. Lessons Learned\. 19
7\. Comments on Issues Raised by Borrower/Implementing Agencies\. 21
Annex 1\. Project Costs and Financing\. 22
Annex 2\. Outputs by Component\. 24
Annex 3\. Economic and Financial Analysis \. 29
Annex 4\. Poverty Impacts\. 32
Annex 5\. Overall Outcome's Ratings against Original PDOs and MTR targets \. 35
Annex 6\. Bank Lending and Implementation Support/Supervision Processes\. 36
Annex 7\. Summary of Borrower's ICR and/or Comments on ICR\. 38
Annex 8\. List of Supporting Documents\. 52
Map
A\. Basic Information
Country China Project Name Gansu Hexi Corridor
Project ID P003594 L/C/TF Numbers IBRD-40280; IDA-28700
ICR Date 06/27/2007 ICR Type Core ICR
Lending Instrument SIL Borrower People's Republic of China
Original Total Commitment US$150\.0 million Disbursed Amount US$117\.88 million
Environmental Category A
Implementing Agency The Gansu Provincial Project Management Office
B\. Key Dates
Process Date Process Original Date Actual Date
Concept Review 07/29/1994 Effectiveness 09/27/1996 09/27/1996
Appraisal 09/22/1995 Restructuring 11/12/2004
Approval 05/30/1996 Mid-term Review 06/12/2000
Closing 12/31/2006 12/31/2006
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcome Moderately Satisfactory
Risk to Development Outcome Moderate
Bank Performance Moderately Satisfactory
Borrower Performance Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance by ICR
Bank Ratings Borrower Ratings
Quality at Entry Unsatisfactory Government Unsatisfactory
Quality of Implementing
Supervision Satisfactory Agency Satisfactory
Overall Bank Overall Borrower
Performance Moderately Satisfactory Performance Moderately Satisfactory
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators QAG Assessments (if any) Rating
Potential Problem Project at
any time? No Quality at Entry (QEA) None
Highly Satisfactory
Problem Project at any (supervision of safeguards)
time? Yes Quality of Supervision (QSA) Moderately Unsatisfactory
(QSA)
DO rating before Closing Moderately
Satisfactory - -
D\. Sector and Theme Codes
Original Actual
Sector Code (as percentage of total Bank financing)
Central government administration 10 11
General agriculture, fishing and forestry sector 15 20
General water, sanitation and flood protection sector 10 23
Irrigation and drainage 65 46
Theme Code (Primary/Secondary)
Land administration and management Secondary Secondary
Other environment and natural resources management Secondary Secondary
Other rural development Primary Primary
Pollution management and environmental health Primary Primary
Rural services and infrastructure Primary Primary
E\. Bank Staff
Positions At ICR At Approval
Vice President James W\. Adams Russell Cheetham
Country Director David R\. Dollar Nicholas C\. Hope
Sector Manager Rahul Raturi Joseph R\. Goldberg
Project Team Leader Sari K\. Söderström Lang Seng Tay
ICR Team Leader Sari K\. Söderström -
ICR Primary Author Sergiy Zorya -
F\. Results Framework Analysis
Project Development Objectives
The objectives of the project were: (a) to alleviate poverty of some 200,000 poor farmers from the
resource-poor areas of central and south-east Gansu Province by emigrating and settling on newly
developed irrigated land in the Hexi Corridor; (b) to increase agricultural production in Gansu
Province, especially in food grains and commodity crops; and (c) to protect and restore degraded
environments\.
The project focused on the development of new irrigated lands and improvement of water
facilities for existing irrigated land to improve the livelihoods of resettling people who, at
appraisal, lived in dire poverty in the poorest counties of Gansu Province\. The project area in the
Shule Basin is part of the Gobi Desert\. It is very arid and windy, with naturally saline soil
conditions; the development and the sustainability of irrigation, land reclamation, soil leaching
and forest windbreak establishment are essential for agricultural production and resettlement\.
Revised Project Development Objectives
The project had changes in scope which were recorded in the revised Legal Agreements in 2004\.
However, the original project development objectives were not revised\. The major revisions
were a reduction in the number of voluntary resettlers from 200,000 to 75,000 and a reduction in
the area of land to be reclaimed from 54,610 ha to 27,213 ha\.
(a) Project Development Objectives Indicators
Original Target Revised Target Actual Value
Indicator Baseline Value Values Values (MTR)
1 Achieved at
Completion
Indicator 1 Per capita net income (RMB)
Project total: 1,850
Value Project total: 248 Project total: 1,564 Project total: 1,830 Changma: 1,601
Shuangta: 1,720
Huahai: 2,575
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
The Value Achieved was 118\.3 percent of the SAR target and 101\.1 percent of MTR target\.
Comments The project total per capita net income is weighted by the number of resettlers in the three
irrigation districts (Changma, Shuangta, Huahai)\.
Indicator 2 Changes in food grain production (tons)
Value Project total: 7,200 Project total: 215,100 Project total: 120,300 Project total: 108,000
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
The Value Achieved was 50\.2 percent of the SAR target and 89\.8 percent of MTR target\.
Comments The unmet targets of food grain production, set at appraisal and MTR, do not necessarily
imply negative result but reflect the shift from production of food grains to production of
higher-value cash-income crops (see Indicator 3)\.
Indicator 3 Gross agricultural output (million RMB)
Value Project total: 740 Project total: 1,989 Project total: 1,475 Project total: 1,957
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
The Value Achieved was 98\.4 percent of the SAR target and 132\.7 percent of MTR target\.
The values of gross agricultural output are reported in nominal prices\. Farm-gate prices at
completion did not differ greatly from those at appraisal, implying that real prices (if
Comments adjusted for inflation) were even lower\. Food prices declined as a result of China's WTO
accession in 2001, but began rising in 2003 as a result of an increase in world market prices
and in domestic demand\. At the same time, the newly-reclaimed irrigated area at
completion was half of appraisal estimate (see Intermediate Outcome 4)\.
1The second MTR (in 2003) set revised targets for the Key Performance Indicators associated with the Project
Development Objectives and the Intermediate Outcomes; these are included here\. The Intermediate Outcome
Indicators #3 and #4 were formally revised through a letter of amendment dated November 12, 2004 and counter-
signed on November 17, 2004\.
Actual Value
Indicator Baseline Value Original Target Revised Target
Values Values (MTR) Achieved at
Completion
Indicator 4 Distribution system efficiency of irrigation canals (percent)
Project total: 62
Value Project total: 43-55 Project total: 62 Project total: 62 Changma: 63
Shuangta: 60
Huahai: 62
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 100\.0 percent of the SAR target and 100\.0 percent of MTR target\.
Indicator 5 Cost recovery ratio (as water fees to O&M expenses)
Project total: 1\.34
Value Project total: 0 Project total: 1\.57 Project total: 1\.21 Changma: 1\.41
Shuangta: 1\.25
Huahai: 1\.35
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
The Value Achieved was 85\.4 percent of the SAR target and 110\.7 percent of MTR target\.
The original target value of 1\.57 is not comparable with the actual result\. The original
Comments target was based on 98,200 ha of rehabilitated and new irrigated lands\. At completion, the
total irrigated area was 70,400 ha and, if recalculated, the original target would have been
about 0\.8\. Note that the typical cost recovery ratio in Gansu province is reported at 0\.6-0\.7\.
Indicator 6 Overall vegetation cover area (percent)
Project total: 15\.3
Value Project total: 2 Project total: 11 Project total: 15 Changma: 16\.1
Shuangta: 13\.3
Huahai: 16\.9
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 139\.1 percent of the SAR target and 102\.0 percent of MTR target\.
(b) Intermediate Outcome Indicators
Original Target Actual Value
Indicator Baseline Value Values (from Revised Target Achieved at
approval Values (MTR) Completion or
documents) Target Years
Indicator 1 Per capita grain production (kg)
Project total: 404
Value Project total: 260 Project total: 677 Project total: 544 Changma: 583
Shuangta: 506
Huahai: 245
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
The Value Achieved was 59\.7 percent of the SAR target and 74\.3 percent of MTR target\.
The reduction in per capita grain production reflects the increased quality of the structure
Comments of agricultural output (crop pattern) and is the result of a gradual shift to cash crops (such as
cotton, Chinese herbs, and spices) supported by the access to irrigation and changing
market incentives\. See Indicator 2\.
Actual Value
Indicator Baseline Value Original Target Revised Target
Values Values (MTR) Achieved at
Completion
Indicator 2 Per capita gross agricultural output (RMB)
Project total: 5,043
Value - - Project total: 3,385 Changma: 4,206
Shuangta: 6,668
Huahai: 4,852
Date - - December 31, 2006 December 31, 2006
Comments The Value Achieved was 149\.0 percent of MTR target\.
Indicator 3 Improved irrigated area (`000 ha)
Project total: 18\.8 Project total: 43\.6 Project total: 43\.6 Project total: 43\.6
Value Changma: 11\.5 Changma: 27\.4 Changma: 27\.4 Changma: 27\.4
Shuangta: 5\.8 Shuangta: 12\.4 Shuangta: 12\.4 Shuangta: 12\.4
Huahai: 1\.5 Huahai: 3\.8 Huahai: 3\.8 Huahai: 3\.8
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 100\.0 percent of the SAR target and 100\.0 percent of MTR target\.
Indicator 4 Newly reclaimed irrigated area (`000 ha)
Project total: 54\.6 Project total: 27\.2 Project total: 26\.8
Value Not applicable Changma: 31\.4 Changma: 15\.2 Changma: 14\.0
Shuangta: 16\.2 Shuangta: 7\.1 Shuangta: 8\.4
Huahai: 7\.1 Huahai: 4\.9 Huahai: 4\.4
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 49\.1 percent of the SAR target and 98\.6 percent of MTR target\.
Indicator 5 Total irrigation water supplied (million cubic meters)
Value Project total: 545 Project total: 941 Project total: 644 Project total: 647
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 68\.8 percent of the SAR target and 100\.5 percent of MTR target\.
Indicator 6 Water charges collected (million RMB)
Value Project total: 4\.55 Project total: 48\.65 Project total: 34\.92 Project total: 38\.60
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 79\.3 percent of the SAR target and 110\.5 percent of MTR target\.
Indicator 7 Operation and maintenance expenses (million RMB)
Value Project total: 7\.07 Project total: 31\.01 Project total: 28\.36 Project total: 28\.80
Date September 22, 1995 June 30, 2006 December 31, 2006 December 31, 2006
Comments The Value Achieved was 92\.9 percent of the SAR target and 101\.6 percent of MTR target\.
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(US$ million)
1 06/24/1996 Satisfactory Satisfactory 0\.00
2 07/02/1996 Satisfactory Satisfactory 0\.00
3 10/22/1996 Satisfactory Satisfactory 0\.00
4 06/24/1997 Satisfactory Satisfactory 9\.32
5 11/12/1997 Satisfactory Satisfactory 11\.55
6 05/28/1998 Satisfactory Satisfactory 13\.89
7 06/30/1998 Unsatisfactory Unsatisfactory 14\.12
8 12/24/1998 Unsatisfactory Unsatisfactory 16\.89
9 12/28/1998 Satisfactory Satisfactory 16\.89
10 05/12/1999 Satisfactory Satisfactory 18\.89
11 08/26/1999 Satisfactory Unsatisfactory 20\.18
12 12/29/1999 Satisfactory Unsatisfactory 29\.29
13 04/11/2000 Satisfactory Unsatisfactory 31\.66
14 06/25/2000 Satisfactory Satisfactory 34\.69
15 12/21/2000 Satisfactory Satisfactory 39\.54
16 06/28/2001 Satisfactory Satisfactory 40\.40
17 12/13/2001 Satisfactory Satisfactory 45\.92
18 06/28/2002 Satisfactory Satisfactory 48\.98
19 12/23/2002 Satisfactory Satisfactory 57\.27
20 06/17/2003 Satisfactory Satisfactory 65\.60
21 12/05/2003 Unsatisfactory Unsatisfactory 71\.17
22 06/03/2004 Unsatisfactory Unsatisfactory 71\.17
23 12/20/2004 Satisfactory Satisfactory 74\.69
24 06/20/2005 Moderately Satisfactory Satisfactory 77\.48
25 05/18/2006 Moderately Satisfactory Moderately Satisfactory 103\.58
H\. Restructuring
Restructuring Board ISR Ratings at Amount
Restructuring Disbursed at Reason for Restructuring &
Date Approved
PDO Change Restructuring Key Changes Made
DO IP (US$ million)
The water utilization ratio at
appraisal was set at 92 percent of
the estimated water flow\. This was
adjusted to 65 percent at MTR to
11/12/2004 No U U 74\.69 correspond to international practice
in water resources management\.
Accordingly, the number of
voluntary resettlers was reduced to
75,000\.
I\. Disbursement Profile
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
1\.1\.1 This project was one of a series of Bank-assisted poverty reduction projects in China
supporting the government's Ninth Five-Year Plan\. The project aimed to promote the Bank's
overall goal of poverty reduction as articulated in the 1997 report "Rural Development from
Vision to Action" in which China was identified as one of the focal countries\.
1\.1\.2 The project was designed to be consistent with the Country Assistance Strategy (CAS) of
19951 that supported income-generation programs in lagging regions, upgrading of marginal
agricultural lands, major water storage, and irrigation and drainage development\. At the time of
project preparation, the voluntary resettlement of poor households from resource-poor to
relatively resource-rich areas was considered to be an important element to reduce absolute
poverty and prevent further environment degradation\. This was also in line with the Poverty
Reduction Strategy jointly developed by the government and the Bank in the 1990s\.
1\.1\.3 The rationale of Bank support for the project was that: (a) the Bank had significant
experience in addressing poverty in China in the most difficult environments; (b) the Bank sought
to develop a prototype large-scale settlement project integrated with irrigated agriculture for
future scaling-up; (c) enhanced knowledge transfer would occur during project preparation and
implementation; (d) the Bank's involvement would improve project implementation and induce
institutional reforms in the management of natural resources; and (e) the Bank's assistance would
leverage additional domestic resources for poor project counties\.
1\.2 Original Project Development Objectives and Key Indicators
1\.2\.1 The project development objectives (PDOs) were: (a) to alleviate poverty of some
200,000 poor farmers from the resource-poor areas of central and south-east Gansu Province by
emigrating and settling on newly developed irrigated land in Hexi Corridor; (b) to increase
agricultural production in Gansu, especially in food grains and commodity crops; and (c) to
protect and restore degraded environments\.
1\.2\.2 The project focused on the development of new irrigated lands and the improvement of
facilities for existing irrigated land to improve the livelihoods of resettling people who lived in
dire poverty in the poorest, mountainous counties of Gansu Province\. The project area in the
Shule River Basin, part of Gobi Desert, is very arid and windy with naturally saline soil
conditions, thus the development of irrigation, land reclamation, soil leaching and forest
windbreak establishment were considered to be essential for the sustainability of the resettlement
and agricultural production\.
1\.2\.3 The Key Performance Indicators (KPIs) to monitor the achievement of the PDOs were
specified in three broad groups (increased agricultural production, poverty reduction and
environment protection) and included, among others: (a) changes in per capita income; (b) total
1Close collaboration was established resulting from the 1992 sector study "China: Strategies for Reducing Poverty in
the 1990s" and the International Conference on Poverty Issues in China held in Beijing\.
1
production of grain and cash crops; (c) per capita grain production; (d) distribution system
efficiency of irrigation canals and water cost recovery; (e) rehabilitated and newly reclaimed,
irrigated areas; and (f) overall vegetative cover\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
1\.3\.1 The original PDOs were not revised, but in 2004 the project had changes in scope which
were recorded in amendments to the Legal Agreements\. The main changes included a reduction
in the number of immigrant farmers (from 200,000 to 75,000) and a corresponding reduction in
the area of land reclamation (from 54,610 ha to 27,213 ha)\.
1\.3\.2 The project was intended to address complex issues related to water resources and land
development under challenging environmental conditions\. In addition, it involved the creation of
new administrative areas (townships) and moving 200,000 people to new and difficult conditions\.
For these reasons, the Borrower originally proposed a project implementation period of twelve
years\. In view of the rapidly changing economy and implementation conditions in China, the
Bank did not consider such a long project implementation period to be advisable and in a
compromise an implementation period of ten years (already unusually long by the Bank's
standards) was agreed upon\. At the time, the Bank did not have alternative lending instruments
that could accommodate phased project implementation\. Instead, in the legal agreements it was
agreed that a two-stage Mid-Term Review (MTR) would be used to adjust the project\.
1\.3\.3 By the time of the first stage of the MTR, a number of serious design flaws had surfaced
and a severe shortfall in counterpart funding had had a negative impact on project implementation\.
The two-stage MTR (2000 and 2003) was used to mitigate the design shortcomings (described in
Section 2\.1) and issues that arose during implementation (described in Section 2\.2)\.
1\.4 Main Beneficiaries
1\.4\.1 At the time of project preparation, the average per capita rural income of the project area
significantly exceeded the average for Gansu Province and even more so for the eleven intended
emigration ("move-out") counties located in central and south-eastern Gansu\. Most households
in the move-out areas lived in absolute poverty with per capita annual income below RMB300
caused by the poor resource base, a deteriorating environment and increasing population pressure\.
The project intended to resettle 200,000 people to the relatively resource-rich Yumen City,
Guozhou County (formerly Anxi County) and selected state farms in the northern Hexi Corridor\.
The intended target population included a large number of ethnic minorities living in Yongjing,
Jishishan and Lixian counties of eastern Gansu\.
1\.4\.2 During the MTR process, the scope of the resettlement was reduced to 75,000 people (see
Sections 1\.6 and 2\.1 below)\. The actual number of resettlers at the time of completion was
75,378\. These included 62,000 people directly moved by the project (37,908 people to Changma
Irrigation District (ID), 9,419 people to Shuangta ID and 14,673 people to Huahai ID) and 13,378
"self-moved" people under the local authorities' permission (for which residential identification
cards - hukou were issued)\. The self-moved people came from 43 national/provincial level
poverty counties in Gansu and included more than 7,000 people from the project's original eleven
move-out counties\. Their relocation to the Hexi Corridor was mainly stimulated by the
infrastructure and income-generating opportunities created by the project\.
2
1\.5 Original Components
1\.5\.1 There were seven components in the project as designed in the PAD\. The costs shown
below included provisions for price and physical contingencies\. The components were:
(a) the Changma Dam (US$41\.25 million) on the Shule River was designed to provide storage of
about 194 million m3 of water for irrigation\. The design required 131 families (566 people) to be
involuntarily resettled from the reservoir site and 172 ha of cultivated land acquired\.
(b) Irrigation and Drainage (US$143\.30 million) to improve irrigation facilities for an existing
area of 43,300 ha and to develop 54,600 ha of new irrigated land in three irrigation districts\.
(c) Agriculture Support (US$3\.37 million) for agricultural machinery, seed production and
processing, extension and research\.
(d) Livestock Development (US$2\.86 million) for improvement and establishment of a livestock
extension network, the supply and production of improved livestock, fodder production and feed
processing, and credit for livestock production activities\.
(e) Environmental Protection and Management (US$10\.33 million) for afforestation (forestry
development) and for soil and water conservation activities\.
(f) Voluntary Emigration and Land Settlement (US$44\.51 million) for 200,000 immigrant
farmers to newly developed irrigated land in 16 new townships and 160 villages\.
(g) Institutional Strengthening and Support (US$14\.61 million) through the provision of
training, technical assistance, equipment, vehicles and essential facilities\.
1\.5\.2 The construction of the Changma Dam and the irrigation facilities provided the basis for
agricultural development and income generation for the resettlers in the existing and newly-
reclaimed irrigated areas\. The project set the institutional arrangements and financed the
capacity-building activities to ensure a high distributional efficiency of the irrigation system and
the cost recovery of operating and maintenance expenses (O&M)\. The Voluntary Emigration and
Land Settlement component enabled the resettlement and the preparation of agricultural land for
resettlers\. At the same time, the Agricultural Support and the Livestock Development
components helped the resettled farmers to produce new crops and livestock, mainly through
training and extension services and also through a "one-time" provision of agricultural inputs\.
Finally, the Environment Protection and Management component encouraged afforestation in
support of environmentally sustainable development\.
1\.6 Revised Components
1\.6\.1 The original components were revised through the MTR process and recorded in the
Amendments of the Development Credit Agreement due to significant changes in project scope\.
The main changes included a reduction in the number of immigrant farmers from 200,000 to
75,000 and a corresponding reduction in the area of land reclamation from 54,610 ha to 27,213
ha\.2
2The scale of the original components was adjusted twice\. During the MTR in FY2000, it was agreed to reduce the
number of resettlers from 200,000 to 95,000\. During the second MTR in FY2003, the decision was made to reduce the
number of resettlers to 75,000\.
3
1\.6\.2 Other project activities were also revised accordingly, including the construction of
canals and on-farm works, land improvement, agricultural, forestry and livestock development
activities related to the settlers, the establishment of new townships, villages, schools, hospital
and clinics, etc\. In addition, the MTR included the government's policy decision not to finance
commercial seed-processing companies, commercial livestock-breeding farms, and commercial
forestry farms, and to reduce agricultural equipment purchases (farmers financed this themselves
with direct government subsidies)\. The number of project components remained unchanged but
their scale and financing amounts were altered\. The major changes are presented below:
(a) Irrigation and Drainage: There was a reduction in: (i) the area of land reclamation and on-
farm works from 54,610 ha to 27,213 ha; (ii) the total length of branch canals from 952\.6 km to
340\.9 km; (iii) the length of branch drainage canals from 412\.3 km to 116 km; and (iv) the
quantity of roads, power transmission and communication lines, and other related small facilities\.
Funds were reallocated to finance two small hydro-electric power stations on the main canals and
to establish farmer water users' associations (WUAs) in the irrigation districts\.
(b) Agricultural Support: There was a reduction in number of technical extension stations at
the township level (from 16 to 6) and in the purchase of agricultural machinery (from 304 sets to
57)\. Funds were reallocated to add an extension station in one of the state farms and to cover for
additional soil desalinization measures on demonstration areas (13,467 ha)\. Funds for
commercial seed-processing companies were cancelled\.
(c) Livestock Development: The number of livestock extension stations at the township level
was reduced (from 16 to 6)\. The area of commercial forage production was reduced (from 11,060
ha to 2,441 ha)\. Funds were reallocated to provide 30,000 sheep for immigrant households\. The
development of commercial feed- and fodder-processing companies and commercial livestock-
breeding farms were cancelled, along with the provision of related fencing and tubewells\.
(d) Forestry Development and Environment: The number of township extension stations was
reduced (from 11 to 6)\. The number of natural forest stations was reduced from 5 to 3; on-farm
field forest belts were reduced from 3,053 ha to 1,200 ha; and household orchard development
was reduced from 2,667 ha to 1,000 ha\. The commercial forest farms in Yumen and Guazhou
and the 1,000 ha firewood forest were cancelled\. Funds were reallocated to support: (i) the
Changma upper reach natural forest station; and (ii) water-soil conservation, grassland for wind
and sand protection, and cultural heritage protection\.
(e) Voluntary Resettlement: T he number of immigrant farmers was reduced from 200,000 to
75,000\. Correspondingly, the number of new townships and hospitals were reduced from 16 to 6,
new villages from 160 to 57, new primary and middle schools from 176 to 66, and new clinics
from 160 to 57\. Resettlement-related infrastructure (roads, water and power supply, etc\.) was
reduced accordingly\.
1\.7 Other Significant Changes
1\.7\.1 No other significant changes were made to the project\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
2\.1\.1 The PDOs were set clearly in the context of the CAS and the government's strategy for
poverty reduction\. The specific activities planned to achieve the project's poverty reduction
objective built on the experience of previous "poverty-reduction-through-voluntary-resettlement"
4
programs in Gansu, the results of which were considered very positive in reducing absolute
poverty and providing greater level of incomes after resettlement on newly-irrigated lands\.
2\.1\.2 However, there were four major shortcomings in the project design, which had significant
negative impacts on project implementation: (a) environmental issues; (b) institutional issues; (c)
social issues; and (d) technical preparation\.
2\.1\.3 Environmental Issues\. Insufficient attention was paid to environmental issues during
preparation and appraisal\. The basin-level rate of water utilization agreed upon was very high (at
91\.7 percent)\. During implementation, increasing attention in China was paid to the sustainability
of water resources management, and eventually the Gansu Provincial Planning Commission
started questioning the sustainability of the project's water withdrawals and requested that an
ecological study be carried out to evaluate the water balance in the Shule River Basin\. The Shule
Basin Ecology Study investigated the water balance required for both the project area and
ecological uses downstream of the Changma Reservoir and concluded that there was a need for a
strong, province-level river basin management agency to protect the basin's water ecology and
environment, and specified the amount of water that needed to be reserved for ecological
demands along the lower reaches of the Shule River\. Consequently, during the MTR, the water
utilization rate was revised downwards to 65 percent, which is in accordance with international
standards\. Although the concept of "ecological water requirement" was acknowledged at the
national decision-maker levels only as recently as 2000, it had been a commonly accepted
concept internationally for some years; the Bank Task Team should have paid closer attention to
this fundamental design issue at the time of preparation and appraisal\.
2\.1\.4 Institutional Issues\. At the time of appraisal, a prefecture-level water resource
management bureau for the Shule River was agreed to be sufficient for the project although
integrated water basin management was already a widely-accepted best practice inside the Bank
and internationally\. The Bank's Supervision Team had to exert extreme pressure and push
significant policy reform finally to convince Gansu to concede that a province-level bureau would
be more effective in handling the complex issues of water allocation among competing uses
within the prefecture borders and water- use control to stay within the extremely tight water
budget for the whole river basin\. The establishment of the Province-level Gansu Shule River
Basin Water Resources Management Bureau (SRBWRMB) was eventually finalized, even if not
as quickly as the Bank would have wished\. SRBWRMB establishment is a major
accomplishment for Gansu and at project completion is highly appreciated by the local, provincial
and the national governments\. The Ministry of Water Resources (MWR) has recognized the
importance of this achievement by giving Gansu a special award for integrated river basin
management\. It is unlikely that this achievement would have taken place without continuous
pressure from the Bank's Task Team and strong support from the Gansu Water Resources
Bureau\.
2\.1\.5 The positive institutional impact that eventually was achieved was further strengthened
by the establishment of 87 WUAs which were originally not included in the project design\. The
WUAs are now managing the operation and maintenance (O&M) of the irrigation systems in the
three irrigation districts under the project, ensuring efficient water use, and facilitating the
collection of water fees which fully cover the O&M expenses (still a rare achievement in China)\.
The institutional reform at the top (the establishment of SRBWRMB) and the establishment of
WUAs at the grassroots level "closed the loop", enabling a positive cycle of sustainable water
resource management in the project areas\.
5
2\.1\.6 Social Issues\. No stakeholder assessment or social assessment that systematically would
have identified the project's key stakeholders and their views of and attitudes towards the project
was carried out\. While a social assessment was carried out in the move-out counties, no such
assessment was undertaken in the receiving counties (receiving local governments and
communities in Jiuquan Prefecture)\. This left the Bank's Supervision Team unaware of many of
the complexities which caused the reluctant attitude of Jiuquan Prefecture/Municipality toward
the project and their wariness in accepting re-settlers from the other poorer prefectures\. A major
issue was that the large inflow of poor households would at least initially reduce the average per
capita GDP of the relatively better-off Jiuquan (which would adversely affect the development
reputation of Jiuquan)\.
2\.1\.7 With continuous internal negotiations and consultations between the provincial and
prefecture governments during implementation, the thrust to relocate people to the resettlement
sites gained renewed momentum as the major irrigation works were completed and land
preparations were initiated\. In addition, the reduction in the number of re-settlers as a result of
the water balance issue eased the pressure on Jiuquan\.
2\.1\.8 Technical Preparation\. The extent of soil salinization in the selected irrigation areas
was seriously underestimated during appraisal, causing significant delays and cost increases for
land reclamation\. The large share of extremely saline soils in the newly-reclaimed areas (about
65 percent) required particular attention\. Intensive research was undertaken in close
collaboration with several international institutes to prepare land typing based on remote sensing,
with detailed descriptions of soil structure, salt content and treatment required, and the
classification of their potential use in agriculture\. Extension workers and farmers received on-site
training in various soil-leaching techniques for different types of soil and groundwater conditions\.
Guidelines and manuals were prepared and trainees participated in actual soil leaching of selected
pilot areas under the guidance of experienced technical personnel \. 3
2\.2 Implementation
2\.2\.1 Internal factors that had a significant impact on project implementation related to: (a) the
shortage of counterpart funds; (b) the introduction of a national program encouraging potential re-
settlers to stay in the move-out areas; and (ci) construction delays\.
(a) Counterpart Funds\. From the outset, progress on all project components was slow because
of counterpart funding shortages\. At appraisal, the Bank's Task Team was informed that national
poverty reduction funds would be allocated to cover a large part of the required counterpart funds
(forty percent)\. However, the regulations for use of national poverty reduction funds were
changing and relevant provincial departments knew prior to negotiations that the project would
not be eligible to use those funds\. Consequently, counterpart funds for the project were short by
40 percent before the project even had started implementation\. The Bank Supervision Team
became aware of this situation only later, when the lack of counterpart funding started to have an
impact on project implementation\.
(b) National Program Supporting Move-Out Areas\. In the late 1990s, the central government
introduced a national program entitled the "Grain for Green Program" to rehabilitate forest and
grassland areas in resource-poor areas (mainly in the western areas of the country) which had
3The extension stations in the project areas have gained substantial and unique experience in tackling severe salinity
problems\. This experience is worth transferring to other countries where land and water is very scarce and soil salinity
hampers agricultural production\.
6
been damaged by poor farming practices (especially farming on steeply sloping land)\. This
program provided subsidies and grain for farmers to take sloping land out of grain production and
to plant trees and forage instead\. The program supplemented the move-out farmers' income and
changed their incentives for moving out to the Shule River Basin in the harsh Gobi Desert\. This
was another rationale for reducing the number of re-settlers\. The introduction of the Grain for
Green Program was also the reason for the cancellation of the project's environmental
investments in the move-out areas as these activities were to be covered by the national program\.
4
(c) Construction\. The collapse of a section of the Changma Dam silt diversion tunnel (caused by
geological conditions) in 1998 significantly delayed the completion of the dam and ancillary
works\. The collapse also delayed the availability of additional water needed for land reclamation,
land leaching and crop production which, in turn, delayed the relocation of re-settlers\. In addition,
the completion of bidding, evaluation and selection for ten key construction contracts for
irrigation and drainage works was delayed because of the Borrower's lack of experience in
following the Bank's procurement guidelines \. The delay in procurement contributed to the
5
slow construction of irrigation facilities for the settlement sites\. The Severe Acute Respiratory
Syndrome (SARS) outbreak in 2002-2003 further slowed procurement and construction progress
(see paragraph 2\.2\.3 below)\.
2\.2\.2 The Bank's Supervision Team was very flexible in addressing the design problems and in
adapting to unexpected events\. The Mid-Term Reviews in FY00 and FY03 tried to cope with 6
the loss of the national poverty reduction funds, to bring attention to ecological sustainability and
social development, and to adjust the project activities accordingly\. The targeted number of
beneficiaries was reduced along with the newly reclaimed irrigated areas, and the water
utilization rate was adjusted to 65 percent to ensure the sustainable use of water and to protect the
downstream environment7\. Although Gansu was able eventually to make up part of the
counterpart funding shortage by obtaining funding through national treasury bonds issued by the
central government, the lack of timely availability of the funds at the project site continued to
hamper implementation progress throughout the life of the project\.
2\.2\.3 One important external factor affected the project implementation; the outbreak of SARS
in China in late 2002 basically stopped movement for some six months between and within
provinces, and Bank-supported operations along with the government's own programs were
basically suspended during this time period\. Project personnel were unable to travel within
counties and were to a large extent called on to support the control of the outbreak\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
2\.3\.1 The project was supported by a survey-based M&E system, consisting of three parts:
(a) involuntary resettlement for the Changma Reservoir; (b) voluntary emigration and land
4The "Grain for Green" program provided compensation for farmers for converting low economic-value cultivated
land to ecological purposes in northern and western parts of China\. In 2006, the subsidy equaled approximately
RMB200 per mu plus a certain amount of grain\.
5A special training program was arranged in Yumen City by the Beijing Office of the Bank in October 2000 to
strengthen the project's procurement capacity\.
6The detailed changes to the project components induced by the MTR are described in Section 1\.6\.
7At completion, the reserved ecological water balance of 260 million m3 was fully consistent with the
recommendations in the Shule River Basin Ecological Study\. This is approximately 25 percent of the annual runoff of
the Shule River\.
7
settlement; and (c) environmental monitoring of land and water resources\. Output and outcome
indicators were selected for each project component\.
2\.3\.2 The National Research Center for Resettlement of Hehai University monitored and
evaluated annually the socio-economic well-being of 131 households (of a total of 139
households) involuntary relocated by the construction of the Changma Reservoir and resettled
mainly in Huahai ID (and also in Yumen City and Changma ID)\. The M&E was undertaken
during 2000-2002\. The progress of involuntary resettlement was regularly reported to project
management and the Bank for information and action\. The Bank reviewed the quality of the
involuntary relocation and deemed it to be fully in accordance with both government regulations
and Bank safeguards\.
2\.3\.3 The Voluntary Resettlement Program was also supported by an external M&E
mechanism conducted by Lanzhou University in Gansu, designed to advise program
implementation in the local social context of Hexi Corridor in accordance with the project's
voluntary resettlement plan\. The annual surveys and reporting lasted for ten years until the 2006
report\. The M&E reporting covered all major aspects of socio-economic conditions of "move-
out" areas (11 poverty counties in south-east Gansu Province) and "move-in" areas (in the Shule
River Basin), with a focus on the progress achieved in resettlement implementation, development
of the new settlements and livelihood rehabilitation of the resettled households\. Besides
examining physical construction, social services and production arrangements in the new sites
(eight in total), a sample size of about 2,000 resettlers (500 households) was annually selected for
surveys of incomes and expenditures (from agriculture and labor out-migration, and in the new
sites and old move-out villages), living environment and satisfaction indexes\. Tracking progress
on output and outcome indicators and other socio-economic indicators across "move in" and
"move out" areas, these surveys yielded high-quality data for the M&E of the voluntary
resettlement program\.
2\.3\.4 The project was also supported by Environmental Monitoring and Evaluation conducted
in project "move-in" and "move-out" areas\. The Water Environment Center of the Gansu
Hydrology and Water Resources Investigation Bureau, the Gansu Agriculture Engineering
Planning Institute, and other relevant universities and institutes were sub-contracted to conduct
M&E on parameters for surface and groundwater, meteorological data, water table, soil quality
and ecological environment\. M&E techniques used included surveys, field investigations and
research\. Various reports were prepared regularly for the PMO8\.
2\.3\.5 In addition to the M&E system, a computerized Management Information System (MIS)
was set up to collect and monitor financial and physical progress data from technical bureaus and
units implementing the various project components\. Procurement and financial reports detailed
all works, project expenditures and supporting documents for disbursement from loan/credit
proceeds\. Progress reports were prepared semi-annually\. The various M&E systems helped
greatly to inform on the status of project implementation and also facilitated the evaluation
discussions at completion\. However, an integrated M&E system that would have measured
overall project efficiency, performance and outcome was never put in place\.
8These included the reports on "Annual Environmental Management", "Water Resources Balance and Reservoir
Groundwater Level Prediction", "Anxi Grassland Ecological Environment Monitoring", "Meteorological Monitoring
and Analysis" and "Soil Monitoring and Evaluation"\.
8
2\.4 Safeguard and Fiduciary Compliance
2\.4\.1 The project triggered Bank safeguard policies on environment, dam safety, resettlement
and indigenous people\. The Bank supported the project's compliance with safeguard policies
through supervisions which were rated by QAG in late 1999 as "Highly Satisfactory\."
2\.4\.2 Environment\. The PMO established monitoring stations for water and soil quality and
controlling the environmental issues during construction\. Particular attention was paid to the
ecological water balance and soil salinity after the major construction works were completed\.
The monitoring of water table and changes in soil salinity allowed for improving the drainage
systems and for mastering soil desalinization measures\.
2\.4\.3 The establishment of the SRBWRMB has greatly improved the implementation of the
Bank's environmental safeguard policies, and integrated ground- and surface-water management
has become a reality\. Changma, Shuangta and Chijinxia Reservoirs became jointly operated and
regulated on flood control and supply of water for irrigation and other uses\. Since its
establishment, SRBWRMB has released about 200 million m3 of water annually for downstream
natural reserve areas to protect the ecological system\.
2\.4\.4 In 2004, the Gansu Water Resources and Hydropower Investigation and Design Institute
and Tsinghua University undertook research on the use of ground-water in the irrigation areas\.
The report analyzed the current status and projected an outlook for changes in ground-water
levels between 2000 and 2030 for each of the project's three irrigation districts\. The study
predicted a decrease in the ground-water levels north of the mountains while some increase was
actually observed across irrigation districts\. In Changma ID, the ground-water level slightly
increased (0\.3 m-0\.6 m); in Shuangta ID, because of irrigation water diversion and ecological
water discharge, the ground-water level also increased (0\.12 m - 2 m); in Huahai ID, for similar
reasons as in Shuangta ID, the ground-water level increased with about 0\.4 m - 4m\. These results
were later confirmed by actual ground-water level data collected by Gansu Water Resources and
Hydropower Investigation and Design Institute between the years 2001-2006\. These increases in
some of the irrigation districts indicate the need for continued monitoring of ground-water levels
and possible future investments or measures to improve drainage\.
2\.4\.5 The salt content of the water impounded by the Shuangta Reservoir, downstream of the
Shule River, has also been monitored carefully because of the potential for salt build-up\. The
Water and Environment Monitoring Center of the Gansu Hydrology and Water Resources
Investigation Bureau monitors salinity changes in the Shuangta Reservoir at intake, reservoir area
and downside of Shuangta Dam\. The monitoring data during 2000-2006 shows a decline in total
salt content, mainly resulting from the increased water diversion from Changma Reservoir and
improved drainage systems downstream\.
2\.4\.6 A Cultural Investigation Report and Protection Plan for the Shule River Project was
prepared by the Gansu Relics and Anthology Research Institute and the Guazhou Relics and
Tourism Bureau\. The Plan was followed during construction under the supervision of the PMO\.
As a result, those relics found remained protected and a list was prepared and provided to the
Bank\. Seven reports on cultural excavation and relics' protection were submitted to the PMO and
the Gansu Culture Protection Bureau\.
2\.4\.7 Dam Safety\. Three dams (Changma, Shuangta and Chijinxia Dams) triggered the
Bank's Operational Policy on Dam Safety (OP 4\.37)\. An International Panel of Experts was
appointed in accordance with the policy and was involved in project preparation and
9
implementation stages\. The Panel of Experts inspected the sites three times and their comments
were incorporated in the final dam designs\. In 2001, the China Institute of Water Resources and
Hydropower Research reviewed the safety status of the Changma Dam granting permission to
initiate water storage\. The Changma Dam was completed and operational in 2002 and is now
operated by the Changma Reservoir and Hydropower Management Station\. The Provincial
Water Resources Bureau periodically reviews the dam and flood control emergency preparedness\.
2\.4\.8 Involuntary Resettlement\. The construction of the Changma Dam caused the
involuntary resettlement of 580 farmers (139 households) in Shuixia Village of Changma
Township, Yumen City\. About 2,489 mu of farmland was inundated\. The physical relocation of
households started in May 2000 and was completed in November of 2000\. Some 547 people
moved into the newly-constructed Xixia village while 33 people decided to return to their old
township\.
2\.4\.9 The Changma Involuntary Resettlement Program was planned and implemented in
conformity with OP 4\.12, ensuring that all resettled households' living standards were improved
and their incomes enhanced\. Infrastructure construction of the new site was completed before
people moved in\. Housing and social services such as schools, clinics and cultural centers, were
established based on consultation with the relocated people\. More than 5,500 mu of land was
developed, including forestry and grassland\. About 2,200 mu of farm land was allocated to the
relocated households with each farmer receiving 4-5 mu of land\. Intensive training on irrigation,
desalination and techniques for economic cropping was provided to the farmers to enable them to
adapt to their new living and production circumstances\. Land quality in Xixia village was
continuously improved and is now nearly equal to that in the old irrigation districts\.
2\.4\.10 Indigenous Peoples\. Resettlement was carried out based on social assessments covering
all move-out areas and potential resettlers\. About 30 percent of the resettlers belong to ethnic
minorities, all of them moving voluntarily and with special consideration in regard to their culture
and practices\. Among them, Dongxiang accounted for 13\.75 percent of the total and Hui
accounted for 10\.7 percent of the total\. There were 65 Tibetan households and 7 Tu households\.
2\.4\.11 According to tradition and custom, all Dongxiang (Muslim) and most Hui (Muslim) were
settled in concentrated sites\. According to the National Ethnic Minority Autonomous Law and
the project design, the Qiduntan resettlement site was established as a Hui and Dongxiang Ethnic
Minority Township\. Other new sites, such as the Dushanzi sub-farm (township level), have also
been populated mainly by Dongxiang people and are currently going through formalities to
become ethnic minority townships\. Tibetans and Tus (both Buddhists), consistent with their own
requests, were mostly resettled in concentrated areas in the old irrigation districts\. Ethnic beliefs
and religions were respected in the new resettlement communities, including the construction of
21 mosques in all (Muslim) sites with separate cemeteries for each Hui and Dongxiang village\.
2\.5 Post-completion Operation/Next Phase
2\.5\.1 Post-completion operation will be greatly facilitated by the institutional arrangements
created by the project\. SRBWRMB at the river basin level and the WUAs as grassroots water
management organizations, with active farmers' participation at the field level, form an integrated
system giving impetus to agricultural growth while ensuring environmental sustainability\. The
distribution system efficiency of irrigation canals is high, and full cost recovery of water charges
provides a sound mechanism for continuous support of operation and maintenance and the long-
term sustainability of the irrigation systems and facilities\.
10
2\.5\.2 The main challenge in the post-completion phase will be to manage the increasing
pressures for more intensive water and land use, and the trade-off between income generation and
environment protection\. Population growth and limited income opportunities beyond crop
production in rural Gansu will require the continuous attention of the SRBWRMB on the
technical efficiency of water supply and on-farm efficiency of water use in order to save water for
other high-value uses\. SRBWRMB will need to be pro-active in meeting the changes in water
demand and to prevent environmental degradation\. This includes, but is not limited to, the
regulating of water fees and water supply\. Moreover, a hydropower development plan (based on
generating stations on the main canals) should be developed to utilize fully the potential for
hydropower without damage to the environment, generating revenues to help fund SRBWRMB
operations\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
3\.1\.1 The project's objectives remain relevant to the Bank's Country Partnership Strategy
(CPS) 2006-2010 for China that aims to reduce poverty, inequality and social exclusion\. The
project also remains consistent with current government policies/poverty reduction strategy\. The
most recent "slogan" for the provincial government's poverty reduction strategy is: "Yi Ti Liang
Yi" meaning "one body (village-based comprehensive poverty reduction) and two wings
(agricultural skills training and mobility of labor, and agricultural industrialization and
modernization)"\.
3\.2 Achievement of Project Development Objectives
3\.2\.1 The PDOs were met\. Many of the indicators for achievement of the PDOs exceeded the
targets set at both appraisal and MTR\.
3\.2\.2 The main indicator of the first project objective was to increase per capita income above the
absolute poverty line in the project area, and it was fully achieved9\. At completion, the net per
capita income in the move-in project villages had increased by RMB 1,602 to about RMB 1,850 (to
RMB 1,601 in Changma ID, RMB 1,720 in Shuangta ID, and RMB 2,575 in Huahai ID)\. The
project's per capita income targets were RMB 1,564 at appraisal and RMB 1,830 at MTR\.
Moreover, the quality of income significantly improved\. The re-settlers shifted from the production
of food grains for subsistence to production of cash crops, and are instead purchasing grain for
household consumption and livestock\. Furthermore the outlook for additional income growth and
poverty reduction for households in the "move-in" areas is much more promising than for those
staying in the "move-out" areas\. A discussion of the types of welfare gains and how much of the
reported gains could be attributed to the project is provided in Section 3\.5 and Annex 4\.
3\.2\.3 The substantial shortfall in achieving the appraisal targets, however, is that the number of
project beneficiaries decreased from 200,000 to 75,387 people\. The initial resettlement target
was based on a level of water use which was too high, assuming as it did an overall water
utilization rate of 92 percent (see Section 2\.1)\. Once this assumption was revised to 65 percent,
9The project's M&E system collected data on net per capita income but not on the poverty headcount measure\. In
2006, the absolute poverty line in Gansu was RMB650 per capita and the relatively-poor poverty line was RMB956
(see Section 3\.5, paragraph 3\.5\.3)\.
11
the resettlement and all associated activities had to be scaled-back, automatically leading to a
qualitative rather than quantitative achievement of many of the project's targets\.
3\.2\.4 The project's second objective, to increase agricultural production in Gansu Province,
was fully achieved\. While the targets of food grain production set at appraisal and revised at
MTR were not met, the gross agricultural output in the project area exceeded both appraisal and
MTR targets\. This resulted from the shifts away from low-value grains to higher-value cotton,
spices, herbs and vegetables which all are well-suited to Shule Basin conditions\. At completion,
these cash crops accounted for about 80 percent of total cultivated land\. The price effect was
small because the nominal farm-gate prices of most agricultural outputs at completion were very
similar to those at appraisal (the real prices were even lower if adjusted to inflation), and income
growth was caused by the increases in yields on the smaller, newly-reclaimed irrigated areas (the
actual reclamation irrigated area was 25,100 ha compared to 27,200 ha planned at MTR and
54,600 ha planned at appraisal) and especially the massive change to much higher-value crops10\.
3\.2\.5 The project's third objective, to protect and restore degraded environments, was also
achieved\. The overall vegetation coverage of the area reached 15\.3 percent, exceeding both the
appraisal and MTR targets\. In terms of irrigation, the efficiency of water-use is high\. The target
of distribution system efficiency of irrigation canals, set at 62 percent, has been achieved and the
O&M costs are fully recovered through fees collected from water users\. These are significant and
rare achievements in China, where canal efficiency is usually well below 50 percent and cost
recovery averages 60-70 percent (and is often much less)\.
3\.3 Efficiency
3\.3\.1 The project's Net Present Value (NPV) at completion is estimated at RMB 21\.5 million\.
With an Economic Rate of Return (ERR) of 12\.2 percent, the project's rate of return about
equaled the social discount rate (12 percent)\. The ERR of the largest component (Irrigation and
Drainage) is 11\.9 percent, with the lowest ERR in Changma ID (9\.9 percent) and highest in
Shuangta ID (14\.4 percent)\. The NPV and ERR at completion are substantially lower than the
NPV and ERR estimated at appraisal (because of the reduction in the project's scale) but larger
than those estimated at MTR\. The MTR is more relevant comparator because of the similar
project scopes with the ICR\. With this in background, the project efficiency at completion was
higher than expected at MTR\. Annex 3 provides a comparison of the NPVs and ERRs of project
components at appraisal, MTR and completion\.
3\.3\.2 The project's overall ERR critically depends on the Irrigation and Drainage Component
which makes up 86\.3 percent of the total investment \. Its ERR was found to fluctuate between
11
7\.6 - 12\.0 percent in Changma ID, between 11\.7 - 15\.9 percent in Shuangta ID and between 7\.9 -
15\.7 percent in Huahai ID, using a simulation analysis of a 10 percent decrease/increase of the
gross revenue from agricultural activities\. Such fluctuations in gross revenues are possible and
can be caused by changes in prices and yields of the agricultural products\.
10The gross agricultural output is expressed in nominal prices\. At appraisal, food prices in China exceeded world
market prices\. After China's WTO entry, food prices initially declined but increased starting 2003 following the
increase in world market prices and domestic demand\.
11Note that the investment costs of project components for economic analysis differ from those in Table A of Annex 1\.
The project costs were allocated to crop, livestock, forest and hydro-electric power stations' components based on the
weights in total benefits\.
12
3\.3\.3 The ERR is especially sensitive to changes in the price of cotton (the main crop)\. At
completion, cash crops in Changma ID accounted for 63 percent of the total cropping area (with
91 percent in Shuangta ID and 85 percent in Huahai ID)\. A 20 percent fall in cotton prices at the
farm-gate would result in a 2\.2 percentage points decrease of the ERR\. A 30 percent fall in
cotton prices would reduce the Irrigation and Drainage component's ERR from 11\.9 percent to
8\.6 percent\. The largest decrease would be in Huahai ID where the ERR would decrease from
12\.2 percent to 5\.9 percent\.
3\.3\.4 That the ERR significantly declines when cotton prices decline underscores the critical
importance of sustainable irrigation systems, efficient farming and development of marketing
infrastructure\. It further highlights the importance of extension services in effectively
transferring new knowledge to farmers on modern technologies for other crops and on
prevention/mitigation measures against cotton pests\. More generally, similar to this project,
future poverty projects should include serious capacity building and institutional improvements
for extension services to help farmers diversify and to prevent them from falling back into
subsistence farming and poverty\.
3\.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
3\.4\.1 While the project was designed almost thirteen years ago, its basic objectives remain
relevant to the government's current plans to construct a "new socialist countryside", although
today much more attention is given to the environmental sustainability of development
interventions\. The project's PDOs were met and the efficiency achieved is satisfactory, given
that this was a poverty reduction project\. Significant positive poverty reduction impacts, gender
benefits and social developments were achieved and although the total number of the project
beneficiaries was smaller than planned at appraisal it met the MTR target\. Moreover, the outlook
for further improvements for the poverty-stricken people who settled in the "move-in" areas is
much more promising than for those remaining in the "move-out" areas (see Section 3\.5)\. With
this in view, the overall outcome of the project is rated as "moderately satisfactory\."
3\.4\.2 This rating is supported by the weighting calculation against the original PDOs and
revised MTR targets (Annex 5)\. Although the MTR targets were not formally revised, they are
useful to judge the achievement of the PDOs\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
3\.5\.1 Poverty\. Significant improvements in the re-settlers' welfare were recorded\. At
appraisal, the average annual per capita income of the future re-settlers in situ was estimated to
be about RMB 248\. At completion, the average per capita income estimated for the largest
resettlement townships increased to RMB 1,810\. Since the re-settlers were reallocated to new
reclaimed areas, the increase in per capita income (RMB 1,562 per capita) can be fully attributed
to the project\. The results remain significantly positive even after the changes in per capita
income in "move-in" areas is corrected for the changes in income in "move-out" areas (i\.e\., to
allow for the changes which would have happened in the absence of the project - a "difference in
difference" evaluation)\. Since the average per capita income in the "move-out" areas ("without
13
the project") increased by RMB 968, the per capita income increase fully attributable to the
project is RMB 594 \. Annex 4 presents a detailed analysis of the poverty impact\.
12
3\.5\.2 The majority of the project's "move-in" households succeeded in escaping absolute
poverty by the year 2006\. At the outset of the project, most of the res-ettlers were absolute poor,
but in 2006 none of the surveyed households lived in absolute poverty using the Gansu poverty
line of RMB 650\. Only 38 percent still had a per capita income below the "relatively-poor"
poverty line of RMB 956\. However, while significant improvements in poverty reduction were
achieved in comparison with Chinese poverty thresholds, the majority of the re-settlers (except
some of those living in Huahai ID) continue to live below the Bank's poverty line of US$1 per
day (equal to about RMB 2,800 per capita)\. This raises the question of whether the Bank
investment was justified and if there were better alternatives to the investment (e\.g\., investing in
the "move-out" areas)\. For the latter, investment opportunities for economic and human
development in the "move-out" mountainous areas were and continue to be extremely limited\.
For the former, the investment is seen as justified taking into account the positive future outlook
for poverty reduction in the move-in areas\. Since the relocation was delayed, most of the re-
settlers did not achieve their full income potential from agriculture and off-farm activities at the
time of the ICR, but their outlook is very promising as land productivity has great potential to
increase, the reliable irrigation promotes diversification, and the farmers increasingly master new
farm techniques (none of which can be said about the "move-out" areas)\.
3\.5\.3 Gender Aspects\. While the project focused on enhancing household welfare in general,
it also helped women to improve their well-being\. Among the resettled people, more than 29,700
were women\. Women laborers not only work in fields but participated in new site construction
and labor mobility outside villages, which has become an important source of income that most
resettled households rely on\. In 2006, for example, 5,073 women in the project areas took outside
work accounting for 47 percent of all off-farm laborers and their income added up to more than
RMB 7\.12 million, 48\.4 percent of the total project area income from outside work (Table 1
below)\. On average, the women earned more than RMB 1,400 per person in 2006 in off-farm
income, increasing their contribution to their families well- being which, in turn, increased their
participation in household decision-making (according to survey, 75 percent of women took equal
part in household decision-making\.)
12This is a conservative estimate\. The project's contribution was probably higher\. The people in "move-out" areas
obtained "Grain for Green" subsidy at approximately RMB200 per mu for conversion of cultivated slope land to
grasses and forests\. Excluding this subsidy from per capita income calculations in the "move-out" areas increases the
project's contribution to re-settlers' income growth to about RMB800\.
14
Table 1: Proportion of family income generated by women, 2006
Move-out Move-in Surveyed 10% 10%~30% 31%~50% 50%
counties townships HH HH % HH % HH % HH %
Dongxiang Zhahua 48 10 21 29 61 9 18
Jishishang Xiangyang 30 1 5 15 50 12 39 2 6
Tangchang Lianghu 54 4 7 29 54 18 34 3 5
Minxian Bijiatang 102 11 11 60 59 22 21 9 9
Hezheng Qidun
Wudu township 78 9 12 41 53 20 25 8 10
Linxia
Lintang Qidaogou 84 13 15 45 54 20 24 6 7
Yongjing
Lixian Shuangta 120 16 13 66 55 27 23 11 9
Dongxiang Dushangzi 60 10 16 35 58 15 26
Total 576 74 13 320 56 143 25 39 6
3\.5\.4 Social Development\. The resettlers directly benefited from project investments in
irrigation infrastructure, agricultural and livestock support and financing of the resettlements\.
Positive externalities from environment protection and management accrued not only to the
resettlers but also to other residents in the project area\. Additional indirect benefits were obtained
from the establishment of the WUAs and the improved extension services\.
3\.5\.5 Ethnic Minorities\. With production improvements and development of new
opportunities for all resettlers, the incomes of ethnic minority communities were enhanced during
and after resettlement\. For Dongxiang people, the largest "move-in" ethnic minority group, per
capita income grew from RMB 294 in 1997 to RMB 1,253 in 2006\. In contrast to their
hometown where they could plant only rain-fed crops, now they have mastered irrigated
agriculture\. According to the satisfaction survey carried out in the resettlement sites, 95 percent
of the resettlers are satisfied with their new life\.
(b) Institutional Change/Strengthening
3\.5\.6 The highlight of the institutional change induced by the project was the establishment of
the SRBWRMB and the introduction of WUAs\. Establishment of the SRBWRMB greatly
improved project completion, ensured environmental water use for ecosystem protection and
strengthened coordination among government line agencies\. After project completion, the
SRBWRMB will continue to play the key role in integrated management of water resources and
ensure sustainable social, economic and environmental development of the Shule River Basin\.
3\.5\.7 In general, substantial institutional strengthening took place at various levels during
project implementation, from the implementing agency down to the resettlement sites\. Various
kinds of training were provided to farmers, extension workers and the implementing agency\. The
implementing agency's project supervision practices were adjusted to the supervision methods
similar to those of the Bank\.
3\.5\.8 At the grassroots level, the water management structure is supported by the WUAs that
are managed by the farmers\. The establishment of WUAs was not originally included in the
project design, but was introduced by the Bank's Supervision Team\. Some 87 WUAs are in place
in the project areas\. The WUAs, combined with SRBWRMB, provides a well-functioning,
15
integrated water management system that will provide sustained impetus for agricultural growth
while ensuring environmental sustainability in and beyond the project areas\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
4\.1 The risk to the development outcome is considered to be "moderate"\. The national
government's commitment to further reduce poverty continues to be one of the most important
policy priorities\. Increased funding is being channeled to the western areas of the country,
including large sums being allocated for village-level development and rural infrastructure\. The
establishment of the SRBWRMB ensures the sustainable management of water resources across
prefectures, and great attention is now being paid both to the ecological water balance and
efficient use of the scarce water resources\. Dam safety measures have been fully implemented,
the distribution efficiency of irrigation channels is high, and full cost-recovery for water will
ensure adequate future O&M of the irrigation systems\.
4\.2 The main risk posed to the development outcome is related to slower than expected soil
desalinization of the reclaimed land\. About 60 percent of the new reclaimed lands in the project
area have required three to five years leaching, with some land plots where the salinity conditions
proved much worse than expected needing up to eight years for adequate desalinization\. While
the project has made significant investments in desalinization measures, in capacity building of
the extension services, and in subsidization of fees for water used for leaching, the extended time
required for land development works reduced the project funds available for move-in households\.
Even though the SRBWRMB has prepared a plan aiming to use RMB 107 million of collected
water fees annually for soil leaching, many post-project investments will need to be financed by
local public funds and the households themselves\. Therefore, the SRBWRMB has requested
additional provincial funds to assist the move-in households in post-project agricultural extension\.
4\.3 Changes in market incentives also pose certain risks\. Currently most farmers in the
move-in areas specialize in cotton production which generates cash income and contributes to soil
desalinization because of its salt tolerance\. In the future, the profitability of cotton production
may decline resulting in shifts from cotton to less salt-tolerant crops\. The probability of a large
decline in cotton profitability, however, is low in the Hexi Corridor, given the favorable climate
conditions, the less favorable conditions for grains and the rising demand for textile and clothes
inside and outside of China\. In addition, the severity of soil salt problems can be expected to
decline after a number of years of cotton production and leaching of salts out of the root zone\.
4\.4 The probability of continued spontaneous self-resettlement remains low, but if controls
are relaxed the impact would be negative\. At this point, local government has recognized the
consequences of potential over-use of land and water resources and the importance of the
environmental sustainability in the area\. Adequate administrative measures have been put in
place to prevent further resettlement (e\.g\., hukou issuance)\. Furthermore, the SRBWRMB
controls the water supply, preventing its access by illegal users\. The local government will have
to continue closely to monitor and prevent any over-use of land and water to minimize risks to
sustainability of the project development outcomes\.
16
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Unsatisfactory
5\.1\.1 No QAG "Quality at Entry" review of the project was carried out\.
5\.1\.2 Although the project was consistent with the government's poverty reduction strategy
and the Bank's CAS, its design had several major shortcomings which had negative effects on
achieving the development outcomes (see Section 2\.1)\. A full ecological assessment focused on
water should have been carried out for the Shule River Basin during project preparation, and
downstream ecological water requirements should have been included in the water balance
calculations\. Similarly, better soil surveys should have been done to estimate accurately the
required soil desalinization efforts\. Furthermore, the Bank inadequately addressed the issue of
integrated river basin and watershed management, significantly delaying the creation of a
province-level river basin management bureau\. Finally, the Bank did not require the completion
of a social assessment covering both the "move-out" areas and the "move-in" areas which
probably would have uncovered the wary attitude of the receiving prefecture toward the project as
designed\. All these drawbacks in the project design were mentioned in two QAG reviews (1999
supervision quality of safeguards, and 2004 supervision quality)\. In view of these major
shortcomings, the Bank's performance in ensuring quality at entry is rated as as "unsatisfactory\."
(b) Quality of Supervision
Rating: Satisfactory
5\.1\.3 In late 1999, the quality of safeguard supervision was rated by a QAG review (which
included a field review) as "highly satisfactory"\. The field review noted a number of problems
with quality at entry but gave the project a "Highly Satisfactory" rating for supervision\.
5\.1\.4 However, in 2004 a second QAG rated the quality of supervision during the period of
FY2003-2004 as "moderately unsatisfactory"\. The major reasons for the rating were reported as
follows: "The project had serious design flaws as the proposed infrastructure development was
not based on realistic assessment of resources for development and the poor communities who
would derive the benefit\. Throughout the period under review, the team grappled with these
fundamental design problems and the lack of counterpart funding\."\. Additional concerns raised
at the 2004 QAG review included that "\. little attention (had been) given to social development
of the re-settlers \." and that the Supervision Team had not rated the project implementation as
unsatisfactory earlier\.
5\.1\.5 The ICR team, however, is of the opinion that the quality of supervision of the project as
a whole has been "satisfactory" for the following reasons:
(a) Significant financial and human resources were provided for implementation support during
supervision to mitigate the project design's shortcomings and to assist the Borrower to address
the evolving challenges\. The Bank demonstrated a strong commitment to correcting the design
problems and considerable flexibility in addressing them\.
17
(b) The Bank's Task Team successfully induced significant institutional reform through intensive
dialogue and persuasion\. The Prefecture-level Shule River Basin Water Resources Management
Bureau was finally transformed into a Provincial-level Shule River Basin Water Resource
Management Bureau\. Compliance with the Bank's environmental and social safeguard policies
was supervised regularly, either by the main team or by specific technical experts\. The
establishment of the involuntary and voluntary resettlements was closely monitored by the Bank\.
(c) When the larger-scale relocation became possible as the major irrigation and infrastructure
works were completed, the Bank's Supervision Team paid close attention to the timely
completion of construction of schools, hospitals and other social infrastructure for resettlers and
their children and their adequate staffing\.
5\.1\.6 It should be noted that the 2004 QAG mainly raised problems of a "quality at entry"
nature rather than of supervision, emphasizing the shortfall of counterpart funds at the outset and
the inadequately-addressed ecological issues\. Also, basically all the reasons for the unsatisfactory
supervision rating were successfully resolved by the time of project completion\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
5\.1\.7 Based on the "unsatisfactory" rating for Quality at Entry, the "satisfactory" rating for
supervision of the project and the "moderately satisfactory" achievement of the PDOs, the Bank's
overall performance is rated as "moderately satisfactory\."
5\.2 Borrower Performance
(a) Government Performance
Rating: Unsatisfactory
5\.2\.1 In spite of the strong political support and high attention to the project that eventually
was received from the provincial government, and the efforts made to raise the counterpart funds
after the MTR, the government's performance is rated as "unsatisfactory"\. Project
implementation was severely constrained by the shortfalls in counterpart funds\. The ineligibility
of Gansu to utilize national poverty reduction funds for the project was suggested at lower levels
at the time of appraisal but raised by Gansu only prior to or at the time of negotiations\. Gansu
should have undertaken quick measures at that time either to find alternative sources of
counterpart funds or to adjust the project's scale to match the actual funds available\. It is likely
that the relevant departments over-estimated their ability to replace the lost poverty reduction
funds from other sources, and may also have under-estimated the impact of the loss of these funds
on project implementation\. On the other hand, had implementation gone according to plan it is
likely that the long-term ecological impact of the project would have been severely negative
given that ecological water requirements were not included in the original project design and
water balance\.
5\.2\.2 After the MTR, the problem of the counterpart funds was eased through high-level
leadership attention at the provincial level and close attention given to the project by provincial
leaders\. At completion, the actual allocation of counterpart funds reached 85\.6 percent of the
MTR target\. However, even with the additional funds project implementation was severely
hampered by the untimely/uncertain allocations and the slow release of those funds to the project
18
office\. The planned infrastructure works were slowed down, resulting in delayed resettlement
and consequently delayed agricultural growth and human development\.
5\.2\.3 In addition, the provincial government exhibited weak coordination on resettlement and
social issues\. Registration of many resettlers had not been completed even at the time of the ICR
mission\. A remaining concern is the re-settlers on the two state farms who are still in the process
of having their hukous transferred to the newly-created townships\. Although the Bank
acknowledges the associated complex institutional constraints to complete the issuance of the
hukous, greater efforts could have been expected from the government to overcome these barriers
to allow the relocated people to have as smooth and quick a transition as possible\.
5\.2\.4 Finally, together with the Bank's Preparation Team, Gansu government was also
responsible for the major shortcomings in the project design as described in Section 2\.1\. These
shortcomings greatly affected project implementation and reduced the achievement of the PDOs\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
5\.2\.5 The performance of the implementing agency - the Gansu Provincial PMO - is
considered to have been "satisfactory"\. Implementation difficulties were acknowledged and
addressed, even if not always as rapidly as the Bank would have wished\. Despite the continuous
lack of counterpart funds and the limited "construction seasons"13, the PMO was able to carry out
project implementation to a high quality\. Staff at all levels were highly qualified and extremely
dedicated, working long hours under challenging and harsh conditions\. The main institutional
achievement - the establishment of SRBWRMB - can now serve as a demonstration model not
only for China but also internationally\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
5\.2\.6 In view of the "unsatisfactory" rating for government performance, the "satisfactory"
performance of the Implementing Agency and the "moderately satisfactory" achievement of the
PDOs, the overall Borrower performance is rated as "moderately satisfactory\."
6\. Lessons Learned
6\.1 The main lessons from this project relate to: (a) the project's length and complexity; (b)
the project's design and preparation; (c) the stakeholder and social analysis; (d) the importance of
flexibility during implementation; (e) leadership attention; (f) securing counterpart funds; (g)
institutional arrangements; and (h) M&E\.
(a) The Project's Length and Complexity\. The project was extremely ambitious and its
planned implementation period unusually long\. To develop the water source, undertake land
reclamation and development, provide for agricultural and other support, build townships and
villages, resettle tens of thousands of people and establish a new river basin bureau under the
13The construction season in the Hexi Corridor is from May to August, with construction activities in the remaining
part of the year greatly constrained by severe weather conditions\.
19
difficult and harsh, cold desert conditions of the project area was a daunting task\. Proper
synchronization and sequencing between infrastructure construction, water mobilization and land
development on the one hand and social development on the other hand should have taken place
over a longer period of time but instead had to be rushed\. In hindsight, the project should either
have been designed with a longer implementation period as originally requested by the Borrower
(12 years or more) or have been split into two separate operations consisting of: (i) construction
of the dam and main irrigation facilities; and (ii) resettlement, township and village
establishment, construction of water distribution facilities, agricultural support, and forestry
development\. If designed today, the project could have been designed as a phased operation\.
(b) Project Design\. The main design flaws that surfaced during project implementation related
to the lack of application of internationally-recognized best practice in proper water utilization
ratio and integrated river basin management\. There simply was not enough water, based on
international water resource and ecological standards at the time of preparation\. This was a
fundamental flaw that should have been caught during the Bank's intensive internal review
process, but was not\. It is imperative that the Bank uses effectively its quality control and support
mechanisms, and internal formal and informal quality reviews, to ensure that no significant
design flaws are introduced in projects financed by the Bank\.
(c) Stakeholder and Social Analysis\. This project demonstrates the importance of proper
stakeholder and social analyses, particularly in the context of complex projects\. Clearly, a
thorough stakeholder analysis covering both "move-out" and "move-in" areas should have been
carried out as part of project preparation\. It is likely that such an analysis would have revealed
the differing views which the provincial government and the receiving prefecture held with
regard to the project\.
(d) Importance of Flexibility\. Flexibility during implementation encouraged the effective
correction of the project's design problems, raising attention to the various issues of
environmental and economic sustainability and enabling completion of the project with relatively
satisfactory achievement of the PDOs\. It is important for the Bank's supervision teams to be pro-
active and flexible and to respond in a timely manner to unexpected changes and difficulties
during project implementation\.
(e) Leadership Attention\. Close leadership attention, at various levels and in various forms, is
fundamental to successful project implementation and the resolution of issues arising during
implementation in China\. Such attention is also a key prerequisite for putting in place suitable
institutional arrangements\. Examples of effective leadership attention are: requests for regular
progress and problem identification reports from lower levels, and personal review of annual
funding requests\. Without the close attention by senior leaders in Gansu, the project would not
have been successfully completed\.
(f) Securing Counterpart Funds\. Difficulties with timely availability of adequate amounts of
counterpart funding is a chronic issue in Bank-financed rural projects in China\. This project in
particular demonstrates that relying on counterpart funding sources outside the direct control of
the implementing province is a major risk, as the inability of the project to make use of national
poverty reduction funds had a significant impact on project implementation\. To resolve this issue
in future projects, the Bank and the Borrower should agree on a realistic proportion of counterpart
funds based on the payment capacity of the province, specifying sources of the funds and
minimum amounts per project component\. Also, the project's counterpart fund requirements
must be included in the relevant provincial bureaus' annual budgets, thus ensuring regular
funding allocations as part of the province's regular budget provisions\.
(g) Institutional Arrangements\. Integrating project activities with the Borrowers' own
programs and project implementation units within the existing institutional system ensures a
20
higher degree of ownership, enabling better delivery of funding and technical services\. It also
ensures more sustainable post-completion operations\. In the case of this project, it was
considered a poverty reduction project but was implemented by the water resources bureau
instead of the poverty reduction office\. Had it been designed as a water resources project with a
poverty objective, results might have been better\.
(h) Monitoring and Evaluation\. The right concept of defining and measuring efficiency and
performance is extremely important in order to monitor and evaluate a project's poverty impact\.
In particular, in an environment as dynamic as China's, the concept of a "before and after the
project" comparison cannot properly capture the impact that can be attributed to a project and,
hence, can lead to wrong assumptions in implementation and incorrect conclusions at completion\.
It is important to design M&E based on the "with and without" concept and also to integrate
different components of the M&E system to allow for consistent and timely use of monitoring
information\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies
7\.1 The preparation of the implementing agency's internal implementation completion report
and the Bank's ICR took place in close cooperation, allowing for in-depth discussions on all
technical issues\. As a result, the Bank does not have any comments on the Borrower's summary
report as presented in Annex 7\.
7\.2 Gansu Provincial Government reviewed the draft ICR and submitted written comments
(as presented in Annex 7) on the rating of the Borrower's Performance and the Bank's
Performance\. The Bank considered these comments carefully when finalizing the respective
ratings, but concluded that no new evidence was presented justifying a revision in the ratings\.
21
Annex 1\. Project Costs and Financing
1\.1 The total project cost was estimated at US$259\.2 million (RMB2,697\.6 million) at
appraisal and re-estimated at US$229\.8 million (RMB1,907\.7 million) at the time of the MTR\.
The actual cost at project completion was US$211\.46 million (RMB1,710\.7 million)\. The actual
cost at completion was about 82 percent (in US$) and 63 percent (in RMB) of the appraised
estimate\. The difference is being the result of exchange rate movements14\. The cost reduction at
completion was the result of the reduced project scope and scale for the voluntary emigration and
land settlement: the reduction of the total number of resettlers from 200,000 to 75,000; the
reduction of the area of land reclamation and on-farm works for newly developed irrigated land
from 54,610 ha to 27,213 ha; and other related activities (see Section 1\.6 of the main report)\.
1\.2 The total actual project cost was about 92 percent of the total costs revised at the time of
the MTR, decreased by about RMB18\.4 million to RMB196\.9 million\. The decrease was
primarily due to: (a) cost savings in procurement; (b) reduced price and physical contingencies;
(c) lower investments for agricultural machinery (about 9 percent of MTR targets and 2 percent
of SAR targets, due to the further adjustment made incorporating government's new subsidy
policy for agricultural machinery during project implementation which included project areas);
(d) reduced numbers of sheep provided to households (because of the lack of the feed in the
newly resettled areas, and difficulty in finding households willing to be responsible for loan
repayment for sheep raising)\.
14The exchange rates were: at appraisal: US$1 = Y8\.4 and SDR1 = US$1\.4563; at completion
US$1=Y8\.09 and SDR1 = US$1\.3859\.
22
(a) Project Cost by Component (in US$ Million equivalent)
Components Appraisal MTR ICR Percentage Percentage
Estimate Estimate Actual of Appraisal of MTR
A\. Irrigation and Drainage
1\. Changma Reservoir 35\.27 45\.11 42\.56 120\.65 94\.34
2\. Changma Reservoir
Resettlement 1\.84 6\.63 7\.07 384\.20 106\.62
3\. Changma Irrigation Area 84\.33 70\.97 65\.42 77\.57 92\.17
4\. Shuangta Irrigation Area 25\.42 19\.67 14\.06 55\.32 71\.49
5\. Huahai Irrigation Area 9\.31 11\.81 14\.24 152\.98 120\.60
6\. Monitoring & Simulation
System 0\.47 1\.71 3\.73 793\.47 218\.09
Subtotal Irrigation and
Drainage 156\.64 155\.90 147\.08 93\.89 94\.34
B\. Agricultural Support 3\.04 4\.64 3\.98 130\.97 85\.81
C\. Livestock Development 2\.8 2\.41 1\.38 58\.12 57\.39
D\. Environmental Protection
and Management 8\.78 8\.72 9\.83 252\.01 224\.84
E\. Voluntary Resettlement 36\.65 26\.37 26\.07 71\.14 98\.88
F\. Institutional Development 12\.69 22\.19 23\.12 182\.21 104\.20
Total Baseline Costs 220\.18 220\.23 211\.46 96\.04 96\.02
Physical Contingencies 12\.72 4\.41 0\.00 0\.00 0\.00
Price Contingencies 26\.30 5\.20 0\.00 0\.00 0\.00
Total Project Costs 259\.20 229\.84 211\.46 81\.58 92\.01
(b) Financing (in US$ million)
Appraisal MTR Actual ICR Percentage Percentage
Estimate Estimate Estimate of
Appraisal of MTR
Central Government 23\.80 29\.02 14\.51 60\.97 50\.01
Gansu Province 70\.10 41\.95 39\.75 56\.70 94\.74
City/Counties/Entity 7\.60
Self-Raised Funds 7\.70
State Bonds 38\.55 39\.56 102\.60
Subtotal 109\.20 109\.52 93\.81 85\.91 85\.65
Bank/IDA 150\.00 120\.32 117\.65 78\.43 97\.78
Total 259\.20 229\.84 211\.46 81\.58 92\.00
23
Annex 2\. Outputs by Component
2\.1 The project was basically completed within ten years as scheduled\. The main output
targets completed for each component compared to the appraisal and MTR estimate are
summarized below:
2\.2 A\. Changma Dam (US$49\.63 million, 94 and 138 percent of MTR and SAR cost
estimate)\. The dam provides water to all the three irrigation districts\. The dam is 54\.8 m high
with a crest length of 366 m and a zoned earth fill embankment with a central clay core; A side
channel regulated spillway, with three gates (10 x 8 m), was built with discharge capacity of
1,570 m3/second; an 8\.0 m diameter concrete-lined 298 m long flood and silt flushing tunnel on
the right abutment was built ; the water intake concrete-lined tunnel (5\.5 m in diameter x 499 m
long) was built on the left abutment to divert water for irrigation downstream after passing
through a surface powerhouse; the powerhouse was built behind left abutment of the dam with a
total installed capacity of 14\.25 MW (3 Francis turbines; 2 x 6\.5 MW and 1 x 1\.25 MW)\.
2\.3 At project completion, a reservoir was created covering about 12 km2 of area with a total
storage capacity of 194 million m3, out of which 80 million m3 is dead storage\. The reservoir is
jointly operated with the Shuangta Reservoir and the Chijinxia Reservoir downstream, improving
the irrigation guarantee of existing 43\.6 ha and expended 27 ha of irrigation land, and provides 83
million m3 of water for industry purpose\. The power house generates 60 million KWH power\.
2\.4 B\. Irrigation and Drainage (US$98 million, 94 and 82 percent of MTR and SAR cost
estimate)\. This component supports various project activities\. At project completion, an
additional total of 71,454 ha of land (43,600 existing land and 27,854 new developed land) is
benefiting from irrigation\. Irrigation is provided by 2 headworks, 218 km of trunk canals, 94 km
of main canals, 330 km of branch canals and 500 km of lateral canals, and 160 km of drainage
canals\. Provision of irrigation greatly improved crop productivity, land desalination, afforestation,
and soil and water conservation\. The irrigation system also provides environment water to
downstream preserved areas and protected ecosystem of the district\. An information
modernization system was also established modernizing the management of the SWRB\.
2\.5 Agricultural Support and Services (US$3\.98 million, 86 percent of MTR cost estimate
and 131 percent of SAR, mainly for increased investments in improving saline land)\. The actual
outputs achieved under this component included: (i) improvement of 13,467 ha of saline land (100
percent of ICR targets) with the establishment of demonstration sites (620 ha, 100 percent of MTR
expected targets); (ii) supporting extension service centers in Yumen, Guanzhou (Anxi) and two
state farms (100 percent and 150 percent of MTR and SAR targets respectively), six agricultural
extension stations in newly established townships and sub-farms (100 percent of MTR targets and
40 percent of SAR targets due to the reduced number of voluntary settlers and townships); (iii)
procured 5 sets of agricultural machinery for 5 administrative villages (about 9 percent of MTR
targets and 2 percent of SAR targets, due to the adjustments made incorporating government's new
subsidy policy for agricultural machinery); (iv) agricultural research for land improvement, soil
testing and monitoring, etc (about RMB0\.3 million, about 20 percent of MTR and 25 percent of
SAR estimate)\.
2\.6 Through the newly developed irrigated land and soil improvement, the agricultural output
has increased substantially\. In the existing irrigation areas, the annual food grain production was
about 77,465 tons at completion (about 96 and 198 percent of MTR and SAR estimate
respectively), despite decline of the total grain area cultivated (about 40 and 88 percent of the
24
MTR and SAR estimate)\. The decline in grain area was caused by falling grain prices after the
government withdrew the grain subsidy and freed the grain market\. Cropping pattern was
appropriately adjusted to reflect the market demand\. Commodity crop areas at completion
increased from 11,500 ha to about 25,385 ha with total production increased by about 90,874 ton
(about 665 and 83 percent of SAR and MTR estimate); thereby more than off-setting the
reduction in grain production\. In the newly developed irrigation area, cash crop production areas
increased by about 18,446 ha with total production increased by about 224,664 ton (about 207
and 116 percent of SAR and MTR estimate)\.
2\.7 Livestock Development (US$1\.38 million, about 57 and 58 percent of MTR and SAR
estimate, the investment was reduced mainly due to smaller investment in sheep raising by farm
households (43 percent of the total MTR estimate)\. According to MTR adjusted targets nine
veterinary extension stations have been established in Yumen, Guazhou (Anxi), the two state farms,
and six newly established townships and sub-farms (100 percent of MTR targets and 50 percent of
SAR targets due to the reduced number of resettlers and townships)\. Civil works and equipment for
two forage seed production and extension bases in newly reclaimed area have been completed (100
percent of MTR and SAR targets)\. Establishment of 2,531 ha forage land by farm households has
been completed (103 percent of MTR and 23 percent of SAR target due to the reduced number of
resettlers)\. Furthermore, the project financed 1,066 breeding sheep, 1,117 sows, and 94,627
chicken (total RMB4\.66 million, about 100 percent of MTR, and 89 percent of SAR targets)\.
Investment for cattle had been switched to sheep, sow and chicken due to market demand in the
local areas\. Sheep raising only completed RMB0\.25 million (836 sheep, three percent of the MTR
estimate) due to lack of the feed in the newly reclaimed areas and difficulties in finding households
willing to be responsible for loan repayment for the sheep raising\.
2\.8 Forestry Development (US$5\.42 million, about 117 and 174 percent of the MTR and SAR
estimate)\. This component aimed to protect the fragile land from wind erosion and enhance eco-
environments for crop production and human habitation in the newly developed irrigation areas\.
The project increased the vegetative cover from 4\.2 percent to 15\.3 percent (139 percent of SAR
estimate and 102 percent of MTR estimate)\. A total of 7,215\.8 ha of forests were financed under
the component (about 126 percent of the MTR targets)\. This includes planting eco-environment
protective forest belts (2,043\.5 ha, about 536 and 100\.03 percent of SAR and MTR targets
respectively), primary and secondary windbreaks and on-farm trees about 1,487 ha planted along
the canal networks (about 124 percent of MTR targets), farm orchards (268\.1 ha), and nurseries (42
ha), soil and water conservation forestry (3381\.5 ha)\. In addition, 13 forestry service centers and
stations have been established in Yumen, Guazhou (Anxi), State Farm, six newly established
townships and sub-farms, and Changma Upper Reach Natural Forestry Reserve Area (100 percent
of MTR targets)\.
2\.9 Environment Protection (US$4\.41 million, about 108 and 78 percent of the MTR and
SAR cost estimate)\. With the forestry development described in section 2\.8, the ecological
environment in the whole Shule River Basin has been effectively protected by the project\. The
project systematic environmental protection measures had been carried out including the water
environment protection, air pollution control and noise control at the construction sites during the
project implementation; over 200 million m3 water per year of environmental flow provided for
ecological system in the irrigation district and downstream natural conservation areas;
establishment of the sound monitoring and evaluation system/monitoring stations to monitor the
soil and water quality (surface and groundwater); experiments for improvement of saline-alkali
soil (about 14, 247 ha saline wasteland and 13,607 ha wind eroded sandy land had been converted
to farmland in oasis, the desert has changed into green oasis to regulate basin micro-climate and
reduce the water loss and soil erosion, and protect ecological environment); water and soil
25
conservation works for grass grids, plantation of trees, canal dredging, and garbage treatment
(Y8\.86 million financed, about 400 percent of ICR estimate); and the rehabilitation, monitoring
and evaluation of move-out area, especially about Y122\.4 million from government subsidy
(about 904 percent of SAR estimate,) financed for land reversion of forestry in move-out area,
including freezing and prohibition of cultivation of steep slope land (more than 25 degree),
afforestation, land terracing, and planting of shrubs and grass\.
2\.10 Voluntary Resettlement (US$26\.07 million, about 99 and 71 percent of the MTR and
SAR estimate)\. The output targets of this component were revised significantly during the MTR
process\. Thee number of resettlers were reduced from 200,000 to 75,000, and all other project
output targets were reduced accordingly (see section 1\.6)\. At project completion, 75,387
resettlers from 11 of the poorest counties in Gansu had voluntarily emigrated and settled on the
new developed irrigated land under the assistance and subsidies as project planned (about 100\.5
percent of MTR target), all new infrastructures and facilities for public services in the new sites
had been constructed and established, including 6 new townships (100 percent of MTR targets),
46 administration villages (about 81 percent of MTR target), 50 primary schools (about 88
percent of MTR target), 6 middle schools (about 100 percent of MTR target), 6 hospitals (about
100 percent of MTR target), 46 clinics (about 81 percent of MTR target), and total RMB67\.75
million invested in road, water and power supply (about 110\.8 percent of MTR target)\. In
addition, all other components supported the newly developed irrigation areas including irrigation
and drainage facilities, land and soil improvement, agricultural production technologies and
services, quality seed production, rural roads and electricity, and WUA development\.
2\.11 Institutional Strengthening and Development (US$22\.6 million, about 101\.6 percent of
MTR estimate and 177\.7 percent of SAR estimate)\. Various activities including water
management system reform, research, training, study tours, technical assistance, project M&E,
and provision of office facilities provided under the project were fully completed, achieving
substantial results in strengthening the management and technical capabilities of PMOs at all
levels\.
(a) Water Resources Management System Reform\. The water resources management system
was reformed and strengthened by establishment of the Shule River Water Resources
Management Bureau of Gansu Province, WUAs (87 WUA established in all existing villages in
project areas a sub-component added during the MTR), and an Automatic Information
Monitoring and Simulation Management System for monitoring\. The management system reform
ensures integrated water resources (including surface and groundwater) management in Shule
River Basin, joint operation of the three reservoirs, environmental protection for irrigation district
and downstream areas, and sustainable development of Shule River Basin; increases farmers'
participatory management and secures water fee collection; and information management of the
river basin by provision of effective and scientific means of tracking surface and groundwater
supply and quality, and decision making support in improvement of irrigation and water resources
management measures in the Basin\.
(b) Research, Training, Study Tours, Technical Assistance, and M&E: A number of applied
research and studies were satisfactorily carried out by international, national and provincial
research institutions and experts (with consultancy assistance from Canada Jiahua hydro-power
engineering group, China Academy of Water Resources and Hydro-power Science, Xian Industry
and Science University, Gansu provincial Academy of Water Resources and Science, and Yumen
Agricultural Extension Center, etc\.) at a total cost of about RMB1\.86 million\. The applied
research and studies covered various aspects including dam safety, saline lands improvement,
water saving irrigation, impact of soil salinity in Shuangta Reservoir, crop protection and
cultivation, livestock breed variety, forestry development and management, and river basin water
26
resources and irrigation management, etc\. The research and study results are relevant and have
been disseminated in the project area during project implementation\.
(c) Training completed included PMOs' staff training at a total investment of about RMB4\.28
million (122 percent of MTR estimate and 104 percent of SAR estimate), covering topics in: (i)
procurement, disbursement, and M&E; (ii) operation, maintenance and management of large
irrigation areas and hydropower stations; (iii) water resources monitoring, simulation and
dispatch in Shule River Basin; (iv) management of large-scale human settlements; (v)
optimization of agricultural production in arid regions, covering crops, livestock and forestry; and
(vi) drainage and water and soil salinity control\. Farm households/settlers' training was carried
out about 72,396 person-times (about 60 percent of SAR target due to the reduced number of
settlers)\. This training covered areas such as: irrigation technology, arable farming, fruit growing,
and livestock production\. The overseas and local study tours involved a total of 303 person-times
(about 103 percent of MTR and SAR targets)\. Eleven overseas study tours on various technical
training topics took place to USA, Australia, European and Canada, involving a total of 72
person-times (about 116\.13 percent of MTR targets)\.
(d) Monitoring was carried out by independent institutes\. The impact of the voluntary
resettlement was monitored and annually evaluated by Lanzhou University\. A total of 10
monitoring reports from 1997-2006 were prepared by the Shule River Project Implementation
Office covering all project areas\. Surface and ground water and soil quality were monitored and
evaluated by several Water Environment Center of Gansu Hydrology and Water Resources
Investigation Bureau and other relevant universities and institutes\. Annual Environmental
Management Reports and several other environmental reports concerning water and soil quality
and cultural relic protection were prepared and send to the Bank and government authorities\.
2\.12 Key outputs by components are presented in the Table 2A\.1 below\. The numbers are
based on data provided by the Borrower:
Table 2A\.1: Major project outputs
Item Unit SAR MTR ICR ICR/MTR ICR/SAR
(%) (%)
1\. Irrigation & Drainage
Improvement Area `000 ha 43\.60 43\.60 43\.60 100\.00 100\.00
New Area `000 ha 54\.61 27\.22 27\.85 102\.33 51\.01
Headwork No\. 2\.00 2\.00 2\.00 100\.00 100\.00
General Main Canal km 253\.64 217\.71 217\.71 100\.00 85\.83
Main Canal km 152\.70 89\.95 94\.12 104\.64 61\.64
Branch Canal km 952\.60 340\.94 330\.37 96\.90 34\.68
Main Drainage km 89\.10 60\.93 60\.93 100\.00 68\.38
Branch Drainage km 412\.30 116\.04 98\.59 84\.96 23\.91
Buildings m2 35,300\. 38,471 37,383 97\.17 105\.90
Road km 368 274\.80 240\.84 87\.64 65\.45
Transmission Line km 705\.30 660\.40 317\.76 48\.12 45\.05
Hydropower Station No\. 3\.00 2\.00 5\.00 250\.00 166\.67
IMSD System No\. 1\.00 1\.00 1\.00 100\.00 100\.00
Involuntary resettlement person 566\.00 580\.00 580\.00 100\.00 102\.47
2\. Agricultural Support
Yumen Extension Center No\. 1\.00 1\.00 1\.00 100\.00 100\.00
Anxi Extension Center No\. 1\.00 1\.00 1\.00 100\.00 100\.00
State Farm Ext\.Center No\. NA 1\.00 1\.00 100\.00
Township Ext\. Station No\. 16\.00 6\.00 6\.00 100\.00 37\.50
Township Agr\.Mach\. Station set 304\.00 57\.00 5\.00 8\.77 1\.64
Research RMB mill\. 1\.20 1\.51 0\.30 19\.87 25\.00
Land desalinization ha NA 13,467 13,467 100\.00
27
Item Unit SAR MTR ICR ICR/MTR ICR/SAR
(%) (%)
3\. Livestock Development
Anxi Veterinary Station No\. 1\.00 1\.00 1\.00 100\.00 100\.00
Yumen Veterinary Station No\. 1\.00 1\.00 1\.00 100\.00 100\.00
State Farm Tech\. Ext\.Center No\. NA 1\.00 1\.00 100\.00
Township Veterinary Station No\. 16\.00 6\.00 6\.00 100\.00 37\.50
Forage Seed Prod\. Base No\. 2\.00 2\.00 2\.00 100\.00 100\.00
Forage Seed ha 11,060 2,441 2,530 103\.64 22\.88
Livestock Breeding RMB mill\. 5\.21 4\.66 4\.66 100\.00 89\.44
Sheep Raising No\. NA 30,000 836 2\.79
4\. Forestry Development
Yumen Forest Ext\. Center No\. 1\.00 1\.00 1\.00 100\.00 100\.00
Anxi Forest Ext\. Center No\. 1\.00 1\.00 1\.00 100\.00 100\.00
State Farm Forestry Extension
Centre No\. NA 1\.00 1\.00 100\.00
Township Forestry Station No\. 11\.00 6\.00 6\.00 100\.00 54\.55
Natural Forestry Station No\. 5\.00 3\.00 3\.00 100\.00 60\.00
Changma Upper Reach Natural
Forestry Station No\. NA 1\.00 1\.00 100\.00
Farm Fields Forest Belt (new
irrigation area) ha 3,053\.33 1,200 1,075 89\.66 35\.24
Household Orchard ha 26,66\.67 1,000 268 26\.81 10\.05
Environment Forest ha 380\.01 2043 2,043 100\.00 537\.74
Nursery ha 73\.33 53\.33 42\.00 78\.75 57\.28
5\. Environment Protection
Environmental Monitoring RMB mill\. 34\.19 27\.92 20\.03 71\.74 58\.58
Rehabilitation of Emigrated Source
Areas* RMB mill\. 13\.50 0\.90 122\.04 13560 904
Cultural Heritage Protection RMB mill\. NA 2\.95 2\.37 80\.34
Water-soil Conservation RMB mill\. NA 2\.23 9\.86 442\.15
Wind & Sand Prevention Ha NA NA 449\.00
Wind & Sand Prevention RMB mill\. NA NA 3\.40
6\. Voluntary Resettlement
People Settled person 200,000 75,000 75,378 100\.50 37\.69
Built Middle School No\. 16\.00 6\.00 6\.00 100\.00 37\.50
Primary School No\. 160\.00 57\.00 50\.00 87\.72 31\.25
Hospital No\. 16\.00 6\.00 6\.00 100\.00 37\.50
Clinic No\. 160\.00 57\.00 46\.00 80\.70 28\.75
Township Office and Other
Facilities No\. 16\.00 6\.00 6\.00 100\.00 37\.50
Village Office and Other Facilities No\. 160\.00 57\.00 46\.00 80\.70 28\.75
Infrastructure for Road, Water and
Power Supply RMB mill\. 3\.80 61\.15 67\.75 110\.79 1782\.89
7\. Institutional Development
Training of Migrant Farmers RMB mill\. 924\.30 355\.00 229\.00 64\.51 24\.78
Project Mgm't staff training RMB mill\. 4\.12 3\.52 4\.28 121\.59 103\.88
Overseas Study Tours person-times 62\.00 62\.00 72\.00 116\.13 116\.13
Local Study Tours person-times 233\.00 233\.00 231\.00 99\.14 99\.14
WUA Development No\. 85\.00 85\.00 100\.00
M & E/Management RMB mill\. 80\.00 151\.76 171\.74 113\.17 214\.68
* RMB1\.22 million financed by government subsidy of land reversion for forestry in move-out counties from 2003-
2006\.
28
Annex 3\. Economic and Financial Analysis
3\.1 Methodology and Assumptions\. The economic rate of return (ERR) and Net Present
Value (NPV) at completion have been recalculated using data from the project M&E system\.
Methodology and assumptions used are very similar to those adopted at appraisal and Mid-Term
Review (MTR) to maximize comparability\. The data on output/input prices, wages, water and
electricity prices, yields and other data were updated from appraisal and MTR\. The ERR and
NPV were calculated across four out of seven project components and the overall project ERR
was obtained as the investment-weighted average of the four ERRs\.
3\.2 Estimates of the NPV and ERR are based on the data collected from three irrigation
districts (ID) of the project: Changma ID, Shuangta ID and Huahai ID\. Actual investment costs
reported by the project were used to account for investments\. In calculating the ERR for the
component, investments in overall institution building and dam construction were incorporated on
a pro rata basis as a cost\. At the ICR, the Irrigation and Drainage Component accounted for 86\.3
percent of total project investments, Forestry Development Component for 4\.8 percent, Livestock
Development Component for 1\.8 percent and Hydropower Stations Component for 7\.1 percent\.
3\.3 Net Present Value and Economic Rate of Return\. The project NPV at completion was
estimated at RMB21\.5 million\. With the ERR at 12\.2 percent, the project's rate of return just
equals the social rate of return (Table A3\.1)\. For the project's Irrigation and Drainage
Component (the project's largest component), the NPV and the ERR are the lowest in Changma
ID where the new reclaimed area is the largest on which it takes longer to reach the production
potential prevailing on the existing irrigated areas, and where the natural conditions to produce
cotton the most profitable cash-generating crop in Gansu Hexi Corridor are least favorable\.
The project NPV estimate at completion is much lower than the one estimated at appraisal but
larger than estimated at MTR\. This is because of the changes in the project's scale during the
MTR and economic reasons, as explained below\.
3\.4 At appraisal, all project components were expected to have a robust rate of return,
allowing for high efficiency at completion\. During the MTR, project components were revised
and scaled down, and the investments costs were adjusted to the revised scope of the project
components\. In addition to revising the number of resettlers, existing and new reclaimed irrigated
areas, structure of cropping areas, yields and prices, the MTR substantially changed the Livestock
Development Component\. From the ten original subcomponents of the Livestock Development
Component, only three subcomponents remained after the MTR\. Those included Forage Seed
Production Base, Breeding Development and Livestock Production Base\. At appraisal, the
livestock subcomponents sought to establish large chicken and pig farms, but at MTR they were
dropped due to changes in market conditions\.
3\.5 The ERR at completion includes the returns from five hydropower stations, the
construction of which were financed by the project but the details for ERR analysis were
unknown at appraisal\.
29
Table A3\.1: NPV (million RMB) and ERR (percent) of project components at project
appraisal, mid-term review and completion*
Project Components Appraisal MTR ICR
NPV ERR NPV ERR NPV ERR
1\. Irrigation and Drainage
Changma ID 227\.5 15\.8 -127\.6 8\.5 -73\.8 10\.1
Shuangta ID 319\.7 23\.4 -36\.3 9\.8 64\.6 14\.0
Huahai ID 72\.5 18\.0 -32\.6 7\.2 0\.1 12\.0
Subtotal Irrigation and Drainage 619\.7 18\.2 -196\.5 8\.7 -9\.2 11\.9
2\. Forestry Development
Protection Forestry 3\.0 14\.7 13\.0 4\.6 -15\.9 8\.1
Fuel Wood Forestry 0\.5 17\.0
Agro-Forestry** 91\.4 22\.8 7\.9 16\.4 3\.2 21\.4
Nursery 1\.1 20\.5 -1\.5 5\.4 1\.7 23\.9
Fast Growing Forestry -1\.5 5\.4 5\.4 25\.4
Subtotal Forestry Development 96\.0 21\.4 -3\.8 11\.4 -5\.6 10\.9
3\. Livestock Development
Pasture Development 42\.0 29\.5
Forage Seed Production Base 0\.8 21\.2 4\.6 18\.1 5\.0 19\.9
Parent Layer Egg Chicks Farm 2\.2 31\.5
Parent Layer Meat Chicks Farm 0\.3 15\.0
Breeding Pig (Lean Pork) Farm 0\.0 12\.5
Breeding Pig (Sow) Farm 1\.2 22\.4
Breeding Development 40\.4 39\.7 8\.4 14\.5
Livestock Production Base 10\.8 37\.0 15\.3 23\.2 -0\.4 8\.7
Subtotal Livestock Development 58\.0 29\.1 58\.4 27\.9 17\.5 21\.0
4\. Hydropower Stations 1\.1 12\.2 18\.8 14\.9
Total Project 774\.1 17\.1 -108\.1 10\.6 21\.5 12\.2
* Social discount rate is 12 percent\. ** Household fruit trees and orchards\.
3\.6 In addition to differences in prices and yields' assumptions at different stages and the
delayed/reduced resettlement, changes in irrigation areas and in cropping patterns were the major
determinants of the Irrigation and Drainage Component's ERR and consequently the total
project's ERRs given the large share of this component in total project investments\. The new
irrigation area at MTR was adjusted downwards compared with appraisal but the actual
reclamation area at completion exceeded the MTR target (Table A3\.2)\. Moreover, tremendous
changes were observed in the cropping pattern which was the result of shifts from grain
production for subsistence to cash-generating crops such as cotton, spices, Chinese herbs,
vegetables, hops and safflower\. This strong supply response to market incentives allowed for
increased benefits that, to some extent, compensated for the losses from the delayed/reduced
resettlement and the smaller irrigation area\.
30
Table A3\.2: Key assumptions at appraisal, MTR and completion influencing the project's
efficiency\.
SAR MTR ICR
Existing irrigation area, ha 33,590 33,707 33,707
Changma ID 19,910 21,620 21,621
Shuangta ID 10,940 9,200 9,202
Huahai ID 2,740 2,887 2,884
New irrigation area, ha 42,060 20,080 23,232
Changma ID 24,440 11,200 7,704
Shuangta ID 12,250 5,260 8,664
Huahai ID 5,370 3,620 6,864
Structure of sown area: ratio of grain to cash-generating crops
Changma ID 79/21 40/60 37/63
Shuangta ID 60/40 20/80 9/91
Huahai ID 70/30 30/70 15/85
Base acreage used for forage seed production, `000 ha 11,060 2,441 2,530
Number of elite livestock breeds:
Cattle 190 0
Pigs 1,117 0
Chicken, `000 315 18\.5
Sheep 677 1,066
Number of sheep raised by households 30,000 836
3\.7 The lower NPV (ERR) of the Livestock Development Component at completion
compared to the one at MTR is the result of the slow progress in construction activities which
caused the delayed resettlement and failure in predicting the demand of the resettlers for livestock
raising\. The move-in area is part of the Gobi Desert with very limited natural pasture\. At the
outset, the resettled households were preoccupied with land improvements and crop production
activities\. With no natural pasture and little forage available, investments into animal husbandry
were reduced, resulting in the low ERR\.
3\.8 The value of separate calculations of the financial rate of return was considered
negligible, as markets in China are now well integrated, prices have limited distortions and
farmers are exempted from taxes\.
3\.9 Sensitivity Analysis\. Given that the Irrigation and Drainage Component makes up 86
percent of the total investment, the project's overall ERR critically depends on the ERR of this
component\. The ERR of this component was found to fluctuate between 7\.6-12\.0 percent in
Changma ID, between 11\.7-15\.9 percent in Shuangta ID and between 7\.9-15\.7 percent in Huahai
ID, given a 10 percent decrease/increase of the gross revenue from agricultural activities\.
3\.10 The ERR is particular sensitive to the changes in price incentives for cotton production\.
At project completion, cash-income crops, mainly cotton, but also spices, Chinese herbs and
others, in Changma ID accounted for 63 percent of total cropping area, 91 percent in Shuangta ID
and 85 percent in Huahai ID\. A 20 percent decrease in cotton prices at farm-gate would result in
a decrease of the ERR by 2\.2 percentage points, with the highest decrease by 4 percentage points
in Huahai ID and the lowest by 1 percentage point in Changma ID\. A 30 percent fall in cotton
prices would reduce the Irrigation and Drainage Component's ERR from 11\.9 percent to 8\.6
percent\. For Huahai ID, the ERR would decrease from 12\.2 percent to 5\.9 percent, while the
declines in the remaining irrigation districts are smaller\.
31
Annex 4\. Poverty Impacts
4\.1 Significant improvements in the resettlers' welfare and poverty were recorded\. At
appraisal, the average annual per capita income of the future resettlers in situ was estimated to be
about RMB248\. At completion, the average per capita income estimated for the largest
resettlement townships increased to RMB1,810 (see Table A of the Data Sheet)\. Since the
resettlers were reallocated to the new reclaimed areas, the increase in per capita income
(RMB1,562 per capita Table A4\.1) can be fully attributed to the project\. The results remain
significantly positive even after the changes in per capita income in "move-in" areas is corrected
for the changes in income in "move-out" areas, i\.e\. to allow for the changes which would have
happened in the absence of the project (a "difference in difference" evaluation)\. Since the
average per capita income in the "move-out" areas ("without project") increased by RMB968 (to
RMB1,216), the per capita income increase, fully attributable to the project, is RMB59415\.
Table A4\.1: Total changes in net per capita income in "move-in" and "move-out" project
areas in 2006 compared to the base situation in 1996
Move-out RMB Move-in RMB Difference
Jishishan 782 Xiangyang (Shuangta ID) 1,353 571
Dongxiang 749 Zhahua (Changma ID) 1,005 256
Ming Xian 1,372 Bijiatan (Huahai ID) 2,327 955
(simple)
Average 968 1,562 594
Note: (i) the average per capita income was approximately RMB248 at appraisal; (ii) the resettlement to
"move-in" areas originated from "move-out" counties as shown in the table; (iii) for the move-in areas, the
income data is derived from the project M&E, based on surveys of 180 households\. In 2006, the total
number of surveyed households in all "move-in" townships was 576; (iv) for the "move-out" areas, the
income used is the township's average as reported by the local statistical bureaus in 2006\.
4\.2 The smallest income increase was reported in Zhahua township (Changma ID) and the
largest in Bijiatan township (Huahai ID)\. The differences in income growth were determined by
the parallel income developments in the comparable townships ("move-out" versus "move-in"),
the time of relocation and the quality of land the households were relocated to\. Relocation to
Changma ID was the largest and, thus delayed the most\. In addition, Changma ID had the largest
areas of newly-reclaimed land that required more time and investments (i\.e\., soil leaching and
other desalinization measures) to reach the productivity of existing irrigated areas, and it is less
suitable to cotton production, the major cash crop in the Hexi Corridor\.
4\.3 Although the project's M&E system did not collect poverty headcount data, the income
distribution across surveyed households sheds some light on the poverty situation\. It suggests
with high likelihood that the majority of the project's "move-in" households succeeded in
escaping absolute poverty by 2006\. At the outset of the project, most of the resettlers were
"absolute poor\." Table A4\.2 shows that in 1999 the net per capita income of the most `fresh'
resettlers was below the absolute poverty line of RMB30016\. In 2003, about 70 percent of the
15This is a conservative estimate\. The project's contribution was probably higher\. The people in "move-
out" areas obtained "Grain for Green" subsidy at approximately RMB200 per mu for conversion of
cultivated slope land to grasses and forests\. Excluding this subsidy from per capita income calculations in
the "move-out" areas increases the project's contribution to resettlers' income growth to about RMB800\.
16The "absolute poverty line" includes food poverty, while the "relative-poor poverty line" combines both
food and non-food poverty lines as determined by the provincial statistical bureau\.
32
resettlers were still below both the absolute and relatively-poor poverty lines of RMB630 and
RMB879 per capita, respectively\. In 2006, however, none of the surveyed households lived in
absolute poverty (the absolute poverty line at that time having been raised to RMB650), and only
38 percent still had a per capita income below the "relatively-poor" poverty line of RMB956\.
While the income distribution within the townships is not known and the poverty headcount may
exceed the level ones presented in Table A4\.2, the large poverty reduction impacts of the project
on the resettled households is clear\.
Table A4\.2: Distribution of per capita income across surveyed households in the move-in
areas, 1999-2006\.
1999 2003 2006
Average No\. % of Average No\. % of Average No\. % of
income of HH income of HH income of HH
RMB HH RMB HH RMB HH
Changma ID 200 153 46\.4 464 234 69\.9 921 330 23\.3
Zhahau 200 153 46\.4 1,086 57 17\.0 1,253 48 9\.3
Qiduntang 335 60 17\.9 871 78 15\.1
Qidaogou 221 57 17\.0 1,023 84 16\.3
Shuangta 132 60 17\.9 759 120 23\.3
Shuangta ID 290 134 40\.6 1,110 45 13\.4 1,720 84 16\.3
Xiangyang 315 101 30\.6 896 27 8\.0 1,601 30 5\.8
Lianghu 200 33 10\.0 1,636 18 5\.4 1,989 54 10\.5
Huahai ID 255 153 13\.0 475 57 17\.0 2,575 102 19\.8
Total project 244 330 552 336 1,378 516
4\.4 While significant improvements in poverty reduction were achieved by comparison with
Chinese-poverty thresholds, the majority of the resettlers, except some of those living in Huahai
ID, continue to live below the Bank's poverty line of US$1 per day (equaling to about RMB2,800
per capita)\. This raises the question of whether the Bank investments were justified and if there
were better alternatives to the investment (e\.g\., investing in the "move-out" areas)\. For the latter,
investment opportunities for economic and human development in the "move-out" mountainous
areas were and continue to be extremely limited\. For the former, the investments can be seen as
justified if one takes into account the positive future outlook for poverty reduction in the move-in
areas\. Since the relocation was delayed, most of the resettlers did not achieve their full income
potential from agriculture and off-farm activities at the time of the ICR (see paragraph 3\.5\.5 in the
main text), but their outlook looks very promising as land productivity has great potential to
increase, the reliable irrigation promotes diversification, and as the farmers increasingly master
new farm techniques (none of which can be said about the "move-out" areas)\. There, as
population continues to grow, scarce natural resources continue to be over used, causing
continued high reliance on subsidies such as "Grain for Green"\.
4\.5 Resettlement to Hexi corridor has significantly increased the income-generation
opportunities both on- and off-farm\. The project provided the irrigation infrastructure and water
that enabled farmers to diversify from grains to more profitable cash crops\. In 2006, the average
ratio of planted area for grains and cash crops was 15/85 compared to the expected 70/30 at
appraisal17\. Furthermore, the resettled farmers have now received training in modern farm
technologies and have had access to effective extension services\. As a result, the income of
17According to M&E information, in 2006 the net income (gross income from sales of main and by-
products minus variable costs) from cotton, for example, was reported to be 63 percent higher than that of
wheat , the main grain crop in the Gansu Hexi Corridor\.
33
moved-in members of households from agriculture was six times as high as the income of any
remaining members of the household in the "move-out" villages (Table A4\.3)\. Similarly, by
moving to the new areas some members of the resettled households increased their opportunities
to earn off-farm\.
Table A4\.3: Sources of total net income in "move-in" and "move-out" project areas in 2006
(RMB per household)
Move-in Move-out
households households
Total income 6,432 1,226
Income from agricultural activities 4,888 822
Income from crop production 4,434 581
Income from livestock production 454 241
Off-farm income 1,544 404
Number of surveyed households 1,612 282
4\.6 Furthermore, the project, by investing in schools, kindergartens, clinics and hospitals,
ensured the delivery of important public services to the resettlers\. In the project's move-in areas,
the school participation rate was reported at 99\.2 percent in 2006, compared to the average 96\.8
percent in the move-out counties18\. Now the resettlers' children overnight at home with their
families (instead of boarding) and spend less time to reach school; this is a significant benefit
compared to many children in the "move-out" mountainous areas, which is not reflected in the
school participation rate\. The number of doctors per 1,000 people in the "move-in" areas
increased from 0\.65 in 2003 to 0\.94 in 2006\. The delivery and quality of better public services,
therefore, has greatly improved the welfare of the resettlers and the future of their children, far
exceeding the current income gains\.
18The data for the "move-out" counties is based on information from Dongxiang, Jishishan and Minxian
counties\.
34
Annex 5\. Overall Outcome's Ratings against Original PDOs and MTR targets
Against Original Against
PDOs Revised MTR Overall
Targets
Changes in per capita income (%) 118\.3 101\.1
1\. Rating Highly satisfactory Satisfactory
2\. Rating value 6 5
3\. Weight (% disbursed before/after PDO change) 64 36 100
4\. Weighted value (2x3) 3\.8 1\.8 5\.6
5\. Final rating (rounded) Satisfactory
Per capita grain production (%) 19 59\.7 74\.3
1\. Rating Satisfactory Satisfactory
2\. Rating value 5 5
3\. Weight (% disbursed before/after PDO change) 64 36 100
4\. Weighted value (2x3) 3\.2 1\.8 5\.0
5\. Final rating (rounded) Satisfactory
Change in gross agricultural output (%) 98\.4 132\.7
1\. Rating Satisfactory20 Highly Satisfactory
2\. Rating value 5 6
3\. Weight (% disbursed before/after PDO change) 64 36 100
4\. Weighted value (2*3) 3\.2 2\.2 5\.4
5\. Final rating (rounded) Satisfactory
Distribution system efficiency (%) 100\.0 100\.0
1\. Rating Satisfactory Satisfactory
2\. Rating value 5 5
3\. Weight (% disbursed before/after PDO change) 64 36 100
4\. Weighted value (2*3) 3\.2 1\.8 5\.0
5\. Final rating (rounded) Satisfactory
Cost recovery ratio (%) 85\.1 110\.8
Moderately Highly
1\. Rating unsatisfactory satisfactory
2\. Rating value 3 6
3\. Weight (% disbursed before/after PDO change) 64 36 100
4\. Weighted value (2*3) 1\.9 2\.2 4\.1
5\. Final rating (rounded) Moderately Satisfactory
Overall vegetation cover (%) 140\.6 103\.1
1\. Rating Highly satisfactory Satisfactory
2\. Rating value 6 5
3\. Weight (% disbursed before/after PDO change) 64 36 100
4\. Weighted value (2*3) 3\.8 1\.8 5\.6
5\. Final rating (rounded) Satisfactory
19The reduction in per capita grain production does not translate into an unsatisfactory outcome rather it
is a positive sign that production shifted from food grains to higher-value crops as supported by Indicator 3\.
20Despite the small under-achievement, the outcome against original PDO is rated as "satisfactory"
because the actual result is based on a cultivated area half that established as at appraisal target\.
35
Annex 6\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit
Lending
Lang S\. Tay Sr\. Irrigation Engineer, Task Manager
Walter Ochs Drainage Adviser
Youlan Zou Resettlement Specialist
Robert Crooks Environment
Qun Li Financial Analyst
Xiaohong Yang Disbursement Officer
Weizhen Zhang Drainage (Consultant)
Yizhar Raz Agronomist (Consultant)
Bruce Mitchelhill Livestock (Consultant)
Jens Thomsen Forestry Consultant
Naoya Fujimoto Irrigation Engineer
Supervision
Lang S\. Tay Sr\. Irrigation Engineer, Task Manager (retired)
Richard Reidinger Lead Water Resources Specialist, Task Manager
(retired) EASRE
Sari Söderström Lead Operations Officer, Task Manager EASRE
Daniel R\. Gibson Sr\. Social Scientist EASSO
Qun Li Agricultural Officer EASRE
Wanlong Lin Agricultural Economist EASRE
Zong-Cheng Lin Senior Social Development Specialist EASSO
Ximing Zhang Water Resources Specialist EASRE
Weiguo Zhou Operations Officer EASRE
Xiaokai Li Water Resource Specialist/Dam Engineer EASRE
Xie Qingtao Environmental Specialist EASRE
Zhentu Liu Procurement Specialist EACCF
George Radosevich Water Law/River Basin Specialist Consultant
Liu Houbin Irrigation Engineer/WUA Specialists Consultant
Liu Hongyun Dam Engineer/River Basin Specialist Consultant
Peter Ting Agriculturalist Consultant
Eric Hansen Dam Engineer/Procurement Specialist Consultant
Gary Wilson Agricultural Engineer Consultant
ICR
Sari Söderström Lead Operations Officer, Task Manager EASRE
Qun Li Agricultural Officer EASRE
Zong-Cheng Lin Senior Social Development Specialist EASSO
Ximing Zhang Water Resources Specialist EASRE
Xiuzhen Zhang Project Assistant EACCF
Sergiy Zorya Sector Economist EASRE
36
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands
No\. of staff weeks (including travel and
consultant costs)
Lending
FY93 0\.48
FY94 6\.02
FY95 158\.78
FY96 120\.54
Total: 285\.82
Supervision/ICR
FY97 70\.47
FY98 46\.16
FY99 36\.09
FY00 37 92\.58
FY01 25 90\.77
FY02 142\.33
FY03 22 120\.69
FY04 18 121\.32
FY05 9 57\.34
FY06 10 31\.04
FY07 12 33\.84
Total: 159 842\.63
37
Annex 7\. Summary of Borrower's ICR and/or Comments on ICR
Borrower's Comments on ICR
A Letter of Gansu Water Resources Department Concerning the Revision of the Implementation
& Completion Report on the Shule River Project of the World Bank (WB)\. May 30, 2007
Representative Office of the World Bank in Beijing,
The report you submitted on April 30, 2007 was forwarded to Gansu Water Resources
Department, Gansu Development and Reform Commission and Gansu Finance Department by
the Administration of Agriculture Irrigation and Migrant Relocation of Gansu's Hexi Corridor
(Shule River Project Construction Management Bureau)\. The report is basically comprehensive
and objective\. After a further study of the report, we concluded that the Gansu Provincial
Government played an important role in project preparation, its mid-term adjustment, completing
the management structure, mobilizing supporting funds and properly settling various kinds of
complicated problems during the relocation of the local people\. The government adopted a series
of effective measures for the smooth operation of the project and achieved remarkable results\. At
the same time, WB also did a lot of work in the preparation and implementation of the project\.
Scientific evaluation was made and many obstacles were identified and tackled during the
construction thanks to the effort of WB, who made indispensable contributions to the due
completion of the project and its functioning\. It is because of the effective work of and the great
importance attached by Gansu Provincial Government, together with the active work of WB, that
the construction goals of the Shule River Project was fully realized\.
Therefore, WB should change its comment on the performance of the Gansu Provincial
Government from "Unsatisfactory" to "Satisfactory", and its comment on WB performance
should be revised as "Satisfactory" rather than "Moderately Satisfactory"\.
With our best regards,
Attachment: Statement of the Reasons for Revising the Comments on the Performance of the
Gansu Provincial Government and the World Bank\.
38
Attachment: Statement of the Reasons for Revising the Comments on the
Performance of the Gansu Provincial Government and the World Bank
The Implementation & Completion Report on the Shule River Project of WB pertinently
reviewed and assessed the achievements made during the implementation of the Hexi Corridor
project for which Gansu province got loans from WB\. However, the report graded the
performance of the government as "Unsatisfactory" and that of WB "Moderately Unsatisfactory"\.
As far as we are concerned, this does not conform with the real situation of the province and the
project implementation, and should be revised accordingly\.
I\. Changing the comment on the performance of the Gansu Provincial Government
from "Unsatisfactory" into "Satisfactory"
The Gansu Provincial Government has always attached great importance to the WB funded Hexi
Corridor project\. During the more than 10 years from the initial planning to the accomplishment,
the government organized for many times coordination meetings to solve major problems arising
from the project\. It also vigorously provided for the organization construction, project
management, fund mobilization, etc, thus greatly facilitated the project implementation and
realization\.
(I) Great importance attached by the government to the establishment and completion of the
organizational and management institution ensuring smooth implementation of the project\.
The WB funded Hexi Corridor project was signed in 1996, and was listed as a key agriculture
development project by the Gansu Provincial Government for the "Ninth Five-Year Plan" and the
"2010 Prospects" of the province\. The project was designated as a state-level key development
project by relevant department\. To ensure smooth implementation of the project, the provincial
government established an Execution Committee for the project\. The committee was chaired by
the provincial governor\. The Shule River Construction Management Administration was also
established, and corresponding project offices were set up in Yumen City, Anxi County and the
Provincial Agricultural Cooperation for the project construction and daily management\. The
establishment of the institutions provided for the effective management and operation of the
project\. Besides, during the implementation of the project, top provincial officials listened to
reports for many times, organized coordinating conferences, and carried out in-depth
investigations to make sure that the project was proceeding according to the plan\.
(II) Successfully mobilizing the supporting fund and solving the problem of migrant relocation\.
At the time when the project was signed, the total investment was calculated at 2\.697 billion
RMB, out of which around 1\.26 billion RMB would come from the loans of WB, with 1\.437
billion RMB of domestic supporting fund\. After the 2004 mid-term adjustment, the total
investment was reduced to 1\.97 billion RMB, and the WB loan and domestic fund stood at 996
million RMB and 974 million RMB respectively\. As of end of May 2007, a total of 968\. 54
million RMB of supporting funds had been mobilized, accounting for 99\.44% of the expected
amount\. In the beginning of the project, because of national policy changes, the originally
planned poverty-alleviation supporting fund could not be used for the construction of key projects,
resulting in delays of supporting funds compared to the project plan in the first years\. But during
the implementation, the Gansu Provincial Government overcame the difficulty of a tight budget
and arduous poverty-alleviation task, spared no efforts in mobilizing domestic supporting fund,
and finally received 320 million RMB of national debt funds, offsetting the deficit in the domestic
supporting fund\. The domestic supporting fund was further supplemented in later period of the
project implementation and some postponed subsidiary projects were finished on time\.
39
Meanwhile, the provincial government also managed to find money for the community level
investments and operation of 75,000 migrants, through earmarked transfers, facilitating the
realization of the poverty-alleviation goals according to the timetable\. In addition, to ensure the
smooth completion of the follow-up programs, the Provincial Finance Department added some
supporting funds for the project to the 2007 budget, quite satisfactorily solving the funding
problem of the project\.
Migration is a major development goal of the project\. During the construction of the project, the
provincial government consulted for many times with the local governments and competent
departments for the relocation of migrants\. Consensus was reached, local governments were able
to bear the overall picture of the province in mind and actively participated in the construction
and development of the project, and successfully integrated the migration work into the local
administration\. Also, policy and fund support was given to the community construction in the
areas of culture, education and health for the migrants because of the local governments\. At
present, the hand-over of 3 migrant townships constructed within the framework of the project
has been properly solved, and the hand-over of state-owned farms is underway\. All these fully
illustrate, that the local governments and people bore the overall picture in mind, and made great
contribution to the smooth implementation of the Shule River project, as well as to the poverty-
alleviation and well-off of the migrants\. The WB ICR report's statement that "Jiuquan area is
reluctant towards the project, and is unwilling to accept migrants coming from poor areas" does
not conform to the real situation\.
(III) Improving the project design
The initial design of the project was carried out and accomplished more than 10 years ago\.
According to the requirements of competent departments of the country and WB, Gansu province
asked designing companies with qualification to make elaborate designs for the project
construction\. The early idea was to fully utilize the water and land resources\. As the plan turned
out, utilization of water resources of the Shule River reached 91\.6%\. Whereas, there was little
potential for sustainable development and eco-environmental water consumption\. Having said
that, with the adjustment of domestic policies, the Gansu Provincial Government made timely
adjustment on the scale of the Shule River project, which was endorsed by WB\. With the
coordination of the provincial government, a conference assessing and evaluating the eco-
environment of the river valley was held, and the project plan was modified for several times,
further improving the water utilization efficiency and ensuring the water supply of the eco-
environment construction\.
To conclude, it is suggested that WB change the comment on the performance of the
Gansu Provincial Government from "Unsatisfactory" to "Satisfactory"\.
40
II\. Statement of reasons against the comment on WB performance
During the preparation and implementation of the project, the performance of WB was satisfying\.
(I) Timely adjusting the scale of the project, and making plan for the sustainable development of
water resources utilization
At the very beginning, proceeding from the idea of fully utilizing the water and land resources in
the Shule River valley and tackling the poverty of 200 million migrants in central-south Gansu as
soon as possible, WB set the water utilization rate at 91\.6%, in the special background of solving
the grain problem of poverty-stricken farmers in Gansu\. During the implementation of the project,
WB, proceeding from the drainage water resources balance and eco-environment protection,
made timely adjustment of the too-high water resources utilization rate and the development scale
of 200 million migrants with 819,000 Mu of land, making the project more suitable for
sustainable development\. It has been proved that the provincial government and WB were right in
making the mid-term adjustment of the project\. Now, the goal of increasing individual income for
barely poor population in the project area has been fulfilled comprehensively, with the migrants
shifting from self-supporting grain production to the production of economic crops\. More
importantly, the prospect of increasing the income and poverty-alleviation of the farmers is more
optimistic in the accepting areas than in the providing areas\. The goals of increasing Gansu's
agriculture production and protecting & recovering the eco-environment have been
comprehensively realized\.
(II) Frequent supervision and examination, tackling key problems
During the implementation of the project (May, 1996--April, 2007), WB supervising team
visited the Shule River project more than 20 times, altogether 113 person-times\. The team was
able to give rational, detailed, concrete and feasible opinions and suggestions to the party of
Gansu in a timely, objective and candid manner, enabling the Gansu Provincial Government to
study and solve such major issues as drainage institution management, bidding & procurement,
quality process control, provincial supporting fund, settlement of voluntary and non-voluntary
migrations, environmental protection, expenditure reimbursement, water administration system
reform and association of water-consuming farmers\. This provided strong support and help to the
project management institutions for their accurate understanding of the WB policy and
requirements and for improving their work in the project management\.
(III) Introducing WB management methods, improving the project management level
During the construction of the project, many experts from WB had on-site visit to the project, and
provided technical consultation and help in the field of dam safety, eco-environment protection,
saline land improvement, bidding process, informationization of the irrigated areas, etc\. This
helped the management institutions in understanding correctly the WB policy and requirements,
and helped established a set of more effective comprehensive management mechanism and
procedures, pushing forward the party of Gansu to continuously strengthen the control over
project process, quality and investment, and to improve the level of standard management of the
project, which ensures the quality and effectiveness of the project\. At the same time, this helped
in the training of a group of talents good at WB project management, raising the management
level of the project\.
41
(IV) Spotting and solving problems, increasing the sustainability of the project
During the implementation of the project, WB raised the question of a too-high water utilization
rate, which stood at 91\.6%, adjusted the scale for land development and migrants relocation,
suggested a 15% increase of forest and grassland area, and helped to solve such problems as
water resources allocation, migrants relocation, saline land improvement and dam safety\. WB
also coordinated the solution of problems affecting the project construction, such as the
supporting fund, water resources balance and environmental protection, making the project
implementation and realization of the goals more sustainable\.
(V) Pushing forward the reform of the drainage water resources management system, promoting
democratic management in the irrigated area
WB supervising team followed closely the system reform of the water resources management of
the Shule River drainage and gave feedbacks to the provincial government for many times\. It also
held meetings with competent department, put forward suggestions and requirements, helped
established the water resources management institutions of the drainage, and actively promoted
the water resources management system reform in the drainage area with the associations of
water consuming farmers participating in the management\. Under the guidance and help of WB,
there came into being 87 associations of water consuming farmers in the Shule River irrigation
area, and the water resources management system evolved from a simplistic one dominated by
the government into a system involving industry management, social management and
participation of water consuming farmers\. WB played a very big role in the water resources
management reform of the Shule River drainage area\.
(VI) Scientific management methods and sense of responsibility endorsing the success of the
project implementation
WB set an example for the working team of Gansu province, by the scientific rigorous and
realistic working style\.
Mr\. Lang S\. Tay, former TTL of WB paid 11 supervising visits to the project between 1995 and
June 2000\. He was able to, after discovering problems, put forward rational opinions and
suggestions to the Gansu Provincial Government objectively and candidly\. He helped lay a good
foundation for the project by supervising and coordination the solution to problems such as
institution establishment, bidding & procurement, migrants' relocation, environmental protection,
training & visit and supporting fund\.
Mr\. Richard Reidinger, former TTL project manager, organized 11-16 times of supervising visits
to the project between June 2000 and October 2003\. He actively proposed and urged the
government to establish water resources management institutions in the drainage area, and
develop associations of water consuming farmers\. He suggested the project institutions to
introduce advanced technology and management experience at home and abroad, for the
promotion of water administration reform, and made remarkable achievement\.
Mrs\. Sari Söderström, TTL of WB, headed 16-21 supervisions to the project\. She actively pushed
forward the system reform for the water resources management and the water administration in
the drainage area\. She helped to promote the participation of the associations of water consuming
farmers in the management system\. Based on 10 years' practice and experiences in the project,
she did earnest and pragmatic work for the successful implementation of the project\.
In November 2001, Mr\. Daniel (Ritchie), who led a quality inspection team from WB
headquarters, made such remarks, "The Hexi Corridor Shule River project is very well managed
42
among all WB projects\. For three reasons, I am very much impressed: Firstly, the supervision
work is aimed at solving problems\. The problems are discovered, raised and tackled in the timely
manner; Secondly, the two parties of the project demonstrated a great deal of flexibility regarding
the solution of problems\. It is very important to make necessary adjustment and take a flexible
approach towards the solution of problems during the process of project implementation and
supervision; Thirdly, relevant policies of WB were well observed and carried out\. They are
concerned with non-voluntary migration, environmental protection, dam safety, cultural heritage,
ethnic minority, etc\. My overall comment on the project is `very satisfactory'"\.
In conclusion, it is suggested that the comment on WB performance in the project
should be changed from "Moderately Unsatisfactory" into "Satisfactory"\.
43
Summary of Borrower's ICR
1 Background
Located in the western part of Hexi Corridor of Gansu Province, Shule River Basin covers an
area of 41\.3 thousand km2, with its mainstream river totaling 670 km in length and 1\.031 billion
m3 in terms of long term average runoff\. The river basin includes three irrigation districts (IDs),
namely Changma, Shuangta and Huahai, consisting of 27 townships and 3 state farms situated in
Yumen City and Guazhou (previously Anxi) County\. In order to solve the poverty problem for
the tens of thousands people in the 11 counties in arid central Gansu province or in the high and
cold mountainous areas of southern Gansu province, the provincial government put forward the
strategy "developing the western area while aiding the central area through implementing poverty
reduction and development program" and decided to develop the rich water and soil resources in
the Shule River Basin through implementing the Hexi Corridor Project (the Project) following the
World Bank policies for poverty reduction and environmental protection and improvement\.
The feasibility study of the Project was completed in 1994\. In October 1995, the World Bank
conducted formal appraisal of the Project\. With approval of the State Council, the Project was
listed in the national Ninth Five Year Plan as the major project for Gansu Province\. On July 2,
1996, the Government of P\. R\. China officially signed with the World Bank the Project
Agreement, the Development Credits Agreement and the Loan Agreement for the Project,
defining that a World Bank loan totaling USD 150 million would be used for the Project with an
estimated total investment of RMB2\.673 billion to support land reclamation of 54,600 ha,
resettlement of 200 thousand people and irrigation development of 97,800 ha\.
In 2002, a Mid Term Review (MTR) of the Project was conducted in line with common
understanding reached between the provincial government and the World Bank on water
resources bearing capacity of the Shule River Basin, eco-environmental protection and
counterpart funding, resulting in reduction of resettlement scale from originally planned 200
thousand persons to 75 thousand persons, decrease of number of new resettlement
townships/farms from 16 to 6, decrease of number of resettlement administrative villages from
160 to 57, land reclamation downsized from 54,600 ha to 28,533\.33 ha, forest and grass coverage
rate increased from 11% to 15%, water resources utilization ratio reduced from 91\.6% to 64\.5%,
and the Project total investment reduced from RMB2\.673 billion to RMB1\.971 billion\.
The Project was launched in May 1996 and accomplished in December 2006\. The successful
implementation of the Project had played an important role in solving the poverty problem for the
tens of thousands resettles in the central and southern Gansu province, enhancing the sustainable
social, economic and ecological development of the Shule River Basin in the Hexi Corridor\.
2 Project Objectives
The main project objectives were: (1) to relocate 200 thousand (75 thousand as per MTR
adjustment) people from the central and southeastern Gansu province where the natural
conditions are poor to the new irrigation districts developed in the project areas within the Shule
River Basin; (2) to upgrade and increase agricultural production in Gansu province, particularly
grain and cash crops' outputs; (3) to protect and restore the deteriorated eco-environment\.
Through 10 years' implementation, the Project had fully realized these three main objectives and
each of its components had basically accomplished or exceeded the development goals defined in
MTR, presenting outstanding economic, social and ecological benefits\.
44
3 Achievements and Benefits of the Project
The Project had been completed as scheduled and given full benefits, including apparent
economic, social and ecological benefits produced thanks to full completion of the water
resources, resettlement, agricultural, forestry and live stock development components\.
3\.1 Construction of Water Engineering Works and Development of New
Agricultural Irrigation Districts
Funded by the Project, the Changma Reservoir, a grade-2 large scale reservoir with a
storage capacity of 194 million m3, was fully completed and put into operation\. Under
combined regulation together with Shuangta and Chijinxia reservoirs at the downstream,
the Changma reservoir is now functioning to serve multiple purposes including runoff
regulation, flood retention and control, agricultural irrigation, industrial and domestic
water supply, ecological water delivery, fishery, tourism, hydro-power generation, etc\. As
a result, the historical problem of spring and summer droughts in the irrigation areas
along Shule River was terminated\.
In the 3 IDs, the Project supported new and improved main canals of 681\.64 km, main
and branch drainage canals of 152 km, canals at branch level totaling 147 in number and
1094\.6 km in total length, resulting in great increase of canal water use efficiency (from
54% to 62% for Changma ID, from 43% to 62% for Shuangta ID, from 54% to 62% for
Huahai ID) and thus realization of the component's objective as designed\.
The Project made it possible to ensure normal operation of and power generation by the
18 small-sized hydropower stations at the downstream of the river basin, the produced
power totals 280 million kWh with a revenue of approximately RMB45 million\.
Water diversion and utilization increased from 430 million m3 in 1995 to 926 million m3
in 2006, which made it possible for developing new irrigation area of 27,854 ha and
guaranteeing irrigation for the existing farm land of 43,600 ha, thus the irrigated area
reached 71,454 ha in total\. In 2006, the total water fee collected was RMB33\.77 million,
water supply for industrial uses totaled 82\.75 million m3, the amount of water reserved
for ecological uses totaled 220 million m3\.
The project area expanded from originally 13 townships and 3 state farms to 27
townships and 3 state farms, with agricultural population increased from 105,890 at
appraisal time to 195,891\.
Along with full completion of the Project and implementation of integrated water
resources management, regulation and utilization of water resources had been fully
upgraded in the river basin, with canal water use efficiency upgraded greatly, flood
pressure reduced and lives and properties of the local people in the downstream areas
safeguarded\.
Project construction drove forward development of the local economy as a whole, and
facilitated development of sectors including agriculture, forestry, animal husbandry and
the others, providing not only strong guarantee for comprehensive agricultural
development and resettlement, but also a solid foundation for all-rounded, coordinated
and sustainable social and economic development in the locality\.
45
3\.2 Full Completion of Resettlement Tasks and Basic Realization of Poverty
Reduction Objectives
By using the new resettlement approach of "preparing unified plan, setting up demonstrative pilot
and implementing whole village relocation," totally 75\.378 thousand people ( 31,424 persons in
the agricultural farms, 30,576 persons in the administrative areas of Jiuquan Municipality, and
13,378 persons of spontaneous relocatees) were relocated on a voluntary basis in the past 10 years
from 11 counties in the central or southern parts of Gansu province, including Linxia, Hezheng,
Yongjing, Jishishan, Dongxiang, Minxian, Tanchang, Wudu, Lixian, Lintan, Zhouqu\. Involuntary
resettlement was implemented because of construction of Changma Reservoir, involving totally
580 people from 159 households\. Community service facilities established for the resettlement
purpose include buildings for the township governments, village committees, schools and
hospitals/clinics for the 6 townships/farms, 57 administrative villages and 8 natural villages\.
Canals, access roads and tree belts had been completed in the newly established irrigation areas,
and the resettlement areas had been served with adequate water and power supply facilities and
roads\. In 2006, the per capita net income of the relocatees reached RMB1,548, an increase by
500% compared with that of RMB300 when the resettlement was initiated, and the resettlement
objective defined as "first year moving in, second year settling down, third year having ample
food and clothes" had been basically realized\.
3\.3 Agricultural Restructuring and Increase of Both Agricultural Production and
Farmers' Income
Under the Project, adjustments were conducted to the scale of irrigation areas, irrigation system,
ratios of cropping, forestry, and livestock raising in the overall agricultural sector, cropping mix\.
Totally 22,061\.33 ha of land in the new irrigation areas had been leveled and equipped with
auxiliary on-farm structures, salinity improvement had covered an area of 10,267 ha,
desertification improvement and shelter trees had covered an area of 5,573 ha, forest land and
grass land had reached 3,800 ha and 666 ha, respectively, so that forest and grass coverage rate in
the project area had exceeded 15%\. In 2006, livestock raised totaled 72 thousand heads and the
agricultural production value in the irrigation areas increased to RMB1,034 million from that of
RMB435 million at appraisal in 1996, ratio of grain and cash crops changed to 2:8 from
previously 8: 2, particularly cotton area reached 37,333 ha, resulting in farmers' income increase
by RMB250 million annually\.
Income of the relocatees has been increasing year by year through cropping, livestock raising,
processing and labor service operations, their per capita net income increased to around
RMB1,500 in 2006 from that of below RMB600 before 2000, a net increase of RMB900\.
According to analysis of the per capita land occupation in rural areas of Gansu province, the
newly reclaimed land can support 128 thousand people\. If using the current per capita agricultural
added value in the calculation, the annual net contribution of the Project to agricultural added
value and GDP is RMB209 million and RMB260 million, respectively\. In the new irrigation
districts, irrigated oases with an area of 27,854 ha of productive land and well-developed tree
belts had been formed with support of the Project and played an important role in increasing
farmers' production and income\.
3\.4 Eco-environmental Improvement and Harmonious Development of the IDs
For purposes of sustainable water resources utilization and eco-environmental protection,
adjustments to the project scale were conducted during MTR, including reduction of water
46
resources utilization ratio from 91\.6% to 64\.5%, increase of forest and grass land coverage from
11% to 15%, reserve of ecological water use of 220 million m3\. Since more than half of the newly
reclaimed land of 27,846 ha was originally typical source area for wind erosion sands, the
reclamation of such area improved the sand source area and the local climate through turning it
into cultivated land and then oases\. Combined regulation of the three reservoirs, including
Changma, Shuangta and Chijinxia reservoirs, can ensure annual ecological water delivery of a
total amount of 220 million m3 to the Ganhaizi natural reserve in Yumen City, Qiaozi ecological
reserve in Guazhou County, the national ecological reserve West Lake in Dunhuang City and the
wind-break and sand dune fixing tree belts in the irrigation areas, so as to restore the natural eco-
systems at the downstream, including the large area of popular diversifolia trees, effectively
protect the eco-environment in the river basin and realize harmonious development of human and
nature\.
4 Major Factors Affecting Project Implementation
Constrained by the natural climate, project construction can only be possible from May to
October in a year, even during such a short period, the construction has to stop for half a month
on average due to windy and dusty weather, imposing great difficulties and heavy workload to the
construction\. As a result, quite a lot engineering projects could not be finished within one
calendar year\.
During construction of the Changma reservoir, collapse of the sediment discharge tunnel due to
geological difficulties caused delay of construction of the auxiliary facilities(including the hydro-
power station) and thus a one-year delay of water storage of the dam, though the main body of the
reservoir was finished as scheduled\. Consequently, there was a one-year delay for implementation
of resettlement and other activities such as cropping, forestry and livestock raising, etc\.
SARS occurred in China in 2003 covered a vast area and resulted in closure of transportation and
impossibility for the construction teams to enter into the construction sites, and thus a one-year
delay of project construction\.
Due to change of national poverty reduction policies, poverty reduction funds could not be used
to support construction of water engineering works and thus the counterpart funds originally
committed to be sourced from the provincial poverty reduction office could not be made available,
leaving a gap of counterpart funds of RMB600 million and causing incompletion of annual
investment plans in the first years of project implementation\. Through efforts made afterwards,
the counterpart funding problem had been well solved, but it still held back in the early stage
implementation of the PIP defined at project appraisal\.
5 World Bank and Borrower Performance
5\.1 World Bank Performance
The project team leaders and consultants of the World Bank had played an important role in the
project preparation and implementation phases\. Totally over 20 World Bank missions consisting
of 113 members had come consecutively to inspect the Project implementation, providing in a
proper and timely manner suggestions and recommendations that are objective and to the point to
the project province\. World Bank introduced into the project its scientific management theory,
approaches and established an effective and integrated project management mechanism and
corresponding procedures to facilitate strengthening control over project progress, construction
47
quality and investment by the project province\. It also provided great assistance and guidance to
ensure smooth project implementation, such as its coordination assistance in solving of problems
relating to establishing river basin management institution, counterpart funding and
environmental protection, etc, and its active efforts in supporting reform of irrigation water
management system and participatory management by the WUAs (Water Users Associations)\.
The World Bank project management team established a good example for the project province
with its pragmatic, careful and precise working style and the practical, realistic working attitude
aiming at constant improvement, which helped the province in the process of continuously
upgrading project management towards a standardized level and thus ensured quality and benefits
of the project implementation\.
5\.2 Performance by Gansu Provincial Government
Gansu provincial government paid great attention to the Project\. It organized 14 times of
provincial governor's working conferences to discuss issues of project formulation, establishment
of the river basin management institution, project organization and implementation, counterpart
funding, resettlement arrangement, etc\. and solve the problems encountered\. Despite the very
tight budget for construction purpose, the provincial Development and Reform Commission,
Finance Bureau and Water Resources Bureau tried their best in raising funds to ensure timely
allocation of counterpart funds and played an important role in ensuring smooth project
completion\.
5\.3 Performance by the Shule River Project Construction and Management Bureau
(Project Implementing Unit)
The Shule River Project Construction and Management Bureau (the Bureau) strictly followed the
World Bank policies concerning dam safety, voluntary resettlement, involuntary resettlement,
environment protection, ethnic groups and religion, land acquisition, cultural heritage protection,
etc\. In line with the World Bank procedures for project management and implementation, the
Bureau conducted scientific and standardized project management and effective control over
project investment, progress and quality, which had ensured the successful project
implementation and full completion of tasks for all project components\. The Bureau introduced
advanced technologies and management skills at home and abroad into the project
implementation process, consequently its management concept and project management level had
been upgraded and a team of staff that is equipped with technical and managerial skills and
familiar with the management procedures for World Bank project had been trained and developed\.
Because of its highly efficient and practical performance in the project implementation and
management process, the Bureau was recognized as `Advanced Working Unit for World Bank
Project Implementation in Gansu Province' and `Work Unit with Advanced Civilization' by the
provincial government, and also `Working Unit with Advanced Civilization' by the Ministry of
Water Resources\.
48
6 Lessons Learned
6\.1 Major Positive Lessons
6\.1\.1 Sustainability of Irrigation District Development
6\.1\.1\.1 Sustainability of Water Resources Management in the River Basin
The newly established Shule River Basin Water Resources Management Bureau and its
functioning in formulating and implementing the long term plan for sustainable water resources
utilization and water-saving society development provided institutional and systematized
guarantee for unified planning, management, allocation, protection of water resources in the river
basin, as well as effective and sustainable utilization of the water resources\. In the three IDs, the
management sections are now responsible for canals at the main and branch levels, while WUAs
and their members take the management responsibility for the tertiary and quaternary canals,
forming the integrated managerial model of ` Water Supply Unit + WUA + Water Users'\. By
using information management in the river basin, sustainable water resources utilization has been
realized to support sustainable economic, social and ecological development in the river basin\.
6\.1\.1\.2 Sustainability of Democratic Irrigation Management
Based on experience accumulated from the pilot WUAs, totally 87 WUAs had been established
within the 3 irrigation districts of Yumen City and Guazhou County, covering 83 villages/village
groups of 14 townships and 2 township level farms\. Thus, democratic water management by the
WUAs is implemented in the irrigation districts, with `Water Receipt System' established to
avoid irrelevant fees added into the water charge and reduce burdens to the farmers\. The sound
water charge collection and management system is effective in motivating the farmers to
participate in irrigation management and construction activities and helpful in realizing
democratic and standardized irrigation management\. Meanwhile, as a systematized measure,
0\.004 yuan/m3 out of the water charge collected had been designated for purpose of operation,
management and maintenance funding of WUAs to ensure sustainability of democratic irrigation
management\.
6\.1\.1\.3 Sustainability in Resettlement Arrangement
Voluntary resettlement in the project was based on experience from the major resettlement
program (or the so-called `Liangxi Resettlement Program') implemented in the province and
obtained concern and policy support from the governments at all levels, as well as cooperation by
relevant departments and industries\. As a result, high standard and complete public service
facilities had been set up in the resettlement areas, including school, hospitals, village committee
offices, water and electricity supply facilities, roads and tree belts in the farming areas, etc\. The
national government provided through transfer payment or other channels the development funds
to support social development in the resettlement communities\. The resettlement areas had been
handed over to the local governments for jurisdictional management, in order for their reliable
economic and social development in the locality\. With good performance in solving the issues
and problems concerning production, living and development of the relocatees, the resettlement
component under the Project had created successful experience for poverty reduction in Gansu
province and is thus of great significance in providing guidance and useful reference to similar
resettlement programs in China\.
49
6\.1\.1\.4 Sustainability of Water Resources Regulation Information Management
System
Under the Project, an information management system for water resources regulation was
established with an investment of over RMB30 million\. Built on an optical cable of 309\.6 km,
383 monitoring and measurement sites in the irrigation districts and 200 monitoring and control
sites\. The system consists of 6 sub-systems, namely integrated reservoir regulation, groundwater
monitoring, flood prevention and simulation, gate monitoring and control, water measurement
and office information management\. Such a system can be used to undertake integrated and
optimized regulation of water in the three reservoirs, rational allocation of both surface and
underground water, prediction of flood, drought and water-logging disasters, monitoring on
groundwater and the salinity dynamics, assessment of impacts of water engineering works on
groundwater environment, etc, so as to provide references to support decision-making for
sustainable water resources utilization and management, upgrade irrigation management and thus
ensure full benefits of the Project\.
6\.1\.1\.5 Sustainability of Eco-environmental Protection and Construction
In accordance with water resources allocation plan for the river basin, water delivery of 220
million m3 had been conducted annually for uses by the ecological reserve areas at the
downstream and windbreak and sand dune fixing trees\. Large-scaled desert improvement and
wind-breaking measures had been taken in the irrigation areas of resettlement locations, such as
the `straw-grids' measure covering an area of 466\.67 ha in the Qidun township, a Hui nationality
resettlement township located in Guazhou County and known by the local as `the World Storage
of Winds ', and with that measure, the local people realized the dream of building oases and
settling down in the previously desert area\. In the three IDs, totally 5,573 ha of windbreak tree
belts were planted, forestry land reached 3,800 ha and grassland reached 666 ha, thus the forest
and grass coverage rate reached more than 15% and a green shelter had been established\.
Additionally, an eco-environmental monitoring center was set up for the purposes of monitoring
quality of water in Shule River, Shiyou River, Shuangta reservoir, Shijinxia reservoir, drinking
water quality in the resettlement areas within the 3 IDs, quality of soil in the newly reclaimed
land areas and the leached soil, and eco-environment recovery and improvement in the 11 move-
out counties\.
6\.1\.2 Agricultural Production Increase Realized through Salinity Improvement
Soil salinity improvement experiments under the Project first started at the Xiangyang
resettlement area in Guazhou County, where there was a large reclaimed area with salinity
problem featured by high salt content and great difficulty for improvement\. Improvement
measures such as leaching with open drainage canals, vertical leaching using flooding irrigation
with great quantity of water and intermingle clay to drain salt through vertical holes were tested
by the technicians and extended to the new IDs after having been proved to be successful\. The
technical specifications and operational manuals prepared and training course organized made it
possible for over 10 thousand of farmer to master the biological and engineering measures in
improving the saline land\. Consequently, totally 10,000 ha of saline land reclaimed in the IDs had
been successfully converted into stable and high yield land, with grain production increased by 40
million kg annually, cotton production increased by 2 million kg and the benefits generated
totaling RMB66\.9281 million\. Successful improvement of the saline soil not only made the
relocatees confident of salinity improvement in the project, provided them with the measures for
improvement and laid the foundation for production and poverty shaking-off by the relocatees,
50
but also provided good reference and example for salinity improvement in Gansu province and
even in the whole country\.
6\.2 Major Negative Lessons
Reviewing the project process, international and domestic awareness of environmental protection
at the time of project appraisal time was not that adequate, especially for Gansu province, a
province suffering water shortage problem, its emphasis of development was placed at that time
on full water resources utilization to support irrigation development, so as to solve the poverty
problem for its 200 thousand poor people\. Along with social and economic development and
project implementation, construction of water-saving society became the emphasis of
development, with particular stress on eco-environmental protection and project sustainability\.
Based on such consideration, the World Bank and the Gansu province reached the agreement for
adjusting water resources utilization in the river basin, thus water resources utilization ratio of the
river basin was reduced to 64\.5% from 91\.6%, and, correspondingly, resettlement and land
reclamation were downsized, while ecological water and forest coverage ratio were increased\.
The purpose of such adjustment is to allow for sustainable economic and social development in
the river basin and to make the project implementation more realistic\.
The major reason for counterpart fund allocation lagging behind the PIP is that, a total amount of
RMB600 million of poverty reduction funds planned at project formulation stage as counterpart
funds to the Project could not be made available to the project, due to changes of national poverty
reduction policy afterwards\. In the mid period of project implementation, the provincial
government used the T-bonds to increase project investment and fill up the gaps of counterpart
funding, so that the delayed several project components were completed as scheduled\.
51
Annex 8\. List of Supporting Documents
1\. Staff appraisal Report on April 23, 1996
2\. Monitoring and Evaluation Report on Voluntary Migrants' Resettlement (9 editions from
1998 to 2006) produced by Lanzhou University
3\. Implementation Completion Report and 9 sub-reports by Shule Project Management
Bureau
4\. Supervision Mission Aide Memoires during 1997-2006
5\. Preparation Mission Aide Memoire in September 1994
6\. Pre-Appraisal Mission Aide Memoire in May 1995
7\. Appraisal Mission Aide Memoire in November 1995
8\. QAG's Quality of Safeguards Supervision report 1999
9\. QAG's report: Quality of Supervision Assessment (QSA6) on 08/03/2004
52 | REVIEW |
P004201 | Document of
Tne World Bank
FOR OFFICIAL USE ONLY
Report No: 23838
IMPLEMENTATION COMPLETION REPORT
(IDA-26060)
ONA
CREDIT
IN THE AMOUNT OF SDR21\.8 MILLION (US$30 MILLION EQUIVALENT)
TO THE
LAO PEOPLE'S DEMOCRATIC REPUBLIC
FOR A
SECOND HIGHWAY IMPROVEMENT PROJECT
June 20, 2002
Transport Sector Unit
East Asia and Pacific Region
| This document has a restricted distribution and may be used by recipients only in the performance of their
| official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
kLXchge1,% PteL% Ef1eLCL1VV Deebe 1, 2001)
Currency Unit = Kip Nationale (KN)
KN 1\.00 = US$ 0\.0001
US$ 1\.00 = KN 9;465
FISCAL YEAR
October 1 - September 30
MEASURES AND EQUIVALENTS
1 meter (n) = 3\.2808 feet (ft)
1 square meter (sq m) = 10\.7639 square feet (sq ft)
1 kilometer (am) = 0\.62 mile (mi)
1 square kilometer (sq am) = 0\.3861 square mile (sq mi)
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
ERR Economic Rate of Return
HIIP Highway Improvement Project
MDA Intemrational DevelOPment Assnoi2tion
MCTPC Ministry of Communication, Transport, Post and Construction
NPV Net Present Vallie
NTS National Transport Study
R M4vMD Poad Mantenar\.ce Management Divi:ini
SAR Staff Appraisal Report
SHIP Second Highwvay Tmprvement Pro,ect
SOE State Owned Enterprise
LJ*tLfl\. LJa vaL nt Road zrd B, d ge Cowr,Jt\.ucn Coxrp \.AJLLqJany
TA Technical Assistance
1T,±\.1 IT,,A ---ighay IiujJLUverIent r ---J-ec
TPU Transport Planning Unit
LJI'ILJ UrLiLVU INatiUii De~velop,-er,tL rIugIdiialhICr
Vwoe Prpsicptit Thrznpl\.uA\.Ain VKviin
Country Director: Ian C\. Porter
Sec'\.or Di,-ec'\.or: Jild1-N\. Bajpai
Task Team Leader: Francesco Addis
WROP0 01VE'TI'T AT rtiolram' 01Thtfrl'l
FOr OrL rJ s wE L'JI\. oi X 'Il,
LAO PEOPLE'S DEMOCRATIC REPUBLIC
Second Highway Improvement Project
CONTENTS
PROF No
I\. Project Data 1
2\. PrinciDal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 1
4\. Achievemer\.t of 'Object;\.ve and O\.uts 5
5\. Major Factors Affecting Implementation and Outcome 9
6\. Sauswiiibiily 10
7\. Bank and Borrower Performance 11
8\. Lessons Learned 12
9\. Partner Comments 13
10\. Additional Information 23
Annex 1\. Key Performance Indicators/Log Frame Matrix 24
Annex 2\. Project Costs and Financing 26
Annex 3\. Econoniic Costs and Benefits 28
Annex 4\. Bank Inputs 29
Annex 5\. Ratings for Achievement of Objectives/Oututs of Comnponerts 3 1
Annex 6\. Ratings of Bank and Borrower Performance 32
Anniex 7\. List of Supporting Documents 33
Annex 8\. Map IBRD 25206 34
This document has a restricted distribution and may be used by recipients only in
the performance of their official duties\. Its contents may not be otherwise disclosed
'l ith- T'shT 11 \.B- a
W-iLthout vv oiaE Danlk authnorization\.
I Project ID: P004201 |Project Name: HWY IMPROVE II
Team Leader: Francesco Addis TL Unit: EASTR
I1CR TvDe: Core ICR I ReDort Date: June 20\. 2002
I \.Proj> ata
Name: HWY IMPROVE II L/C/TFNumber: IDA-26060
Country/Department: LAO PEOPLES DEMOCRATIC REPUBLIC Region: East Asia and Pacific
Region
Sector/subsector: TH - Highways
KEY DATES
Original Revised/Actual
PCD: 01/11/1993 Effective: 02/14/1994 02/14/1994
Appraisal: 05/17/1993 MTR:
Approval: 04/14/1994 Closing: 06/30/2001 12/31/2001
Borrower/lImplementing Agency: GOVT OF LAOS/MS OF CTP&C
Other Partners:
STAFF Current At Appraisal
Vice President: Jemal-ud-din Kassum Gautam Kaji
Country Manager: Ian C\. Porter Callisto E\. Madavo
Sector Manager: Jitendra N\. Bajpai Jeffery Gutman
Team Leader at ICR: Francesco Addis Maurice Le Blanc
ICR Primary Author: Francesco Addis; Ephrem Asebe
2\. Principal Performance Ratings
(HlS=Highly Satisfactory\. S=Satisfactory\. U=Unsatisfactory HL=Hiihl- Likely\. L'=Likelv\. UN=Unlikelyv HtN=Highlv
Unlikely, HU=-Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
Background\. In 1990, the Government embarked on a transport sector development strategy
which recognized the need to develop a prioritized program of investments in the transport sector\. The
Government with the support of the World Bank and the United Nations Development Program (UNDP)
undertook a National Transport Study (NTS)\. The Study identified priority transport needs and defined in
detail an investment, operation and maintenance program for 1991-1995\. In particular, the NTS
formulated broad transport sector policies, outlined in detail a development program for I 996-2000 and
identified in detail projects for possible financing\. The NTS also recommended continued focus on road
development, particulariy the restoration of the North-Soutn axis of Route 13 as well as the rehabilitation
and construction of rural access roads to agricultural areas\. The Second Highway Improvement Project
(SHim) was one in the series of projects identified by N - S and was designed to integrate and compiement
the work of donors involved in the sector\.
Project objectives\. As stated in the Staff Appraisal Report (SAR), the project aimed to support
key subsector goals in the Government's development strategy\. Tlese goals were to increase the efficiency
of the country's transport system through specific road improvements; strengthen institutional capabilities
to plan, manage and maintain the national highway network; and to support the development of local
contracting capacity through the commercialization of selected state enterprises\.
The project objectives of promoting transport efficiency and developing the local contracting
industry were appropriate and timely:
a Fpirt the nhieIvP\. e w\.ere in line vwith the nrinritipe nf the r'imntrv Tn the Cnrteyt nf T \.2n PDR
in the early 1990's, the project was to contribute to the overall National Development
Stfratem The ,nnintru wm- cegrPiinc tnwrnri a mark-Pet ernnnmv FPnwilit-Atinca the effi\.ient flnw_
of trade with neighboring countries, improving the road network on a sustainable basis and
daw9elnn;na tho 1nuo1l inina ii ;ne wtra ere ""pmortat gnols for the GovPrnment\.
* Second, the project objectives supported the Government's strategic goals of removing the
infrastructure constraints on agricultural development and to build maintenance capacity\.
* U mane, une project objecJ"M\.f werwe wiY w't Gvve\.-ments 0 fltJLfAAdl st-ance mn
the contracting industry, through the commercialization of selected state enterprises\.
The project objectives were in line with IDA Country Assistance Strategy (CAS)\. The CAS
fucussd ou\. ka) jprLvmowur -g riu _ vt gr aul euc L \.gL%r pove,LL\.;; kw) \.LMtULiE L: - r^,%OUnoricLU%
stability; (c) eliminating infrastucture bottlenecks; (d) supporting human resource development; and (e)
u-veopig xuan-zt u -u agrn\.i1-uuLv -d iiwuiai reou-\.---
'2 Is,^tb,c;e
On Februarv 29\. 1996\. the Development Credit AMreement (DCA) of the Project was amended to
cover approximately 95 percent of outstanding costs of the rehabilitation of about 70 km of Road 13S
h;twa_ Nanmkading and Savannakhet\. This road was to be financed under the prior pro3ect; Highwav
Improvement Project (HIP)\. HIP had encountered initial cost increases during the rehabilitations of the
Narkdiinaavannaklhet Road as descn:hed below in Section 3-4 However; since SHP was conceived as a
continuation of HIP and shared the same key objectives with HIP, changes in the objectives of SHIP were
not tleen,d ne\.ppgqrv
-2-
3\.3 Original Components:
The project components as outlined in the SAR were:
A Upgrading MaLntfenane Caparitvy aT(S$10\.70nmi11inn
Implementation of maintenance program, including the execution of spot improvements and
periodic maintenance, on about 2,000 km of the Borrower's network\. This component involved
the upgrading and execution of the maintenance program on the road network through:
i\. the financing of the three-year program for spot improvements and periodic maintenance;
ii\. a three-year program of routine maintenance, to be financed by the local budget; and
;ii tA\.- nrnuiv nn nf t+P inii a1 acdietanrP (TAI fnr the nroan','*nn rnA ae\.ve\.eiin nf tlhe rn 11
mnaintenance program\.
B\. Road Improvement (US$16\.70 million)
TTJ-AJ - of abfot 13 \.J l f tf \.-'\.' Sava -tl "se Av to,J--- b\.-A-A f-A\.-
rehabilitation of 36 bridges;
C\. Development of Construction Industry (US$1\.00 million)
I GIUL"4I asiat4ULe Lu e jJLUJVAL Ui\.1\. IFm\.IL4UoLJ, UVVe1:JomLLVLnt VI oUf IUAR4 Loc ALM\.LIUL5
capability, transport planning and policy development In particular, this component would
co-ver L - i\.e I \. n ar\. uevepme LLt IVA Ll f Io LUUe Lci aWiUUUU Lf ueI
State-Owned-Enterprise (SOE) that was being created from the merger of enterprises Nos\.
I;3;2, ;3/3 aiUI ;3/4 1for iiie p pUJUTA PU[]PUue\. ilU it WUiUuv UU IUUIi LWo-yeau[ period
during which the capacity of the new enterprise in such areas as financial management and
costing, and project equipmet aniamagement wouid be developed\. Tie enterprise wouid be
assisted by two internationally-recniited experts; and
D\. Technical Assistance and Training (US$0\.15 million)
Technical assistance, degree courses, and short-term training for tne Ministry of
Communications, Transport, Post and Construction (MCTPC) staff\.
3\.4 Revised Components:
As mentioned above, in February 1996, the Project credit allocation was amended to bridge a
financing gap covering the shortfall of funds under Highway Improvement Project The estimated short fall
of SDR 9\.0 million (US$13\.3 million) arose from bids higher than expected due to design modifications
and additional works approved by IDA\. The shortfall of funds under HIP was anticipated and was planned
to be financed under a component of the Third Highway Improvement Project (THIP), but effectiveness of
THIP was delayed by a year\.
Since the Second Highway Improvement Project was a continuation of the Highway Improvement
Project and shared its key objectives, including rehabilitation of selected sections of Highway Route 13S,
the change was not conceived as a change in objective\. The amendment in the DCA was reviewed by the
Regional Vice President and approved pursuant to the requirement of OP 13\.25 "Use of Project Cost
Savings", para\. 2 (b), and the corresponding BP 13\.25, para\. 3, which governs relocations with five percent
or more of the original Credit amount
-3-
Accordingly, the Second Hiighway Improvement Project Credit was amended to transfer SDR 2\.0
million from Category 1 "Civil Works, Part A(l)", and SDR 4\.0 million from Category 2 "Civil Works,
Part A (2)" and SDR 3 million from category 4 "Unallocated", to a new category to finance 95% of the
civil works being carried out under contracts Nos\. I and 2 signed to contract Road No\. 13 between
Namkading and Savannakhet under HIP, Category 1\. And, the original scope of work under Category 1
and 2 of SHIP was agreed to be reduced\.
The scope of work to be financed under the Credit was further defined\. Thus, Part A(1) and (2) of
Schedule 2 to the agreement were amended to finance the following:
1\. pnot r,uvlline, rpeordincr emhb-nnLmpnt raising, nr^Iosion nfAr!inn-gP anid mje%rAT+s a-d
improvement of bridges at selected locations over a distance of 1,000 km through the
Borronr r'c road nd , ,-rork
2\. Upgrading of about 55 km of roads consisting of Route 13S between Ban-Lak and Seno, and
Route 11 between Ban-Lak 35 and Savannakhet\.
-\. DO o;;+ +AS -A ; ;;- AA}A A-\. IA A-+- P7A^ tA-N \.rlD-,+- l-WQ
J\. fl%\.UWA JflflLOLJU W V V -U h -If-L LU 5' VI AWUA 0%\. V V fI \V f_"J MA flUULA\. au
between Namkading and Savannakhet\.
The cost estimates were also modified and a new component (4) was added as follows:
Component Cost | Rating
1\. Road Rehabilitation, Road No\.13 ana NO\.1i 9,UU,UUU\.U0U0 I
2\. Road Maintenance %2-800\.l00\.000 IS
3\. Institutional Strengthening $4,400,000\.00 S
4\. Road Rehabilitation, Road No\. 13 $13,300,000\.00 S
In June 2001, an extension of the closing date was agreed in order to complete additional
uupLUvemLen tuu Irleudimm woIrk\. ituse wulfks aUVwuU\. fIV 0i6LcanUL Davurgs In ftUwLe, rIUaIULGjIelance
interventions, as well as gains in road use and could not be executed/completed due to extensive rainy
w-1-her A fiiurewctino ul re3 roed, mairii foii _ aeoj _iioa -- was nees
WekvltW\. It~ JLUiU IVd\.lUVLiUUUI VI Ulu UACUlL pIULXcub, unnunlILy UUIU uir, LudLuguy UUuI-iuULavu, Wub 1usbuery
to allow for the completion of these activities\. The following table outlines the original and successive
rea'ilocatioiis\.
Category Allocations (SDR)
Original Revised Final
1\. Civil works under Part A (1) of the Project 4,030,000 2,000,000 3,110,000
2\. Civil works unider part A (2) of the Project 11,120,000 6,600,000 5,260,000
3\. Consultants' services, including auditing 3,290,000 3,000,000 3,560,000
and training
4\. Civil works under Part A (4) of the Project 0 9,000,000 9,870,000
5\. Unallocated 3,360,000 1,200,000 0
Total 2i,800,000 21,800,000 21,800,000
-4 -
3\.S Quality at Entry:
The project was not reviewed by the Bank Quality Assurance Group\. The ICR rates the quality at
entry of the project as satisfactory for the following reasons:
* First, the design of the project was consistent with both the Government priority as reflected
in its sector development strategy a-nd tue Bank's Counuty Assistance Straiegy oI October 12,
1992 for the country\. In particular, both the Government and IDA endorsed the transport
sector strategy wInch focused on coatinued development of the backbone of the national
network, rehabilitating feeder roads in major agricultural areas and development of the road
maintenance capability for the country\.
* Second, recognizing the underdevelopment of the domestic market, the design of the project
took an incremental approach in the commercialization of state enterprises\. Also, recognizing
the weak implementation capacity of the borrower\. the design of the proiect made the
appointment of two technical experts to the state enterprises a condition of credit
effectiveness\. IDA found it necessary to nostnone the effectiveness date of the nroiect twice
because the selection of consultants to assist the Savannakhet Road and Bridge Construction
Company (SRBCC) in its nrivatization prwess was a condition of effectiveness=
* Third, the design of the project explicitly recognized the risks the project implementation
faced due to lack of availability of adequate local budgetary revenues\. It paid special attention
to the budgetary constraints the Government was facing so as to ensure annual allocation of
funds for road maintenance\. However, at the time of appraisal, agreement on a set of
performance indicators was not reached\. A retrofitting exercise was therefore necessary later
during implementation\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Road Transport Efficency
Overall achievement of the project objectives was satisfactory\. The investments in roads
contributed to transport efficiency\. The improved roads led up to reduced travel time from the capital city
of Vientiane to the city of Savannakhet from 2 days to 5 hours\. The increased transport efficiency also led
up to better access to markets, social services, increased agricultural products and better income,
contributing to IDA's principal mission of poverty alleviation\. The resulting increased efficiency in
transport services also enhanced the functioning of the domestic market\. Price differences between the
surmlus and deficit region have narrowed\. Strengthening institutional capacity, in terms of laying the
foundation for the planning and programming and contracting of works, contributed to the overall transport
efficiency\. Both formal and on-the-job training contributed to improved nerformance in budgeting\.
planning, contracting, and supervision\.
Contracting Industry
Privatization was delayed due to the asset valuation problems particularly for equipment for which
there is limited secondary market in Lao\. Although the local construction industry still lacks adequate
modem equipment, funds and qualified staff, the drive towards liberalization has contributed to the
emergence of a domestic contracting industry\. The three SOEs were converted into one SOE, Savannakhet
- 5-
Road and Bridge Construction Company (SRBCC)\. SRBCC has moved further towards being privatized\.
(Tne management and tie employees of the company bought 51 percent of the share in December 1997)\.
SRBCC performed well with two direct contracts totalling US$5\.5 million and entered into a joint venture
with a foreign Company (a major contract valued at US$13 miilion through ICB procedure under
IDA-financed project)\.
4\.2 Outputs by components:
The specific project development outputs by component are summaized below:
A\. Upgrading of the maintenance capacity
The focus of this component was to carry out urgently needed maintenance works and to continue
the lon\.g-terl flprocs of P tahliching arn \.f\.fectivr roadl mai,nfPn,nP capabilt 4,,- rhih vv-e otff\.4ta I--
HIP\. In both areas progress has been made under the project as follows:
Program of spot improvement and periodic maintenance\. Besides completing 100 percent of the
_A--AA V- __r r \.- -rv4AL; +U _ ;A_A_ A_A _-AA C__+A_A_ A; __A AAA -- 1sU_ 1
\.ULASLuL E ` Lv ;L Uy v\.OUL OF"t Ju41 U Ufl\., -pVJ%vL Inaut a VL,,VUUfLL UVM LUIW
development of the contracting industry\. Initially, the project was to finance some 2,000 km of a three-year
spoL UUi-Vr0vCMICn+L pjLVri,a\.Ln consis1L:ng VI a larnr \. I1UULLVL VI sirlUI AVUcUMAs WIL5 IUL sLze Varying UVLWeUe
US$10,000 and US$250,000\. However, the targets for spot improvement and periodical maintenance were
A_e uet 4-n-d 1 _avalblt offnigudr the:_ \. amn-ded --t geer\.ent In u end, the -roJect
iVUU%,VU UUV LU "n~ULv avauiaumtiy V\. \.uuLu\.LLr LLUnui LwLv VuILUVU %,LVU1L arLV1~VLL\.LL L LUUV, CLIU, LLLU P10Jj L
financed only 50 percent or 1,000 km of its original targets\.
First year procurement (1995/96) was planned and executed using direct contracting to private
contuUcators aMud uie staLe eLiterpr1se, wiUiil uhe NCBn p[UceU[cs werC UCing uevelopeu for LiC RWoaU
Maintenance Management Division (RMMD) under the project, The procedure developed comprised: (i)
conuitons of contract (based on tLe IDA SIMs lor smauer works); and (ii) specifications, bils oI
quantities, contracts and acceptance of works\. During the second and third years, the NCB documentation
was tested for the spot improvement and periodic maintenance\. A total Of 13 spot improvement contracts
were executed at a total cost of US$1\.83 million\. Of the two periodic maintenance contracts planned to test
the NCB procedures, one contract could noT be compieted given me aforementioned reduction in the
allocated resources\.
Beside upgrading critical sections of the road network, this component developed and tested
bidding documents and procedures for future uses\. The contracts created opportunities for contractors to
familiarize themselves with bidding documents and procurement procedures, and to create basic
understanding of quality control and supervision of contracts\.
Threeyear program of routine maintenancefinancedfrom local budget\. Routine planning
procedures were introduced together with improved NCB bidding procedures, documents and staff training\.
However, the Government, facing a deteriorating exchange rate (LAK 720 = US$1 in June 1993; LAK
3,200 = US$1 in May 1998) was not able to meet the agreed minimum budget for the program in real
terms (US dollar), and was able to allocate funds to maintain only the most critical sections of the national
road network\.
Organization and execution of the road maintenance program\. RMMD, with the assistance of
TA, prepared a five-year maintenance program, developed a Bridge Maintenance Database, standard
bidding documents, annual maintenance programs and documents for management of works\. A road
- 6 -
referencing system was established by the Government The TA was designed to: (a) establish the
RMMD; (b) bring forward the arterial network to a maintainable condition; and (c) establish a bridge
maintenance system\. The reduction in scope of the spot improvement and maintenance program, the TA
was correspondingly reduced and completed at the end of 1997\.
B\. Development of Construction Industry
The exercise towards privatization of SRBCC was a major development in the context of
establishing a local contracting industry\. Three State-Owned Enterprises were joined to form SRBCC\. The
accounting system of the company was set up\. Cost accounting and control procedure were completed by
July 1997\. SRBCC's capability was strengthened to the point that it was able to execute direct and ICB
contracts\. The first three contracts were directly contracted\. The last contract (3 lots) was under ICB with
SRBCC winning the bid under a joint venture\. The privatization of SRBCC, however, proved to be time
consuming\. This was mainly because of the weak secondary equipment market, which caused difficulty in
asset valuation problems and the impact of the East Asia financial crisis\.
C\. Road Improvement
Sections of National Route 13S & Savannakhet-Pakse Road Improvement\. NR 13 is the sole
road linking the southern part of Lao PDR to the central region around Vientiane and to the north of the
country\. A section of NR 13, Savannakhet - Pakse Road, was improved under the Southern Transport
Project (Cr\. 1846-LA)\. The current proiect was to improve 135 km of the road from gravel road standard
to a 9 meter wide formation with 6 meter double surface treatment\. Funds under the project were
redirected to rehabilitate 70 km of Routel3S between Namkading and Savannakhet which was contracted
out under HIP\. As a result, the total length of the Savannakhet-Paske Road was reduced to 55 km
consisting of three sections of the road, Seno-Ban-Lak 35, Savannakhet to Ban-Lak 35, and Savannakhet
by-pass (Road A-1)\. The three sections were contracted out in six lots to SRBCC and satisfactorily
comnleted\.
Rehabilitation of 70 km of NR 13S\. Namkading - Savannakhet This sub-comnonent was
originally planned to be financed under HIP\. The works were executed according to the contracts and
procedures estahlished under HITP_ During the defect liability period, the road showed serinu- signs of
localized deterioration\. Investigation showed that two major slip failures had occurred and that the erosion
wna dale tn hvdrnIlo^nil nrnblem Aftera series nf investicutinnq it was determined that the rnntractrr the
design and supervision consultant, as well as the employer, shared responsibility for the defects\. The total
rernedi awnrVe w-re estimrnuteA at TTUS@ 68R millinn The linhilltu ws annnprti-ned am ^ng the rnntrnntnr
consultant and the employer\. The contractor agreed to carry out 15 km of remedial works, a considerable
part at his oWn expense\. An amicahle ettlpmpnft uwth rnncrPtart \.was alson rearthed iv corbinhed liahbilit,
for both structural design and construction supervision amounted to US$2\.86 million, covering some 28
r_r_nfn At e1, n -aA - pn tl-, 1,_ n,arlrc --tr- r-an,n lMaA \.-A Arf\.,+ -hl\.i,- toartrprfi n,no' -AeeeA f-r ha+Il
construction contracts in March 2001\.
Rehabilitation of Bridge on NR 13S Improvement\. Following reallocation of the credit to bridge
sln ~~a4ifD a\.,l-1-T TOOf A C -\.II;- ---- +_ 4\.,\. -f\.,\. la,\. a4T TOOC CZ -\.11- --
LiAulauvm fig EaP oA 11AA, only US$0\.4 rAillion compred *\.o *d [e o,\.ginal zhllcaton uf US$2\.5~ rsAL lionL was
allocated to this component\. A total of 11 contracts covering priority bridges on the National Highway
wereC LrehabJU'LaLU by AuLUsL 1770\. 1\.e L\.er\.LU4aly UbIUr,de WLre lIVL ouUL L* Ube ePLMVU\. Uy pe\.-11\.IULaL
structure under TRIP\.
Construchon Supervision\. The supervision consultants were selected using the quality- and
cost-based selection process and financed under the Southern Transport Project The supervision of works
was carried out with special focus on strengthening the local supervision through participation in
supervision of works\.
D\. Technical Assistance and Training
TA for Project Coordination Unit The Consultant who has been working on HIP was retained to
assist the Project Management Unit The project coordinator used a simple financial and physical
monitoring system based on the experience of HIP for all project components and contracts\.
TA for Transport Planning Unit (TPL)\. TPU was established under HIP\. The task of
self-sustained development has begun, although it is likely to take continuous improvement through various
technical assistance\. The trained staff now undertake some of the assignments which were undertaken by
foreign experts\. The Transpoit Planning Unit provides data, advice and training to MCTPC staff in
support of the establishment of its transport plan\. In addition, the unit carried out annual traffic counts,
provided training and assistance to the provincial and communications departments and carried out
seminars and lectures in economics and planning to senior ministry personnel\.
Training\. Beside on-the-job training, fellowship for training of five staff for bachelor's degree,
three in civil engineering and two in economics, was provided under the project
4\.3 Net Present Value/Economic rate of return:
The major components financed by the project were of high economic benefit\. However, it is not
easy to fully quantify the benefits of all the components\. The development of the contracting industry,
technical assistance and training have distinct costs and are essential to sustainable development\. Where it
is easily quantifiable, as is in the case of road maintenance, the economic benefit is so high that there is no
limited value in estimating it For the same reason, the SAR had not undertaken any formal economic
evaluation\.
The appraisal estimate for the 135 km road constructed with base course on a 9-meter wide
platform with 6-meter wide pavement together with the bridge rehabilitation, and technical assistance for
supervision to the state enterprise was for a total cost of US$18\.3 million\. It was also anticipated that
works would begin in late 1994 and substantially completed in 1999\. After seven years, an application of
prime coat and single surface treatment would be required\. On this basis, vehicle operating cost savings for
the base case of 7 percent annual traffic growth yielded an economic rate of return of 28 percent\.
The actual length of Savannakhet-Paske section of Route 13S under SHIP was reduced to 55 km\.
The construction was carried out as planned, with 9-meter platform and 6-meter wide pavement The total
completion cost was US$9\.9 million\. Normally, the traffic growth was below expectation and the post
construction ERR estimate was 22 percent (see Section 9)\. For the Namrkading- Savannakhet section of
Route 13S, including the sections rehabilitated with SHIP funds, the estimated ERR after completion of the
works (see ICR of HIP) is 23\.4 percent compared to the appraisal ERR estimate of 17 percent\.
For the Savannakhet-Ban Lak 35 section, the 28 percent ERR target was achieved\. For Seno-Ban
Lak 35 section, the traffic growth was less than expected and the ERR value was estimated to be around 10
percent\. The economic analysis was carried out by the supervising engineers as part of the completion
report and verified by the Bank\.
4\.4 Financial rate of return:
Not applicable\.
4\.5 Institutional development impact:
The institutional impact of the project was positive\. Capacity in road maintenance planning,
budgeting, and control has been improved\. Progress was made in the practices of contracting-out, project
management, and in establishing the foundation of SOEs privatization\. The Government demonstrated
significant contract negotiation skills\. Through amicable settlement, the Government resolved the defect
liability of the Namkading-Savannakhet road dispute\. Delays in privatization, however, were more likely
due to the economic condition of the country than lack of commitment on the part of the Governrnent\. There
was a growing awareness about the importance of road maintenance\. The improved efficiency of the road
transport helped the functioning of the domestic markets and enhanced integration of the regional markets
within the country\.
5\. Major Factors Affecting Implementation and Outcome
5 1 Fartnrm nutvide the control of government or implementing agency:
Pricing structure\. The transition to market economy changed the prevailing relative prices\. As a
result, the contractors' cost estimates for Namkading-Savannaket were found to be far below the true costs\.
This led to the credit amendment to cover the cost increase\.
Heavy rain\. The unexpected heavy seasonal rain delayed construction\.
Domestic market\. Absence of a competitive market for second-hand eauipment made valuation of
equipment difficult\. TA advisors were unable to finalize the assessment of the depreciated equipment value
and other asqetc Moreover\. to formulate acceptable values to be naid to the Government they faced
difficulties in coming up with the proposed ownership pattern and amortization of assets\. This contributed
tn the d^ipav in the nrivatization of SRRCC\.
Del>a,ve in TA skeirned wrnrke Althnno4h tenhnwien ne6istnnr\.i wnq nrnuvide for mnrF thnn si-Y
months, a civil works costing system, procurement system, and a list of company assets and equipment
value ,w,ere not ready at the plannned dt-e\. MCTPC had to reqnest the TA consultants Head Office to
ensure that an adequate and timely services would be provided\.
5\.2 Factors generally subject to government control:
Amicable resolution of defect liability\. Following the discovery of poor quality civil works, the
Government, having identified the causes of failures, took measures to rectify the defects in the quality of
construction\.
-9-
inys pn proUje Clefi'euveness f ehe Th ird rmgnway Improvement Project ii nan Deen
anticipated that THOP would bridge the financing gap for contracts under HIP\. However, the delays in the
pruject effectuveness made it necessary to utnlizee eunds approved under SHPr\.
5\.3\. F-£ r ge,J eraClfly \.flWJCLCt 4\.,,\.lme,r age,CEC&fl 5C\.y L(Jfl&2(J:
Enforeing contracti\. With the aqsistAnce of the Rank Otff the imniementing aena,y wac able tn
document the defects and pursue the liabilities due to defects in structuml design and supervision by the
cnntratr and 9sTupervising ennquiltrnt
Poor construcion quality\. Tnitially, some 80 mpter A f TN 13 nerW A;- \.1, --A
towards the river and required urgent reconstruction\. The need to remedy the poor quality of works caused
Aplnue althn,iahl uth thP aAi4\. ,f tf , AT thf v16 tpn\. l Aan x -,o
5\.4 Cots and financina:
The revised total project cost was currently estimated at US$29\.65 million, compared to SAR
estimates of US$33\.37 millon\. The unutilized balance is US$3\.62 million\. The government recovered
about US$4\.05 million through amicable settlement of the dispute with the contract and consultant\. The
unutilized balance of the credit was slightly smaller than the amount of the disputed claim\. Taking into
consideration the uncertainty of how the settlement of the Namkading-Savannakhet would be resolved, the
final US Dollar costs was very close to the SAR projected figures\.
6\. Sustalnability
6\. Rationalefor sustainabiitiy rating:
The project is likely to mai ntain the benefit\. s\.;A rela";on 'o +;\.'s ; -_ o e
economic life for the following reasons:
* First, institutional reform and capacity building have taken place under SHIP and subsequent
MA-f -----A pJects ,1 *\.Le area of r UaU \.aML:U4U\. In Ta 14\.Utiv', Uie i\.-JU1 ance of
maintenance in sustaining life of infrastructure has been well recognized by the MCTPC\. The
Road 'vi-amtemanc 1VIk1irue\.nt IJIVIsULo V\.ViIr\.U duLLnLdr\. 'I A been siLi;ngWIaiinU UndUCr
SHIP and was further strengthened under the subsequent IDA-financed projects\.
* Second, the progress made in strengtiening the institutional capacities to plan, manage and
main ain the national hignway network will 'nave a positive impact on the overall management
of the road network\. The Transport Planning Unit, established in the Department of Roads in
199i, has-been strengthened with trained staff\.
* T\. A fL IA 1N \.+ _\. _;-_A,\. \.+-X, -\.+-A \.-_A \._ A;A+- -\.- -41 1 LA _ AI\. A-4 A - - A AJA A
- \.£s-U lca +uwAL1L du1sUW W A A U W UI1\., FJ\.vJ1\.4 WILL A JuLuvL ULVV1IPGGUp UUUS;
the subsequent projects i\.e\., Third Highway Improvement Project (Cr\. 2943-LA) and Road
1V_ A * t(r\._4 -81 A
* FUA LUL, inLUIIL BLUUp incLLUULin UIV 1JUU-cLLUULr :dIUU-wty anUU UUbuiLLnbs rUUp;S W-v ia-vor an
increase in the road maintenance budget, are active and vocal in raising their concerns\. Also,
the commercia in erest arising from the increas ng interdependence of the domestic market,
with the flow of agricultural commodities from deficit to surplus regions, is likely to reinforce
\.uh prsue on u*h Government * eW a duuLe uequa-e irsouie ior roau maintenance\.
- 10-
'o Finally, measures now being taken to raise revenue from user charges are showing encouraging
biYU\. inl 'UUb uli re a, M's R o\.Uau 1viM-UL-'UUe rIujuit q%[\. 34tO1LA)t Will 1Wliw --me,UlU7UL
the situation with the establishment of a Road Maintenance Fund managed by an Advisory
The nroiect is fillv onerational\. The sector strate2v\. which envisioned a series of follow-on
projects, had built-in transitional arrangement for sustainable operation\. An 8-year maintenance program
is heinc financed by IDA through the Road Maintenance prniect (Cr\. 3481 -T-A) The latter pnriect
promises to be an important phase in the systematic management of the road assets\. Under the Road
MAintelnane Prniect a Rnad Maintenae Fund Advisorn Bo^rd has been estblished\. Thlus, both the
resource and institutional constraints facing project sustainability are being addressed with IDA-funded
nrmip-tg ditQim,ptd tn -nhAince qiiqta hilitv within the fimP\.unrk nf the trSnanntt s>-tnr atrtem- \. The
local contracting industry capacity built through the liberalization process will increasingly provide the
hSftuit,iional ndnA tp hnir\. npanrnft ec tn evecY t\. t1he =nnii,,p\. nrpltinna\.
7\. Bank and Borrower Performance
Bank
7 1 Lending:
Ideiniclation of the project as nted earniev based on +16\. Go-e-en46 's
development's priorities\. The Program included restoration of vital sections of the transport network and
*ha[e pm\.nsaio\.n of ;mnprn\.,0e4 4rnnennrt servinc 1'\.m A socnn~\.atio cn's t\.n in L ao PDRl n,nc lals m,\.,n\.4t, of
the Government's effort in promoting economic growth and reducing poverty, maintining macroeconomic
sb:LauLy, Jl11J\.LLur U,LnuO}umv Ut,_ SLeUL,A4 VJpog ILe ILULULUI L'O%JLU\.V Ue V"UJjJILiLn, Gul
developing market oriented agriculture and managing natural resources\.
Preparation of project investment was assisted by the National Transport Study, supported by the
T T_:!_- -T___ 'T__1-,AA_ T%-_A \. T TkTAT'%T -_S YTr% A __ 'L__C_ _ -_C ,1__L
UilulU i'4UUuIm L\.#vblUp1illLl rlVrULLUiu kLJViLJr) w1u 1IU^ WIUl bIgUUInltWL pm UViliUUU Ul Ulb IUiUII awU\.I\.
The staff later formed the nucleus of the Transport Planning Unit within MCTPC\.
Appraisal identified the potential risks\. The main risks were related to project implementation
capacity and the lack of maineae managemen stanf\. Te implem tation risks wer to be minimized
through the provision consultant services to help coordinate project activities, implementation, as well as
supervision\. To reduce the need for high level maintenance, a i5-year design standard was adopted\.
However, in some areas, the materials used for road surface for the sub-grade and sub-base did not meet
the specification's requirements\. Tne expectation that the iocal human capacity weakness would be
compensated by expatriate staff did not materialize as anticipated\. The risks due to inadequacy of
maintenance budget were to be mitigated through improved user charges over the medium term was not
realized\.
Overall IDA's performance in lending operations was satisfactory\.
7\.2 Supervision:
Overall supervision is assessed as satisfactory\. The skill mix was appropriate\. Bank staff insisted
on qnli;t of n :s Bns,lr n oto' a,nsu,mport-n- toea rrnnarnrnn n c for ;Xla ,nffiects of
-1 1-
1NaJ1IUiLflUgSVWill'LUWL IIroadU, uLnJ\.iig DULLi *Lii WnMULLUiUI1 ad1U ULU UCdfc li iiiyL periucL WUlrl uie
investigation showed that the Namkading-Savannakhet road failure was not the result of force majuer
events, The Bank supported amicable rsolu in of uie I-airns -wiui ih ntractors\. in ihe course of
pursuing this matter the Government staff gained practical experience on how to enforce contracts\.
Moreover this action had positive unpaci on the performance of future contractors\.
7\.'- L'Vta\.' D-,\.
Overall Bank performance wac satisfactorv\. Bank assistance in the framing of the sector
investment on long-term development strategy and the preparation was satisfactory\. Supervision had
positive impact on intituntional canacitv hbiltdiinog and trannnrt efficiency onhieniveq of the proiectt The
delays in the effectiveness date of THIP led to restructuring of the SHIP\. This was one area where the Bank
i-niii hnv\.e hetter assessed the risk nnd imnpct of deIinv\.
Borrower
7\.4 Preparation:
The Borrower has shown commitment to the development of its road transport infrastructure\. To
its awareness of limited experience in developing sector strategy, the Borrower called on IDA and UTNDP to
assist in undertaking the National Transport Study\. The Study helped in determining priority needs: a)
defined a detailed investment, operation and maintenance program for 1990-95; b) formulated an outline
development program for 1996-2000 and efficient sector policies; and c) identified projects for possible
foreign financing\. The participants in the NTS became the nucleus of the Transport Planning Unit the
Government created to enhance its capacity\.
7\.5 Government implementation performance:
Tne Government was committed to the prject objectives, and was keen in implementing the
program to achieve transport efficiency and sustainable road network\. It was also committed to
liberalization of the economy\. However, it was faced witi substantial constraints of resources and trained
staff, and difficulties of the small domestic market\. Despite such constraints, it handled the claims arising
from the Namkading-Savannakhet road in a highly satisfactory manner\.
7\.6 Implementing Agency:
The Prnie\.t Manavement T Tnit the Commminic2tinns flepnntmentq and Rnnd Mi_tenannce
Management Division played significant role in the implementation of components of the project\. A
nrnioet ro%nrdinvtnr hbaed in Vientianne sistedi ePact of thpe hunve iinits in exveeltingr their rnese\.ii,e
responsibilities\. Overall, their performance was satisfactory\.
7\.7 Overall Borrower performance:
The Borrower and its implementing agencies, despite its limited institutional and technical capacity
and resources, have shown commitment and have responded well to the challenges as they arose\. Their
performance under the project is assessed as satisfactory\.
8\. Lessons Learned
There are several valuable lessons that can be derived from the implementation experience of the
Second Highway Improvement Project with regard to the continued development of infrastructure in Lao
PDR\.
- 12 -
Flexibility during implementation enhances reaching outcome oriented development
objectives\. Tne SHiiP was a continuation of the HirP and shared the development objectives, including the
rehabilitation of sections of Highway Route 13S\. When actual constructions costs of sections of Route
13S exceeded the HIP credit proceeds, the Government asked the Bank to restructure project components
and reallocate resources to complete rehabilitation works\. Since the development objectives were outcome
oriented, the project was restructured witn little deiay as Bank's management promptly agreed to the
reallocation\. Thus, the combination of outcome orientation, flexible project design, and timely response to
the implementation issues, saved significant cost and time while maintaining an effective development
impact on the ground\.
Capacity building and commitment to infrastructure asset preservation require sustained
involvement over time\. In developing countries such as Lao PDR, strengthening the capacity of
institutions to properly maintain and preserve infrastructure assets requires sustained comnitment to a
long-term development framework\. An incremental transport sectof approach-based on a series of
rehabilitation projects with increased focus on maintenance and important capacity building
components-as proved to be effective in Lao\. This framework has facilitated timely response to
implementation issues and proved to be conducive to building Borrower's commitment towards a long-term
sector development goal\. A sustained engagement has also allowed improvements in skills of counterpart
staff and capacity of sector institutions over time\.
Contract management and timely handling of contractual disputes are critical to attaining
high quality infrastructure\. Some sections of Route 13S between Namnkading and Savannakhet had
shown construction defects which were corrected during the construction phase\. Additional defects
appeared during the Defect Liability Period\. Moreover, both vehicle axle loads and volume of traffic had
increased by about 150 percent over the projections\. As advised by the Bank's supervision mission, a
series of field investigations and intensive studies were carried out by an independent consultant In
parallel, investigations were carried out by MTCPC and local consultants to identify the causes, extent and
liability of defects\. Subsequently with the Bank's support, MCTPC was able to reach an amicable
settlement with the contractor, and the estimated liability was apportioned among the contractor,
consultants and the employer\. Both MCTPC and the contractor ultimately benefited from the resolution of
this dispute\.
9\. Partner U ComrRenIta
(a) Borrower/implementing agency:
Introduction
The Second Highway Improvement Program (SHIP) is a direct continuation of highway projects
implemented by the Ministry of Transport and Communications of Lao PDR (MCTPC), and through its
Department of Roads (DOR)\. These are:
* Southern Transport Project 1988 - 1995 (Credit 1846-LA), US$14\.1 million;
* Highway Improvement Project (Credit No 2218-LA), 1991- 1997, US$49\.2 million
(including NDF credit No 4/90, US$5 million)\.
- 13 -
I nu ariir nas Lim disundiorn of conunuing Lute ruau sctor reiorm m reiauoun wiun mLe Government
policy of transition towards market economy and laying the foundation for mainstreaming the concept of
managemenit and maintenance of the road network\.
Tne Project was complewed m December L0U01, anrer a six month extension of tne ongmal scnedule\.
The Project Monitoring Division (PMD) of the Department of Roads assisted by a team of representatives
from other Departments and Divisions in the Ministry has compiled this report Tne report reflects tne
borrower's view of the implementation of the Project and has been endorsed by the Govermment
Project Background and Design
The Project formulation started in the early 1990's during the implementation of the Highway
Improvement Project (HIP)\. At this time the Government identified the following development objectives in
road sector:
1\. Restoration of vital sections of transport network such as:
* National Road& 13 and 9;
* Other main roads supporting agricultural production; and
a Rural aG-eS rnads in noTimiltu-ra areas\.
2\. Improving road maintenance capacity of central and provincial organizations\.
3\. Improve transport services in general\.
All these issues were critical to pursue the overall policies of the Government aimed at
=dronnlhanin thea eco nl hase nf th1ea Crm and redA ucir\.gf ifnAtr-\.rpnnrol ficaro\.Nt *n, mn^ " aned
development The Government requested project preparation assistance from the World Bank to formulate
UlA L v L iJ6A \.Y U= a \. * JSLI vII \.jI t-in 1fll-S5 6 v -
A - a rewult½ eUi --a - I la\.uoJtf Trpo tu was -- UAy t-MA\. -A&T\. Tns -A dcorupletdA I Onl1\.
The study concentrated on outlining the road sector programming, policies and identification of priorities\.
LLL 1 1, the sIor lJP:J a I -aung, TLJiUL (TAv U) was eLaUblisheU in LL\. ' \.eDpa ua\.ent of AWaJOUO WiiJ IUl
framework of HIP to:
* Collect and review basic data on roads, traffic and necessary improvements; and
* Sturngthen insIutuUuu capacityv fo planning, uuAr\.VLUlry pwusganm \.i\. andu iua1i\.LafLnig Luu c
National Road Network\.
The Road Maintenance Management Division (RMMD) was created under the HIP to pursue the
first real efIorts to address road r naninidM tenance in ute country\. TIe Go-verliinUL waned wO conunue and
strengthen this effort under the next project\. The SHIP outline was completed during appraisal mission of
June 1993 based on the established government policies, lessons iearned from the previous projects, various
studies and data collected by TPU\. The Staff Appraisal Report was submitted in March 1994 leading to the
signing of the Development Credit Agreement (DCA) in july 1994\.
- 14 -
Project Objectives and Planned Outputs by Components
The Govermment agreed to the following main project objectives:
a\. Increase the effectiveness of the Country's road network by road improvements on NR 13S
between Savannakhet-Pakse;
b\. Strengthen the institutional capacity in road management by providing technical assistance;
c\. Maintain the National Road Network through spot improvements, periodic and routine
maintenance, and
d\. Create a local contracting industry by commercialization of selected state owned enterprises\.
In relation to the above objectives the following outputs were planned over a five year
implementation period:
Road Rehabilitation
* NR 13S between Savannakhet - Pakse improvement from gavel road standard to a 9 m wide
formation with 6 m DBST surface (135 lan);
* Rehabilitation of 36 temporary bridges on the above mentioned road; and
* Construction supervision for the imnlementation (96 staff-months)\.
r(nnQitv Rniidina
* Technical assistance for the Project Coordination Unit (Project Coordinator, 24 staff-months);
* Technical assistance for Transport Planning Unit ( 1 expert, 12 staff-months); and
* Short term training, visits abroad, fellowships (5)\.
Maintenance
* o *npo\. tv amA ,per,nA riat inkni ey cnitrmet4n& ni 200A hm nf Natineai mna2,
over a three-year period;
* Routine Maintenance, financed by the Government, on a network of 5,449 km over a
three-year period,
* Technical assistance for the execution of the maintenance programs (4 experts); and
* Specialized short term technical assistance for SHIP- management (auditors etc\.)\.
Contracting Industry
* TeLCUMch assisUtace Luo oneLS, state eWeI frctAJOL cotdn, ' ;atuin and pojt\.
management (two experts, total 48 staffinonths)\.
- 15 -
Special Credit Covenants and agreements
The following covenants and agreements were well formulated and had a positive impact on the
timely implementation of the project without confusing Project objectives or outputs\. There have been no
major obstacles in fulfilling these conditions either before or during the implementation\.
a\. Appointment of consultants for technical assistance to the selected state enterprise\.
b\. Establishment of the Project Management Unit for the supervision of the works for
Savannakhet-Pakse road improvement maintaining this unit until the completion of the works
with responsibilities and staffing acceptable to the IDA\.
c\. Enviruo entalG uuiueles approved by Prime Mvinstenal Dere\.
d\. Government financing of its share of the Proiect for 1995/1996 US$1\.4 million, 1996/1997
US$1\.8 million and 1997/1998 US$3\.4 million with a line item in MCTPC budget\.
e\. Agreement to annual reviews no later than October 31 for each fiscal year\.
f\. Proiect Coordination Unit will be maintained for the duration of the Proiect
g\. The selected State Enterprise to be maintained until the end of the Project\.
h\. In LCB the bidding documents wiU be available in English and in Lao\. Foreign contractors are
allowed to participate in the biddina without preregistration\.
1\. Annual audits will be carried out on Project and Special Accounts according to international
standards\.
i\. Quarterly progress reports and Proiect Completion Report (Borrower's contribution) will be
submitted to the World Bank\.
Project Implementation by Components and Output
Increased costs for Namkading-Savannakhet road improvement under HIP caused major changes
in the (rwit Anllntinn in late I QQS hnwever the nhientiveaq nf the Prnieet were nnt Ahnnaed The fnllnwing
reallocations to HIP were confirmed in an amendment to the DCA in February 1996:
* Category 1 (bridge rehabilitation) US$2\.5 million (originally US$2\.95 million)
* Category 1 (civil works) US$4\.5 million (originylly US$6\.25 million\.)
* Category 2 (spot improvements) US$7\.0 million (originally US$15\.13 million)
* Category 3 (consultancy services) US$1\.0 million (originally US$2\.43 million)
Since funds for spot improvements were decreased by 50 percent and for upgrading and civil
wLAa Uby Vp J%\., -vJ plan=e oujuts of - A e jwt w Ve n e -Vtnc\.-\.
* A network of 1,000 km for spot improvements and bridge rehabilitation;
* Upgrading of 55 In of Routes 13 and 1; and
* Rehabilitation of 70 km of Route 13S between Namkading and Savannakhet
- 16 -
Road Rehabilitation
a) NR 13S between Savannakhet - Pakse improvement from gravel road standard to a 9-m wide
formation with 6-m DBST surface
Due to the decrease of funds\. the planned output was decreased to 55 kIn and to contain Route 13S
between Seno - Ban-Lak 35, Savannakhet to Ban-Lak 35 and Savannakhet by-pass\. All the, Contracts
were completed in time with satisfactorv qualitvy
rnnfart I Signped CnmmPnced I rnmnlptiln I Mode of I Fn, Cost 1
1 _dVa,tKe_0_1date Contract (US$ million)
I \.z3 iOt) 11 I 7/I __O__I __ _ 1/ r;\.-+ n) 7
2 (I lot) 2/29/96 3/23/96 4/23/98 Direct |_2_7_l
3 (3 lOtSJ | 6l/2/9 77/|11/97^ 1 /3i/99 iC 26l \.> 9
Average cost of construction was US$i20,2004m Average production rate of completed road per
month of contract period was 1\.65 km\.
b) Rehabilitation of 36 temporary bridges on Route 13S
Originally, only US$0\.45 million remained for bridge rehabilitation after the reallocation of funds
to HIP\. The 1996/1997 and 1998/1999-bridge imnpvements program\.s were conmnleted in August 199R
with total disbursements of US$0\.793 million\. A further US$0\.721 million was used for the final part of
the nromrnm during 2001\. Pr orty obietvives and outputs were accomplished for the reduced sqone of the
component for priority bridges on the National road network\. In view of the proposed Third Highway
prioect (T1P) it wan not fensihIe to carrv out maior rehabilitntion on te\.mporary hridves that woulld be
replaced by permanent structures in the near future\.
c) Construction superisionfor the implementation (96 staff-months)
The supervision was carried out successfully by international consultants with appropriate
attention to strengthen both local supervision capacity and the contractor's management of works\. Six local
supervisors were trained during the process\. Supervision costs were at 15 percent of the costs for the
works\.
Capacity Building
a) Technical assistancefor the Project Coordination Unit (Project Coordinator, 24 staffmonths)
The Project Coordinator (international expert) that was employed for the implementation of HIP
co< U\.- -i --- -vices sucssulyw+U- +Ue o\.kof SnT\. A s:_i\.~ecia -Arl _U-_:_ic
monitoring system was continued and further developed based on experience from HIP for all project
corm-onn', -an --- acts
A VGL75IU\.W U &)SU5"LCJUF A F"taUH\.JJ! A £UOFg5~55 lull (A C_VI A & \.aiUJJffOUI5W5\.)
An International expert provided these services satisfactorily\. Statistics for road management were
collected including expenditures for operations into a simple database\.
-17 -
c) Short-term training, visits abroad fellowshiDs (5)
Intemational and national workshops were financed by the Project\. Three annual training programs
have been implemented for a total of 60 short courses and 9 fellowships utilizing the available funds
efficiently\. The total number of participants in training was 1,000 with nearly 1,700 staffmonths\. English
language traiunig was 70 percent of the total output
Maintenance
a) Spot improvements andperiodic maintenance by contracting on 2,000 km of national roads over a
three-year period
The scope was reduced to cover only 50 percent of the original network\. Only US$1\.88 million
remnine f-r the oricinal JMJ o^utpults and the activitiem were a c-ntinuAtion of the HMT project\. Direct
Contracts (22) under US$50,000 were used for the FY1995/1996 spot improvement program worth
USS1\.!24 million wuith dwditional uwrks for the kpy netw\.ork wor-rth US$0\.16 million\. Procurement was
based on a minimum of three quotations for each contract, because NCB documentation was being
A--I-A 4- A,m,wnr t nrAoram 1V1 00V/1 007 otartPA 11c-inn Irpal r%mnPtiutP1 hiAAlinc _in
US$0\.646 million was committed on 13 contracts\. A total of approximately US$1\.83 million was utilized
It^o SLTD \.-Ad +16 + re|m opewds_esiybfr he wet apacem in 998
Two pe-iodic =\.; m\. confr ,,ts were to t toe\. NICBr nrnmirmArnt in 1002 Tha
original allocation was reduced from US$0\.6 to US$0\.4 million\. As a result, only one of these contracts
was successfi\.lly completed\.
This comnonent was essentially imnortant to:
* Upgrade critical sections of the road network to maintainable standard;
* Develop bidding documents and procedures for further use on bigger contracts;
* Familiarize contractors for the bidding and procurement process; and
* ('reate haqic iinderqtAndinpy of qiualitv control and sunervision of contracts\.
It is regrettable that the original size of the comnonent was shqta ntiallv reduced nreventin'
upgrading of continuous network for about 1,000 kIn to maintainable standard to facilitate efficient routine
and pr:e^4fr' m itentanre Thi er--eteid nrnhleniq fnr the nteYt nronram nhhapes (TT-TP and RMA) that need
to include spot improvements in their concept,
b) Routine Maintenance,financed by the Government, on a network of 5,449 km over a period of
The Government struggled to fulfill the agreed financial commitments in order to reduce the gap
between earlier budgetary needs for road maintenance\. The budgetary commitments were made in US$
terms\. The exchange rate of LAK/JS$ that was 720 at the time of appraisal (June 1993) steadily
deteriorated to 3,200 by the end of May 1998\. The trend accelerated thereafter\. At the same time the
relevant price indexes (Consumer, Energy and Construction, and Transport and Communications)
increased by 50 percent
In spite of all these financial difficulties, MCTPC managed to secure enough funds from the
consolidated budget to carry out basic routine maintenance tasks for the essential parts of the National
- 18-
Rnad Netwnrk Routine maintenance nIanningr waS omdullalv introdiurced together with annromnriate NCR
bidding procedures, documents, and training of staff\.
Financial 1 Agreed Agreed Actual Actual CPIand
Year minimum minimum budget budget Construction
budget budget nKP bilHon) taidng into Index
(US$ millin (ubllion) jaccount j______
l l |~~~~~~~(KIP blllon) |I 2 | aC°PUI I
95/96 1\.4 [ 1\.0 1 3\.980 L 3\.71 l 107
96/97 1\.8 l 1\.296 I 5\.152 4\.15 7 124
97/98 3\.4 2\.448 3\.273 J 1\.50 217
1/ Based on average exchange rates LAK 720 / US$1 and CPI base index of 100
2/ Including emergency works
c) Technical assistance for the execution of the maintenance programs (4 experts)
Due to the reduction in the scope of the Project, consultancy input for TA to RMMD was reduced
in late 1995, respectively\. TA consultants were appointed to RiviID and started in May i996 with
five-year maintenance planning, condition analysis, and development of bridge database as priorities\.
Standard bidding documents, annual maintenance programs, and documents for management of worKs were
prepared\. Road numbering system was developed and agreed by the Government in June 1997\. The
technical assistance component was satisfactorily completed at tne end of 1997\.
d) Specialized short-term technical assistance for SHiP management
Regular annual audits have been carried out by local consultants to the satisfaction of the borrower
and the World Bank Communications Design Research Institute (CDRI) contract was extended from HIP
to cover additional designs and bidding documents for the civil works\. Special experts and local consultants
were hired for the analysis of defects and failures on Route 13N\. A short term legal expert was employed
for legal advise on the liability issues on Route 13S\.
Contracting Industry
Technical assistancefor one state enterprisefor cost accounting, estimating and project management
(two experts, total 48 staffmonths)
International technical assistance to state enterprise SRBCC started in late 1995 with the priority
of setting up the accounting system\. SRBCC privatization plan started in May 1996\. SRBCC cost control
and accounting procedures were completed by the end July 1997\. This consultancy assignment was not in
all respects satisfactory measured by the impact of the Services\. The Contractor's capacity was obviously
limited to make efficient use of the theoretical approach and the computer programs that were introduced
were complicated and sophisticated\. The Consultants did not adapt the systems to suit the local
environment and to comply with the enterprise's capacity and expectations\. On the positive side, the
company made successful ICB bids for Contract 3 in SHIP and, later on, as partner in a joint-venture, for
Contract 1 in THIP\.
- 19 -
Additional Works
Rehabilitation of 70 kn of R13 S between Namkading and Savannakhet
This component was added to finance unexpected additional works in the HIP (SDR 9\.37 million,
US$12\.8 million equivalent)\. The works were carried out according to the contracts and procedures
established under the HIP and were taken over in April 1997\. During the Defects Liability Period, two
major slip failures occurred, hydrological problems especially related to erosion were discovered and the
road showed serious signs of localized deterioration\. After a series of investigations, the Contractor carried
out 15 km of remedial works\. An amicable settlement was reached so that the contractor compensated US$
0\.573 million for the defects\. An amicable settlement was also reached with the design and supervision
consultants that compensated US$136,296\.10 for the Client's losses\. The works have now been completed
and defects liability certificate was issued for both construction contracts in May 2001\.
Costs of the Project
About 98 percent of the planned costs (SDR 21\.8 million, US$30 million equivalent) have been
disbursed\. Most of the savings are due to Category 2 (Civil works, Savannakhet -Pakse) and technical
assistance services to RMMD (later on Road Administration Division)\.
Benefits of the Project
The most important benefit of the project is the recognition of the primary importance of road
maintenance to safeguard the road assets and to continue developing the maintenance management as a
priority\. As a result of the project the road users directly benefited from reduced vehicle operating costs on
the rehabilitated road sections with increased reliability for movement of goods and passengers\. This
indirectly increased to economical activities that were dependent on the transport routes contributing to the
agricultural and commercial development\.
The target of Economic Rate of Return of 28 percent for the road improvement component was
reached for the section Savannakhet -Ban Lak 35\. For Seno- Ban Lak 35 the traffic growth was less than
expected and the ERR value was estimated to be around 10 percent
The spot improvement works improved the continuity of the road network and enabled the road
sections to be routinely and periodically maintained in the future\. The development of databases,
documentation and management processes paved the way for the improvement of road maintenance
management tools\. The human resources development essentially upgraded the key personnel to carry out
the required management duties for effective road maintenance and pursue its adequate financing\.
The development of local contracting industry benefited one single state enterprise and established
the necessarv arrangements for it's privatization\.
TntIltitionsal T_sues
The Proiect was concentfted on the develnnment of central ministrv orgoanintion to execute mrd
management\. For this purpose, the establishment of RMMD and TPU proved to be beneficial in general
tprns\. The Govemment policy for decentmfi7Ation of the road mnamogement to loscl l,evel \.was only partly
included in the Project concept but provided the possibility to gradually start moving towards the
CVFrnmF-nt'leeP\.ntr1i7Ation ohiprtive\.
-20 -
The operational guidelines and standards for the Ministry were often prepared separately under
each component\. A systematic development and issuance of these documents would have improved the
adoption of the practices in central and local level\. Some documents and guidelines were left at draft stage
without final approval from the Ministry\.
The Manpower and Organization Division (MODD) of MCTPC was active in implementing the
human resources development component\. However, a systematic management of all training activities
within the Project components would have required MODD to take an active role in the overall
management and monitoring of all training (including on-the-job and language training)\. This was difficult
because the Ministry internal management structure and practices of the Ministry were in accordance with
strict top-down, line-management principles without flexible inter-linkages between various Divisions and
Departments\. Moreover, the role of the PCU was concentrated on the coordination and monitoring of
project activities without official executive institutional status in the Ministry's organization\.
None of these institutional issues had serious effects in the implementation of the Project, but left
some room for considerable improvement in the future\.
Proiect Sustainabilitv
The institutional development and training carried out under the Proiect provided the basis for a
reasonable amount of sustainability in basic road maintenance management at the central level\. However,
the dependence on foreign assistance will continue to prevail for a considerable time in the future especially
taking into account:
* the vast financing gap for road maintenance;
* backlog of maintenance reouiring coneiderahle investments for rehabilitation/snot
imnprovements;
* the age of the main road network that requires major structural improvement in the near
future;
* lack of qualified permanent staff for road management in central, and especially local level;
* lack of qualified services and works from local consultants and contractors for contracting;
and
* gradual shift to asphalt concrete and stabilization technology as the traffic density increases\.
While the Project addressed most of the above mentioned critical issues there is further need for an
in-Aepnth wvi,pur nffthe rnrtsp related tn thpe Csitni"OhiEftu Ad r-ngC the Prninit dsigpcnia ,tfr
TJDV _JoeAnne T narnaA
It becu-e obvi-ous during the first year of the P-oject that a thorough rewrew of the cost est;ma'tes
and budgets for the previous project (HIP) was necessary\. In order not to compromise the quality of HEP it
uIMCM1me necesstary Wo r *1oca'e major aM-oS *4-l frlv Cum I-A; Cred;t\. ALF-r\.9\. - 'hese Jjo ectdwr
closely related and the flexible approach of the WB can be appreciated in this process\.
-21 -
The technical assistance should be concentrated in on the job training principle with a systematic
app\.ach Mud WMl;-fion of Ufl\. pie\. \.omaJ \. 1ACeptir\. Lo\.U e spewcia l sV-\.ces, 'U1 CObuuLS M\.LUI
always have nominated qualified counterparts that will retain the consultants' inputs in the Ministry\. At the
5SilC ii~U1~1VIU~U Wil LU I ~ UUUL L j ,UV1U %IUIUILUL UI UI UiUu\. UIJ5 r~VICUS\.
same- ,:m JV11"e L Iv Iit -sd it'sutmost oL- provdid cor,<ur\.-uit oft 'ue oc bLisufdmgul evcs
The 1dve:opment1 ouis acmpiUic Lee, iivoivmg a wide range of uansfer of
knowledge, information and technology from qualified experts\. In addition, the access to foreign currency
souces re-ains a bottleneck for equipment management and renewal\. in order to address this problem in a
comprehensive way the technical assistance should be based on a balanced combination of the recipients'
needs and the cons-ultants' expertise\. Tne approach should be practical and simple with the services
provided by consultants who have practical comprehensive experience in all aspects of small/medium- sized
constuction comnpany management\. Sophisticated and complicated management practices should not be
introduced at his stage\.
The same principle applies to all management systems that will be introduced in the future in the
Ministry (road and bridge management, quality assurance etc\.)
Coordination of the Project activities was considered successful\. However, for sustainability, the
Project coordinator should have had a local counterpart from the beginning of the Project with institutional
executive powers\.
The counterpart funding agreements should be specified m view of Govermment's available
resources, possible imbalances of excessive inflation and unfavorable exchange rates\.
The last and most important lesson that the Ministry learned was the importance of maintaining the
existing road infrastructure as a most economical means of road asset management\.
Borrower's Performance
The Borrower has not identified any significant defects, obstacles or lack of performance during
the Project, as it was formulated in the Development Credit Agreement or in its Amendment\.
The Borrower's performance may have been further improved by taling into account the
development needs of the local level road management in view of the decentralization policy of the
Government However, there was a defimite priority to develop and test the core management systems and
capabilities at the central level, leaving this subject to the next Projects\.
The Borrower's performance might also have been improved by emphasizing the need in the Project
to review the organizational structure at the central and local level, applying appropriate office
management principles, management of personnel, leadership practices and improving various types of
communication skills under the different components\.
In general, the project objectives, outputs and activities were well formulated and balanced the
Borrower's, stakeholders' and Lender's views during the preparation\. This has attributed to the positive
general outcome of the Project\.
- 22 -
Bank Performance
Tne world Bank responded promptly and adequately to the needs for reallocation of funds from tne
SHIP to the HIP\. Although it was unfortunate for SHIP, it shows that the World Bank appropriately
recognized the importance and urgency of the amendment\. Tne World Bank also showed commendable
flexibility in allowing an exemption for procurement of vitally important goods for the operations\.
From November 1995, the World Bank has undertaken 10 supervision missions averaging nearly
twice a year\. In most cases,, the subject of these missions has been all the on-gomg highway credits at the
time\. The missions have been well timed and adequately staffed for the supervision of the Project\. The
Ministry's views and capacity to tackle current problems during the visits was well understood and taken
into account with excellent understanding and cooperation on problematic issues\.
The mutual understanding might have been further enhanced by allowing a bit more time for the
review and comments on the draft aide-memoire at the end of the mission so that all the involved parties
might be able to express their opinion on the text and especially the proposed agreements\.
In aggregate, the World Bank's performance can be rated as highly satisfactory\.
Final Conclusions
The Second Highway Improvement Project has been carried out according to the schedule and
within the budget The Project has achieved most of its major relevant objectives and may be expected to
achieve its satisfactory development results with only a few shortcomings\. Therefore, the overall
performance can be rated as satisfactory\.
(b) Cofinanciers:
(c) Other partners (NGOs/private sector):
10\. Additional Information
-23 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
Indicator/Matrik Projected in last PSR- |Actual/Latest Estimate
Increased effeciency of the I The baseline for reduced VOC\. 1
country's road network\. transport cost and travel time
was never established\.
Tnshtituinnal canacities C GOL made nrogress in GOL made progress min
strengthened\. intemalizing the importance of intemalizing the importance of
mIrod minttennnrp to safep\. riird rmnd mintfPnnice to safeu, 2nrdd
the road assets\. the road assets\.
Showed commitment to give Showed commitment to give
priority to further develop priority to further develop I
maintenance management maintenance management
capabilities\. capabilities\.
Transport Planning Unit now Transport Planning Unit now
plans budgets and program the plans budgets and program the
manage and maintained of the manage and maintained of the
highway network\. highway network\.
Improved annual maintenance Improved annual maintenance
program\. program\.
Transition to a market economy The management and the The management and the
in the iocai contracting industry\. empioyees of the company empioyees of the company
bought 51% of the share in bought 51% of the share in
December i997\. SRBCC December i997\. SCKCL
obtained, under a joint venture obtained, under a joint venture
scheme with an intemational scheme with an intemational
contractor, a major contract contractor ,a major contract
valued at US$13 million through valued at US$13 million through
ICB procedure under ICB procedure under
IDA-fimanced project\. IDA-financedproject\.
- 24 -
OutPut Indicators:
Indicator/ir PrOjected tiWFbS; |AChuI1I ateSt Estimate
I T* U-pAdIng o 55 k f oA^f U Adedp 55m ofI TT-AA CC L- 1--f
sections of Roads No\.13 and Roads No\.13 and No\. 11 with Roads No\.13 and No\. 11 with
I XT 11 -,1 TD D ^ I AOTDD-,\.^ AOL I TDD-\.^1AOL
(target reduced from 135 due
1 -\. IWL-- -34r TT'LI" JILL,`, AV 35 due L Ill (U\. IlL~ LU 0
LU UV%,Uj I\.UUUD foULr )\.
2\. TTnpm Ainae nf 7n km nf?n-^ano TPhoiliatfA 7AKm ofR13 Pp1h a1il4ati\.A '70 m of RP3
No\.13 included under Credit between Namkading and between Namkading and
1 2-T A (_f-\. Am* Ai,n* mnwa'unaWiha\.t I,ana,h\.A+
dated 02129/96)\.
Rehabilitation of 36 11 bridges rehabilitated 11 bridges rehabilitated\.
tmnanrarv hridses on R13-S III
3\. C\.M\.L'sBudgitfnr ( IA 's Rm4aot for mintmantvn\.-p r (nOT!'B iidct for m aintmnpam,P
m-Aaintenyance\. (95/96: US$1\.4 million; 96/97: (95/96: US$1\.4million; 96/97:
~~~~~~~~~~~~tS!8mai_ntenance\. (9 8 S3\. U!8 mlon; 96 \./97:US\.
ITTQ't8 2 w11zi'wrI\. 07102\. TT2tA A ITTRU 2 ,riHllnv,\. 07/02\. TTQ'I A
million)\. million)\.
4\. Aggregate length of roads Aggregate length of roads | Aggregate length of roads
I VgA5 - t ^VA-JVL I1jFLW s'LUg\.AL\. m-&VUI OL\.AJ& UUjJLUV U"&\.I WYV64 La Vr OF41, u'v\.g\.V\. impt o UVL I
over five-year period\. five-year period: 1,0001ans\. k five-year period: 1,000kms\.
5\. Annual survey of road Completed\. Completed\.
~xuuliuuujl
A A -\.A - \.4t h,,f\.r- ta1P\. h,A +aho1,AA
system I
7\. Development of a road Completed under ReP\. Completed under RMP\.
m5nsaframent wvdrm
8\. ARe sstrationsystem for Established under ReP\. Established under RMP\.
contractors for maintenance
works\.
9\. Training Fellowship for 3 bachelor's in Fellowship for 3 bachelor's in
civil engineering and 2 civil engineering and 2
economists\. economists\.
L J\. £ J~~~~~~~~M
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
T Appraiial ActuaU/Latit' \. P,ercentage of
: ,, , :\. , , ~~~~~~~~~~~EstiMate Estiate - \.Appralsal\.
-4',,;r Prqoject;Cost\.By Component IS$mIUion US$ million \.
National Road Maintenance (Gov\. contnbution to routine 10\.74 3\.22 30
nmaint\.+XX)
Savannakhet-Pakse Road (inc+\.loc) 16\.74 11\.23 67
Consulting Services and Training 1\.05 1\.57 150
Road Rehabilitation 0\.00 13\.63
I otai t3aseline Cost 28\.53 29\.65
Physical Contingencies 2\.83
Price Contingencies 2\.30 _
Total Project Costs 33\.66 29\.65
| Total Financing Required |_-_33\.66 29\.65
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
I - U Procurement Method'\.
Expenditure Category ICB NCB \.th2 N\.B\.F\. TotairC&st
1\. Works 17\.73 0\.00 7\.00 3\.68 28\.41
_ _ _ _ _ _ _I 1 /\.It) I j U\.UU) I I/\.UV) I UI\.UU) I tQ\.1 /3)
2\. Goods' 0\.00 0\.00 0\.00 0\.00 0\.00
*_____________________ I(0\.00) 1 (0\.00) 1 (0\.00) 1 (0\.00) 1 (0\.00)
13\. Services I 0\.00 I 0\.00 5\.27 0\.00 5\.27
Consulting (0\.00) (0\.00) (5\.27) (0\.00) (5\.27)
14\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
I (0\.00) 1 (0\.00) 1 (0\.00) 1 (0\.00) J (0\.00)
15\. Miscellaneous 1 0\.00 1 0\.00 1 0\.00 0\.00 I 0\.00
__________________ _ I (°0\.00) I (°\.°°) (0\.0\.00 (0\.00) (0\.00)
6\. M!sce-nl!aneios 0 \.0 n nn A AA A AA A nn
(0\.00) 1 (0\.00) (0\.00) (0\.00) (0\.00)
(17\.73) (0\.00) (12\.27) (0\.00) (30\.00)
The civil works include road inprovement, spot improvement and routine maintenance\.
-26 -
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
\. ~~~~~~~Procurement Method
Expenditure Category ICB NCB Other N\.B\.F\. Total Cost
r1\. Works 12\.85 T 0\.12 12\.32 0\.00 25\.29
I I (12\.85) I (0-12) T (12-32 I (0n00) (25-29)
2\. Goods 0\.00 0\.00 0\.00 0\.00 0\.00 1
(0_____________ ~ \.00) (0\.0J0 (O\.0J0) (0\.00) ( V\.00)
3\. Services | 0\.00 0\.00 2\.92 0\.00 2\.92
Consulting (0\.00) (0\.00) L\.(00) (0\.00) (2\.92)
14\. Miscellaneous I 0\.00 I 0\.00 0\.00 0\.00 0\.00
I______________________ I (0\.00) I (0\.00) I (0\.00) 1 (0\.00) (0\.00)
5\. Miscellaneous | 0\.00 | 0\.00 1\.66 | 0\.00 1\.66
(0\.00) (0\.00) (1\.66) (0\.00) (1\.66)
6\. Miscellaneous I 0\.00 I 0\.00 0\.00 0\.00 0\.00OI
I I (\.°00) I (0\.00) I (0\.00) [ (0\.00) 1 (0\.00)
I Total I 12\.85 1 0\.12 I 16\.90 1 0\.00 1 29\.87
(12\.85) (0\.12) (16\.90) [ (0\.00) J (29\.87)
"Figures in parenthesis are the amounts to be fimanced by the IDA Credit\. All costs include contingencies\.
"'inciudes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
mLar\.anLl i\.r\.s jfJj\. tL --A\. flnJ t\.e-nt-A,L\. -- -J\. LUlSL U,lL5 s!fUliitLll
Proiect Financing by Component (in US$ million equivalent)
I I P-\.ntaage of Apprasal
Component, Appraisal Estimate VActuaLatest Estimate s - ______
| ~ ~ ~ ~ - -1n Ti D_l I #~B [ -A' IBA\. I PAT C \.FC I\. BaInE\. I 1 rCuFI
NationalRoad I 7\.23 t 3\.51 t 0\.00 t 3\.22 0\.00 44\.5 I 0\. 0\.0
Maintpnnne I I
Savannakhet-Pakse Road 15\.90 0\.84 0\.00 10\.81 0\.43 0\.00 68\.0 51\.2 0\.0
(inc+loc)
Consulting Services and 1\.05 0\.00 0\.00 1\.57 0\.00 0\.00 149\.5 0\.0 0\.0
Training 0
Road Rehabilitation 0\.00 0\.00 0\.00 12\.96 0\.68 0\.00 0\.0 0\.0 0\.0
Physical Contingency 2\.71 0\.14 0\.00 0\.00 0\.00 0\.00 0\.0 0\.0 0\.0
Price contingency 2\.18 0\.11 0\.00 0\.00 0\.00 0\.00 0\.0 0\.0 0\.0
Tota irojet Cost 8\.0 1 4\.61 0\.00 29\.89 0\.43 0\.00 106\.4 9\.3 0\.0
Annex 3\. Economic Costs and Benefits
Please refer to Section 4\.3 for ERR estimates\.
-2 -
Annex 4\. Bank Inputs
(a) Missions:
I ^lgaP nfliorPr \.T ruPip F ~ No\. of-Persons\.d Per or-ance y g\.I
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Mnnth/Yfnr Coun\.t | I Pr s | Ojeciv
|Identification/Preparation
05/20192 ; I L ulIp*JU L L IA)IUILI
02/15/93 3 Economist, Highway Engineer,
Appraisal/Negotiation
06/15/93 3 Economist, Highway
Engineer, Road User
Charges
10/28/93 1 Accounting/Financial Specialist
Supervision
03/28/94 1 Highway Engineer HS HS
06/27/94 1 Highway Engineer HS HS
11/21/94 1 Hinhwav Engineer\. HS HS
02/11/95 1 Transport Economist HS | -HS
05/19/95 2 Transport Economist, Highway HS HS
Engineer
11/4/95 2 Transport Economist, Highway HS HS
Engineer
02/17/96 2 Highway Engineer, Transport S S
Specialist
04/5/96 2 Highway Engineer, Transport S S
Specialist
02/16/97 1 Highway Engineer S S
05/12/97\. 2 Highway Engineer, Transport S S
Specialist
12/16/97 2 Highway Engineer, Civil S S
Engineer
03/28/98 1 i l Highway Engmeer S S
06/11/98 1 Highway Engineer S S
12/7/98 2 Highway Engineer, pavement S
specialist
05/31/99 2 kHighway Engineer, pavement S S
Specialist
12/23/99 2 Hignway Engineer, Civil S S
Engineer
V,T/J,UU 3 nign tgway rngznur, ravimt nI
specialist/Highway Engineer,
|,nonno 1i\.cAoor\.gement Specialist
05/05/0 1 3 'Transport Economist, Highway S S
Engineer, Financial Management
Specialist
-29 -
jStage of Project Cycle - l No\. of Persons anid Specialty r Performance Rating
(e\.g\. 2 Econotists,_IFMS, etcl Implementationn 'Development
|,Month/Year Count Specialty | Progress Objective
ICR
12/14/01- | 3 Economist, Highway S S
Engineer (2)
(b) Staff\.
Stage of Project Cycle 1 ; Actual/Latest Estimate,
\. -~~~~~~~N'o\. StaffweK- |m - U$ (000)|
Identification/Preparation j 17\.80 J 61\.50
AppraisauNegotiation 29\.30 106\.0
Supervision 58\.65 189\.65
iCR 4\.84 29\.78
Total 1 110\.59 | 386\.93
- 30 -
Annex 5\. Ratings for Achievement of Objecti+ves/Onuputs of Componets
(H=High, SU=Substantial, M=Modest\. N=Negligible, NA=Not Applicable)
Rating
OMacro policies O H OSU*M O N O NA
I Sector Policies OH * SU O M O N O NA
O Physical O H * SU O M O N O NA
O Financiai OH OSUOM O N * NA
O Institutional Development 0 H O SU *M 0 N 0 NA
I Environmental OH O SU @ M O N O NA
Social
O Poverty Reduction O H OSU*M O N O NA
IOI Genuer O HfO SU OJ M(D YO N iVA
D Other (Please specify) O H OSUOM O N * NA
Pri-rrvie esecir de-veloprneniC H * SUJflAU O lv \J IM YO NO I'VA
O Public sector management O H * SU O M O N 0 NA
YnL- /fl1 t\.or LI c 'rr a, -' \.7
LO Otheur (P\.*-e apukJy\.J di\. \\.O S vi O J M ON j IVA
- 31 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Sattsfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatsfactory)
6\.1 Bankperformance Rating
Z Lending OHS OS 0 U O HU
5a Nun1ervW1ion n HS *s n u n Hi
0 Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
12 Preparation OHS OS OU O HU
Z Government implementation performance O HS OS 0 U 0 HU
iA impiementation agency perormance O HS O S O U OU u
0 Overall OHS OS 0 U O HU
-32-
Annex 7\. List of Supporting Documents
The World Bank, Staff Appramsal Report No\. 12526-LA: Lao People's Democratic Republic,
\.~~IAflIU -1I-IW ID-:-\.* kLA\.MU I it I~4 OA
The W orsd B \.an Suerwvisivo n Repos A, a
Tne World Bank, -bupervision Reporm>
Addif:tinal Anne- 8= Man TBRD 25206
LA025206\.git
LA025206\.PDF
- 34 -
IBRD 25206
| 1 by Th4 World bonh's staff 91CHINA04-
\ XCHINA ,22,it S mternOi use 2fndThefSWffodB^hk ]| MYANM CI
Aof r d fo theMYANMA
| x ~r ,2t-\.Huse of The World Rork
rp '\.h -deo ;,o-' 1
ond the bou-drie ufo'- I ~ P OP E of
,~~~~~~~~~~~~~~~~~~~~~~a \. n, i,- j, \.
fl~~~ ~ ~ 'V" L * \.
prt of T e World Ron Groo\.'tCiI ~ ~ (
\.ory |dgr-nt the egol REP\.
I F \.1 1s ~~~~~~~~~~~~~~~stotus of any tentoiy or on/a
\g/\\.~,,uf \.1) ' endore-menD t or c- '\.fooce -o- \.
I MYANMAR\.r"5 PHONGSALY schu,doi\.Lr9&V4
-;, NAMlHAN VIETNAM THAILAND
~~~~~N-11, 4 ~~~~~~~~~~~~~~~~~~~~~~~~~~'1CN\.INA'
NoKnttho *# VININ - \/~2:\.)\. KH^1OAE Nv -j
IOKEO S, i:i AOI SEA
0U094<~2z A
| SECOND HIGHWAYl IMRVEN PROEC -i AN1
Roods LUA --A
PSAABOpJRY Plb'ed KHRor A 'ONANGG
("K~~~~~~~~~~~
-16- ' ' 'i 'yb Previcus Poj dRol ° Seleeed T'~ owns g I ~ 6
THAILAND f Ntionol S Prvic H
BOLIKE{AOvSAI EI
| _ UnpovedJNobonol / Ncoboo Copitolsi Ron, i t
f nobhotn "'00 0 ~~~~eNorRsaI ~~ VIET '
| ) otool RodNmes(\ P ke
I fKeneIhoo~~~' VIE~~lANE~~ PREVIcTE OF K~~ 5O d u
LAO PEOPLE'S DEMOCRATIC REPUBLIC
SECOND HIGHWAY IMPROVEMENT PROJECT ~ I
Roads: ~te\.botpo \t,'
- ProosdP-\.,v5nd ±- Airports II4SAVANNAKHET
Previous Praject Road 0 Selected Towns 16\.0;i\.,SI \.
I- s~~~~~~ - ~~~ Paved National 91 Province Headquartersm L NE)/
- Unpaved National *0 National Capitals ~ooo
I'Paed Province - Province Boundaries __ SKN
Unpaved Province - ltrainlBudre EO
() Notional Road Numbers
1278 Province Rood Numbers CHAMPAA
KILOMETERS 9 5,0 190 lj0 I
MAILI F 5 160
14- ~~~~~~~~~~~~~~~~~CAMBODIA i1~
icr ~~~~~~~~~~~~~194-
SEFPTFMBER 1993
KIVIMUR M13
Report No\. 23838
Tvnp- ICR | REVIEW |
P005489 | Document of
The World Bank
Report No: 25178
IMPLEMENTATION COMPLETION REPORT
(CPL-39010; SCL-3901A; SCPM-3901S)
ON A
LOAN
IN THE AMOUNT OF US$57\.6 MILLION
TO THE KINGDOM OF
MOROCCO
FOR A
SECONDARY\. TERTIARY AND RURAL ROADS PROJECT
December 11, 2002
CURRENCY EQUIVALENTS
(Exchange Rate Effective As of October 25, 2002)
Currency Unit = Dirham (Dh)
US$ 1 = Dh 10\.75
FISCAL YEAR
January 1- December 31
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
CNER National Center for Road Study and Research
CNPAC National Center for the Prevention of Road Accidents
CERET Regional Center of Technical Studies
DPE Privincial Directorate of Equipment
DRCR Directorate of Road and Road Traffic
ERR Economic Rate of Return
GOM Government of Morocco
HDM Highway Design Model
ICB International Competitive Bidding
ICR Implementation Completion Report
IRI International (Road) Roughness Indicator
JBIC Japan Bank for International Cooperation
MOE Ministry of Equipment (Public Works)
MTR Mid-Term Review
NCB National Competitive Bidding
NRRP National Rural Roads Program
OED Operations Evaluation Department
ONT National Transport Office
QAG World Bank's Quality Assurance Group
PIU Project Implementing Unit
PSR Project Status Report
RD Regional Directorate
SAR Staff Appraisal Report
SPEE Regional Planning and Economic Studies Service
Vice President: Jean-Louis Sarbib
Country Manager/Director: Theodore Ahlers
Sector Manager/Director: Hedi Larbi
Task Team Leader/Task Manager: Mohammed Feghoul/Heman Levy
KINGDOM OF MOROCCO
SECONDARY, TERTIARY AND RURAL ROADS PROJECT
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 9
6\. Sustainability I 1
7\. Bank and Borrower Performance 11
8\. Lessons Learned 13
9\. Partner Comments 15
10\. Additional Information 15
Annex 1\. Key Performance Indicators/Log Frame Matnx 16
Annex 2\. Project Costs and Financing 18
Annex 3\. Economic Costs and Benefits 20
Annex 4\. Bank Inputs 22
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 23
Annex 6\. Ratings of Bank and Borrower Performance 24
Annex 7\. List of Supporting Documents 25
Annex 8\. Beneficiary Survey Results 26
Annex 9\. Stakeholder Workshop Results 35
Annex 10\. Borrower's Evaluation Report 38
Project ID: P005489 Project Name: MA-SECONDARY ROADS
Team Leader: Mohammed D\. E\. Feghoul TL Unit: MNSIF
ICR Type: Intensive Learning Model (ILM) of ICR Report Date December 12, 2002
1\. Project Data
Name* MA-SECONDARY ROADS LIC/TFNumber: CPL-39010;
SCL-3901 A;
SCPM-3901 S
Country/Department: MOROCCO Region: Middle East and North
Africa Region
Sector/subsector: Roads & highways (87%); Central government
administration (13%)
KEY DATES
Original Revised/Actual
PCD: 10/28/1992 Effective\. 10/03/1995
Appraisal: 06/24/1993 MTR 11/16/1998
Approval: 06/08/1995 Closing 06/30/2000 06/30/2002
Borrower/Implementing Agency: KINGDOM OF MOROCCO/MPW-DRCR
Other Partners:
STAFF Current At Appraisal
Vice President: Jean-Louis Sarbib Caio Koch-Weser
Country Manager: Theodore Ahlers Daniel Ritchie
Sector Manager: Hedi Larbi Amir Al-Khafagi
Team Leader at ICR: Mohammed Feghoul Jaffar Bentchikou
ICR Primary Author Heman Levy
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: M
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry\. S
Project at Risk at Any Time Yes
The Bank's supervision performance was assessed by the Quality Assurance Group in October 2000\. QA G rated
supervision satisfactory\.
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The project objectives were to:
(i) address core needs of the rural poor by improving access to social services and to markets;
(ii) accelerate private sector development by reducing regulatory constraints in road transport and by
increased resort to road works and supervision by contract;
(iii) develop road management expertise in the new regional directorates; and
(iv) improve road safety\.
Project objectives were clearly relevant for Morocco's development\. Poverty in Morocco is mostly rural\.
Rural living is made especially difficult by isolation, a result of poor roads, difficult topography and rains
and flood that often interrupt traffic\. A study by the Operations Evaluation Department in 1996 (Morocco:
Impact Evaluation Report-Socioeconomic Influence of Rural Roads) that assessed the impact of rural roads
improved in Morocco under a preceding highway project, confirmed the importance of improving rural
access\. The study found major impacts on: improved accessibility to, and quality of, services in health and
education; major gains in girl's enrollment in primary education; farmers benefiting from lower cost to
markets, reduced cost of inputs such as fertilizers and pesticides and reduced risk of roads closures, leading
to more efficient production and higher-value composition of output\. Therefore, improving rural roads
should significantly help improve conditions of the rural poor\.
The project would help private sector development, both through a better functioning market for the
provision of road transport services and through increasing outsourcing of road maintenance works to
private contractors\. This should lead to reduced costs and improved efficiency of road works and transport
operations\.
Developing expertise in the new regional directorates was in line with govermnent
decentralization/deconcentration policy at the time of appraisal, a policy that remains a key government
priority\. Regional directorates have a coordinating and assistance role in technical aspects, planning and
programming\. This function effectively reduces the role of the center, while allowing for closer links and
easier interaction between the executing bodies (the provincial directorates) and the advisory entity (the
regional directorates)\.
Morocco has a high rate of road accidents and fatalities compared to other countries with similar level of
development, and the project's focus on improving safety through both physical investments (eliminating
'black spots' sections, where a disproportionate percentage or accidents occurred) and institutional
development was important\.
Project components, as described below, supported well the objectives\. One component, the improvement
of branch roads, was not well articulated in the definition of objectives\. However, as noted in the SAR,
branch road were secondary and tertiary roads, and as such were essential parts of the road network and
contributed to road access\. Similarly, a project requirement that road maintenance funding be provided at a
satisfactory level was essential to ensure the preservation of the network\.
3\.2 Revised Objective:
While project objectives were not revised during implementation, specific targets for works were modified
at the Mid-Term Review as described in section 3\.4\.
- 2 -
3\.3 Original Components:
(a) rural roads (cost: $35\.4 million): improving 1,133 kilometers of priority unpaved roads to all
weather gravel standard, constructing 96 km of paved roads, and finalizing the road
reclassification;
(b) classifiedpaved roads ($108\.8 million\. These roads were labeled as 'branch roads' at appraisal, a
terrninology that DRCR has discontinued): improving 2,219 kilometers of roads in the secondary
and tertiary road networks by carrying out maintenance backlog resealing, structural overlays
and/or widening;
(c) network management ($10\.3 million): improvements through technical support, planning and
programming, training, and renewal of essential road maintenance equipment; and
(d) road safety ($11\.1 million): streamlining of organization and supporting priority actions\.
Although not specifically defined as a project component, the project, in support of objective (ii) included a
government commitment to submit to Parliament the laws and regulations liberalizing the trucking market\.
3\.4 Revised Components:
At the Mid-Term Review targets were modified\. The loan agreement was amended accordingly (Bank letter
of September 27, 1999)\. The new targets were:
(a) rural roads: improvement of 1,000 kilometers instead of 1,133 kilometers; construction 235
kilometers of paved roads instead of 96 kilometers;
(b) classified paved roads: improvement of 2,660 kilometers (of which 825 km to be financed by the
Bank, the remainder by the Japan Bank for International Cooperation), instead of 2,219 kilometers;
(c) equipment: amount reduced and limited to equipment needed for snow removal and emergency
works only\.
The changes agreed on road works targets under (a) and (b) reflected road subprojects meeting project
selection criteria and for which documentation available allowed a faster processing under the project\. The
increase in paved roads was due to more cases where paving was the right investment, because of traffic
levels, topography and other conditions, than expected at appraisal\. Changes under (c) meant fewer
equipment purchases\. This was in line with government policy to reduce the role of the highway agency as
an operating body, while continuing to expand the outsourcing of works to private enterprises\. Project
objectives remained unchanged\.
3\.5 Quality at Entry:
The ICR rates quality at entry satisfactory\. The project predated QAG and there was no formal quality at
entry (QE) assessment at the time of Board approval\. The project was consistent with Bank strategy
supporting rural development, confirmed in the 1997 CAS\. Project design and preparation was exhaustive,
and benefited from Bank experience with Morocco's road sector gained during supervision of the preceding
highway project (Highway Sector Project, Loan 3168-MOR)\. Project complexity was essentially limited to
the institutional objectives and components, where the project went substantially beyond its predecessors;
physical objectives were not especially demanding on the implementing agency, since DRCR was well
experienced with Bank projects\. The SAR had identified underfunding of road maintenance as the main
project risk, and proposed to mitigate this risk by monitoring road budgets\. Several studies carried out
under the preceding project had pre-identified some 15,000 km of rural roads for which various strategies
of improvements were technically and economically justified\. The SAR had well defined criteria for the
selection of investments under the project\. The project was ready for implementation, first-tranche
investments had been identified and DRCR was prepared to launch the works\. However, Borrower
ownership, a major determinant of quality at entry and project success, was mixed\. During initial project
preparation and until appraisal, the project was strongly supported by the responsible sectoral ministry, the
- 3 -
Ministry of Equipment (MOE)\. However, some issues arose after appraisal\. The key issues were the extent
of government commitment to road classification, passing of transport law to liberalize the trucking market
and securing funding for road maintenance at a satisfactory level\. At the same time, the Ministry of Finance
opposed providing counterpart funds from within the budget\. Finally, an agreement was reached to use
funds from the Road Fund to finance the governments counterpart contribution\. Agreements were also
reached on the other issues\. These discussions substantially delayed negotiations that ended up taking place
about one year after the appraisal mission\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective\.
Related outcome indicators were satisfactory and better than expected (annex 1)\. Institutional development
objectives were only partially achieved\. There was, however, a two-year delay in project implementation\.
This happened because the government gave preference to carrying out work under an emergency drought
relief program partly financed by the Bank (Emergency Drought Recovery Project - Loan No\. 39350)\.
Road subprojects that were ready for implementation under the road project were taken over by the
emergency program\. At the same time, since the overall budget for DRCR's road program did not change,
DRCR did not have the resources to launch in parallel the road and the emergency projects\. The project's
closing date was extended until June 30, 2002\. The Mid-Term review adjusted the targets of the physical
components according to the readiness of economically viable subprojects, while remaining within the
objectives\.
Achievement of physical targets contributed significantly to the objective of improving access to social
services and markets and thus benefiting the rural poor\. The project focus on improving accessibility of the
rural poor included definition of performance monitoring indicators that have proven useful in the setting of
benchmarks under current rural road programs\. A key indicator is the reduction in road closures caused by
rain and floods\. Road closures in the rural roads improved under the project fell from over 50,000
kilometer-day before improvement, to about 3,000 kilometer-day by the end of the project, which is better
than the appraisal target\. Reduction in road closures is significant because it diminishes isolation and
improves accessibility\. According to estimates made by the DRCR and the provincial highway
departments, about I million people live in the direct zone of influence of the roads improved under the
project, or near roads that connect to the project roads, and therefore are direct beneficiaries of the
reduction in road closures\. The Beneficiary Survey and Workshop (Annexes 8 and 9) confirmed the
importance of improving access\. The survey found decrease in time to reach health centers, schools and
administrative centers, and improvement in transport services to be the highest rated benefits stemming
from improved roads\.
Road closures (thousand kilometer-days)*
60000 _ _ _ _ - - _ _ _ _ _ _
50000 _ __
40000 _ __
20000 ___
1995 1996 1997 1990 1999 2000 2001
Target values are based on the first-tranche roads identified in the SAR\. Actual values are based on all roads actually constructed or unproved under the project
-4 -
Another key indicator of outcome is road condition\. The condition of the paved road network during the
project period, as measured by the IRI (International Roughness Indicator), improved\. The IRI by end 2001
had attained 3,367 millimeters/kilometer, or about 6\.5 percent better than the target of 3,600, and was
better than before the project (3,724 in 1994)\. At the same time, the proportion of the paved road network
in good and acceptable condition increased from 63\.1 percent in 1996 to 66 percent in 2000\. A key factor
in this achievement was DRCR's compliance with the maintenance expense levels stipulated at appraisal
(Annex 1)\. In view of improvements (widening) and expansion of roads, and increased traffic, funding
levels are likely to require substantial adjustments, and the MOE is preparing to launch a detailed study on
this matter\.
Another significant outcome was a marked reduction in the unit cost of the works\. They turned out to be
lower than the appraisal and engineering estimates\. The actual unit costs were, as percentage of the SAR
estimates (details in Annex 1):
(i) for rural roads: 87 percent for improvement and 60 percent for construction/pavement;
(ii) for classified paved roads: a range of 56 percent for widening with overlay, to 98 percent for overlay
and surfacing with no widening\.
This outcome is probably the result of a combination of factors: the project's continuing emphasis on
competition for road works, increased role of the private sector, and cost-effective engineering, especially
designs and use of local materials\.
The objective related to private sector development was largely met\. A law to liberalize the transport
market was passed, exceeding the project covenant that a draft law be submitted to Parliament\. Major
policy reforms such as reforming the transport market are extremely difficult to achieve\. This reform was
also supported under the Policy Reform Support Loan (Loan 4483, approved June 1, 1999)\. The approval
of the transport law was a significant step in support of the project's objective to accelerate private sector
development in the road transport industry\.
There was also progress in other areas relating to development of the private sector\. The Ministry of
Equipment launched three pilots to test multiyear contracts for routine road maintenance\. The first pilot
was a two-year contract covering two provinces (Meknes and Tetouan)\. The contract was output-based
(quantity of work done)\. This pilot was considered unsatisfactory because of lack of performance targets
and because unit prices were substantially higher than by force account\. The second pilot was a three-year
contract covering a national road\. Contract penalties were based on several performance parameters\. Prices
were slightly higher than force account\. This pilot was considered a qualified success\. The third pilot, also
a three-year contract, also focused on a national road\. This contract, also performance-based, used several
indicators integrated into one single indicator of performance, on which penalties were based\. This pilot
was considered successful: the quality of work was good, and unit prices were comparable to those by force
account\.
There was also progress in developing road management in the regional directorates: (i) DRCR expanded
the number of Regional Directorates; (ii) DRCR delegated some technical functions to the regional
directorates, and (iii) regional directorate's staff received training in engineering and economic subjects\. In
addition, a review of DRCR procedures was launched under the project, which will be useful for the further
transfer of responsibilities\. However, much of the progress happened in the last stages of the project and
the impact will not be felt until after project closing\. For example, two important training programs took
place in early 2002, and by project closing the DRCR was in the process of testing the capacity of the
regional directorates to put in place activities stemming from these training programs\.
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The expected improvement in road safety was the more difficult objective to achieve\. Elimination of
"black-spots" (road sections with a high proportion of accidents) proceeded initially at a slow pace due to
delays in preparation and approval of engineering studies, although substantial catching-up happened in the
last two years of the project\. The outcome of these investments should be positive since black spots were
selected after careful analysis of 5-year accident data\. Actual outcome, however, can only be assessed when
a 5-year cycle after the improvements is completed\. Progress was even more difficult in the task of
strengthening the institutional set-up for road safety\. It was intended to establish a safety-coordinating
agency at a high political level that would coordinate all the actors involved in road safety (police,
transport, roads, health, and insurance)\. While a document creating such interministerial committee to be
placed in the Prime Minister's office was drafted by technical staff of the Ministry of Transport and
conveyed to the Prime Minister, this committee is yet to be created\.
4\.2 Outputs by components:
(a) Improvement and construction of rural roads
- 232 km of paved rural roads were constructed, or 99 percent of the revised objective, and
- 714 km of unpaved roads were rehabilitated or 71 percent of the revised objective (including 24 km
with exclusively local finance)
Project-financed rural road works were distributed among all regions, with the South (42\.3%) and the
Oriental (34\.3%) regions receiving the highest share (in kilometers) of paved rural roads, and the Center
(36\.3%) and the Center-South (14\.9%) receiving the highest share of improved rural roads\.
(b) Rehabilitation ofpaved classified roads\.
2,736 km of road rehabilitation works were done (933 km under Bank financing)\. Thus, 103 percent of the
target was achieved\. As in the case of rural roads, these works were spread out practically throughout all
regions\. The South (24\.9%) and the Center (23\.3%) received the highest shares\.
Some 48 percent of the rehabilitated roads were widened\. Most of the widening was for roads that received
overlays: 50 percent of overlays also received widening, while only 40 percent of the roads surfaced were
also widened\. Overall, the mix of overlay and surfacing with or without widening is a rational combination
of options, selected with assistance from the Highway Design Model (DM)\. This allowed Morocco to
utilize its resources for the highway network efficiently\.
(c) Network management\. Under this component, a number of activities were undertaken\. However, this
component launched after a long delay, and by the end of the project only the initial consultant missions
and some training had been completed\.
- A study of shadow tolls (road concession contracts with payment to the concessionaire based on traffic
levels rather than toll collection) was completed for Phase I\. This Phase conducted a simulation to assess
the potential of the shadow toll approach for: (i) high traffic roads, and (ii) roads in poor condition\. In
addition, a feasibility study was carried out for a sample of seven roads\. The study concluded that four of
the roads would yield a financial return for the concessionaire of 10 percent or above\. The consultant
continues to work with DRCR with a view to defining the parameters of possible concessions and selecting
routes for piloting the shadow toll approach\. Shadow toll concessions could be a practical way in high
traffic roads requiring investment in increased capacity or rehabilitation to further involve the private sector
in the finance and management of the road network\.
- Technical Assistance to the DRCR\. The original concept to make a pool of experts available to the
regional directorates under an open consultancy contract was not considered feasible\. Assistance therefore
was restructured under four well defined topics:
i\. Highway capacity of high-traffic roads, and possible adaptation of the US Highway Capacity
- 6-
Manual\. The DRCR has identified the road sections with traffic levels close to saturation and
carried out detailed traffic analysis in selected experimental sections\.
ii\. Procedures for carrying out road studies (preparation, review, approvals, role of different
stakeholders)\.
iii\. Upgrading of the National Center for Road Study and Research (CNER)\.
iv\. Training: two courses were carried out with assistance from project-financed consultants, covering
highway maintenance planning, economic analysis, management and inspection of bridges and
drainage structures\.
(d) Road safety: This component consisted of the following:
(i) Improvement of road sections with high accident density (black spots)\. DRCR identified 86 critical
black spot sections\. These sections were identified on the basis of accident records\. By project closing, 43
black spots had been improved or eliminated, 15 were being executed, and 13 were in the bidding process\.
(ii) Institutional improvements\. The government had undertaken to reform the mandate of Morocco's
National Center for the Prevention of Road Accidents (CNPAC), and to create an interministerial
committee under the office of the Prime Minister\. While CNPAC prepared the documentation for the
change, the relevant Ministry (Transport) did not succeed to convince the higher political authorities on the
need to establish such a committee\.
(iii) Purchase of equipment: The Ministry of Transport from its own budget acquired 25 radars, 6
weighbridges and other equipment for road safety awareness campaigns\.
4\.3 Net Present Value/Economic rate of return:
At appraisal, it was stipulated that road works to be financed under the project would need to show a
minirnum economic rate of return of 12 percent\. On completion of the project, the DRCR camed out an
economic re-evaluation for individual subprojects\. This analysis was based on the Bank's Highway Design
Model III (HDM-III), the same that was used at appraisal for a sample of roads\. As at appraisal, the
re-evaluation quantified as benefits only the savings in vehicle operating costs\. The re-evaluation showed
high economic rates of return (ERR) for the road works\. No single investment was below the 12 percent
threshold\. A number of individual investments had ERR close to or exceeding 100 percent\. Overall, it can
be estimated that the ERR for the whole project was in the 30-50 percent range\. This is consistent with the
ERR estimated by the DRCR at appraisal for the first-tranche program\.
4\.4 Financial rate of return:
Not applicable
4\.5 Institutional development impact:
- Strengthening of road network management\. The project initially intended to strengthen road network
management by providing a pool of experts that would be available for assisting the Ministry of Equipment
Regional Directorates (RD) as and when requested\. The RD's function of assistance to the Provincial
Public Works Departments by concentrating technical and managerial competence (particularly regarding
planning and economic studies) and to 'decongest' the central MOE was conceptually well conceived\.
Further, this concept was consistent with the government decentralization policies\. In practice, however, the
system of open consultancy envisaged under the project, with 'on-call' experts at the demand of the
Regional Directorates, was found difficult to put in practice\. The government's controller's office objected
on the basis that the on-call approach conflicted with established procurement procedures\. At the same
time, overall government regionalization policy proceeded at a much slower pace than originally
anticipated\. In fact, the MOE Regional Directorates, even as they stood in 1995, were ahead of other
sectors with regard to transferring central responsibilities to regional offices\.
- 7 -
Because of the problems with the consultancy approach, the MOE took the view, and the Bank team
agreed, that the objective of improving road network management would be well served by developing
procedures, preparing tools and guidelines that would help govern the transfer of responsibilities to the RDs
and by carrying out training for both the central and the regional offices\. As a result, this component was
refocused into technical assistance/studies activities listed under paragraph 4\.2c judged by DRCR to be
priority needs, but also included training for the RDs\.
Despite the problems, the MOE did expand the number of RD from the four pilots in place at the time of
project appraisal to all 16 Regions\. At the same time, the DRCR has already delegated several technical
review functions to the regional directorates\. The nine most important regional directorates are equipped
with a Regional Center of Technical Studies (CERET), while all 16 have a Planning and Economic Studies
Service (SPEE), in addition to administrative support\. These two services are key parts of the delegation
process\. Such delegation is continuing\. In January-February 2002, DRCR carried out two important
training courses that representatives from all regional directorates attended: (i) a course on road
maintenance planning and economic analysis (the HDM4 model), and (ii) an engineering course on
inspection of bridges and drainage structures\. These two courses will be instrumental in the further
delegation of functions by DRCR to the MOE's regional directorates\. The DRCR is currently piloting
increased delegation in several Regional Directorates\.
DRCR carried out other activities that will also help improve network management\. Notably, DRCR: (a)
launched and is carrying out environmental assessments for rural roads projects and rehabilitation of main
roads, (b) launched and is carrying out safety audits for several main roads to improve their safety, (c) is
conducting periodic surveys to assess the impact of rural roads investments, (d) carried out pilots to test
routine maintenance by multi-year contract\.
In parallel with the project, another activity was carried out that will help the MOE prepare for further
delegation of its functions, whether to the Regional or to the Provincial Directorates\. Under a grant from its
Institutional Development Fund, the Bank provided support to the MOE to develop an integrated financial
management system to improve budget preparation, as well as investment planning and programming\. The
new system groups MOE expenses by programs and projects rather than by inputs, as it was traditionally
done\. The system, currently under implementation, will be an essential tool for shifting MOE's budget from
a centralized, expense-based system to a more decentralized, performance-based system that will allow the
Provincial or Regional Directorates to enter their programs and projects into the MOE's budget system\.
-Liberalization of transport market\. The transport law was approved in March 2000\. The law includes a
clause added during the debate in the Parliament providing a 3-year transition to effectiveness and
grandfathering current holders of trucking licenses for six years to meet professional qualification
standards\. The 3-year period expires in March 2003, when all provisions of the law except the
grandfathering will enter into force\. There are already signs that the transport market is being liberalized
and is becoming more competitive and efficient\. For example, small trucks that were traditionally limited to
'own-account' transport increasingly are providing 'for-hire' services without the government attempting to
enforce current regulations regarding small trucks\. Also, some large trucking companies are being allowed
to do transport without obtaining prior approval by the National Transport Office (ONT), which is only
requiring post notification\.
- Increased role of the private sector in road management\. As noted in Section 4\.1, useful pilots were
done regarding outsourcing routine maintenance\. The successful third pilot should provide a good basis for
an extension of this approach to a larger number of roads\. As expected, 100 percent of road rehabilitation
and periodic maintenance is carried out by contractors, as is about 50 percent of routine maintenance\.
- 8-
Consistent with experience elsewhere, some routine maintenance activities, especially in remote areas, are
difficult to outsource since the small size of the works of routine maintenance and the high cost of access
makes them little attractive for contractors\. The performance-based multiyear contracts may be a way to
further expand outsourcing of routine maintenance in the future\.
- Road safety\. As noted, despite much effort by the Ministry of Transport technical staff, no change was
effected in the government's road safety organization\. Therefore, no real impact has been achieved to date\.
On the other hand, it is possible that the promotional work done under the project, especially the
documentation for setting up an inter-ministerial agency/committee under the Prime Minister could see
fruition at any time\. This could well happen once the government is finally persuaded that the only way to
reverse Morocco's poor road safety record is to coordinate the many stakeholders in road safety under the
umbrella of the Prime Minister's office\.
4\.6 Beneficiary Survey and Workshop
The Intensive Learning ICR requires that during its preparation, a beneficiary survey and workshop be
carried out\. A survey assessing the impact of the project was carried out during April-May 2002 in 19
provinces (out of the 36 provinces covered by the project)\. The survey consisted of four sub-surveys, one
for each type of road works financed under the project\. The survey interviewed a wide variety of
stakeholders, including direct beneficiaries such as villagers living near the improved roads and providers
of transport services (both passenger and freight), and indirect beneficiaries such as rural school teachers
and health care personnel that benefit from improved accessibility and improvement in transport services\. A
total of 2,320 persons were interviewed, divided into 1,437 villagers, 326 providers of social services and
557 providers of transport services\. The survey report was prepared by CID (Conseil Ingenierie et
Developpement), a consulting firm with substantial experience in social surveys\. The survey found
significant project impact in facilitating access to social services, helping increase enrollment in primary
education, improving provision of transport services, and effecting reductions in travel time, vehicle
operating costs and truck rates\.
A workshop carried out on October 14, 2002 reviewed the project's achievements and discussed the
findings of the survey\. The workshop was organized by the DRCR and attended by about 50 participants,
including representatives from various ministries (Economy and Finances, General Affairs, Transport,
Equipment), DRCR (Rabat), provincial and regional highway personnel, CNPAC, mayors and other
representatives from local communities, and the World Bank\. The key conclusions of the workshop were:
(a) the project met its objectives; (b) impact on the population was significant, notably as reflected by the
survey; (c) the efforts to improve highway safety need to be pursued; (d) the contribution of local finance
through partnership arrangements (Partenariat) was successful and greatly increased ownership of the
road improvements; and (e) the workshop itself was useful\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control ofgovernment or implementing agency:
None
5\.2 Factors generally subject to government control:
The mixed ownership of the project at various levels of government that was felt during project preparation
and appraisal remained in the following stages of the project, affecting its implementation\. In particular,
there was government resistance to the technical assistance component designed to support the
strengthening of the Regional Directorates\. There was little commitment at the political level to implement
recommendations prepared by CNPAC and the Ministry of Transport staff to create a high-level
interministerial commission on road safety\. On the positive side, government action was instrumental in
-9-
getting the Transport Law approved by Parliament\.
5\.3 Factors generally subject to implementing agency control:
The DRCR was the implementing agency for most of the project; CNPAC was responsible for the
safety-related aspects\. The DRCR, under the Ministry of Equipment, is responsible for design, construction
and maintenance of the national, regional and provincial networks\. The DRCR is a well established
organization, experienced in Bank projects, and therefore there was no need for establishing a separate
implementation unit\.
Almost concurrently with Board approval of the project, the Ministry of Equipment (MOE) launched a
massive, countrywide rural roads development program\. This program, financed from the national budget,
dwarfed in size the Bank project, and required close attention by MOE officials\. The problem was
compounded by the need to reallocate the budget within the MOE towards an emergency program (
Programme Secheresse) to mitigate the effects of the drought\. The result was practically no disbursements
during the early years of the project\. This situation improved radically after the mid-term review\.
Delays in project implementation also happened because DRCR had limited identification of branch road
subprojects mainly to a few Southern and Eastern provinces\. While the limitation was not formally written
in the project documents, the list of road subprojects for the First Year Program did in fact reflect this
limitation\. During the MTR, the DRCR and the Bank agreed to open selection of subprojects to practically
any province, provided the required technical and economic studies were ready\.
The DRCR was not enthusiastic about the project component on network management, which it considered
to be too big and difficult to procure\. It proceeded slowly on this component\. It was only in the last two
years of the project that DRCR launched training programs and other activities aimed at strengthening
network management and the capacity of the MOE's Regional Directorates\.
Morocco's continued support to competition for public works led to a number of major international
contractors bidding for contracts\. This was especially important with the launching of the national,
toll-based motorway in the late 1980s\. Equally important was the launching of the national program of
rural roads that has guaranteed a stable level of road works\. The combination of these factors resulted in
the strengthening and expansion of local contractors, more competition, and a reduction in the cost of road
works\. While competition happened mostly for the larger civil works contracts (such as construction and
paving of national roads), it had a trickle-down effect, bringing prices down in smaller works as well\.
5\.4 Costs andfinancing:
The project was co-financed with the Japan Bank for International Cooperation (JBIC), under parallel
financing arrangements\. Japan's financing was approved and made effective about one year earlier than the
Bank project and is expected to close about year later than the Bank project\.
At Borrower's request, after disbursing about $2\.3 million from the $57\.6 million loan, the remainder was
converted to a single-cufrency loan denominated in French Francs on June 9, 1998, and then converted to
Euro on January 1, 2002\.
The SAR anticipated that local govemments would make a small contribution to project finance, estimated
at $0\.4 million\. In practice, they contributed $3\.2 million\. This amount was contributed by just two
Southem provinces, and more than half the amount contributed was for paved roads, while originally it was
anticipated that it would be for non-paved rural roads only\.
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6\. Sustainability
6\.1 Rationalefor sustainability rating:
Sustainability is rated likely\. The project-financed investments are likely to be sustainable, because: (i)
funding allocated to road maintenance has been kept at the level agreed at appraisal; (ii) unit costs of road
works have been declining, and should help to get more work done for a given budget; (iii) the condition of
the road network has improved, albeit slightly; (iv) the expected further privatization of maintenance
activities through multi-year contracts tested during the project period should lead to lower costs and higher
quality of the works\. An element of uncertainty is the increase in road maintenance requirements resulting
from upgrading and expansion of the road network during the 1990s and continued expansion under the
NRRP\. The DRCR is launching a review of the needs\. At the same time, the government needs to address
the long-delayed decision to reclassify the road network that should lead to transferring some roads
currently being maintained by the MOE to the communes\.
On the institutional side, (i) it is unlikely that the transport law, that was passed after much debate and
preparation, could be overturned, and, at the same time, changes in the transport market, making it more
competitive, have taken place even ahead of the effectiveness date of the transport law, and (ii) the policy to
further deconcentrate management of the road network through strengthening and expanding the functions
of the Regional Directorates is well established\.
6\.2 Transition arrangement to regular operations:
All the roads improved under the project are under the responsibility of the Ministry of Equipment and their
maintenance and operation are covered by the MOE's regular budget\. According to the MOE's
organization, actual responsibility for the upkeep of the roads rests with the MOE's Provincial Directorates\.
The Directorates have assumed the responsibility for the maintenance of the improved roads as the works
have been completed under the project\. Transfer of some roads to the provincial and communal
governments may happen if the road reclassification is carried out\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Bank performance was satisfactory\. The project objectives were sound and relevant, and the project team
designed a number of performance indicators to monitor achievement of project objectives, implementation
of components and government compliance with loan conditions\. Substantial effort was devoted to ensure
availability of counterpart project funds as well as funds for financing road maintenance at an adequate
level\. The project aim to reform the transport market was valuable\. For many years, the Bank had drawn
attention to the need to deregulate and liberalize the transport market\. A question is whether the Bank
could have found a way to be more effective in promoting reforms in trucking\. For example, the project
could have comprised technical assistance to help the government adapt its institutions to a deregulated
market\.
7\.2 Supervision -
Bank performance was satisfactory, especially at and after the Mid-Term Review, as it made major efforts
to speed up implementation\. This was confirmed by a QAG' assessment of supervision (October 27, 2000
memo)\. The QAG assessment found supervision during FY00 "satisfactory overall in the four main
supervision categories, except for 'adequacy of supervision inputs and processes' that are rated highly
satisfactory"\. The latter rating was due to the supervisions' accurately recording and reporting on key
- 1 1 -
indicators\. During the MTR, the Bank went to great lengths to get the project moving, after three years
with practically no disbursements (cumulative disbursements had reached less than 5 percent, compared to
about 30 percent foreseen at appraisal)\. The Bank' decision at the MTR to finance road rehabilitation
subprojects funded by the DRCR since effectiveness and that met the eligibility criteria allowed speeding
up disbursements, thus benefiting Morocco by reducing the amount of commitment fee on undisbursed
funds\.
7\.3 Overall Bankperformance:
Bank performance overall is rated satisfactory\. There are two aspects that, in hindsight, the Bank could
have done differently\. The first is the Bank's missed opportunity to help the government adapt to new roles,
functions and organization once the transport market deregulated upon the passage of the Transport Law\.
The second relates to the objective to strengthen the regional directorates\. These directorates were at the
pilot stage during appraisal, but by the Mid-Term review it should have been apparent that while the
objective was a valuable one, the component supporting this objective was too heavy in technical
assistance, and its open-ended nature was not supported by the implementing agency and its financial
comptroller\. Another aspect, more debatable, is whether the Bank should have tried to include the
Transport Law requirement under the railway restructuring project (Loan No\. 41280) that was being
prepared almost concurrently with the road project\. Because the railway is under the Ministry of Transport,
the dialogue with the Bank mission would have been easier\. On the other hand, seizing the opportunity of
the road project may have been safest, since there were no assurances that the railway project would be
approved soon after the road project\.
Borrower
7\.4 Preparation:
Governnent performance was satisfactory until project appraisal\. Thereafter, up to and including
negotiations, it was unsatisfactory\. As noted in Section 3\.5, the government raised a number of issues after
agreement had been reached at appraisal, and negotiations were substantially delayed\. At the same time, the
launching of the National Rural Roads Program in parallel with the preparation of the Bank project
certainly affected the final preparation stages of the project, and its initial implementation\. In hindsight, the
government should have tried to integrate the then proposed Bank project into the government's NRRP
instead of treating it as a separate investment program, which it did in late 1997 with the Rural Water
Supply and Sanitation Project (Loan No\. 42540), to support its program to improve access to water in the
rural areas\.
7\.5 Government implementation performance:
The government generally provided funding for highway maintenance at the levels (or slightly above)
agreed at appraisal\. The approval of the Transport Law was a major achievement\.
7\.6 Implementing Agency:
Implementation performance until the Mid-Term review was poor\. For three years after project approval,
there were practically no disbursements\. During that period, DRCR financed from their budget a
substantial number of rural roads under the NRRP\. This situation led to a government request and Bank's
exceptional agreement to finance roads works launched under the NRRP after the Loan effectiveness\. The
implementing agency also was slow to set in motion the project's technical assistance and institutional
components\. On the positive side, the implementation agency was diligent in monitoring performance
indicators, carrying out economic analysis and environmental assessment of sub-projects, preparing a
detailed contribution for the preparation of the ICR and organizing and carrying out the beneficiary survey
and workshop\.
- 12 -
7\.7 Overall Borrower performance*
Borrower performance is rated satisfactory, although marginally\. Performance was satisfactory in the early
and the later parts of the project cycle\. It was unsatisfactory from appraisal and early implementation\. Yet,
overall, it managed to get a satisfactory outcome\.
8\. Lessons Learned
Implementation
Implementation Arrangements\. The decision to carry out implementation through line agencies, instead of
a project implementation unit (PM proved to be correct\. PIUs often facilitate the tasks of Bank
supervision missions, notably because they have as sole responsibility the execution of the project\. Yet,
PIUs, by their very nature, disrupt the existing organization\. Working with the line agencies avoids this
problem, while allowing the dialogue during project supervision to serve as an effective instrument of
knowledge exchange, notably on institutional issues and on technical tools\. An example was the setting up
and operation by the DRCR of the HDM, which the DRCR now routinely uses for the selection and
evaluation of investments\.
Need to Centralize the Monitoring Function\. The project contained a number of performance indicators,
originating in different units or agencies\. Collection and processing of raw data by supervision missions
was time consuming\. In view of the increasing importance of performance indicators and monitoring, it is
recommended that a single unit or individual within the Borrower be assigned the responsibility for
producing updated perfonnance indicators covering the whole project\.
Risks and Benefits of Having a "Champion "\. During project preparation, the project was "championed"
by the higher authorities of the MOE, which viewed the project as a key instrument to achieve ambitious
objectives\. Yet, just after appraisal, the authorities changed and new ones, less supportive of the project,
took over\. The result was protracted negotiations and less ownership\. The lesson probably is that objectives
should not be overly ambitious, and that much discussion is needed with new authorities to gain ownership
or modify the project if necessary\.
Road Management
Deconcentration versus Decentralization\. A key question road agencies have to respond to is: what
responsibilities and at what pace should the center delegate for the process to be useful and effective?
Central government agencies promoting decentralization often also promote decentralization of road
management functions to local governments\. Yet, experience worldwide has shown many costly failures,
followed by recentralization\. Failures often are due to lack of sufficient technical personnel in the local
governments, sometimes compounded by the non-transfer of budgetary resources\. Morocco's approach
aiming for gradual deconcentration appears to be right\. While the DRCR is endowed with highly qualified
technical personnel, resources overall are limited and spreading them too thin would be wasteful\. At the
same time, most of the MOE's provincial directorates are well established as executing bodies\. Thus,
DRCR approach to gradually develop Regional Directorates (that are only a fraction the number of
Provincial Directorates) after a pilot trial, prudently expanding their advice, planning and review functions,
and supported by training, appears as an appropriate way to delegate central functions while avoiding
atomization of resources\.
Cost of Road Works: role of competition and stable funding\. A significant achievement by the DRCR was
- 13 -
the reduction in unit costs, in large as well as in small works\. This achievement stemmed mainly from
increasing competition for civil works\. Large international contractors, often employing domestic
contractors as subcontractors, coupled with a steady level of public works funding under the NRRP,
contributed to the further development of local contractors, increasing their efficiency and reducing costs\.
While these results are normally to be expected, sometimes inefficient market conditions prevent achieving
the hoped-for results\. The experience in Morocco confirms that under the right conditions competition will
bring about real gains and reduce costs\.
Road Maintenance Budgets, Accounting and Targets\. The lack of standard accounting for the road
maintenance budgets reduces transparency, and compounded by frequent changes in budget lines, makes it
difficult to set and monitor road maintenance budgets and funding\. Specifically, the SAR included a target
for road maintenance funding that included routine maintenance plus periodic maintenance and
rehabilitation\. But, in the original local accounting terminology, rehabilitation also covered strengthening,
road widening and realignment\. Considerable efforts had to be spent during project supervision to achieve
consistency and satisfactory standards in the budget to allow monitoring of funding targets\.
Participation of Local Communities\. Project design anticipated local communities' contribution to
financing of the project\. This happened, and to a larger extent than foreseen\. Where it happened, there is a
heightened sense of ownership and the need to preserve the roads\. However, in considering the financing
approach in future projects, the following should be taken into account: (i) the contribution expected at
appraisal from local governments was a token 0\.25 percent of total project costs; (ii) local community
funding happened mainly in the southern provinces, where communities (benefiting from remittances and
strong solidarity among the population) have a well established tradition of helping finance roads\. The
contribution of other provinces was minor; (iii) the contribution was mostly for paved roads, and suggests
that local communities have their own priorities\. Financing of the NPRR provides a broader confirmation
of the difficulty in getting local communities to help fund road programs: the communities have contributed
barely a quarter of the amount they had been expected to contribute (10 percent of NPRR costs) and again
such contribution was essentially limited to the same southern provinces\.
Defining accessibility objectives\. A major focus of the project was to improve accessibility to benefit the
rural poor\. To this end, the project funded improvement of rural roads and included performance indicators
to monitor impact\. Two key targets were reduction of road closures and number of people benefiting from
improved accessibility\. Their measurement was based on crude data available at the time\. While these
indicators were a useful start, there is a need for better understanding of the accessibility problem, and a
more precise definition of targets\. Morocco has developed a detailed rural road inventory by province that
will help substantially improve the knowledge of current levels of accessibility, and to better measure the
accessibility impact of future rural road investments\.
Policy Reforms
Policy reforms, adapting institutions, and Bank's role\. Under the project, the government committed to
liberalize the trucking market\. Such liberalization was long overdue and had been pursued by the Bank for
many years through a variety of instruments\. The government did fulfill its commitment under the project
and got a law approved\. The new market conditions that will evolve will require the government to adapt its
functions, and train its staff accordingly\. To do this, the relevant agencies will need to reflect on their new
mandate, to develop new procedures and to reorganize\. A liberalized transport market without properly
functioning regulatory institutions can be chaotic\. Preparing and establishing such institutions is not cheap
and requires learning from international experience\. The Bank should consider it essential that policy
reforms it endorses are adequately supported by technical assistance and other resources\.
- 14 -
The political economy ofpolicy reforms and government organization\. Policy reforms and organizational
changes often fail because 'losers' have more clout than 'winners'\. How this dilemma is managed is critical
for the success of the reforms\. Two examples stem from the project:
(i) Trucking deregulation\. The law that deregulates trucking in Morocco contains two clauses that aim
to mitigate the shock of deregulation\. One clause involves grandfathering current holders of trucking
licenses six years to meet professional qualification standards\. The other clause provides a period of three
years until the new deregulated market becomes effective\. These clauses allow operators to prepare for new
market conditions\. It is evident that these clauses will result, at least initially, in not gaining all that is
possible from a liberalized market\. On the other hand, such clauses, by giving protection to the potential
'losers', may well lead to a more orderly transition from current conditions to the new market conditions
thereby minimizing social tensions that could ensue from fast and radical market changes\.
(ii) Road Safety Organization\. Given Morocco's very high rate of traffic accidents and fatalities,
establishing a more effective way to promote safety is essential\. International experience has proven that
the only way to seriously address highway safety is to launch a government effort at the highest political
level, requiring the creation of a multi-sectoral commission under the Prime Minister's office (or
equivalent), and including all key stakeholders (police, public works, health, insurance)\. In Morocco, a
draft proposal to set such high level office was never implemented\. It may well be the case that losers, real
or perceived, under the proposed organization managed to block the reorganization\.
9\. Partner Comments
(a) Borrower/implementing agency:
DRCR, the implementing agency, provided the following comments\. (The DRCR summary report is in
Annex 10)\.
* The ICR presents a clear description of the project objectives, components, and implementation
phase\.
* Differences between the Borrower and the Bank after project appraisal regarding road maintenance
stemmed from priority given by the government to the maintenance of classified roads, with
funding allocated in accordance with existing norms, while the Bank demanded a more specific
quantification of maintenance funding needs\.
* The initial implementation delays were due to the limited geographic area to be covered by Bank
funding, namely the Oriental and Southern regions, since the Bank had understood that road works
in other regions would be financed by Japan\.
Other comments made by the DRCR have been incorporated in the current version of the ICR\.
(b) Cofinanciers:
No comments were received from the Japan Bank for International Cooperation (JBIC)\.
(c) Other partners (NGOs/private sector):
10\. Additional Information
Not Applicable\.
- 15 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
A\. Outcome/Impact Indicators
Table A1\.1 Key Indicators - Summary
Indicator SAR SAR Actual/Latest
Baseline Target Estimate
Traffic Interruption, Rural Roads (days-km)a/ 50,000 n\.a\. 3,000
Rural Population Given All-Weather Access n\.a\. n\.a 1,000,000
Road Condition, IRI network average(mm/km) 3,724 3,600 3,367
Road Maintenance by Contract(periodic/routine) n\.a\. 100/25 100/47
Road Safety (see below) \.
Road Maintenance Expenses (see below) \. \. \.
Unit Cost of Works (see below) \. \. \.
a/The SAR baselme calculated by extrapolation of the project's first tranche identified m the SAR
Actual values are based on the roads actually constructed or improved under the project
Table A1\.2 Road Safety
Indicator 1994 1996 2000 2001
Fatalities target 3605 3572 3521 3521
actual 3605 2807 3627 -
Fatalities/Million Population target 131 124 113 103
actual 138 a/ 105 128 -
Fatalities/000 Vehicles target 4,1 3,7 3,0 2,5
actual 2,78b/ 2,00 2,164
a/ Based on a population of 26 07 million (1994 census) and 2 06 percent annual growth rate thereafter
b/ Based on automobile fleet of 907,300 in 1994\.
Table A1\.3 Road Maintenance Expenses a/
1995 96/97 97/98 98/99 99/00 2001 2002
Maintenance expenditures (Million 845\.7 934\.9 949\.0 945\.2 939\.3 996\.0 1,051
Dh)
Target Budget (per SAR) 745\.0 790\.4 822\.2 869\.8 922\.8 1000\. 1050\.0
0
Expenditures/TargetBudget(%) 113\.5 118\.3 115\.4 108\.7 101\.8 99\.6 100\.0
a/ In 1995, and again starting m 2001, accountng is on calendar year basis\. 2001 and 2002 are budget figures
Table A1\.4 Unit Costs - Rural Roads (Dh or Dollar/kilometer)
Appraisal Engineering Actual Actual/ Appraisal (%)
(dollar basis)
Improvement 198,000 (1994 Dh) 209,000 198,000 Dh 83
$23,000 $19,000
Construction 826,000(1994 Dh) 633,000 619,000 Dh 61
$96,000 $59,000
- 16-
Table A1\.5 Unit Costs-Paved Classified Roads ( Dh or Dollar/kldometer
Overlay Surfacing
Appraisal Actual Actual / Appraisal Actual Actual?
Appraisal Appraisal
Widening Dh 693,000 Dh 473,000 56 Dh 468,000 Dh 386,000 67
($81,000) ($45,000) ($54,000) ($36,000)
No Widening Dh 416,000 Dh 497,000 98 Dh 279,000 Dh 211,000 63
($48,000) ($47,000) ($32,000) ($32,000)
B\. Output Indicators
Table A1\.6 Physical Outputs: Road Works (kilometers)
Indicator SAR Target a/ Actual/Latest Estimate
Rural Roads -Construction Paved 235 232
Rural Roads - Rehabilitation 1,000 714
Paved Classified Roads - Rehabilitation 2,660b/ 2,736
WB&Gov't (1,148)
JApan (1,588)
a/As revised at the Mid Tenn Review
b/ Bank-financed only\. Most of this component was financed by Japan The Japan-financed operation is still underway
Table A1\.7 Rehabilitation of Paved Roads (kilometers) a/
Overlay Surfacing Total
Widening 323 163 486
No Widening 322 120 442
Total 645 283 928
a/Excluding Japn financung, incomplete data
Table A1\.8 Institutional Outputs
Indicator SAR Target Actual/Latest Estimate
Transport Law Law submitted to Law submitted and approved
Parliament
Road Safety Comnmittee Restructure CNPAC CNPAC was restructured\. However, formnation
of a hlgh level Intermnnisterial Committee was
discussed, draft prepared, but not approved\.
Regional Directorates The 4 pilot RDs were 16 RD are in place, of which 9 are fully
expected to be expanded\. organized, including a CERET and a SPEE\.
No specific target was
set\.
-17 -
Annex 2\. Project Costs and Financing
Project Cost US$ million
Appraisal Estimate Actual/Latest Estimate Percentage of Appraisal
(Overall Project) (Overall Project)
Rural Roads 35\.436 27\.648 78\.0%
Paved Branch Roads 108\.778 109\.713 100\.9%
Network Management 10\.271 2\.460 24\.0%
Road Safety 11\.126 9\.686 87\.1%
Total Base Cost 165\.611 149\.508 90\.3%
Physical Contingencies 16\.990
Price Contingencies 11\.480
Total Project Cost 194\.081 149\.508 77\.0%
Financing US$ million (Ap raisal)
At appraisal GOM Municipal Total GOM + Grant IBRD JBIC Total
Governments Municipalitles
Rural Roads 13\.604 0\.425 14\.029 26\.676 40\.705
Paved Branch Roads 48\.547 48\.547 17\.968 61\.617 128\.132
Network Management 4\.797 4\.797 5\.993 1\.238 12\.028
Road Safety 4\.080 4\.080 2\.192 6\.953 13\.225
Total Disbursements 71\.028 0\.425 71\.453 2\.192 57\.590 62\.855 194\.090
Financing US$ million (Actual)
Actual GOM Municipal Total GOM + Grant IBRD JBIC Total
Governments Municipalities
Rural Roads 7\.825 19\.823 27\.648
Paved Branch Roads 35\.428 28\.576 45\.709 109\.713
Network Management 2\.073 0\.387 2\.460
Road Safety _ _2\.569 7\.117 9\.686
Total Disbursements 45\.621 3\.200 45\.821 0\.000 57\.590 46\.096 149\.508
Average exchange rate 1 USS = 10\.48 DH
Project Costs by Procurement Arrangements (Appraisal Estimate) US$ Equivalent a/
Expenditure Category ICB NCB Other N\.B\.F Total Cost
-Works 22\.417 45\.503 98\.400 166\.320
(16\.140 (30\.195) (46\.335)
2 Goods 7\.178 3\.688 10\.866
(4\.207' (4\.207)
3 Services 4\.045 9\.428 0\.10( 3\.325 16\.905
= _______________________ (1\.599' (5\.364 (0\.086 (7\.049)
33\.64( 54\.931 0\.10 105\.413 194\.090
= _________________________ (21\.946' (35\.558_ (0\.086 (57\.591)
a/ in parenthesis, amount financed by the World Bank
- 18 -
_ Project Costs by Procurement Arrangements (Actual/latest Estimate) US$ Equivalent a/
___ Expenditure Category ICB NCB Other N\.B\.F Total Cost
I Works 16\.577 57\.059 70\.912 144\.548
(11\.935) (41\.082 (53\.017)
_ Goods 1\.455 1 \.455
________________________ (1\.455) (1\.455)
3 Services 0\.61 2\.499 0\.387 3\.505
______________________ (0\.618 (2\.499 (3\.118)
______________________ 18\.65( 59\.558 0\.00 71\.300 149\.508
________________________ b/(14\.008 (43\.582 0\.00 0\.000 (57\.590)
a/ in parenthesis, amount financed by the World Bank
b/ amount of ICB less than expected because more sub-projects than foreseen in SAR were of small size and of no
interest to intemational contractors\.
-19-
Annex 3\. Economic Costs and Benefits
The DRCR, applying the same methodology used at project appraisal, recalculated the economic return of
the project-financed investments based on the actual values of costs and benefits\. All type of road
investments financed under the project were evaluated, except the 'black spots', short sections with a high
density of traffic accidents, which have been recently completed and for which there is not enough data\.
Overall, about 2,200 kilometers of road works (or about 56 % of project-financed roads, and 100 percent
of Bank-financed roads) have been subject to economic re-evaluation\.
The methodology for this re-evaluation is based on the Bank-developed Highway Design Model (HDM)\.
Version HI, the same used at appraisal\. The key parameters considered in the re-evaluation are: the roads'
geometric characteristics (influencing vehicle operating costs) before and after the project, the economic
costs of the road investments, the base traffic and its development, the operating costs of the vehicles using
the roads, and the expected maintenance costs\.
Traffic assessment were based on visual counts carried out by the regional and provincial highway
departments\. Traffic growth was estimated at 5% per year\. This is slightly higher than the 4\.5% growth
rate estimated at appraisal, and is based on the actual increase in traffic over Morocco's road network\.
For the rural road improvements, for the purposes of the economic re-evaluation it was assumed that the
improvement would be followed ten years later by paving, and that the paved road would give rise to a
'generated' traffic equal to the road's normal traffic\. These hypotheses were the same as those adopted
ex-ante\. Because of the mostly very high rates of return of the road improvements, which depend mainly on
the construction cost and initial traffic levels, the economic return would not vary significantly if these
hypotheses did not hold true, for example, if generated traffic upon paving were to be significantly lower
than the normal traffic, or if the road paving were to be delayed\. The HDM-III model was also used to
assess the most suitable type of investment for each road, relative to altemative investments that would
result in different types of road improvement\.
At appraisal, a rate of return of 12 percent was considered as a minimum to include a road subproject
under the project-financed road program\. As shown in the table below, the returns for all categories of
investments were very high\. This includes low traffic roads, for which appropriate low-cost improvements
were carried out\. As a result, the size of the sample selected for the re-evaluation is satisfactory\.
Economic Rates of Return (ERR) - Summary by Program
Paved Classified Rural Roads Rural Roads
Roads Improvements Construction
Program Cost 109\.7 13\.3 13\.4
($US Million equivalent)
ERR-minimum (%) 12\.5 15\.9 15\.8
ERR-maximum (%) Over 100 Over 100 Over 100
The economic analysis re-evaluation carried out by the DRCR using the HDM-III model is shown in table
form below\.
E: Elargissement (widening); RT: Revetement (Surfacing); R: Renforcement (strengthening)
- 20 -
Long 6tat'Finat\. L,n- __at Final
Codo ID~ DREIDPE, Nat'ure Route' '(kin) coot - Code IliD DREIDPE; Niture Roure a n coot,
Tre vaux , (kdh) \.TMJA,- TRI ______T,evaui _ (kiih) TMJA TRI
M007 B MELLAL Es-Rt 3201 12 20 3860 469 80 10 M39B NADOR E\.R 610 27 10 17 308 615 37 90
MOO8 B\.MVELLAL E+Rt 3208 13 90 3437 372 58 40 M035 NADOR R 6203 7\.00 3686 124 7 27 30
M009 B MELLAL R 317 500 1483 114 15 10 M002 I OUTANANE R 1001 27 00 13962 225 39 00
M106 B MELLAL Es-RI 1 1 13 00 3029 6048 TR>100 M003 I OUTANANE RT 1001 17 00 5025 225 19 60
moil ICASA E+R 3008 600, 3873 3500 TR>100 M061 OUJDA - B-sR 607 630\. 6501 738 19 30,
M021 KENITRA E+R 409 11 90 90011 600 42 10 M062 OUJDA E+RT 607 4 30 6501 1738 24 20
M022 KENJITRA E+R 4214 22 00 12101 200 37 50 M075 ITAOUNATE RT 5309 2 50 4241 511 31 10
M023 KHEMISSET R 14301 18 00 6410 1250 82 30 M077 TAOUNATE R __5309 11 00 66941 511 27 80
M024 KHEMISSET RI 401 15 00 1428 747 34 20 M099 TAOUNATE R ___5309 7 50 2697 511 37 40
M025 KHEMISSET R 401 7 00 5075 747 22 40 M079 TATA R 1__12 _ 31 20 9128 432 13 20
M026 KHENIFRA R ___7308 `12 00 3570 230 27\.30 M092 TATA E ___12 3 60 981 432 36 30
M027 KHENIFRA R ___3214 20 00 7 01 3 200 14 40 COOB KENITRA C __ 4228 12 00 597 7 450 TR>100
M028 IKHOURIBGA R __312 900 2102 1185,TR>100 C012 KHEMISSET C __4300 6\.75 5335 684 TR>100
M029 KHOURIBGA Es-RI 311 12 00 5335 925 73 00 C013 KHOURIBGA C __3512 11 58 6647 114, 41 70
M030 LARACHE R ___1 3 00 2377 7626 TR>100 COOI ICHTOUKA I C__ 1900 18 00 5738 400 TR>100
M30B LARACHE R ___1 10 50 8319 3044 TR>100 C027 CHTOUKA I C __1011 11400 4463 440 TR>100
M031 MKNES E-sR 1714 9 00 4 375 747 73 30 C022 TIZNIT C __ 1903 8 00 2868 140 85 20
M032 MKNES Rt__ 6 6 00 3039 7271 TR>100 C023 TIZNIT C 1 920 18 00 6454 35 19 80
M033 MKNES Es-RI 402 12 00 5770 822 67 601 C024 TIZNIT C __ N C 13 50 4887 14 76 50
M006 ASSA ZAG Es-RI 103 22 20 4503 336 74 10 C025 TIZNIT C ___1921 26 40 24818 150 40 30
MObo BOULEMANE R ___5109 4 601 625 285 49 10 COO6 FIGUIG C __ 604 40 00 297 32 __45 iS 80
MOOS CHTOUKA I R ___1011 15 00 8502 1 113 23 50 C017 OUJDA C__ N C 14 001 8143 __42 16 70,
M012 CHTOUKA I R 1 450 6393 2013 52 50 C018 [OUJDA C INC 800 7112 152 36 30
M014 CHTOUKA I E\.R 1016 5 00 2996 838 85 s0 COOS CHEFCHAOUEC 14102 24 07 24249 519 90- 10
M018 EL JADIDA Es-R 201 13 00 7434 1107 TR>100 C016- OUJDA C 6038 950 4292 __45 23 40
M019 EL JADiDA RI__ 318 1 60 508 1412 43 40 C019 OUJDA C 6022 800 410O2 7 2 31 40
Miol EL JADIDA RI 3431 2 90 306 117 19 601 A009 EL JADI DA A __ N C 905 1892 302 TR>100
M102 EL JADIDA Rt 3431 14 20 1767 411 50 10 A010 EL JADIDA A ___3455 13 40 1 277 300 TR>100
M103 IEL JADIDA RI \.303 16 80 2354 1947 TR>100 A01 1 EL JADI DA A 3439 810 1583 300,TR>l100
M020 GUELMIM E+R 103 137 80 7801 1 336 86 30 A013 ESSAOUIRA A 2240 119 50 35101 27 16 50
MOOl I OUTANANE R 1000 13 70 3411 84 12 50 A017 IKENITRA A 4262_ 4 95 1270 300 85 50
M004 I OUTANANE Es-R 105 1 300 8727 1 388 TR>100 A051 KENITRA A 4229 5 20 1 335 300 862 20
M31B MKNES Es-R 714 4 20 28634 747 5 3 30 A019 KHEMISSET A 4321 7 00 829 565 TR>100
M036 NADOR ErR 61 2 12 00 7451 470, 41 80 A020 KHEMISSET A 4315 15 00 1854 1100 TR>100
M037 NADOR R ___6202 13 00 7274 1750 72 50 A050 KHEMISSET A 4322 9 00 4074 532 47 20
M045 NADOR RI__ 15 27 00 6171 1659 76 50 A027 RABAT A 4006 7 00 1173 153\. 73 70
M039 NADOR E-sR 1610 8 50 3578 750 43 30 A028 RABAT A 14043 12 00 2011 56 32 301
M040 NADOR R ___16 9 00 3789 1750 91 90 A043 SAFI -A 2319 15 00 1808 45 33 90
M042 NADOR R ___6203 9 27 3615 790 68 30 A044 ISAFI A 2306 20 20 4516 46 20 10
M044 NADOR E+R 616 7 60 5609 5765 TR>100 A029 SETTAT A 3626 14 60 3487 257 70 10
M045 NADOR RI__ 15 25 00 661 1659 TR>100 A030 SETTAT A 3633 13 00 2470 21 3 79 60
M047 OUARZAZATE EsR 10 37 001 15029 5101 28 50 A031 SETTAT A 3626 15 50 1990 246 TR>100
M048 OUARZAZATE E+R 10 15 00 6798 428 37\.70 A032 SETTAT A 2115 iS 00 21591 566 TR>100
M050 JOUARZAZATE RI__ 10 1 100 3281 432 16 30 A033 SETTAT A 3604 10 36 1690 150 76 00
M052 OUJDA Rt__ 16 20 00 7050 1143 47 60 A034 SETTAT A 13628- 12 50 2263 88 44 401
M054 OUJDA ErR 6000 10 20 5342 2560 TR>100 A036 SETTAT A 361 3 14 21 2318 180 81 10
MO55 OUJDA E-sR 612 6 70 3509 1180 98 30 A007 IB MELLAL A 3204 14 00 3064 200 64 50
M056 OUJDA ErR 6008 18 00 11790 5311 TR>100 A055 B MELLAL A 3219 500 __440 148 TR>100
M058 OUJDA ErR 607 25 00 10297 170 32 50 A021 MARRAKECH A 2034 38 00 6941 250 TR>100
M059 OUJDA ErR IN C 4 001 3109 488, 37 20 A047 MEKNES A N C 6 00 736 600 TR>100
M060 OUJDA ErR N C 400 3109 770 41 40l A015 IFRANE A N C 3 40, 619 100, 56 50
M063 OUJDA ErR 6011 15 50 10159 3745 TR>100 A016 IFRANE A 7231 3 50 495 400 TR>100
M105 OUJDA ErR N C 8 00 6218 656 33 60 A048 IFRANE A \.7204 4 67 615 100 51\.30,
M064 RABAT RrRT 322 14 00 5981 5952 TR>100 A040 TAROUDANT A 1 735 42 00 6799 43 27 801
M065 RABAT R 'I_ 4 00 6499 15155 TR>100 A039 TANGER A 4613_ 12 00 3167 1087 TR>100
M066 SETTAT ErRT 305 24\.00 10641 1052 71 50 A002 AZILAL A 3104 34 00 3358 80 TR>100
M070 SETTAT R ___3618 34 30 1 5093 727 64\.50 A003 AZILAL A 302 26\.00 3234 120 TR>100
M071 SETTAT ErRT 13602 17\.501 7430 1OSS1TR>100- A004 AZILAL A 3100 35 00 7700 50 iS 90
M072 SETTAT RT 308 17 80 2890 1274 TR>100 A005 AZILAL A 3107 20 001 5500 50 2 3 20
M073 SIDI KACEM R ___408 41 00 20400 1620 56 70 A012 ERRACHIDIA A 703 40 00 7501 50 27 10
M074 TAOUNATE ErR 8 19 50 7 040 2430 TR>IOO A049 ERRACHIDIA A 17109 1 500 4757 60 19 80
M076 TAOUNATE RT 5314 12 00 4518 495 16 80 A025 OUARZAZATE A 1519 24 00 3500 1130 66 901
M078 TAROUDANT E+R 109 23 00 10999 474 44 40 A026 IOUARZAZATE A 1502 26 00 2670 171 TR>100
M098 TATA ErRT 109 10 00 4778 356 25\.10 A054 GUELMIM A 1315 14 70 2643 70 39 50
M094 TAZA R 5407 115\.00 5564 434 34\.10 A041 TAZA A 5406 19 30 9710 1`16 21 80
M095 TIZNIT R ___104 9 40 3697 1723 88 30 A042 TAZA A 4941 72 00 11968 _ 34 24 90
M069 ITIZNIT E 104 50 00 11233 1984 TR>100 A046 TAOUNATE A 5301 14 201 5598 70 23 10
M013 CHTOUKA\.1 RT 1016 6 00 2996 _ 665 34 10 A053 FIGUIG _ A 604 38 00 4679 30 24 80
MOls CHTOUKA I RT lOS 4 20 993 1 368 71 10 A045 OUJDA A__5424 10 00 2402 46 20 20
M016 CHTOUKA\.I ErR 1014 10 30 3740 731 71 80 A023 NADOR A__6209 15 80 4329 50 21 10
M043 NADOR ErR 810 27 50 11486 600 71 30 A024 NADOR A__6202 10 00 1600 300 TR>100
M034 NADOR E\.R 610 4 00 9254 1400TR >100I A08 !KEN IT RA A 4203 6 00 1878 930 TR>100
-21 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
February 1992 2 Economist, Highway Engineer
June 1992 1 Highway Engineer
November 1992 1 Highway Engineer
February 1993 3 Highway Engineer, Economist
Appraisal/Negotiation
July 1993 3 Engineers (2), Economist
November 1993 3 Engineers (2), Economist
April 1994 3 Engineers (2), Economist
April 1995 5 Engineers (2), Economist,
Lawyer, Financial Analyist
Supervision
October 1995 2 Engineer, Proc\. Spec\. HS HS
April 1996 3 Engineers (2), Economist S HS
December 1996 1 Engineer U S
June 1997 2 Engineer, Economist U S
October 1997 1 Engineer U S
June 1998 3 Engineer (2), Project Assist\. U S
November 1998 4 Engineer, Economist, Sector Dr\., S S
Portfolio Mgr
July 1999 1 Engineer S S
November 1999 4 Engineer, Economist (2), Public S S
Sector Specialist
June 2000 2 Engineer, PS Specialist S S
June 2001 1 Engineer S S
October 2001 2 Engineer, Economist S S
ICR
April 2002 2 Engineer, Economist
(b) Staff:
Stage of Project Cycle Actual7Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 57\.7 173
Appraisal/Negotiation 82\.8 265
Supervision 113\.3 442
ICR
Total 253\.8 880
- 22 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Neghgible, NA=Not Applicable)
Rating
OI Macro policies O H OSUOM O N * NA
O Sector Policies O H *SUOM O N O NA
O Physical OH *SUOM ON ONA
0 Financial OH OSUOM ON *NA
F Institutional Development 0 H O SUO M 0 N 0 NA
Environmental OH OSUOM ON *NA
Social
E Poverty Reduction O H OSUOM O N * NA
Fii Gender O H OSUOM O N * NA
O Other (Please specify) O H OSUOM O N * NA
F Private sector development 0 H O SU O M 0 N 0 NA
O Public sector management 0 H O SU O M 0 N 0 NA
OI Other (Please specify) O H OSUOM O N * NA
- 23 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bankperformance Rating
? Lending OHS OS OU OHU
0 Supervision OHS OS OtU OHU
Z Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
3 Preparation OHS OS OU O HU
2 Government implementation performance O HS O S 0 U 0 HU
3 Implementation agencyperformance O HS O S 0 U 0 HU
F Overall OHS OS 0 U O HU
-24-
Annex 7\. List of Supporting Documents
The following documents on this project are available:
* Memorandum of the President
* Loan Agreement
* Project Agreement
* Back-to-Office Reports
* Project Supervision Reports
* Responses to Beneficiaries' Questionnaire
* Survey of Beneficiaries
- 25 -
Annex 8\. Beneficiary Survey Results
SUMMARY OF FINDINGS
The main findings of the survey are:
* decrease in the time to reach health centers, schools and administrative centers of villages and rural
communities\. This improvement is attributed to the improvements of the roads as well as to the
construction of new facilities, the construction of which has been made possible or facilitated by
the road improvements
* improvement in transport services, especially share-ride taxis, bus or informal transport
* improved access to foodstuffs and other basic products, often with a drop in the prices of such
products
* decrease in the operating cost of vehicles, often leading to a reduction in transport rates for
passengers and freight compared to the non-improved routes\.
I\. INTRODUCTION
The Intensive Learning ICR requires that a Beneficiary Survey be carried out as part of its preparation\. In
compliance with this requirement, a survey was carried out\.
Survey design: the survey was designed by the Bank project team, and was reviewed and adapted by the
DRCR, taking into account field conditions, especially the profiles of the interviewees\.
Coverage: all four types of investments financed under the project, namely:
* Rural Roads - Improvement
* Rural Roads - Construction
* Paved Roads - Improvement
* Black spots (road safety) improvements\.
Beneficiaries: three categories of beneficiaries were considered:
* villagers living along the improved roads
* providers of social services (education, health, community services)
* providers of transport services\.
Organization and Execution: the DRCR was responsible for the overall organization and conduct of the
survey\. Field work was done by personnel from the provincial highway departments (DPEs), with
personnel experienced in surveys\. DPE personnel attended training sessions in Rabat prior to launching the
survey\. The training put special emphasis in the approach of interviewees, a large percentage of which was
expected to be illiterate\. The consultant company CID assisted with the surveyors' training and preparation
of the survey report
Survey Period: The survey was carried out during April-May 2002\.
- 26 -
II\. SAMPLE SIZE AND CHARACTERISTICS
The sample size was 2,320\. This comprised:
a) By type of beneficiary
* 1,437 villagers
* 326 providers of social services
* 557 providers of transport services
b) By type of project-financed works:
* 655 for rural road improvements
* 391 for rural road construction
* 1034 for paved road improvements
* 240 for black spots
c) By gender
* 2,185 males
* 135 females
d) By education level
* 1,003 were illiterate
* 456 had primary education
* 517 had secondary education
* 99 had higher education
e) By geographical coverage\. The survey covered 19 provinces, or 53 percent of the 36 provinces where
the project carried out works\.
III\. QUESTIONS
1\. Did the road have a positive or negative effect?
2\. Is the road now better than before?
3\. Has the road improved your economic opportunities?
4\. 4a What were the positive effects of the road improvement?
4b\. What are the negative effects of the road improvements?
5\. Have you improve services as a result of better roads (for transport services providers only)?
6\. Did the safety improvements make it safer for you and your family (for villagers/black spots only)?
7\. Are road safety improvements a priority for you ( for providers transport services/black spots
only)?
- 27 -
IV\. SURVEYRESULTS
4\.1 Rural Roads: Improvement
a) Profile of interviewees\.
Number: 655
Male/Female: 580/75
Prevailing age bracket: 31-40
Percentage illiterate: 43 percent
3ampie Gender _ = Age Education Level =
# Male Female <=20 21 a 30 31 a 40 41 a 50 >50 Illiterate Primar Secondarv Higher
RR Vilaqers 379 342 37 18 63 96 95 107 231 106 37 5
Improvement Sal Services 190 152 38 0 74 92 17 7 4 9 146 31
ranport Serv\. 86 86 0 0 14 44 14 14 46 14 25 1
Total 655 580 75 18 151 232 126 128 281 129 208 1 37
b) Responses
Question 1: Did the road have a positive or ne ative effect?
Positive (%) Negative (%) No effect (%)
Villager 93 3 4
Transport Services 100 0 0
Total 94 3 3
Question 2 : Is the road now better than before
Better (%/\.) No change (%)
Villager 95 5
Social Services 98 2
Transport Services 99 1
Total 96 4
Question 3: Did the improvement improve your economic oportunity
Yes (%/6) No change (%)
Villager 96 4
Total 96 4
- 28 -
Question 4a\. What were the positive effects of the road improvement?
Impact Villager Provider Provider
Social Transport
Services Services
1\. Improvement of transport services (buses, taxis, jeeps) 40 34
2\. Creation of new transport services 10 - 24
3\. Better access to health services 15 33 -
4\. Better access to schools 5 26 _
5\. Increase in Primary School enrollment 6 8 -
6\. Increase in Girls' Primary School enrollment 3 11 -
7\. Reduced absenteeism of teachers thaks to better roads 2 10 -
8\. Improved health services (for example, longer work hours, 2 1 -
more personnel\.)
9\. Improved access to community services 15 11 6
10\.Improved supply of foodstuffs and other basic necessities 31 10 21
1 1\. Improved access for visits with family and friends 14 0 13
12\. Obtain better prices for my products 8 0 na
13\. Operating and maintenance costs of vehicles are lower 3 11 24
14\. Less dirt on the roads 0 0 0
15\. Lower cost of basic products 16 14 14
Question 4b\. What were the negative effects?
Impact Overall Villager Provider Provider
Social Transport
Services Services
No negative effects 53 62 34 53
Higher pedestrian risks due to 2 1 3 7
higher traffic I
Increase in dirt due to higher 19 21 18 13
traffic I_I
Question 5: \. Have you improve services as a result of better roads (for trans port services providers only)\.
Yes | No
Providers Transport Services 98 2
- 29 -
4\.2 Rural Roads - Construction
a) Profile of interviewees\.
Number: 391
'Male/Female: 364/27
Prevailing age bracket: 31-40
Percentage illiterate: 47 percent
Gender Age Education Level l
Sample illiterate Secondar
Size Male Female <=20 21 - 30 31 - 40 41 - 50 >50 Primary Pnmary Y Higher
Villagers 190 189 1 3 36 43 32 76 138 36 13 3
RR Const Social Services 136 110 26 0 31 57 33 14 6 11 74 45
Transport Sev 65 65 0 0 10 28 19 8 38 18 9 0
Total 391 364 27 3 77 128 84 98 182 65 96 48
b) Responses
Question 1: 1\. Did the road have a positive or negative effect?
Positive (%) Negative (%) No change (%)
Villager 99 0 1
Transport Services 100 0 0
Total 100 0 0
Question 2 : Is the road now better than before
Better (%) No change (%)
Villager 100 0
Social Services 100 0
Transport Services 100 0
Total 100 0
Question 3: Didthe iprovement im ve your economic opportunity
Yes (%) No change (%)
Villager 97 3
Total 97 3
-30 -
Question 4a\. What were the positive effects of the road improvement?
impact Villager Provider Provider
Social Transport
Services Services
1\. Improvement of transport services (buses, taxis, jeeps) 36 43
2\. Creation of new transport services 4 - 6
3\. Better access to health services 25 24 17
4\. Better access to schools 33 29 5
5\. Increase in Primary School enrollment 3 25 -
6\. Increase in Girls' Primary School enrollment 1 5 -
7\. Reduced absenteeism of teachers thanks to better roads 1 9 -
8\. Improved health services (for example, longer work 2 22 -
hours, more personnel\.)
9\. Improved access to community services 6 24 9
1 O\.Improved supply of foodstuffs and other basic necessities 24 21 11
11\. Improved access for visits with family and friends 12 - 11
12\. Obtain better prices for my products I - -
13\. Operating and maintenance costs of vehicles are lower 3 3 49
14\. Less dirt on the roads 4 1 14
15\. Lower cost of basic products 16 9 8
Question 4b\. What were the negative effects?
Impact Overall Villager Provider Provider
Social Transport
Services Services
No negative effects 46 49 49 34
Higher pedestrian risks due to 3 4 3 0
higher traffic
Increase in dirt due to higher 1 0 0 3
traffic
Question 5: Have you improved services as a result of better roads (for transport services providers only)\.
Yes No
Providers Transport Services 98 2
- 31 -
4\.3 Paved Roads - Improvement
a) Profile of interviewees\.
Number: 1,034
Male/Female: 1,001/33
Prevailing age bracket: 31-40
Percentage illiterate: 41 percent
Gender Age Education Level
Sample Illiteratel - _
Paved illa # Male Female <=20 21 - 30 31 - 40 41 - 50 >50 Pnmarv Primary Secondary Higher
Paved Villagers 728 695 33 17 67 185 206 253 313 |173 125 1 3
Roads Fransport Sen 306 306 0 2 37 90 106 69 115 60 52 0
Total 1034 1001 33 19 104 275 312 322 428 | 233 177 13
b) Responses
Question 1: 1\. Did the road have a positive or negative effect?
Positive (%) Negative (%) No change(%)
Villager 100 0 0
Transport 100 0 0
Services
Total 100 0 0
Question 2: Is the road now better than before
Better (%) No change (%)
Villager 100 0
Social Services
Transport 98 2
Services
Total 99 1
Question 3: Did the improvement irnprove your economic opportunity
Not applicable to paved roads\.
Question 4\. What were the positive effects of the road improvement?
This question is designed to capture localized effects of rural roads improvements and construction, and
was not applied to improvement of paved roads\.
Question 5: \. Have you improve services as a result of better roads (for transport services providers only)\.
| Yes No l
Providers Transport Services 99 1
- 32 -
4\.4 Black Spots
a) Profile of interviewees\.
Number: 240
Male/Female: 240/0
Prevailing age bracket:41-50
Percentage illiterate: 47 percent
Gender Age Education Level
Sample Illiterate
# Male Female -=20 21 a 30 31 a 40 41 a 50 >50 Prima Pnmarv Secondarv H her
Safety illae140 140 0 0 14 37 44 43 65 19 27 1
|Transport Serv 100 100 0 0 12 33 38 15 47 9 9 0
240 1 240 0 0 26 70 82 58 112 28 36 1
b) Responses
Question 1: 1\. Did the road have a positive or negative effect?
Positive (%) Negative (%) No change (%)
Villager 84 12 4
Social Services
Transport Services 95 5 0
Total 89 9 2
Question 2 : Is the road now better than before
| Better (%) No change (%)
Villager 87 13
Social Services - -
Transport Services 98 2
Total 91 9
Question 3: Did the improvement improve your economic opportunity
Not applicable to black spots\.
Question 4\. What were the positive effects of the road improvement?
This question is designed to capture localized effects of rural roads improvements and construction, and
was not applied to improvement of black spots (on paved roads)
Question 5: Not applicable to black spots\.
Question 6\. Did the safety improvements make it safer for you and your family (for villagers/black spots
onely)
Yes No
Villagers 81 19
-33 -
Question 7\. Are road safety improvements a priority for you ( for providers transport services/black spots
only)
l:E::~: Yes | No l
I Providers Transport Services | 96 | 4 l
- 34 -
Annex 9\. Stakeholder Workshop Results
The preparation of an ICR-Intensive Learning requires the conduct of a workshop to discuss the results of
the project, including the findings of the beneficiary survey\.
Organization\. The workshop was carried out on October 14, 2002 in Rabat\. The workshop was organized
by the DRCR (Directorate of Road and Road Traffic) and conducted in the DRCR's conference facility\.
Attendance\. The workshop was attended by about 50 people, including representatives from
* the Ministries of Economy and Finance; Affaires Generales; Transport; and Equipment
* the DRCR
* DPEs (provincial branches of DRCR)
* CNPAC (road safety commission)
* representatives from local govemments (communes and associations)
* CID consultant
* World Bank
Agenda\. The workshop lasted a full day\. The agenda was as follows:
I\. The Project
Presenters: All government units involved with the project
II\. Findings of Beneficiary Survey
Presenters: DRCR/CID representatives
III\. Case studies
Presenters: Representatives from Local Govemments and DPEs\.
IV\. World Bank comments on project and relevant intemational experience
Presenters: Bank project team
V\. General Discussion
Key conclusions \. The key conclusions of the workshop were:
(a) the project met its objectives
(b) impact on the population was significant, notably, as reflected by the survey, in facilitating access
to social services, helping increase enrollment in primary education , helping improve provision of
transport services, and effecting reductions in travel time, vehicle operating costs and truck rates;
(c) the efforts to improve highway safety need to be pursued,
(d) the contribution of local finance was successful and greatly increased ownership of the road
improvements
(e) the workshop itself was very useful\.
- 35 -
Annex 9
Appendix 1\. List of Workshop Participants
Nom Prenom Foncfion
DRCR
BEN NCER M'hamed Directeur des Routes
DARDOURI Mohamed Directeur Adjoint
RMILI Abdennebi Directeur Adjoint
IMZEL Ahmed Chef de Division
BENZEKRI Jaouad Chef de Division
BOUNOUA Lahssen Chef de Division
HIMMI Mohamed Chef de Division
ALAOUI M\.MOUHSINE Chef de CNER
BEN AZIZ Ikrarn Chef de Service A la DP
FADIL Hammadi Charge des projets finances
MALIKI Adil Ingenieur A la DT
BOUHOUT Hakim Ingenieur A la DP
BRAHMI Mustapha Ingenieur A la DP
RISSAOUI Mustapha Chef de Service A la DPF
DRE/DPE
ENOURHBI Abderrahirn Marrakech
AYAD Allal Khernisset
BEN ALLA Mohammed Azilal
JAHID Mohamed Chefchaouen
El JANATI Ahmed Taounate
OUTIFA MOhamed Chtouka-Inezegane
BENTAOUHIT Rabat
BEJRHIT Mohamed L'Oriental
ISMAILI Abedellah Meknes
BAKHTI El Hassan El Jadida
OUAHI Omar Kenitra
EL GHAMRASNI Med Ifrane
GHARBI Abdellah Ouarzazate
JAFRANE Said Taroudant
RZAIZI Mohamed Tiznit
MOUTAOUAKIL Larbi Settat
CID
BENSSIED TaYb Ingenieur principal
Ministere de l'Economie des
Finances et de la Privatisation
CHERKAOUI Farouk Chef Service des decaissement du Financement Multilateral
CHERGUI Aicha Inspecteur finances
HAMIA Mohamed Charge du secteur routier
- 36 -
Nom Prenom Fonction
Association Adrar Tassgedlt
Chtouka Ait Baha
BARGACHE Mohamed President
Association Semlalia
BOUTAM Abdellah Secretaire Generales
MAKTOUM Ahmed Membre Technique
Ministere du Transports et de
la Marine Machande
ZHAR Hamid Directeur de la Planification et de Etudes
IDRISSI Najib Chef de Division
FADILI Mohamed Chef de Division
FNICHEL Abdesslam Chef de Service
CNPAC
BOULAAJOUL Benacer Chef de Service
LPEE
JAKANI Directeur du CERIT
DPE (ME)
GOUNI Youssef Chef de Service
Ministere des Affaires
Gen6rales de Gouvernement
EL AMRANI Abdellcrim Charge de mission
Commune Rurale d'amen
Selfia
CHKIRNI President de commune
Banque Ntondiale
FEGHOUL Mohamed
HERNAN Levy
BERGM Sylvia
NAJAT Youwari
WARD Cristopher
- 37 -
Additional Annex 10\. Borrower's Evaluation Report
Note: An English translation of this annex is available separately\.
1\. Gen6se, description et evolution du projet
1\.1\. Genese du projet
Depuis 1969, la Banque Mondiale a soutenu la politique du Gouvemement en matiere de routes en
fmancant cinq projets routiers pour la construction, F'amelioration et la remise en etat des routes et dix
projets agricoles pour les routes de desserte rurale\. Les projets routiers ont ete concus pour encourager des
investissements A fort rendement pour 1'economie marocaine (entretien et remise en etat en particulier), et
pour aider A renforcer les institutions responsables de la construction des routes, de leur entretien et de la
coordination des transports\. A travers ces projets, l'intervention de la Banque a permis de renforcer la
prioritM donnee aux travaux d'entretien et de rehabilitation sur lesquels le gouvemement marocain fait
maintenant porter tous ses efforts de financement\.
Le projet de routes secondaires, tertiaires et rurales, appele communement 6eme Projet Routier, a et
identifie A l'origine en 1991 comme un projet de routes rurales\. Cependant en 1992, le Gouvernement a
demande d'en e1argir le cadre aux autres domaines prioritaires du secteur, A savoir la securite routiere et le
reseau des routes secondaires et tertiaires\.
Les objectifs globaux qui ont ete retenus pour le projet s'inscrivent dans le cadre de la strategie
d'intervention de la Banque au Maroc qui vise le developpement du secteur prive et des secteurs sociaux, la
lutte contre la pauvrete, la conservation des ressources hydriques, la gestion du secteur public, la protection
de 1'environnement, le financement et la gestion du secteur public\.
Les objectifs du projet sont:
* repondre aux besoins essentiels du monde rural touche par la pauvrete en ameliorant l'acces aux
services sociaux et aux marches;
* accelerer le developpement du secteur prive en diminuant les contraintes liees A
la reglementation des transports routiers et en faisant davantage appel A des intervenants contractuels
pour les travaux routiers et leur contrBle;
* developper les competences en matiere de gestion routiere au sein des nouvelles directions regionales;
* ameliorer la securite routiere\.
Les principales actions du projet initialement prevues qui permettent d'atteindre ces objectifs sont:
- La rehabilitation d'environ 2219 kmn de routes secondaires, tertiaires revetues en effectuant des
enduits superficiels, des renforcements et/ou des travaux d'e1argissement,
- La rehabilitation d'environ 1133 km de routes rurales prioritaires non revetues et la construction de
96 km de routes bitumees,
- L'aamelioration de la gestion du reseau routier (appui technique, planification et programmation,
- 38 -
amelioration par etapes et formation) et renouvellement de l'equipement essentiel pour 1'entretien
routier,
- La rationalisation de l'organisation de la securite routiere et le soutien d'actions prioritaires\.
1\.2\. Les r6alisations
Lors de la revue A mi-parcours du projet, afn de tenir compte des contraintes de programmation et des
d6lais d'achevement du projet, il a ete convenu d'apporter les modifications suivantes A la description du
projet:
- Routes rurales : rehabilitation de 1 000 km de routes rurales prioritaires et construction et bitumage de
235 km de routes rurales prioritaires\.
- Routes secondaires revetues: execution d'un programme d'enduisage, de renforcement etlou
d'61argissement d'environ 2 660 km de routes secondaires revetues\.
- Gestion du reseau routier : acquisition de 7 porte-chars, 5 camions etraves et 5 chargeurs sur chenilles\.
1\.2\.1\. La composante routes rurales
Le programme d'amenagement de pistes concemr par le projet porte sur 46 operations totalisant un
lineaire de 713,8 km(soit 11,7 % de l'ensemble des amenagements du PNRR) pour un montant global de
l'ordre de 138,3 MDH\.
Le programme de construction, quant A lui, porte sur 15 operations totalisant un lineaire de 231,6 km (soit
4,5 % de l'ensemble des constructions du PNRR), pour un montant global de l'ordre de 143,4 MDH\.
L'ensemble de ces operations ont e achevees\.
Ces operations d'amenagement et de construction de routes rurales ont permis le desenclavement d'une
population rurale estimee A environ un million de personnes dans l'ensemble des regions economiques du
Pays\.
Enfin, il convient de noter que la composante routes rurales du projet prevoyait une action
d'accompagnement visant la finalisation du reclassement du reseau routier\. Actuellement, seul le
reclassement du reseau routier A la charge de l'Etat est acheve\. Le reseau des routes communales n'est pas
encore arret\.
1\.2\.2\. Composante rehabilitation
Le programme de rehabilitation des routes secondaires et tertiaires comprend des travaux d'elargissement
et de renforcement ainsi que des travaux revetement pour rattraper le retard d'entretien periodique\.
Le programme de rehabilitation du projet comporte 94 operations dont 55 operations pour le volet
conservation du patrimoine et 39 operations pour la modernisation du reseau, pour un lineaire global de
1131,8 km, y compris 12 operations A financement local qui representent un lineaire de 219,4 km\.
- 39 -
Tableau 1\.1\. Repartition des lineaires et du nombre d'operations des routes secondaires et tertiaires revetues par
nature d'interventions(non compris les op6rations financees localement)
Renforcement Revetement Total
Avec 4largissement 393,8,2 km 169,8 km 563,6 km
(30 operations) (9 op&rations) (39 operations)
Sans 6largissement 335,9 km 248,6 km 584,5 krn
(37 op&rations) (18 operations) (55 operations)
Total 729,7 km 418,4km 1148,1 km
(67 operations) (27 operations) (94 opeations)
Les operations de maintenance et de rehabilitation realisees dans le cadre de ce projet ont permis de
soutenir I'action du Ministere de l'Equipement en matiere de sauvegarde du patrimoine qui constitue l'une
des priorites de la politique routiere\. Ainsi, on note une amelioration du reseau routier revetu en etat << bon
A acceptable >> de 3 points, passant de 63,1% en 1996 A 66% en 2000\. II en est de meme de la valeur d'UNI
qui est passee de 3724 mm/km en 1996 A 3600 mm/km en 2001\.
1\.2\.3\. La composante gestion du reseau
- Acquisition de materiel : La liste des engins acquis avec le fmancement de la Banque Mondiale a ete
reduite aux equipements d'intervention d'urgence\. Elle comprend 7 engins porte-chars, 1 pelle hydraulique
et 3 camions chasse-neige\. Ces materiels ont ete acquis pour un montant total de 15 249 900 DH\.
- Etude d'appui technique (mise a disposition d'experts et formation): L'objet de ce contrat (n° DR
13/99) est de mettre A la disposition de la DRCR des experts dans le domaine routier pour des missions de
courte duree autour d'un certain nombre d'axes bien identifies\. Un programme de travail a e arr&e avec
le groupement, titulaire du marche, autour de quatre axes de developpement:
1- Amdnagement de capacite des routes d fort trafic: cet axe se rapporte A la definition de la
capacite des routes actuelles et sur la possibilite d'utilisation du manuel americain HCM ou de son
adaptation au contexte marocain;
2- Processus des dtudes: cet axe est poursuivi par une expertise relative A la definition de termes de
references pour la realisation de certaines actions jugees prioritaires pour ameliorer le processus des
etudes dont notamment la revision de certaines instructions et CPC\.
3- Amelioration du service rendu d l'usager: la reflexion concemant cet axe est achevee\.
4- Mise d niveau du CNER: de 1'exploitation du rapport de la premiere mission, il ne parait
opportun d'entreprendre de nouvelles actions dans le cadre de ce marche\.
A ce jour, les missions de diagnostic ont ete realisees pour les quatre axes sus-cites\. Ces missions ont
mobilis6 environ 25% du montant du marche y afferent\.
1\.2\.4\. La composante securite routiere
Entre 1994 et 1995, la DRCR a realise 118 amenagements de securite pour un cofit de 35 000 KDH\. Au
-40 -
titre des annees 1997-2003, c'est le programme de securite routiere finance par le Projet de routes
secondaires, tertiaires et rurales qui a ete mis en cnuvre\. II comporte 86 amenagements lourds de securite
pour un cout de 111,6 Millions de Dirhams, dont 50 sont acheves au terme de l'exercice 2001, pour un
cout de 67\.000 KDH\.
Le programme retenu a connu un demarrage tardif en raison des retards dans la preparation et
l'approbation des etudes d'execution\. Toutefois, le taux d'execution, qui est de 60 % au 31 decembre
2001, reste appreciable\.
A priori, les donnees brutes semblent indiquer que la situation de la securite routiere ne s'est pas amelior6e
depuis les progres enregistres entre 1995 et 1996, bien que les indicateurs rapportant le nombre de tues a
la population et au parc national de vehicules aient tendance A stagner\.
1\.3\. Indicateurs de performance
Conformement au rapport d'evaluation du projet etabli en Mai 1995, les indicateurs qui ont e retenus
pour le suivi de l'execution des operations du projet sont les suivants:
Tableau 1\.2\. Description des indicateurs de suivi du 6eme Projet Routier
Programme Dfinition des indicateurs de suivi Priodicite
- Routes Rurales 1- Interruptions de trafic(kmrjour) I an
2- Trafic (veh/j) Ian
- Routes revetues 1- UNI I an (*)
2- Trafic (veh/j) I an
- Securite routiere 1- Nombre de tues I an
2- Nombre de tu6s par millions d'habitants 2 ans
3- Nombre de tues par millier de vehicules 3 ans
(*) Lors de l'elaboration du rapport a mi-parcours du projet (1998), la p6riodicite initiale des mesures de l'UNI
qut etait annuelle a e modifi6e pour devenir triennale\. En effet, pour chaque section relevant du programme de
maintenance des routes revetues, l'UNI est renseigne une seule fois sur trois ans\. Aussi, il a e propose a la
Banque de calculer une valeur moyenne de l'UNI qui est triennale glissante\.
1\.3\.1\. Routes rurales
L'objectif de la composante relative aux routes rurales est de repondre aux besoins essentiels du monde
rural touche par la pauvrete, en ameliorant l'acces aux services sociaux et aux marches\. Comme le montre
le tableau suivant, les valeurs reelles des indicateurs retenus ont permis d'atteindre ces objectifs\.
En effet, pour l'ensemble des sections du projet, l'indicateur des interruptions de trafic est passe 52 301
km*jours en 1995 A 3647 km*jours au 31 decembre 2001, et ce, alors que le projet n'est pas encore
entierement acheve\.
L'evolution de l'indicateur de mesure des interruptions de trafic, exprimee en milliers de km*jours, est
repr6sentee A la figure 1\.1 \. II y apparait, en particulier, que l'objectif vise a ete atteint, et meme depasse,
et ce, en depit des retards enregistres au cours des trois premieres annees d'execution du projet\.
- 41 -
interruptions
de trafic 60
(1000*km*jour)
50 -
40 _ | Valeurs cibles
30 _____ -\.--\. ~~~~~~~~~~~~~Valeurs r6eI1es
20
10
1995 1996 1997 1998 1999 2000 2001
annee de mesures
Figure 1\.1 \.Evolution de l'indicateur d'interruption de trafic
En outre, les valeurs cibles de l'indicateur de mesure du trafic sur le reseau(exprimees en millions de
v6hicules*knm/an) ont ete approchees au cours des trois premieres annees de l'execution du projet, pour
etre nettement depassees A partir de l'an 2000\.
Trafic sur le reseau
(Mllilhons
v6h\.*kmIan) 70 - =
60
/0 Valeurs cibles
40 - -4i< - Valeurs reelles
40~ _
30-
20 - - -
1995 1996 1997 1998 1999 2000 2001
annee de mesures
Figure 1\.2\.Evolution de l'indicateur de trafic
Au 31 decembre 2001, le trafic reel degageait un excedent de l'ordre de 13,4 millions de vehicules*km/an
par rapport aux estimations preliminaires du projet\.
En ce qui conceme la desserte de population, le nombre de personnes ayant acces en tout temps aux routes
realisees dans le cadre du Projet a atteint plus d'un million (Fig\. 1\.3) soit 8 % de la population rurale
nationale\.
-42 -
1000
800
600
400
200
1995 1996 1997 1998 1999 2000 2001
Figure 1\.3\. Evolution de la population desservie par les routes rurales du projet
1\.3\.2\. Routes revetues
Comme le montre le tableau qui suit, le projet a contribu a l' amelioration du niveau de service du reseau\.
En effet, les valeurs reelles de l'UNI durant la periode de realisation du projet sont inferieures aux valeurs
cibles\.
Tableau 1\.3\. Evolution de la valeur d'UNI du reseau routier revetu
Valeurs d'UNI(mm/km)
Valeur cibleValeur reelle
Valeur de depart:
3 724 mm/km
30-juin-97 37003450
30-nov-98 36703395
31-dec-01 36003367
En ce qui concerne 1'entretien periodique, les travaux sont realises A 100% par l'entreprise\. D'autre part,
les pourcentages des travaux d'entretien de routine realises A l'entreprise depassent les valeurs cibles du
projet et ont atteint 47%/ en 2001\.
1\.3\.3\. Seurite routiere
Comme le montre le tableau donne ci-apres, le nombre de tues a connu une reduction en passant de 131
tues par million d'habitants en 1994 A 128 tues par million d'habitants en 2000\.
-43 -
Tableau 1\. 4\. Evolution des indicateurs de s6curit6 routiere au long de la dur6e du projet (y compris les tues en
agglom6rations urbaines)
Indicateur 1994 1996 2000 2005
Nombre de tues (cible) 3605 3572 3521 3521
Nombre de tues (reel) 3605 2807 3627 -
Nombre de tu6s (cible) 131 124 113 103
par Millions d'habitants (reel) 138 (1) 105 128
Nombre de tues (cible) 4,1 3,7 3,0 2,5
par Millier de vehicules (r6el) 2,78 (2) 2,00 2,16
(1) Le calcul de l'indicateur est base sur une population de 26\.073\.000 habitants
(recensement de 1994), et sur un taux de croissance annuel de 2,06% (taux observ6 entre 1982 et 1994)\.
(2) Ce taux a e calcul6 sur la base d'un parc automobile evalue en 1994 A 907302\.
2\. Evaluation des performances du projet
Bien que le projet a connu un retard d'environ trois ans dans son demarrage Oes negociations du projet ont
e entamees enl993 alors que le projet n'a demarr6 qu'en juillet 1997), dfi A un certain nombre de
questions qui restaient en suspens, notamment en ce qui conceme le financement de l'entretien des routes, la
Banque et l'organe d'execution ont donn6 un bon 6lan au projet qui a pu d6marrer effectivement en 1997\.
2\.1\. Evaluation des performances de I'organe d'ex6cution et de la Banque
2\.1\.1\. L'organe d'execution
Les performances de la DRCR sont satisfaisantes pour ce qui concerne l'accomplissement des formalites de
mise en vigueur du pret et l'acheminement des demandes de decaissements\.
Le contr6le et la surveillance des travaux ont ete assures correctement par les Directions R6gionales et
Provinciales de l'Equipement, avec le recours des laboratoires agre6s, en mettant un personnel competent
sur le projet pour faire respecter les normes techniques et de qualite exigees dans le domaine\. Les
d6comptes et les demandes de d6caissement ont et6 etablis r6gulierement\. La Banque a pu recevoir
regulierement les rapports d'avancement du programme sur les plans physique et financier\.
Toutefois, la r6alisation de certaines actions prevues dans le cadre du volet relatif aux etudes de
developpement institutionnel, notamment en ce qui conceme les contrats de pilotage des travaux et la mise
a disposition d'experts, a connu une lenteur qui est due A des difficult6s rencontrees lors de la mise en
ceuvre de ces etudes\. Apres le cadrage des objectifs attendus de ces etudes, la DRCR a pu faire aboutir les
actions les plus prioritaires qui rentrent dans le cadre de ces 6tudes\.
2\.1\.2\. La Banque
Apres le demarrage du projet, les performances de la Banque ont donn6 un bon 61an au projet\. Les missions
de supervision ont permis A la Banque de suivre de tres pres l'ex6cution des differentes composantes du
projet\.
En outre, les visites de chantiers effectu6es dans les provinces de Settat, Khouribga, Khemisset, Meknes,
Tiznit, Agadir, Taounate, Khenifra et Beni-Mellal par les reponsables de la supervision du projet du c6te
de la Banque ont 6galement contribue A ameliorer cette qualite et tirer profit des recommandations 6mises
par ces experts lors de ces visites\.
-44 -
Les resultats obtenus montrent que le projet a e bien prepare et evalue, et que ses objectifs sont atteints\.
En conclusion, le 6eme Projet Routier, finance par la BIRD, a e bien concu\. II correspond A des priorites
economiques dans le secteur routier et a e realise avec succes\. II a contribue au desenclavement du monde
rural (environ 1 million d'habitants ruraux sont desservis par les routes du projet), et A l'amelioration du
niveau de service des routes et de la securite routiere\.
La mise en ceuvre du 6eme Projet s'est deroulee dans le cadre d'une collaboration etroite entre l'organe
d'execution et la Banque\. A titre d'exemple, les criteres de s6lection des projets ont ete revus pour
permettre d'identifier les operations pertinentes A fort impact dans les zones beneficiaires\.
C'est ainsi que lors de la revue A mi-parcours du projet effectuee en 1998, la criteres de selection des
operations de routes rurales eligibles au fmancement du 6eme Projet Routier tels qu'ils ont ete fixes dans le
rapport d'6 valuation ont e revus\. Suite A cette revue, il a ete decide que la justification economique de ces
operations soit effectuee comme suit:
- pour les amenagements de routes dont le cofit des travaux est inferieur A 0\.2 MDH/km, la justification
economique des operations se basera uniquement sur une analyse multicritere\. Les op6rations dont la
note d'analyse multicritere est inferieure A 8 sont eliminees\.
- pour les am6nagements de routes d'un cofit superieur A 0\.2 MDH/km et les constructions de routes
revetues, la justification economique se base sur analyse multicritere suivie d'une evaluation
economique par HDMIII\. Pour cette demiere categorie d'operations, il a e convenu de maintenir les
operations rentables dont la note est superieure A un seuil fixe A 6 au lieu de 8, initialement prescrit par
la Banque\.
La revue a mi-parcours du projet a egalement etendu la zone d'action du projet en ce qui conceme la
maintenance du reseau routier A d'autres provinces du Royaume en dehors de celles situees dans les regions
de l'Oriental et du Sud qui etaient les seules prevues initialement par le projet\.
2\.2\. Impact socio-economique
2\.2\.1\. Contexte
Le 6eme Projet routier a ete choisi par la Banque pour faire l'objet d'un rapport d'achevement dit
d'enseignement intensif (RAPEI)\. L'une des exigences pour la preparation d'un tel type de rapport est la
prise en compte des resultats d'une enquete aupres des beneficiaires du projet pour pouvoir en tirer des
enseignements dont pourront beneficier A la fois l'emprunteur (le Gouvemement du Maroc), I'agence
d'execution du projet (la DRCR - Ministere de l'Equipement), et la Banque Mondiale\.
2\.2\.2\. Objectifs de P'enquete
Cette enquete vise A 6valuer l'atteinte des objectifs suivants:
- repondre aux besoins essentiels du monde rural touche par la pauvrete, en ameliorant l'acces aux
services sociaux et aux marches,
- ameliorer la securite routiere\.
-45 -
2\.2\.3\. Principaux resultats obtenus
Operations d'amenagement et de construction
Les impacts les plus ressentis par les beneficiaires sont:
- la reduction du temps d'acces aux services socio-administratifs (chef-lieux, centres de sante,
etablissements scolaires)\. Ce progres est imputable a la fois a l'amelioration des routes et a de
nouveaux equipements dont la construction a e rendue possible en partie par les routes\.
- I'amrlioration des services existants de transports, notamment les taxis, les autobus ou le transport
informel qui assurent un service plus frequent et moins cofiteux, selon 38% des personnes
interrogees\.
- L'amelioration de l'acces a l'approvisionnement en produits alimentaires et autres produits de
premiere necessite\. Cette amelioration a eu pour effet une diminution des prix d'achat selon 22%
des personnes interrogees\.
- La reduction des couits d'exploitation des vehicules, d'ofu une diminution des tarifs de transports de
voyageurs et de frets par rapport a ceux pratiques dans les routes non amenagees\.
Operations de maintenance
Les impacts les plus ressentis par les beneficiaires sont l'am6lioration des services existants de
transport public sous forme de taxis et de bus qui assurent un service de transport plus rapide (exprime
par 59% des enqu8tes) , et la reduction du cofit de reparation et d'exploitation des vehicules, selon 25%
des personnes interrogees\.
En outre, I'elimination des congestions et des coupures des routes a permis une circulation plus rapide
et l'augmentation de la fluidite du trafic:
- 35% des personnes interrogees ont mis l'accent sur la possibilite de circuler plus vite,
- 27% ont signale la reduction ou l'elimination des coupures,
- 14% ont signale l'amrlioration de la fluidite du trafic\.
Securite routifre
Parmi les impacts les plus ressentis par les beneficiaires, on peut citer:
- 70% des personnes interrogees ont affirme que la circulation est plus sfire apres la realisation de
l'amenagement;
- 57% ont signale une reduction du nombre d'accidents;
- 32% ont signale que la circulation est devenue plus sure pour les pietons\.
2\.3\. Impact sur I'environnement
Dans le cadre de l'evaluation de l'impact sur l'environnement des operations du 6eme Projet Routier, la
DRCR a elabore un questionnaire qui a e envoye en 1999 aux DRE/DPE en vue de le renseigner pour
toutes les operations prevues en construction ou en e1argissement\.
-46 -
L'analyse des questionnaires renseignes par les DRE/DPE a montre que globalement les operations
realisees n'ont pas eu d'impact negatif sur l'environnement\. En effet, 1'execution des travaux de
construction et d'amenagement de pistes s'effectue dans 1'emprise de la route\. II en est de meme pour les
travaux d'e1argissement\.
Quelques impacts negatifs sur l'environnement, quoique minimes, ont ete releves et concement en
particulier la non remise en etat des quelques zones d'emprunts des materiaux et de campement des
chantiers et la modification de trace des itin6raires utilises par le betail\.
Une visite de terrain a e effectuee par une equipe de la DRCR dans les DPE de Tiznit et
Chtouka-lnezgane et a porte sur une dizaine de sections\.
Apres ces visites, la DRCR a diffuse une circulaire A 1'ensemble des DRE/DPE au cours de F'annee 2000
leur demandant de mettre en oeuvre les recommandations visant la prise en compte de I'aspect
environnement dans la realisation des futurs projets routiers et la reduction des impacts sur l'environnement
lors de 1'execution de ces projets\.
3\. Recommandations pour les futurs projets
3\.1\. Criteres d'eligibilite des routes rurales
Les criteres d'eligibilite des routes rurales qui exigent en sus de l'analyse multicritere une evaluation
economique par HDM III ne sont pas toujours adaptes A cette categorie de routes\. En effet, une route peut
avoir un faible trafic tout en assurant un r6le socio-administratif significatif alors qu'une route qui draine
un trafic de transit important peut avoir un fort irnpact economique sans assurer un r6le socio-administratif\.
A ussi, il est propose pour la justification economique des routes rurales d 'adopter I 'un des deux criteres
suivants: soit une note d'analyse multicritere superieure d 8, soit un TRI>=12%\.
3\.2\. Procedures de passation des marches
La passation des marches des projets finances par la Banque connait souvent des retards tres importants
dus principalement A la difference des procedures entre la Banque et celles habituellement appliquees par
la DRCR notamment pour ce qui conceme les procedures de passation des marches par appel d'offres
international avec preselection pour les quelles il est propose:
- de les adopter uniquement pour les operations dont le cout depasse 2OMdh quelque soit la nature
des travaux\.
- de domicilier la preselection et l 'ouverture des plis au niveau de la province concernee par le
projet et non au niveau de la region
- de reduire le delai pour la preparation des offres par les entreprises nationales de 45 jours d 15
jours comme 1'exige la reglementation nationale\.
3\.3\. Maitrise de la gestion de 1'execution
Pour les marches de construction et de maintenance depassant 2 millions de dollars, l'accord de la Banque
est necessaire pour etablir l'attestation d'eligibilite exigee par le Ministere de l'Economie, des Finances et
du Tourisme\. Cet accord prend beaucoup de temps en raison des longs delais d'acheminement du courrier
entre le Maroc et le siege de la Banque aux USA\. Sans ladite attestation les DRE/DPE mandatent les
-47 -
decomptes selon la procedure normale(c'est A dire un seul mandat par decompte)\.
Pour eviter un tel retard dans l'execution des marches, il est preferable que I'attestation d'eligibilite soit
6tablie sur la base de I'attestation de rattachement signee par la DRCR comme pour les operations dont le
montant et inferieur A 1,5 millions de dollars\.
3\.4\. Procedures de decaissement
Le pret BIRD 3901-MOR dispose d'un fond de roulement ouvert A la Tresorerie Generale du Royaume\. La
procedure de financement, telle qu'elle est arretee par le Ministere des Finances par circulaire du
29/06/1990, stipule que les pieces justificatives de paiement doivent etre acheminees par les tresoreries
provinciales\. Un releve de paiement par march6 est adresse A la Tresorerie Generale du Royaume, A la
Direction du Budget pour etablir la demande de realimentation du fond de roulement\. Une copie est
communiquee par le Ministere des Finances a la DRCR , et elle sert de base pour l'actualisation des
paiements\.
Pour permettre a la DRCR d'actualiser de facon reguliere le rapport trimestriel des paiements des marches
finances, la DRCR souhaite que la Tresorerie Generale du Royaume lui envoie les pieces justificatives au
meme titre que la Direction du Budget
-48 - | REVIEW |
P120595 |  ICRR 14526
Report Number : ICRR14526
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 12/30/2014
Country : Tonga
Project ID : P120595 Appraisal Actual
Project Name : Tonga Post Tsunami US$M ):
Project Costs (US$M): 5\.00 5\.12
Reconstruction
L/C Number : Loan/ US$M ):
Loan /Credit (US$M): 5\.00 5\.10
Sector Board : Urban Development US$M):
Cofinancing (US$M ):
Cofinanciers : Board Approval Date : 10/19/2010
Closing Date : 03/31/2013 12/31/2013
Sector (s): Housing construction (81%); Public administration- Water sanitation and flood protection
(17%); Information technology (2%)
Theme (s): Natural disaster management (100%)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Roy Gilbert Kristin Hallberg Christopher David IEGPS1
Nelson
2\. Project Objectives and Components:
a\. Objectives:
original :
"To assist the Government of Tonga to implement its Niuatoputapu * Priority Tsunami Recovery Program aimed at
recovering the living standard of the population living in the island affected by the Tsunami of September 30, 2009,
through the reconstruction of residential houses with auxiliary water and sanitation facilities in Niuatoputapu, and
strengthening Tongaâs capacity to address future natural disasters \." (Financing Agreement, FA Schedule 1 p\. 4;
Emergency Project Paper, EPP p\.13)\.
revised :
To assist the Recipient to implement its Niuatoputapu * Priority Tsunami Recovery Program aimed at recovering the
living standard of the population living in the island affected by the Tsunami of September 30, 2009, through the
reconstruction of residential houses with auxiliary infrastructure facilities in Niuatoputapu, and strengthening the
Recipient's capacity to address future natural disasters \." (Amendment to Financing Agreement November 29, 2013
p\. 1)
* With a population of around 900, Niuatoputapu is a 16 km2 island located some 700 kms north of the main island of the
archipelago of Tonga \.
Since no disbursements were made after what was a minor revision of the project objective--revised principally to make project
investment in access roads eligible by including a more generic reference to "auxiliary infrastructure facilities"--IEG bases this
review upon the original objective without prejudice to project efforts to improve access roads to the restored housing\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
Yes
Date of Board Approval: 11/18/2013
c\. Components:
Original Components (from FA Schedule 1, with amendments)
Part A : Cyclone -Resistant Housing Construction (appraisal cost US$3\.35m\.; actual cost US$3\.73m\.): incl\. (i)
technical assistance for land surveying, planning and allotment; (ii) construction of about 85 units of low-cost
cyclone-resistant housing, with auxiliary water and sanitation facilities in Niuatoputapu to replace destroyed housing
These housing units will be built on land specifically allocated by the Government of Tonga for this purpose \. The
Amendment proposed in 2010 extended the auxiliary facilities beyond just water and sanitation, to encompass
infrastructure more generally\.
Part B : Retrofitting of partially damaged housing and buildings : (appraisal cost US$0\.35m\.; actual cost US$0\.46m\.)
incl: financing construction materials, small works and technical assistance to retrofit about 40 partially damaged
houses, small enterprises buildings and community halls \.
Part C : Strengthening of Disaster Risk Management : (appraisal cost US$0\.50m\.; actual cost US$0\.40m\.): incl:
equipment for hazard and risk information assessment, institutional strengthening of the planning and GIS units of
the Ministry of Land Survey and Natural Resources, and the preparation of community disaster risk management
plans in Niuatoputapu\.
Part D : Project Management : (appraisal cost US$0\.40m\.; actual cost US$0\.53m\.) incl: funding the Project
Management Unit, responsible for the day -to-day implementation of the project, including financial management,
accounting, environmental and social safeguards, procurement, monitoring and supervision activities, audits of
project accounts, and reporting through technical assistance \.
Unallocated amount : (appraisal cost US$0\.3 million; actual cost US$0\.0 million) given the considerable uncertainties
and potential logistical challenges during project implementation \. [IEG notes that this was, presumably, equivalent to
conventional contingencies that did not figure in this appraisal's cost tables ] (EPP p\. 26)\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project cost :
The ICR reports the total actual cost of the project was US$ 5\.121 million (ICR p\. 21)\. The reported difference from
the appraisal cost of US$5\.0 million was partly due to the appreciation of the value of the Special Drawing Rights
(SDR), in which the Grant was denominated, against the US dollar that measured costs and financing in project
documentation\. At project approval in October 2010 the SDR:US$ exchange rate was 1\.51\. By project completion in
December 2013, it had risen to 1\.54\. SDR:US$ exchange rate fluctuations during implementation point to an actual
total project cost of US$5\.10 million (details under "Financing" below)\. Overall project costs at completion were
nevertheless close to the appraisal estimates, although actual unit costs were significantly higher than appraisal
estimates (details under Efficiency Section 5)\. At the level of individual components, actual cost performance broadly
followed the expenditure plan laid out at appraisal \.
Financing :
The project was 100 percent grant financed by IDA, meaning that the project's total cost and the total value of the
Grant were the same amount\. The ICR correctly reports the US dollar of the Grant committed at appraisal as US$ 5\.0
million\. In error, however, the ICR reports that the actual Grant disbursed was US$ 0\.0 (ICR p\. 21)\. For that reason,
IEG sought the correct data from the Bank's Client Connection that reported a total Grant disbursement of US$ 5\.10
million, the value used by IEG for this review (and for the actual total project cost )\. This US dollar denominated value
derives from the varying SDR:US$ exchange rates as applicable at the time of each of the 26 disbursements made
from the Grant during the implementation of project between 2010 and 2013\.
Borrower contribution :
No Government counterpart funding was expected at appraisal and none was forthcoming during implementation \.
Dates :
Although disbursements were very slow for the first half of implementation, they accelerated after mid -term, enabling
the project to be completed within only one six month extension to the original closing date \. The project was
designed as an emergency operation to be financed through an Emergency Recovery Loan (ERL)\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
rating : substantial
At appraisal, the objectives were consistent with the Bank's Pacific Regional Engagement Framework 2006-2009 that
focused upon helping member countries, including Tonga, manage natural disasters \. Currently, the objectives are
still relevant to the 2011-2014 Tonga Strategic Development Framework (TSDF) as well as the 2009-2014 Tonga
National Strategic Planning Framework \. Alongside these references, the ICR cites the following, presumably
extracted by the ICR from the content these strategy documents : "appropriate, well planned and maintained
infrastructure that improves the everyday lives of people " and " disaster risk management and climate change
adaptation, integrated into all planning and implementation of programmes "\. The project's objectives are relevant to
the priorities explicitly laid out by the 2011-2014 Country Assistance Strategy (CAS) for Tonga that specifically
highlighted the importance of reconstruction after the 2009 tsunami as well as strengthening the disaster
management and response capacity (CAS p\. 15), Recovering the pre- tsunami living conditions as the project
objectives proposed was an unrealistic aim for one project focused only upon housing \. The ICR correctly makes
clear that recovering a disrupted standard living depends upon many other factors beyond the scope of a single
project like this one (ICR p\. 13)\. From discussions with the project team, IEG learned that the project's adoption of a
recovered standard of living as its main objective came directly from the mission statement of Tonga's broader
Niuatoputapu Priority Tsunami Recovery Program \. IEG agrees that it was not prudent for the objective of a sectoral
project like this to have promised to achieve the recovery of a population's living standards intended by the broader
program\.
b\. Relevance of Design:
rating : modest
The ICR does not explicitly review relevance by considering the logic of the project's results framework and the
linkages between project interventions, outputs delivered and outcomes obtained \. IEG notes, however, that by
building new cyclone resistant housing for those who had lost their homes (Part A) and retrofitting partially damaged
housing (Part B) could help contribute to achieving only part of the project's broad objective of recovering the living
standards of the islanders affected by the tsunami \. Restored living standards depends on many things far beyond the
housing offered by this project \. They include security, employment and income, health and education services, and
the availability of goods and services --to mention a few\. While the project's housing and ancillary infrastructure
provision could be a positive contribution, it alone could not ensure the recovery of living standards promised by a
project whose design was not conceived to encompass the multiplicity of actions needed to achieve such a broad
goal\. A new, even fully serviced house, by itself, could not guarantee the restoration of living standards to a
household if that household were without income and access to goods and services, for example \. By strengthening
disaster risk management through providing equipment for hazard and risk assessments, and the preparation of
community disaster risk management plans (Part C), the project would be set up to help achieve objective of
strengthening Tonga's capacity to deal with future natural disasters \.
4\. Achievement of Objectives (Efficacy):
Objective 1 - rated substantial : To assist the Government of Tonga to implement its Niuatoputapu Priority
Tsunami Recovery Program aimed at recovering the living standard of the population living in the island affected by
the Tsunami of September 30, 2009, through the reconstruction of residential houses with auxiliary water and
sanitation/infrastructure facilities in Niuatoputapu,
Evidence specifically about recovering the living standard of the victims of the tsunami is not provided by the ICR,
which also does not tell us what the living conditions had been before the disaster (the baseline) and what they had
become after the project (the endline)\. In a meeting with IEG, the TTL explained that the beneficiaries' standard of
living, derived from agriculture and fishing, had been above subsistence levels \. It had been disrupted by the tsunami
and the project had helped it recover \. The PAD itself refers to "the former living standards" of the victims (PAD p\. 45),
but does not specify what they were or provide a measure of them \. Nor did the project design include an indicator to
measure any recovery of this standard \. This leads the ICR to conclude correctly that the "higher level" objective of
recovering the pre-tsunami living standard was beyond the scope of this project alone (ICR p\. 13)\. The reconstruction
of residential housing with its auxiliary infrastructure, initially conceived as the only project instrument for achieving
the recovery of that living standard, was itself partially achieved \. Of the target of 85 restored houses, 73 were
completed by the project\. According to the ICR, the target was reduced as 12 houses were provided by other donors \.
The ICR provides no information, however, about the quality of these houses and whether they constituted, at least
from the housing services perspective, a restoration of living standards \. Its evidence about the location of these
houses with respect to avoiding vulnerable areas prone to natural disasters, notably tsunamis, wind storms, floods
and landslides, is scant\. Only in the Borrower ICR could IEG find a brief and general statement on this : "The houses
were constructed on higher and safer ground thereby reducing vulnerabilities of the affected families to any future
tsunamis and storm surge hazards " (ICR p\. 33)\. The TTL provided IEG additional information, including maps that
showed the location of the new housing units in areas less vulnerable to tsunamis that take into account a minimum
contour of 10 meters above sea level\. As per the information provided by the TTL, the new housing units had two
rooms, a bathroom and a kitchen unit with a 34 m2 floorspace\. This cannot be directly compared with the standard of
the housing lost to the tsunami, however, for which comparable data is not available for this review \.
Objective 2 - rated modest : To strengthen Tongaâs capacity to address future natural disasters \.
The project had no performance indicators to measure the achievement of this objective \. The ICR notes that it is
impossible to measure if Tonga will have a stronger capacity to respond effectively \. The report hedges an
assessment by affirming that Tonga's capacity can only be assessed when put to the test, presumably in the face of
another disaster when "the capacity is called upon " (ICR p\. 13)\. The ICR also notes that national risk management
and planning--that nevertheless included highly sophisticated and good quality damage maps --could not make full
use of the equipment and training provided by the project, particularly because planning information for preparedness
was not available in a timely manner (ICR p\. 14)\. IEG reckons, however, that based upon an understanding of past
vulnerabilities that allowed disasters to strike, the ICR could have made an assessment of whether such
vulnerabilities had been reduced by the project or not \. To assess impacts upon the capacity for disaster response,
we cannot only wait for a new disaster to strike \. A different part of the ICR notes, however, that hazard risk
information was more available and accessible to the islanders after the project and that community awareness of
and preparedness for disasters was increased on the island of Niuatoputapu where outreach and operational drills
increased community ownerships of plans (ICR p\. 15)\.
5\. Efficiency:
rating : modest
While there were no estimates of economic rates of return (ERRs) made at the appraisal as this project was prepared
urgently as an ERL, the ICR reports that a conventional cost benefit was not conducted at completion --when the
emergency exemptions of an ERL no longer apply --because it was difficult to quantify the costs inflicted by the
tsunami and the benefits generated by the project \. Moreover, the ICR affirms that "the small population, the extreme
remoteness and inaccessibility of the island of Niuatoputapu render a conventional cost :benefit of any investments
irrelevant\." (ICR p\. 14)\. The report notes that, as the project was primarily aimed at meeting basic human needs,
"decisions on whether to include investments could therefore not be driven by an assessment of cost /benefit, but
rather by whether the investment would best meet the long -term needs of the population" (ICR p\. 14)\. To know
whether the investment indeed is the one that best meets those needs precisely requires an assessment of its
efficiency and the efficiency of alternative investments \. IEG therefore does not concur with the rejection of an
economic analysis for this project, nor would it be consistent with Bank guidelines \. Taking into account the
remoteness and inaccessibility of the island would make a cost :benefit analysis of recovering the living standards of
the few inhabitants particularly important for at least three reasons : (i) to help clarify that the pre-tsunami standard of
living was indeed restored, (ii) that this was achieved at reasonable cost with the efficient and accountable the use of
project funds; and (iii) it would demonstrate whether the Bank could help deliver housing outputs to help achieve a
recovery of living standards on the very small scale foreseen to a very remote location \. Without an assessment of
efficiency a question thus remains whether US$ 57,500 per unit was an efficient use of funding for the housing
provided by this project\. We can conclude from information in the ICR that there was a loss of efficiency \. The project
built fewer houses than planned while spending more than expected \. The appraisal had intended that the project
spend US$3\.7 million on 85 houses and their infrastructure, while the actual spending was US$ 4\.2 million on 73 34
m2 two-room houses and their infrastructure \. The actual spending per housing unit was therefore US$ 57,500, 32
percent higher than the appraisal estimate of US$ 43,500 per unit\. The TTL provided additional information to IEG
that showed that housing construction costs varied considerably across the Tonga archipelago and that
Niuatoputapu's remote location at more than 700 kms from the nearest international port was a factor in increased
costs on that island\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re -estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The relevance of objectives was Substantial and of design Modest \. Efficacy of the first recovery objective was
Substantial, for while evidence of the recovery of that pre -tsunami living standard is non-existent, additional
information provided by the TTL (beyond the ICR) demonstrated that the project's housing reconstruction purpose
had been achieved\. Efficacy of the second disaster mitigation capacity objective was Modest, a rating that takes
account of the ICR's diffident assessment of this result \. Efficiency, where costs and benefits were not evaluated by
the ICR, was rated Modest\.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
rating : moderate
The ICR notes that the project houses are well -built, have a useful life of 20 years and are designed to be cyclone
resistant\. There is also reference to the more cyclone resilient construction skills having been transferred to local
people when they carry out their own construction \. The ICR does not confirm, however, that the project houses are
all in safer locations more resilient to windstorms and flooding through cyclones and tsunami than the units they
replaced\. While the ICR restates the appraisal's aim and intention of locating the new housing on higher ground (that
would be safer from tsunamis) several times, it is only the Borrower ICR that states what actually happened, albeit in
general terms: "The houses were constructed on higher and safer ground thereby reducing vulnerabilities of the
affected families to any future tsunamis and storm surge hazards " (ICR p\. 33)\. During IEG's meeting with the TTL,
however, the TTL gave assurances that the housing was indeed built on higher ground in areas that were not prone
to flooding or landsides\. The TTL also provided IEG with maps showing these locations The ICR itself notes a risk
with respect to the ancillary infrastructure arising from the lack of training in the operation and maintenance of
sanitation systems that could lead to a misuse of the facilities and their eventual failure to operate (ICR p\. 16)\. With
regard to the water supply in each village, it is the responsibility of the village water committee \. Each committee is
expected to take over responsibility for the extended and upgraded supply system of pumps, overhead tanks and
underground pipework in its village, having undergone initial training by Tonga Water Board, who designed the
upgrading and supervised construction (ICR p\. 12)\. The ICR does not report on the actual performance of these
committees, however\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The Bank project design was in direct response to a request by the Borrower for assistance in reconstructing
assets damaged by the tsunami, and drew upon important (but unspecified) lessons from a previous emergency
project in Tonga\. In preparing and appraising the project, the Bank took into account local capacity to implement
the project, although it underestimated how protracted the land acquisition processes became, causing delays to
project implementation\. The design included a small disaster risk management component in the form of the
project's Part C that included disaster risk mapping of the island, details of which IEG learned from the TTL \. As
already mentioned in this review, the idea of achieving a general recovery in the pre -tsunami standard of living
solely through a small project focused upon housing reconstruction, was a promise beyond what the project could
reasonably deliver and was not a realistic element of the project design \.
at -Entry Rating :
Quality -at- Moderately Satisfactory
b\. Quality of supervision:
Difficulties of accessing the island of Niuatoputapu, with infrequent and weather disrupted flights, prevented
regular supervision by the Bank \. The ICR reports performance ratings during implementation filed by four
supervision missions during the three years of execution of this project \. The ICR does not report about Bank
supervision interactions with the Government of Tonga or the local authorities and communities on the island of
Niuatoputapu\. It does note, however, that Cyclone Evan of December 2012 stretched the Bank team's resources
based in the Sydney office, with the result that the new road investments for this project had not been fully
prepared, a problem that was overcome by financing of road maintenance by the Government \.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Government of Tonga set up an inter -Ministerial Project Coordination Committee (PCC) chaired by the
Minister of Finance to oversee this operation and all other relief and reconstruction projects for the island of
Niuatoputapu\. The PCC was very active during implementation and coordinated well with the PMU \. The ICR
does not describe or assess the PCC operations, however, nor comment on whether these too were hindered by
the island's inaccessibility as Bank supervision was \.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
Through force account, the Ministry of Infrastructure (MOI - previously called the Ministry of Works ) was
responsible for the all civil works related to the reconstruction \. The quality of the completed works varied --land
clearing-good, access roads-poor (ICR p\. 18)\. The ICR highlighted a number of problems, including project
management, that was too onerous for one individual, was nevertheless unduly reliant upon a single consultant \.
This consultant's contract was not extended to cover project implementation extensions \. This meant that there
was no project manager in place for the final nine months of the project (ICR p\. 8)\. Contract management for
house construction was lax in allowing cost escalation without proper authorization, and this caused cost
overruns on one contract (whose total value was not given by the ICR ) of US$90,000 (ICR p\. 8)\. A reason cited
for these problems was the very limited and slow communication with the PMU (ICR p\. 18)\. Slow procurement of
goods and expertise for the mapping component to meant that this component was implemented far behind
schedule\.
Implementing Agency Performance Rating : Moderately Unsatisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
At appraisal, M&E design included one outcome indicator, namely the number of housing units restored to affected
families, that was easily measured and directly related to the achievement of the project objectives \. It did not cover
the number of people benefitting from the project, however \. A second outcome indicator, the provision of auxiliary
water and sanitation facilities, was less precisely conceived and more difficult to measure unambiguously \. The
project's third "outcome" indicator, the establishment of community risk plans was really about the delivery of one of
the project's components, and so could not measure the achievement of the objective that had no reference to such
plans or similar mitigation measures\. These three indicators were not, however, formally included in the project's
M&E\. No baseline or target values were measured or set leading to what the ICR describes as "an unfortunate
disconnect between the results framework and the monitoring arrangements " (ICR p\. 8)\. There were no indicators to
measure the achievement of the second objective of the project, namely to strengthen Tonga's capacity to manage
future disasters\. At appraisal, the project management unit (PMU) was assigned responsibility for M&E and
expected to provide a series of quarterly reports (PP pp\. 19 and 25)\. The ICR does not report on who carried out the
limited M&E undertaken for this project, and what efforts were made in this regard \.
b\. M&E Implementation:
Any implementation was carried out by the Bank itself \. The ICR does not report any M&E work undertaken by the
PMU, that did not regularly collect data "as it should have" (ICR p\. 19)\.
c\. M&E Utilization:
Since very little data was collected, there was very little use of this project's M&E \. Bank supervision itself, through
regular supervision reports, came closest to using M&E as it identified necessary modifications to project
implementation, as the ICR notes\. This, however, approximates to normal supervision activities, as applied to all
Bank financed projects during implementation, and does not constitute the utilization of a purpose built M&E system \.
M&E Quality Rating : Negligible
11\. Other Issues
a\. Safeguards:
Environment : As a category B project, the operation's impact on the environment was expected to only be minor \.
Nevertheless, as required by the Bank, an Environmental and Social Screening Assessment Framework (ESSAF)
was prepared and the Ministry of Works carried out an Environmental Impact Assessment (EIA) that was disclosed at
the time of appraisal\. Environmental Management Plans (EMP) had to be prepared for individual sub -projects and
Bank supervision missions found their quality to be good \. Studies were carried out into the effect of the project's
water and sanitation investments, and found that their impact on the island's aquifers was minimal \.
Social safeguards : Since the project triggered OP 4\.12 on Involuntary Resettlement, a Land Acquisition and
Resettlement Framework was prepared as part of the ESSAF just mentioned \. As a result of direct oversight by the
Minister of Lands, who twice visited the site, all resettled households received legal title \. Local consultations made
directly by the ICR mission confirmed no outstanding grievances over location, compensation or titling by those
affected\.
b\. Fiduciary Compliance:
Financial management : Financial management went well for most of project implementation \. Project financial
statements and (unqualified) audits were submitted on time until the closing of the project \. For reasons that the ICR
does not provide, the final project financial statements and audit pertaining to 2013 have still to be delivered\.
Procurement : The management of procurement was uneven during project implementation \. It had started well, but
there were cases of poor record keeping toward project closing \. As mentioned earlier in this review, some contract
conditions were changed without authorization by the local PMU, a problem caused by poor PMU -Bank
communication, according to the ICR (ICR p\. 11)\. Even so, the changes were considered eligible after subsequent
review by Bank supervision\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Unsatisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR highlights the following lessons (with some adjustments by IEG ):
The time required for satisfactory land acquisition arrangements to be devised should not be underestimated \.
Project implementation periods should provide for adequate time to negotiate land issues, and, even then,
allow for possible additional delays \. In this project, even though land acquisition arrangements seemed
relatively straightforward at the appraisal stage, unforeseen local political issues stalled implementation of
physical investments\. For some regular investment projects it may be appropriate to make the completion of
land negotiations a condition of effectiveness \. For emergency operations, however, such a decision should be
made on a case-by-case basis since it could hold up implementation of other urgent recovery activities \.
For remote and inaccessible locations, a project's estimated implementation period should incorporate a
realistic assessment of the logistical challenges posed of reconstruction in a remote location \. In this project,
existing transport impediments, worsened by the 2009 tsunami itself, made it difficult for essential work teams,
equipment and other materials to arrive at the project site, and disrupted schedules for project supervision by
the Government and the Bank\.
When a project's financing plan includes unallocated amounts, of US$ 0\.3 million in the case of this operation,
it is important that the formulation of the PDO not be so specific and narrow as to preclude additional activities
that might be financed by this amount \. For this project, the original PDO specified that investment should be in
housing and ancillary water supply and sanitation \. Since this did not cover work on an access road later found
to be urgent, it required a full restructuring of the project and revision of the objective to make the new
investment eligible under the Grant \. In hindsight, the revised PDO covering ancillary infrastructure would have
been a better formulation from the outset \. It would have dispensed with the need for restructuring with Board
approval altogether\.
Direct links among all project activities are especially important in an emergency operation \. Under this
operation, capacity building activities, for instance, were only loosely connected to the operation's
reconstruction and recovery activities, which were given priority \. Furthermore, the two sets were implemented
by different ministries\. If different priorities and timelines are given separately to different activities, then
important matters can be left behind, as capacity building was in this project \.
From IEG :
An economic analysis is required, and is generally feasible, for emergency projects at completion \. In the case
of this project and in many others, the project team misunderstood that an emergency project was also
exempt at completion from an economic analysis \. The completion exercise is not constrained by the same
urgency of preparing an emergency response to a disaster, when a prolonged economic analysis might delay
the delivery of Bank assistance to the victims \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
While the ICR is candid about a number of shortcomings of the project, the report itself has a number of
shortcomings:
Specifically with respect to the location of the restored housing units, the ICR does not clearly explain that they
were all located in places that were less vulnerable to tsunamis and other natural disasters than the original
housing was\. While the ICR restates several time the appraisal's aim and intention of locating the new housing
on higher ground (that would be safer from tsunamis), it is only the Borrower ICR that states what actually
happened, and even this only in the most general terms : "The houses were constructed on higher and safer
ground thereby reducing vulnerabilities of the affected families to any future tsunamis and storm surge hazards "
(ICR p\. 33)\. In reporting actual results, we would expect the ICR to provide information on the tsunami -safe
location and elevation of the completed housing, which, according to the TTL, should be at least 10 meters
above sea level to be safe from a tsunami \. To demonstrate the results achieved, the ICR could contrast the
resulting location and elevation with the original (baseline) conditions namely of the housing damaged or
destroyed by the tsunami\. These were presumably at or near sea level, but the ICR does not tell us clearly \. Also,
the ICR should tell us if the new housing is occupied by the intended beneficiaries, or by anybody \. For IEG,
reporting results such as these is not just a âproject descriptionâ\. It is central to understanding the effectiveness
of the project in achieving its objectives \. During IEG's meeting with the TTL, however, the TTL gave assurances
that the housing was indeed built on higher ground in areas that were not prone to flooding or landsides \. The
TTL also provided IEG with maps showing these locations that could well have been included in the ICR itself \.
It does not explain whether the restored housing is occupied by families who lost housing through the
tsunami--or indeed, whether the housing is even occupied at all \. Again, the TTL provided assurances to IEG that
the beneficiaries occupying the new housing had all been affected by the tsunami and that all but three of the
houses were occupied\.
The ICR is candid in recognizing that restoring the standard of living of those affected by the tsunami, the
project's formal objective, lies beyond the scope of one small project like this one \. On the other hand, the ICR
could have provided some insight into the housing side of this restoration, notably the present units' size,
ancillary services, and quality of construction, when compared with the housing affected by the tsunami \. The
TTL informed IEG that this "standard of living" paradigm itself comes directly from the objective of Tonga's
broader Niuatoputapu Priority Tsunami Recovery Program \. The TTL provided IEG with information about the
size and amenities of the new housing units, 34 m2 with two rooms and bathroom and kitchen facilities \.
The ICR provides no assessment of efficiency, a key dimension of evaluating a project's result, asserting to be
irrelevant\. This self-evaluation could address, for example, whether a cost of US$ 56,000 per project housing unit
was an efficient use of resources \. In the circumstances of a remote and inaccessible island, it might have been
highly efficient\. We would like to know\. The guidelines require it\.
While the ICR is correct in asserting that a capacity to resist future disasters will be fully tested in practice only
when a new disaster strikes, that does not mean, as the ICR implies, that an assessment of likely resilience
cannot not be made before that \. Such assessments of known risks and how they are mitigated form the basis of
modern disaster risk management (DRM)\. They consist principally of whether known vulnerabilities to disasters,
such as house building in flood -prone areas, have been corrected or not, and these could have figured
prominently in this ICR's self evaluation \. In response to this later comments by the Bank highlighted the project's
attention to addressing known weaknesses in institutional capacity to address disasters, such as insufficient
skills for hazard mapping, the lack of hazard and risk information, and inadequate community level awareness,
yet with emphasis still upon Tonga having "a stronger capacity to respond effectively " to future disasters (ICR
pp\. 14-15)\. Instead of responding to them, even if in a better way than before, DRM would emphasize how
project actions to remedy these weaknesses would reduce the risk of a disaster strike in the first place \.
Measuring and evaluating disaster risk reduction is not easy, but more ICR attention to the topic would have
made a stronger case that the project's intended contribution to Tonga's recovery is sustainable \.
In error, the ICR reports than the actual disbursement of the IDA Grant by project completion was US$ 0\.0 (ICR
p\. 21)\. IEG learned that the true disbursement was US$ 5\.10 million (details in Section 2d of this review)\.
There are some minor inconsistencies in the ICR \. On page 14, for instance, it notes that project information was
not made available in time for community consultation and preparedness planning, while page 15 notes that
community level awareness and preparedness for disasters had increased \. IEG received the following
clarification on this from the Bank : âSpecific new risk information (hazard maps etc\.) generated through the
project was not available at the time of community consultations (rather, it was used later to review village risk
plans) but other available information was used at the time of consultations which still increased community
preparedness for disasters \. The team acknowledges that this point could have been made clearer \.â? The third
lesson of the ICR (p\. 19) incorrectly refers to unallocated project funds as being "uncommitted"\.
a\.Quality of ICR Rating : Unsatisfactory | REVIEW |
P111290 | Document of
The World Bank
Report No: ICR00003427
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-94483)
ON A
GRANT FROM THE
GLOBAL ENVIRONMENT FACILITY
IN THE AMOUNT OF US$ 2\.54 MILLION
TO THE
REPUBLIC OF CÃTE DâIVOIRE
FOR A
PROTECTED AREA PROJECT (PARC-CI)
June 14, 2015
Global Practice Environment and Natural Resource Management (GENDR)
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 31, 2014)
Currency Unit = West African FCFA Franc
1\.00 = US$ 0\.00185632
US$ 1\.00 = FCFA 538\.7000
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
AFD French Agency for Development (Agence française de
développement)
ANADER National Agency for Rural Development (Agence Nationale dâAppui
au Développement Rural)
AVCD Village Association for Conservation and Development (Association
Villageoise de Conservation et Développement)
C2D Debt Reduction and Development Contract (Contrat de
Désendettement et de Développement)
CGL Local Management Committee (Comité de Gestion Local)
CPS Country Partnership Strategy
DZNE Directorate for North-East Zone (Direction Zone Nord Est)
FPRCI Foundation for Parks and Reserves of Côte dâIvoire (Fondation
Parcs et Réserves de la Côte dâIvoire)
GEF Global Environment Facility
GEO Global Environment Objective
GEPRENAF West African Pilot Community-Based Natural Resources and
Wildlife Management Project (Gestion Participative des Ressources
Naturelles et de la Faune)
GIZ German Federal Enterprise for International Cooperation
(Gesellschaft für Internationale Zusammenarbeit)
GoCI Government of the Republic of Côte dâIvoire (Gouvernement de la
Côte dâIvoire)
HQ Headquarter
IUCN International Union for Conservation of Nature
KFW German Development Bank (KFW Entwicklungsbank)
KPI Key Performance Indicator
M&E Monitoring and Evaluation
METT Management Effectiveness Tracking Tool
NGO Non-Governmental Organization
OIPR Agency in charge of Parks and Reserves of Côte dâIvoire (Office
Ivoirien des Parcs et Réserves)
PAD Project Appraisal Document
PAG Development and Management Plan (Plan dâaménagement et de
gestion)
PCGAP National Protected Area Management Program (Programme Cadre
de la Gestion des Aires Protégées)
PNC Parc National de la Comoé (National Park Comoé)
PNGTER Rural Land Management and Community Infrastructure
Development Project (Projet National de Gestion des Terroirs et
Equipment Rural)
UNESCO United Nations Organization for Education, Science and Culture
WCF Wild Chimpanzee Foundation
WHS World Heritage Site
SeniorGlobal Practice Director: Paula Caballero
Practice Manager: Benoît Bosquet
Project Team Leader: Douglas J\. Graham
ICR Team Leader: Douglas J\. Graham
CÃTE DâIVOIRE
PROTECTED AREA PROJECT
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Global Environment Objectives and Design
2\. Key Factors Affecting Implementation and Outcomes
3\. Assessment of Outcomes
4\. Assessment of Risk to Development Outcome
5\. Assessment of Bank and Borrower Performance
6\. Lessons Learned
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
Annex 1\. Project Costs and Financing
Annex 2\. Outputs by Component
Annex 3\. Economic and Financial Analysis
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
Annex 5\. Beneficiary Survey Results
Annex 6\. Summary of Borrower's ICR and/or Comments on Draft ICR
Annex 7\. Comments of Cofinanciers and Other Partners/Stakeholders
Annex 8\. List of Supporting Documents
MAP
A\. Basic Information
Project Name: Protected Area Project
Country: Côte dâIvoire
(PARC-CI)
Project ID: P111290 L/C/TF Number(s): TF-94483
ICR Date: ICR Type: Core ICR
Lending Instrument: SIL Borrower: Republic of Côte dâIvoire
Original Total
USD 2\.54M Disbursed Amount: USD 2\.217M
Commitment:
Revised Amount: N/A
Environmental Category: B Global Focal Area: B
Implementing Agencies:
Office of Parks and Reserves (OIPR)
Foundation for the Park and Reserves (FPRCI)
Cofinanciers and Other External Partners: GIZ, KfW, AFD, WWF, WCF, UNESCO
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 01/23/2008 Effectiveness: 07/21/2009 01/15/2010
Appraisal: 06/25/2008 Restructuring(s): 09/18/2013
Mid-term
Approval: 04/30/2009 10/29/2012 12/08/2012
Review:
Closing: 11/30/2013 12/31/2014
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Moderately Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Government: Satisfactory
Satisfactory
Quality of Moderately Implementing Satisfactory
Supervision: Satisfactory Agencies:
Overall Bank Moderately Overall Borrower Satisfactory
Performance: Satisfactory Performance:
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem
Quality at Entry
project at any time No None
(QEA):
(Yes/No):
Problem project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Forestry 100 50
Public Administration, Agriculture, fishing and forestry 50
Theme Code (as % of total Bank financing)
Biodiversity P 60
Small and medium enterprise support S 0
Environmental policies and institutions 30
Participation and civic engagement 10
E\. Bank Staff
Positions At ICR At Approval
Vice President: Makhtar Diop Obiageli Katryn Ezekwesili
Country Director: Ousmane Diagana Madani M\. Tall
Practice Manager: Benoît Bosquet Marjory-Anne Bromhead
Project Team Leader: Douglas J\. Graham Nyaneba E\. Nkrumah
ICR Team Leader: Douglas J\. Graham
ICR Primary Author: Gabriele Rechbauer
F\. Results Framework Analysis
Global Environment Objective (GEO) and Key Indicators (as approved)
The Global Environment Objective is to improve the sustainable management of the fauna
and habitat of the Comoé National Park\.
Revised Global Environment Objective (as approved by original approving authority)
GEO was not revised\.
(a) GEO Indicators
Actual Value
Original Target Values
Formally Revised Achieved at
Indicator Baseline Value (from approval
Target Values Completion or
documents)
Target Years
GEO Indicators as confirmed/approved at restructuring
Indicator 1: Reduction in poaching of wildlife (percentage)
Value 2\.9 indices/10 km No target set 1\.16 indices/10 km 0\.75 indices/10
(quantitative (60% reduction) km
or (74% reduction)
Qualitative)
Date
01/15/2010 11/30/2013 09/18/2013 12/31/2014
achieved
Exceeded (123%)\. Baseline and target added at restructuring\. Poaching decreased due to
Comments
a combination of enabled surveillance based on increased staffing, training, improved
(Incl\. %
equipment and infrastructure rehabilitation as well as awareness raising and participatory
achievement)
community-engagement measures\.
Indicator 2 : Abundance of three bio-indicator species for Comoé National Park (percentage)
Value Hartebeest 24\.27/100 + 46 % +41%
(quantitative km Hartebeest 35\.73/100 km Hartebeest
or Buffalo 2\.7/100 km Buffalo /3\.94/100 km 33\.95/100 km
Qualitative) Kob 2\.12/100 km Kob /3\.10/100 km Buffalo 2\.36/100
km
Kob 4\.9/100 km
Date
01/15/2010 12/31/2014 12/31/2014
achieved
Comments Partly achieved (89%)\. Longer-term observations are needed to confirm fauna trends
(incl\. % observed\. The indicator replaced the original GEO indicator (#3 below)\. The decrease in
achievement) anthropogenic pressures through the reestablished management of CNP supported
recovery of animals in the park\.
(b) Intermediate Outcome Indicators as confirmed/approved at restructuring
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Intermediate Outcome Indicators
Funds mobilized by the Foundation for National Parks through fundraising
Indicator 1 :
(number; percentage)
Value US$ 3\.112m (i) US$ 3\.5m (i) US$ 5\.37m (i) US$ 41\.196m
(quantitative (ii) 5% (ii) 5% (ii) 5\.20%
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013 12/31/2014
Exceeded (437% average)\. The baseline was adjusted to include funds mobilized at
Comments
project start\. Indicator measured (i) funds mobilized and (ii) rate of return on capital
(incl\. %
investment in percentage\. Funds raised included sinking and endowment funds from
achievement)
various donors targeting Comoé, Tai and Banco National parks (see annex 2)\.
CNP fringe communities able to receive radio transmissions from the project
Indicator 2: radio transmissions (percentage)
Value
(quantitative 32 75 70 39\.30
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013 12/31/2014
Comments Partly achieved (56%)\. The baseline was recalculated at restructuring (from 15 % to
(incl\. % 32%)\. Three conventions with local radios (Bouna, Nassian, Dakabala) were signed
achievement) thereby extending the MAB radio network in CNP\. A disconnect between good
awareness results (86%) and the weak performance on radio transmission received is
noted and attributed to survey and indicator limitations\.
Indicator 3 : Training of OIPR field staff in participatory park management (number)
Value 0 26 24
(quantitative
or Qualitative)
Date achieved 09/18/2013 12/31/2014 12/31/2014
Comments Nearly achieved (92%)\. The quality of the training is evidenced through satisfactory
(incl\. % results evidenced in community surveys at closure (see annex 2 and 5)\.
achievement)
Indicator 4 : Training of OIPR staff (number)
Value 76 122 122
(quantitative
or Qualitative)
Date achieved 09/18/2013 12/31/2014 12/31/2014
Comments Achieved (100%)\. Training was provided through 25 training modules and included
(incl\. % staff from other OIPR zones (see annex 2 for details)\.
achievement)
Indicator 5 : Management effectiveness score in protected area management increased
(percentage)
Value â¤35 70 70
(quantitative
or Qualitative)
Date achieved 01/15/2010 12/31/2014 12/31/2014
Achieved (100%)\. Baseline METT not available but retrospectively estimated\. The
Comments
final METT shows improvements in law enforcement, demarcation, participatory
(incl\. %
planning and management instruments, biomonitoring data, research, funding,
achievement)
awareness raising, community engagement and infrastructure\.
Indicator 6 : Involvement of local communities in park management plan (percentage)
Value 0 70 89\.90
(quantitative
or Qualitative)
Date achieved 01/15/2010 12/31/2014 12/31/2014
Exceeded (128%)\. 125 communities living within 10 km of park boundaries were
Comments involved in park management activities such as ecomonitoring, patrolling, reopening
(incl\. % park roads and tracks, border work, training, awareness raising, management plan
achievement) development, park management committee and establishment of village organizations
(AVCD)\.
Indicator 7 : Presence of livestock in the park (number)
Value 28\.01 indices/10km 7 indices/10km 0\.30 indices/10km
(quantitative (75 % reduction) (98\.9% reduction)
or Qualitative)
Date achieved 01/15/2010 12/31/2014 12/31/2014
Comments Exceeded (132%)\. Livestock presence in the park was highly successfully reduced
(incl\. % due to implementation of community-engagement measures, awareness raising,
achievement) participatory planning and management with strong support from local government
and traditional authorities\.
Indicator 8 : Area brought under enhanced biodiversity protection (hectare)
Value 0 1,149,150 1,149,150
(quantitative
or Qualitative)
Date achieved 01/15/2010 12/31/2014 12/31/2014
Comments Achieved (100%)\. METT category changed for CNP from 35% to 70% (see indicator
(incl\. % 5 above)\.
achievement)
Indicator 9 : Village centers with a park conservation organization (percentage)
Value 0/25 19/25 (75 %) 20/25
(quantitative
or Qualitative)
Date achieved 01/15/2010 12/31/2014 12/31/2014
Comments Achieved (105%)\. Target was added after restructuring\. Eight more park conservation
(incl\. % organizations (AVCDs) were established in non-village centers\. The AVCDs are the
achievement) village-based awareness-raising partner of OIPR and a condition for microprojects\.
Dropped GEO and Intermediate Outcome Indicators
Indicator 3 : Change of encounter rate of key indicator fauna species (percentage)
Value 0\.0279/km Kob +5% No data
(quantitative or 0\.3688/km for
Qualitative) Hartebeest
0\.0163/km
Hippopotamus
0\.0256/km
Waterbuck
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Revised at restructuring due to measureability issues\. This GEO indicator was replaced
(incl\. % by GEO indicator #2\.
achievement)
Indicator 1 : Comoé based OIPR staff trained and equipped (number)
Value
(quantitative 0 >76 76
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Achieved (100%)\. Dropped at restructuring and replaced by two new indicators
(incl\. % focusing on general OIPR staff and theme of training\.
achievement)
Indicator 2 : Training plan executed in the first 18 months (percentage)
Value
(quantitative 0 100 75
or Qualitative)
Date achieved 01/15/2010 07/15/2011 10/30/2012
Comments Partly achieved (75%)\. Dropped at restructuring as indicator was focusing only on
(incl\. % first 18 months\. 15 training sessions for 76 of OIPR staff realized\.
achievement)
Indicator 4 : Reduction in signs of illegal human activity in the park (percentage)
Value Livestock: 28\.01/10 60 No data
(quantitative km
or Qualitative) Tracks: 2\.9/10 km
Agricultural fields:
0,42/10 km
Camps: 0\.09/10 km
Timber extraction:
0\.03/10 km
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Dropped at restructuring as perceived unrealistic in view of limited funds available and
(incl\. % because better indicators measured illegal human activity (i\.e\. livestock in park and
achievement) poaching)\.
Indicator 5 : Increase in the number of poachers caught in the first three years (number)
Value
(quantitative 0 40 (3 years) 54
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Exceeded (135%)\. Dropped at restructuring as it covered only first three years and
(incl\. % because a GEO-level indicator measured the actual reduction of poaching, a more
achievement) reliable measurement than number of arrested poachers which is highly sensitive to a
number of factors\.
Increase in area covered by surveillance in the Comoé National Park
Indicator 6 :
(percentage)
Value 0 70 80
(quantitative
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Exceeded (114%)\. Dropped at restructuring due to unspecific methodology and
(incl\. % because the surveillance of the park was measured through the METT indicator (in
achievement) part) and better outcome indicators for the success of surveillance were defined\.
Indicator 7 : Poachers caught that are convicted (percentage)
Value 0 80 5
(quantitative
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Not achieved (6%)\. Dropped at restructuring\. After parallel funds for livelihood
Comments
projects were cancelled, OIPR decided to support incentive-based community-
(incl\. %
engagement measures rather than focusing on prosecution of poachers\. Nonetheless,
achievement)
356 offenders were apprehended during implementation\.
Indicator 8 : Land management contracts with communities (number)
Value 0 8 15
(quantitative
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Partly achieved (50%)\. Dropped at restructuring due to loss of funds for microprojects\.
(incl\. %
achievement)
Indicator 9 : GEF METT tracking tool shows that trends are improving in PA management
(percentage)
Value No baseline 50% improvement No data
(quantitative of baseline score
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Revised at restructuring (see above revised indicator # 5)\.
(incl\. %
achievement)
Indicator 10: Target population trained in biodiversity issues (percentage)
Value 0 70 60
(quantitative
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Partly achieved (86%)\. Dropped at restructuring due to loss of funds for microprojects\.
(incl\. % Training was delivered on bush fire prevention, park management and biodiversity
achievement) conservation\.
Participants aware of link between microprojects and the park conservation
Indicator 11 :
(percentage)
Value 0 100 No data
(quantitative
or Qualitative)
Date achieved 01/15/2010 11/30/2013 09/18/2013
Comments Dropped at restructuring\. PNGTER parallel funded microprojects did not materialize
(incl\. % due to early closing\. Better indicators measured implication of local actors in park
achievement) conservation\.
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 12/28/2009 Satisfactory Satisfactory 0\.00
2 06/04/2010 Satisfactory Satisfactory 0\.25
3 03/25/2011 Moderately Satisfactory Moderately Satisfactory 0\.60
4 12/19/2011 Moderately Satisfactory Moderately Satisfactory 0\.77
5 07/04/2012 Moderately Satisfactory Moderately Satisfactory 0\.88
6 01/05/2013 Moderately Satisfactory Satisfactory 1\.21
7 07/10/2013 Satisfactory Satisfactory 1\.46
8 03/22/2014 Satisfactory Satisfactory 1\.75
9 10/27/2014 Satisfactory Satisfactory 2\.03
10 12/29/2014 Satisfactory Satisfactory 2\.12
H\. Restructuring (if any)
ISR Ratings Amount
Board at Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring Restructuring
Date(s) Key Changes Made
PDO Change in USD
DO IP
millions
09/18/2013 N S S 1\.46 A level two restructuring
involved:
(i) One-year extension of
closing date from Nov\. 30,
2013 to Dec\. 31, 2014;
(ii) Changes in indicators to
improve quality and
measurability;
(iii) Reallocation of funds
between categories; and
(iv) Change in disbursement
estimates due to extension\.
I\. Disbursement Profile
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
(a) Country and Sector Context
1\. Socio-demographic context: At appraisal, Côte dâIvoire (322,463 km2) had a
population of 18\.8 million inhabitants of which 49 percent lived in urban areas\.
Population growth averaged 2 percent\. Most of the countryâs inhabitants have been
living along the coastal region; apart from the capital area (Abidjan and its
agglomeration represents about 30 percent of the total population), the rest of the
country is sparsely populated\. The country is heavily dependent on agriculture\. At
appraisal, agriculture employed over 67 percent of the countryâs labor force 1 and
contributed 25 percent to the Gross Domestic Product (GDP)\. 2
2\. Political conflict\. Years of political and military crisis (2000-2006) 3 and poor
governance had taken a heavy toll on the country, transforming the once model African
nation into an unstable state\. The country experienced a fragile peace in 2007
(Ouagadougou Peace Accord) calling for the merging of the rebel movement âForces
Nouvellesâ in the northern and western parts of the country with the Government forces
in the south\. A transitional Government was established, the buffer zone between the
two forces was dismantled and the militias disarmed\.
3\. Economic context: During the conflict and crisis from 2000-2006, the annual
per capita real GDP declined 2\.1 percent\. The reduced income from agriculture resulted
in increased poverty levels (less than 1\.25 US$/day) from 29\.66 percent in 2002 to
35\.04 percent in 2008\. The Gross National Income (GNI) per capita fell from US$1,123
in 1999 to US$991 in 2008\. 4 The HDI (Human development Index) was 0\.427 in 2008
(ranked 171 of 187)\. 5
4\. Biodiversity and protected areas\. Côte dâIvoire has the highest level of
biodiversity in West Africa mainly found in its interior protected areas (PA)\. The PA
network is comprised of eight national parks and six nature reserves, which account for
about 6 percent of the countryâs territory (2\.1 million hectares, see map on last page)\.
Together, these diverse habitats protect about 90 percent of regionally endemic
mammals and birds\. The national parks constitute the largest intact ecosystems of
Guinean forest and Sudanian savanna ecosystem, including the Comoé National Park\.6
5\. However, the management of these PAs was becoming increasingly
unsustainable over the last decade mainly due to a severe lack of financial resources\.
The period of political unrest starting in 2002 further worsened the natural resource
depletion and environmental degradation\. The main identified threats to PA
conservation in the country related to habitat loss and overexploitation through
1 Source: CIA Côte dâIvoire World Factbook\.
2 Source: Côte dâIvoire, 2008, World Databank, World Bank\.
3 The actual civil war started in 2002 and ended in 2004\.
4 Source: Côte dâIvoire, 2008, World Databank, World Bank\.
5 Source: UNDP HDI database\.
6 According to the Biodiversity Atlas of West Africa, Volume III, Côte dâIvoire (2010), BIOTA, the CNP contains
about 135 mammals, 27 insectivore and 40 chiroptera species, 35 species of amphibian, 60 species of fish, 71 species
of reptiles and 497 species of birds of which five are endangered world-wide; and 620 plant species\.
1
poaching, agricultural encroachment and livestock grazing\. Most PAs were left
unattended by government authorities, leaving the door open for accelerated poaching
resulting in dwindling loss of large mammals and biodiversity assets\.
6\. Insufficient funding for PA\. Government funding to the PA network had fallen
below critical levels: US$1\.2 million per year for recurrent costs of the PA network
including salaries for 167 staff from the Office of Parks and Reserves of Côte dâIvoire
(OIPR) 7 and 4 staff from the Foundation of Parks and Reserves of Côte dâIvoire
(FPRCI) 8 in 2008\. 9 By 2008, most donors had pulled out of the sector or shifted their
priorities, 10 except for the German cooperation which continued to provide support to
the Tai National Park\. 11
7\. Comoé National Park (CNP)\. CNP was established in 1968 and is located in
the northwest part of the country between the Comoé and Volta rivers (bordering partly
Burkina Faso)\. It is the largest park in Côte dâIvoire (1\.15 million hectares), the third
largest in West Africa and is one of the 20 largest parks of the world\. During the
political and military crisis, most of the park was located within the rebel-controlled
zone and the park authorities, based in Bouna, left the area\. Without any management
in place for nearly a decade (2002 to 2010), the park suffered from high levels of
poaching and encroachment for farming, fishing and cattle grazing\. As a consequence
of the increasing threats, the CNP, a World Heritage Site (WHS) since 1983, was put
on the WHS list of sites in danger in 2003\. 12 However, a rapid assessment done by
International Union for Conservation of Nature (IUCN) in 2006 and by Wild
Chimpanzee Foundation (WCF) in 2008 delivered evidence of the existence of
diversified habitats and fauna (but in very low numbers) despite high anthropogenic
pressure up to then\. The park habitat and boundaries were found still relatively intact\.
8\. PA Sector reform\. The Government, supported by its development partners
including the World Bank, engaged since 1995 in an ambitious sector reform leading
to the adoption of a âNational Protected Area Management Programâ (PCGAP) in
2000 13\. The financial needs for its implementation were estimated at US$100 million
(2002)\. One key pillar was to advance a substantial institutional and legal reform\. In
2002, at the outbreak of the crisis, the Parliament adopted a new law, 14 which
established OIPR as an autonomous parastatal, entrusted to park and reserve
7 OIPR was established by law on February 11, 2002 as the authority in charge of the management of the countryâs
parks and reserves\.
8 FPRCI was introduced by the 2002 law and created as an association responsible for long-term fundraising for
national parks on November 20, 2003\. It received the status of a public utility organization in January 2009\. A sister
organization FPRCI-UK was established in 2009 to allow for international capital investment\.
9 From 2000 to 2008 less than 1% of the national annual budget was earmarked for environment, forestry and mining
sector (CEA June 2010 â WB report 54429-CI)\.
10 At appraisal, WWF and WCF continued to provide small grants to the protected area system\.
11 Both German development partners, KFW Entwicklungsbank (KfW) and GTZ (Gesellschaft für Technische
Zusammenarbeit, GIZ since 2011) have been long-term (over 20 years) supporters of the Taï National Park\.
12 UNESCO puts WHS on the list of sites in danger if threatened by impacts due to civil unrest, reduction in large
mammals due to uncontrolled poaching and absence of efficient management\. CNP is a WHS and Man and the
Biosphere Programme (MAB) Reserve\.
13 PCGAP aimed at establish an institutional and legal framework (i\.e\. OIPR with administrative and financial
autonomy; a foundation to support the financial efforts of the Government, a national scientific council), reinforce
training for agents and local communities, develop and implement an improved management plan for each protected
area; integrate development projects and involve local residents of the peripheries\.
14 Law for the Management and Financing of Parks and Reserves 2002-102, 11 February 2002\.
2
management and allowed for the creation of a private foundation to finance the park
system\. The FPRCI was created in 2003 to fulfill this function\. Importantly, the law
introduced community participation in OIPR park management through âland
management contractsâ 15\.
9\. Key sector issues related to PA management identified at appraisal included: (i)
poverty and demographic growth augments poaching levels; (ii) lack of understanding
of the value and benefit that protected areas can provide to local communities; (iii) lack
of financial, technical and human resources to effectively patrol and manage the CNP;
(iv) lack of engagement strategy to involve communities in park management activities;
and (v) decline in the capacity of the national park management system to withstand
systematic pressures on the parks\.
(b) Rationale for Bank Assistance
10\. The Bank had been very actively supporting the Government since 1995 in the
establishment of the ambitious and comprehensive PCGAP (see footnotes 14 and 19)
and brought other donors on board\. It proposed to deliver its support through a 15-year
programmatic approach with a US$40 million credit from the International
Development Association (IDA) and a US$16 million grant from the Global
Environment Facility (GEF)\. In 2004, the proposed project was withdrawn because of
the political insecurity and conflict led to non-payment of debt arrears, resulting in a
general Bank suspension of disbursements to the country\. In 2007, the Bank received a
new request for PA support and reengaged in 2008 in Côte dâIvoire\. The proposed
project addressed two of the three objectives of the Bankâs Interim Strategy Note
(FY08-09), namely livelihood support and provision of basic services for crisis-affected
populations and institution building\.
(c) Higher level objectives
11\. The higher-level objectives to which the project contributed were long-term
poverty reduction in surrounding communities as a prerequisite for sustainable
management of the Comoé National Park and global biodiversity protection of the last
remaining intact blocks of savannah forest ecosystem in western Africa with corridor
links to protected areas in Burkina Faso\.
1\.2 Original Global Environment Objectives (GEO) and Key Indicators
(a) Global Environment Objective
12\. The GEO, as stated in the project Appraisal Document (PAD) and the Grant
Agreement, was to improve the sustainable management of the fauna and habitat of
Comoé National Park\.
(b) Key Performance Indicators
13\. The PAD and the grant agreement had two key performance indicators:
â 60 percent reduction in poaching of wildlife
â 5 percent change in the encounter rate of key indicator fauna species
15 These land management contracts (contrats de gestion de terroir) are between the âmanagerâ of a protected area
and the surrounding rural communities representated by non-governmental entities\. They define the contracted
interventions of community members in park management such as patrolling, maintenance, tourism etc\.
3
1\.3 Revised GEO (as approved by original approving authority) and Key
Indicators, and reasons/justification
14\. The GEO was not revised but the results framework was revised through a level
2 restructuring (see data sheet)\. The revisions aimed to improve clarity and
measurement\. One Key Performance Indicator (KPI) âEncounter rate of key fauna
speciesâ was revised as:
â 46 percent average increase in abundance of three bio-indicator species (buffalo,
kob, hartebeest) for Comoé National Park\.
1\.4 Main Beneficiaries,
15\. The project targeted two beneficiary groups: OIPR and FPRCI as national
institutions supporting protected area management and poor rural communities living
at the fringe of the Comoé National Park (177,000 people) 16\. The project aimed at
enhancing the institutional, financial, technical and operational performance of OIPR
and FPRCI\. The project was further expected to benefit community members and local
Non-Governmental Organizations (NGOs) from enhanced park management and
alternative livelihood options\. The protection and management of the biodiversity
resources in the CNP was expected to generate local, national and global environmental
benefits\.
1\.5 Original Components
16\. The GEO was to be achieved through the implementation of four interrelated
components (see annex 1b for details on planned and actual financing)\.
17\. Component 1: Institutional, Financial, and Technical Strengthening for
Protected Area Management and Oversight (Total cost US$5\.174 million, of which
GEF US$1\.016 million)\. This component was intended to strengthen the capacities of
the OIPR Headquarter and OIPRâs Directorate for North-East Zone (DZNE) as well as
FPRCI through technical assistance, training and equipment\. It comprised two sub-
components:
1\.1\. Capacity Building for the OIPR (Total cost US 2\.694 million, of which GEF
US$0\.704 million - implemented by OIPR) and
1\.2\. Support to the Establishment and Operations of the FPRCI (Total cost US$2\.48
million, of which GEF US$0\.3\.12 million - implemented by FPRCI)\.
18\. Component 2: Management Planning and Implementation for Comoé
National Park (Total cost US$1\.336, of which GEF US$1\.0 million)\. The component
comprised three sub-components:
2\.1\. Up-dating the Comoé Park Management Plan (Total costs funded by GEF US$0\.04
million);
2\.2\. Implementation of the Management Plan (Total costs US$1\.056 million of which
GEF US$0\.76 million and GoCI US$0\.296 million); and
2\.3\. Biodiversity Impact Monitoring (Total costs US$0\.240 million of which GEF
US$0\.2 million and WCF US$ 0\.04 million)\.
19\. Component 3: Support to Park Communities (Total cost US$1\.47 million of
which parallel funded through PNGTER US$1\.2 million and GEF US$0\.27 million)\.
16 Estimated population living around the CNP based on the national census of 1998 is 177,000 inhabitants\.
4
This component was meant to support development and livelihood investments in
communities (microprojects) surrounding the CNP funded by another World Bank
project under implementation, the âProjet National de Gestion des Terroirs et
Equipment Rural (PNGTER)\.â 17 Support for income-generating activities was
expected to discourage these communities from extracting resources inside the CNP
(e\.g\. poaching, herding)\. GEF funds were earmarked for engaging adjacent
communities in park rehabilitation measures using land management contracts, for
training of community members and for awareness raising campaigns\.
20\. Component 4: Project Management and Results Monitoring (Total cost
US$0\.999 million, of which GEF US$0\.254 million and GoCI US$0\.392 million)\. This
component was meant to support project management and monitoring supported by a
small project management unit at OIPR DZNE and Headquarters\.
1\.6 Revised Components
21\. The project components were not revised\.
1\.7 Other significant changes
Table 1\. Changes during implementation
Change Comments
Design and cofinancing (shortly after effectiveness)
Loss of PNGTER funds for Earmarked parallel IDA funded PNGTER resources (US$1\.2
component 3 alternative livelihood million) did not materialize as the project was closed earlier than
options/microprojects expected\. Mobilization of alternative funds (500 million FCFA
from AFD/C2D) was launched but funds became available only
after project closure\. To demonstrate community support, OIPR
supported the development of three pilot microprojects on the
basis of its new community partnership approach and manual\.
Restructuring level 2 (09/18/2013)
Extension A 13-month extension was granted to compensate for
implementation breaks during the post-conflict time in 2011 and
treasury budget delays in 2013\.
Disbursement schedule An adjustment of the disbursement schedule to address the
extended project implementation period was needed\.
Reallocation of proceeds A reallocation between disbursement categories was introduced
to ensure sufficient funds were available for priority activities\.
Revision of indicators A revision of the indicators was carried out to improve
measurability and quality of the results framework\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
(a) Soundness of background analysis and analytical work\.
22\. The project was prepared in a post-conflict period as a pilot initiative promoting
opportunities for future scaling up into a larger program\. The preparation time was short
17 PNGTER was implemented from 04/1998 to 08/2010 (included a 2-year extension to make up for two periods of
suspension (2000 to 2002 and 2004 to 2008)\. It aimed at enhancing rural livelihood conditions by improving land
tenure system, strengthening capacity of people and institutions related to local deveopment and to support small-
scale investments for sustainable management of natural resources, agriculture and rural infrastructure\. The 2008
restructuring narrowed the geographic focus including communities surrounding the CNP as new beneficiaries\. The
microproject component disbursement was only 25% of the planned amount used primarily for health and education
issues\. It closed with an âUnsatisfactoryâ rating and an undisbursed balance of approximately US$10 million\.
5
(5 months from concept to appraisal) explained by the fact that some preparation had
taken part as part of detailed PCGAP 18 design and the agreement among stakeholders
to intervene urgently to address the increasing threats to the PA system\. No preparation
funds were requested from GEF\. WCF carried out a rapid post-conflict assessment of
the CNP in 2008\. GTZ funded three key CNP baseline studies (infrastructure status, the
socio-economic assessment and the aerial survey) in 2010\. Preparation included a visit
to the second flagship park, the Tai National Park, and consultations with key
stakeholders including other donors and NGOs\. The weakness of the sector work prior
to appraisal related to the lack of an up-dated and thorough problem and stakeholder
analysis after years of conflict as demonstrated by the below\. No economic or financial
analysis was done given the capacity-building focus and lack of tourism potential in the
park in the near future\.
23\. Alignment with CAS and Sector Priorities\. The project was aligned with the
objectives of the Bankâs Interim Strategy Note (FY08-09)\. It was meant to contribute
to two of three objectives through its component 3 supporting livelihoods and basic
services in crisis-affected park fringe communities and its component 2 supporting
capacity building of OIPR and FPRCI\. The project was also in line with GoCIs strategic
priorities as defined in the 2002 PA framework law and the PA Management Program
(PCGAP) prioritizing capacity building activities for FPRCI and OIPR\.
24\. Lessons from past projects\. Lessons from previous projects in the Côte dâIvoire
including the World Bank/GEF funded West African Pilot Community-based Natural
Resources and Wildlife Management project (GEPRENAF), 19 German long-lasting
support to the second largest park, the Tai National Park, and activities funded by the
United Nations Organization for Education, Science and Culture (UNESCO) Man and
Biosphere Program (MAB) in the country were taken into account\. 20 However, the
project preparation and design could have included additional lessons from other post-
conflict PA projects\.
(b) Assessment of project design
25\. The intended causal link between the GEO outcomes and the components was
a direct one\. All three technical components were interlinked and focused with the main
complexity being the institutional set-up splitting execution between the two agencies,
OIPR and FPRCI and within OIPR between headquarters (HQ) and CNP management
18 PCGAP aimed to establish an efficient and sustainable system for protection and valorization of national parks
and reserves\. It targeted (i) capacity strengthening for management and surveillance; (ii) sustainable financing
mechanism to cover part of operational costs; and (iii) establishment of OIPR\. Its preparation was detailed and
lengthy (more than 10 years) and supported by multiple donors including the Bank\. The WB âNational Protected
Area Management Programâ (P037583) was planned as APL with (IDA US$20m for phase 1 covering CNP, Mont
Nimba and Mont Peka and US$20m for phase 2) and GEF (US$16m â mostly intended to support FPRCI with an
endowment)\. Preparation studies for PCGAP were supported through two GEF preparation requests totaling to
US$521,500\. The Bank cancelled its support to PCGAP in 2004 due the political crisis and suspension of
disbursements\. Subsequently, GEF funds were suspended and finally cancelled\. The WB project was cancelled in
the system in 2009\. The new GEF4 RAF policy allowed accessing only a tiny fraction (US$ 2\.54m) for a new
biodiversity project, PARC-CI\.
19 GEPRENAF targeted the Comoé ecosystem\. The ICR pointed among other lessons on the need for sustainable
financing mechanism (endowment), the balanced support to enable a partnership between governmental institutions
and communities for conservation efforts; using radio communications to fight poaching and to professionalize anti-
poaching measures\.
20 Lessons pointed at the benefits of community microprojects, the organization of communities in AVCDs and the
use of local radios for awareness raising (radio Boutourou)\.
6
(DZNE)\. The component three was designed to complement PNGTER activities in the
periphery of the park and provided a causal link between investments and benefits
expected to flow to communities\.
26\. Design strengths\. The project design was relevant to the project objective,
combining priority investments for CNP management with institutional capacity
building\. Strong points were the focus on addressing the main threats in the CNP (i\.e\.
poaching, herding), strengthening and rebuilding park management capacity,
developing and implementing a participatory park management plan and enhancing
capacity of the FPRCI to serve as a sustainable and viable financial mechanism for the
PA network\.
27\. Design weaknesses\. (i) The GEO was conventional for a classic PA
management project and flexible enough to cater for a post-conflict situation in the
CNP\. Nonetheless, it could have been more focused and realistic acknowledging the
emergency state of the park, the capacity building focus of the national institutions as
well as the very limited project funds and duration compared to the size and challenges
at the time\. A more convincing project objective could have been formulated focusing
on reestablishing a management system of the CNP and the intended catalytic function\.
(ii) Another shortcoming was the informal partnership arrangements with PNGTER to
support component 3\. As community involvement and support was identified as one of
the key elements of success to achieve the GEO, the parallel cofinancing from
PNGTER should have been better prepared and assessed (risk analysis did not include
a related risk)\. (iii) The proposed M&E system was weak with an inconsistent results
framework (i\.e\. selection of indicators, lack of methodology and baseline), absence of
a M&E manual and lack of analysis on effective ways to build an efficient M&E system
(using partnerships and a clear methodology) for the CNP\. Looking backward, the KPIs
focused on longer-term threat control results and yet only partial data on the ecosystem
value had been made available at project closure 21\.
c) Assessment of projectâs strategic choices
28\. The strategic choices to use the limited project resources were sound as
confirmed during the QER in 2008 22 : First, the project selected CNP as a pilot to
demonstrate better biodiversity management given its undoubtable biodiversity and
habitat value in the country and region\. Second, it focused on basic and cost-efficient
measures for park management (increased staffing, re-equipment, core access to the
park and controlling poaching)\. Third, it provided capacity support to the newly created
institutions OIPR and FPRCI for system-related park management\. The largely debated
choice to not channel project funds through the FPRCI but to enable FPRCI to finalize
its instruments and mobilize additional funds was not detrimental as seen by the large
amount of funds mobilized at closure\.
(d) Institutional set-up for implementation arrangements
21 These issues are recognized in the up-dated management plan and improvements to cover separately vegetation
and habitat from species including lions and elephants addressed\.
22 QER (May 2008) raised the issues of (i) complexity to limited funds available (2\.54 million instead the earmarked
56 m of PCGAP); (ii) the use of the FPRCI as mechanism to channel project funds under a sinking fund arrangement
instead the use of standard project accounts and (iii) the choice of CNP as a large pilot site in a post-conflict area\.
7
29\. The project had two implementation agencies (OIPR and FPRCI)\. To
compensate with insufficient capacity at appraisal, a small Project Coordination Unit
(PCU) was established within OIPR to support project planning, procurement, financial
management and monitoring and evaluation function\. 23 The projectâs interventions in
CNP (10 hours from Abidjan) required the establishment of a field-based management
team in Bondoukou\.
Assessment: The implementation arrangements were kept simple\. Selecting OIPR and
FPRCI as the implementing agencies was appropriate and worked well\. The 2009
framework agreement between these agencies clarified and improved an effective
working relationship between benefitting overall PA management over the long term\.
The choice to establish a small PCU split between HQ and DZNE to support OIPR was
sound, notably as OIPR had no experience with World Bank (WB) projects\. However,
implementation experiences indicated that PCU support functions could have been
better integrated into the OIPR hierarchical system to avoid the sense of having parallel
functions\.
(e) Risk assessment
30\. Overall, project risks were assessed as "substantialâ\. 24 Financial and
procurement risks were assessed as âhighâ recognizing that this was the first World
Bank project that OIPR implemented\.
Assessment: Risks were generally correctly identified and rated\. However, the risk
assessment lacked two risks of which one materialized during implementation, namely
the lack of PNGTER funds and support for local development and livelihood options
in fringe communities\. This was even more important as the expected results from
component 3 (awareness raising and community-engagement for conservation and park
management) could not be disconnected from the livelihood support\. The other missing
risk related to the challenges to restore resource protection and mitigate the (regional)
driven anthropogenic threats in such a large park after a decade without any
management with very limited funds\.
(f) Quality at entry â Moderately Satisfactory
31\. The overall rating for quality at entry and readiness for appraisal is moderately
satisfactory\. The design was aligned with the Governmentâs PCGAP and the Bankâs
Interim Strategy and the analytical basis supporting the project design at a post-conflict
stage was adequate\. The Government showed commitment and mobilized 46 OIPR
staff to kick-start the project\. However, in hindsight the design showed some
weaknesses particularly related to the GEO and RF, the risk assessment and the lack of
a M&E manual\. 25
2\.2 Implementation
32\. Project implementation spanned nearly five years\. The main milestones
impacting implementation included the (i) post-electoral crisis in 2010 at project start,
(ii) loss of funds from PNGTER in 2010; and (iii) Country Director (CD) approved
23 The PCU comprised a project manager (Bondoukou), a procurement specialist (Abidjan) and two project
accountants (one in Abidjan and one in Bondoukou)\. Government appointed a financial manager and M&E specialist\.
24 The main risks identified included: (i) insufficient initial commitment from protected area staff to benefit from
and capitalize on training; (ii) low OIPR staff levels to ensure adequate surveillance of the parks; (iii) inadequate
fundraising results; (iv) post-conflict risk; (v) lack of training of staff in procurement; (vi) multi-stakeholder increase
financial risks and (vii) conflict with communities due to access restriction and loss\.
25 A project implementation manual (without an M&E manual) was delivered in March 2010\.
8
level two restructuring in September 2013\.
Key factors affecting the project implementation are summarized below\.
33\. Post-election conflict (2010â2011) impacted project activities and assets\. The
project was particularly affected as the park was located in the northern rebel-controlled
region, which was subject to civil strife and instability\. During this period, the project
lost 6 vehicles; Information Technology (IT) and office equipment and furniture (value
of stolen goods totaling approximately US$103,000 - later replaced partly with funds
from Government and from Japan) which impacted implementation and the project
came to a complete halt with no activity for 6 months\. The project ârestartedâ after the
end of the Bankâs suspension on May 11, 2011\. 26 The PCU operated from more distant
Bondoukou 27 until June 2014 before they could move back to the rehabilitated offices
in Bouna\.
34\. Loss of funds for community support microprojects\. Due to unsatisfactory
performance, PNGTER closed unexpectedly more than 1 year earlier than anticipated
and the project âlostâ US$1\.2 million in funds earmarked for microprojects in CNP
surrounding communities (about 177,000 people)\. 28 Despite efforts from OIPR and the
World Bank, alternative funds could not be accessed during project implementation\.
As one response, OIPR piloted three microprojects on the basis of its newly developed
community-engagement manual\. 29 The implementation of the CNP community-
engagement strategy developed under the project was nonetheless highly effective to
engage local residents positively in achieving the project objective\. 30 Community
support projects started only after project closure with funds from C2D/AFD\.
35\. Lower governmental counterpart funding but incremental actions for
surveillance\. According to the legal agreement, the Government was expected to
transfer to OIPR US$1\.76 million per year for CNP management recurrent costs
including salaries of OIPR staff and to FPRCI US$0\.14 million per year\. Actual total
counterpart funding to OIPR and FPRCI for operational costs including salaries reached
sixty-eight percent of the amount (see annex 1)\. This impacted at times the scale of
surveillance operations in the CNP but OIPR managed to overcome generally these
challenges by adjustments in planning and securing additional support\. Importantly,
OIPR managed to secure Governmentâs additional support (estimated US$330,000)
from 2011 to 2013 for the use of staff from the transitional security force (army) in
CNP, thus significantly strengthening the existing patrol staffing situation and
increasing law enforcement effectiveness in the CNP\. 31
26 Source: OIPR annual reports and email communications during and after ICR mission\.
27 The office is 175 kilometers away from the park entrance requiring more than 2 hours in travel time\.
28 The 2010 May mission suggested that the Government should compensate the loss of PGNTER funds but in view
of limited governmental resources this could not materialize\.
29 Direct beneficiaires were 68 persons out of 588 residents (see annex 2 for more details)\.
30 Reasons provided by OIPR during the ICR mission include favorable social cohesion among CNP adjacent
villages, strong engagement and impact from traditional authorities as well as a low population density\.
31 Source: OIPR annual reports and email communications during and after ICR mission\.
9
36\. Adjustments during restructuring\. As introduced during the MTR 32, a level-two
restructuring resulted in a one-year extension to compensate for a six-month project
standstill due the Bankâs suspension (December 2010 to April 2011) following the post-
election crisis, improved the results framework and led to a minor reallocation of funds
between disbursement categories and estimates particularly related to component 3\.
37\. Incomplete biomonitoring\. Late 33 and less extensive surveys were carried out
and a biomonitoring strategy for CNP involving key actors could not been finalized
during implementation\. This impacted reporting to UNESCO WHS, the finalization of
the management plan and reporting on KPIs\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
(a) Overall M&E rating: Moderately Satisfactory
38\. M&E design and quality: Moderately Unsatisfactory\. The results framework in
the PAD included a few poorly defined indicators lacking baseline data, targets and
methodology 34 \. There was an inconsistency between indicators reported in the
summary and the detailed monitoring tables\. 35 Some indicators measured more than
one aspect (e\.g\. staff trained and equipped; funds mobilized (included funds and rate of
return)\. 36 One indicator (radio coverage) lacked clarity (i\.e\. measuring radio coverage
or actual listening to radio messages)\. More, the initial RF did not propose a qualitative
indicator to measure overall OIPR and FPRCI institutional capacity gains\.
39\. M&E implementation: Moderately Satisfactory\. OIPRâs learning curve resulted
in improved M&E quality and performance as evidenced by delivery of two METTs,
aerial and pedestrial as well as community surveys (see data sheet, annex 2)\. OIPRâs
M&E function was done by a qualified planner in Abidjan and staff at zone level - all
trained in M&E\. At MTR, the need to revise the indicators to improve their quality,
attribution to GEO and measurability was agreed by all stakeholders\. The level 2
restructuring resulted in a revised improved results framework and an M&E framework
defining baselines and methodology for each indicator (the latter required substantial
time to finalize)\. OIPR produced its semestrial and annual reports in adequate quality
using the results framework indicators\. It delivered a completion report and issued two
complementary independent evaluation studies\. Weaker points included that the newly
developed CNP savannah biomonitoring methodology was reviewed but not validated
at the time of project closure\. A GEF request at approval related to the establishment
and validation of such methodology by OIPRâs Scientific Council (not established at
completion)\. The revised M&E manual that was requested by the Bank at restructuring,
32 MTR recommendations focused on: extension, revision of indicators, compensation of funds for loss of PNGTER
ressources, additional funds needed for rehabilitation of the infrastructure and increased staffing for mobile law
enforcement\.
33 Due to a national ban on using small planes following some deadly accidents, the 2013 aerial survey was
postponed until June 2014\.
34 A rapid baseline study on the fauna status in CNP was carried out by WCF in 2008 as part of the preparation
process (funded by the Bank) and used to inform the original RF\. Complementary baseline studies were done later
in 2010 (funded by GIZ) including assessment of CNP infrastructure and community issues\.
35 Indicators listed on the summary page of the RF in the PAD but disappeared in the actual RF: (i) Number of
foundation staff and key members of the Board fully trained; and (ii) Number of trainings session for the Foundation
members in each identified skill area\.
36 For example: âNumber of OIPR staff and formed measuresâ two different aspects\. âNumber of poachers convictedâ
is outside the projectâs control\. âReduction in poachingâ was too general and lacked methodology\.
10
was not completed until 2013\. Importantly, the KPIs were informed through only two
comparable aerial surveys (2010 and 2014), which focused mainly on threats and key
species\. 37 The development of partnerships with research institutions including the
research station in the southern part of CNP was not prioritized mainly due the delayed
reopening of the station in 2014\. 38
40\. M&E Utilization: Moderately Satisfactory\. M&E was included in OIPRâs
management and helped to plan and direct project intervention\. Important, most of the
revised indicators and associated methodology have been integrated in the new CNP
management plan and OIPRâs national M&E system and are used to a large extent in
follow-up projects by other donors (German Development Bank (KfW), German
Federal Enterprise for International Cooperation (GIZ) and UNESCO)\. Weaker points
included that M&E data was not widely disseminated (e\.g\. OIPRs or FPRICs webpage),
a comprehensive CNP biodiversity M&E system was not yet finalized at closure due to
the inclusion of stakeholder contributions 39 and that M&E lacked data on monitoring
broad-based community benefits\. However, GIZ and KFW plan to support the
finalization of a biodiversity M&E system covering savannah and forest ecosystems
governed and completely mastered by OIPR in the Taï and Comoé NP in 2015\.
2\.4 Safeguard and Fiduciary Compliance
(a) Safeguard Compliance â Rating Satisfactory
42\. Environmental and Social Safeguards\. The project was correctly designated as
a category B project and triggered two safeguard policies: Environmental Assessment
(OP/BP 4\.01) and Involuntary Resettlement (OP/BP 4\.12)\. An Environmental and
Social Impact Analysis (ESIA) and a Resettlement Policy Framework (RPF) 40 were
prepared in consultative manner and disclosed on June 23, 2008\. The restructuring did
not change the safeguard policies and no other safeguard actions were required during
implementation\. The project complied with the safeguard policies\. The safeguard
ratings had been satisfactory throughout the project\.
43\. Environment\. The rating for environmental safeguards compliance is
satisfactory\. Environmental safeguards policies and procedures were complied with\.
OIPR mainstreamed compliance with environmental safeguards in the investments
(rehabilitation of park roads, buildings and screening and approval of three pilot
microprojects) as documented\. The staff was trained on environmental safeguards and
the implementation manual contained adequate guidance\.
37 The PAD planned to support more foot surveys to complement the aerial surveys\. However, the methodology for
foot surveys was not compatible with the results of the aerial survey\. Finally, only one foot survey instead of three
per year was carried out in 2012\.
38 The external funded research station in the South of CNP managed by the German University Julius-Maximilian
from Wuerzburg was built in 2000\. It suffered severe infrastructure damages and losses during the crisis in 2002 and
reopened only by mid-2014\. Current research studies reveal greater than expected numbers of chimpanzees\. The
partnership with the station and the Abidjan university is planned for 2015\.
39 Recommandations from 2014 workshop include: (i) increase of park coverage from currently 6 to 10 better 20 %;
(ii) revise data collection system from current use of standard transsects; (iii) separate habitat and vegetation (every
5 years new satelites imagery and aerial survey) from fauna monitoring (the latter including lion and elephant
monitoring)\. OIPRâs approach is to develop and apply a biomonitoring methodology for the entire PA network and
not individually which implies time-intensive consultations and alignments\.
40 RPF focused on implementation of component 3 that was impacted by the loss of PNGTER funds for
microprojects\.
11
44\. Social\. Compliance with social safeguards policies is rated satisfactory\. 41
The project implementation did not trigger any resettlement actions and no issues
occurred during implementation\. Although the RPF recommendations were
implemented, there was a lack of systematic attention by the Bankâs team to follow-up
with OIPR and ensure specific social safeguard reporting\.
(b) Financial Management Compliance\. Rating: Moderately Satisfactory
45\. Financial management (FM) performance\. The consolidated FM
performance covering both implementation agencies, OIPR and FPRCI, was rated
moderately satisfactory\. 42 The project complied with all financial covenants\. Eighteen
trimestral and two semestrial IFRs were submitted by OIPR on time and they were of
acceptable quality\. The opinions of the external audit reports were unqualified except
for 2013\. 43 Most of the agreed financial management actions arising from FM
supervision reviews were properly addressed\. The training sessions provided by the
Bank helped to strengthen OIPRâs financial management capacity also to deal with
local service providers (NGOs) with weak capacity\.
46\. Shortcomings that improved over time related to the issues of (i) internal control
system 44 , (ii) late withdrawal applications, and (iii) budget execution rate\. With
hindsight, the staffing arrangement combining consultants and civil servants at OIPR
HQ and on site-level was perceived as less effective due to different contractual
conditions\. A weakness related to insufficient counterpart allocation impacting
implementation until the end 45\.
(c) Procurement Compliance\. Rating: Moderately Satisfactory
47\. Procurement performance\. The consolidated procurement performance for
OIPR and FPRCI was moderately satisfactory\. The procurement execution rate at
closure was 98 percent\. 46 The Bank provided substantial training and follow-up support
as demonstrated by the high execution rate\. There was no evidence of deviation from
Bank procurement policy\.
48\. Shortcomings: Because of perceived procurement risks, the Bank required that
a substantive proportion of the procurement be subject to prior review, which became
cumbersome due to the numerous local service provider contracts with NGOs and
community associations\. Generally, procurement deadlines were met and activities
started and completed within the planned timeframe\. Sometimes late payments and the
need for better filing and back-up were noted\. At site level, the Zone director and
project-funded accountant handled local-level procurement\. The staffing arrangements
41 The project complied with proposed actions in the strategic framework (annex 1 of RPF) for populations in PAs
such as local participatory park management committee, demarcation of borders, capacity building for OIPR staff
on participatory management, community-engagement strategy etc\.
42 FM performance was rated in all ISRs in the satisfactory range\.
43 The qualified opinion was received due to irregularities in the procurement process for acquisitions of goods and
services to be paid with counterpart funds related to the date on the report for evaluation of suppliers\. This was
explained and justified by the PCU\.
44 The 2010 audit identified the lack of supporting documentation for counterpart funding\. The 2012 audit 2012
raised the issue of the lack of a physical inventory of immovables, back-up of project data, supporting documentation
for accounting positions âadvancesâ and âother receivablesâ\.
45 Delayed payment caused at times demotivation of staff including strikes and at closure, OIPR lacked US$136,000
to pay for outstanding salaries\.
46 All except two activities were completed (one being vehicle maintenance and the other a training event of the DG
OIPR totaling US$ 17,000)\.
12
in the field were not effective and the local level procurement and financial
management was transferred to Abidjan\. This contributed to some delays due to the
distance involved for signing\. The use of the Procurement Cycle Tracking System
(PROCYS) system was cumbersome and contributed to delays\.
2\.5 Post-completion Operation/Next Phase
49\. Community-engagement\. Although initially planned as a parallel funded
activity, microprojects supporting adjacent communities could not be funded during
project implementation\. At completion, the C2D (debt-conversion with France)
concluded its preparation and implementation of the community-engagement manual
supported by PARC-CI has been initiated\.
50\. Sustaining institutional capacity\. Considerable progress has been made to build
and strengthen OIPRâs national, regional and local as well as FPRCIâs capacity since
appraisal\. Institutional capacity needs to be maintained for which the Government and
other development partners such as GIZ, KfW and AFD are committed as demonstrated
by the new projects and funds secured\. 47 These projects will sustain and substantially
enhance the projectâs achievements and investments\.
51\. Sustaining and expanding management of CNP\. One of the key results of the
project has been the 10-year management plan for the CNP, validated prior to project
closure\. Implementation has been launched in 2015 and is supported by AFD, GIZ,
KfW and the Government\. A request to UNESCO/WHS has been formulated in
January 2015 to request the withdrawal from the list of WHS sites in danger, a decision
is expected in June 2015\. The focus of the post-completion operations are maintaining
PARC-CIâs efforts on (i) institutional capacity, (ii) equipment and infrastructure
investments for park management, and (iii) local development support in the park
periphery\.
52\. Use of FPRCI as financial mechanism\. At project closure, FPRCI had leveraged
highly satisfactorily funds for PA management in the country\. More, it managed to
receive additional endowment capital and a new project (C2D) is transferring funds
directly to FPRCI confirming its capacity and role in the sector\. FPRCI will be the
financial mechanism in charge of administrating C2D funds\. OIPR will open an account
for each park and submits work plans to FPRCI for funding\.
53\. Regional cooperation\. In July 2014, OIPR signed a memorandum of
understanding with Burkina Faso to collaborate on transboundary protected area
management\. A revival of the WB/GEF funded GEPRENAF model would enhance the
value of the CNP investments\. 48
54\. Replication\. The project supported OIPR with capacity building and the
development of park management instruments (management plan, biomonitoring
methodology, community engagement strategy, etc\.), all of which serves the overall
47 French funded CORENA project includes a component âConservation of Parks and Reservesâ: â¬4\.6 million for
three parks (Azagny, CNP and Mont Sangbe\. Cp\. 1 Strengthening administrative and financial management PA; For
each national park: business plan, tourism plan, communication docs; capacity building FPRCI and OIPR; Cp\. 2
Technical management of PA; Equipment (IT, plane, office, infrastructure) and biomonitoring; Cp\. 3 microprojects;
radio and Cp\. 4 Endowment\. Implementation starts in 2015\.
48 Support for this is expected from EUâs funded PAPE program currently focusing on Benin, Burkina Faso and
Niger mais it is intended to include the CNP as regional pilot for land use management\.
13
PA network in the country due to OIPRâs rotation scheme of staff and efforts to
structure PA management in a systematic way\.
55\. External support to CNP\. At project closure, there were three major projects
supporting the national park system and particularly CNP nearing implementation: (i)
KfW: â¬10 million for infrastructure in CNP, (ii) GIZ: â¬6 million for infrastructure
support around CNP, and (iii) C2D: â¬4\.6 million for support to OIPR, CNP in three
parks (CNP, Azagny and Mont Sangbé) including up-date of the PCGAP framework\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
56\. Relevance of GEO: Substantial\. As stated earlier, the GEO was well aligned
with GoCIs priorities and strategies and with the Bank's Interim Strategy\. The relevance
at appraisal was evidenced by strong commitment from Government to move forward
with implementation of the PCGAP even without donor funds in times of crisis\. The
GEO remained relevant at completion, as reflected in GoCIs environmental priorities
for up-dating and strengthening the institutional framework and capacity and to restore
the national parks through investments, surveillance and community-engagement stated
in the National Development Plan (2012-2015)\. At the time of this ICR, the new
Country Partnership Framework (CPF) is at the concept stage\. The draft CPF concept
note includes an assessment of the achievement of objectives of the previous strategy
document, and concludes that objective 2\.3\. âSustainable management of the fauna and
habitat of the Comoe National Park is improvedâ, under Pillar 2, has been achieved\.
The CPF proposes to support Cote dâIvoire in achieving inclusive growth through
building human capital and enhancing the countryâs strategic role in regional
development\. Thus, the GEO is broadly aligned with the proposed CPF cross-cutting
areas: Governance, Land, and Spatial Inequality\. The GEO remained consistent at
completion with global priorities for biodiversity conservation through effective
management of PAs as defined in the GEF6 biodiversity strategy and the conventionâs
Aichi targets\.
57\. Relevance of Design and Implementation: Substantial\. Although there were
a few shortcomings such as the analytical underpinnings and M&E, the project design
was conducive to its intended function serving as a catalyst for future investments in
the CNP\. It balanced institutional and human capacity building with priority investment
support and community involvement, and focused both on technical and financial
sustainability for the CNP\. This was substantially relevant for a national park that was
abandoned for nearly a decade\. 49 External funding that became available to implement
the CNP management plan supports similar design elements\.
58\. Overall Rating Relevance: Substantial
3\.2 Achievement of Global Environmental Objective
59\. The GEO âto improve the sustainable management of the fauna and habitat of
the Comoé National Parkâ was achieved as demonstrated by the change in the
Management Effectiveness Tracking Tool (METT) category from a score of below or
49 The Bank was the only development partner at the time to support OIPR and FPRCI in relaunching management
activities of the PA network and the CNP after a decade of conflict, instability and degradation\.
14
equal 35 to 70 percent 50, the positive results of the 2014 aerial survey and the outcomes
described in detail below\.
60\. At closure, the biodiversity-rich CNP is enjoying a reestablished and functional
management system developed with limited project funds in a post-conflict period
under poor conditions\. This was achieved through increased deployment and capacity
building of OIPR staff, priority investments reopening access and surveillance
measures inside the park, rehabilitation of selected buildings and patrol stations,
equipment and operational support for surveillance and importantly good community-
engagement\. The project was instrumental in âup-datingâ the 2001 management plan
and in developing a number of park management tools such as the surveillance strategy,
community-engagement strategy\. The projectâs results achieved additional spill-over
effects related to OIPRâs capacity and management of the PA network\. Despite the
transfer of limited funds PARC-CI to FPRCI, its catalytic role contributed to FPRCIâs
highly successful fundraising benefitting the sustainable management of the CNP and
the broader PA network\. A presentation of the key outputs compared to those initial
planned is found in Annex 2\.
Outcome 1: Sustainable financing for PA management â Rated High
(GEF US$0\.298m spent)
61\. The outcome target was highly satisfactorily achieved as shown by the indicator
(IOI3) measuring external funds mobilized by FPRCI (see tables in annex 2 below)\. At
closure, FPRCI leveraged US$41\.2 million including increasing its endowment capital
from US$3\.2 million to US$26\.2 million\.
62\. The funds generated at present focus on the two national flagship parks (CNP
and Tai National Park)\. FPRCI is transferring US$150,000 in 2015 as a starting point
to OIPR for CNP recurrent expenditures\. Importantly, the German debt conversion has
opted since 2012 to use FPRCI as a financial mechanism to channel financing to the
Tai NP, and since 2014 to the CNP\. Governmentâs own contribution was realistically
not expected to increase\. The projectâs limited support to the FPRCI (basic equipment,
training, outreach including webpage and networking) and to the CNP at a time where
no other development partner supported CNP was considered as a key contributor to
this achievement\. It should be acknowledged that FPRCI received additional
institutional support from other partners including KFW (PCPNT project with 200\.000
EUR from 2011 to 2014) and the Government\. 51
Outcome 2: Improved management of CNP â Rated High (GEF US$0\.904m spent)
63\. The outcome was satisfactorily achieved, particularly considering the departure
point in CNP with nearly 10 years of no management\. Compared to the pre-project
situation, staff numbers were increased from 48 to 76, staff was trained, equipped and
a participatory new management plan is in place\. OIPR DZNE relocated back to the
Bouna headquarters close to the CNP entrance\. The impact of better management
50Note that 2010 baseline METT was not done and only estimated\. METT 2012 was assessed at 56%\.
51FPRCI training on instutitional communication, fundraising, accountability and financial management was funded
by GoCI while training on communication and environmental marketing, fundraising strategies, governance of
environmental funds and extractive industries was funded by RedLaC and training on financial management was
funded by IUCN\.
15
reducing threats on the CNP biodiversity value within a short period of time (4\.5 years)
and very limited resources for a park of that size is impressive\. The improved
management is hoped to contribute to a removal of the CNP from the UNESCO list of
WHS in danger requested by the Government at closure\. A core achievement has been
the development a highly participatory management plan that was validated in
December 2014\. 52 Additional planning and strategic documents on outreach,
surveillance, community engagement, and biomonitoring were developed in parallel\.
Implementation focused correctly on addressing the main threat of poaching by
enabling surveillance related activities 53: increase in staffing, reopening of a main park
road from Bania to Gawi (90 km) and maintenance of park roads (557 km inside and
30 km at the park border), rehabilitation of selected patrol posts and buildings (11),
regular patrolling (272 missions of 27,990 man-days), aerial and pedestrial surveys (3),
demarcation and signage (150 posts and 6 signs), training of OIPR staff including
DZNE (122), awareness raising of adjacent communities including use of community
labor for patrolling, maintenance and fire fighting, and establishment of a well-
functional local participatory multi-stakeholder park management committee with
decision-making rights\. 54
Outcome 3: Strengthened OIPR and FPRCI institutional and staff capacity â Rated
High (GEF US$0\.583m spent)
64\. The outcome was satisfactorily achieved (see details in annex 2)\. While initially
the training topics for the then 52 CNP-based OIPR agents were broad, training
measures after the restructuring focused on participatory management as the key issue
for success in managing the CNP and other PAs in the country\. The current OIPR staff
has gained competencies in anti-poaching control, biomonitoring, Geographic
Information System (GIS), Global Positioning System (GPS) as well as management
skills\. Due to OIPRâs staff rotation scheme, capacity gains will be deployed throughout
the PA network\. FPRCIâs capacity gains are demonstrated by its highly successful
fundraising results and donor agreement to manage C2D project funds\.
Outcome 4: Increased community conservation awareness and engagement in park
management â Rated Substantial (GEF US$0\.18m spent)
65\. The outcome was satisfactorily achieved despite loss of parallel funds for
alternative livelihood options\. A beneficiary survey at completion showed that 89
percent of CNP adjacent communities are aware of biodiversity and demonstrate a
positive attitude towards park conservation (see annex 5 for details)\. However, the 2010
socio-economic baseline study did not assess related issues making evaluation of actual
gains difficult\.
66\. The effective implementation of the community engagement strategy resulted
in improved knowledge, interest and participation 55 demonstrated through awareness
raising campaigns in 72 adjacent villages, establishment of 23 village conservation
52 The Minister signed the bylaw for its application on March 8, 2015\.
53 During project implementation, 356 offenders (poachers, herders, gold miners and fishermen) were
apprehended\.
54 Sources: OIPR annual progress reports and completion report\.
55 An example of the improved understanding and engagement by communities in collaborative management was
the request to OIPR by community members in Toupe to adjust the boundaries to conserve a gallery forest bordering
the river Kinkene (Toupe)\.
16
groups (20 AVCDs 56 and 3 non village centers), use of 3 local radios for reaching out
to all CNP adjacent communities, establishment of a participatory and well-functioning
local park management committee with community, local authority and Government
representation, use of villagers for joint patrolling (about 20 percent of paid community
members) 57 and for operation and maintenance of park tracks\. Importantly for the
integration of park management in local development and land use planning was the
signing of a convention with the Regional Council of Bounkani\. The project supported
the use of local NGOs as service providers 58 for example for training of 70 community
members from 22 village centers in bush fire prevention\. 59 This contributed to
achieving a reduced level of poaching, herding and agriculture encroachment in the
park and a better relationship with OIPR\.
Outcome 5: Improved livelihoods for communities surrounding CNP â Rated Low
(GEF US$0\.088m spent for microprojects and see outcome 4)
67\. The outcome was not achieved due to the loss of funds from PNGTER and
delays accessing alternative funds from other sources 60\. Nonetheless, OIPR supported
the use of community members for park patrols, biomonitoring and O&M tasks, which
generated direct benefits\. In addition the project supported the piloting of three
livelihood-support microprojects 61 on the basis of the community-engagement manual
developed\. The ICR evaluation is that these efforts were commendable to demonstrate
OIPRâs support for fringe communities, however due to the lack of funds, experience,
institutional arrangements and time left results are modest showing the need for a robust
microproject scheme including commercialization and microfinancing aspects\. At
closure, OIPR and FPRCI mobilized funds from AFD to develop the livelihood support
component of CNP management\.
Outcome 6: Reduced threats to the park â Rated Substantial
(see outcome 2 for GEF US$ spent)
68\. The outcome is achieved satisfactorily considering the results of the 2014 aerial
survey compared to 2010\. Project interventions contributed mainly to these results
although it is noted that the recent Ebola crisis in the region has generally decreased the
demand for bush meat\. 62 The time frame and approach is likely insufficient to provide
robust data but certainly indicates a very encouraging trend 63 (see map below)\. An in-
country debate on the suitability of the methodology has been carried out and resulted
56 The AVCDs are expected to be OIPRâs partner in charge of village-based awareness-raising and microprojects\.
57 For example in 2014, the patrol team carried out 169 patrols with the participation of community members
resulting in 2 243-man days paid worth about US$ 18,000\.
58 The project signed 8 contracts with local NGOs including such as Beni-haly, Termites, SOS Comoé, Bitakoulessa
and Deprerenaf\.
59 The NGO Lucofeubrou received an award from the presidency in August 2014 for leading the most performing
bush fire prevention committee\.
60 UNESCO and WWF provided limited parallel funded support for other microprojects around CNP\.
61 Bee-keeping, poultry and gardening in three different fringe communities (Kakpin, Yalo and Toungbo-yaga) with
technical support from the National Agency for Rural Development (ANADER)\.
62 The outbreak of the 2013 Ebola virus epidemic in West Africa resulted in nation-wide awareness raising
campaigns from the Government on the risks related to bush meat consumption contributing to reduce bush meat
demand\. However, in absence of data on illegal bush meat trade in the country, the contribution of Ebola on the
estimated decrease in the supply (meaning poaching) is difficult to quantify\.
63 Data related to fauna trends need further analysis to determine the likely reasons for the changes\.
17
in a number of recommendations\. 64
69\. At the same time a new threat, small-scale gold mining, emerged during the last
65
year\. OIPR immediately reacted through a number of awareness raising activities
(media, local committee, collaboration with local authorities) and reinforcement of
surveillance posts and motorbike equipment for improved mobility of DZNE staff\.
70\. Considering that achievement of outcomes is rated substantial and the GEO
achievement on the basis of the revised indicators is rated satisfactory, efficacy is rated
substantial\.66
3\.3 Efficiency
72\. The design and structure of the project was not amenable to a classical stand-
alone financial or economic analysis at appraisal, as the institutional, environmental
and capacity building long-term benefits were and remain difficult to quantify\. The
project design and arrangements resulted in a very efficient use of the limited resources
to achieve the satisfactory results of project activities\.
73\. Despite the budget constraints (US$2\.54 million total, US$0\.3 million to
FPRCI), the project funds helped FPRCI to improve its institutional performance as
demonstrated by the excellent fundraising results (US$41\.2 million â exceeding
significantly the initial target of US$5\.37 million) ensuring sustainable management of
the CNP and the national PA network (see annex 2)\.
74\. Moreover, there are few or no projects in Africa that have been designed to
cover such a huge park with such a small amount of funds and that have successfully
reestablished effective management conditions\. A study suggested that the minimum
effective management of a PA in Africa would require on average recurrent
expenditures (actual running costs including local salaries but without start-up,
replacement, technical assistance, survey and M&E costs) of US$50 per year per km2\. 67
If applied to CNP, this would amount to US$574,650 per year and sum up to
US$2,873,250 over a five-year period, which is significantly higher than the actual
project funding for CNP management, which included also core replacement costs for
infrastructure damages during the conflict period\.
75\. The following findings from implementation demonstrated how efficiently
project funds were used at CNP site and institutional level to achieve the GEO (see for
details annex 2):
64 They include supplementing standardized aerial surveys covering about 20% of the CNP with species-specific
surveys (focus on elephant, lion) and separate vegetation assessments on the basis of satellite imagery (all part of
the new management plan)\.
65 While until the second half of 2014, no gold miner was caught, OIPR caught 79 during the remaining months of
2014\. Among the explanations for threat increase are the increased mobility of gold miners, availability of metal
detectors and high gold price (US$ 32/gram)\. In November 2014, the local management committee of CNP destroyed
in November 31 metal detectors confiscated from 62 gold miners caught in CNP\.
66 One of the GEO indicators and some of the intermediate outcome indicators were revised during restructuring to
improve quality and measurability but the nature of the changes did not justify the use of a disbursement-split
evaluation\.
67 Source: Allard Blom âAn estimate of the costs of an effective system of protected areas in the Niger Delta â
Congo Basin Forest Regionâ in Biodiversity and Conservation 13: 2661-1678, 2004\.
18
â Use of community-based contracts for O&M, biomonitoring and patrolling in the
CNP (reduced overall costs but high incentive for community support); 68
â Use of NGOs (eight service contracts) for awareness raising and bush fire prevention
(reduced costs and stronger acceptance from communities) with one NGO
(Lucofeubrou) receiving an award for leading the best performing bush fire
prevention committee in 2014;
â Cost-effective choice to use the limited project funds mainly for local level
information and participation and for surveillance activities while keeping the
replacement/rehabilitation of goods/infrastructure at a low level;
â Cost-effective low OIPR overhead costs through (i) use of lean PCU (only essential
staffing and equipment), (ii) use of mainly OIPR staff and very limited consultants,
(iii) use of complementary staff for patrolling from other agencies (army, former
rebels), (iv) use of field-based training avoiding high transportation costs;
â Improved OIPR institutional management and performance at PA network level
through consolidated training open to OIPR staff from other PAs and expanded
scope and scale of PA management tools to the benefit of broader PA-network and
future funding from other development partners;
â Leveraging funds during implementation to support planned and additional project
activities including for lost assets during crisis (Japan, MAB/UNESCO, UICN,
KfW, GIZ);
â One project extension for only a year limiting dispersion of funds for project
administration; and
â No misprocurement or fraudulent use of funds\.
Overall Rating Efficiency: Substantial
3\.4 Justification of Overall Outcome Rating: Satisfactory
76\. The overall outcome rating is Satisfactory, which is evidenced by a substantial
rating for relevance; a substantial for efficacy and a substantial for efficiency\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
77\. Poverty\. While reduction was not an explicit objective of the project, the rural
poor (about 170,000 people) surrounding the CNP in Côte dâIvoire depend mainly on
the availability of the natural resources for their livelihoods\. As a result of the PARC-
CI community members received additional income for participating in patrols (total of
2243 man-days throughout implementation (US$18,012), informant services and short-
term work opportunities for O&M in the CNP\. 69 Benefits to community members and
gender aspects were not systematically assessed and documented\. Unfortunately, the
loss of parallel funds from PNGTER excluded livelihood support microprojects and
support from C2D is only expected after project closure\. The project funded three pilot
microprojects for total of US$88,000 (see annex 2 and 5)\.
(b) Institutional Change/Strengthening
78\. The project contributed to institutional strengthening not only for the main
target groups OIPR and FPRCI, but also helped build institutional capacity for local
68 Project design aimed at using 25 % of community workers for O&M (see PAD)\. In reality nearly all community
members of the surrounding villages were involved\.
69 For example in 2011, local O&M works amounted to US$ 74,000\.
19
authorities and local Government as well as local NGOs through participating in the
development of the CNP management plan and the local management committee\. 70 At
ICR, these benefits cannot be quantified and were not measured\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
79\. The project contributed to reestablish governmental authority in the former
rebel-controlled zone\. The OIPR PARC-CI temporary office in Bondoukou was used
by other services from the then newly established Ministry of Environment\.
80\. As a result of the consultations on how to address the emerging threat of gold
mining in the CNP, the Ministry of Mines is now requesting a prior notice from the
Ministry of Environment before issuing mining permits\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
81\. Two independent beneficiary surveys in CNP adjacent communities (total of
sample 726 people) 71 were carried out as part of the final evaluation exercise at
completion\. Globally, community members expressed their satisfaction with OIPRâs
management of the CNP (see annex 5)\.
4\. Assessment of Risks to Development Outcome
Rating: Moderate
82\. At completion, there are two main risks for sustainable management of the
CNP: (i) insufficient funding and staffing and (ii) decline in community support\.
83\. Funds/staffing: The project support resulted in augmented staffing and
equipment that increased the recurrent costs to be covered\. 72 However, taking into
account GoCIs commitment as demonstrated through continued funding for recurrent
costs and infrastructure rehabilitation during implementation, allocation of additional
staff (volunteers) and the availability of significant flow of external financial resources
to CNP and OIPR raised by FPRCI (US$ 1\.62 million for 2015 including first payments
from FPRCIâs endowment) 73 over the next years, the risk is considered moderate\. 74
The Government is expected to continue supporting the recurrent costs of the CNP
through a regular budget line\.
83\. Social: The results from implementing the community engagement strategy
were satisfactory and the up-coming support for microprojects and OIPRâs continued
focus on participatory management is expected to further strengthen the community
70 The CNP Local Management Committee was created in 2012 as a consultative and supervising body for the park\.
It includes 15 members such as the Regional Council, municipalities; traditional authorities; tourism operators;
regional directors of tourism, NGO and AVCD representatives, OIPR, Research station\. The president is the prefect
from the region with the largest area of the CNP\. The meetings of the committee are scheduled to take place in all
administrative regions\.
71 501 people were interviewed for the survey on participatory park management and radio documentation (C\. G\.
Kapie) and 250 people for the general evaluation survey (Yves Joel Dirabou)\.
72 Patrol premium fees, O&M for vehicles purchased, patrol fees and rations\. etc\.
73 Funding sources for CNP implementation of 2015 workplan include FPRCI (US$556,000), GIZ (US$216,100),
C2D (US$295,300), KfW (US$421,733) and others (US$130,322)\.
74 In 2014, FPRCI provided for the first time US$388,000 to Tai National Park and to CNP US$ 150,000 for recurrent
costs\. Starting 2015, Tai will receive US$800,000/year and CNP US$600,000/year from endowment fund
investments\.
20
engagement in park management and implementation of the new management plan
priorities (integration of CNP in local development through AVCDs including
knowledge-sharing on resource use options and development of GEPRENAF alike
voluntary natural reserves in the park periphery)\. The risk is considered low\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry â Rating Moderately
Satisfactory
84\. Bank performance in identification, preparation assistance and appraisal of the
project was moderately satisfactory (see 2\.1)\. 75 Within a short preparation period (five
months), the Bankâs team worked with OIPR and FPRCI to develop a rather
conventional PA management project that was in line with GoCIs PA reform agenda\.
According to the external evaluation survey, the process did not include local level
consultations with social groups, local authorities and government\. A QER took place
in May 2008 (see para\. 25) and raised a number of design issues, which were addressed
during the pre-/appraisal mission and final design\.
85\. Weaknesses: The performance was affected by moderate shortcomings, such as
incomplete identification of risk factors and mitigation measures, weak quality of the
results framework including an ambitious and unspecific GEO, lack of up-dated
baseline studies for CNP at appraisal, 76 incomplete arrangement for accessing
PGNTER parallel funding 77 and lack of an M&E manual\. However, most of these
design shortcomings were either addressed during implementation or did not
significantly affect the project outcomes\. As a reminder, the preparation context was
challenging and sensitive in view of the cancellation of the Bankâs PCGAP program
and significant loss of GEF grant resources\. 78 This situation could have been used by
the team to undertake a more detailed participatory problem analysis to avoid top-down
perceptions of some stakeholders and improve the Bankâs standing in the sector\.
(b) Quality of Supervision
Rating: Moderately Satisfactory
86\. Overall, the Bankâs supervision was undertaken by a team with adequate
technical and operational skill mix 79 and Bank policies and procedures were well
applied and pursued\. The Bank regularly supervised the project even during the period
75 There were three non-country based TTLs during project preparation (concept to Board approval), which is not
considered a best practice\.
76 Only a rapid assessment of the biodiversity status of the CNP done by WCF in 2008 was available at appraisal\. In
2010, GTZ funded three essential baseline studies including a socio-economic study\. Consequently, the project
design could not make use of these findings at appraisal\.
77 It was planned that PGNTER would support a joint technical team comprising PARC-CI, OIPR and ANADER to
deliver microprojects and to use the same manual\. A collaboration agreement should be signed to clarify the
financing arrangement and the implementation schedule\. However, this never materialized\.
78 Several non-governmental agencies formally complained about the cancellation of the PCGAP project and related
IDA and GEF funding in a letter to the President of the World Bank Mr\. Wolfowitz (May 15, 2007) signed by SOS
Forets, Afrique Nature and Forum of NGOs for the Environment and Sustainable Development\.
79 There were three task team leaders, all senior environmental sector staff with the first one and last based in
Washginton and the second based in Abidjan (2010â 2013), which was considered a beneficial arrangement by OIPR
and FPRCI\. The social and environmental safeguard function was for the most part carried out by the TTLs\. This
is judged acceptable in view of the low safeguards risk of project activities following the loss of PGNTER resources\.
21
of crisis when the WB office in Abidjan was evacuated thereby limiting implementation
interruption effects and ensuring fast recommencing of project activities in 2011\. It
carried out 7 physical supervision missions led by the TTL over the course of the 4\.5-
year project life, which is considered appropriate but only two site-visits\. 80 The
missions identified correctly implementation bottlenecks and provided detailed action
plans in aide memoires to address them\. However, the Bank teamâs efforts to remind
the Government on a regular basis of meeting its full counterpart-funding obligation
could have been a stronger focus of missions\. In view of limited data on the actual
conservation status and to improve the OIPR CNP M&E, the TTL encouraged OIPR to
carry out a CNP biomonitoring methodology study in 2013, which is considered
instrumental for CNPâs sustainable management\. 81 The ISRs were filed regularly and
ratings were on balance candid\.
87\. The TTLs kept a basic dialogue with other donors involved in the sector to
mutually enrich and harmonize interventions\. During the early years, when
implementation was moving slowly, the Bankâs country office fiduciary team dedicated
its efforts to support OIPR in accelerating implementation and troubleshooting
activities resulting in satisfactory execution of work plans\. Following the loss of
PGNTER funds, the TTL identified and assessed a number of options with OIPR and
the country team (such as using counterpart funds, requesting additional financing,
mobilizing funds from other development partners) but without being able to resolve it
during implementation\. It was only at the restructuring, that actions were introduced to
address the loss of community-livelihood support in the project design\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
88\. The Bank's performance in both preparation and supervision is rated moderately
satisfactory and the overall rating is also moderately satisfactory\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
89\. The Government showed adequate commitment to its own PA reform agenda
and to the achievement of the GEO\. It satisfactorily met the covenants in the legal
agreement\. The commitment is evidenced by: (i) providing regular counterpart funding
to OIPR for staffing and recurrent costs in CNP and to FPRCI\. Although there has been
a regular replenishment of the counterpart account, governmental counterpart funds for
operating costs did not perform in accordance with the financial plan defined at
appraisal; 82 (ii) stepping in to address the alarming poaching situation in CNP with an
80 Missions were carried out in: May 2010, November 2011, May 2012, December 2012 (MTR), June 2013, October
2013 and January 2014\. (The December 2010 mission was cancelled due to the crisis\.) Financial management and
procurement specialists carried out additional missions but without travelling to the CNP\.
81 GIZ funded this biomonitoring methodology study in 2014\.
82 At appraisal, annual counterpart funding to OIPR (US$1\.62 million) was meant to support: (i) assignment of 46
staff to CNP management, (ii) rehabilitation of buildings and park tracks; and (iii) electricity and communication
expenses\. Further, counterpart funding of US$140,000) per year was planned for FPRCI (see legal agreement
22
additional allocation of US$0\.33 million from 2011-2013 for equipment and operating
costs; 83 (iii) mobilization of sixty former rebels and their CNP deployment for 8 months
in 2014; (iv) at closure securing sixty additional forestry interns (Agents des Eaux et
Forests) to strengthen OIPR field staffing capacity (dispatched primarily to CNP and
Tai National Park); and (v) requesting UNESCO to reassess the status of CNP in order
to proceed with the withdrawal of CNP as WHS in danger\.
90\. Weaker aspects: In view of the insufficient counterpart funding, operating
expenses of the project for CNP management could not be fully covered during
implementation impacting at times the performance of park management activities\.
(b) Implementing Agencies Performance
Rating: Satisfactory
91\. PARC-CI was implemented by two implementing agencies, each is assessed
separately below:
92\. FPRCI: Highly Satisfactory\. FPRCIâs performance under the project was
highly satisfactory as demonstrated by a successful disbursement of 99\.7 percent and
substantial exceeding the performance indicator related to fundraising and achieving a
number of positive institutional outcomes (see annex 2)\. There were no fiduciary issues;
FM and procurement performance was satisfactory\. FPRCIâs contribution to the
financing of PA needs in the country at project closure has exceeded expectations\.
93\. OIPR: Satisfactory\. OIPRâs performance under the project was satisfactory\.
The final consolidated project disbursement rate was 87\.3 percent\. Despite initial weak
capacity at OIPR and lack of experiences with World Bank projects, OIPRâs
management, supported by a small PCU, was effective after a short learning curve\. 84 It
demonstrated flexibility, adaptability and diligence in finding solutions to overcome
challenges such as insufficient counterpart funding for operational costs and
investments, compensating the loss of PNGTER parallel funds for community
livelihood projects with C2D AFD funds and for the loss of project funded vehicles
with Japanese funds\. There were no safeguard issues\. FM and procurement
performance were both rated in the satisfactory range throughout implementation\.
OIPR was also efficient in engaging other development partners in follow-up support
ensuring sustainability of initial efforts to reestablish PNC management\. Capacity
building efforts in procurement, financial management and M&E were mainstreamed
in OIPRâs agency system\. On the weaker side, project execution was impacted by some
(externally as well as internally caused) delays\. At closure, the Scientific Council was
not yet established 85\.
section V\.D\. p\. 19)\. The sum of counterpart funds for OIPR staffing and recurrent costs of CNP as well as
FPRIC was US$5\.17 million - about 65% of the planned amount for 4\.5 years (see annex 1 and annex 2)\.
83 In 2011, the Ministry in charge of Economy and Finance decided to allocate FCFA200 million to OIPR to address
the alarming issue of poaching in the CNP\. The funds were used from 2011 to 2013 to improve patrol equipment
and operational costs under the so-called âopération transitoire de sécurisation du PNCâ\.
84 Progress, not considering the political events and standstill, of execution of the annual work plan was: 28% in
2010, 51% in 2011 and 70% in 2012, then on average 85%\. This is further demonstrated by an increase in
disbursement capacity until the project end\.
85 It was only at project end in 2014, that the CNP based research station reopened\. The operationalization of the
SC is planned for 2015\.
23
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
94\. Both the FPRCI and the OIPR closely managed project implementation,
monitored progress toward achieving the global environmental objective and were
effective in working with the Bank team during formal supervision missions, and
through regular correspondence\. Taking into account the minor shortcomings at
Governmental side with providing lesser than expected counterpart contribution,
overall Borrower performance rating is satisfactory\.
6\. Lessons Learned
95\. Dependency on parallel funding to achieve significant outcomes is an important
risk factor to be addressed\. The project design and outcomes relied on the achievement
of community-development results in CNP fringe communities from a separately Bank-
funded project\. This was an unidentified risk and should have been mitigated by a
detailed plan for coordination (for example as an effectiveness condition) between the
two projects or by the identification of a fallback option\.
96\. Conventional livelihood microprojects are not the only elements to be
considerered to achieve community engagement in park management as long as such
engagement measures generate direct benefits to communities\. The design of the
community component of the project used a combination of microprojects, awareness
raising, local capacity-building and participatory planning\. With the loss of PNGTER
resources for microprojects, the expectation would have been that communities
disengage from project efforts\. However, the project demonstrated that using
community contracts providing for local employment in park rehabilitation,
maintenance, biomonitoring and patrolling instead of microprojects could be as
effective or even more in triggering a positive behavioral change towards park
management objectives\. 86
97\. Projects in post-conflict countries need detailed situation and risk analysis\. Due
to the urgent need for rapid intervention and previous work done under PCGAP, the
project did not carry out any studies or lengthy and detailed consultation but used
preliminary rapid assessments funded by development partners and NGOs\. A more
robust assessment involving the key actors, stakeholders and donors in the sector could
have been used to improve the GEO, define methodology and clear baselines for all
indicators, expand the risk analysis and tap into lessons from protected area
management projects in other post-conflict countries\. 87
98\. Performance of projects can be improved through incentive-based
arrangements for governmental servants\. OIPRâs financial management team was
initially composed of civil servants\. When the project funded a procurement and
86 In this case, key favorable elements included the existence of a legal framework introducing community-contracts
for PA management, the cultural and socio-demographic conditions, engaged traditional authorities, capacity
building of OIPR staff, use of trustful local NGOs seeking synergies with other local development issues such as
health and education, a participatory park management plan and a local management committee\.
87 Management of PA in post-conflict period can be seen as important element of government and donor efforts to
manage national capital for conservation, assist local communities in recovery and provide income to population
and national economy, while still maintaining biodiversity\. Further, care must be taken to assess opportunities and
risks in employing ex-combatants as law enforcement staff\. Capacity constraints, infrastructure/equipment damages
as well as loss of critical management systems and data need to be assessed and considered\. (USAID: Biodiversity
conservation and crisis, 2008)\.
24
accountant consultant for the PCU, the salary discrepancy caused distortion and
demotivation resulting in at times slower execution\. Projects preparation should
consider additional (non-salary-based) incentives for civil servants such as tailored
training and coaching measures\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
99\. The Implementing Agenciesâ completion report (see Annex 7) is
comprehensive and detailed\. It does not raise any issues that require comments from
the Bank\. Comments received by OIPR on the translated ICR report were addressed in
the final version\.
(b) Cofinanciers
None received\.
(c) Other partners and stakeholders
None received\.
25
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent) 88
Appraisal Actual/Latest
Percentage of
Components estimates Estimate
Appraisal
(USD millions) (USD millions)
Cp\. 1 Institutional, Financial and 1\.02 0\.89 87
Technical Strengthening for PA
Management and Oversight
Cp\. 1\.1\. OIPR 0\.70 0\.58 83
Cp\. 1\.2\. FPRCI 0\.32 0\.30 94
Cp\. 2 Management Planning and 1\.0 0\.73 73
Implementation for the CNP
Cp\. 2\.1\. Design Management Plan 0\.04 0\.03 75
Cp\. 2\.2\. Implementation Mgmt\. Plan 0\.25 0\.17 68
Cp\. 2\.3\. Monitoring 0\.71 0\.54 76
89
Cp\. 3 Support to Park Communities 0\.27 0\.18 67 90
Cp\. 4 Project Management and Results 0\.25 0\.37 148
Monitoring
Total Baseline Cost 2\.54 2\.17
Advance 0\.17
Total Project Costs 2\.54 2\.34 92\.13
Total Financing Required 2\.54
(b) Financing
Appraisal
Actual/Latest
Type of Estimate Percentage of
Source of Funds Estimate
Cofinancing (USD Appraisal 91
(USD millions)
millions)
Borrower In-kind/grant 7\.6 92 5\.17 93 68
Global Environment Grant 2\.54 2\.34 92
Facility
World Bank/IDA Parallel 1\.2 0 0
(PNGTER)
WCF Parallel 0\.04 0
IUCN 94 Parallel 0\.07
WWF Associated 95 2\.00 3\.11 155
88 The table shows project costs for GEF funding only\.
89 The component 3 allocations were adjusted at restructuring to US$ 0\.18 million\.
90 Considering reallocation at restructuring, the component 3 was financed 100%\.
91 It should be recognized that appraisal estimate were done for 4 years while actual project duration was 4\.5 years
(excluding 6 months standstill)\.
92 According to the PAD ICA, direct GoCI contribution for PARC-CI was estimated US$ 3\.73\. The finance
agreement however stated an annual contribution of US$1\.76m (US$0\.56m for OIPR and US$0\.14m for FPRCI),
thus a total of US$7\.6 million for four years\.
93OIPR received the equivalent of US$963,640 over 4\.5 years for recurrent costs; US$2\.9 million over 4\.5 year for
salaries while FPRCI received US$980,000 for 4\.5 years\. The total allocation including the additional US$0\.33
million for temporary security force was US$5\.17 million\.
94 IUCN provided parallel cofinancing for the up-dating of the CNP management plan (US$41,371) and for the
training of agents from the mobile law enforcement unit (US$30,000)\.
95 Associated funding is defined as funding related to the activities related to project objectives and outcomes\.
26
German
Associated 2\.14 15\.9 97 743
cooperation 96
Japan Associated 2\.62 98
Total 15\.52 29\.21 188%
96 German funding to the sector accounted as parallel cofinancing in the incremental cost analysis included the
endowment fund contribution for Tai National Park\. At completion, GIZ and KfW funding to the sector included in
2012 US$ 5\.4 million Tai National Park; US$ 7\.064 million endowment for Tai National Park and in 2014 US$ 6
million Comoé National Park; US$ 9\.5 million endowment for Comoé National Park and KfW US$ 6\.56 million
endowment for Tai Sapo\.
97 German cooperation funded three CNP baseline studies in 2010 in the amount of US$ 100,000 (included)\.
98 Amount for equipment used for CNP management\.
27
Annex 2\. Outputs by Component
Component 1: Institutional, Financial and Technical Strengthening for Protected Area Management and Oversight
Planned (PAD) Actual Comments
Sub-component 1\.1\. Capacity building for OIPR
Training of HQ staff: 13 2010: Training in GIS, anti-poaching, procurement By MTR: 76 OIPR staff have been trained in 15
Topics: finance, procurement, administration 2011: Training modules in GPS, accounting software, project training sessions during the first 3 years including
management, project M&E, administration and procurement 29 on participative methods of park management\.
Training at CNP/DZNE level: Number not (38 staff)
specified but expected 48 2012: Training in METT tool use (71 staff including 11 staff By completion: Total of 122 OIPR staff trained
Topics: wildlife mgmt\., financial and administrative from other services)\. (76 planned) in 25 training modules (20
management, community engagement, ICT, 2013: Training of 1 FM staff\. planned):
biomonitoring, court cases, surveillance 12 training session in GPS, human rights, WHS management, Project management and institutional capacity:
Excel, etc\. (58 DZNE staff) ⢠Administrative, procurement and financial
(Training should be completed within 18 first 2014 : Training in climate change adaptation capacity management (including WB procedures);
months\. Training service providers were meant to building (Senegal, 10 staff), GIS, motorboat use, safeguards ⢠Environmental and social safeguards
include Baoufle Training School, Forestry School, policies, M&E, basic military skills, anti-poaching, radio use, (WB);
Wildlife School, and NGOs\.) GIS, GPS\. ⢠Software use including Excel
(Note: Data on precise number of persons trained per ⢠project M&E;
training module and session not consistently available\.) ⢠project management (Paris);
See also chart 1 below\. ⢠Fundraising; institutional communication
(Paris)
Park management:
⢠GPS;
⢠GIS;
⢠Study tour in Benin (Pendjari);
⢠METT;
⢠Participatory management and diagnostic
⢠Bush fire prevention;
⢠Biomonitoring;
⢠Surveillance strategies; anti-poaching
techniques
⢠Radio and communication systems\.
⢠WHS risk management;
⢠Human rights and children rights
28
Equipment for OIPR staff: 2010: 8 cars, 10 motorbikes, fuel\.
2011: 5 air conditioners, IT material (14 computers, 6
DZNE level: 8 vehicles; 1 large truck; 5 motorbikes; laptops, 14 printers, 1 scanner, 1 video projector, office
10 laptop computers; 1 laser printer; 1 fax, 1 furniture and equipment (fax, photo), 5 GPS, 23 internet
photocopier, 1 projector equipment, radio system, keys)\.
surveillance equipment and small canoe 2012: 1 generator, DVD reader, laptop, projector; tents,
raincoats, drinking bottles etc\. 2 cars equipped with geo-
HQ level: 1 4x4 vehicle surveillance material\.
2013: 74 uniforms, 2 GPS, 2 motorbikes, 34 tents, 76
For partners: NGOs 2 motorbikes drinking bottles\.
Cofinancing Japan 99: 9 pickups, 5 motorbikes, 9 GPS, 3
computers, 1 laptop, 1 tablet, 13 electricity stabilizator, 1
photocopier, 2 printers\.
2014: 3 satellite phones, 2 motor boats, 2 GPS, 10 bullet
proof jackets, 20 life vest, 50 hand cuffs, 129 raincoats, 104
tents, 1 car 4x4, 5 radios, 5 chain saws, 8 radio antennas,
microphones, battery charger, 1 fire fighting equipment\.
99 Not initially planned to compensate for equipment loss\.
29
Chart 1: Number of OIPR staff trained per theme throughout implementation (HQ, DZNE/CNP and other zones)
Total budget: US$102,953
Anti- Software GIS, 5
poachin accounting, 9 Procedural Manual,
g, 35 Procurement, 1 16
Financial
Management, 4
Project
management, 2
GPS, 27 Administration, 1
Knowledge
exchanges, 5
Total, 243 Planning and
M&E, 2
Jurisdictional
procedures, 17
METT,
36 Strategy for
surveilance, 37
Human rights, 22
Participatory
measures, 24
30
Sub-component 1\.2\. Support to Establishment and Operations of the FPRCI
Training and equipment:
â Implementation of communication strategy including
web site, special events, brochures See below for details:
â Training in fundraising, grant writing, asset
management, FM
â 1 external trip for fundraising
â Implementation of fundraising strategy
â 1 vehicle
Foundation Foundation Foundation Foundation national and Fundraising Flow of funds for PAs
training 100 equipment instruments including international (see tables below)
communication outreach and partnerships
2011: Accountant trained 2011: 1 car, 1 2011: Strategic plan 2010- 2010: Identification public 2011: Finance 2014: Financial support for Taï
in software use; training photocopier & 2013 finalized & approved; and private partners at proposal developed operational cost
plan developed; Director office Investment strategy for national and regional level for Taï Park with (US$380,000)\. 101
trained in fundraising, furniture\. UEMOA finalized; Fund 2011: 6 consultations with KFW\. Financial
business plan 2013: 1 laser raising strategy under Government & developing agreement signed Agreement signed with OIPR for
development printer, office development; webpage partners; 1 Board meeting\. with KFW\. CNP operational costs
2012: Director trained in furniture\. developed\. Workshop with Critical Mobilized 17,5 (US$150,000), from 12/14 to
business communication 2013: Production of a movie Ecosystem Partnership Fund millions FCFA from 02/15 (to cover community
and private sector (2 and communication support; (CEPF)\. UICN for engagement measures, awareness
sessions)\. investment strategy modified; Member of Conservation management plan\. raising, capacity building for
2013: 2 training sessions 2014: Strategic plan up-dated; Finance Alliance (FCFA)\. 2013: Preparation of OIPR community liaison staff)\.
in Senegal & update of communication plan Partnership established with financial convention
Madagascar; training in and implementation\. 10 foundations (African with AFD for 3
English; mission to Paris Environmental Fund parks including
and London (FPRCI UK)\. Committee)\. PNC\.
2014: Training in audit, Regular participation in 2014: project
outreach/event meetings of the National proposal for Debt
organization and Budget Committee\. swap agreement with
extractive industries\. 2013: Participation in general Germany (â¬10
assembly meeting of CAFÃ million) developed\.
100 Parallel and cofunding training: GoCI supported training on institutional communication and fundraising and on accountability and financial management; RedLaC supported training on
communication and environmental marketing, fundraising strategies, governance for environmental funds and extractive industries; IUCN supported training on financial management and
disbursement\.
101 Planned activities to be supported: border maintenance, maintenance of buildings, patrolling, awareness raising, operational support to DZSO\.
31
network (Madagascar); Fund
raising meeting with private
sector; 3 Board meetings, 1
General Assembly meeting\.
2014: Convention with RTI
signed\.
Participation in World Park
Congress (Sydney) and
General Assembly CAFE
network\.
Private sector events
organized (petit dejeuner de
la Foundation)\.
Table 2: FPRCI fundraising results at project closure (12/31/2014)
Year Project/Sinking funds (US$) Endowment funds (US$) Donors Comments
2009 WWF International Endowment for Tai National Park
3,112,000
2012 5,400,000 7,064,000 Germany Debt conversion program (Tai National Park)
2012 6,000,000 France C2D 1st tranche
2013 60,000 GEF/UNEP Preparation funds for Banco National Park
2014 3,500,000 9,500,000 Germany Debt conversion (Comoé National Park)
2014 6,560,000 KfW Endowment Tai-Sapo
Total 14,960,000 26,236,000
Total 41,196,000
Table 3: FPRCI Portfolio (12/31/2014)
FPRCI portfolio size: US$35\.2 million
Capital investment US$13\.154 million
Portfolio performance 9\.30 %
32
Table 4: Governmental counterpart contribution to FPRCI
Planned Disbursed to FPRCI Comment
2010 US$318,000 US$240,000 (75%)
2011 US$150,000 US$150,000 (100%)
2012 US$170,000 US$170,000 (100%)
2013 US$340,000 US$340,000 (100%) Delayed due to budget vote delay\.
2014 US$80,000 US$80,000 (100%
Total US$1,058,000 US$980,000 (93%)
Table 5: Budget execution of counterpart funding to OIPR (in FCFA) by December 31, 2014 excluding salaries
Category/Year 2010 2011 2012 2013 2014 TOTAL
Notified budget 192 321 270 88 829 275 100 794 722 204 083 000 46 200 000 632 228 267
Budget transferred 144 240 953 88 829 275 100 794 722 204 083 000 46 200 000 584 147 950
Execution rate 75% 100% 100% 100% 100% 92,38%
33
Component 2: Management Planning and Implementation for the Comoé National Park
Planned (PAD) Actual Comments
Sub-component 2\.1\. Updating the Comoé Park Management Plan
Up-dated 2001 CNP Mgmt\. Plan inclusive of 2011 â 2014: Management Plan up-dated and presented in 2010: Cofinancing GTZ for 3 preparatory
community role; up-dated fauna data, action-plan, participatory workshops in 2013 and 2014\. Final validation by OIPR studies in CNP: Aerial inventory, socio-
maps, annual work plan including support to a Board in December 2014\. economic study, infrastructure assessment
consultant inside and outside the park (estimated at 1\.4
The new management plan objective is: The PNC management billions FCFA)
system reverses the trend of natural resources degradation\.
Result 1: PNC resources are protected and managed rationally\. Cofinancing IUCN for management plan
Indicators: (i) The encounter rate of selected indicator species up-date: US$41,371\.
(hartebeest, Buffalo, Kob, Elephant, Antelope) increases by 5% from
year 3 (2017)\. (ii) Illegal activity indices decrease by at least 25%
per year from year 2 (2016)\. (iii) The distance leakage of a sample of
indicator species is reduced by at least 50% in year 3 (2017)\. (iv) The
decline in the encounter rate of domestic animals is 50% annually
Result 2: PNC management is supported by local stakeholders\.
Indicators: (i) 75% reduction in conflicts recorded between OIPR and
actors from the periphery of Year 3 (2017); (ii) 50% regression of
offenses from the 3rd year (2017); (iii) 20% of communities integrate
rational management of natural resources issues each year\.
Result 3: The ecological monitoring and research is used for PNC
management decisions\. Indicators: (i) 75% of the recommendations
of the annual reports on the state of the environment are taken into
account in the management of the park\.
Result 4: PNC funding available\. Indicators: (i) 50% of the
operational needs for the PNC management are provided by the
FPRCI and other sources of funding from Year 5 (2019)
Result 5: The PNC infrastructure is rehabilitated and improved\.
Indicators: (i) At least 50% of the tracks and buildings being
rehabilitated or constructed are for each update
- A new text redefining the boundaries of the PNC is taken by the
Government in the 2016 maturity (Year 2)
Result 6: PNC is managed efficiently\. Indicators: (i) The
implementation rate is at least 40% by the end of Year 5 (end of
2019)\. (ii) The Management plan is updated at the end of Year 5
(2019)\. (iii) At least one corridor is established between the PNC and
34
other protected areas in the region\. (iv) The PNC is removed from the
list of World Heritage Sites in Danger
Sub-component 2\.2\. Implementation of the Management Plan
(i) Surveillance Activities: design and implement a 2011: 29 OIPR staff dispatched to CNP (total 77)
surveillance strategy for the North-East sector, 2011-2012: New surveillance strategy developed and finalized
bonus for informants (tracking with GPS, mapping)
2013: Up-date of surveillance strategy
(ii) Support to minor infrastructure-repair of pre- 2011: Rehabilitation of 166 km park trails, 30 km boundaries (6 At completion:
existing roads, repair of one or two pre-existing conventions with NGOs and local communities); rehabilitation of one â Rehabilitation of 5 OIPR park
park office for OIPR field staff; anti-bush fire office building in Bondoukou buildings at Gawi and 1 building at
campaigns, improved signage; habitat 2012: 13 agreements/contracts with local NGOs for maintenance of Koutouba;
rehabilitation and land management and 269 km de trails and 128 km boundaries\. â Rehabilitation of 5 OIPR offices
surveillance contracts with communities 1 participatory planning workshop including all stakeholders (NGOs, and housing buildings (3 at Bouna
local authorities, communities, local Government) to identify role of HQ and 2 at Dabakala;
communities\. â Rehabilitation of 90 km of road
2013: Rehabilitation of 6 buildings and 2 houses in Dabakala; tracks within the CNP (Bania â
rehabilitation of 90 km park roads (Bania-Gawi)\. Rehabilitation of 6 Gawi);
park information signs\. Installment of 150 demarcation posts\. â Rehabilitation of a crossing-point
Rehabilitation of a crossing point (Gawi)\. Maintenance of 269 km of within the CNP;
park trails\. â Manual maintenance of 557 km of
2014: Maintenance of 238 km park trails\. Opening of 141 km of park road tracks within the CNP and 30
boundary trails (west side)\. km surrounding the CNP
Cofinancing UNESCO 11,5 millions FCFA for 13 signs and 144 â Implantation of 6 information
demarcation posts\. panels and 150 demarcation posts
Consultation with local communities to review and agree on
â Relocation of DZNE offices to
boundaries including local authorities\.
Bouna (06/14)
(iii) Comoé Park Monitoring Activities 2010: 1 aerial survey (funded by GTZ) At completion: 272 patrols executed (27 990
(biomonitoring, poacher activity, surveillance 2012: Implementation of the new surveillance strategy: man days) resulting in arrest of 356
monitoring, METT) 58 patrol missions (32 OIPR / 26 OTS ; 9424 man days) ; poachers, confiscation of 69 guns and 1824
Results: 113 people arrested (47 poachers, 45 transhumance herders, munitions of caliber 12\.
8 gold miners, of which 3 poachers were convicted\. Penalties for gold
miners: 9,6 millions FCFA\. 37 guns, 1486 cartridges and 170
carcasses confiscated\.
Implementation of ecological monitoring program: 5 missions;
Training and equipment for 18 community members and 8 OIPR staff
to participate in pedestrian survey; 1 pedestrian survey\. 1 contract
with local NGO to train villagers from 19 communities on bush fire
management\.
35
2013: 81 regular patrols (8667 man days) and 21 mobile patrols
(4806 man/days) of which 1869 man/days served by community
members\.
Results: 64 people arrested (poaching, illegal fishing, grazing and
gold mining)\. 16 guns, 105 cartridges, 6 bikes, 2 boats, 2 carcasses,
23 fishing nets confiscated\. Contract signed with the CI Army and
OIPR to carry out joint patrols\.
Workshop on pedestrian survey\.
2014: 1 aerial survey and validation workshop\.
135 patrols (9899 man days of which 2243 community man days)\.
Additional 60 temporary staff from the demobilization disarming
reintegration program were dispatched to CNP from 04 to 12 / 2014\.
Results: 174 people arrested (79 gold miners)\.
Discussion about a collaboration framework with Research Station
started\.
36
The following charts and tables present findings from the aerial surveys in 2010 and 2014:
Chart 2: Spatial distribution of livestock identified during aerial survey in 2010 (left) and 2014 (right)
37
Chart 3: Indication of human activities observed during aerial surveys in 2010 and 2014
38
Table 6: Signs of human activities observed during aerial surveys in 2014 compared to 2010
Signs of human activities in 2014 Signs of human activities in 2010
Type of Observation Number Number observed in Total number Encounter rate CNP Encounter rate Encounter rate CNP Encounter rate
observation observed in CNP GEPRENAF 102 area observed (#/100km) GEPRENAF (#/100km) (#/100km) GEPRENAF (#/100km)
Human Foot trails 155 34 189 7\.50 3\.90 29\.0 43\.1
activities Dirt roads 88 148 236 4\.20 16\.8 06\.7 23\.0
and tracks
Agricultural 25 255 280 1\.20 2\.90 04\.2 4\.2
fields
Bush fires 13 14 27 0\.60 1\.60 0\.60 1\.0
Other trails 10 03 13 0\.50 0\.30 0\.00 0\.00
Camps 07 83 90 0\.30 9\.40 0\.90 31\.90
Water 05 0 05 0\.20 0 0\.20 0\.2
points
Other signs 03 08 11 0\.10 0\.90 1\.40 1\.50
of human
activities
People 04 23 27 0\.20 2\.60 1\.90 12\.90
Villages 03 31 34 0\.10 3\.50 0\.10 1\.90
Trees cut 0 03 03 0 0\.30 0\.30 1\.10
Livestock 0 02 02 0 0\.20 0\.30 0\.90
holding area
Total 313 604 917 15\.1 68\.70 45\.7 175\.80
Domestic Beef 64 1191 1255 7\.30 139\.5 279\.6 184,50
animals Sheep 0 123 123 0 14\.0 0\.00 20\.60
Others 0 19 19 0 2\.20 0\.00 0\.00
Total 64 1333 1397 3\.1 151\.7 280\.1 210\.10
102 GEPRENAF activities are not considered as illegal as the area is not placed under restricted resource use\.
39
Component 3: Support to Park Communities
The map below shows the location of fringe communities surrounding the CNP and adjacent protected areas\.
Chart 4: Map of fringe communities (2015)
40
Planned (PAD) Actual Comments
Community Awareness Activities: up-grading and 2010: IEC campaign Bouna & Nassian; At completion:
expanding MAB radio network in Nassian; public Exchange visit AVCD Nassian; â 72 villages reached by
awareness campaigns; specific training on 2011: 3 IEC missions in Bouna & Nassian\. awareness campaign
biomonitoring Study on radio coverage of CNP\. â 3 contracts with local radio
3 conventions with local radios signed (Bouna, Nassian, Dakabala) stations established (Bouna,
2013: Radio programs\. Cofinancing MAB/UNESCO for radio support\. Nassian, Dabakala)
IEC campaigns (1000 village participants, local authorities, school, â Communication material
covered by radio)\. produced and distributed (T-
Outreach event at ANADER 20-year celebration\. shirts, calendar and brochures)
2014: First CGL meeting covered by radio, TV and internet\. Evaluation survey showed:
Awareness raising on gold mining threats to CNP in Dabakala (12 62 % of fringe communities have a radio
villages)\. 29 village meetings with AVCDs, local authorities, NGOs 39 % received messages
and private sector on tourism and border issues\. 90 % feel they are associated in planning
3 conventions with local radio renewed\. and management of CNP
86 % were reached by communication
80 % of leaders confirm a behavioral
change 103
Training for project partners (AVCDs, communities, 2010: Study on community training needs
local NGOs) on project, poaching and other threats, 2011: Contracting local NGO for training of villagers in bush fire
importance of CNP, governance issues, training of prevention: 70 community members from 19 targeted villages trained
park communities in bush fire prevention\.
2013: 24 AVCDs in the 5 CNP sectors sensitized and training provided
by local NGOs\.
Social assessment of park fringe communities 2010: GTZ funded baseline assessment\.
No further assessment except final evaluation rapid survey in selected
villages\.
Establishment of local management committee Land management contract signed between OIPR and Regional
comprising community associations, local economic Council of Bounkani\.
2012: CGL established\. 58 meetings hold\.
103 Study: Collecte des données du PARC-CI relatives a la proportion des communautés riveraines impliquées de manière effective dans la préparation et lâimplémentation du plan de gestion du
Parc national de la Comoé; la proportion de populations riveraines du PNC recevant les émissions radios des activités du projet par Charles KAPIE\. G, Dec\. 2014
41
operators, prefectures, general and municipal 2014: 3 CGL meetings\. Meetings with livestock holders and
councils and NGOs\. Government to address transhumance threat\. Participation of DZNE in
local committee to address gold mining threat\.
Establishment of technical team supporting 2012: 10 AVCDs established (Bouna, Nassian, Tehini)\.
PNGTER livelihood activities: Create and education 2014: 20 AVCD established in targeted villages\.
of AVCDs in environmental awareness, NRM and 3 microprojects developed and implemented by AVCDs each funded in
conservation the amount of US$22 500 supported by NGOs and ANADER: Yalo
(onions - 5 tons produced), Kakpin (bee-keeping â 55 kg of honey
produced) and Toungboyaga (poultry)
Table 7: Presentation of three microprojects piloted during PARC-CI
Location Village Type of Outputs Number of beneficiaries Lessons learned
residents microproject
(number)
AVCD Yalo 220 Onion production 2 ha of onion fields; 50 women (Dawori group)
5 tons of onions harvested;
Revenues used for school
canteen;
Increase of women savings\.
AVCD 479 Bee-keeping for 25 bee-hives (of which 20 11 young community members Need to prepare better full cycle
Kakpin honey production type âKenyaâ and 5 type from training to commercialization
âLangstropâ;
11 young residents trained to
become bee-keeper
AVCD 289 Chicken 420 chicks; chicken feed, barn 7 young community members Timing, transport to be carefully
Toungo- constructed\. previously trained by another project planned to avoid loss and lack of
Yaga in traditional poultry market\.
Total 988 68
42
Component 4: Project Management and Monitoring for results
Planned (PAD) Actual Comments
Project coordination and financial management capacity: 1 project 2010: 1 project manager, 1 procurement specialist, 2 accountants recruited\.
manager, 1 procurement specialist and 2 accountants Project launching workshop (02/2010)\.
Development of project documents: Procurement plan, implementation manual
including administrative, procurement and financial management\.
Signing of bylaw 00588/MINEEF/MEF on May 6, 2010 related to institutional
framework for PARC-CI management\.
22 coordination meetings including 8 with TTL at WB office in Abidjan\.
Project management instruments developed (workplan, reporting schedule, mission
schedule etc\.)\.
3 field missions\.
1 annual report\. 1 audit report\. IFRs\.
2011: 1 annual report\. 1 audit report\. IFRs\.
2012: 1 annual report\. 1 audit report\. IFRs\.
2013: 1 annual report\. 1 audit report\. IFRs\.
2014: 1 annual report\. 1 audit report\. IFRs\. Completion report (external evaluation
and OIPR/FPRCI report as well as community survey)\.
43
Annex 3\. Economic and Financial Analysis
At appraisal, no real economic and financial analysis was carried out\. Protected areas are
usually considered a net cost to local and national economies, as they do not generate
significant revenue, in contrast to landscapes with for example agriculture, logging or
mining\. 104 The PAD refers to the lack of viable tourism potential for the CNP at this early stage
in a post-conflict environment but valued the rehabilitation efforts as a first step in the process\.
The financial analysis assessed roughly the current funding situation to the PA system in Côte
dâIvoire including the Governmentâs contribution to OIPR and FPRCI (US$1\.5 million per
year) and the initial endowment of the FPRCI expected to generate about US$100,000 per year
assuming a 5 percent return rate\. The PARC-CIâs assumption was to support the Government
with awareness building and active lobbying of decision makers for greater Government
budgetary allocation by year 5 to ensure an increase in staffing for the parks and reserves and
to support FPRCI to fundraise more funding particularly with the private sector\.
ICR assessment: At closure, tourism is still far from being a viable option for the
CNP\. 105 Acknowledging the post-conflict situation and limited funds, an institutional
assessment of the costs (and future benefits) of OIPRs protected area network including Tai
National Park and CNP was not a priority\. The ICR lacked data to assess the CNP management
effectiveness improvements achieved during project implementation (i\.e\. cost-efficient
management options for law enforcement, rehabilitation and community engagement)
compared to a comparable protected area in Africa\. A counterfactual analysis (situation in the
CNP in absence of a project intervention) was not considered as none of the other national
parks in Côte dâIvoire supported such an assessment\.
The project had clearly a catalytic role and contributed to FPRCIs capacity to increase the
financial sustainability of the CNP and the entire PA network\.
104 Source: Allard Blom âAn estimate of the costs of an effective system of protected areas in the Niger Delta â Congo Basin
Forest Regionâ in Biodiversity and Conservation 13: 2661-1678, 2004\.
105 The only remaining tourism accommodation in the vicinity of the CNP is the Kafolo Safari lodge built in 1974 in the Kong
department in the north (40 rooms, 80 beds)\. The operator is part of the local management committee\. The only high-standard
hotel in the south of the Park closed in 1992\. Between 1993 and 2002, tourism existed on a very small and steadily decreasing
scale of about 100 â 500 tourists per year (source: Frauke Fischer âStatus of CNP and the effects of warâ)
44
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Nyaneba E\. Nkrumah Sr\. Natural Resources Mgmt\. Spec\. GENDR TTL
Peter J\. Kristensen Sector Leader Environment GENDR Team member
Emmanuel Y\. Nikiema Sr\. Natural Resources Mgmt\. Spec\. GENDR Team member
Frederick Addisson Institution/Community Specialist Consultant Team member
Salimata D\. Follea Natural Resources Mgmt\. Spec\. GENDR Operations Specialist
Wolfgang M\.T\. Chadap Finance Officer LOAFC Disbursement
Bella Lelouma Diallo Sr\. Financial Management Specialist GGODR Financial Management
Sameena Dost Country Lawyer/Senior Counsel LEGAF Legal
Maurice Adoni Procurement Specialist AFTPC Procurement
Nina Chee/Africa Olojoba Environmental Safeguards Specialist ASPEN Safeguards
Cheick Sagna Social Specialist SFTEG Social Safeguards
Virginie Vaselopulos Program Assistant AFTEN Team support
Ernestina Aboah-Ndow Program Assistant AFCF2 Team support
Gayatri Kanungo Consultant AFTEN ENR specialist
Frederick Addison Consultant Community specialist
Supervision/ICR
Maurice Adoni Senior Procurement Specialist GGODR Procurement
Kignopron Coulibaly Temporary GENDR Team support
Sr\. Financial Mangement
Saidou Diop GGODR Financial Management
Specialist
Salimata D\. Follea Natural Resources Mgmt\. Spec\. GENDR Team member
Assiata Houedanou Soro Sr Program Asssistant AFCF2 Team support
Jean-Michel G\. Pavy Senior Environmental Specialist GENDR Team member
Douglas J\. Graham Senior Environmental Specialist GENDR TTL
Africa Eshogba Olojoba Senior Environmental Specialist GENDR TTL
Virginie A\. Vaselopulos Senior Program Assistant GENDR Team support
Assiata Houedanou Soro Sr\. Program Assistant AFCF2 Team support
Nyaneba E\. Nkrumah Sr\. Natural Resources mgmt\. Spec\. GENDR TTL
Akoua Gertrude Tah ET Temporary AFCF2 Team support
Abdoulaye Gadiere ET Consultant GENDR Team member
Marie Bernadette Darang Information Assistant AFTN1 Team support
Kishor Uprety Senior Counsel LEGAM Legal
Barabara Nalugo Team Assistant AFMUG Team support
Oumar Toure Consultant AFTMW Team member
Senior Social Development
Lucienne M\. MâBaipor AFTCS Social Safeguards
Specialist
Mariame Bamba Team Assistant AFCF2 Team support
Gabriele Rechbauer Consultant GENDR ICR author
45
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY08 6\.30 75\.05
FY09 28\.17 13\.88
Total: 34\.47 88\.93
Supervision/ICR
FY10 9\.23 16\.96
FY11 8\.55 9\.07
FY12 8\.52 10\.95
FY13 7\.92 8\.72
FY14 6\.84 3\.60
Total: 41\.06 43\.90
46
Annex 5\. Beneficiary Survey Results
The CNP is surrounded by villages with estimated 177,000 residents focusing their economic
activities on small-scale (0\.77 to 2\.6 hectares) agriculture, mainly for yam and cashew\.
Livestock holding and herding are not suitable for the region due to the climate and tse-tse fly
presence\. However, the area is subject to transhumance (North to South)\. There are 13 ethnical
groups with the majority being the Lobi\. Two beneficiary surveys were conducted as part of
the projectâs evaluation\. As part of the external project evaluation assignment, the consultant
visited 15 village centers in three of the five CNP sectors (Bouna, Nassian and Tehini) to carry
out a beneficiary survey with 240 community members\. Further consultations included
representatives from local Government, traditional authorities, NGOs, local radios and
AVCDs\. 106
The second survey focused on awareness raising results (evaluation of two project indicators)
and carried out interviews of 501 community members and 79 representatives from social
groups including local radio and NGOs of all five CNP sectors (Nassian, Bouna, Tehini, Kong
and Dabakala)\. 107
Below is a summary of key points and selected tables from both studies:
Strong points and achievements:
1\. Partnerships with local stakeholders were designed as service provider contracts\.
2\. Selection of local NGOs helped to achieve community engagement and support instead
of external consultants and was complementary to other local development issues such
as Ebola, aids etc\.
3\. Community employment for reopening and maintenance of park tracks generated
significant revenues for villagers and helped to attract previous âillegalâ park users for
conservation related activities\. Revenues were often used to pay school fees\.
4\. Community members perceive OIPR now more as a support structure against previous
âforest guardsâ which fulfilled basically a police function\. Villagers have expressed
their motivation and cooperation willingness to support CNP management\.
5\. Establishment of AVCDs, as the entry point to gain access to microprojects, filled an
institutional gap at local level\.
6\. Strong participation and support from local government and traditional authorities in
project implementation was conducive to project results\.
7\. Ninety percent of community members interviewed expressed their involvement in
CNP planning and management\.
8\. Eighty-seven percent of community members interviewed claim to have been
sensitized by the awareness raising measures\. Eighty percent des traditional leaders
believe that a behavioral change has taken place\.
106 Evaluation Finale du Proejct PARC-CI, Rapport Principal, Consultant Yves Joel Dirabou, Janvier 2015
107 Collecte des donnees du PARC-CI relative a la proportion des communautes riveraines impliquees de maniere effective
dans la preparation et lâimplementation du plan de gestion du PNC et la propotion de populations riveraines du PNC recevant
les emissions radio des activites du projet, Charles G\. Kapie, Decembre 2014
47
Table 8: Results from EOP survey on awareness raising campaign (translated)
Responses
Questions Yes No No opinion
# % # % # % TOTAL
Is it necessary to forbid access to CNP? 201 83,8% 37 15,4% 2 0,8% 240
Is it necessary to patrol CNP? 204 85,0% 35 14,6% 1 0,4% 240
Are you willing to provide information to protect CN? 105 43,8% 124 51,7% 11 4,6% 240
Are local people sufficient aware of CNP? 189 78,8% 48 20,0% 3 1,3% 240
Do you know the boundaries of the CN? 104 43,3% 135 56,3% 1 0,4% 240
Do you think that poaching was reduced? 198 82,5% 38 15,8% 4 1,7% 240
Source: Final evaluation report: Yves Joel Dirabou, January 2015
Table 9: Survey results on perception of CNP (translated)
Questions Responses
Communities Government No opinion
# % # % # % TOTAL
To whom belongs the CNP? 152 63,3% 78 32,5% 10 4,2% 240
Who should protect the CNP? 112 46,7% 124 51,7% 4 1,7% 240
Source: Final evaluation report: Yves Joel Dirabou, January 2015
Table 10: Comparison of socio-economic baseline study with EOP survey (translated)
GIZ study 2010: 2014 EOP Survey: Observations
Constraints Assessment of constraints
Project impact and Ebola
Extreme level of poaching Limited poaching
consequences
Timber exploitation Less frequent timber extraction\.
Agricultural encroachment Less agricultural encroachment Some hidden places exist\.
Dumping of waste and human
Still the same
excrements
Transhumance High reduction Herders move to Ghana
Lack of governmental control Strong presence by OIPR
Weak presence and staffing of OIPR 100% of units deployed in the field
Weak conscience of institutional All institutional actors are sensitized and
actors engaged
Weak demarcation of boundaries Still challenging
Feeling of displacement Not an issue anymore Good collaboration with OIPR
High level of poverty Still the same
Traditional practice of bush fires Improved
Weaker points and gaps:
1\. NGOs stated the need to participate more in activity planning (location and timing)\.
2\. Unclear legal status of local radios delayed signing of contracts\.
3\. Lack of opportunity for local radios to develop new conservation talks as OIPR
predefined and delivered radio messages to air\.
4\. More frequent consultations were suggested by local Government structures to ensure
follow-up on agreed actions\.
5\. Lack of funds/insufficient funds for mobility support for traditional authorities and
awareness raising sessions to cover adequately project intervention zone\.
6\. Only thirty-nine percent of interviewed community members received radio talks
funded by the project\.
48
Summary of ICR mission site visits in Kakpin and Toungbo-yaga: The beneficiaries
interviewed by the team noted they were satisfied with the support from OIPR, particularly
from the community engagement officer\.
In the case of Kakpin, the young beekeepers expressed their satisfaction with the training,
equipment and experience received\. The community members explained that honey is the
second commodity after cashew and on high-demand\. Previously, villagers went into the park
and gathered honey by burning\. The priority issue to successfully continue this activity is to
connect the product to the markets as the rural roads in the area are in bad condition and the
village is very remote\. As of now, the honey bottled is not yet commercialized\.
In the case of Toungbo-yaga, (construction of small barn, purchase of chicks, transport, animal
feed) the results are mixed due to delays with delivery of chicks missing the core festive season
with high demand\. In the future, the technical support from ANADER needs to be well
coordinated by OIPR to ensure correct planning and execution of activities\.
49
Annex 6\. Summary of borrowerâs ICR and/or Comments on Draft ICR
The following completion report summary was submitted by OIPR in December 2014\.
1\. Description et démarrage du projet
1\.1 Historique
-Contexte politique et cadre institutionnel
Le Parc national de la Comoé (PNC) sâétend sur une superficie de 1\.149\.150 hectares dâun seul
tenant au nord-est de la Côte dâIvoire, entre les latitudes 8°30 â 9°37 Nord et les longitudes
3°07 â 4°26 Ouest\. Site du Patrimoine mondial et formant, avec sa zone périphérique, une
réserve de biosphère, il se trouve dans la zone de transition entre la savane soudanienne et les
formations forestières du domaine guinéen\. Cette situation est à lâorigine de la variété de ses
paysages et de sa grande diversité biologique\. Il est lâun des trois maillons essentiels de la
« diagonale écologique » de la Côte dâIvoire et offre, sur le plan touristique, les meilleures
perspectives pour la vision de la grande faune\.
Le contexte du projet est marqué par une volonté politique des autorités de la Côte dâIvoire de
mettre en route la démocratie, entachée par une crise militaro-politique et un engagement de la
communauté internationale et des partenaires au développement dâassister le pays\. Dans ce cadre,
le FEM a convenu avec le Gouvernement ivoirien de se focaliser sur la relance de la gestion
durable du Parc national de la Comoé, compte tenu de lâétat de braconnage préoccupant dont ce
parc fait lâobjet\. Cet appui se fonde aussi sur le fait que dâimportants efforts ont été consentis par
le pays dans la lutte contre lâérosion de la diversité biologique à travers lâadoption de la loi n°
2002-102 du 11 février 2002 relative à la création, à la gestion et au financement des parcs
nationaux et réserves, la création de lâOffice Ivoirien des Parcs et Réserves et de la Fondation
pour les Parcs et Réserves\.
Le projet a été développé dans une période dâinstabilité marquée par des tensions entre les
différentes forces politiques du pays et une transition politique difficile à la suite de la rébellion
armée de 2002 à 2010\. Durant cette période, lâappareil d'Etat a été fortement fragilisé, la
cohésion sociale mise à mal et les outils de production économique fortement perturbés\. Les
élections présidentielles qui ont eu lieu à la fin de l'année 2010 ont entrainé un véritable chaos
politique, économique et occasionné de nombreux morts dans un conflit armé pour la possession
du pouvoir\.
Depuis avril 2011, le pays a fortement évolué vers une situation de retour à un fonctionnement
normal\. Cette normalisation politique se poursuit même si le double défi de la réconciliation
nationale et de la cohésion sociale reste dans une certaine mesure à relever\.
Dans cette perspective, le Gouvernement a procédé à lâactualisation du plan national de
développement (PND), dâun coût global d'environ 11\.000 Milliards de Francs FCFA, qui
retrace les axes majeurs dâintervention sur la période 2012-2015 dans lâoptique de faire de la
Côte dâIvoire un pays émergent à lâhorizon 2020\.
-Situation économique et sociale
Après un déclin catastrophique, lâéconomie ivoirienne sâest rapidement redressée dès la fin de
la crise post-électorale (avril 2011), grâce à la normalisation de la situation sécuritaire et à la
reprise des exportations et de lâaide internationale\. La récession a ainsi pu être limitée à 4,7%
en 2011 et le pays poursuit sa reprise avec une croissance de 8,8% en 2013 contre 9,8% en
2012\. La croissance devrait se poursuivre à un taux moyen de 9% en 2014 et 2015, grâce à la
poursuite des réformes sociales et lâamélioration du climat des affaires\. Lâactivité économique
est portée par les investissements réalisés dans les infrastructures de transport et par le secteur
des télécommunications avec lâattribution de licences de troisième génération\.
Malgré ces bonnes perspectives, des défis importants sont à relever\. La première priorité
consiste à rendre la croissance durable et inclusive, pour quâelle réponde aux besoins pressants
dâune population jeune en quête dâemploi\. La compétitivité du pays reste également à améliorer,
50
notamment dans les domaines douanier, financier, agricole, du transport et du renforcement
des capacités de la main-dâÅuvre nationale\.
1\.2 Objectifs du projet
Le PARC-CI a visé à réaliser deux des trois objectifs de la Note de stratégie intérimaire de la
Banque mondiale (FY 08-09) en appui à la reprise dâurgence post-conflit de la Côte dâIvoire :
(a) la composante 3, qui appuie les moyens dâexistence et les services de base dans les
communautés riveraines des parcs affectées par la crise, est financée par le FEM ; et (b) le
projet, à travers la composante 1, appuie également le développement des capacités et le
renforcement de lâOffice ivoirien des parcs et réserves et la Fondation, qui respectivement
gère et finance les parcs nationaux et réserves en Côte dâIvoire\.
-Objectifs du projet
Lâobjectif de développement et environnemental global du projet est de renforcer la gestion
durable de la faune et de lâhabitat du Parc national de Comoé (PNC)\. LâObjectif du projet sera
atteint par (a) le renforcement de la capacité de lâOffice Ivoirien des Parcs et Réserves à gérer
les parcs ; (b) lâélaboration et la mise en Åuvre dâun plan de gestion participatif pour le PNC ;
et (c) lâamélioration de lâéducation environnementale des communautés du PNC pour leur
permettre de comprendre les préoccupations relatives à la biodiversité et de participer à la
mise en Åuvre du plan de gestion\.
Le projet vise spécifiquement à inverser la spirale de dégradation de la diversité biologique
du Parc national de la Comoé par la mise en place dâun système de gestion modèle\.
1\.3 Composantes du projet
Prévu pour une durée de quatre (4) ans (2010-2013), le PARC-CI a été prorogé dâun an, ainsi
le projet a été clôturé à la fin de 2014\. Il sâarticule en quatre composantes :
Composante 1 : Renforcement institutionnel, financier et technique pour la gestion et la
supervision des aires protégées
-Sous-composante 1\.1 : Renforcement des capacités de lâOffice Ivoirien des Parcs et
Réserves (OIPR) est mise en Åuvre au Siège de lâOIPR à Abidjan et au niveau de la
Direction de Zone Nord-est (DZNE) Ã Bouna
Le projet apporte un appui au renforcement des capacités (formation, équipements) au profit
du personnel de lâOIPR chargé du Parc national de Comoé, du personnel et des spécialistes
dâapprovisionnement et spécialistes financiers à Abidjan\. En termes de formation, un accent
est mis sur le renforcement de lâexpertise technique et scientifique de lâOIPR, notamment sur
les méthodes de conservation participative\.
-Sous-composante 1\.2 : Appui à la mise en place et au fonctionnement de la Fondation des
Parcs et Réserves de la Côte dâIvoire (FPRCI)\.
Le projet finance les activités de renforcement des capacités susceptibles de renforcer la
capacité de la Fondation à mobiliser et à gérer un (des) fonds de dotation/dâamortissement\.
Composante 2 : Planification et mise en Åuvre de la gestion pour le Parc national de la
Comoé
-Sous-composante 2\.1 : Actualisation du Plan de gestion du Parc national de Comoé
Cette sous-composante porte sur la mise à jour du plan dâaménagement et de gestion du Parc
national de Comoé de 2001\.
-Sous-composante 2\.2 : Mise en Åuvre du Plan de gestion
La mise en Åuvre du Plan de gestion concerne lâexécution des fonctions de gestion du parc
tels que lâaménagement, la surveillance, le suivi-écologique\.
-Sous-composante 2\.3 : Suivi de lâimpact de la Biodiversité
Un système de suivi biologique adapté à lâécosystème de la savane de lâimpact, basé sur un
inventaire aérien et pédestre, devra être mis en place afin de disposer de données sur les
51
activités humaines illégales et les ressources animales\.
Composante 3 : Appui aux populations riveraines du parc
Cette composante apporte un appui aux communautés riveraines du parc, par des campagnes
de sensibilisation, la formation sur des thématiques en liaison avec la biodiversité et le
développement de microprojets en vue de leur permettre de participer activement à la gestion
du parc\.
Composante 4 : Gestion du Projet et suivi des résultats
Cette composante vise à assurer la bonne gestion du projet à travers une organisation et la mise
en place dâun système dâinformation efficace\. Elle porte sur lâappui à la gestion du projet et la
réalisation des audits annuels\.
1\.4 Organisation des ministères et autres agences dans la mise en Åuvre du projet\.
Le présent projet met en relation six (6) acteurs principaux que sont :
- Le promoteur (Ministère de lâEnvironnement, de la Salubrité Urbaine et du Développement
Durable) qui représente les intérêts de lâEtat de Côte dâIvoire, bénéficiaire du financement ;
- Le Ministère de lâEconomie et des Finances qui joue le rôle dâagent fiduciaire du projet ;
- Les Services déconcentrés des Ministères de lâIntérieur, de la Justice, de lâAgriculture qui
accompagnent le projet à travers les composantes 2 et 3 ;
- lâOffice Ivoirien des Parcs et Réserves (OIPR) qui a la responsabilité de lâexécution technique
des composantes 1(a), 2 et 3 du projet conformément à lâaccord de don ;
- et la Fondation pour les Parcs et Réserves de Côte dâIvoire (FPRCI) : Association dâutilité
publique, elle a la responsabilité de lâexécution technique de la composante 1(b) du projet
conformément à lâaccord de don\.
- le bailleur de fonds (Banque mondiale/ FEM) qui apporte une assistance technique et
financière pour lâatteinte des objectifs assignés au projet\.
2\. Conception, exécution, réalisation et impact du projet
2\.1 Evaluation de la conception du projet
La conception du projet, faite dans la période post-conflit, a procédé dâune approche inclusive
et participative pour lâidentification et lâanalyse des problèmes sectoriels que rencontrent le
secteur des parcs nationaux et réserves de Côte dâIvoire en général et singulièrement le PNC
(braconnage, déficit de financement, non implication des communautés dans les activités de
gestion du parc, etc\.)\. Cette approche sâest traduite par des séances de travail et des
consultations lors de la mission préparatoire de la Banque Mondiale en 2008, durant laquelle
les structures dâexécution (OIPR et FPRCI) ont pu préciser leurs besoins, traduits à travers les
composantes du projet, et apporter des améliorations à lâorientation du projet\. Le projet sâest
aussi adapté aux nouvelles situations offertes par lâamélioration du climat sécuritaire du pays,
en facilitant lâextension de ses actions à lâensemble du parc et de sa périphérie après des
concertations avec les différentes parties prenantes\. Lâidentification dâacteurs locaux et
partenaires du projet a aussi procédé de la même approche participative\. Les missions
conjointes menées sur le terrain lors de sa préparation, ont retenu comme partenaires au projet
certaines ONG locales telles que LUCOFEUBROU et DEPRERENAF\. Ces structures
devraient accompagner certaines actions du projet, notamment la maintenance des
infrastructures (entretien du réseau routier à lâintérieur du parc, des limites et des sentiers), la
gestion de l'habitat (feux précoces dans la savane) et la sensibilisation pour le changement de
comportement des populations à lâégard du parc\. Actuellement, ces ONG ont gagné en
notoriété chacune dans le domaine qui la concerne\. Le cas de lâONG LUCOFEUBROU,
distinguée meilleur comité de lutte contre les feux de brousse par la présidence de la
52
République de Côte dâIvoire le 7 aout 2014, mérite dâêtre cité\. Certains enseignements tirés
de la mise en Åuvre des projets antérieurs financés par des organismes internationaux ont
également été pris en compte dans la conception du projet\. Il sâagit notamment du Programme
sur lâHomme et la Biosphère du PNUD / UNESCO mettant lâaccent sur :
- lâamélioration de la perception du parc à travers la mise en Åuvre de microprojets ;
- la structuration des populations en AVCD comme interface avec les gestionnaires du
parc ;
- lâutilisation des radios de proximité dans la sensibilisation à lâinstar de la radio
Boutourou, autre produit du projet MAB UNESCO\.
Dans le même ordre dâidée, le projet dans sa conception, a proposé que soit capitalisée
lâexpérience acquise du projet pilote Ouest-Africain de gestion participative des ressources
naturelles et de la faune (GEPRENAF), financé également par le FEM\.
Ces bases, qui ont prévalu à la conception du projet, répondent dâune approche cohérente et
pragmatique même si en raison de la situation sécuritaire certaines analyses approfondies au
niveau des acteurs nâont pu être menées\.
2\.2 Evaluation des principaux résultats obtenus dans chacune des composantes du
projet au regard des objectifs convenus
Composante 1 :
Renforcement des capacités de lâOffice Ivoirien des Parcs et Réserves
Le projet a permis de renforcer les capacités de plus de 122 agents de lâOIPR sur environ 25
thématiques en liaison avec la gestion des aires protégées, contre une prévision de 76 agents\.
Il a également permis de doter la Direction de Zone Nord-est de lâOIPR de 10 véhicules 4x4
[dont 7 emportés lors de la crise postélectorale], de 10 motos, et de 2 camions à plateau pour
la surveillance ainsi que dâimportants matériels bureautiques, informatiques et techniques\.
Grâce au Japon, ces équipements ont été renforcés en 2014, de 10 autres véhicules 4x4, 5
motos et de divers autres matériels techniques\.
Appui à la mise en place et au fonctionnement de la Fondation pour les Parcs et Réserves de
la Côte dâIvoire\.
La Fondation a bénéficié, dans le cadre du projet, des 4 formations prévues dans les domaines
de la gestion financière, la communication, la mobilisation de financement, lâutilisation du
logiciel comptable et de lâorganisation évènementielle\. Ces capacités logistiques ont été aussi
renforcées en matériels roulant, informatique et bureautique\.
Le projet a permis de réaliser lâétude sur la clarification du statut fiscal de la Fondation en vue
de proposer un décret relatif à ce nouveau statut fiscal\. Les différentes actions de renforcement
de capacités ont permis à la Fondation dâétablir un partenariat avec 10 Fondations ; elle fait
désormais partie dâun réseau de 11 Fondations africaines liées par un partenariat à travers le
CAFE (Consortium Africain des Fonds environnementaux)\.
Le projet a également permis à la Fondation de se doter dâun plan de communication, dâune
étude sur les perspectives de partenariat avec le secteur privé ainsi que dâun site web\. Divers
outils de gestion, notamment le plan stratégique 2010-2013, les stratégies d'investissement
dans l'espace UEMOA et de mobilisation ont été finalisées et validées par le Conseil
d'Administration\.
Le choix de la Fondation comme canal pour le financement pérenne des parcs nationaux de
Taï et de la Comoé, dans le cadre de la conversion de dette de la République d'Allemagne
ainsi que pour la composante « Préservation des Parcs et Réserves » au titre du C2D
(2014/2015), illustre bien les effets positifs du projet sur cette structure\.
Composante 2 :
Actualisation du Plan de gestion du Parc national de Comoé
53
En prélude à lâactualisation du plan de gestion du parc et à lâappui de lâAllemagne, quatre (4)
études portant sur lâidentification des besoins de formation de la radio Boutourou, lâinventaire
aérien de la faune, le volet socio-économique et lâétat des infrastructures du PNC ont été
financées par la GIZ\.
Ces études ainsi que les consultations menées dans un processus participatif et itératif ont
permis de mettre à jour le plan dâaménagement et de gestion du Parc national de la Comoé
(2015-2024)\.
Mise en Åuvre du Plan de gestion
En application du plan dâaménagement de 2001, plusieurs actions techniques ont été réalisées
par le projet\. Ces actions portent, entre autres, sur la remise en état de 11 bâtiments à usage de
bureau et à usage technique, le reprofilage de 90 km de piste (Bania-Gawi), la remise en état dâun
ouvrage de franchissement, lâentretien manuel de 557 km de piste intérieures et de 30 km de
limites avec le concours des organisations locales et lâimplantation de 6 panneaux dâinformation
et de 150 bornes de délimitation\.
Au terme du projet, il reste à achever le reprofilage de 188 km et lâouverture manuelle de 257
km de limites et pistes intérieures\.
Le projet a permis de doter le parc dâune nouvelle stratégie de surveillance et de réaliser 272
missions de surveillance pour 27\.990 HJ\. Ces opérations de surveillance ont permis
dâappréhender 356 contrevenants dont 78 braconniers, 115 bouviers, 93 orpailleurs et 18
pêcheurs\.
Il convient de relever que la sensibilisation, avec lâaide des autorités administratives, politiques
et coutumières, a été privilégiée par le projet en lieu et place des poursuites judiciaires en vue
de réduire au maximum les impacts sociaux négatifs du projet\. Dans cette optique, seulement
42 contrevenants ont été condamnés dont 21 braconniers, 8 orpailleurs\. Au total, 69 fusils et
1824 munitions de calibre 12 ont été saisis\.
Cette stratégie a fait lâobjet dâune évaluation qui a permis de dégager les mesures correctives
nécessaires\.
Suivi de lâimpact de la Biodiversité
Un contrat a été signé avec la WCF pour la réalisation des opérations de suivi biologique\. Dans
ce cadre, 2 inventaires aériens ont été réalisés en 2010 et en 2014 et un suivi pédestre en 2012\.
Ces inventaires ont permis de disposer de données permettant de dégager des tendances en ce
qui concerne lâévolution des ressources fauniques et des pressions anthropiques\.
Par ailleurs, conformément aux recommandations de la mission de supervision de 2013, une
étude pour la définition d'une méthodologie de suivi biologique adaptée au PNC a été réalisée
du 25 au 31 mai 2014 et validée du 11 au 13 juin 2014\. Des options pour le suivi écologique
plus opérationnel ont été proposées et devront encore faire lâobjet de concertation entre
lâensemble des partenaires techniques pour le suivi des habitats et des populations animales\.
Composante 3 :
Lâun des axes majeurs de cette composante a trait à la formation des communautés riveraines
sur des thématiques environnementales et au financement des projets communautaires ou
générateurs de revenus au profit des riverains afin de développer des alternatives socio-
économiques au profit des communautés riveraines\. Cet axe dâaction, qui devrait être
exécuté par le PNGTER, nâa pu être mis en Åuvre du fait de retrait de ce financement qui
avait suscité beaucoup dâespoir au sein des communautés locales\.
Le projet, Ã travers la campagne dâinformations et de sensibilisation autour du parc et des
séances de travail avec les populations, a permis à lâOIPR de diffuser la législation en matière
de gestion des aires protégées en Côte dâIvoire et de présenter la nouvelle approche de
collaboration avec la population\.
54
Lâappui apporté par le projet en terme de structuration des organisations locales a également
permis à 20 villages centres sur les 25 existants de se doter dâassociations de conservation et
de développement (AVCD) actives pouvant conduire les initiatives de développement de leurs
localités\.
En dépit du retrait des fonds du PNGTER, le projet a pris lâinitiative de financer des
microprojets pilotes dâaviculture, dâapiculture et de maraichers dans 3 villages de la périphérie\.
8 conventions dâentretien du parc avec les associations et les ONG locales ont été signées et
exécutées dans lâoptique de mettre en évidence les retombées positives et profits dont
pourraient bénéficier les populations de lâexistence de ce parc\.
Composante 4 :
Après la mise en place de ses organes (UCP, Cellule dâexécution), le projet a pourvu lâOIPR
dâune cellule de passation de marchés qui reste fonctionnelle\. Le projet a également permis la
mise en place et le fonctionnement du Comité de Gestion Locale du Parc national de la Comoé\.
Le suivi évaluation et les audits financiers annuels ont été régulièrement menés\. 78 marchés
sur 80 prévus ont été réalisés (97%) et les mesures de sauvegarde environnementale et sociale
ont été appliquées\.
Niveau dâatteinte des indicateurs clé du projet
Suite aux recommandations de la mission de revue à mi-parcours, tenue du 08 au 14 décembre
2012, 11 indicateurs clés ont été retenus pour mesurer lâefficacité du projet en lieu et place des
15 indicateurs initiaux\. En fin décembre 2014, les progrès enregistrés se présentent comme suit
:
⫠% de réduction du braconnage : 74% de réalisation contre 60% attendu ;
⫠% de variation du taux de rencontre du principal indicateur des espèces de la faune :
1,41 contre 1,46 attendu, ce qui correspond à un croît moyen annuel de 9% pour les 3 espèces
de bovidé\. La variation du taux de rencontre de chaque espèce se présente comme suit :
Nbre indices Variation
Espèces Croît annuel
2010 2014 (%)
Bubales 24,27 33,95 1,399 8,75%
Buffles 2,7 2,36 -0,87 -3,31%
Cobes de Buffon 2,12 4,91 2,31 23,36%
TOTAL 29,09 41,22 1,41 9,10%
â« % dâagents de lâOIPR intervenant dans le projet ayant reçu au moins une formation au
terme du projet : 100%
Au total, 122 agents de diverses spécialités de lâOIPR ont reçu au-moins une formation sur une
thématique sur une prévision de 76\. Le projet a permis de renforcer les capacités techniques du
personnel au-delà des prévisions créant ainsi un pool de compétences pour la mise en Åuvre
des activités de gestion des parcs nationaux et réserves\.
â« % dâagents spécialisés de lâOIPR formés sur les méthodes participatives de gestion de
parcs nationaux au terme du projet : 92% contre 100% attendu
Au total, 24 agents ont été formés sur les techniques d'animation rurale, lâapproche
participative et lâélaboration des plans de développement locaux sur une prévision de 26\.
⫠Evolution des fonds mobilisés par la Fondation pour les Parcs et Réserves de Côte
dâIvoire : + 100% de fonds mobilisés pour une prévision de 35,8%
Montant mobilisé de 2010 à 2014 : 48,69 millions dont $3\.68 millions (WWF international) en
2010, $14,73 millions (KfW/Allemagne) en 2012, $7,092 millions (C2D/France) en 2013 et
$23,12 millions (Allemagne) en 2014\.
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Valeur du portefeuille : 5,20% de rendement moyen contre 5% attendu\. De 2011 Ã 2014, la
valeur générée par le portefeuille investi est donc de $1 4747 069\. Annuellement, de 2011 Ã
2014, les rendements respectifs de -1\.96% (plus-value générées : -$66 176), 7\.26% ($274 859),
6\.72% ($414 750) et de 8\.61% ($843 783) ont été réalisés\.
⫠Evolution des indices de présence des animaux domestiques dans le Parc national de
la Comoé (PNC) : 98,9% de réduction réalisée contre 75% attendu (n indice 2014 = 0,31/10
km et n indice 2010 = 28,01/10 km)
⫠Superficie (ha) du parc sous gestion améliorée : 1 149 150 ha
La valeur du METT nâa pas pu être déterminée en 2010, pour servir de référence et mettre en
évidence les changements réalisés\. Mais, nous convenons que lors du démarrage du projet, le
parc ne disposait pas dâun système de gestion fonctionnel\. La valeur du METT en 2010 est
donc de toute évidence ⤠35%\. En 2014, la valeur déterminée du METT est de 66 (soit 70%)\.
De ce fait, il nâest donc pas exagéré dâaffirmer que la valeur du METT est passée de la catégorie
minimale à la catégorie suivante (comprise entre 35% et 75%), avec une superficie placée sous
protection renforcée de 100% de lâaire du parc\.
â« % dâamélioration des indicateurs du FEM METT : 66 contre 75 attendu (52 en 2012)
⫠Pourcentage des populations riveraines du PNC qui reçoivent les transmissions radio
des émissions sur le projet : 39,31% contre 75% attendu ;
⫠% de communautés riveraines qui sont impliquées de manière effective dans la
préparation et lâimplémentation du plan de gestion : 89,87% contre 70% attendu
â« % villages-centre dotés dâassociations pour la conservation du parc : 80% contre 75%
attendu\. Par le biais du projet, 20 villages-centre autour du PNC sont dotés dâassociations de
conservation et de développement actives (AVCD), sur une prévision de 25\.
2\.3 Impact du projet dans la mise en Åuvre des différentes politiques nationales\.
A la sortie de la crise, conformément aux actions de politique à engager diligemment, le projet
visait ainsi :
- dâune part, à appuyer le développement des capacités et le renforcement de lâOffice
Ivoirien des Parcs et Réserves et la Fondation, chargés respectivement de la gestion et du
financement pérenne des parcs nationaux et réserves ;
- et dâautre part, Ã appuyer les moyens dâexistence et les services de base dans les
communautés riveraines des aires protégées affectées par la crise\.
A travers ce projet, les politiques en matière de lâadministration du territoire, agricole,
forestière, minière, touristique et environnementale ont été impactées de façon directe ou
indirecte par ledit projet\.
Le premier impact significatif est la restauration de lâautorité de lâEtat sur la gestion de ses
biens en situation post-conflit\. Alors que la crise électorale de 2010 était à son paroxysme, la
présence de lâOIPR, avec la formation des forestiers commandos nouvellement recrutés, en
zone dite CNO, a permis de créer la confiance des autres services de lâEtat qui se sont
redéployés progressivement\. Le bureau de lâOIPR à Bondoukou a même permis dâabriter
certains services du Ministère de lâEnvironnement, nouvellement mis en place\.
Le projet a permis également au personnel de la Station de recherche en écologie dâêtre en
confiance et de sécuriser les biens de ladite station réhabilitée après la crise\. Ce faisant, le projet
a contribué à la consolidation de la coopération bilatérale entre la Côte dâIvoire et lâAllemagne\.
Du point de vue environnementale, le changement perceptible après cinq années de mise en
Åuvre du projet demeure la préservation dâun écosystème soudano-guinéen riche dâune
diversité biologique exceptionnelle et important dans la lutte contre le changement climatique
local et sous-régional\. En effet, le PARC-CI a contribué au maintien de la valeur universelle
exceptionnelle qui a prévalu à lâinscription du PNC sur la liste du Patrimoine mondial (Cf\.
Rapport de Mission de suivi réactif de lâUNESCO en 2013) en dépit des agressions que le parc
56
a subi en périodes de crises\.
Au plan institutionnel : Les capacités des gestionnaires technique (OIPR) et financier (FPRCI)
ont été ont été renforcées pour assumer leur rôle de façon durable\. Par le biais du projet, les
activités de recherche dans le parc, stoppées depuis 2002, ont été relancées\. Des thèmes de
recherche dâétudiants ivoiriens et dâautres nationalités sont développés au profit des universités
et centres de recherches\. Néanmoins, lâéducation du public et surtout des élèves ou acteurs du
monde scolaire a été insuffisamment développée pour les raisons évoquées en ce qui concerne
la composante 3\.
Du point de vue touristique, le potentiel naturel est un atout pour la valorisation touristique\. Le
rapprochement avec Côte dâIvoire Tourisme à travers une convention en préparation a été
favorisé en partie par ce retour du PNC comme un autre pôle potentiel après les parcs nationaux
de Taï et du Banco\.
Du point de vue social et de lâadministration du territoire, la présence du projet a contribué Ã
renforcer une dynamique sociale forte\. Les communautés se sentent concernés par la protection
du parc, surtout dans les zones où les leaders communautaires participent aux activités du parc\.
Lâaction des autorités administratives et des organisations non gouvernementales locales bien
représentées dans le Comité de gestion locale y participe également\. Les microprojets mis en
Åuvre dans certains villages ont permis de faire percevoir la réalité des retombées de la
présence du parc et de consolider les liens au sein des communautés pour le bien commun\. De
même, divers emplois (écologues ou auxiliaires villageois désignés par les populations pour
prendre part aux activités de gestion du parc) ont été créés\.
La convention de gestion de terroirs signée avec le Conseil Régional du Bounkani est un signe
fort de cette appropriation du parc et de son rôle important perçu dans lâaménagement du
territoire et du développement local\.
En matière agricole : En développant le concept de la gestion durable des ressources naturelles
à la périphérie du PNC, le projet a renforcé la synergie dâactions avec les partenaires du monde
agricole\. Toutefois, la non-exécution du volet relatif à lâappui aux populations riveraines nâa
pas permis dâamplifier cette action\.
En matière de politique minière, le projet a contribué au renforcement de la protection du parc
contre lâorpaillage en favorisant une plus grande synergie dâaction entre les services miniers et
lâOIPR dans lâoctroi de titres ou des autorisations dâexploration\. Ainsi, le Ministère des mines
demande lâavis préalable du Ministère de lâenvironnement avant lâattribution des permis
miniers\.
2\.4 Analyse critique de l'action de la Banque mondiale et du Gouvernement
Au démarrage du projet, la Banque mondiale et la partie ivoirienne ont convenu de la prise en
main progressive du Parc national de la Comoé en regroupant les services de terrain dans les
Secteurs de Bouna (Secteurs de Téhini, Bouna, Kong) et de Nassian (Secteurs de Nassian,
Dabakala)\. Les deux parties avaient décidé que les activités de sensibilisation concerneront
lâensemble du parc tandis que les mesures riveraines se dérouleront sur la zone prioritaire
dâintervention\. Les brigades mobiles, localisées à Bondoukou devaient effectuer une rotation
des équipes à Nassian et à Bouna\.
Cette option, si elle est pertinente, fragilisait ainsi les efforts au Nord et à lâOuest compte tenu
de la grande étendue du parc\. La décision de redéployer lâensemble des services a véritablement
permis de reprendre en main la totalité du parc et dâimpliquer lâensemble des acteurs riverains
dans le pilotage du projet\.
Tout au long du projet, la Banque mondiale a joué un rôle dâappui conseil à lâUnité de
Coordination qui mérite dâêtre relevé\. Ces conseils ont visé, notamment le maintien dâun appui
budgétaire à un niveau appréciable de lâEtat afin dâassurer la couverture des charges de
fonctionnement de la coordination du projet\. Cet appui financier a été régulier sur la durée du
57
projet mais a connu de forte variation passant de 192 millions de FCFA en 2010 Ã 88 en 2011,
100 en 2012, 204 en 2013 et 46 millions en 2014\. Cette variation, couplée aux difficultés de
trésorerie, a eu un impact sur l'exécution du projet\.
2\.5 Appréciation de l'action de la Banque mondiale au cours de l'exécution du projet
- Principales décisions ayant favorisé l'exécution du projet
Les principales décisions ayant favorisé lâexécution du projet sont :
o Prolongation de la durée du projet
Cette décision majeure prise par la Banque mondiale sur demande du Bénéficiaire eu égard
aux perturbations sociopolitiques survenues au cours des deux premières années du projet sâest
avérée indispensable pour lâatteinte des objectifs fixés notamment en termes dâaccroissement
du niveau dâexécution des plans de travail et du taux de décaissement du projet\.
o Allègement du dispositif dâélaboration des DRF par lâintroduction systématique
des DRF électroniquement
Cette décision ou directive de la Banque mondiale a fortement contribué à un allègement
systématique des documents à fournir pour la production des Demandes de Retrait de Fonds
(DRF)\. La réduction des délais de transmission et de traitement des DRF à la Dette publique,
qui en est découlé, a permis au projet de rehausser son taux de décaissement\.
- Principales décisions ayant freiné l'exécution du projet
Aucune décision en la matière nâa été enregistrée par le Gouvernement\.
- Suivi du projet par la Banque mondiale
La supervision du projet par la Banque mondiale a été exécutée de manière satisfaisante avec
cinq (5) missions de supervision et une revue à mi-parcours\. En outre, le projet a enregistré
diverses missions de supervision de la gestion financière et de revue de la passation des
marchés\.
- Missions de suivi et de consultations
Des missions dâappui et de coordination ont été menées au niveau de la région cible du projet
et auprès des parties prenantes notamment les communautés riveraines du parc (sensibilisation
de masse, appui à la sensibilisation des radios communautaires, appui aux ONG locales, etc\.)\.
- Principales leçons à tirer
Les financements du projet, axés sur les conditions de reprise en main du parc, ont été bien
ciblés\. Cependant, lâétendue des besoins du PNC nâa pas permis de satisfaire tous les aspects
prioritaires dâinvestissement en particulier les outils de gestion de feux, les réhabilitations de
pistes, des mares et les bâtiments à usage de bureau ou servant de poste de surveillance\.
2\.6 Appréciation de l'action du Gouvernement au cours de l'exécution du projet\.
- Principales décisions ayant favorisé l'exécution du projet
Deux décisions majeures prises par le Gouvernement ont véritablement permis une bonne
exécution du projet\. Ces décisions portent sur (i) le financement, en 2012, de lâopération
transitoire de sécurisation du parc dâun montant de 200 millions, (ii) la prise en charge de
certaines charges de fonctionnement du projet\. Cette opération de sécurisation a permis
dâengager des actions de surveillance intensive et dâaffirmer ainsi lâautorité de lâEtat sur
lâensemble du parc\.
- Principales décisions (ou absence de prise de décisions) ayant freiné l'exécution du
projet
Le retard accusé pour la signature de lâarrêté modificatif du budget 2013 a fortement perturbé
la bonne marche du projet\.
- Suivi du projet au niveau des ministères de tutelle et/ou des agences d'exécution
Le suivi externe de lâavancement du projet a été régulièrement assuré par le Ministère de tutelle
et le Ministère de lâEconomie et des Finances à travers les réunions, les sessions du Conseil de
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gestion de lâOIPR et les revues de portefeuille qui ont permis de trouver des solutions aux
difficultés majeures rencontrées\.
- Principales leçons à tirer
Le Gouvernement a démontré sa capacité à développer des initiatives pour assurer la réussite
du projet malgré lâenveloppe réduite et la situation sécuritaire fragile au démarrage du projet\.
2\.7 Evaluation de l'efficacité et de la qualité des relations entre la Banque mondiale
et le Gouvernement durant l'exécution du projet
Le projet a bénéficié de la synergie dâaction et du climat convivial entre la Banque mondiale
et le Gouvernement\. La restructuration du projet, à travers la réallocation des fonds, la revue
des indicateurs, lâélaboration du manuel de suivi évaluation et lâactualisation dâexécution du
projet, pour une meilleure atteinte des objectifs, se sont réalisées de façon concertée et
constructive\. Les Avis de Non objection (ANO), dans lâensemble, ont été obtenus dans les
délais impartis\.
La régularité des réunions de coordination et la flexibilité dans les prises de décision ont
favorisé lâanticipation sur des situations de blocage de certaines activités\.
2\.8 Evaluation des performances des différentes institutions, bureaux d'études et
consultants ayant participé à la réalisation du projet (coûts, bénéfices)
2\.8\.1\. Cabinet Price Waterhouse Coopers (PWC)
Le PWC a réalisé deux missions dâaudit des comptes du projet pour les exercices 2010 et 2011\.
Les rapports dâaudit ont été remis dans les délais prescrits par le contrat\.
2\.8\.2\. Cabinet KPMG
Le Cabinet KPMG a réalisé deux missions dâaudit des comptes du projet pour les exercices
2012 et 2013\. Les rapports dâaudit ont été remis dans les délais prescrits par le contrat\.
2\.8\.3\. Convention OIPR et WCF
Une convention entre lâOIPR et la WCF a été signée à lâentrée en vigueur du projet pour le
suivi écologique du PNC\. Les rapports des activités de suivi écologique, jugés satisfaisants,
sont disponibles\.
2\.8\.4\. Convention avec les organisations locales
Plusieurs conventions ont été signées avec des ONG locales, des associations villageoises et
des radios locales pour mener des activités de reprofilage, dâentretien manuel des pistes, de
gestion de terroirs et de sensibilisation des populations\.
La mise en Åuvre de ces conventions a connu des difficultés liées à la production, par les
prestataires, de documents administratifs et financiers nécessaires au règlement des prestations\.
Cette difficulté a été résolue après plusieurs séances de travail avec ces prestataires qui ont dû
régulariser leur existence administrative auprès des autorités compétentes\.
2\.8\.5\. Les Entrepreneurs et Fournisseurs
Plusieurs entrepreneurs locaux ont contribué à la réhabilitation de bâtiments à usage de bureau
et lâentretien des pistes du parc\. La plupart des contrats ont été exécutés dans les délais impartis,
et la qualité des ouvrages est jugée satisfaisante\.
Les fournisseurs, au nombre de la trentaine ont respecté dans lâensemble leurs délais
contractuels, et leurs fournitures sont de bonne qualité\.
2\.8\.6\. Les consultants
Le projet a engagé un Chef de projet chargé de la planification, un comptable et un spécialiste
en passation de marchés en 2010\. En outre, des assistants en gestion financière et passation des
marchés ont renforcé pendant 2 ans lâéquipe fiduciaire du projet\. Les performances de ces
consultants sont appréciables dans lâensemble\. Il est toutefois important de noter que le Chef
de Projet a joué plus un rôle de suivi et dâévaluation de la mise en Åuvre du projet quâun rôle
59
de coordination et de gestion du projet\. Cette action a été plutôt assurée par le Coordonnateur
du projet qui nâétait autre que le Directeur Général de lâOIPR\.
La mise à jour du PAG du PNC a nécessité le recrutement dâun consultant dont lâintervention
est jugée satisfaisante\.
2\.8\.7\. Le Gouvernement
Le Gouvernement a fait preuve dâune performance acceptable dans lâexécution du projet
surtout au niveau du maintien de sa contribution financière et de la prise en main du parc\.
Les procédures dâacquisition des biens et services de la Banque ont été respectées par le
Gouvernement\. Lâunité de coordination du projet a régulièrement adressé à la Banque les
rapports dâexécution\.
3\. Evaluation économique et financière du projet
3\.1 Coût total du projet
- Prévisions de départ et coûts réels pour les différentes composantes et catégories de
dépenses du projet
Lâappui du FEM, de 2,54 millions $US, nâa pas varié à la suite dâune réallocation des
ressources par catégories lors de la prorogation du projet\. Le tableau 1 ci-dessous résume les
coûts par composantes et par catégories de dépenses\.
Tableau 2 : Situation des décaissements IDA en $US au 31 décembre 2014 du PARC-CI
Description de la catégorie Initial Alloué Décaissé Non décaissé
Totaux 2 540 000 2 133 453,03 406 546,97
Travaux, Services des consultants (y compris
1 les audits), Formation, Coûts opérationnels pour 1 300 000 1 380 000 1 117 257,93 262 742,07
les Composantes 1 (a), 2 (a), 3 et 4 du Projet
Travaux, Services des consultants (y compris
2 les audits), Formation, Coûts opérationnels pour 313 000 313 000 248 134,47 64 865,53
la Composante 1 (b)
3 Travaux pour la Composante 2 (b) du Projet 247 000 187 000 124 779,39 62 220,61
Travaux, Services des consultants, Formation,
4 680 000 660 000 470 103,55 189 896,45
la Composante 2 (c) du Projet
DA-A Avance au Compte Désigné 0\.00 173 177,69 173 177,69
Source : Dépenses effectives enregistrées (client connection) à la date du 31/12/14
Les décaissements ont commencé en fin mars 2010, trois mois après la date dâentrée en vigueur
du Don\. à la date du 31 décembre 2014, le montant global des décaissements du don IDA
sâélève à 2,133 millions $US, soit un taux de décaissement de 84%\. Ce taux sera de 92,13%
en fin avril2015 lorsque les règlements en cours seront finalisés\. Le montant non décaissé
sâélèvera à 199 814,64 $US (7,83%)\.
- Valeur et niveau de recouvrement de la contrepartie du Gouvernement
Suivant les termes de lâaccord de financement, la contrepartie de lâEtat devrait être de
1 760 000 $US dont 744 480 000 francs FCFA pour lâOIPR et à 140 000 $US pour la Fondation
des Parcs et Réserves de Côte dâIvoire\. Ces fonds devraient couvrir les charges de
fonctionnement de la Coordination (prise en charges des agents de lâEtat, charges
dâabonnements, dépenses de terrain etc\.)\.
Les ressources mobilisées par lâEtat se sont élevées à 632 228 267 FCFA, soit un taux de
réalisation effectif de 85% en ce qui concerne lâOIPR\.
Les décaissements et le niveau de recouvrement de la contrepartie du Gouvernement sâélèvent
respectivement à 578 863 512 FCFA (taux de décaissement de 91%) et à 584 147 950 FCFA
sur (soit un taux de 92%)\.
3\.2 Coûts récurrents engendrés par le projet et ayant un impact sur le budget de l'Etat
60
La mise en Åuvre du projet a engendré des coûts récurrents qui auront un impact budgétaire
sur le budget de lâEtat\. Il sâagit :
- des primes de missions et des équipements techniques de patrouille pour assurer la
continuité de la surveillance ;
- des frais de rémunération du personnel et agent de lâEtat intervenant sur le projet durant
la période de grâce pour assurer la clôture du projet ;
- des frais dâentretien et de réparation des véhicules acquis dans le cadre du projet ;
- des frais de fonctionnement de la direction en charge du parc\.
3\.3 Conséquences prévisibles de la fin du projet sur les structures institutionnelles
mises en place dans le cadre du projet
La fin du projet entraîne inéluctablement la fin des organes de pilotage et de gestion du projet
(Comité de pilotage, lâUnité de coordination, la cellule dâexécution)\. Mais les entités dâappui
(AVCD, Comité de gestion locale) devraient être pérennisées en raison de leurs actions pour
la conservation du parc\.
3\.4 Principales leçons à tirer
Le projet a constitué une occasion opportune pour les responsables des parcs nationaux et
réserves de se familiariser avec les méthodes et procédures en matière de gestion de projet\. Il
permet également à lâOIPR et la Fondation dâêtre plus opérationnels pour les projets futurs\.
Le projet a permis de restaurer lâautorité de lâEtat et dâaméliorer les conditions pour assurer la
protection du parc\. En définitive, le projet a permis de relancer les activités de gestion le Parc
national de la Comoé\.
4\. Perspectives pour la pérennisation des acquis
Pour consolider les acquis et surtout les pérenniser, il convient de :
- développer des projets dâenvergure de conservation des parcs nationaux et réserves Ã
travers le mécanisme de financement existant afin de consolider et pérenniser les acquis de ce
projet pilote ;
- apporter une assistance plus accrue aux populations riveraines du Parc national de la
Comoé et des autres aires protégées\. Lâintervention consisterait à mettre lâaccent sur les
investissements dâenvergure ou communautaires devant permettre aux populations dâadapter
leurs besoins dans un environnement modifié par les effets des changements climatiques ;
5\. Conclusion
Le PARC-CI a été conçu et mis en Åuvre pour apporter une réponse à la dégradation des aires
protégées de Côte dâIvoire\. Le choix du Parc national de la Comoé, dont les populations de
faune ont été réduites de façon drastique durant les deux dernières décennies, constituait un
site pilote idéal pour relancer la conservation\.
Le projet, à travers les résultats obtenus, a réalisé de belles performances de manière générale\.
Sa mise en Åuvre a non seulement permis de restaurer lâautorité de lâEtat sur ce parc mais
également de freiner le processus dâérosion de sa diversité biologique\. Sur onze (11)
indicateurs clés du projet, 7 ont été entièrement atteints\. Pour ce qui est de la principale menace,
notamment le braconnage, qui pesait sur les ressources fauniques, le projet a permis de réduire
de 74% les indices par rapport à son niveau de 2010\. Il a, également permis de freiner la
transhumance des animaux domestiques à un taux de 98,9% comparativement son niveau de
2010\. En dehors du buffle, de lâéléphant et du lion pour lesquels des études spécifiques
devraient être diligentées pour confirmer les tendances, les populations de bubales et de cobs
connaissent une augmentation appréciable\.
Par ailleurs, le projet a doté lâOIPR dâune masse dâagents susceptibles dâassurer le pilotage de
la gestion durable des aires protégées\. Il a également amélioré la capacité de mobilisation des
61
ressources de la Fondation dont les performances ont été au-delà des prévisions\.
Bien quâayant produit des résultats satisfaisants, le projet a été confronté à des difficultés
notamment le retrait des fonds destinés à la composante 3\.
Pour pérenniser les acquis du projet, la partie ivoirienne propose quâune assistance soit
envisagée à lâeffet :
- de développer des projets dâenvergure de conservation des parcs nationaux et réserves
à travers le mécanisme de financement existant afin de consolider et pérenniser les acquis de
ce projet pilote ;
- dâapporter une assistance plus accrue aux populations riveraines du Parc national de la
Comoé et des autres aires protégées\. Lâintervention consisterait à mettre lâaccent sur les
investissements dâenvergure ou communautaires devant permettre aux populations dâadapter
leurs besoins dans un environnement modifié par les effets des changements climatiques ;
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Annex 7\. Comments of Cofinanciers and Other Partners/Stakeholders
None received\.
63
Annex 8\. List of Supporting Documents
1\. Project documents
ï§ Project Appraisal Document for Côte dâIvoire Protected Area Project (PARC-CI);
Report No: 46322-CI, April 7, 2008
ï§ Global Environment Facility Grant Agreement between Republic of Côte dâIvoire and
International Bank for Reconstruction and Development acting as Implementing
Agency of the Global Environment Facility; GEF Grant Number TF 094483, July 21,
2009
ï§ Global Environment Facility, Project Agreement between International Bank for
Reconstruction and Development acting as Implementing Agency of the Global
Environment Facility and Fondation des Parcs et Réserves de Côte dâIvoire, GEF Grant
Number TF 094483, July 21, 2009
ï§ Restructuring Paper on proposed project restructuring of Côte dâIvoire Protected Area
Project; Report No: RES11636, August 7, 2013
ï§ Project Implementation Manual version initial and update: Manuel dâexécution du
projet, Mars 2010 et Aout 2014
ï§ Resettlement Process Framework (RPF), PR688 âCadre de Politique de Réinstallation
Involontaires des Populationsâ, 2008
ï§ Environmental and Social Impact Assessement (ESIA), E1931, âEvaluation dâImpact
Environnemental et Socialâ, March 2008
2\. Mission reports
ï§ Aide-Mémoire de mission préparatoire du PCGAP, Janvier 27 â Février 16, 2008
ï§ Aide-Mémoire de la mission de réévaluation/évaluation du PARC-CI Côte dâIvoire,
Juin 9 â 28, 2008
ï§ Desktop Aide-Mémoire based on SMO for mission planned for December 5-10, 2010
ï§ Aide-Mémoire, November 14 - 21, 2011
ï§ Aide-Mémoire de la mission dâappui a la mise en oeuvre du PARC-CI Côte dâIvoire,
Mai 21 â 29, 2012
ï§ Aide-Mémoire de revue a mi-parcours du PARC-CI Côte dâIvoire, Décembre 8 â 14,
2012
ï§ Aide-Mémoire de la mission de supervision du PARC-CI Côte dâIvoire, Octobre 1 â
9, 2013
3\. Fiduciary reports
ï§ Audit reports covering 2010 â 2013
ï§ IFRs: Rapport de suivi financier du PARC-CI trimestriel 2011, 2012, 2013
4\. WB documents
ï§ GEF Project Identification Form (PIF), December 12, 2007
ï§ Minutes of the PCN Review Meeting, January 24th, 2008
ï§ Minutes of Quality Enhancement Review for PARC-CI, June 3, 2008
ï§ Implementation Status Reports (number 1 to 10)
ï§ Post Procurement Review March 2012 (Gnoleba Meguhe)
ï§ FM Supervision report 10/2014
ï§ WB Implementation Completion and Results Report on a Credit in the Amount of
SDR 29\.6 Million to the Republic of Côte dâIvoire for a Rural Land Management and
Community Infrastructure Development Project, No\. ICR00001525, February 8, 2011
64
5\. OIPR and FPRCI documents
Project management
ï§ Revised COSTAB, February 2010
ï§ OIPR Project annual progress reports 2010 â 2014
ï§ OIPR Project second semestrial report 2014, January 2015
ï§ OIPR Mid-term review report: Rapport a mi-parcours du PARC-CI, 2010-2012,
November 2012
ï§ OIPR Evaluation of community engagement efforts at project closure: Collecte des
données du PARC-CI relatives a la proportion des communautés riveraines
impliquées de manière effective dans la préparation et lâimplémentation du plan de
gestion du PNC et la proportion de populations riveraines du PNC recevant les
émissions radio des activités du projet, Charles Kapie, Décembre 2014
ï§ OIPR Final evaluation report: Evaluation finale du Projet PARC-CI, Yves Joël
Dirabout, Janvier 2015
Project outputs
ï§ OIPR CNP surveillance strategy, March 2012
ï§ OIPR Community Engagement Manual: Manuel dâexécution des Mesures Riveraines,
Novembre 2012 (version provisoire)
ï§ OIPR METT CNP 2012 and 2014
ï§ OIPR and WCF Pedestrial Survey Report: Rapport de lâinventaire pédestre de la
faune (Mars â Aout 2012)
ï§ OIPR and WCF Aerial Survey Report: Rapport de lâinventaire faunique par survol du
17 au 24 avril 2014, Juin 2014
ï§ OIPR CNP Management plan: Plan dâaménagement et de gestion du PNC, période
2015 â 2024
5\. Other relevant documents
ï§ RCI: Cinquième Rapport National sur la Diversité Biologique, Mars 2014
ï§ GIZ baseline studies (2010) related to CNP fauna and habitat, infrastructure and
socio-economic situation
ï§ OIPR UNESCO WHS report: Etat de conservation du PNC Côte dâIvoire, Janvier
2015
ï§ Parks Vol 14 No 1 War and Protected Areas 2004: Frauke Fischer: Status of the
Comoé National Park, Côte dâIvoire, and the effects of war
ï§ RCI: Loi no2 2002-102 du 11 février 2002 relative a la création, à la gestion et au
financement des parcs nationaux et des réserves naturelles
ï§ RCI: Décret No 2002-359 du 24 juillet 2002 portant création, organisation et
fonctionnement de lâOffice Ivoirien des parcs et réserves
ï§ Protocole portant composition et fonctionnement du comite inter-état de mise en
oeuvre de lâaccord de coopération pour la conservation des ressources naturelles
partagées entre le Gouvernement du Burkina Faso et le Gouvernement de la
République de Côte dâIvoire
ï§ Biodiversity Atlas of West Africa, Volume III, Cote dâIvoire, BIOTA, Soluleymane
Konate and Dorothea Kampmann (eds\.) 2010
ï§ USAID: Biodiversity Conservation and Crisis, Key Issues for Consideration,
November 2008
65
MAP
66 | REVIEW |
P003446 |  ICRR 10363
Report Number : ICRR10363
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID:
OEDID : C1713
Project ID : P003446
Project Name : Rural Health & Preventative Medicine
Country : China
Sector : Basic Health
L/C Number : C1713; L2723
Partners involved : GTZ, Dutch Development Assistance, Rotary International
Prepared by : Roy A\. Jacobstein, OEDST
Reviewed by : Timothy A\. Johnston
Group Manager : Gregory K\. Ingram
Date Posted : 08/19/1999
2\. Project Objectives, Financing, Costs and Components :
The project was designed to assist the MOH to improve the quality and coverage of its rural health and
preventive medicine services\. The project had four components: 1) Rural Healthââconstructing new
facilities, training service providers in the poorer counties of five provinces, and improving disease
monitoring, immunization delivery, and management of other preventive health programs; 2) Vaccine
Productionââconstruction and rehabilitation of three national centers for the production of essential
vaccines meeting international standards; 3) improved Drug Quality Control; and, 4) the conduct of
relevant Operational Research in disease surveillance and approaches to rural health insurance\. At
appraisal, total project costs were estimated at $177\.4 million; actual total project cost was $248\.1 million,
due to cost overruns of $100 million in the Vaccine Production component\. The funding shortfall was met
via reallocated project funds, GOC funds ($44 million), a Rotary International Grant ($15 million), and
Dutch Development Assistance ($4\.5 million)\. The project was officially closed in June 1996, four years
behind schedule; the vaccine production facilities were finally completed in 1998\.
3\. Achievement of Relevant Objectives :
The rural health, drug quality control, and operational research components appeared to have met most
of their specific objectives, although the absence of monitoring and evaluation data makes it difficult to
assess impact\. The vaccine production facilities were finally completed, but with substantial delays and
significant cost overruns\. The facilities are still not producing vaccines, although they recently passed the
international "facility acceptance" test\.
4\. Significant Achievements :
The rural health component improved geographical access to basic health services in the five target
provinces, and the delivery of preventive services was apparently strengthened through training financed
by the project, as was disease control and monitoring\. The Drug Quality Control Component provided
training and equipment for drug efficacy and quality testing, and contributed to the revision of the Chinese
pharmacopoiea in 1995\. The Operational Research component helped the Chinese Academy of
Preventive Medicine to broaden its mission and to attract additional government and other support\.
Studies on health education campaigns and rural health insurance experiment were considered
particularly valuable\. Finally, regarding the Vaccine Production component, all five vaccines are projected
to be in licensed production by the end of 1999 or early 2000\.
5\. Significant Shortcomings :
The major project shortcoming was the substantial delays and cost overruns with the Vaccine Production
component, resulting in costs exceeding 350% of planned levels\. Several years were lost initially because
of poor performance by the international contractor chosen to construct the facilities\. Production costs will
likely be significantly higher than appraisal estimates, undermining the original justification that domestic
production will result in net savings from vaccine imports\. In retrospect, the original decision to proceed
with an industrial project based in the health sector is questionable\. The absence of monitoring data on
the other components makes it difficult to judge whether the project resulted in the expected impacts --
whether in terms of health outcomes, service utilization, or the impact of staff training\. Inadequacy of
recurrent cost coverage by the GOC--despite strong economic performance--may have reduced the
impact of new facilities\. Finally, the Drug Quality Control component did not give sufficient attention to key
policy dimensions; despite improved training and equipment, the national control authority did not have
enhanced regulatory enforcement capability\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Marginally The rural health, drug, and research
Unsatisfactory components merit satisfactory ratings, but
are outweighed by the significant
inefficiencies of the vaccine component,
which constituted a majority of project
costs\.
Institutional Dev \.: Substantial Substantial The ICR reports that even the vaccine
component resulted in significant learning
and technology transfer to the borrower \.
Sustainability : Uncertain Uncertain The long-term economic viability of the
vaccine centers is still in doubt \.
Bank Performance : Satisfactory Satisfactory Project identification and design were
clearly deficient, but the Bank deserves
credit for attempting to rectify problems
during supervision
Borrower Perf \.: Satisfactory Satisfactory Similar comments apply as for Bank
performance\.
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
A number of key lessons can be drawn from this project: 1) Project components that are industrial in
nature should be appraised as such (including rate of return assessments), and not supervised primarily
by health specialists; 2) Project monitoring and evaluation frameworks and indicators of intended
outcome must be identified in the project formulation stage and then must inform project implementation
and supervision\. 3) In expanding health infrastructure, retention and adequate remuneration of properly
trained staff are critical, yet are often overlooked\. Training components should include plans to assessing
the outcome of such training on outcome\. 4) A critical policy aspect of âstrengtheningâ? an organization
dedicated to quality control is to endow it with the ability to control quality, i\.e\., with regulatory authority\. 5)
A project carrying out service-related activities in a decentralized system, or in the peripheral parts of a
centralized system, needs to build in implementation flexibility and devolve greater autonomy to
sub-national levels of government\.
8\. Audit Recommended? Yes No
9\. Comments on Quality of ICR :
The ICR is well-written and admirably frank about implementation difficulties\. However, supporting
evidence for many conclusions, i\.e\., quantifiable, measurable, or otherwise concrete indicators, are rarely
presented\. Furthermore, the summary assessments of achievement of objectives, bank and borrower
performance, and assessment of outcome seem unduly positive given the narrative in the ICR about the
substantial difficulties the project encountered\. A summary of the borrower ICR should have been
included as an annex\. | REVIEW |
P001070 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 24243
IMPLEMENTATION COMPLETION REPORT
(IDA-25740)
ONA
CREDIT
IN THE AMOUNT OF SDR 17\.4 MILLION (US$24\.6 MILLION EQUIVALENT)
TO THE
REPUBLIC OF GUINEA
FOR A
HEALTH AND NUTRITION SECTOR PROJECT
October 3, 2002
Human Development n
Country Department 11
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective )
Currency Unit = Guinean Franc (GF)
GF1 = US$ 0\.001
US$ 1 = GF953
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
AGBEF (Association Guineenne pour le Bien-Etre de la Famille)
Guinean Association for Family Well-Being
CAS Country Assistance Strategy
CBDs Community Based Services
CDD Commnunity Driven Development
CTC Comite Technique de Coordination
Technical Coordination Committee
CTRS Comite Technique Regional de Sante
DAAF Division for Administrative and Financial Management (MSPAS)
DH Hospital Division (MSPAS)
DNES National Directorate for Health Facilities
DNPL (Direction Nationale de la Pharmacie et Laboratoire)
National Directorate for Pharmacy and Laboratory
DPSAS (Direction Prefectorale de la Sante et des Affaires Sociales)
Prefectoral Directorate for Health and Social Affairs
FP Family Planning
ICR Inplementation Completion Report
IDA Intemational Development Association
IEC Information, Education and Communications
IGS Inspection General de la Santi
General Health Inspectorate
IRS Inspection Regional de la Sante
Regional Inspectorate for Health and Social Affairs
MCH Maternal and Child Health
MDG Millenium Development Goals
MOH Ministry of Health
MPF Ministry of Plan and Finance
MSPAS Ministere de la Sante Publique et des Affaires Sociales
Ministry of Public Health and Social Affairs
NGO Non-Governmental Organization\.
PHC Public Health Care
PIU/UGP Project Implementation Unit
PPF Proiect Preparation Facility
PPSG Projet Population Sante Genesique
Population and Reproductive \.exIth
PTHG Plan Triennal A Horizon Glissaat
(Three-Year Rolling Plan)
RH Reproductive Health
SIAC Conmmunity-Based Nutrition Ir 6 nma'tion Sys:emn
SRO Sels de Rehydratidn Orale
UNICEF United Nations Children's FunCt
Vice President: Callisto E\. Mae vo
Country Manager/Director- Mamadou Dir
Sector Manager/Director: Alexandre V\. a\.mrncs
Task Team Leader/Task Manager: Khama Odero Rogo
GUINEA
HEALTH AND NUTRITION SECTOR PROJECT
CONTENTS
Page No\.
1\. Project Data I
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 8
6\. Sustainability 10
7\. Bank and Borrower Performance 11
8\. Lessons Learned 12
9\. Partner Comments 14
10\. Additional Infornation 14
Annex 1\. Key Performance Indicators/Log Frame Matrix 15
Annex 2\. Project Costs and Financing 19
Annex 3\. Economic Costs and Benefits 21
Annex 4\. Bank Inputs 22
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 24
Annex 6\. Ratings of Bank and Borrower Performance 25
Annex 7\. List of Supporting Documents 26
Annex 8: Summary Borrower/Executive Agency 27
Map No\. IBRD - 31718
Project ID: P001070 Project Name: HEALTH/NUT\.SCTR\.
Team Leader: Astrid Helgeland-Lawson TL Unit: AFTH2
ICR Type: Core ICR Report Date: October 3, 2002
1\. Project Data
Name: HEALTH/NUT\.SCTR\. L/C/TFNumber: IDA-25740
Country/Department: GUINEA Region: Africa Regional Office
Sector/subsector: Health (89%), Central government administration
(I11%)
KEY DATES
Original Revised/Actual
PCD: 07/27/1990 Effective: 06/28/1994 12/21/1994
Appraisal: 06/26/1992 MTR: 03/01/1996 02/08/1999
Approval: 03/01/1994 Closing: 06/30/2001 03/31/2002
Borrower/lImplementing Agency: GOVERNMENT/MIN OF PUB H & SOC\.
Other Partners:
STAFF Current At Appraisal
Vice President: Callisto E\. Madavo Edward K\. Jaycox
Country Manager: Matnadou Dia Olivier Lafourcade
Sector Manager: Alexandre V\. Abrantes Ok Pannenborg
Team Leader at ICR: Astrid Helgeland-Lawson
ICR Primary Author: Khama Odera Rogo
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=-Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M-Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The original objective of the project was to improve the health status of the population of Middle and
Lower Guinea (the prefectures in Boke, Kindia, Mamou and Labe regions), especially the most vulnerable
groups of the population, by increasing quality and access to low cost basic health services\. This was to be
accomplished through (i) expansion of service coverage and quality improvement of health, nutrition and
family planning services, and (ii) strengthening sector organization, management and resource mobilization
and community participation in order to build a sustainable program\.
This was the second IDA-financed health sector project in Guinea\. The project objectives were broad but
hopeful\. It would cover a population of over one million, or roughly 20% of the country's population\.
Guinea had gone through more than two decades of political uncertainty and economic stagnation\. By
1984, when the Second Republic was declared, Guinea's health care system had virtually collapsed giving
the country some of the worst health indicators in the region\. A new health policy was formulated in 1986
focusing on improving primary health care coverage and quality, especially for women and children\.
Indeed, considerable improvement in policy and service delivery had taken place in the intervening period,
thanks to multiple donor support, including the first IDA-financed project\.
Guinea had implemented an economic and financial reform program from 1986, focusing on improving
incentive framework for the private sector, phasing out state monopolies and streamlining the civil service\.
The process had not been entirely smooth and human resource limitation was recognized as a major
constraint to the country's economic growth and improvement in the health sector\. In response, the
government doubled basic wages in 1991, but at a time when revenues from mining were on the decline\.
This led to a severe liquidity crisis that affected availability of counterpart financing of foreign assisted
projects\. The government formulated appropriate reactions and by FY93 there had been overall portfolio
improvement\. A Country Assistance Strategy (CAS) was prepared in 1993\.
The first IDA project was a three-year specific investment loan, with IDA-financing of US$ 19\.7 million
and Government and beneficiary contribution of US$ 2\.0 million and US$ 0\.8 million, respectively\. Its
objective was to strengthen MSPAS (Ministere de la Sante Publique et des Affaires Sociales) strategic
management and improve basic health services in Middle Guinea\. The project successfully tested out
approaches to service delivery, community involvement and cost recovery\. It raised levels of utilization of
essential primary care services, improved institutional capacity and renovated some facilities\. The lessons
of this first project were: (a) proper coordination between the Project Implementation Unit (PIU) and the
MSPAS is essential; (b) availability of counterpart funds is critical to avoid delays in implementation; (c)
supervision is a key element in ensuring success; (d) consultation of beneficiaries is important; and (e)
shortages in supplies and poor staff motivation have a tremendous impact on quality of care\.
3\.2 Revised Objective:
The objectives of the project were not revised\.
-2 -
3\.3 Original Components:
The project had two major components made up of six sub-components:
I\. Expansion of Service Coverage and Improvement of Service Quality: (i) rehabilitation, construction
and maintenance (works, equipment, furniture and spare parts) of twenty (20) health centers, two (2)
improved health centers and four (4) prefectoral hospitals, as well as their operation and maintenance (in
three (3) prefectures in Middle Guinea and four (4) prefectures in Lower Guinea)(Cost: US$ 11\.5 million);
(ii) supply of low-cost essential drugs, vaccines and materials for health facilities in these seven (7)
prefectures and limited support consisting of vaccines and iodine capsules for the five (5) prefectures
(Cost: US$ 3\.3 million); (iii) strengthening of key technical programs through training, small equipment
and operating costs to strengthen and fully integrate priority technical programs, such as matemal and child
care, family planning and nutrition, into the primary health care delivery system (Cost: US$ 2\.2 million);
and
H\. Strengthening of Sector Organization and Management: (i) rehabilitation of central and peripheral
directorates and provision of goods and services for strengthening further decentralization and sector
coordination, (ii) training, goods and services to improve systems for financial, material and human
resource management, and (iii) support for generation of new resources through user fees and adequate
budgetary allocations, including rehabilitation (Cost: US$ 9\.7 million)\.
Rehabilitation was to be undertaken in three (3) phases and criteria for site selection included population
density and level of neglect\. Communities were expected to contribute labor and provide latrines and
shelters for Health Centers\.
Drug supply component was supposed to provide a basic package of essential drugs and training in drug
management and improved prescription practices\. An initial two-year stock of essential drugs was to be
provided\.
Modest rehabilitation of central services building of MSPAS (Ministere de la Sante et des Affaires
Sociales) and strengthening of central coordination of the Ministry as well as regional and prefectoral
levels was planned\. Facility health committees for hospitals and health centers were to be trained in
financial, material and human resource management\. To enhance sustainability, cost recovery system was
to be extended into all new IDA-supported hospitals and health centers\.
3\.4 Revised Components:
There were no major revisions during the life of the project\. The PPSG (Projet Population Sante
Gen6sique) took on many reproductive health activities from 1999\.
3\.5 Quality at Entry:
The quality at entry was satisfactory\. There was no QAG review at that time\. Entry was based mainly on
experience gained during the first IDA-supported project\. The lessons learnt were taken into account\. And
under two PPF advances, several studies undertaken and documents prepared, including a study on sector
budgeting and financing; a national health inventory of infrastructure and equipment and a plan for
developing norms, facilities and equipment; the design of a new hospital management system; a feasibility
study on iodine deficiency; a beneficiary assessment in the project zones; job descriptions for MSPAS
- 3 -
(Ministere de la Sante Publique et des Affaires Sociales); project implementation manual and preliminary
architectural studies for year one of the project\.
Detailed outlines on project management were worked out, further drawing from the first project's lessons\.
Implementation schedule, disbursements, accounting and procurement procedures were also prepared\.
The main risks identified were weak political will, financial constraints and limited management skills\.
Benefits of the project were to reach the poor and vulnerable whose health status was to be improved
through increased coverage and quality enhancement\. Health care coverage would expand to three
additional prefectures in Middle Guinea (five were covered in the first project); and four prefectures in
Lower Guinea\. More specifically, immunization rates were expected to rise to 70% and antenatal coverage
from less than 60% to 70% in the project areas\.
It should be noted, however, that although considerable effort went into addressing some of the
shortcomings identified in the first project, the issue of human resource, an important ingredient to project
success and sustainability, was not definitively tackled\. In addition, comprehensive targets were not set and
indicators were left open to be worked out after the inception of the project\. On the technical side, the
specific choice of intervention against iodine deficiency by supplying iodine capsules rather than focusing
on iodination of salt was inadequate\. If there was any intended linkage between these two activities, it was
not specified in the project documents\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Overall, the project achievements, especially within the confines of catchment populations of the health
facilities, were satisfactory\. It is, however, important to distinguish between the catchment population of
health facilities and the total population of the two geographical project zones as the two provide different
denominators\. Most of the quantifiable outcomes are based on the catchment population\.
The project management was set up in confornity with the agreements and a strong implementation unit
established to provide administrative, technical and financial oversight\. The PIU (Project Implementation
Unit) was much stronger than was the case in the first project, probably because the previous coordinator
had been retained and was now more experienced\. Actual implementation was undertaken by various
divisions of the MSPAS, the regions and prefectures\. Compared to the first project, there was great
improvement in their coordination this time\. Regular assessments and the mid-term review were carried
out, reports forwarded and appropriate revisions recommended and for the most part undertaken\.
Although most of the project activities were limited to Middle and Lower Guinea where it supported the
development of primary health facilities, district hospitals, and regional and district health administrations,
there was also considerable national reach\. For example, most of the training was done for the whole
country and was only restricted to staff from the project zones\. The project assisted the MSPAS improve
its management capacity and decentralize decision making, set up a management information system,
update the Carte Sanitaire and issue an Infrastructure Development Plan\. It also strengthened key technical
programs, such as Maternal and Child Health and Family Planning, Nutrition, Communicable Disease
Control, Health and Comnunity Education and more generally enhanced sector organization and
management\. Other areas that benefitted included improvement in donor coordination {with set up of
regular meetings of the CTC - Comite Technique de Coordination - and the annual evaluation of the
Primary Health Care Program}, the 1998 update of the Health Sector Policy and the launch of a
-4 -
Three-Year Rolling Plan (PTHG)\. Lastly, with assistance from this credit, important progress was made in
cost recovery which is now applied across the board in the public sector\.
4\.2 Outputs by components:
PART A: Expansion of Service Coverage and Improvement of Service Quality:
Sub-component 1: Rehabilitation - The project supported the construction, equipment and maintenance of
twenty (20) health centers and four (4) prefectoral hospitals\. The central offices of the MOH, eighteen (18)
prefectoral health offices and one (1) regional inspectorate were also rehabilitated\. All planned
constructions and rehabilitations were completed or in advanced stages of completion by the time of the
ICR mission\. The quality of construction is satisfactory\. There were only a few design issues that could
affect patient flow or efficient function of newly built hospitals and health centers such as lighting in
operation theatres and ramps for transportation of patients to theatre\.
The offices and health centers have all been equipped, furnished and are in use\. But at the time of the ICR,
not all hospitals were opened\. According to government officials and communities, this was due in part, to
delay in the delivery of some equipment and furniture\. Since these facilities were not yet operational, it was
difficult to conclusively judge the quality of services and referrals since their construction was a means to
achieving this and not an end on its own\. There is little doubt, however, that these facilities are badly
needed and should improve coverage and quality of care in the project zone as soon as they are, opened\.
As a result of this intervention, it is estimated that coverage of primary health care in Middle and Lower
Guinea has increasedfrom 50% in 1997, to 70% in 1999, and 85% in 2001\. (target was 70%)
Sub-component 2: Drug supply - Facilities in the project zone received supply of iodine capsules and
Vitamnin A in the early days of the project\.
Although the project did not purchase vaccines and essential medicines, it made immense contribution in
strengthening their logistics system in the public sector, hence reducing shortages and stockouts\.
Sub-component 3: Strengthening Key Technical Programs:
(a) Training: Training and capacity building for management and improved service delivery were a major
component of this project\. These activities were undertaken at all levels and involved all cadres of formal
and informnal staff\. Scholarships were also provided for overseas training\. The ICR mission met and
observed some of the trainees at work and was pleased with the quality of their performance\. An example
is that the current head of Diarrheal Disease Program who had just completed a Masters in Public Health
course in Belgium\.
All the scheduled trainings were completed\. (See Output Indicators)
(b) Transport and Communication: Radio communication was installed in all new health facilities,
linking health centers with prefectoral, regional offices and the MSPAS headquarters\. This now serves as
the major means of communication and is used in weekly surveillance of communicable diseases\. In
addition, the project also procured forty-five (45) vehicles and fifty-three (53) motorcycles to enhance
supervision and emergency referrals\. In nearly all instances, these were the only serviceable vehicles in
their units\. Rising maintenance cost and heavy use have, inevitably, taken a toll on some of the vehicles
which have been grounded\.
-5-
(c) Maternal and Child Health and Family Planning Program: Prenatal care coverage among target
populations of facilities in Middle and Lower Guinea has increased from 31% in 1997 to 65\.3% in 1999
and to 85% in 2001(target was 65%)\. Skilled attendance at delivery rose from 13 to 22% in the projet
areas\. Maternal mortality dropped from 666 in 1994 to 528/100,000 in 2001\. Infant immunization
coverage has increased from 50% in 1997 to 61\.3% in 1999 and 80% in 2001 (target was 65%)\.
Contraceptive prevalence has not improved much, rising from 2% to 6%\. It should be noted that the Projet
Population Sante Genesique (PPSG) has been undertaking most of the Reproductive Health (RH)
interventions since 1999\. Therefore, those results cannot be attributed to the Health and Nutrition Project
alone\.
(d) Nutrition: Nutrition was a major aspect of intervention for the project and micronutrient deficiency
was specifically targeted (Vitamin A and Iodine deficiency)\. The iodine deficiency intervention was mainly
through community education and the supply of iodine capsules\. Later, with advice from UNICEF, the
government enacted a salt iodination decree\. This has had a broader impact\. Today up to 50% of the salt
in Guinea is iodized\. This action, rather than the project intervention, should be credited with the perceived
drop in the prevalence of goitre in the region\.
The most significant nutrition output was the community level intervention where one hundred and eight
(108) villages were involved in training, education and surveillance of childhood malnutrition\. This effort
has contributed to a reduction in moderate and severe malnutrition in 0 to 5 years old children in the
catchment populations, from 36% in 1997 to 27% in 1999 and 18% in 2001 (target was 27%)\.
(e) Communicable Diseases: This component focused on malaria, diarrheal diseases, yellow fever,
tuberculosis and assisted with the control of the meningitis epidemic\. Although the figures were not easily
verifiable, it is estimated that the utilization of impregnated bed nets in Middle and Lower Guinea was 5%
in 1997, rising to 30% in 1999 and 70% in 2001\. The use of oral rehydration solutions and management of
childhood diarrheas has also impr6ved\. More important was the support to the Division of Communicable
Diseases in training and setting up of an effective national surveillance system\. The system relies on the
radio communication network for weekly data collection and reporting and has been given credit for recent
improvement in response to epidemics in mral Guinea, including a recent meningitis epidemic\. It is
acknowledged that the epidemic would have caused many more deaths, if it were not for the project's
contribution\. The number of cases of tuberculosis has risen due to the emergence of HIV/AIDS, and the
same surveillance system is already being used to report and monitor trends\.
(f) Health and Community Education: As part of the numerous training programs for communities and
mobilization efforts, the project also produced significant amounts of health education materials,
undertaken as part of the IEC intervention\. A stakeholder and beneficiary meeting was held prior to the
ICR which reported community satisfaction with these efforts\. This was reaffirmed in focus group
interactions with communities in Mamou and Mali and in individual discussions with govemment officials
and beneficiaries of the trainings\.
-6-
PART B: Strengthening of Sector Organization and Management
Sub-component 4: Rehabilitation and strengthening of decentralization process: MSPAS (Ministere de la
Sante Publique et des Affaires Sociales) undertook a major reorganization and sectoral coordination was
improved\. Construction and renovation of health directorates and the central administrative building were
appropriately completed\. These structures are now providing essential office space and meeting rooms for
managers\. They have all been furnished and computers installed\.
Health sector management has been decentralized in 18 Health Prefectures and I Regional Health
Inspectorate (Kindia) which are now fully functional (i\.e\. adequately staffed, equipped and reporting
regularly)\. The regional inspectorate of Kindia and 18 Health Prefectures have been strengthened through
the development and introduction of administrative procedures and the establishment of financial and
administrative units\.
Sub-components 5/6: Human resource development: With project support, some analytical work on
human resource was undertaken in 2001\. The project and the government have used this information to
develop a good computer based health staff and staffing pattern database for the whole country\. The report
now forms a useful basis for discussion of human resource issues in Guinea\. In addition, a draft human
resource development plan for 2001-2010 has been prepared by the ministry\.
Mobilization of additional resources: The Bamako initiative has been implemented around all health
facilities in the project zone and is now applied across the board in the public sector as a sustainable
method for cost recovery\. Cost sharing is rapidly becoming an accepted norm in Guinea\. MSPAS
non-salary recurrent budget reached FGN 5\.4 billion in 1999 (target was FGN 5\.3 billion) and was
executed at 70% (target was 90%)\. Scarcity of resources and competing priorities were sited as the main
reason for the failure to reach the targets\. It was envisaged that the budget in 2001-2002 may show an
improvement in this area\.
4\.3 Net Present Value/Economic rate of return:
N\.A\.
4\.4 Financial rate of return:
N\.A\.
4\.5 Institutional development impact:
The project has contributed to the strengthening of management and decentralization of the health sector in
Guinea\. It has developed norms and training programs/materials in various aspects of Primary Health Care
(PHC)\. It has mobilized communities and mainstreamed their participation in health promotion, disease
prevention and management of health facilities\. In addition the project has experimented with cost sharing
and demonstrated that communities can indeed be good and reliable managers of health institutions\.
Establishment and institutionalization of the Communicable Disease Surveillance system is another
important contribution\. The draft national human resource plan by the Ministry is an important first step in
the long road to redress the serious personnel problem in the country\. Most of these activities and
contributions have gone beyond the confines of the project zone and have been implemented in the whole
country\.
-7-
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The economic performance of the country remained depressed during the life of the project\. This continued
to affect the ability of the government to allocate more resources to the health sector\.
Political instability in neighboring countries and insecurity in the sub region created refugee problems and
additional demand for health services\.
The human resource crisis observed during the first IDA project was not resolved and continued to plague
the country and the project\. Indeed, it only worsened as older staff continued to retire without adequate
replacement\.
Delay in the delivery of equipment and furniture which partly accounts for delay in initiation of services in
-some facilities was beyond the control of the government and the implemeriting agency\.
Finally, some communities lost their savings through collapse of a cooperative/saving society\. This was a
major setback to the cost recovery efforts and put a dent in the confidence communities that had adopted
the system\. It has also affected financial sustainability in some health centers and may have discouraged
some communities from adopting this approach
5\.2 Factors generally subject to government control:
There has been a general improvement in the working environment in the mninistry, especially during the
second half of the project\. This was a widely held perception both in Conakry and in the districts\. The
government has made many changes in the administration of the ministry and strengthened the regions and
prefectures, an important aspect of decentralization\.
But political commitment to reproductive health, especially family planning, remained weak throughout the
life of the project\. This required special attention with multi-pronged approaches, focusing on politicians,
religious and traditional leaders\. Religious and traditional support is especially crucial in Guinea where the
majority of the population is rural and holds strongly to its cultural and religious beliefs\.
The human resource issue, a major obstacle to project sustainability, remained unresolved and should have
been given a more urgent attention by the Government\. Recent attempts to hire retired staff on contract and
reopen training institutions should be accelerated\.
The private sector is an important player in the establishment of comnmunity based and maternal/child
health services\. Its effective participation requires an enabling policy environment\. The Government has a
primary responsibility of making this possible\. There were several opportunities that an aggressive private
sector could have easily filled in training, service delivery; and commercial iodination/distribution of salt\.
Levels of utilization of new facilities have in some cases remained low or declined\. Reasons for the decline
include medicines stockouts, poor staff attitude, cost, ignorance, culture and preference for traditional
healers\. Adequate numbers of clients are an important factor for sustainability of the cost recovery plan\.
This is a pressing issue and should be addressed immediately\. And while doing so, it would be useful to
assess the impact of cost recovery on service access to the poorest\.
- 8-
Shortage of water and lack of electricity have already hit some the hospitals and health centers\. Unless
resolved, this is likely to affect the quality of care\. The issue of land on which the new facilities have been
built can also be solved by the Government to preempt future problems with expansion\.
5\.3 Factors generally subject to implementing agency control:
The Project Coordination Unit has had two directors with different, but complimentary styles of
management\. The first coordinator moved to head the Projet Population Sante Genesique (PPSG)\. There
is some overlap in the activities of the two projects which could complicate attribution of results\. Probably
more effort should have been made to reduce these overlaps\. A country in the early phases of introduction
of family planning, needs community level activity\. Stronger attempts should have been made to introduce
innovative and effective community-based services for family planning (CBDs)
5\.4 Costs andfinancing:
The actual cost of the project did not exceed the initial estimates made at appraisal\. The table below shows
the categories of disbursement as initially scheduled and as actually paid in thousands US dollars\.
Planned and Actual Expenditure by Cost Category
As of March 31, 2002
July 1, 2001 Actual of
Revised Actual Rev\.
Cat Description APR Estimate Adjustment I/ Estimate Disbursement Estimate
1 Works 8,500 (1,230) 7,270 8,715 120%
Equipment & Furniture for
2 Health Facilities 1,500 947 2,447 2,777 114%
Other Equipment &
fumriture, materials and
3 vehicles 3,000 (311) 2,689 2,661 99%
Drugs, Iodized capsules
4 and Vaccines 2,000 2,000 921 46%
5 Specialist Services 3,000 353 3,353 3,820 114%
6 Training 1,500 71 1,571 1,988 127%
7-A Operating Costs 2,000 240 2,240 1,819 79%
8 PPF 700 700 715 92%
9 S/Account 2,400 (71) 2,329 92 3%
Total 24,600 - 24,600 23,508 96%
At the time of closure of the project, 96% of the funds had been spent\. In July 2001, the Government
made a request to reallocate among other categories (as shown in table below) in order to: (i) finalize the
equipping of four district hospitals that have been rehabilitated/constructed; (ii) finalize an ongoing
beneficiary assessment and an infrastructure development plan; (iii) cover training due to underestimation
of cost; and (iv) ensure sufficient operating costs in project coordination unit following the extension of the
project closing\.
-9-
Revised
Cat Description APR Estimate Reallocation Estimate
1 Works 8,500,000 (1,230,000) 7,270,000
Equipment & Furniture for
2 Health Facilities 1,500,000 947,241 2,447,241
Other Equipment &
furniture, materials and
3 vehicles 3,000,000 (311,034) 2,688,966
Drugs, Iodized capsules
4 and Vaccines 2,000,000 2,000,000
5 Specialist Services 3,000,000 353,448 3,353,448
6 Training 1,500,000 70,690 1,570,690
7-A Operating Costs 2,000,000 240,345 2,240,345
8 PPF 700,000 700,000
9 Unallocated 2,400,000 (70,690) 2,329,310
Total 24,600,000 24,600,000
The contributions of Government and beneficiaries counterpart were fully made available despite a
difficult economic environment\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The prospect for sustainability of the activities undertaken by the project is rated as likely\. This rating
takes into account the likelihood of both institutional and financial independence\. This likelihood will be
greatly enhanced by continued Bank support to the health sector\. There is the opportunity to use the new
HIV/AIDS project to build on what has been achieved\. The willingness of some bilateral donors to replicate
the successes of this project and to support the reestablishment of formal training of health personnel in
Guinea is a positive sign\.
There are encouraging examples of community commitment and cost sharing\. But it is unlikely that the
cost sharing resources on their own will suffice to sustain the services\. Incomes from cost sharing arise
from curative services\. And unless workloads increase steadily this source will not expand\. The expected
increase in the budgetary allocation for health, has not risen above 5% and is insufficient to cover the gaps\.
The human resource crisis, is probably the biggest threat to institutional sustainability\. The project has
been implemented by civil servants\. There has been minimal external support to the implementation\. But
the available skilled staff are thinly stretched and cannot be expected to carry the load for ever\. A steady
in-flow of skilled workers is therefore needed to sustain and expand services both centrally and at the
periphery\. The mixed results from the various activities and sites are a reflection of the strain on resource
and management capacity\.
The achievements of the project form a solid basis upon which a very sustainable health system can be
built\. This project is, therefore, best seen as an entry point for sustainability which is likely to be achieved
if both the Government and development partners continue with their efforts\.
- 10 -
6\.2 Transition arrangement to regular operations:
Since the project was fully implemented by various departments of the ministry, there should be no major
problems in transitioning activities to regular operations\. Indeed, most activities are already part of regular
operations\. The issue of supervision needs extra vigilance, including both human and financial resources\.
With aging motor vehicles and limited resources, managers will be handicapped in the performance of their
supervisory duties\. A hiatus in fimding could easily undermine the gains already made, taking Guinea
several steps backwards\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Project preparation is rated satisfactory\. Although the objectives were broad and ambitious, the Task
Team did a commendable job in keeping the focus\. Lessons from the previous project was also assimilated
well\.
7\.2 Supervision:
Supervision was well and effectively done\. The performance of the Bank during supervision is rated as
highly satisfactory\. Most impressive were the financial, technical and human relation aspects of
supervision\. Despite limitations in local technical capacity, effective working relations were established
between the Bank and the client\. This helped streamline some of the design problems that may have been
inherent in the project\. A good example of the quality of supervision and interaction could be seen in the
manner in which funds that were stolen by a project accountant, were recovered through the Government
without any interruption of activities\.
7\.3 Overall Bank performance:
Overall Bank performance is satisfactory
Borrower
7\.4 Preparation:
Being the second IDA-credit to the sector, lessons learnt from the first project informed the preparation\.
The borrower accepted the shortcomings identified in the first project, strengthened the PIU and improved
coordination with the ministry\. More important, the borrower made adequate preparation to ensure
adequate flow of counterpart funds\. The performance of the borrower is rated as satisfactory
7\.5 Government implementation performance:
Government implementation performance was satisfactory\. The Government maintained its commitment
throughout the life of the project\. Basic conditions were met and staff recruitment accomplished\.
Counterpart funding was duly paid, with very few delays\. Construction was undertaken well and
Govemment inspectors did their work dutifully\. The training and service delivery components were also
undertaken without undue constraints\.
7\.6 Implementing Agency:
The performance of the implementing agency was satisfactory\. The performance was an improvernent on
the first project\. Apart from project accountants, there has been relative stability in staff complement\.
There were no major audit queries and most records were readily available and computerized\. The Project
Implementation Unit (PRI) maintained an excellent relationship with other sections of the ministry, regions
and prefectoral leaders, communities and donors\.
7\.7 Overall Borrower performance:
The overall borrower performance is rated as satisfactory\.
8\. Lessons Learned
This project provides many important lessons on what can be achieved through commitment and focus in a
low resource environment and with limitations in highly skilled personnel\. It also underlines the
importance of long time engagement in order to ensure sustainability\.
1\. Government commitment is critical\.
The Govermment of Guinea is clearly committed to improving the health of the population\. This is evident
from policy pronouncements and changes in mnanagement in MSPAS\. It was also reaffirmed by the regular
payment of counterpart contribution despite adverse economic situation\. The importance of Goveniment's
commitment in the success of this project is underlined as an important lesson\.
The project realized most service delivery objectives and hence improved the health of the population in the
catchment areas of the facilities\. The message and lesson is that with adequate commitment and resources,
health outcomes can improve rapidly, even for populations living in remote villages\.
2\. Coverage and sustainability are a continuous challenge
Sustainability, although likely, will require renewed commitment by donors for a longer period\. HIPC
resources should be used to ensure continuity of activities\. Every effort should be made to ensure that the
vulnerable groups are not left out by the implementation of cost recovery program\. Household surveys
need to be conducted during the project to ensure that sources of inequity in access to services are
addressed\.
3\. Local management is feasible
Guinea has shown the potential to manage complex health programs\. Performance of the PIU and the
strengthened regional/prefecture administration was satisfactory\. Community level activities were also
reasonably managed\. This is a lesson in the value of investing in local management\.
4\. Weaknesses in project design
There were some inherent design issues in the project at entry\. Most significant is the iodine intervention\.
This calls for a more critical technical oversight during appraisal\.
5\. Local contractors have a part to play
Financial Management and contracting were on the whole, carried out satisfactorily\. Local contractors
were given a chance to participate in smaller projects\. This experience should be built on to determine their
ability to undertake bigger projects\.
- 12 -
6\. Improving quality of services is a bigger chaUenge
Construction was, justifiably, a major contribution of the project\. And it has given Guinea's health facility
landscape a badly needed face-lift\. The bigger challenge now is to sustainably translate the beautiful
structures into actual services and improvement in the health of the population\. This is not a given\.
Sustained focus and determination on the part of the government and the other stakeholders will be
required\.
7\. Land, water and energy should be given special attention
Water and land for health facilities are two problems that need to be resolved\. The Government should
address these issues before they affect the provision of care\. In addition, Bank-funded projects should refer
to WHO guidelines on sizes of plots needed for establishment of different types of facilities\.
8\. Community mobilization is critical
The nutrition intervention and community level surveillance were very well received and should be
replicated in other parts of the country\. Future programs should put extra emphasis on community
mobilization and interventions\. This applies to all aspects of primary health care\.
9\. Staff training should be mainstreamed, sustained and linked to retention
Much training took place within the project\. They were mostly short courses\. The training must now be
sustained and translated into improved quality of care\. There is therefore a need to take a comprehensive
look at the training needs in the long term\. This will require better coordination between Education and
Health ministries as more donor support is sought to reestablish basic training programs\. In this regard,
retired nurses and midwives should be recalled to provide skilled care and help with training\.
For Guinea the human resource issue must go beyond training\. Retention, deployment and incentives also
need to be addressed\. The HR study conducted by the project is a good start at defining needs and
elaborating strategies\. Professional associations should be strengthening and encouraged to participate in
the health reform dialogues\.
10\. Utilization of facilities needs to increase
The level of utilization of health services, especially by the rural poor, needs to be escalated\. Operations
research should be conducted to delineate issues and provide solutions\. Informal providers, including
traditional healers should be courted and linked with the formal system\.
11\. Private sector participation is needed
The project had very little dealings with the private sector\. Support to the Family Planning Association
(AGBEF) was the only notable activity\. Iodization and distribution of salt is an example of an area where
the private sector can be relied on\. The private sector in Guinea is still small, but is growing\. The
Government should examine policies on private sector participation in order to escalating private
investment in the health sector\.
12\. Exploit opportunities for inter sectoral collaboration
Most of the existing Bank projects in Guinea offer great opportunities for addressing health issues\. They
include projects in Mining, CDD, Water, Urban and Education sectors\. The mining industry already runs
several health institutions and programs\. Community poverty alleviation programs could be designed to
address health while the water and education projects could link directly with the decentralized health
activities\.
- 13 -
13\. Use current lessons to improve future programs
This project benefited from the lessons of the first project\. The state of health sector in Guinea and the
indicators were very depressing before the two projects\. Much has been achieved since then\. But unless
there is a clear follow up and continuity, these achievements could very easily be squandered\. It is critical
that substantial HIPC resources are allocated to the health sector\. In addition, the success of this project
provides a unique opportunity for the Bank and the Government to extend and expand their relationship\.
The lessons learnt from this project should be fully assimilated and support for the Health sector enhanced\.
9\. Partner Comments
(a) Borrower/inmplementing agency:
An impact evaluation may be the best way of determiining the extent to which the objectives of this project
have been achieved\. This should ideally be done after all the facilities have been opened and are functional\.
The Government was very concemed about the changes in Bank teams during this project\. They would
have preferred more stability and attributed some of the problems on the frequency of the changes\. The
govemnment was otherwise very complimentary of the achievements of the project, including; (i) training,
(ii) improvement in quality of health services, (iii) enhancement in activities and nutrition status of the
population, (iv) strengthening of management of the health sector and decentralization, and (v) increased
mobilization and better management of resources\. Borrower comments are summarized in Annex 8\.
(b) Cofinanciers:
(c) Other partners (NGOs/private sector):
10\. Additional Information
Not Applicable
- 14 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
Indicator/Matrix - \. \. Projected in last PSR Actual/Latest Estimate
Increase coverage of primary health care in 2001: 85% Mid-Term: 70%
Middle and Lower Guinea End of Project: 85%
Increase infant immunization coverage in 2001: 80% Mid-Term: 65%
Middle and Lower Guinea End of Project: 80%
Increase contraceptve prevalence rate in 2001:7% Mid-Term: 4%
Middle and Lower Guinea End of Project: 6%
Increase the prenatal care coverage in Middle 2001: 80% Mid-Term: 65%
and Lower Guinea End of Project: 80%
Reduce the prevalence of moderate and 2001:18% Mid-Term: 27%
severe malnutrition in 0 to 5 year old children End of Project: 18%
in Middle and Lower Guinea
Increase the ublization of impregnated bed 2001: 70% Mid-Term: 30%
nets in Middle and Lower Guinea End of Project: 70%
Make all Regional Health Inspectorates and Mid-Term: 10%%
Prefectoral Health Directorates fully End of Project: 100%
functional in Middle and Lower Guinea (i\.e\.
adequately staffed, equipped and reporting
regularly) under decentralized management
system (increase to 100%)
Increase MSPAS non-salary recurrent Mid-Term: FGN 5\.3 billion and executed at
budget to at least FGN 5\.3 billion in 1999 and least 90%\.
its execubon to at least 90%\.
Output Indicators:
Indicator/Matrixri - * - ProJected in last PSR1 Actual/Latest Estimate
Program 1:
Matemal and Child Heaflth and Family
Planning Adoption of National Plan to reduce matemal Completed
- Reinforcement of framework intervention mortality; Dissemination of procedures in
reproductive health; and Printing of
Vaccinabon Cards
Training of 12 OB/ynecogistsdoctorsandCompleted
- Managemer\.t of Pregnancy with High Risk Training of 12 OBlGynecologists doctors and During the mid-term review it was decided to
hospital midwives; transfer the activities from PSN to PPSG
Training of 44 trainers in child birth
programs;
Training of 40 trainers in the management of
family planning programs\.
Program 2:
Nutrition Completed - distributed
- Fight against iodine deficiency Purchased of 2667 boxes of 1500 iodine Completed
capsules;
Trained 360 trainers on how to fight against
goiter
Trained Lab Technician to control salt
- Fight against Vitamin A deficiency iodinabon Completed - distributed
Completed
Purchased Vitamin A capsules
Elaborabon of strategy to prevent Vit\. A Completed
deficiency;
- Integration of nutribon activities in Health Dissemination of results of survey in the use Done
- 15 -
Centers at local level of Vitamin A
- Community mobilization awareness Training of 263 trainers to prevent Done
malnutrition
Training of trainers (316 x 5 days) in SIAC
Trained/equipped with facilities in SIAC to
108 villages;
Evaluation of SIAC
- Nutrition service capacity Research and production of technical data on Done
breast feeding
Program 3: 100% Done
Communicable Disease
-Survey of communicable disease Purchase of software and computers
determinants
Trained 86 trainers in epidemiology Done
- Integration of activites in the management monitoring;
of communicable diseases Trained 35 doctors for 3 days in integrated
epidemiology monitoring;
Training of 54 hospital doctors;
Workshop in coverage of diarrhea cases;
Training of community agents in SRO; Done
-Testing of impregnated mosquito nets in Training of Dr\. Antoinette Hall at Univ\. of
communites to control malaria , Bruxelles;
Retrain 20 microscopist to diagnose malaria Done
- Reinforcement of capacity service in and tuberculosis;
leprosy, malaria and tuberculosis
Training of trainers on technique of testing on
Program 4: impregnated mosquito nets Done
Social Mobilization
- Identification of determinants Purchase of software and computers
Procurement of Health Printed materials Done
- Improvements in capacity and competences Done
- Message production and dissemination Study on preliminary research in EPS and
IEC
Training DPS and 30 CS trainers in personal
communication;
Training of 25 media representatives on IEC Done
- Reinforcement of capacity service in social for integrated prevention;
mobilization Elaboration/Dissemination of educational
messages for media; D
Water and Sanitation: Training of 38 trainers in IEC/SR one
- Operation of water structure to function Dissemination of messages to educate health
center agents
Purchase of software and computers Completed
- Human Resources development
Study/Analyze the situabon in public hygiene
and sanitation; Done
Constructon of 22 Productive Well and
- Reinforcement of the capacity in services Water Drainage;
Proposition of functional structure
Program 5: WorkshopNalidation of modules in Hygiene
Health Facility Rehabilitaion and & Water Sanitation;
Maintenance: Training of 46 trainers on Hygiene and Water Done
Sanitation modules
- Planning of Health Facilities Support in software and audio-visual
equipment
Completed
- Rehabilitation of Infrastructure
- 16 -
Studies and Supervision of dvil works;
Architectural Design and Management;
Supervision of Construction/Civil works;
Contract Management for construcion;
Supervision of construction worker;
Architectural Studies and Supervision
Done
Construction of 4 Hospitals
- Improve management of local health Construction of 18 Urban Centers
centers Construction of 18 Health Centers
Improved 2 Urban Centers Completed
Purchase of Medical, Lab Equipment and
- Strengthening of the capacity in service Fumiture;
Purchase of Solar and communication
Program 6: equipment;
Program 6: ~~~~~~Construction of Water Drainage
Strengthening Sector Organizaton and Procurement of medicine Completed
Ministry of Health (MSPAS) Purchase of motorcycles and vehicles
- Rehabilitation and strengthening of MSPAS tools for hospitals entathn of manaement Done
Purchase of software and computers
- Strengthening of the Capacity in Human
Resources Completed
- Assistance in the Operational Cost in Rehabilitaton/construction of MSPAS;
MSPAS Procurement of office equipment and Completed
fumrture;
Supervision of Construction
Survey & Monitoring of Studies Information
(SSEI) Training of 4 agents in Public Health
- Sector Coordination and Consultabon Management; Completed
Participation of 10 agents to Intemational
Conferences and Seminars Completed
Procurement of vehicles and equipment Not done
- Establishment of Planning Methods maintenance; Done
Financed Fuel
Hold forum on National Health Done
Hold donors meetings and CTC
Support Annual review on PEV/SSP/ME and
- Collect, Analyze and Data Disseminabon CTRS Completed
Development of PTHG 1996-1998 and 1999 Completed
to 2001;
Support Development of Annual Action Plan Completed
for the Minister;
Training of 58 Prefecture Agents in Budget
Planning;
-Strengthening of the capacity in services Workshop/Procedures of Manual
Development on Planning and Completed
Decentralizabon;
DAAF: (Direction des affaires administratives Training of 40 statisticans to collect/analyze Completed
et financiers) statistics;
- Management on Administrabon and Finance Execution of software on EPISURV at SNIS
level; Done
Dissemination of Annual Statistics Completed
1994-1998;
Production and Disseminaton of the bulletins
- Development of Human Resources of SNIS info\.
Done
Purchase of software and computers;
Contract Personnel on radio communication Done
- 17 -
and supervision
- Strengthening of the capacity in services
Technical assistance in budget and Completed
bookkeeping; Completed
Decentralization: Support in the development of Annual Done
- Strengthening of Capacity Building Budget; Completed
Training of 30 managers on intemal audit and
office administrators;
- Supervision of activities on Health Training 2-Year contract for auditors
Done
Revision of Personnel status and job
descriptions;
- Support to FuncUional Structures Implementation/Evaluation of steering
committee on continuing education;
Technical Assistance in HR Done
Purchase of software and computers
- Establishment of Cost Recovery Training of 2 Office Technology Specialists Completed
PSN Completed
- Technical ManagementtProject Finance Rehabilitation of 2 iRS/Equipment of 4 IRS Completed
Construction and provide equipment to 8 Completed
DPS Training of IRS and DPS
Done
Training of CS officers in SAIC and SRO;
Training of mid-wives
Training of Water Sanitation
Held meetings on CTRS and CTPS
Support to Monthly Supervision and mid-term
revie,w;
Payment of salaries to support personnel;
Support to daily functions of IRS and DPS
Study tariff rates system of Hospitals and
Health Centers;
Manual Development on Project Execution;
Held meetings on Planning and Budget of
PSN;
Evaluation of Phases 1 and 2 of the project;
Financial Management and Annual Audit of
Project;
Training of Administrative Officer and
Financial Management;
Purchase of software and computers
End of project
-18 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
'! C - - - ' ' '-- _, ' t {E, 't,, " t > \. 1, Appraisal-, ActuallL'atest\. Percentage of
Estimate' Estirmatel- Appraisal
Projetticost-By Codmonent US$ million ' S$ million \. _\.
A\. Improving Service Coverage and Quality
1\. Health Facility Rehabilitation and Maintenance 9\.30 12\.80 1\.4
2\. Supply of Pharmaceuticals and Vaccines 2\.70 0\.90 0\.3
3\. Strengthening of Key Technical Programs 1\.60 3\.10 1\.9
B\. Strengthening Sector Organization and Management 7\.70 9\.90 1\.3
C\. PPF Refinancing 0\.70 0\.64 0\.9
Total Baseline Cost 22\.00 27\.34
Physical Contingencies 2\.70
Price Contingencies 2\.60
Total Project Costs 27\.30 27\.34
Total Financing Required 27\.30 27\.34
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
Pr,curement Method
Expenditure Categgory , : - ICB ,\.CB B ' "' Othr - N\.B\.F\. Total Cost
1\. Works 5\.40 4\.30 0\.00 0\.00 9\.70
(5\.40) (4\.30) (0\.00) (0\.00) (9\.70)
2\. Goods 3\.80 1\.10 0\.00 0\.00 4\.90
(3\.80) (1\.10) (0\.00) (0\.00) (4\.90)
3\. Services 0\.00 0\.00 2\.90 0\.00 2\.90
(0\.00) (0\.00) (2\.90) (0\.00) (2\.90)
4\. Pharma & Vaccines 11 1\.20 0\.00 2\.00 0\.00 3\.20
(0\.70) (0\.00) (1\.80) (0\.00) (2\.50)
5\. Miscellaneous (Training 0\.00 0\.00 5\.90 0\.00 5\.90
and OperationlMaint\. 13 (0\.00) (0\.00) (3\.90) (0\.00) (3\.90)
6\. PPF Refinancing 0\.00 0\.00 0\.70 0\.00 0\.70
(0\.00) (0\.00) (0\.70) (0\.00) (0\.70)
Total 10\.40 5\.40 11\.50 0\.00 27\.30
(9\.90) (5\.40) (9\.30) (0\.00) (24\.60)
1/ UNIPAC (UNICEF Procurement Agency)
2/ In accordance with World Bank Guidelines: Use of Consultants by World Bank Borrowers and by the
World Bank as Executing Agency
(August 1981)\.
3/ In accordance with Government procedures\.
-19-
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
'-E'penditureCt Pr ent Meth N\.e\. Tot Cost
NCB ~ _'-Other-J-__ __
1\. Works 5\.78 3\.37 0\.23 0\.00 9\.38
(4\.73)\. (2\.19) (0\.02) (0\.00) (6\.94)
2\. Goods 2\.95 1\.27 0\.78 0\.00 5\.00
(2\.06) (0\.87) (0\.75) (0\.00) (3\.68)
3\. Services 0\.00 0\.00 2\.63 0\.00 2\.63
(0\.00) (0\.00) (1\.60) (0\.00) (1\.60)
4\. Pharma & Vaccines /I 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous (Training 0\.00 0\.00 0\.00 0\.00 0\.00
and Operation/Maint\. /3 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. PPF Refinancing 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 8\.73 4\.64 3\.64 0\.00 17\.01
(6\.79) (3\.06) (2\.37) (0\.00) (12\.22)
Please note that Table applies to procurements only and not totalfinancial outlay\.
"Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\.
21Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
4 i | - | J - __i j -_ - - + ,f;, ]\.centl\. ofA \.r\.is
p'-Pra'isal Esthiate-\. -\. Actual/Latest'Estimate -
____________V___ Bank Govt\. CoP\. Bink--: Govt\. CoF\. Bank Govt\.' CoF\.'
Maternal and child bealth, 0\.20 0\.07 0\.17 0\.07 85\.0 100\.0
including family planning\.
Nutrition 0\.50 0\.00 1\.38 276\.0 0\.0
Communicable Disease 0\.29 0\.00 0\.62 213\.8 0\.0
Social Mobilization 1\.07 0\.02 0\.91 0\.02 85\.0 100\.0
Health Training 13\.45 1\.31 12\.82 1\.31 95\.3 100\.0
Capacity Building 9\.40 1\.29 9\.94 1\.29 105\.7 100\.0
Total 24\.60 2\.69 23\.17 2\.69 94\.2 100\.0
Government totals included contributions from beneficiaries\.
- 20 -
Annex 3\. Economic Costs and Benefits
Not applicable\.
-21 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Perforrnance Rating
(e\.g\. 2 Economists, I FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
May 1991 1 Public Specialist
I Implementation Specialist
1 Nutrition Specialist
I Health Economist
October 1991 1 Public Specialist
I Nutrition Specialist
I Health Economist
I Projects Officer
Appraisal/Negotiation
June/July 1992 2 Public Health Specialist
2 Implementation Specialist
I Health Facilities Planner
I Nutrition Specialist
I Health Economist
I Projects Officer
Supervision
02/06/1995 3 (I)Sr\. Public Health Spec\. S S
(1) Implementation Spec
(1) Public Health Spec
11/29/1995 4 Consultant (3); Health Economist S U
06/16/1996 2 Task Team Leader (1); S S
Implementation Spec (1)
02/28/1997 2 Sr\. Health Economist (1); Sr\. S U
Operation Officer (1)
10/28/1997 3 Health Economist (1); S S
Disbrusement Anaylist (1);
Implementation Spec (1)
04/07/1998 3 Health Economist (2); Public S S
Health Spec (1)
09/03/1999 2 Team Leader/Health Econ (1); \. S
Principal Public Health (1);
11/22/2000 4 Team Leader/Health Econ (1); S S
Lead Sp\. Public Health (1);
Financial Management (a);
Implementation Spec\. (I)
05/11/2001 4 Team Leader/Health Ec\. (1); S S
Public Health Spec\. (1);
Procurement Spec (1);
Implementation Spec (1)
11/09/2001 4 Team Leader/Health Econ (1); S S
Implementation Spec(l);
- 22 -
Financial Management (1);
Procurment Spec (10
ICR
April 2002 1 Lead Health Specialist S S
1 Sr\. Operations Officer S S
I Financial Analyst S S
(b) Staff:
Stage of Project Cycle 1 Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 34\.67 156\.01
Appraisal/Negotiation 53\.23 239\.53
Supervision 145\.70 655\.63
ICR 7\.95 35\.796
Total 241\.55 1,086\.97
- 23 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies O H OSUOM O N O NA
OSector Policies O H OSU*M O N O NA
f Physical OH *SUOM ON ONA
Z Financial O H OSU*M O N O NA
2 Institutional Development 0 H * SU O M 0 N 0 NA
? Environmental 0 H O SU O M O N 0 NA
Social
Z Poverty Reduction O H OSUOM O N * NA
Gender OH *SUOM ON ONA
O Other (Please specify) O H OSUOM O N O NA
* Private sector development 0 H O SU O M 0 N 0 NA
* Public sector management 0 H 0 SU O M 0 N 0 NA
M Other (Please specify) O H OSUOM O N O NA
Other: Developed community linkages and
participation\. Strong linkages with other
development partners, e\.g\. UNICEF and GTZ\.
- 24 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
0 Lending OHS OS OU OHU
0 Supervision OHS OS O U O HU
F Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
(? Preparation OHS OS O U O HU
F Government implementation performance O HS O S 0 U 0 HU
F Implementation agency performance O HS OS 0 U 0 HU
F Overall OHS *S 0 U O HU
- 25 -
Annex 7\. List of Supporting Documents
Staff Appraisal Report - Health and Nutrition Sector Project\. Report No\. 11684-GUI,
December 22, 1993
- Memorandum and Recommendation of the President - Report No\.P-6024-GUI, February 7, 1004
- Development Credit Agreement, March 28, 1994
- Aide-Memoires, 1994-2002
- Project Status Reports, 1994-2002
- PSN Mid-Term Report, February 1999
- PSN Rapport D'Inventaire des Immobilisations, December 31, 2001
- La Gestion Mobilisatrice Des Ressources Humaines, Ministere de la Sante Publique, Novembre 2000
- Rapport sur La Situation Du Personnel De La Sante En Guinee, Ministere de la Sante Publique,
Octobre 2000\.
- Plan Directeur De Developpement Des Ressources Humaines Du Secteur De La Sante, 2001-2010
Ministere de la Sante Publique\.
- Procurement Decentralization and Country Responsibilities in the Africa Region, December 2001
- L' Initiatve de Bamako en Guinee (1991-1995)
- Guinea Demographic and Health Survey (DHS) 2000
Programming for Safe Motherhood\. Guidelines for Maternal and Neonatal Survival\. UNICEF, 1999
- Republique de la Guinee, Ministere de la sante publique, Projet Sante et Nutrition, Credit IDA No\.
2574-GN, Rapport final de fin du projet, du 20 mars 2002
- 26 -
Additional Annex 8: Summary Borrower/Executing Agency
INTRODUCTION
Apres le PDSS (Projet de Developpement des Services de Sante), le Gouvemement guineen a demande a
F'IDA son assistance pour financer un deuxieme projet de six ans visant a appuyer la mise en ceuvre de la
strategie de d6veloppement de son systeme de sante pendant la periode 1992-2000\. Les grandes lignes de la
politique et de la strategie adoptee dans ce domaine par le gouvemement ont evolue depuis 1986 et
concement aujourd'hui les questions de qualite et de couverture aussi bien que la perennite du systeme de
soins de sante\.
Ainsi, le PSN (Projet Sante et Nutrition) se situe dans un contexte politique et historique de redresse-ment
socio-economique et de promotion des ressources humaines en cours depuis F'avenement de la deuxieme
Republique\. I1 appuie le programme de reformes institutionnelles du secteur de la sante\.
PRINCIPAUX PROGRAMMES TECHNIQUES:
* La Sante Maternelle et infantile / planning familial:
* La nutrition\.
* La lutte contre les maladies transmissibles\.
* L' education sanitaire et communautaire\.
* Le renforcement de l'organisation et de la gestion du secteur\.
* Amelioration des systemes de gestion des ressources\.
Resum6 de la contribution du PSN
Analyse par programme\.
Le Tableau 1 ci-apres resume les depenses du PSN par rapport aux six programmes prevus\.
Tableau 1: Repartition des depenses par programmes
Programme Prevision Realisat\. R6alisat\.
(USD) (USD) (GNFX1000) realisat\.
1 SMI/PF 198\.786 165 ?550,01 157\.7703,20
2 Nutrition 504\.539 1\.382\.649,5 1\.317\.665274
3 Lutte contre la 278\.031 623\.143,76 593\.856224,10
maladie
4 Mobilisation sociale 1\.068\.653 914\.606,50 871\.62085 ,50
5 Fornations 14\.967\.077 12\.818\.268,6 12\.215\.81091,40
sanitaires
6 Renforcement 10\.290\.914 9\.935\.870,93 9\.468\.88597,20
institut\.
To 27\.300\.000 25\.840\.089,41 24\.625\.60694,60
Le taux de change utilis a l 'e'aluation du projet est: I USD = GNF 953
- 27 -
11 ressort de ce tableau que le taux global de l'execution du budget par programme montre un niveau de
94,60%\. On note un large depassement au niveau des programmes nutrition et lutte contre la maladie\. Ces
faits resultent de la sous estimation des besoins au cours de la preparation du projet\.
Analyse de la contribution du Gouvernement (BND)\.
Tableau 2: Contributions annuelles du Gouvernement\.
Ann1es Prvision 1Ralisat\. % real\.
1 1995 _ _ _ _ _ _ _ _ _ _
2 1996 260\.000\.000 260\.000000100,00
3 1997 300\.000\.000 233\.250\.00067,00
4 1998 442\.700\.000 335\.000\.00075,60
5 1999 471\.000\.000 473\.000\.000100,40
6 2000 450\.000\.000 429\.600\.00095,40
7 2001 450\.000\.000 450\.000\.000100,00
Total general\. 2\.373\.700\.000 2\.180\.850\.00091,80
nI ressort de ce tableau que la contribution du Gouvemement, en depit du contexte economique difficile du
pays se chiffre a 92% de ses engagements a la preparation du projet\. Cependant, cette contribution varie
d'une annee a l'autre\.
Au cours de P'annee 1997, la contribution a e de 67% alors qu'elle l'a ete de 100% en 1996, 1999 et
2001\.
Toutes fois les contributions sont versees en general a partir du 6eme mois de l'annee budgetaire eu egard A
la tenue de la session parlementaire au mois de mars de chaque ann6e\.
Analyse de la contribution des beneficiaires\.
La contribution des beneficiaires s'est effectuee A travers:
- La mise A disposition des domaines d'implantation des structures sanitaires et la regularisation des
papiers administratifs y afferents;
- Le paiement des soins par la population A travers le recouvrement des cofits qui fera l'objet
d'analyse dans le chapitre << mobilisation des ressources financieres > qui cemera la capacite
du recouvrement des cofits des structures de sante\.
- 28 -
CONCLUSION
Points forts et points faibles\.
Points forts\.
Au terme de l'ex6cution du projet sante et nutrition, on note:
Au niveau central\.
(i) La forte amelioration dn cadre de travail des services centraux par la renovation du siege du
Ministere
de la sante publique et l'equipement des bureaux\.
(ii) L'amelioration de la capacite d'encadrement du Ministere par la formation et la mise a disposition
de moyens logistiques efficaces et de fournitures diverses pour le fonctionnement des services\.
(iii) Le respect des engagements financiers du Gouvemement lors de la negociation du projet\.
(iv) L'important soutien de la Mission Residente dans l'execution du projet\.
Au niveau des structures deconcentrees\.
(i) L'amelioration du cadre de travail et de la capacite de gestion des DRS et des DPS\.
(ii) L'elargissement du paquet minimum des activites techniques par leur integration\.
(iii) La mise en place des structures de coordination a tous les niveaux de la pyramide sanitaire
a permis un echange d'experiences entre les agents\.
(iv) L'aptitude des structures deconcentrees regionales et prefectorales a organiser de facon
autonome leur fonctionnement\.
Points faibles\.
(i) Le retard de 1'execution des travaux de genie civil qui a induit une prorogation de la date de cloture
du projet de 9 mois\.
(ii) La lourdeur administrative dans les procedures de passation de marches\.
(iii) Le decalage entre la renovation/construction et l'appui au fonctionnement des structures affaiblit
les effets du projet sur la sante de Ia population\.
(iv) Les equipements ne sont pas livres a temps et en totalite avant la cloture du projet\.
(v) La sous estimation des couits de certaines composantes du projet\.
Recommandations\.
Au niveau central\.
(i) Alleger les procedures de passation de marches\.
(ii) Encourager les administrations prefectorales, communales et sous communales a contribuer
au fonctionnement des services de sante\.
(iii) Encourager l'appropriation des structures par les beneficiaires pour garantir la perennisation
du fonctionnement des structures\.
Au niveau deconcentre\.
(i) Poursuivre l'implication active des communautes dans la gestion des services de sante\.
(ii) Amener les structures prefectorales et sous prefectorales a contribuer au fonctionnement
des services de sante\.
(iii) Encourager dans les zones respectives la mise en place des systemes de solidarite dans le paiement
des soins (mutuelle de sante, M U R I G A )\.
(iv) Mettre en place des mecanismes et des outils de gestion du patrimoine des services de sante\.
(v) Developper un systeme de maintenance decentralise des infrastructures et des equipements\.
- 29 -
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O ceon, any judgment on te legal status of any territory, or any endorsement
C_I/ot,\. r or acceptance of such boundaries 8 | REVIEW |
P006173 |  ICRR 10328
Report Number : ICRR10328
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID :
OEDID: C2761
Project ID : P006173
Project Name : Capitalization Program Adjustment Credit
Country : Bolivia
Sector : Public Sector Management Adjustment
L/C Number : BOL
Partners involved : IDB
Prepared by : Elliott Hurwitz, John Johnson, OEDCR
Reviewed by : Alain Barbu
Group Manager : Ruben Lamdany
Date Posted : 06/07/1999
2\. Project Objectives, Financing, Costs and Components :
Objectives : The objectives were to: (1) establish an appropriate legal and regulatory framework to attract private
investment and spur growth in an efficient manner; and (2) divest and capitalize key public enterprises
("capitalization" is explained in section 4, below)\. Components : Included (1) preparation of reform legislation and
regulatory frameworks for the hydrocarbon, telecommunication, power, mining, railway, and aviation sectors; (2)
capitalization and transfer to private management of six large enterprises that dominated these sectors; (3)
institutional and legal reforms to strengthen the business environment; and (4) deepening of long-term financial
markets by strengthening the financial sector regulatory framework \. Costs and Financing : CPAC consisted of
original financing from IDA of US$50 million, which was increased by amendments incorporating IDA reflows of an
additional US$15\.3 million\. Cofinancing of US$82 million was provided by IDB, for a total project cost of US$ 147\.3
million\. US$10 million was disbursed in the first tranche at effectiveness upon approval of designated laws and
preparation of other strategies \. Three floating tranches were disbursed upon completion of specific reform actions \.
CPAC was approved by the Board in July 1995, and closed in September 1998, 15 months later than planned\.
3\. Achievement of Relevant Objectives :
Legal and regulatory framework to attract investment : The ambitious program of legal and regulatory reform was
largely accomplished, with substantial transformation of the affected sectors \. In some cases (telecommunications,
power), a transitional period was provided for existing providers to adapt to the new regime \. Also, new regulatory
agencies had to rapidly build their capacity and credibility \. Private investment in 1997 was 11\.5% of GDP, nearly
double the pre-CPAC level of 5\.9% in 1994\. Divestiture and capitalization : Bolivia successfully transferred 5 of its
6 large SOEs to private management (only one, a tin smelter, failed to attract any bids )\. The winning bids totaled
US$1\.7 billion, nearly 1/4 of Bolivian GDP, which comprised 2\.5 times companies' book value\. Offered shares at
book value, 90% of workers bought shares\.
4\. Significant Achievements :
(1) CPAC assisted in the fundamental restructuring of the Bolivian economy, with 5 large SOEs transferred to private
management and substantial legal and regulatory reforms in 7 sectors\. (2) CPAC demonstrated the feasibility of
capitalization, in which strategic investors were offered 50% ownership and management control in return for
providing investment capital to the company \. Ownership of the other 50% was transferred to enterprise workers
(1-2%) and the Bolivian people, in the form of shares managed by private pension funds and distributed to owners
upon retirement\. Capitalization thus provided capital to the firm for investment, no fiscal windfall to the government,
and necessitated reforms in the pension and capital markets areas \.
5\. Significant Shortcomings :
(1) The proceeds from capitalization were initially distributed in annuities paid upon retirement to adult Bolivians, but
the program was neither transparent nor easily -implemented, and consequently had to be substantially modified; (2)
in the context of substantial change, weak organizational capacity has hampered the effectiveness of the new
regulators; (3) substantial reforms in other sectors highlighted the need for stronger supervision of the insurance
sector\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Highly Satisfactory CPAC assisted in the fundamental
restructuring of the Bolivian economy,
with 5 large SOEs transferred to private
management and substantial legal and
regulatory reforms in 7 sectors\. ICR text
states: "outcome\.is highly satisfactory\."
Institutional Dev \.: Partial Substantial Project succeeded in developing
substantial organizational, legal, and
regulatory capabilities affecting a broad
portion of the Bolivian economy\.
Sustainability : Likely Likely
Bank Performance : Highly Satisfactory Highly Satisfactory
Borrower Perf \.: Satisfactory Highly Satisfactory Overall Borrower performance was highly
satisfactory\. Shortcomings in
implementing distribution of capitalization
proceeds-Bonosol-were not sufficient to
detract from overall highly satisfactory
performance\.
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
Ownership and commitment are key to success of reform programs \. Locally conceived programs, even with
minor flaws, should be taken seriously \.
Public information programs are important to successful reform \.
It is highly beneficial to have laws, regulations, and regulators in place prior to privatization transactions \.
In privatization programs, distributional effects should be explicitly considered \.
8\. Audit Recommended? Yes No
Why? Success of capitalization program could provide model as well as useful lessons \.
9\. Comments on Quality of ICR :
ICR, otherwise good, does not provide : adequate macroeconomic performance data, or evidence for sustainability
of policy/regulatory reforms\. The ICR could have provided more information on activities related to organizational
capacity building, as well as linkages to supporting TA loans (listed in Table 2)\. Also, there is no Table 8A or 8B,
and Tables 5 and 6 are incomplete\. | REVIEW |
P050719 |  ICRR 12479
Report Number : ICRR12479
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 08/09/2006
PROJ ID :P050719 Appraisal Actual
Project Name :Urban Transport & Project Costs 24\.2 24\.3
Maintenance Project US$M )
(US$M)
Country :Kyrgyz Republic Loan/ US$M )
Loan /Credit (US$M) 22\.0 22\.1
Sector (s):Board:
): TR - Roads and US$M )
Cofinancing (US$M)
highways (99%),
Sub-national government
administration (1%)
L/C Number :C3410
FY )
Board Approval (FY) 01
Partners involved : Closing Date 05/31/2004 11/30/2005
Evaluator : Panel Reviewer : Division Manager : Division :
Peter Nigel Freeman Roy Gilbert Alain A\. Barbu IEGSG
2\. Project Objectives and Components
a\. Objectives
The rather vague project objective as stated in the project appraisal report (and repeated in the ICR) was to provide
sustainable, reliable and affordable access to mobility for the populations of Bishkek, Osh, and Jalalabad \. In the
Development Credit Agreement (Schedule 2) the project objective is articulated as follows: to introduce sustainable,
reliable and affordable access to transportation for the populations of the participating cities, through restoring
selected urban roads to acceptable service standards and initiating the process of reform of urban roads
maintenance and rehabilitation financing \. This, however, confuses the basic objective by casting project initiated
actions (i\.e\. components) as if they were objectives\.
b\. Components (or Key Conditions in the case of Adjustment Loans ):
Three components were identified for the cities of Bishkek (population 1 million), Osh (population 450,000) and
Jalalabad (100,000):
1\. Rehabilitation and maintenance of priority sections of urban streets in the country's three major cities : (appraisal
estimate US$ 21\.75 million; completion US$ 20\.90 million); Bishkek 72 km of roads/maintenance; Osh 14 km of
pavements/maintenance and Jalalabad 12 km of pavement, 3 km of overlay and 1\.5 km of reconstruction\.
2\. Consultant services and training (appraisal estimate US$ 2\.48 million; completion US$ 3\.02 million); comprising
engineering design and construction supervision, a municipal road finance study and a passenger transport
reform study in Bishkek, to be financed under a grant \. The intention of the reforms was to take the first steps to
develop a reliable source of financing for urban roads maintenance and rehabilitation \. This was to cover:
Separation of road planning, budgeting, and contract administration from road construction;
Divesting of all road construction entities and financial management from single city agencies in each of the
three cities to newly established separate City Road Departments; and
Support for the ongoing reform process in public transport \.
3\. PIU operating costs (appraisal estimate US$ 0\.4 million; completion US$ 0\.38 million)\.
c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The appraisal and final project costs were virtually identical overall \. Savings in civil works costs were balanced
against higher costs for consultancy services \. Although counterpart funds required were less than 10% of total costs,
payments were often in arrears and made up at the end of the fiscal year \. However, this did not cause a significant
problem because of the slow progress (and therefore claims pattern) of the contractors\. Initial problems with
contractor performance led to implementation delays while some of the work was re -done and the closing date was
extended by a year\. Later, this closing date was further extended by an additional six months because of delays in
the signing of a Japan Policy and Human Resources Development Fund (PHRD) technical assistance grant
component (under the auspices of the World Bank ) and appointment of consultants for the advancement and
planning of urban transport services \.
3\. Relevance of Objectives & Design :
The original request from the Government of Kyrgyz in 1996 was for assistance with both urban infrastructure and
public transport services\. During the preparatory period, however, due to a lack of investment the bus fleet had
dwindled from 600 vehicles to only 35 by 2000, and the gap had been filled by private mini -bus operators\. It was thus
decided to refocus the project on road infrastructure improvements with support to the ongoing reform process in
public transport through a PHRD Grant \. Although this change was criticized by the Quality Assurance Group, which
believed that issues such as the franchising of urban passenger services should have been pursued through this
project with the assistance of the Bank, in IEG's view, the preparation team followed the only possible solution \. This
was because urban public transport had virtually collapsed and there was no funding for urban transport subsidies as
the Republic of Kyrgyz was heavily in debt and the International Monetary Fund (IMF) had recommended spending
cutbacks to ensure better fiscal performance \. The Bank has also has only partial success with public transport
projects in this region\.
The project was in line with the CAS objectives of improving public finances, sustaining growth, reducing poverty,
and improving governance; it supported the privatization of road works,construction, reduced the cost of urban
mobility without introducing unaffordable subsidies and facilitated access to employment and basic services \. The
project objectives and design were therefore substantially relevant \.
4\. Achievement of Objectives (Efficacy) :
To provide sustainable, reliable and affordable access to mobility for the populations of Bishkek, Osh, and Jalalabad\.
(Substantially achieved)\.
There is evidence that the project helped these cities achieve more reliable and sustainable access to transportation\.
First, the project achieved the goal to separate of road planning, budgeting and contract administration from road
construction\. Second, the project provided support for the ongoing reform process in public transport; the three cities
have now established Passenger Transport Authorities to plan, contract and monitor the private provision of services \.
The services that have been developed are also free of subsidy, reducing the financial burden on the government \.
Third, it was intended that all capital construction equipment and staff would be divested to City Road Departments \.
This has been partially achieved in that the separation of the management and implementation functions has been
completed, but routine maintenance is still being undertaken by force account \. Construction, however, is now
awarded to private contractors and the major equipment has been sold off to the private sector \. Although a new
Japanese financed asphalt plant has been retained under the control of the city of Bishkek for the time being, this is
to be until there is greater stability in work orders, which are too variable at the moment \. It is, however, expected that
this plant too will be privatized when the market is right \.
During the early part of the project the financial resources of both the cities and the central government were
constrained; the IMF recommended spending cutbacks which were implemented in 2001\. This delayed work on the
financial issues, but a working group was formed, seminars were held in the cities and eventually detailed financing
plans were prepared\. Budgets were increased to the suggested levels for the two biggest cities, but Jalalabad fell
short of the target\. In November 2005 an important workshop was held, organized by the Ministry of Finance which
approved five recommendations :
1\. To establish urban road funds;
2\. Each city to adopt a prioritized five year road development and maintenance program;
3\. Private vehicle owners tax to be increased threefold;
4\. Ten per cent of the National Road Fund (NRF) to be allocated to city roads; and
5\. An inter-departmental commission to be established to ensure that NRF funds are to be used specifically for
roads\.
Since the workshop this ongoing process has been given a high priority; given that the intention was only to "take the
first steps\." this part of the objective has been substantially achieved \.
The achievement of the part of the objective referring to affordable access to mobility is less clear\. Certainly the
roughness of the roads decreased substantially upon completion of the civil works financed under the project \.
Although the figures for roughness improvement varied by location, in Bishkek the largest city, the index of
roughness improved significantly from the range 7-12\.2 in 1999 to 1\.8-3 in 2004\. A total of 105 km of roads were also
rehabilitated as against 98 km planned\. This would substantially decrease the operating costs of the vehicles using
the roads\. However, this proxy measurement does not fully demonstrate the degree to which access had become
more affordable\. For instance, at the end of the project the number of full size transit passenger equivalents per day
in Bishkek is given as 3,000 moving 206,000 passengers\. No information, however, is given about the numbers
before the project or the fares being paid before or after the project or the percentage of household income spent on
transport - all of which would have been very useful \.
5\. Efficiency :
The project rehabilitation component was completed within budget with an extraordinarily high rate of return (224%)
due to huge savings in operating costs resulting from the improvements in road condition \. It is unclear what
assumptions were being made about future traffic growth, but notwithstanding this points to the efficient achievement
of the project objective\.
6\. M&E Design, Implementation, & Utilization:
Only two of the key performance indicators were measurable, presumably because of a lack of data at the time of
appraisal\. In both cases the results exceeded the targets \. More thought could have been given to the measurement
of the softer issues or the development objectives could have been re -worded to be less ambitious, but more easily
measurable\.
7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):
The project was assessed as environmental category B \. Because it did not involve widening or re -alignment neither
land acquisition nor resettlement were needed \. However, a participatory approach was followed throughout the
project's preparation and implementation \. A social assessment including potential stakeholders was carried out by a
local non government organization and the preparation unit also held discussions with affected parties \.
8\. Ratings : ICR ICR Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating,
IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \.
9\. Lessons:
1\. It is important to be flexible and to be prepared to adapt project designs in response to changing circumstances,
even when the need for such adjustments are only identified at a late stage \.
2\. In a situation where local consultants and contractors are inexperienced, a balance needs to be established
between using international and local expertise to ensure no costly implementation mistakes are incurred, but at
the same time allowing local professionals to learn through experience \.
3\. Assessing a proposed privatization of public sector assets needs to take into account the anticipated cash flow
of funds for local contractors as well as contractor capability to handle the volume of work expected \.
4\. In circumstances where the extent of funds for future maintenance may be uncertain, it could be cost effective
to design thick pavement overlays to lessen deterioration of the pavement condition over time \.
10\. Assessment Recommended? Yes No
Why? This is a story that is still unfolding \. Reviewing the project at a later stage to see how the reform
action plans and recommendations have been further pursued would be useful \.
11\. Comments on Quality of ICR:
The ICR reads easily, but has an important shortcoming in that it takes the courses of action (major components) as
the objectives and does not address the real project objective which is access to mobility \. The lessons identified,
however, are quite useful\. The author could, nonetheless, have been more critical about the lack of performance
indicators and also the formulation of the development objective which is rather general \. It did not fully cover some of
the issues that were sufficiently important to be covenanted \. | REVIEW |
P090829 | Document of
The World Bank
Report No: ICR0000928
IMPLEMENTATION COMPLETION AND RESULTS REPORT
ON GRANTS
IDA H1940 AF
AND
IDA H2950 AF
IN THE TOTAL AMOUNT OF SDR 108\.2 MILLION
(US$ 160 MILLION EQUIVALENT)
TO THE
ISLAMIC REPUBLIC OF AFGHANISTAN
FOR THE
PROGRAMMATIC SUPPORT FOR INSTITUTION BUILDING II (PSIB II)
AND
PROGRAMMATIC SUPPORT FOR INSTITUTION BUILDING III (PSIB III)
June 20, 2009
Poverty Reduction, Economic Management, Finance and Private Sector Development
South Asia Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 21, 2009)
Currency Unit = Afghani
1\.00 AFN = US$ 0\.02
US$ 1\.00 = 49\.87 AFN
FISCAL YEAR
March 21 March 20
ABBREVIATIONS AND ACRONYMS
AAA Analytical and Advisory Activities M&E Monitoring and Evaluation
ADB Asian Development Bank NGO Non-Government Organization
AIA The Afghan Interim Authority MTFF Medium-Term Fiscal Framework
AISA Afghanistan Investment Support NDF National Development Framework
Agency
ANA Afghan National Army NRVA National Risk and Vulnerability
Assessment
ANDS Afghanistan National Development OED Operations Evaluation Department
Strategy
ANP Afghan National Police PDO Program Development Objective
ARTF Afghanistan Reconstruction Trust PAR Public Administration Reform
Fund
BPHS Basic Package of Health Services PFEM Public Finance and Expenditure
Management
CSO Central Statistics Office PFM Public Financial Management
DAB Da Afghanistan Bank PEFA Public Expenditure and Financial
Accountability
DDR Disarmament, Demobilization and PRGF Poverty Reduction and Growth Facility
Reintegration
DFID Department for International PRR Priority Reform and Restructuring
Development
EOI Expression of Interest PRSP Poverty Reduction Strategy Paper
GDP Gross Domestic Product PSIB Programmatic Support for Institution
Building
GOA Government of Afghanistan PRGF Poverty and Growth Facility
IAB Independent Appointment Board SMP Staff-Monitored Program
IARCSC Independent Administrative Reform SOEs State-Owned Enterprises
and Civil Service Commission
ICR Implementation Completion and SSR Security Sector Reform
Results Report
IDA International Development TISA Transitional Islamic State of
Association Afghanistan (TISA)
ISN Interim Strategy Note TSS Transitional Support Strategy
ISR Implementation Status and Results USAID United States Agency for International
Report Development
Vice President: Isabel Guerrero
Country Director: Nicholas Krafft
Sector Manager: Joel Hellman
Task Team Leader: Birgit Hansl
ICR Team Leader: Birgit Hansl
AFGHANISTAN
Programmatic Support for Institution Building II and III
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Program Performance in ISRs
H\. Restructuring
1\. Program Context, Development Objectives and Design \. 1
2\. Key Factors Affecting Implementation and Outcomes \. 8
3\. Assessment of Outcomes\. 15
4\. Assessment of Risk to Development Outcomes\. 26
5\. Assessment of Bank and Borrower Performance \. 27
6\. Lessons Learned\. 31
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 32
Annexes
Annex 1\. Bank Lending and Implementation Support/Supervision Processes\. 33
Annex 2\. Beneficiary Survey Results\. 36
Annex 3\. Stakeholder Workshop Report and Results\. 41
Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 42
Annex 5 Comments of Cofinanciers and Other Partners/Stakeholders\. 57
Annex 6\. List of Supporting Documents \. 58
Maps
MAP 1\. 59
A\. Basic Information
Program 1
Programmatic Support
Country Afghanistan Program Name
for Institution Building
Program ID P078618 L/C/TF Number(s) IDA-39630
ICR Date 06/10/2009 ICR Type Core ICR
Lending Instrument RIL Borrower AFGHANISTAN
Original Total
XDR 54\.7M Disbursed Amount XDR 54\.7M
Commitment
Implementing Agencies
Ministry of Finance
Cofinanciers and Other External Partners
Program 2
Programmatic Support
Country Afghanistan Program Name for Institution Building
II
Program ID P090829 L/C/TF Number(s) IDA-H1940
ICR Date 06/10/2009 ICR Type Core ICR
Lending Instrument DPL Borrower AFGHANISTAN
Original Total
XDR 55\.3M Disbursed Amount XDR 55\.3M
Commitment
Implementing Agencies
Ministry of Finance
Cofinanciers and Other External Partners
Program 3
Programmatic Support
Country Afghanistan Program Name for Institution Building
III
Program ID P102709 L/C/TF Number(s) IDA-H2950
ICR Date 06/10/2009 ICR Type Core ICR
Lending Instrument DPL Borrower AFGHANISTAN
Original Total
XDR 52\.9M Disbursed Amount XDR 52\.9M
Commitment
Implementing Agencies
Ministry of Finance
Cofinanciers and Other External Partners
i
B\. Key Dates
Programmatic Support for Institution Building - P078618
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 03/23/2004 Effectiveness: 08/05/2004
Appraisal: 06/28/2004 Restructuring(s):
Approval: 07/29/2004 Mid-term Review:
Closing: 03/20/2005 03/20/2005
Programmatic Support for Institution Building II - P090829
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 09/19/2005 Effectiveness: 12/27/2005
Appraisal: 10/17/2005 Restructuring(s):
Approval: 12/13/2005 Mid-term Review:
Closing: 09/30/2006 09/30/2006
Programmatic Support for Institution Building III - P102709
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 02/08/2007 Effectiveness: 07/11/2007
Appraisal: 03/27/2007 Restructuring(s):
Approval: 05/29/2007 Mid-term Review:
Closing: 03/21/2008 03/21/2008
C\. Ratings Summary
C\.1 Performance Rating by ICR
Programmatic Support for Institution Building - P078618
Outcomes Satisfactory
Risk to Development Outcome Substantial
Bank Performance Satisfactory
Borrower Performance Satisfactory
Programmatic Support for Institution Building II - P090829
Outcomes Satisfactory
Risk to Development Outcome Substantial
Bank Performance Satisfactory
Borrower Performance Satisfactory
ii
Programmatic Support for Institution Building III - P102709
Outcomes Satisfactory
Risk to Development Outcome Substantial
Bank Performance Satisfactory
Borrower Performance Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Programmatic Support for Institution Building - P078618
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank Overall Borrower
Performance Satisfactory Performance Satisfactory
Programmatic Support for Institution Building II - P090829
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Moderately Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank Overall Borrower
Performance Satisfactory Performance Satisfactory
Programmatic Support for Institution Building III - P102709
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Moderately Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank Overall Borrower
Performance Satisfactory Performance Satisfactory
iii
C\.3 Quality at Entry and Implementation Performance Indicators
Programmatic Support for Institution Building - P078618
Implementation QAG Assessments
Performance Indicators (if any) Rating:
Potential Problem
Program at any time No Quality at Entry None
(Yes/No): (QEA)
Problem Program at any Quality of
time (Yes/No): No Supervision (QSA) None
DO rating before
Closing/Inactive status
Programmatic Support for Institution Building II - P090829
Implementation QAG Assessments
Performance Indicators (if any) Rating:
Potential Problem
Program at any time No Quality at Entry None
(Yes/No): (QEA)
Problem Program at any Quality of
time (Yes/No): No Supervision (QSA) None
DO rating before Moderately
Closing/Inactive status Satisfactory
Programmatic Support for Institution Building III - P102709
Implementation QAG Assessments
Performance Indicators (if any) Rating:
Potential Problem
Program at any time No Quality at Entry None
(Yes/No): (QEA)
Problem Program at any Quality of
time (Yes/No): No Supervision (QSA) None
DO rating before
Closing/Inactive status Satisfactory
D\. Sector and Theme Codes
Programmatic Support for Institution Building - P078618
Original Actual
Sector Code (as % of total Bank financing)
Banking 5 5
Central government administration 75 75
General industry and trade sector 5 5
Other social services 10 10
iv
Sub-national government administration 5 5
Theme Code (as % of total Bank financing)
Administrative and civil service reform 29 29
Other social protection and risk management 14 14
Public expenditure, financial management and
29 29
procurement
Regulation and competition policy 14 14
Tax policy and administration 14 14
Programmatic Support for Institution Building II - P090829
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 75 75
General finance sector 15 15
General industry and trade sector 10 10
Theme Code (as % of total Bank financing)
Administrative and civil service reform 29 29
Economic statistics, modeling and forecasting 14 14
Public expenditure, financial management and
29 29
procurement
Regulation and competition policy 14 14
State enterprise/bank restructuring and privatization 14 14
Programmatic Support for Institution Building III - P102709
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 68 68
General finance sector 8 8
General industry and trade sector 16 16
Power 8 8
Theme Code (as % of total Bank financing)
Administrative and civil service reform 29 29
Economic statistics, modeling and forecasting 14 14
Legal institutions for a market economy 14 14
Public expenditure, financial management and 29 29
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procurement
State enterprise/bank restructuring and privatization 14 14
E\. Bank Staff
Programmatic Support for Institution Building - P078618
Positions At ICR At Approval
Vice President: Isabel M\. Guerrero Praful C\. Patel
Country Director: Nicholas J\. Krafft Alastair J\. McKechnie
Sector Manager: Joel Hellman Kapil Kapoor
Task Team Leader: Birgit Hansl Philippe Auffret
ICR Team Leader: Birgit Hansl
ICR Primary Author: Birgit Hansl
Programmatic Support for Institution Building II - P090829
Positions At ICR At Approval
Vice President: Isabel M\. Guerrero Praful C\. Patel
Country Director: Nicholas J\. Krafft Alastair J\. McKechnie
Sector Manager: Joel Hellman Kapil Kapoor
Task Team Leader: Birgit Hansl Stephane Guimbert
ICR Team Leader: Birgit Hansl
ICR Primary Author: Birgit Hansl
Programmatic Support for Institution Building III - P102709
Positions At ICR At Approval
Vice President: Isabel M\. Guerrero Praful C\. Patel
Country Director: Nicholas J\. Krafft Alastair J\. McKechnie
Sector Manager: Joel Hellman Ijaz Nabi
Task Team Leader: Birgit Hansl Stephane Guimbert
ICR Team Leader: Birgit Hansl
ICR Primary Author: Birgit Hansl
F\. Results Framework Analysis
Program Development Objectives (from Program Document)
The objective of the series of Programmatic Support for Institution Building (PSIB)
operations aimed at providing rolling support for the implementation of the Government
of Afghanistan's (GoA) medium-term development strategy within the context of a secure
environment and a satisfactory macroeeconomic framework by deepening and sustaining
the reforms underway in the areas of public administration and fiscal management\. These
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reforms are at the core of the Government's objective to build an accountable and
effective state and are critical for successful poverty reduction\.
The operation complemented separate investment and technical assistance operations
aiming at strengthening public finance management, raising fiduciary standards, public
administration reform, human and private sector development, supporting the
implementation of comprehensive sectoral reforms\.
Revised Program Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Programmatic Support for Institution Building - P078618
Original Target Formally Actual Value
Indicator Baseline Values (from Revised Achieved at
Value approval Target Completion or
documents) Values Target Years
Indicator 1 : High-level impact
GDP growth (percent per annum)
Value
(quantitative or 16 8 or above est\. 16\.1 (SY1384 -
Qualitative) 2005/06)
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
Indicator 2 : External assistance on budget (percentage total external assistance)
Value
(quantitative or 14 30 or above est\. 19\.9 (SY1384 -
Qualitative) 2005/06)
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
Indicator 3 : Fiscal and Budget Management
Revenue to GDP ratio (percentage)
Value
(quantitative or 4\.5 6 or above est\. 6\.4 (SY1384 -
Qualitative) 2005/06)
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
vii
Indicator 4 : Implementation of core development budget (actual expenditures as percentage
of original budget
Value
(quantitative or n/a 50 or above 38\.0 (SY1384 -
Qualitative) 2005/06)
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
Indicator 5 : Quality of budget process
Late Cabinet
Value Institutionalized Approval and
(quantitative or 1st mid year review mid-year review delayed Parliament
Qualitative) and medium-term approval,
fiscal framework institutionalization
of MTFF
Date achieved 03/21/2004 12/27/2005 05/20/2005
Comments
(incl\. %
achievement)
Indicator 6 : Fiduciary standards (percentage expenditures eligible to ARTF as a proportion
of expenditures monitored by ARTF's
Value Wages: 95 or Wages: 84\.9
(quantitative or Wages: 87 above Other: 72\.1
Qualitative) Other: 27 Other: 80 or above (SY1384 - 2005/06)
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. % The total reimbursement ratio in SY1384 was 80\.9 percent\.
achievement)
Indicator 7 : Public access to key documents
SY1382 annual
Budget financial
documents, stataements
monthly financial prepared and
Value reports, annual submitted to
(quantitative or Pre-2001 laws financial Cabinet in a timely
Qualitative) statements, manner\. Monthly
external audit financial reports
reports, and prepared by
contract bids and Treasury and
award s posted on MOF
website\.
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
viii
Indicator 8 : Quality of regulatory framework for budget, financial management,
procurement, and audit
The PFEM Law
Value Procurement Law was gazetted in
(quantitative or Pre-2001 laws and adoption of June 2005\.
Qualitative) key regulations Procurement Law
was gazetted in
September 2005\.
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
Indicator 9 : Efficiency of Public Administration
Number of senior merit-based appointments
Value
(quantitative or 0 1,200 1,000
Qualitative)
Date achieved 03/21/2004 12/27/2005 05/20/2006
Comments
(incl\. %
achievement)
Indicator 10 : Size of civil service (excluding Defense, Interior, and Education; annual
average)
Value
(quantitative or 111,000 105,000 - 115,000 104,000 (SY1384 -
Qualitative) 2005/06)
Date achieved 03/21/2004 12/27/2005 05/20/2006
Comments
(incl\. %
achievement)
Indicator 11 : Quality of regulatory framework for civil service
Civil Service Law
was adopted by
Cabinet in August
Value Gazetting of Civil 2005\. In December
(quantitative or Pre-2001 laws Service Law and 2004 a Code of
Qualitative) adoption of key Conduct for
regulations government
employees was
appr oved by
Presidential Decree\.
Date achieved 03/21/2004 12/27/2005 09/16/2005
Comments
(incl\. %
achievement)
ix
Programmatic Support for Institution Building II - P090829
Original Target Formally Actual Value
Indicator Baseline Values (from Revised Achieved at
Value approval Target Completion or
documents) Values Target Years
Indicator 1 : High-level impact
GDP growth (percent per annum)
Value
(quantitative or 16 8 or above est\. 8\.2 (SY1385 -
Qualitative) 2006/07)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. % Growth declined during this period due to a severe drought and a fragile
achievement) security situation which negatively affected invest ments\.
Indicator 2 : External assistance on budget (percentage total external assistance)
Value
(quantitative or 14 30 or above est\. 18\.5 (SY1385 -
Qualitative) 2006/07)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
Indicator 3 : Fiscal and Budget Management
Revenue to GDP ratio (percentage)
Value
(quantitative or 4\.5 6 or above est\. 7\.5 (SY1385 -
Qualitative) 2006/07)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
Indicator 4 : Implementation of core development budget (actual expenditures as percentage
of original budget
Value
(quantitative or n/a 50 or above 48\.4 (SY1385 -
Qualitative) 2006/07)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
x
Indicator 5 : Quality of budget process
Improved budget
preparation process,
Value Institutionalized Cabinet approval
(quantitative or 1st mid year review mid-year review only 4 days late,
Qualitative) and medium-term
fiscal framework Parliament approval
within first month
of SY
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
Indicator 6 : Fiduciary standards (percentage expenditures eligible to ARTF as a proportion
of expenditures monitored by ARTF's Monito ring Agent)
Value Wages: 95 or Wages: 92\.5
(quantitative or Wages: 87 above Other: 64\.6
Qualitative) Other: 27 Other: 80 or above (SY1385 - 2007/08)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. % The total reimbursement ratio increased in SY1385 to 82\.9 percent as
achievement) compared to 80\.9 percent in SY1384\.
Indicator 7 : Public access to key documents
Budget Budget, monthly
documents, financial reports on
monthly financial MOF web-age, SY
Value reports, annual 1384 state budget
(quantitative or Budget document financial audited, state
Qualitative) statements, financial accounts
external audit and budget
reports, and performan ce report
contract bids and submitted to
award s Parliament
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
xi
Indicator 8 : Quality of regulatory framework for budget, financial management,
procurement, and audit
PFEM action plan
adopted by Cabinet,
PFEM law
Gazetting of regulations
Value PFEM and gazetted,
(quantitative or Pre-2001 laws Procurement Law Procurement
Qualitative) and adoption of procedures issued,
key regulations PPU created, state
financi al accounts
created and
submitted to
Parliament
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
Indicator 9 : Efficiency of Public Administration
Number of senior merit-based appointments
Value
(quantitative or 0 1,200 1,474 (SY1385 -
Qualitative) 2006/07)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
Indicator 10 : Size of civil service (excluding Defense, Interior, and Education; annual
average)
Value
(quantitative or 111,000 105,000-115,000 92,180 (SY1385 -
Qualitative) 2006/07)
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
(incl\. %
achievement)
Indicator 11 : Quality of regulatory framework for civil service
Civil Service Law
gazetted, Costed
Civil Service
Value Gazetting of Civil Reform
(quantitative or Pre-2001 laws Service Law and Implementation
Qualitative) adoption of key Plan adopted,
regulations qualitative review
of merit-based
recrui tement and
action plan adopted\.
Date achieved 03/21/2004 12/27/2005 08/09/2006
Comments
xii
(incl\. %
achievement)
Programmatic Support for Institution Building III - P102709
Original Target Formally Actual Value
Indicator Baseline Values (from Revised Achieved at
Value approval Target Completion or
documents) Values Target Years
Indicator 1 : GDP growth (percentage per annum)
Value
(quantitative or 16 8 or above proj\. 13\.5 (SY1386
Qualitative) - 2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments
(incl\. %
achievement)
Indicator 2 : External assistance on budget (percentage total external assistance)
Value
(quantitative or 14 30 or above prel\. 34\.1 (as of Q3
Qualitative) SY1386 - 2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments There is no exact data on the size of the external budget, this calculation is
(incl\. % based on an estimate from MOF and donors\. As of March 2008 there was no
achievement) final data on grants and loans for SY1386 yet\.
Indicator 3 : Revenue to GDP ratio (percentage)
Value
(quantitative or 4\.5 6 or above proj\. 8\.2 (SY1386 -
Qualitative) 2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments
(incl\. %
achievement)
Indicator 4 : Implementation of core development budget (actual expenditures as percentage
of original budget)
Value
(quantitative or n/a 50 or above 55\.5 (SY1386 -
Qualitative) 2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments
(incl\. %
achievement)
Indicator 5 : Quality of budget process
Value Institutionalized Institutionalized
(quantitative or 1st mid-year review mid-year review mid-year review
Qualitative) and medium-term and medium-term
fiscal framework fiscal framework
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments Improved budget process, timely Cabinet and Parliamant approval conforming
xiii
(incl\. % with PFEM law
achievement)
Indicator 6 : Fiduciary standards (percentage expenditures eligible to ARTF as a proportion
of expenditures monitored by ARTF's Monito ring Agent)
Wages: 96\.7 (as of
Q3 SY1386 -
Value Wages: 95 or 2007/08)
(quantitative or Wages: 87 above Other: 88\.7 (as of
Qualitative) Other: 27 Other: 80 or above Q3 SY1386 -
2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments The total reimbursement ratio increased to 94\.2 percent (as of Q3 SY1386 -
(incl\. % 2007/08)
achievement) as compared to 82\.9 percent in SY 1385\.
Indicator 7 : Public access to key documents
Budget documents,
annual financial
Budget statements, monthly
documents, financial reports on
monthly financial MOF website,
budget audited and
Value reports, annual external audit re
(quantitative or Budget document financial ports / budget
Qualitative) statements,
external audit performance report
reports, and submitted to
contract bids and Parliament, EOIs
award s for contract bids
and awards
evaluations are
online
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments
(incl\. %
achievement)
Indicator 8 : Quality of regularly framework for budget, financial management,
procurement, and audit
Satisfactory
regulatory
Satisfactory framework for
Value regulatory public financial
(quantitative or Pre-2001 Laws framework for management with
Qualitative) public financial PFEM law and
management regulations gazetted
and action plan
adop ted by Cabinet
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments There was an overall improvement in PEFA indicators between June 2005 and
(incl\. % December 2007\.
xiv
achievement)
Indicator 9 : Number of senior merit-based appointments
Value
(quantitative or 0 1,200 2,304 (as of Q3
Qualitative) SY1386 -2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments
(incl\. % Cummulative since start of PRR process\.
achievement)
Indicator 10 : Size of civil service (excluding education and uniformed staff; annual average)
Value
(quantitative or 111,000 105,000 - 115,000 95,693 (SY1386 -
Qualitative) 2007/08)
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments
(incl\. % Excludes, according to baseline - all education staff (incl\. non-teachers)\.
achievement)
Indicator 11 : Quality of regulatory framework for civil service
Gazetting of Civil
Value Gazetting of Civil Service Law and of
(quantitative or Pre-2001 Laws Service Law and Civil Servants Law\.
Qualitative) adoption of key Key regulations
regulations under Civil Service
Law adopted\.
Date achieved 03/21/2004 07/11/2007 03/21/2008
Comments The GoA decided in 2007 to have a Civil Servants Law (under the Civil
(incl\. % Service 'mother' Law) to set out more specif ic civil servants' terms of
achievement) references and under which several regulations and procudures would fall\.
(b) Intermediate Outcome Indicator(s)
Programmatic Support for Institution Building - P078618
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : (cf\. triggers for PSIB II)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
xv
Programmatic Support for Institution Building II - P090829
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : (cf\. triggers for PSIB III)
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
Programmatic Support for Institution Building III - P102709
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : n\.a\.
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
G\. Ratings of Program Performance in ISRs
Programmatic Support for Institution Building II - P090829
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 08/09/2006 Moderately Satisfactory Moderately Satisfactory 79\.18
Programmatic Support for Institution Building III - P102709
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 09/18/2007 Satisfactory Satisfactory 80\.91
2 04/25/2008 Satisfactory Satisfactory 80\.91
H\. Restructuring (if any)
xvi
xvii
1\. Program Context, Development Objectives and Design
1\. This Implementation Completion and Results Report (ICR) describes the results of a
series of three programmatic lending operations, the Programmatic Support for Institution
Building I to III (PSIB) spanning over four years\. The contributions of the first operation
were already discussed in a simplified ICR (Report No\. 33000) and rated as follows:
Outcome: Satisfactory
Sustainability: Likely
Institutional Development Impact: Substantial
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
2\. The World Bank Operations Evaluation Department (OED) reviewed the Simplified
ICR and agreed with all ratings but one\. The criterion on Sustainability was assessed as
non-evaluable\. It was expressed that at the time of the simplified ICR it was not possible
to assess whether benefits of this operation and of the program as whole would be
sustainable\. In particular, it was argued that sustainability remains uncertain as long as
security does not improve in all parts of the country\.
3\. The results of the first operation will be briefly discussed in this document in the
context of describing the program results\. This full ICR accordingly rates the
contributions of PSIB II and PSIB III\.
1\.1 Context at Appraisal
4\. The first operation was appraised in June 2004 at the time when there was great
optimism and increasing confidence in the country's economic future\. This was
attributable to the successful process of political normalization which started with the fall
of the Taliban regime in late 2001\. Progress on a road map for creating a peaceful and
democratic state, known as the Bonn process1, was encouraging\. On January 26, 2004
Afghanistan's first Constitution in three decades was ratified and the first democratic
presidential elections were anticipated in October 2004 (originally set for July 2004)\. As
a result many Afghan refugees, mainly living in the neighboring countries of Pakistan
and Iran, began to return to Afghanistan\. The Afghan Interim Authority (AIA) of the
Transitional Islamic State of Afghanistan (TISA) undertook several actions to establish
security and rule of law, including the formation of an Afghan National Army (ANA) and
Afghan National Police (ANP) and the implementation of the Disarmament,
Demobilization and Reintegration (DDR) program\. Overall the security situation was
relatively calm, but remained unpredictable with the occasional kidnapping (and release)
of United Nations staff members\.
1The political agreement was reached in Bonn in December 2001\.
1
5\. The Government of Afghanistan (GOA) showed strong ownership and
accountability in formulating a national development strategy\. It was committed to
take the first National Development Framework (NDF) from April 2002 further towards a
comprehensive development strategy for Afghanistan, reflected in Securing
Afghanistan's Future presented to the donors in March 2004\. This strategy was endorsed
by the World Bank\. Donors played a significant role delivering humanitarian relief to
vulnerable Afghan people and in the immediate reconstruction effort\. The provision of
public services by the government was very limited, especially outside of Kabul\. The
multi-donor Afghanistan Reconstruction Trust Fund (ARTF), administered by the World
Bank was set up in 2002 to finance parts of the government's recurrent budget, but also
increasingly funded priority investments in the GOA's National Priority Programs based
on the NDF\.
6\. The economy started to recover strongly, but from a very low base\. In 2002/03
real Gross Domestic Product (GDP) (excluding opium) was estimated to have grown
about 30 percent and in 2003/04 at 16 percent (Table 1)\. Growth was largely due to a
recovery in agriculture -Afghanistan's dominant economic activity-- including opium
production\. However, it is highly dependent on weather conditions\. Construction and
services were other rapidly expanding sectors, especially in urban areas\. Opium
production emerged as one of the foremost challenges for the authorities and recovered
dramatically after the Taliban ban of 2000\. Production was estimated to have reached
3,400 tons in 2002/03 and increased further in 2004\. Opium export and its derivatives
also became the largest source of export earnings from domestic sources\. Following the
successful completion of the currency conversion in January 2003 prices came down
from a very high level and inflation initially eased off\.
7\. Recovery was driven by sizable donor assistance, but supported by sound
macroeconomic and monetary policies of the new Afghan leadership\. This was
reflected in a stable exchange rate for the new currency, moderating inflation and
adherence to strict fiscal discipline\. For example, in the financial sector rebuilding of the
Da Afghanistan Bank (DAB) as an independent Central Bank was initiated and a number
of new banks were licensed, supported by the recently adopted DAB Law and Banking
Law (2003)\. In March 2004 the International Monetary Fund (IMF) initiated a Staff-
Monitored Program (SMP)\.
8\. Establishing a proper budget process was key for the budget progressively
becoming a tool to implement the NDF and coordinate donors' assistance\. The first
operating budget2 of 2002/03 was an initial step for setting domestic revenue target,
prioritizing operating expenditure and establishing the government's macroeconomic
credibility\. Although domestic revenues exceeded expectations, a significant financing
requirement needed to be filled with donor assistance\. The second and third budget
cycles of 2003/04 and 2004/05 demonstrated increased levels of sophistication\. In
2004/05 the government adopted for the first time a core budget to improve coordination
2The operating budget consists of current expenditures in the form of wages and salaries and some capital expenditure
(i\.e\. basic office refurbishment)\. The government's development budget covers reconstruction projects and some
donor-funded recurrent costs\.
2
Table 1: Macroeconomic Indicators*
2001/02-2007/08
Financial Year begins on March 21
Est\. Est\. Est\. Est\. Est\. Est\. Est\.
2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
(Annual percentage change; unless indicated)
Output and prices 1/
Real GDP (w/out opium) \. 28\.6 15\.7 8\.0 16\.1 8\.2 11\.5
Nominal GDP (in millions of Afghanis) 133,987 182,862 225,108 284,504 322,231 385,489 478,058
Nominal GDP (in millions of U\.S\. dollars) 2,463 4,084 4,585 5,971 6,489 77,232 9,596
Consumer prices (period average) 2/ -43\.4 52\.4 10\.3 13\.2 12\.3 5\.1 13\.0
Consumer prices (end of period) 2/ \. 5\.1 24\.1 14\.9 9\.4 4\.8 20\.7
(In percent of GDP)
Investment and saving
Gross domestic investment \. 28\.3 35\.7 45\.0 44\.6 40\.5 37\.0
of which: non-government \. 1\.2 1\.3 8\.5 9\.6 8\.1 7\.8
Gross domestic savings \. 24\.6 38\.7 46\.7 41\.8 35\.6 37\.8
of which: non-government \. 19\.3 33\.4 41\.8 45\.4 39\.4 41\.4
(In percent of GDP)
Public finances
Operating revenue (excluding grants) \. 3\.2 4\.5 4\.5 6\.4 7\.5 7\.0
Operating expenditure 3/ \. 8\.5 9\.8 9\.4 10\.0 11\.3 10\.6
Operating budget balance (excluding grants) 3/ \. -5\.3 -5\.3 -4\.9 -3\.6 -3\.8 -3\.6
Operating budget balance (including grants) 3/ \. -0\.1 -0\.8 0\.4 1\.6 1\.2 1\.2
Core budget balance (including grants) \. \. \. -1\.2 1\.0 -2\.9 -1\.8
(Annual percentage change; unless otherwise indicated)
Monetary sector
Currency in circulation (year-to-date change) \. 20\.1 40\.9 34\.6 14\.6 13\.3 17\.0
Reserve money \. 20\.1 30\.0 31\.9 12\.1 22\.3 14\.4
(In percent of GDP; unless otherwise indicated)
External sector 4/
Imports (in U\.S\. dollars, percentage change) 5/ \. \. 51\.8 18\.5 25\.5 12\.5 20\.6
(f\.o\.b\.) in million U\.S\. dollars -1,645 -2,508 -3,785 -3,873 -6,130 -6,744 -7,836
Export (in U\.S\. dollars, percentage change) 5/ \. \. 36\.1 21\.6 22\.2 2\.9 11\.0
(f\.o\.b\.) in million U\.S\. dollars 709 1,291 1,894 1,643 1,795 1,811 1,835
Public transfers \. 1,170 2,421 2,477 4,361 4,625 6,068
Private transfers 52 52 55 310 337 401 438
Current account balance, excluding official transfers \. -33\.6 -51\.0 -44\.9 -75\.2 -70\.0 -66\.9
Current account balance, including official transfers \. -3\.7 -3\.0 1\.8 -2\.8 -4\.9 0\.9
Foreign direct investment \. 50 58 187 271 238 242
Capital and financial account \. 144 150 476 357 194 24
Trade balance (percent of GDP) \. -29\.8 -41\.3 -37\.4 -66\.8 -63\.9 -62\.5
Total debt stock 6/ \. \. \. 10\.9 184\.0 155\.0 21\.0
Total debt service \. 10\.0 8\.7 6\.1 5\.7 1\.6 1\.1
Gross reserves (in millions of U\.S\. dollars) \. 425 820 1,283 1,662 2,064 2,763
In months of next year imports of goods and services) 7/ \. 1\.8 3\.1 4\.1 7\.7 9\.7 11\.1
Memorandum items:
Poppy production (in tons) 200 3,400 3,600 4,200 4,100 6,100 8,200
Poppy price ($ per kg) \. \. \. \. 101 94 86
External budget grants (in percent of GDP) \. \. \. 35\.2 56\.0 50\.6 52\.3
Afghanis per U\.S\. dollar (period average) 54\.4 44\.8 49\.1 47\.7 49\.7 49\.9 49\.8
Real effective exchange rate (annual average, percentage change) \. \. \. \. 2\.7 -2\.0 2\.6
Sources: Afghan authorities and IMF
1/National accounts numbers were revised to reflect the authorities' data, excluding the drug economy\.
2/For Kabul only until 2006, afterwards for Kabul and the five largest cities\.
3/Does not include core budget development spending and externally-financed development expenditures\.
4/Numbers have been revised as a result of more reliable data on public grants\.
5/Excludes reexports\. Exports: Excludes opium\. Due to limited data availability, flows associated with U\.S\. Army and ISAF actifvities\. Imports: Official records plus estimates of
of smuggling\.
6/After HIPC and MDRI debt relief and debt relief from the Paris Club creditors\. Debt stock includes capitalizarion of interest until HIPC completion point\.
7/In months of imports of goods and sevices, excluding imports for reexport and imports by donors\.
Note: *All data is representing latest publicly available data for the respective years and might differ from the numbers
presented in earlier Program Documents\.
Official GDP from Central Statistics Office (CSO) includes opium economy in agriculture, and IMF excluded opium
economy by using UNODC annual opium report data\. GDP data from CSO and IMF is not identical\. Trade balances and
Balance of Payments data are compiled by IMF\. Many Ministry of Finance (MOF) documents (like the Medium-Term
Fiscal Framework, MTFF) refer to IMF data\.
3
and control over donor flows\.3 However, external budget grants (financed and executed
by donors directly) comprised the largest part of public expenditures\.
9\. Reform efforts were underway to overcome a civil service system that lacked
professional capacity and suffered from patronage\. The government enacted in 2003
the Priority Reform and Restructuring (PRR) program for reforming the most critical
functions of government with an elevated pay scale in exchange for organizational
restructuring\. This was an attempt to address the inability of the current pay and grade
system to attract, retain and motivate skilled civil servants\.
10\. Social indicators for Afghanistan showed signs of improvement after the return
of peace and broader economic activity\. Most of all, school enrollment increased and
progress was made in food security\. Public health campaigns included vaccination
programs, but infant and maternal mortality were still among the lowest in the world
(Table 2)\. In 2003 the first National Risk and Vulnerability Assessment (NRVA) was
conducted in Afghanistan with the main objective to better understand the livelihoods of
the rural population\.4 Data suggests that 48 percent of the surveyed population fell below
the per capita food expenditure threshold, i\.e\. the cost of purchasing 2,100 calories/day of
the typical food basket consumed by the poorest households\. Households associated with
opium production had significantly lower poverty rates\. The survey also revealed that
about 40 percent of the sampled households perceived that welfare had improved over the
last 12 months\.
Table 2: Social Indicators
2003-06
2003
Births attended by skilled health staff (% of total) 14
Diarrhea treatment (% of children under 5 receiving oral rehydration and continued feeding) 48
Immunization, measles (% of children ages 12-23 months) 50
Improved sanitation facilities (% of population with access) 30^^
Improved water source (% of population with access) 22^^
Immunization, DPT (% of children ages 12-23 months) 54
Incidence of tuberculosis (per 100,000 people) 186
Lifetime risk of maternal death (%) 13^
Lifetime risk of maternal death (1 in: rate varies by country) 8^
Malnutrition prevalence, height for age (% of children under 5) 59**
Malnutrition prevalence, weight for age (% of children under 5) 33**
Maternal mortality ratio (national estimate, per 100,000 live births) 1,600*
Pregnant women receiving prenatal care (%) 16
Primary completion rate, female (% of relevant age group) 21^
Primary completion rate, male (% of relevant age group) 54^
Primary completion rate, total (% of relevant age group) 38^
Ratio of female to male primary enrollment 57
Note: * 2002, **2004, ^2005^, ^^2006
Sources: World Bank, WDI and GDF database
3The core budget consolidates the operating budget with development expenditures channeled through the treasury's
accounts\. The external budget refers to fiscal operations implemented directly by donors\.
4The NRVA was carried out in July-September 2003 and surveyed 11,200 households in 1,850 villages, however, it
was not a statistically representative survey for rural Afghanistan nor did it capture seasonality\.
4
11\. Despite these laudable immediate reconstruction and stabilization efforts,
enormous development challenges remained\. Many of these challenges related to the
limited administrative capacity in the new institutions of the Afghan state and the lack of
cohesion in the newly set-up systems\. For example, budget execution remained at a low
level and most of the external assistance disbursed went not through the Treasury\. Also,
if administrative capacity was still weak at the center, it was even more limited at the
sub-national level, i\.e\. in the provinces\. In order to address key challenges in institution
and capacity building the government requested from the Bank multi-year financial
support to its budget, that would support recurrent costs, as well as priority development
projects that were not yet fully financed by donors\. This was envisioned under the
objective to deepen and broaden reforms in the areas of public administration and fiscal
management\. With its request the government sought to support an important subset of its
medium-term development strategy while other donors supported other reform areas\.
12\. The first PSIB operation built on reforms that were already initiated with
International Development Association (IDA) support\. This included, for example,
the Emergency Public Administration Project\. Also, it focused on areas for which the
authorities had demonstrated strong ownership and had built a good track record of
reforms\. Raising fiduciary standards was a key objective of this operation and it hoped to
function as a catalyst for other donors' continued support, including through the ARTF\.
PSIB I was in alignment with the Bank's second Transitional Support Strategy (TSS) for
Afghanistan from March 2003, which described the support to the country, covering a
period of 18 months to two years\. The Board of Executive Directors approved the first
PSIB in July 2004 with the initial plan to be followed by at least a second operation the
following year, where the key objectives were to remain the same for the program period\.
The first PSIB was a Development Policy Credit in the amount of US$80 million\. The
second and third PSIB were Development Policy Grants, each in the amount of US$80
million\. PSIB II was approved by the Board in December 2005, PSIB III in May 2007,
based on the performance and progress on implementation of agreed actions in the policy
matrix\.
1\.2 Original Program Development Objectives (PDO) and Key Indicators
13\. The purpose of this series was to deepen and sustain the reforms underway in
the areas of public administration and fiscal management\. The success of these
reforms was seen as essential for building an accountable and effective state and critical
for successful poverty reduction\. The PSIBs were a component of an overall package of
operations that aimed at building the financial management of the state, raising fiduciary
standards, and supporting public administration reform (PAR)\. It complemented separate
investment and technical assistance operations that, together, supported the
implementation of comprehensive sectoral reforms\. By strengthening institutions, the
implementation of these reforms was expected to lead to a more efficient allocation of
fiscal resources to priority activities in the areas of human development and private sector
development\. The series was coordinated with other donors' support\.
14\. Key outcome indicators for each operation are presented in the data sheet and
Table 3\. These indicators included high-level impact indicators like, annual GDP growth
5
and external assistance on budget as a proportion of total external assistance\. To
summarize the program baseline in comparison to the end-of program achievements, key
outcome indicators also included a set of indicators on fiscal and budget management,
including the revenue to GDP ratio, budget implementation ratio and indicators that
would assess the quality of the budget process, fiduciary standards and the quality of the
regulatory process for budget and financial management\. This also included the public
access of key documents\. A third set of indicators focused on measuring the efficiency of
public administration with indicators like the number of senior merit-based appointments,
size of civil service and the quality of the regulatory framework for civil service\.
Progress in these indicators is reported in Table 3\. Key policy areas supported by the
operations are detailed in section 1\.4\.
Table 3: Results for Key Indicators of PSIB I-III
Indicator Baseline value /¹ Actual/² Target
(SY1282 - 2003/04) (SY1386 - 2007/08)
A\. Maintaining Macroeconmic Stability
A\.1 Macroeconomnic Policy
GDP growth (% per annum) est\. 16 proj\. 13\.5 8\.0 or above
Revenue to GDP ratio (%) est\. 4\.5 proj\. 8\.2 6 or above
A\.2 Budget Process
External assistance on budget (% of total external
assistance) est\. 14 est\. 34\.1 /³ 30 or above
Mid-year review and medium-term fiscal
framework institutionalized (yearly Institutionalized mid-year review
Quality of budgte process 1st mid-year review aproved by Cabinet and Parliament) and medium-term fiscal framework
B\. Strengthening Public Administration and
Fiscal Management
B\.1 Government Structure
Size of civil service (excluding education and
uniformed staff - annual average) 111,000 95,693 105,000 - 115,000
B\.2 Personnel Management
Gezetting of Civil Service Law and Civil
Servants Law\. Key regulations under Gazetting of Civil Service Law and
Quality of regulatory framework for civil service Pre-2001 Laws Civil Service Law approved\. adoption of key regulations
Number of senior merit-based appointments 0 2,304 (Q3) 1,200
B\.4 Fiducuary Standards
Implementation of core development budget
(actual expenditure as % of original budget) n\.a\. 55\.5 50 or above
Fiduciary standards (expenditures eligible to wages: 95 or above other: 80 or
ARTF as % of monitored expenditures) wages: 87 other: 27 wages: 96\.7 other: 88\.7 above
PFEM and Procurement Laws gazetted,
Quality of regulatory framework for budget, regulations adopted, PFEM action plan Gazetting of PFEM and Procurment
financial management, procurement, and audit Pre-2001 Laws adopted Law and adoption of key regulations
Budget documents, monthly financial
reports, annual financial statements on
MOF web-page, external audit reports/ Budget documents, monthly
budget performance report submitted to financial reports, annual financial
Parliament, EOIs for contract bids and statements, external ausit reports,
Public access to key financial information n\.a\. awards evaluation online and contract bids and awards
Notes: /¹ Baseline data is from the baseline data presented in the Program Documen for PSIB II and its M&E framework\. Since Afghan official data estimates are often revised later in time the latest
offical data for 2003/04 might differ from the baseline presented in the Program Document\.
/²Data is based on official published preliminary data from the end of SY1386 (March 20, 2008) collected during the ICR completion mission in April-May 2008\. For some data points data was since
then available and provided\.
/³ Data as of March 2008\. There is no final data on grants and loans for SY1386 yet\.
1\.3 Revised PDO and Key Indicators, and Reasons/Justification
15\. The PDO or key indicators were not revised during the implementation of PSIB
II and III\. The first PSIB had a simple monitoring and evaluation framework, mostly
focused on process and input indicators\. This was mainly due to the scarcity of data and
monitoring capacity of the government\. Monitoring & Evaluation (M&E) was
emphasized as an area of improvement in the ICR for the PSIB I\. During the preparation
of the PSIB II a new methodology to monitor and evaluate the reform supported agenda
6
was developed\. However, it struggled with the same underlying conditions of PSIB I, i\.e\.
(i) limited data availability, (ii) poor data quality, and (iii) little monitoring capacity of
the authorities\. These limitations were also noted in the Implementation Status and
Results Reports (ISR) for both operations\. The monitoring and evaluation framework did
not contain any indicators on human development, since this area became less of a focus
during PSIB II and III (1\.5 Revised Policy Areas)\.
16\. The Program Documents for PSIB II and III indicated that the evaluation of the
operations would largely focus on progress and input indicators, which could be
linked to medium-term outcomes\. The framework also included indicators on impacts
and outcomes that were outside of the government's control, but considered important in
order to evaluate the impact of the reform program\. During the PSIB II and III
supervision a subset of 11 key indicators was followed (Table 3)\. For each indicator a
baseline was provided for 2003/04 and a target set for 2007/08\.
1\.4 Original Policy Areas Supported by the Program
17\. The first PSIB was prepared before the first democratic elections under the AIA
of the TISA\. It supported a broad reform program with four main pillars: (A\.)
Maintaining macroeconomic stability, (B\.) Strengthening budget management and public
administration, (C\.) Ensuring human development, and (D\.) Promoting private sector
development\. After a break of 15 months the second PSIB supported the newly elected
Afghan administration with a reform program based on the following pillars: (A\.)
Developing a development strategy, (B\.) Promoting security and rule of law, (C\.)
Maintaining macroeconomic stability, (D\.) Strengthening public administration and fiscal
management, (E\.) Enhancing human development, and (F\.) Promoting private sector
development\. While PSIB II wished to address Afghanistan's upcoming key challenges,
i\.e\., the need to finalize the government's development strategy and the first signs of a
deteriorating security situation, the reform program supported by PSIB II became more
focused on strengthening PAR, raising fiduciary standards and promoting financial sector
development\. This led to less emphasis on the pillar of human development and private
sector development\. PSIB III followed this direction and concentrated on deepening and
sustaining reforms in public administration and fiscal management\.
1\.5 Revised Policy Areas
18\. The policy areas were not substantially revised, but the program evolved over
time, consistent with the concept of a programmatic series\. Over the course of the
PSIB II and III operations the reform program supported became more focused on
strengthening public administration and fiscal management and the policy area of human
development became less prominent\. This was reflected in the Government Policy Matrix
under PSIB II and III\. In PSIB I prior actions related to human development comprised
higher budget allocation for these areas\. However, it appeared that the main limitations
were not the amount of resources available, but the limited absorptive capacity\. Decisive
bottlenecks were in budget formulation and implementation and Public Financial
Management (PFM), due to sub-optimal processes and the very limited capacity of civil
servants\. For these reasons there was a slight shift with PSIB II toward deepening and
7
sustaining reforms in the PFM and PAR\. This was also in the interest of guaranteeing an
adequate fiduciary environment for ARTF resources, which were channeled through the
government core budget\. For example, in 2003/04 the ARTF financed about 40 percent
of the budget, in 2004/05 about 35 percent\. For these reasons the monitoring and
evaluation framework did not contain any indicators on human development, since it was
only used starting with PSIB II (1\.3 Revised PDO and Key Indicators, and
Reasons/Justification)\.
1\.6 Other significant changes
19\. PSIB I was a Development Policy Credit, while PSIB II and III were
Development Policy Grants\. For IDA, debt sustainability started to form the basis for
grant allocation with IDA14 (July 2005-June2008)\. Otherwise no significant changes
were introduced to the operation\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Program Performance
20\. Implementation of the reform program since the start of the PSIB series has
been mostly balanced\. There were times of slower progress toward the end of PSIB I
and the first half of PSIB II\. Stepped up supervision and dialogue brought the reform
program back on track and led to an improved performance under PSIB III\. Overall
progress over the four years was commendable, given the difficult country circumstances\.
Due to the initial absence of a coherent national development strategy, the change in
political leadership in the second half of the first operation and overall limited
government capacity the performance in the first half of PSIB II was uneven\. The
incumbent President formed a new Cabinet in late December 2004, shortly after the first
PSIB was approved in July 2004\. The new government needed some time to take
ownership of the program leading to slower than expected progress in public
administration and civil service reform\. However, performance improved markedly
toward PSIB III and throughout PSIB III implementation progress was satisfactory\. This
is reflected in the results for the key outcome indicators in Table 3 (as a sub-set of the
evaluation and monitoring framework)\.
21\. All agreed prior actions for PSIB II and III were completed before Board
approval of each operation (Table 4)\. There was satisfactory progress in achieving
defined prior actions, triggers and key outcome indicators for the series\.
22\. Program performance was rated satisfactory in two ISRs and one Simplified
ICR\. The Simplified ICR for the PSIB I rated the achievement of the outcomes under
the main objectives, strengthening public administration and fiscal management,
satisfactory\. Overall, the reforms supported under PSIB I were expected to have
substantial institutional development impact in the areas of macroeconomic stability,
public administration and fiscal management\. The ISR for PSIB II (August 09, 2006)
evaluated the progress toward achievement of Program Development Objective (PDO)
and overall program implementation as moderately satisfactory\. This period followed
8
immediately the first democratic Parliamentary (and Provincial Council) elections in
September 2005\. Also at this time the authorities were largely occupied with the
preparation of the development strategy (Interim ANDS) and the first Afghan budget
approved by Parliament\. It was assessed that the there were satisfactory plans in place
and solid commitment to move toward fulfillment of triggers for PSIB III\. Two ISRs
prepared for the PSIB III (September 18, 2007 and April 25, 2008) rated the overall
development objective rating and implementation progress as satisfactory\. Progress
gained momentum between October 2006 and April 2007, with all prior actions for PSIB
III having been reached and most triggers having been either fulfilled as specified or
largely fulfilled with sufficient progress\. The government demonstrated continued effort
towards fulfillment of all outcome indicators\. At the time of the last ISR in April 2008,
10 out of 11 actions were assessed as being fulfilled or likely to be fulfilled by the end of
the Afghan solar year 1386 (ending in March 2008)\.5
Table 4: Prior actions for the PSIB I, PSIB II and PSIB III
Programmatic Support for Institution Building
List prior actions from Legal Agreement/ Program Document Status
1\. Adoption by Cabinet of an ordinary and a development budget for its fiscal year Met
1383, which, among other things, contains: (i) an adequate financing and fiscal
framework, which shows the sources of the financing of the deficit; (ii) an
increase in aggregate allocations to provinces above allotments in fiscal year
1382; (iii) an increase in aggregate non-salary allocations to provinces above
allotments in fiscal year 1382; (iv) an increase in the allocation to the Basic
Package of Health Services above fiscal year 1382; (v) an increase in the ordinary
budgetary allocation to the Ministry of Education above fiscal year 1382; and (vi)
an increase in the allocation to the National Solidarity Program above fiscal year
1382\.
2\. Submission to Ministry of Justice of a draft of the Public Finance and Met
Expenditure Management Law, which includes the budget preparation process and
applicable standards of transparency and financial reporting\.
3\. Approval by the Independent Administrative Reform and Civil Service Met
Commission placing 3,000 government staff positions under an elevated pay-scale
in accordance with the government's Priority Reform and Restructuring Program\.
4\. Approval by the Independent Administrative Reform and Civil Service Met
Commission placing Da Afghanistan Bank's staff under an elevated pay-scale in
accordance with the government's Priority Reform and Restructuring Program\.
5\. Adoption by Cabinet of a tax reform package which includes: (i) wage Met
withholding; (ii) a fixed tax (10 percent) on selected services (hotel, restaurant,
telecommunication and international air travel); (iii) a reduction in the corporate
tax rate (to 20 percent); and (iv) withholding tax on rental income (20 percent)\.
6\. Adoption by Cabinet of Income Tax Law amendments which (i) give effect to Met
the Decree of 7 June 2004 which provides for the Income Tax Law and the
Customs Law to be preferred and applied if there is a conflict between those laws
and other laws or agreements that provide for concessional tax treatment, (ii)
provide alternative tax concessions (accelerated depreciation and loss carry-
5At the time of the ISR not all 4th Quarter data was available for SY1386 to allow a final assessment\.
9
forward) for companies that are registered under the proposed investment law and
for companies that enjoyed tax holidays under the 1381 Investment Law, and (iii)
include appropriate transition rules\.
7\. Completion of a draft procurement law and accompanying procurement Met
regulations\.
Second Programmatic Support for Institution Building
List prior actions from Legal Agreement/ Program Document Status
1\. Adoption by Cabinet of a supplemental budget for 2005/6, which includes an Met
adequate financing and fiscal framework reflecting the sources for financing the
budget deficit\.
2\. Adoption by Cabinet of a Medium-Term Fiscal Framework which includes: (i) Met
four-year projections of revenues, expenditures, fiscal deficit, and sources for
financing the deficit; and (ii) specific fiscal policy actions sustaining the
projections\.
3\. Progress in civil service efficiency as evidenced by: (i) gazetting of a new Civil Met
Service Law; (ii) maintenance of the increase in the number of un-uniformed
central Government employees except teachers; (iii) individualized salary
payments to 15,000 Government employees; (iv) approval of 15,000 positions
under the PRR Program; and (v) merit-based recruitment for more than 600 senior
positions\.
4\. Progress to strengthen fiduciary standards as evidenced by: (i) decrease in the Met
ARTF ineligibility ratio for non-wage expenditure (amount of expenditures
ineligible to ARTF divided by amount monitored by ARTF's Monitoring Agent)
below 35 percent; (ii) decrease of the comparable ratio for wage expenditure
below 5 percent; and (iii) gazetting of the Public Finance and Expenditure
Management (PFEM) Law and the Procurement Law\.
5\. Completion of a baseline evaluation of health service delivery performance\. Met
6\. Completion of a census of teachers\. Met
7\. Progress in financial sector reforms as evidenced by: (i) adoption by DAB Met
Supreme Council of 14 commercial banking prudential regulations; (ii)
publication of DAB's 2003/04 financial statements; and (iii) licensing of 12
banking organizations\.
8\. Progress in State Owned Enterprises (SOEs) reform as evidenced by the Met
preparation of a list of SOEs separating SOEs for divesture from SOEs to stay
under Government's ownership\.
Third Programmatic Support for Institution Building
List prior actions from Legal Agreement/ Program Document Status
1\. Adoption by the Cabinet of the 2007/08 budget, which is anchored in a three- Met
year fiscal framework consistent with the Government's objective of fiscal
sustainability\.
2\. Progress in civil service efficiency as evidenced by: (i) the approval of a costed Met
plan for implementing civil service reform by the PAR Steering Committee; (ii)
the processing of 1,400 merit-based recruitment for senior positions and the
adoption of an action plan to improve processes of the Civil Service Appointments
Board; and (iii) progress in implementing the Verified Payroll Plan\.
3\. Progress in strengthening fiduciary standards as evidenced by: (i) a decrease in Met
the ARTF inelibility ratio for non-wage expenditure (amount of expenditures
ineligible to ARTF divided by amount monitored by ARTF's Monitoring Agent)
to below 26 percent; (ii) the gazetting of regulations for the PFEM Law; (iii) the
issuance of procedures to implement the Procurement Law; and (iv) submission of
2005/06 audited annual State budget accounts to Parliament\.
4\. Progress in financial sector reforms as evidenced by gazetting of amendments Met
to the Insurance Law
10
5\. Progress in SOE reform as evidenced by adoption by Cabinet of an SOE Met
restructuring policy\.
6\. Progress in improving the business environment as evidenced by submission to Met
Parliament of the Corporation and Partnership Law\.
7\. Approval by the Cabinet and implementation of electricity tariff increase in Met
Kabul\.
2\.2 Major Factors Affecting Implementation
23\. The design of the programmatic series itself proved to be very beneficial in the
more volatile environment of Afghanistan\. The PSIB series provided rolling support
for the government's development strategy, with each operation specifying a set of
triggers which, when met, provided the basis for proceeding with the next operation\.
This reinforced government ownership, allowed for predictability of resources for the
government and thus sustained motivation to focus on the implementation of the reform
program\. It also allowed the Bank team to exercise a certain level of flexibility in
adjusting the reform program over time and accurately reflecting the substantial reform
agenda and effort of the government\.
24\. Political support and government commitment to core areas of the supported
reform program allowed following through with an ambitious reform agenda\. The
Minister of Finance and the Deputy Minister of Finance were actively involved in
facilitating the implementation of major reform steps, notably in the areas of
macroeconomic policy and fiscal management\. Throughout the PSIB series supported
reforms were regarded as priority by the MOF\. There was genuine interest and effort by
the counterpart team for advancing the reform agenda in a difficult environment with
very limited capacity\. In a few supported reform areas, there was clearly less reform
commitment or government-wide policy agreement, for example on private sector
development\. In other areas, a longer than anticipated political consensus-building
process was needed, in particular in public administration reform\. Government inter-
agency and inter-ministerial coordination could be improved to better align reform efforts
in areas that require contributions from various agencies\.
25\. Regularity of a candid dialogue with the Bank team and GOA created a
constructive and effective work atmosphere\. This included swift responses to
clarification questions and additional technical support requests by the authorities\. This
was also supported by a transparent information exchange, which helped to ensure
credibility and predictability of the Bank financing\. The close cooperation of the Bank
team with the GOA during the PSIB implementation also enabled the continued
engagement on policy dialogue\. Continuity of the core counterpart team throughout
much of the series of operations allowed the Bank team to build a successful working
relationship\. Since the Finance Minister under the first democratically elected
government took office in December 2004, the GOA counterpart team remained of high
capacity, which made it possible to interact effectively, follow-up without major delays
and contribute to capacity-building\.
26\. The PSIB series complemented Bank's investment and technical assistance
operations\. These included the areas of financial management, procurement, public
administration, and financial and private sector development, energy, and human
11
development\. The design of the reform program with focus on areas with strong
analytical underpinning allowed the identification of critical areas of concern and actions\.
The PSIB series ensured adequate fiduciary standards for other donors that channeled
funds through the government core budget, in particular the significant ARTF resources
to the recurrent budget\.
27\. Close cooperation and links with other donor initiatives and their technical
teams helped to prioritize efforts and use synergies in areas of mutual concern\.
Examples are the IMF SMP and Poverty and Growth Facility (PRGF), and parts of the
Department for International Development (DFID), United States Agency for
International Development (USAID) and Asian Development Bank (ADB) programs\.
With the IMF, the adequateness of the macro framework and of the reform program in
revenue mobilization was ensured\. With DFID, capacity building in the Budget
Department and the Fiscal Policy Unit was supported\. With ADB, efforts to improve
statistical capacity at the CSO and institutional capacity at the MOF were encouraged\.
USAID's projects for creating a private sector legal framework, building capacity in audit
and strengthening supervision capacity at the Central Bank were supported\.
28\. The volatile security situation diverted a large share of government attention
and resources to security-related measures\. This was in particular true in the run-up to
the elections at the beginning of the series (end 2004) and since late 2006 when the
overall security situation started to deteriorate\. It also forced the focus of state-building
on the central government in Kabul, rather than the extension of reform efforts to sub-
national levels\.
29\. The absence of a comprehensive government strategy at the outset of the PSIB
series led to the design of a very broad reform program and government policy
matrix\. For that reason the series needed to be gradually focused over time to address
identified areas of reform priority\. Priority areas emerged largely through the presence of
individual champions in specific government departments or sectors\. The ANDS was
only finalized in April 2008, after the PSIB series ended\.
30\. The scarcity of core skills and competencies required to build an effective
administration were more persistent than expected\. This was aggravated by the
continued competition for qualified staff by Non-Government Organizations (NGOs) and
aid agencies\. The impact of this was felt in all areas of the supported reform program and
the anticipated speed of reforms, but in particular in the area of public administration
reform\. In hindsight, expectations for the PAR agenda were overly ambitious and did not
adequately reflect the long term nature of capacity building\. Not considered earlier but
now increasingly recognized, is that the Independent Administrative Reform and Civil
Service Commission (IARCSC) has neither the political nor technical credibility to
implement reforms in all ministries\. So a more appropriate role for the IARCSC is to
guide and oversee ministries' implementation, while allowing those ministries to take
responsibility for their own respective reforms\. In the area of capacity building, a review
of the Afghan Expatriates Program found that filling the capacity gap was successful
where the objective of technical assistance was clear and focused, and this change was
introduced in the successor program's (Management Capacity Program) design\.
12
31\. The general lack of statistical data and monitoring capacity on the government
side first delayed and then complicated the compilation of an M&E framework\. For
this reason there was no comprehensive set of outcome indicators that could be followed
throughout the series\. This led also to the focus on process and input indicators,
including selected indicators on outcome and impacts that were beyond the government's
control\.
32\. The risk of the program was considered as significant before the first PSIB and
was validated by the implementation experience\. Main country risks (political,
security and macroeconomic) -the mitigation of which was outside of the scope of the
program-- remained present\. Especially the impact of the deteriorating security
environment cannot be underestimated\. Security concerns and related issues are
continuing to dominate the attention of high-level political decision-makers and to
influence their policy choices\. This is particularly apparent in regard to budgetary
pressures from the security sector\. Although implementation capacity improved slowly
over the program series it remained heavily dependent on international technical
assistance\. However, other high risk factors were very successfully mitigated through an
adequate program design and adjustment of the reform program over the course of the
series, and close supervision and continued dialogue with the authorities during program
implementation\. For example, fiduciary and implementation risks were successfully
mitigated partly due to progress in fiduciary standards and budget implementation under
the reform program supported by the series itself\. These improvements also contributed
to higher fiduciary standards for other government transactions and the entire IDA
portfolio\. This contributed to the assessment of high perceived benefits from the
successful PSIB series\. The high benefits of the PSIB series justified the initial approach
of development policy lending in the high risk environment of Afghanistan\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
33\. The M&E framework was overall robust, but also revealed some design
weaknesses\. Generally it was successful in assisting the GOA and Bank team during
operation supervision to track key indicators and to identify issues that would need to be
addressed in the implementation of the reform program\. The M&E framework evolved
from the first to the second operation\. For PSIB I it included 19 indicators in five core
areas of reform support: PFM, transparency of PFM, budget formulation, budget
execution and external audit\. All but two were qualitative indicators\. The M&E
framework for PSIB II and III included 60 indicators, and there was the effort to include
more easily verifiable quantitative indicators\. However, the list of indicators was too long
to monitor regularly and some indicators on impacts and outcomes were outside of the
government's control (e\.g\. proportion of donor assistance on core budget as percentage of
external assistance)\. For each indicator a baseline was provided for 2003/04 and a target
set for 2007/08\.
34\. Throughout the series, the Bank project team provided assistance to the
government counterpart in monitoring and evaluating the program\. Government
counterparts facilitated access to key data sources for the indicators\. Information on
indicators was reported in the aide memoires and the ISRs\. This arrangement worked
13
well in an environment where the monitoring capacity of the government counterpart was
very limited\. During the implementation period, the official data for baseline data
estimates for the M&E framework, as well as the official data estimates collected during
supervision missions, were continuously revised\. Thus, the latest public data on 2003/04
are not necessarily coinciding with the baseline data defined in 2005\. Similar, data
estimates collected and reported in the ISRs were subject to later revisions and might not
coincide with data recorded in this ICR\. There is a long delay between the end of the
Afghan fiscal year (March 20) and the first data available for that fiscal year\. Data
reconciliation can take up to a year\. This ICR used the latest available data for 2007/08
as available during the ICR completion mission\.
35\. The M&E framework for PSIB I was largely based on process indicators
requiring a qualitative assessment of progress\. The improved M&E framework for
PSIB II and III tried to incorporate more quantitative indicators to make the assessment
of progress more straightforward\. However, this M&E framework included a large
number of indicators (60), some of which were difficult to track over the life of an
operation\. A smaller sub-set of key outcome indicators from this framework was thus
used for regular monitoring\. This list consisted of eleven indicators, which were tracked
in the ISRs for PSIB II and III\. While the M&E framework itself was deemed adequate,
the basic data and monitoring constraints in the Afghan country environment limited the
utilization of the M&E framework\. Important data limitations were noted in the
Simplified ICR for PSIB I and the ISRs for PSIB II and III\. Due to the process nature of
several outcome indicators it was at times difficult to summarize and assess the results in
these categories\. Similarly, the significant lag period between the end of the Afghan
fiscal year and the availability of first reliable data estimates for that fiscal year
obstructed a clear and timely assessment of indicators over the program lifetime\. Indeed,
often pre-estimates turned out to be more optimistic than the final end-year data\.
However, overall the M&E framework was a valuable attempt to track progress on the
program implementation and provide a link to medium-term outcomes\. Statistical data
capacity building could have been a more prominent part of the PSIB series itself, in
order to mitigate this problem\.
2\.4 Expected Next Phase/Follow-up Operation
36\. Following the good progress under the PSIB series, the government requested
that the World Bank continue to be engaged in budget support\. The Afghanistan
Strengthening Institutions Development Policy Grant was approved by the Board of
Executive Directors in June 2009\. Given the need for continued reform support through
the government core budget and in view of the political uncertainty in the run-up for the
elections in August 2009, the new development policy grant is a stand-alone operation
with targeted reforms in MOF to preserve reform gains of the most successful
components of the PSIB series\. The grant is providing US$35 million in budget support,
assisting the government with crucial discretionary funds to address expenditure
pressures\. Recently revenue under-performance and spending pressures (as a result of
external shocks, e\.g\. global food or fuel price increases, as well as the deteriorating
security situation) resulted in a significant reduction in cash balances that forced GOA to
adjust medium-term spending downward starting with the SY1388 budget\. Beside the
14
wish to address important financing needs of the GOA, the main function of the
development policy grant is to strengthen the macroeconomic and fiduciary environment
for donor assistance going through the core government budget of Afghanistan\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
37\. The PSIBs' objectives were at the core of the government's goal to build the
institutions of an accountable and effective state and are critical for poverty
reduction\. Public administration and fiscal management reforms were very relevant in
the post-conflict setting of Afghanistan and a central part of the GOA's medium-term
development strategy within the context of a secure environment and a satisfactory
macroeconomic framework\. At the outset of the series, the administrative capacity of the
Government to formulate and implement policies was very limited and there was no
systematic mechanism to adopt and coordinate policies across a large number of
ministries with overlapping functions\. Also, the ministries' capacity to develop and
implement policies was limited\.
38\. The Bank's analytical work supported the main reform areas of GOA's strategy
and has been used for the design and prioritization of the reform program
supported by the PSIB series\. This resulted in an appropriate design that was based on
sound analytical underpinnings and with a focus on areas with sufficient knowledge base\.
The Bank's Analytical and Advisory Activities (AAA) provided significant support in the
area of public administration and fiscal management\. Technical assistance had been
continuously provided for fiduciary areas and civil service reform\. In the area of private
sector development, Afghanistan: Financial Sector Reforms (March 2003), an Investment
Climate Assessment (December 2005) provided the analytical underpinning for the PSIB
series\.
39\. However, a shortcoming to the design was the too broad scope of the supported
reform program in a country-setting with limited implementation capacity\. This was
reflected in an overly broad design of the supported government policy matrix\. In two
areas, private sector and public administration reform, the design was subject to an
overestimated readiness to implement reforms\. While the choice of public administration
reform was justified at the time, because of expected synergies with other PAR related
IDA projects and the wish to provide additional leverage through policy dialogue, these
reforms turned out to be more complex than expected\. The difficult political economy
surrounding this topic was underestimated and led to an unrealistic expectation on the
possible timeline to implement these reforms successfully\. In the area of private sector
reforms, the need for strong government leadership was not acknowledged appropriately,
although there was good analytical work underpinning expected reforms in this area\.
Both reform areas suffered from the overall lack of capacity\. To the credit of the Bank
team these shortcomings were addressed over the course of the series where possible, in
particular making use of the flexibility that the design of a programmatic series allowed\.
This was reflected in the adaptations of the program design over the course of the series
15
with: (i) decreasing focus on private sector reforms, and (ii) more realistic reform
expectations in relation to PAR\.
40\. The Bank support for the PSIB reforms was anchored in the Interim Strategy
Note (ISN)6, which envisaged continued provision of single-tranche budget support\.
The ISN summarized lessons from the implementation of the TSS and noted that
reconstruction is not only about infrastructure, but also about rebuilding the state itself\.
As such, the process of reconstruction takes time, reinforcing the need for programmatic
support to building institutions\. The PSIB series appropriately addressed the core
objective of the strategy: to build the capacity of the state and its accountability to its
citizens and to promote growth of the rural economy and of a formal, modern, and
competitive private sector\. Through their impact on budget management, fiduciary
standards, and capacity building, they also supported the entire portfolio\. Their design
also maximized the synergies with other instruments (investment lending, analytical work,
and administration of the ARTF)\.
3\.2 Achievement of Program Development Objectives
41\. The achievement of the overall PDO to deepen and sustain the reforms
underway in the areas of public administration and fiscal management were
satisfactory\. Institution-building was at the core of the objectives of the PSIBs and
significant progress has been made under PSIB I-III The outcome/output indicators for
the series of operations presented in Table 3 and the data sheet indicate good program
performance\.
(A\.) Developing a development strategy: Satisfactory
42\. There was satisfactory progress in developing Afghanistan's national
development strategy\. Shortly after approval of PSIB II, in January 2006, the
Government completed its Interim ANDS and presented it, together with the Afghanistan
Compact, to the international community\. The Interim ANDS strategy served as the
country's interim Poverty Reduction Strategy Paper (PRSP)\. It was structured around
three pillars: (i) security, (ii) governance, rule of law and human rights, and (iii)
economic and social development\. The Compact guided the program for Afghan
development and cooperation of government and international community after the
formal conclusion of the Bonn process with the inauguration of the National Assembly in
December 2005\. The Compact set specific goals and benchmarks in security, governance,
economic and social development, and counter-narcotics to evaluate performance over
the five-year period 2006-11\. The PSIB III aimed at supporting the government's
medium-term development strategy, the Interim ANDS and specifically incorporated
many of the Compact benchmarks into the government policy matrix\. The government
embarked immediately following on a process of analytical work, sector strategy
6The country assistance strategy related to these operations was provided in the Bank's ISN (FY06-07), discussed by
the IDA Board of Executive Directors in May 2006, and the two TSS covering the 2002-06 period\.
16
formulation, and consultations to develop the Interim ANDS into a full ANDS\. The
ANDS covering the five-year period from 2008 to 2013, was approved by President
Hamid Karzai and his Cabinet on April 21 2008, and submitted to the IMF and World
Bank as Afghanistan's PRSP\. While the ANDS provides a general development
7
framework, it still lacks clear priorities and strategic guidance for implementation\.
(B\.) Promoting security and rule of law: Unsatisfactory
43\. Progress in promoting security and rule of law has been unsatisfactory\. For the
implementation of the reform program supported by the PSIB series and the
macroeconomic framework that underpinned them, an adequate security environment
was a critical element\. In recognition of the critical role of security, the Government
adopted a special Millennium Development Goal on enhancing security\. While progress
has been made in rebuilding state institutions and stimulating economic growth in Kabul
and some other cities, adverse security conditions have prevented such progress in other
regions\. As a result, the reconstruction process has been affected and the GOA has
difficulties imposing its presence outside of Kabul and exerting countrywide leadership\.
Inadequate security remains the main country risk to achieving key national goals for
economic growth, political normalization and social development\. The security challenge
has been compounded by the lack of overall coordination between military/political and
development actors\. While important assistance is delivered through the U\.S\. and
International Security Assistance Forceled Provincial Reconstruction Teams this
resulted in a "provincialization" of aid and potentially pulled resources away from
national programs\. An important lesson for the World Bank in this regard is that
measures are needed to ensure that these military-led development efforts support more
national programs, like the National Solidarity Program, Rural Access Roads and
Irrigation Rehabilitation\.
44\. Over the period of PSIB II insecurity did not present a strategic threat to the
government, but since the end of 2006 and during the last PSIB operation the
security situation continued to deteriorate\. The government followed a Security
Sector Reform (SSR) strategy, which included the build up and training of the ANA, the
ANP and the implementation of the DDR process\. The DDR initiative was completed in
June 2006 and a follow-up program initiated (the Disbandment of Illegal Armed Groups
Program)\. The implementation of the SSR framework led in some regions to an improved
security situation\. However, in the south and east where anti-Government and narcotics
elements were more active, security started to deteriorate\. While the capacity of the
ANA increased, the police and justice system remained weak; lack of security still
hindered private investment, reconstruction, and especially public service delivery
outside Kabul\. Sources of insecurity are complex, including increased insurgency
(particularly in the southern and eastern regions), criminality, drug-related activity, and
7The PRSP and the Joint Staff Advisory Note (Islamic Republic of Afghanistan: Joint Staff Advisory Note of the
Poverty Reduction Strategy Paper, prepared by the staffs of the International Development Association (IDA) and the
IMF, May 15, 2008 [Report No\. 43431-AF]) were discussed by the IMF Board on June 2, 2008 and IDA Board on June
3, 2008\.
17
terrorism (including explosions and suicide bombings in urban areas)\. Managing the
fiscal costs of increasing security expenditures also became more challenging\.
Implementing the National Drug Control Strategy remained difficult, exacerbated by the
increase in opium poppy cultivation in 2006 and 2007\. Finally, reform of the justice
system continued to suffer from problems in the institutional set-up, such as the lack of
independence of judges and concentration of power and functions in the Supreme Court\.
The overall legal framework remained inadequate as did the number and quality of
correctional facilities\. There is a lack of human capacity in criminal justice and internal
security forces are perceived as unreliable and corrupt\.
(C\.) Maintaining macroeconomic stability: Satisfactory
45\. Measures to maintain macroeconomic stability have achieved satisfactory
outcomes\. Over the course of the PSIB series the GOA successfully maintained a stable
macroeconomic framework as evidenced by the successful completion of seven quarterly
reviews under the IMF Staff-Monitored Program (SMP), which was initiated in March
2004 and the successful completion of four reviews under the IMF PRGF between June
2006 and July 2008\. During PSIB II growth recovered to 16 percent in 2005/06,
following a rebound in agricultural production due to better precipitation and growth
prospects remained good\. Inflation eased off and the nominal exchange rate remained
stable\. In support of the Government's objective to strengthen the budget process, PSIB
II had as important triggers the adoption of the PFEM Law and the MTFF\. In June 2005,
the Public Finance and Expenditure Management (PFEM) Law was gazetted and a Fiscal
Policy Unit created in the MOF\. In October 2005, the Government adopted an MTFF
that outlined the key fiscal policies for the next three years\. Progress in increasing
revenues was an important trigger for PSIB III\. Revenues rose in 2006/07 to 7\.5 percent
of GDP, increasing in that year by 28 percent over 2005/06\. This was due to a number of
measures taken in 2005/06: road tolls were introduced, new tax manual and associated
forms were made available, and an appeal system was installed\. The import tariff
structure was reformed, introducing two higher tariff bands on certain goods, partly in
lieu of excises\. The Large Taxpayer Office was further strengthened and the Automated
System for Customs Data, ASYCUDA, was installed on the country's two major transit
routes\.
46\. During the last quarter before PSIB III closed initial gains from the reform
efforts outlined in this ICR became increasingly under threat due to a variety of
factors\. While the revenue performance during the first half of 2007/08 was satisfactory,
revenue collection in the third quarter fell somewhat short of the IMF PRGF indicative
target for December 2007; the third and fourth review of the PRGF were completed
successfully by a waiver for this performance criterion\. Nevertheless, the revised annual
GDP growth and revenue ratio still fulfilled the target set for the PSIB series and were in
2007/08 comfortably above the set target of 8 percent and 6 percent respectively\.
(D\.) Strengthening public administration and fiscal management: Satisfactory
47\. Under PSIB II progress in the area of PFM was satisfactory, but for public
administration reform progress was uneven, albeit positive\. Prior actions under PSIB
18
II continued to support progress in establishing a legal framework for PAR, in particular
the gazetting of the Civil Service Law (adopted by Cabinet in August 2005)\. The
enactment of the Civil Servants (Employee) Law in June 2008 indeed strengthened the
overall legal framework for civil service management in Afghanistan and included
provisions to implement a new pay and grading structure across the non-military civil
service\. However, in the PRR implementation weaknesses emerged and the program
slowed down\. There were questions in regard to the sustainability, both fiscal and
political given the asymmetric approach and slow implementation; the effectiveness in
restructuring ministries and attracting skilled staff; and governance in recruitment
processes\. In retrospect, the asymmetrical nature of the program was more in line with
developed countries' practices, where discipline is more ingrained\. The Government in
2005 adopted a revised PAR strategy, to shift the focus away from previous asymmetric
and department-centered reforms toward comprehensive reforms involving whole
ministries\. Throughout PSIB III, there was continued progress in merit-based
recruitment, and the Independent Appointment Board (IAB) has appointed since its
inception in September 2003, 2,304 candidates for senior grade 2 and above and
monitored 13,461 appointments at grade 3 and below\. However, some vulnerabilities of
the IAB's conduct of merit-based recruitment were identified in early 2007, and a
progress review was made in November 2007, reflecting concerns about the technical
capacity of the IAB and the level of political interference in new appointments to the IAB\.
48\. Under PSIB II and III, achievements in PFM continued to build the credibility
of the budget as a policy instrument\. Progress has been satisfactory, particularly in
budget execution elements of control, accounting, reporting and audit as evidenced by the
improvements for several indicators in the Public Expenditure and Financial
Accountability (PEFA) assessment between June 2005 and December 2007\. Development
budget execution a key outcome indicator-- reached 56 percent in 2006/07 over-
fulfilling the target of 50 percent\. There was a significant improvement in the total ratio
of total expenditures eligible for reimbursement under the ARTF recurrent cost window
over the years\. This was despite the fact that Monitoring & Evaluation of the eligibility
ratios became over the lifetime of the PSIB series much more stringent\. PSIB also
supported the adoption and gazetting of the PFEM Law in June 2005\. These
achievements contributed to an increase in the implementation ratio of the budget and
tighter fiduciary standards\. Monthly financial reports are posted on the MOF website,
and government's accounts have been audited by the Controller and Audit Office
(external auditor)\. For the first time, the 2005/06 budget was audited and the audit report
was sent to Parliament in a timely manner\. As another prior action for PSIB II, the
Procurement Law was enacted in 2005\. With the establishment of a modern Procurement
Law, reforms in procurement picked up with a capacity development program throughout
Government, and a system to monitor and disclose procurement activities\. In November
2006, the centralized Procurement Policy Unit received ISO 9001 certification\.
49\. Despite the major improvements achieved under the PISB II and III, most of the
development aid for Afghanistan is still off-budget\. Also, a large share of civil
servants is paid with donors funds through the core budget\. This high level of aid
dependency, combined with a lack of government control over large donor resources
remain key issues\. While this does not diminish the successes of the PSIB series, it does
put those successes in perspective\.
19
50\. While the PISBs saw immense progress in PFM, there remain concerns about
the sustainability of some of these achievements\. After closing of the program series
in July 2008 a Procurement Law which overrode the 2005 Law was enacted, with mixed
implications\. Proposed amendments made an upward revision of the threshold limits for
first grade award authorities, allowing faster processing of procurement documentation\.
But several revised Articles caused concern, in particular in regard to low value
procurement\. This diluted the transparency of the procurement process and together with
other changes weakened the fiduciary environment, including compromising the
eligibility of government's Operation & Maintenance expenditures for reimbursement
from the ARTF recurrent cost window\. The GOA committed to address these concerns
swiftly\.
(E\.) Enhancing human development: Satisfactory
51\. Progress in the health and education sector has continued through PSIB II and
PSIB III and can be assessed as significant\. In the health sector the increased Basic
Package of Health Services (BPHS) coverage became one of the success stories for the
government, and led to increased use of services, progress in outputs that start to be
reflected in improved outcome indicators\. Latest available data from the Health
Management Information System indicates that skilled birth attendance increased from 3
percent in 2003/04 to 37% in 2007/08, DPT3 vaccination coverage increased from 21 to
over 90 percent and out-patient visits reached nearly one per year\. The third-party quality
assessment indicated that patient satisfaction is high and overall perceived quality of care
is at 75 percent (with convenience to travel to facility rated lowest)\. In education
progress was also substantial and new leadership in this sector led to the development of
a comprehensive five-year strategic plan\. Also, there has been remarkable progress in
increasing rates of female participation both among students and teachers\. In 2003, there
were 4 million children in school (about 25% were girls) and 3,053 female teachers\. In
2007/08, there were 5\.79 million children in school (34\.9% of these are girls) and 30,460
female teachers (females representing now 28% of the teaching force)\.
52\. There are national programs, which served effectively and successfully as socio-
economic programs supporting communities, households and individuals\. But apart
from the public pension program for survivors of martyrs and combat-related disabled,
existing programs do not target well the poorest and vulnerable who are left largely to
humanitarian assistance\. The government started important diagnostic work in this area,
completing the 2005 NRVA and preparing in March 2007, with IDA support, the first
poverty diagnostic (a trigger for PSIB III)\. Since then, the CSO launched and completed
the much improved NRVA 2007/08 with IDA support\.
(F\.) Promoting private sector development: Moderately unsatisfactory
53\. Progress in private sector development stagnated because reforms in this area
lacked strong government ownership and commitment\. PSIB II and III supported
improvements in the legal and regulatory framework for establishing, operating, and
ceasing business organizations\. Although some key business organization laws became
law through Presidential Decree on January 18, 2007 (and are thus in force), they still
20
awaited ratification from Parliament and implementation by the time of closure of the
operation\. The situation regarding several DAB sponsored laws remained largely
unresolved\. In the non-banking financial sector, amendments to the Insurance Law have
been gazetted, regulations drafted, and a new Insurance Committee was established as
part of the MOF\. The limited progress in this area is reflected in the consistently low
Doing Business indicators for Afghanistan\. Afghanistan remained at or near the bottom
for each indicator over the last three years\. Between the Doing Business Reports of 2007
and 2008 there was only one reform reported and Afghanistan slid by 3 ranks in the
overall rating\. Between the Doing Business Reports of 2008 and 2009 no new reforms
were reported and Afghanistan ranked 162nd place out of 181 countries\. Overall the
private sector remains impeded by bureaucratic red-tape and a lack of transparent rules\.
This is aggravated by high perception of corruption, as demonstrated in the low ranking
of Afghanistan in the Transparency International ratings: Afghanistan dropped from
117th out of 159 countries surveyed in 2005 to 172nd of 180 countries in 2007 and
subsequently to 176th out of 180 countries in 2008 (i\.e\. fifth-worst in the world)\.
54\. The financial sector is still lacking a comprehensive strategy to reduce key
vulnerabilities and to extend financial intermediation\. There has been considerable
effort to rebuild the financial sector in terms of its institutional and legal framework,
which has led to an increased number of private commercial banks operating in
Afghanistan and an increase in the amount of loans and deposits\. However, there has
been a weak banking supervision capacity in the Central Bank, and underdeveloped
financial infrastructure, which continues to exposes the banking sector to potential
systemic risks\. Although there was some progress in building the Central Bank
supervision capacity the rapid growth of the banking system and range of available
banking services poses still considerable challenges for the supervisory authority,
especially in enforcement\. A weak financial sector still remains one of the major binding
constraints to private sector development in Afghanistan\. Currently, the sector does not
meet the financial needs of industries and individuals\. Most businesses still have neither
bank accounts nor access to formal financial services, but rely on the informal fund
transfer system, hawala\. In the most recent Doing Business (2009) rankings for "Getting
Credit", a measure of credit information sharing and legal rights of borrowers and lenders,
Afghanistan ranked 178th out of 181 countries\. There are two critical challenges which
remain: (i) ensuring that the financial regulator, i\.e\., Central Bank has the proper
institutional capacity to adequately carry out its core functions, especially supervision of
a rapidly growing banking sector and thereby properly manage systemic risk issues; and
(ii) finding ways of establishing effective property rights and information that the
financial sector can rely on for the purposes of extending credit\.
55\. Divestment of SOEs was progressing satisfactory despite controversial public
and political debates, thanks to a very energetic team in the MOF\. As of March 2008,
the Cabinet approved 19 divestiture proposals, leading to successful auctions of movable
and immovable SOE and former banks assets\. Assets in the amount of US$9\.6 million
were transferred to the private sector\. Of the total estimated 14,000 SOE employees,
1,050 have obtained severance payments and 208 received re-training\. Measures to
improve the financial reporting of SOEs were initiated at the end of PSIB III\. The SOE
department established a Financial Monitoring Section and started to review financial
reporting practices\. It confirmed that only few SOEs submitted balance sheets for
21
2005/06 and the existing reporting format does not provide enough substance for
privatization or taxation, and contains no financial information or any annual plan, report
or audit\.
56\. Supported reforms in the power sector increased the average tariff to bring it
closer to the medium-term cost of supply, but progress in improving governance in
this sector was slow\. In 2006, external assistance to procure fuel for power generation in
Kabul and three other smaller cities in the South was discontinued and the GOA had to
identify alternative financing\. To reduce the fiscal burden of the high level of power tariff
subsidization (notably in Kabul, the country's largest demand center), it increased the
electricity tariffs in Kabul effective September 2006\. As indicated in the Program
Document, given the weak statistical base, the poverty impact of the tariff increase is
difficult to assess\. Nevertheless, this ICR attempted an impact assessment with newly
available data from the NRVA 2007 (Annex 2\. Beneficiary Survey Results)\. Evidence
from household survey data analysis concludes that electricity tariff increase would have
little negative impacts on welfare of Afghan households\. A key first step to improve
governance in the sector is the corporatization the power utility and progress was made in
2007/08 with support from IDA's Power Rehabilitation Project\. However, by the closure
of the operation regular reporting by the utility was still pending\.
3\.3 Justification of Overall Outcome Rating
Ratings: Satisfactory for both PSIB II and PSIB III\.
57\. Achievements in the key areas of the reform program supported by PSIB II and
III were satisfactory\. Macroeconomic stability was attained and progress in the focus
areas of fiscal management and public administration was satisfactory\. While the
government was successful in developing its national development strategy, the
implementation in the area of security and rule of law was unsuccessful\. However, since
improvement in the area of human development was satisfactory, as underpinned by
recent new data sources, it appears that service delivery improvements are not the
predominant factor in security enhancement\. Similarly, other key components of the
PSIB operations, PAR and PFM, did not have the desired impact on the security situation\.
Overall the program and its outcome indicator framework had five main cross-cutting
areas of focus\. The following is a summary of main achievements of PSIB II and III in
these five areas:
58\. First, the PSIBs supported successfully improvements in the legal framework\.
These included: the PEFM Law, Procurement Law, Civil Service and Civil Servant Law,
the key Business Organization Laws, and regulations for several of these and other laws\.
All of the legislative pieces were signed into law over the course of the series and
represented prior actions or triggers for the operation\. The PEFM Law established (i) a
sound budget preparation framework, with comprehensive and transparent documentation,
(ii) requirements for accounting and regular reporting in line with international standards,
and (iii) an independent review of the annual financial statements for presentation to the
National Assembly\. The Procurement Law established (i) transparent and competitive
procurement procedures with contestable mechanisms based on objective and verifiable
selection and award criteria and (ii) the responsibilities of government officials involved
22
in procurement\. The Civil Service Law and Civil Servant Law established (i) the
principle of open competition and merit for all civil service appointments; (ii) the
IARCSC, including independent appointment and appeal boards); (iii) the Administrative
Reform Secretariat as the focal point for public administration reform; (iv) detailed terms
of references for civil servants; (v) the Pay & Grading framework of the new civil
service; and (vi) the base for a number of regulations and procedures to be developed
(including human resource regulations and appointments procedures)\. The business
organization laws (the Partnership and Corporation Laws) and two complementary laws
(the Arbitration and Mediation Law) laid out important rules for (i) starting a business
and obtaining licenses; (ii) closing a business; and (ii) protecting investors\. These legal
changes have been gazetted, a prerequisite for implementation and they were critical for
the institution building agenda supported by the PSIB series\.
59\. Second, the PSIBs supported effectively improvements in budget management
processes\. Budget preparation improved and became timelier over the PSIB series\. For
example, the adoption by Cabinet of the 2004/05 and 2007/08 budgets were prior actions
for PSIB I and PSIB III respectively\. The program also supported the institutionalization
of the mid-year review as a mechanism to transparently adjust allocations based on
performance and inform the following year's budget - a prior action for PSIB II and the
2005/06 budget\. The PSIBs prior actions in particular supported the introduction and
gradual refinement of a MTFF, which includes (i) a fiscal table with 4-year projections of
revenues, expenditures, fiscal deficit and sources of financing, and (ii) a description of
the policy actions which sustain the projections\. On the execution side, the program
supported a number of improvements that have led to an increase in fiduciary standards
(i\.e\. trigger on eligible expenditures for ARTF reimbursement)\. This includes the
achievement of regular annual audit reports of the core budgets financial statements by
the Control and Audit Office and their submission to the National Assembly within 6
months from the end of the fiscal year\. Budget execution for the development budget (as
a proportion of the original budget) a key outcome indicator - increased by the end of
the PSIB series to 55 percent (from 29 percent in 2004/05)\.
60\. Third, the PSIBs supported with some success improvements in civil service
efficiency\. Notably, over the course of PSIB the PRR reform plan was approved by an
inter-ministerial committee for a number of departments and, under this scheme, more
than 43,000 positions have been placed on an elevated pay scale\. Under open and merit-
based recruitment for these positions the IAB made almost 2,304 merit-based
appointments for senior positions\. Overall the size of civil service (excluding uniformed
employees and teachers) was successfully contained, and, as measured by another key
outcome indicator declined slightly yearly\.
61\. Fourth, the PSIBs supported the further development of a stronger monitoring
framework\. Two important triggers for PSIB II were the development of information
systems in health and education, both of which were created\. The PSIB series also
supported the analysis of the 2005 NRVA, based on which poverty diagnostics was
produced, and the preparation of an implementation plan to produce indicators to monitor
the ANDS\. The monitoring framework of the PSIB series itself was successful in
focusing the GOA on critical outcome indicators of their reforms\.
23
62\. At the closure of the PSIB series the main outcomes were achieved, in most cases
fulfilling the targets set for the program\. The first PSIB was rated satisfactory in the
Simplified ICR\. The second and third PSIB are rated satisfactory, recognizing the
difficult environment in which the GOA was overall successful in implementing this
comprehensive reform program as reflected in Table 3\. By strengthening institutions, the
implementation of these reforms will in turn facilitate more efficient allocation of fiscal
resources to priority areas of the ANDS\. The PSIB series, together with the ARTF and
IMF programs, has reinforced the importance and credibility of the budget and the MTFF\.
Expenditure systems have been strengthened and some capacity has been built to
implement the budget and development programs in an accountable manner\.
3\.4 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
63\. Most supported reform steps of PISB II and III did not have any first-level
poverty impact\. However, the PSIB supported NRVA 2005 analysis and preparation of
a poverty diagnosis, which is expected to lead in the future to better targeting
mechanisms for programs that seek to support the poor\. Similarly, a stable
macroeconomic framework ultimately creates an environment that is more conductive to
poverty-reduction measures of other programs\. Also, it is expected that the supported
formulation of the national development strategy, the ANDS and its future alignment
with the improved budget and MTFF will lead to better resource allocations that
potentially benefit the poor\. Through the PSIB pillar on human development and the
private sector development indirectly poverty might have been affected positively\.
64\. One prior action the electricity tariff increase in Kabul in 2006 to reduce the
fiscal burden of the high level power tariff subsidization-- had the potential of a
direct adverse effect on the poor\. At the time the potential distributional impact was
reviewed in the Program Document for PSIB III\. It was concluded that while it was
difficult to assess the poverty impact due to the scarcity of data, it was likely to be limited
due to the severe supply constraint and low level of consumption that are typical for the
poor\. This ICR (see section 3\.5 and Annex 2\. Beneficiary Survey Results) assessed the
potential poverty impact with an analysis of recently available data from the NRVA 2007\.
Evidence from this household survey data analysis concludes that electricity tariff
increase is likely to have marginal if any negative impacts on welfare of Afghan
households\.
65\. The operation supported both women and men\. In the PSIB pillar of public
administration reform, gender imbalance in the civil service was addressed with the
preparation of a policy note to enhance the role of women in the civil service\. Monitoring
of the representation of women in the civil service is ongoing and is expected to lead to
the development of policy options that improve it\. PSIB support in the areas of human
development most likely indirectly resulted in reduced gender imbalances in the
provision of health and education services\.
66\. Social development, including support for reform measures in health, education
and social protection were one pillar of the PSIB series\. However, over time the focus
of the series shifted more to public financial management and public administration
24
reform, since policy reforms in health and education were progressing satisfactorily
through the support of other IDA projects\. PSIB I supported the health and education
sectors with a prior action on increased budget allocations for the BPHS and the Ministry
of Education\. PSIB II supported the health sector with a prior action on the baseline
evaluation of health service delivery performance and the completion of the teacher
census\. Improvements in government budget process, medium-term fiscal planning
(MTFF) and accelerated implementation of the ANDS all supported by the PSIB series
will indirectly foster social development goals\.
(b) Institutional Change/Strengthening
67\. Institutional change and strengthening was at the heart of the PSIB series and is
considered substantial\. In the aftermath of the armed conflict state-building became the
focus of the GOA's strategy and the focus of reform effort by many donors\. The PSIB
operation was instrumental in establishing the legal framework for key institutions and
functions in public financial management, the financial and private sector\. Key laws
supported by the PSIBs included the PFEM Law, Procurement Law, Banking Law,
Insurance Law, Corporation and Partnership Law\. PSIB supported the establishment of
new structures in the MOF, notably the Budget Department, the Fiscal Policy Unit, the
Large Taxpayer Office, the Procurement Policy Unit and Internal Audit Unit and was
also closely engaged in improving capacity in these institutions\. In the financial sector
the operation supported the rebuilding of the Central Bank and its supervision function
and the liquidation of non-licensed and the restructuring of the licensed state-owned
banks\. PSIB also supported the liquidation of non-viable SOEs and the privatization of
other SOEs that had profitability potential\.
68\. The PSIB series laid some key building blocks for a modern civil service, notably
through building key PAR organizations (the Administrative Reform Secretariat, the
Independent Appointments Board), and adopting a modern Civil Service Law\. However,
both the overall PAR program and the PRR have struggled with implementation
problems (Para 47)\. In the medium and long-term it remains to be seen how the further
PAR roll-out, including the Pay & Grading, will sustain leadership, mobilize the
necessary technical and financial resources, and lead to tangible impact in the delivery of
key government services\. Implementation of pay and grading reform is challenging in
any environment, but in Afghanistan the risks of failure and corruption will be heightened
without high level political commitment across government, strong leadership of the
reform, and attention to implementation risks and strategies\. There is concern about the
capacity of the GOA to implement this complex reform\. The overall medium term fiscal
costs remain unclear in the context of ad hoc decisions on specific staffing groups and
uncertainty over staffing numbers, and the implementation strategy and capacity has yet
to be fully defined\. All reform areas benefited from on-going technical assistance, e\.g\. in
the MOF Budget Department (UNDP and DFID), Central Bank (USAID), the IARCSC
(EC) etc\. Developing in-house capacity remains a critical challenge for the government\.
In this context there are concerns that these achievements will not be sustained without
large scale international technical assistance\.
69\. Reforms undertaken under the PSIB series did not have their full impact
because most development funds continue to flow off the budget\. This remains a key
25
development constraint for the GOA\. It also underlines the need to intensify donor
coordination efforts\. The World Bank continues to work closely with other donors,
emphasizing the importance of using the improved PFM systems and channeling more
aid through the budget\.
(c) Other Unintended Outcomes and Impacts
70\. The PSIB series with its M&E framework and transparency-increasing
measures contributed to the beginning of a monitoring and evaluation culture in
Afghanistan\. The broad supported reform program made the PSIB series a flagship
operation series for the GOA's MOF\. This initiated much public discussion of some areas
covered by the PSIB, including the SOE reforms\.
71\. The pay and grading reform as part of the overall public administration reform
could be in the future reasonably associated with increased fiscal risk\. It will remain
to be seen of the Pay and Grading implementation will be successful in: (i) moving the
human resource management system adequate to recruit, retain and motivate skilled staff,
and (ii) maintaining the cost of its implementation at a fiscally sustainable level\.
3\.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
72\. There has been no comprehensive beneficiary survey or stakeholder workshop
on the PSIB series as such\. However, in the one supported reform area of PSIB III the
increase in the electricity tariff--where adverse poverty and social impacts could follow,
the potential poverty impact was assessed with an analysis of recently available data from
the NRVA 2007 in this ICR (Annex 2\. Beneficiary Survey Results), including a
comparison of the connection to grid supply for lower income quintiles in summer 2005
and spring 2007\. The analysis focuses on impacts that could occur to households and
provides distributional analysis of electric tariff reform on well-being of various groups
of households in Afghanistan\. The analysis shows that electricity tariff increase is likely
to have little impact on Afghan households, including the poor\.
4\. Assessment of Risk to Development Outcomes
Ratings: Significant for both PSIB II and PSIB III\.
73\. The risk to the development outcomes of the PSIB II and III is rated as
significant\. These risks are related mainly to factors outside of the operation, and
unrelated to its design or suitability for the Afghan environment\. Significant
uncertainties for the sustainability of the operation's development outcomes are expected
due to the prevailing volatile security situation\. Also, the second round of democratic
elections (for Presidency and for Parliament) are expected in late 2009 and 2010,
respectively and might lead to a less certain political situation in the transition period\.
The risk of the program was considered as significant for the first PSIB, due to the
substantial country risk (political, security and macroeconomic)\. The mitigation of these
risks was assessed to be outside of the scope of the program\. For the simplified ICR of
PSIB I the World Bank OED proposed for the criterion on Sustainability the assessment
26
of non-evaluable\. It was expressed that at the time of the simplified ICR it was not
possible to assess whether benefits of this operation and of the program as a whole would
be sustainable\. In particular, it was argued that sustainability remains uncertain as long as
security does not improve in all parts of the country\. This assessment of uncertain
sustainability remains valid for the achievements under PSIB II and III, since the security
situation did not improve, and arguably deteriorated further since then\. Thus, the main
country risks remained not only significant throughout the series, but might also threaten
the sustainability of the achieved results\.
74\. Uncertainties arising from the possibility of rolling back institutional and legal
changes remain significant\. While PSIB II and III were successful in strengthening
government's core institutions and key functions, for example, progress in fiduciary
standards for government transactions and the achievement of a timely budget process,
the lack of capacity to implement comprehensive legal and institutional reforms is
apparent\. Additionally, governance concerns remain prominent and it remained difficult
to assess the quality of institutional changes, given the high level of international
technical assistance still facilitates many reform efforts\. Nevertheless, government
ownership of key components of the PSIB reform program was high, with the
government successfully building a good track-record of reforms during the
implementation of the PSIB series\. Also, it is important to note that fiduciary and
implementation risks for PSIB II and II were successfully mitigated partly due to reform
program supported by the series itself\. These improvements contributed to higher
fiduciary standards for the entire IDA portfolio and the ARTF resources channeled
through the government core budget\. These significant achievements contributed to the
high perceived benefits from the PSIB series\.
75\. During the information gathering for this ICR it was concluded that the
instrument of a programmatic support worked very well in the country's high risk
environment\. While the program design allowed for flexibility and adjustments of the
reform program over the course of the series, the rolling support and continued dialogue
with the authorities on key areas of reform greatly facilitated success in many of the
covered areas\. The instrument itself was seen by PSIB team members from different
sectors as the catalyst for policy reforms that would in turn enable progress in the areas of
Bank engagement, e\.g\. specific investment projects\. In this regard the PSIB itself was
able - as a series - to sustain the risk to its development outcomes over several years and
the sustainability of the development outcomes would likely benefit from a successor
program and future development policy lending\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Ratings: Satisfactory for both PSIB II and PSIB III\.
76\. The quality at entry for the PSIB II and III is rated as satisfactory\. The Bank
team collaborated closely with the MOF and actively involved the government in the
program design through regular policy dialogue and intensive missions\. The team's
27
consistent engagement and proactive role allowed a seamless progress from PSIB I to
PSIB II, despite the fact that there was a change in government leadership during the
PSIB I operation following elections\. Over the course of PSIB II and PSIB III the
continued responsiveness and close involvement of the Bank team further strengthened
the good relationship with the government\.
77\. The design of the reform program was appropriate and provided the necessary
flexibility in the Afghan context\. It was based on technically sound diagnostics\. For
example, the first economic report on Afghanistan Afghanistan: State Building,
Sustaining Growth, and Reducing Poverty, (2004) a Financial Sector Report (2004) and
numerous sectoral reports, such as the report: Mining as a Source of Growth (2003)
helped to guide policy choices put forward by the PSIB series\. Over the course of the
series other Bank AAA like the Public Finance Management Review (combining a Public
Expenditure Review, a Country Financial Accountability Assessment and a Country
Procurement Assessment Review, 2006), and the Investment Climate Assessment (2005)
continued to provide technical background for the adjustments in the reform programs for
the PSIB series\.
78\. The Bank team properly assessed the risks and the timing of prior actions
included in the program, the fulfillment of which could be easily measured by the
government and the Bank team\. In order to manage the high country risks the Bank
team did not seek permission for appraisal and negotiation for both operations until the
vast majority of prior actions were fulfilled\. This allowed for high quality at entry and the
nearly seamless meeting of all prior actions for PSIB II and III and quick processing of
both operations\. The PSIB series was well integrated with the Bank's strategy and
provided important synergies with other Bank operations in Afghanistan\. The careful
alignment of the reform program with the GOA medium-term development vision and
strategy also contributed to the success of the series\.
(b) Quality of Supervision
Ratings: Satisfactory for both PSIB II and PSIB III\.
79\. The quality of supervision is rated as satisfactory for the PSIB operations II and
III\. One of the key factors contributing to the success of the series was the intensive and
frequent supervision of progress in the reform program\. The team was able to establish a
very close working relationship with staff from all levels of the Afghan counterpart\. The
M&E framework of the PSIB series was instrumental in assessing progress throughout
the series, but due to severe capacity constraints on the government side the monitoring
function largely remained on the side of the Bank team\. However, team members
recognized that supervision presented an important opportunity to build capacity and
adjusted their work program accordingly\. The aide memoires and follow-up
communication with the government identified key issues and suggested actions clearly
and were regarded as important working documents by the counterparts\. In the short
periods between the successive operations the Bank team remained in close contact with
the government and effectively continued supervision and the monitoring of progress in
key government reform areas\.
28
80\. The Bank team closely coordination with the programs of other donors, in
particular with the IMF, DFID and ADB, who together with the Bank played a major role
in assisting the government to achieve tangible results in the area of public financial
management and public administration\. This successful collaboration established
excellent working relations between the teams of these organizations, which were
maintained, even when staff moved on\. Based on the dialogue between these donors on
PSIB related reforms, a frank exchange of ideas and advice in regard to other topics
developed over time, which is still reflected in mutual peer-reviewing of projects\.
81\. Throughout the supervision period the Bank task team had representatives from
all featured sectors who were regularly consulted and provided in-depth sector
knowledge\. When possible the team included experts based in the country office to draw
on their country familiarity and to allow for easy follow-up\. Throughout the operation,
the team brought in additional internal or external expertise when necessary\.
Unfortunately, due to security constraints, it was not possible for the team to travel
outside of Kabul over the course of the PSIB series and assess the situation in sectors
first-hand on the sub-national level\.
(c) Justification of Rating for Overall Bank Performance
Ratings: Satisfactory for both PSIB II and PSIB III\.
82\. The combined rating of satisfactory in ensuring quality at entry with a
satisfactory rating of the quality in supervision leads to the overall satisfactory
rating of the Bank performance for PSIB II and III\. The design of the program
continued to adequately reflect the main priorities of the government's development
vision and strategy and was anchored in the Bank's country strategy and its main
underlying objective to build state capacity\. Collaboration with other donors was
exceptional, in particular in regard to public finance reforms and served the country's
need for improved donor coordination in this area\. The main stronghold of the PSIB II
and III was its good integration into the Bank investment and AAA portfolio\. This
enabled it to complement other Bank activities with a very valuable channel of
communication with the government on policy level issues\. Another decisive contributor
to the success of the series was the deep engagement of an enthusiastic team, which
resulted in them being very proactive and making use of the flexibility of the instrument
when it was needed\.
5\.2 Borrower Performance
(a) Government Performance
Ratings: Moderately satisfactory for both PSIB II and PSIB III\.
83\. The performance of the GOA was moderately satisfactory\. Overall the PSIB
series was considered a flagship operation for the Afghan government with much
attention focused on it\. But issues of continuity, leadership, and capacity remained,
despite the progress in meeting important prior actions and triggers\. In particular, towards
the closure of the operation signs of weakening reform ownership appeared\. The
formulation of economic policy became more fragmented\. This raises questions of
sustainability for the reform outcomes achieved up to date\. On the macroeconomic side,
29
the government steadily implemented the IMF SMP and following that completed three
reviews of the IMF PRGF program successfully\. However, shortly after the PSIB series
ended (in July 2008) the IMF PRGF program started to become under pressure, mainly
due to a deteriorating revenue performance in customs\. The reasons here were slower
than expected administrative reforms and enforcement deficits\.
84\. The capacity of the government remained low throughout the series and
remained heavily dependent on international technical assistance\. Issues of limited
implementation capacity were in particular reflected in the minor delays that occurred in
the fulfillment of triggers that relied on actions to taken by government institutions other
than the main implementation agency, the MOF, e\.g\. in the pillar of private sector
development\. While the M&E capacity of the government improved over the course of
the series, it altogether remained weak and the government had to a large extend delegate
this function to the World Bank task team\.
(b) Implementing Agency or Agencies Performance
Ratings: Satisfactory for both PSIB II and PSIB III\.
85\. The performance of the implementing agency, the MOF was satisfactory\. The
particular staff delegated as the focal point for the PSIB operations, to participate in the
design and implementation of the program had adequate seniority, qualification and
dedication\. Over the period of engagement on the PSIB series the capacity at the
implementation agency slowly increased and slightly consolidated on many
administrative levels\. This was also reflected in the increased ownership of the M&E
framework over the course of the series\. The overall success of the PSIB series is
attributable to the strong commitment of the Minister of Finance and his core team\. The
Ministers keen interest to keep the program on track ultimately provided the necessary
leadership to push ahead many difficult reform issues\. He and his team were diligent in
taking responsibility for advancing reforms in many areas that were outside his
immediate influence realm, but that were part of the overall supported reform program\.
Since one main objective of the PSIB series was improvements in fiduciary standards and
public financial management many reforms supported by the series led to tangible
improvements in the main functions of the implementation agency itself\. These reforms
turned out to be in regard to state and institution building the most successful of the PSIB
series\. Over the course of the series it is fair to say that the MOF -in view of its capacity
and level of institutional operation-- became a model ministry within the Afghans
government\.
(c) Justification of Rating for Overall Borrower Performance
Ratings: Satisfactory for both PSIB II and PSIB III\.
86\. The overall Borrower's performance is assessed as satisfactory\. The PSIB
operations and its supported reforms were a central focus of the government and were
given particular attention as part of the Bank's portfolio\. Signs of waning government
ownership and commitment appeared only towards the closure of the operation and some
of its result materialized after the program closed\. Nevertheless, the ICR considered this
an important indication for the possible sustainability of the results achieved under the
PSIB series\. Over most of the time covered by the PSIB II and III the performance of the
30
implementation agency was satisfactory\. The MOF as the direct counterpart and
implementation agent was the main driver of the reform process and the Minister and his
team were instrumental in guaranteeing the success of the series\. His leadership and
commitment allowed for significant improvements in the public finance framework of the
country, which provides the ARTF donors with assurance to channel large resources
through the government's core budget\. While the overall capacity of the government
remained weak and highly dependent on international technical assistance, areas within
the MOF emerged, e\.g\. revenue, budget, treasury, and audit, where considerable national
capacity was established\. The modeling of the MOF into a good practice ministry
contributed to its ability to attract qualified and motivated staff\.
6\. Lessons Learned
87\. For the PSIB II and III, the Bank team made good use of both facets of the
development policy instrument\. It followed through with important reform steps in
core state-building areas, such as PFM, PAR, etc\., but also used the flexibility of the
instrument to condense and adjust the focus of each series based on the political realities\.
For example, health and education initially played a more central role, but over the course
of the series additional policy level support was deemed not necessary due to strong
emerging ministerial leadership\. On the other hand, acknowledging the multiple and
sometimes overwhelming-- challenges for creating a better business environment
combined with its political inertia in this area, the private sector development reform
agenda was narrowed down and focused more on the regulatory framework and ring-
fencing fiscal liabilities\.
88\. The PSIB's experience emphasized the opportunity to maximize synergies with
other Bank instruments and other donor programs\. In particular, the PSIB series was
successful in leveraging important policy dialogue which complemented Bank's
investment projects\. The series benefited from including sector specialists in the task
team at all stages of the operations\. As described in other sections, the PSIB design built
very much on combined efforts with the Bank's analytical work and investment
operations, as well as with the IMF's PRGF, the ADB's program loans, DFID's technical
assistance and the ARTF\. This was a key ingredient to the success of the series\. However,
the Bank will need to continue to work closely with other donors to emphasize the
importance of using the improved government PFM systems for channeling more aid
through the budget\.
89\. It is vital to carefully assess the political economy in each reform area as well as
ground development policy lending in high quality AAA work\. While the PSIB series
was underpinned by a strong program of analytical work, the political environment of
individual reform areas was initially underestimated and turned out to be more complex,
e\.g\. PAR and private sector development\.
90\. The PSIB series succeeded in strengthening institution building and important
parts of the legal regulatory framework, but capacity development will be a long-
term undertaking\. While the PSIBs were successful in supporting the enactment of key
laws and the creation of some modern organizational structures in the government
administration these fundamental institutional changes need time to establish them and to
31
show desired impacts\. In regard to PAR or civil service reform implementation,
expectations within development lending operations have to be managed cautiously\. One
important lesson cited by the Afghan authorities is that the policy reforms in form of
legislative activities did not yet produce expected outcomes\. It appears that capacity
constraints led to delays in the implementation of some of these laws\. Careful planning
should realistically anticipate time lags while designing future reform programs and
development lending operations in order to avoid disappointment in progress and lack of
results on the ground\. In a low-capacity environment like Afghanistan development
policy lending should exert a high level of reform prioritization to continuously capture
the focus of the government on key reform areas\.
91\. The outcomes for the PSIB series confirmed that a results-based approach can
work in a conflict-ridden and low-capacity environment\. As mentioned above,
however, it needs to be acknowledged that low capacity acts as a barrier to the best
designed programs and can often lead to implementation delays\. In regard to program
monitoring and evaluation, the government policy matrix and the M&E framework need
to be straightforward and reflect the limited capacity endowment in these countries\. It
was expressed that the PSIB government policy matrix was too complex and at times
confused the government as to which were priority areas and actions as compared to just
monitored reform milestones in the overall reform program\. A more simplified matrix
and M&E framework, preferably combined, would seem more adequate for future
operations\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/Implementing agencies
The draft ICR was circulated to the Borrower on June 10, 2009\. As of June 20, 2009 the
Borrower had not provided official comments to the draft ICR or its own evaluation of
the issues raised\.
(b) Cofinanciers
There were no cofinanciers\.
(c) Other partners and stakeholders
There were no additional comments from other partners and stakeholder\.
32
Annex 1\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
P090829 - Programmatic Support for Institution Building II
Names Title Unit Responsibility/
Specialty
Lending
Stephane Guimbert Senior Economist EASPR
Sheila Braka Musiime Counsel LEGES
Supervision
William Byrd Adviser SASEP
Julia M\. Fraser Sr Financial Analyst SASDE
Shawkat M\.Q\. Hasan Procurement Specialist SARPS
Md\. Reazul Islam Sr Private Sector Development SASFP
Syed A\. Mahmood Program Manager CSABI
Samuel Munzele Maimbo Sr Financial Sector Spec\. AFTFP
Serge Michailof Consultant SASEP
Muhammad Khalid Payenda Research Analyst SASEP
Paul Edwin Sisk Sr Financial Management Specia SARFM
Nobuo Yoshida Economist SASEP
P102709 - Programmatic Support for Institution Building III
Names Title Unit Responsibility/
Specialty
Lending
Nigel Peter Coulson Senior Public Sector Specialis SASGP
Julia M\. Fraser Sr Financial Analyst SASDE
Birgit Hansl Economist SASEP
Shawkat M\.Q\. Hasan Procurement Specialist SARPS
Jalpa Patel Consultant SASDU
Muhammad Khalid Payenda Research Analyst SASEP
Arlene D\. Reyes Program Assistant GSDPR
Martin M\. Serrano Counsel LEGES
Paul Edwin Sisk Sr Financial Management Specia SARFM
Nobuo Yoshida Economist SASEP
Supervision
William Byrd Adviser SASEP
Nigel Peter Coulson Senior Public Sector Specialis SASGP
Julia M\. Fraser Sr Financial Analyst SASDE
Stephane Guimbert Senior Economist EASPR
Shawkat M\.Q\. Hasan Procurement Specialist SARPS
Kyoo-Won Oh E T Consultant SASFP
Jalpa Patel Consultant SASDU
Muhammad Khalid Payenda Research Analyst SASEP
Arlene D\. Reyes Program Assistant GSDPR
Martin M\. Serrano Counsel LEGES
Paul Edwin Sisk Sr Financial Management Specia SARFM
Nobuo Yoshida Economist SASEP
33
(b) Staff Time and Cost
P078618 - Programmatic Support for Institution Building
Staff Time and Cost (Bank Budget Only)
Stage
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY03 39\.97
FY04 231\.29
FY05 16\.73
FY06 0\.00
FY07 0\.00
Total: 287\.99
Supervision
FY03 0\.00
FY04 0\.00
FY05 51\.73
FY06 10\.75
FY07 0\.00
Total: 62\.48
P090829 - Programmatic Support for Institution Building II
Staff Time and Cost (Bank Budget Only)
Stage
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY05 30 131\.75
FY06 21 152\.17
FY07 0\.00
FY08 0\.00
Total: 51 283\.92
Supervision
FY05 0\.00
FY06 8 59\.18
FY07 32 74\.11
FY08 0\.00
Total: 40 133\.29
P102709 - Programmatic Support for Institution Building III
Staff Time and Cost (Bank Budget Only)
Stage
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY07 19 86\.81
FY08 0\.00
Total: 19 86\.81
Supervision
34
FY07 0\.00
FY08 24 103\.18
Total: 24 103\.18
35
Annex 2\. Beneficiary Survey Results
Electricity tariff reform and poverty in Afghanistan
Reform in Afghanistan's electricity sector is an important policy that GOA took to
improve efficiency, eliminate economic distortion in its power sector; and prioritizing
public spending\. It also resulted in an increase in electricity tariff, supported by a prior
action of PSIB III\. Despite the benefit of the reform, poverty and social impacts could
follow\. This note focuses on impacts that could occur to households and provides
distributional analysis of electric tariff reform on well-being of various groups of
households in Afghanistan\.
The analysis shows that electricity tariff increase is likely to have little impact on Afghan
households\. Survey data shows that few households have electricity connection, and they
tend to be in urban areas, which tend to be better off than their rural counter parts\. Some
concerns could be said about the less well off population in urban areas, who may be
affected\. Investigating the energy consumption pattern in urban areas reveals that, even in
urban areas where connection rate is high, either rich or poor households do not use much
electricity\. Households in urban Afghanistan mainly use electricity for lighting purposes
and rarely for other purposes such as cooking or heating\. Data from 2005 reported that
two-thirds of urban households use electricity as their main source of lighting, while only
16 percent use it as their main source of cooking\. Since the amount of energy used for
lighting is small, households generally spend a very small fraction of their income on
electricity\.
Due to data limitation, this note only attempts to analyze the likely groups that would be
affected by the reform and extent that it may affect these groups\. This note also focuses
on the likely direction of the impacts, not on the magnitude\. In an ideal situation, one
would have a specialized data that allow us to track aspects of energy use and well as
welfare of households, both before and after the tariff increase\. In the absence of recent
household data, the exercise extrapolates from the available evidence, rather than
measures the impact of changing prices on consumption and welfare\.
The note is organized as follows\. First, it provides background information on tariff
increase structure, and on data and methodology of the analysis\. The analysis, then, starts
with the identification of likely affected groups, by comparing access and consumption\.
We then compare welfare of each group to discern the distributional impact, and
conclude the analysis\.
Structure of electricity tariff increase
During the PSIB series, the electricity tariff was increased (as a prior action) in urban
areas\. In the North, electricity is purchased from abroad at cost-recovery prices and
diesel-based tariffs can be found\. On February 26, 2007 prices were increased in Balkh
province as shown in the table\. Kabul has a formal tariff system based on hydropower\. In
Kabul, the electricity tariff was increased as effective from September 23, 2006\. Structure
of former and current tariffs is presented in Table A\.1\.
36
Table A\.1: Summary of tariff structure during reform
Area Type of customers Current Tariff Former Tariff
North Residential Afs 3\.0 /khw Afs 3\.0 / khw
Government/Commercial Afs 8\.0 / kwh Afs 6 / kwh
Kabul Residential - Category One: From 0 - 300 - from 0 - 600 kwh = 0\.5 Afs
kwh = 1\.50 Afs - from 600 - 1200 kwh = 2
- Category Tow: From 301 Afs
700 kwh = 4\.00 Afs - from 1200 kwh and above =
- Category Three: above 700 3\.5 Afs
kwh = 6\.00 Afs
Commercial 6\.00 Afs/Kwh\.
Government,NGOs, Foreign 10\.00 Afs/K
Representatives
Non-residential 6 Afs\.
(Govt/Business/Commercial/
NGOs/Embassies)
Data sources and methodology
This note attempts to assess effects of electricity tariff increases ones that have already
occurred on households particularly the poor households, using data from household
surveys\. Tariff increase could affect households in two dimensions: increase in
expenditures by households and reduction of electricity consumption\. It is important to
realize that the data reflects consumption patterns of households before the electricity
tariff increases\. Furthermore, the note will not account for the indirect effects of
electricity tariff, if any, on the prices of other goods\. In spite of all the caveats outlined,
this exercise lends useful insights into the nature and distribution of impact of electricity
tariff increases\.
The NRVA 2005 is the appropriate data because it provides estimates of access, usage,
and expenditures on energy and electricity, as well as ranking of households by a widely
accepted welfare measure (per capita consumption expenditure)\. Moreover, the NRVA
2005 has large sample size, which allows us to disaggregate indicators by relevant
groups\. In order to provide a crude trend in electricity connection before an after the
reform, this study is also supplemented with the NRVA spring 2007, a small household
survey conducted during the spring of 2007\.8
8The 2007 survey was a much smaller survey with a few questions on energy consumption and electricity connection\.
The analysis of trend only focuses on the electricity connection, which is less likely to change because of seasonality
because the 2007 survey was conducted in spring, around April and May of 2007The smaller sample size prevents us to
disaggregate the results in the same manner as the analysis using NRVA 2005\.
37
Identification of affected groups
We identify groups that are likely to be affected by the electricity reform by looking at
access and consumption pattern of electricity\. Table 2: Households connected
Households that are connected to electricity are most to public grid in 2005 (%)
likely to be affected\. First, we will look at connection Area % households
to grid electricity because the consumption is clearly National 14
restricted by connection to any sources of electricity Rural 4
power\. We, then focus on electricity use\. Although we Urban 66
do not have information on how many units of grid Other Urban 73
electricity households use each month, we have data on Kabul City 59
electricity expenditure and main energy sources for Source: NRVA 2005, staff's
calculation
lighting and other purposes\.
Overall, the potential impact is expected to be relatively low because few people use
electricity\. The NRVA 2005 data (Table A\.2) reveals that only 14 percent of all
households in Afghanistan have access to grid electricity, thus, only a small fraction of
households in Afghanistan are likely to be affected by this reform\. Electricity tariff hike
would affect urban population more than rural\. Electricity connection is markedly higher
in urban than in rural areas\. Percentage of households with grid connection is at 59
percent in Kabul city and as high as 74 percent in other urban areas outside Kabul\.9
Affected groups and welfare distribution
The affected groups--urban
dwellers--are generally not poor\. Table A\.3: Grid connection by consumption quintiles
and areas (% of households)
Poverty rate in urban areas is much
Consumption Area
lower than rural areas\. Moreover, Quintile Rural Other Urban Kabul City Total
few poor households are connected Poorest 3 65 55 8
to grid only 17 percent of households Q2 4 63 50 10
connected to grid are below poverty Q3 5 72 57 15
line\. This leads to another question: Q4 5 73 61 18
Could poor households in urban Richest 6 81 64 21
areas be heavily affected by the tariff Total 4 73 59 14
increase? Note: consumption quintile is calculated at national level\.
Source: NRVA 2005
Even among poor households in urban areas, many are connected to grid electricity\.
Table A\.3 shows percentage of grid connection across consumption quintile by different
areas\. Connection to grid is widespread across income distribution in urban areas and the
distribution is quite even in Kabul city\. The electricity tariff increase may also affect the
urban poor\. Examining the usage of electricity and energy further explain the extent of
impacts\.
9Those who do not connect to grid, particularly in urban areas, may use electricity from other sources such as private
or community generators\.
38
Extent of impact: Usage of electricity
Looking at electricity expenditure reveals the extent of potential effects of electricity
tariff increase on households\. We will look at the role of electricity in household
functions such as lighting, cooking, and heating\. The data only capture major usages of
energy but not others such as electrical appliances\. Note that this electricity expenditure
includes all sources of electricity, not just from public grid\.
Table A\.4: Energy consumption pattern by area
Area Urban only
Other Kabul All Upper 3 Lower 2
National Rural Urban city Urban quintiles quintile
% of HH use elec as main source of lighting 19 10 65 65 65 66 60
% of HH use elec as main source of cooking 3 0 8 25 16 18 11
% of HH use elec as main source of heating 1 0 8 2 5 5 5
Electricity cost per month 60 31 227 179 204 222 145
% of elec bill to total HH expenditure 1 1 4 3 4 4 4
Note: consumption quintile is calculated at national level\. All expenditures are adjusted by spatial price index\.
Source: NRVA 2005
Table A\.4 shows that even with high level of connectivity, urban households rely on
electricity mainly for lighting\. About 65 percent of urban households use electricity as the
main source of lighting, but usage in other functions such as cooking or heating is
relatively low\. This results in small electricity expenditure, even among urban households\.
Overall, electricity expenditure accounts for 3% in Kabul city and 4% in other urban
areas\. The data also shows that households spend far more money on other types of
energy\.
To gauge the impact of a rise in electricity tariff on the urban poor, it is relevant to focus
on the bottom two quintiles of the population\. NRVA 2005 data reveals that the urban
poor, on average, incur very little expenditure on electricity\. Poor households in urban
areas rarely use electricity in activities beyond lighting and spend similar fraction of their
expenditure on electricity as their better off peers in urban areas\. In conjunction with
larger households size among the poor10, effective electricity expenditure per person is
even lower among the poor\. Therefore, the poor do not appear to bear overwhelming
burden from the tariff increase\.
10In urban areas, the NRVA 2005 shows that the average household size of the poor is about 8 persons per household,
while non-poor household tend to have about 6\.5 persons\.
39
Trends in electricity connection between spring 2007 and summer 2005
The trends in electricity connection between the Table 5: Trends of grid electricity
two years, before and after the reform appear to connection in urban areas (% of
show that higher electricity tariff does not households)
discourage Afghan households, either poor or not 2005 2007
poor, in gaining access to electricity\. Across all Upper 3 quintiles 69 85
urban areas, percentage of household connected to Bottom 2 quintiles 57 76
grid system increased from 66 percent in 2005 to 82 All Urban 66 82
percent in 2007 (Table 5)\. This trend occurred Note: Low quintile household is defined
by household whose per capita
across welfare distribution; both the upper two and consumption is lower than 40 percentile
bottom three quintiles households showed increasing trends in grid connection\. It should
be noted that the trend shown here is crude; it does not account for usage from different
season nor if households limit their electricity consumption due to higher tariff\.
Conclusion
Evidence from household survey data analysis concludes that electricity tariff increase
would have little negative impacts on welfare of Afghan households\. The NRVA 2005
data shows that few households have electricity connection, mostly in urban areas which
tend to be better off to begin with\. Analyzing consumption pattern in urban areas reveals
that, even in urban areas where connection rate is high, neither rich nor poor households
use much electricity\. Electricity is mainly used for lighting; therefore, households
generally spend a very small fraction of their income on electricity\. The trends also show
that tariff increase did not seem to discourage connection to grid supply\.
This note provides a short and simple analysis of the effects of tariff increases\. The
method and depth is suitable for the available data\. More complex studies can be done
when we have more recent data\. The ongoing NRVA 2007/08 is a likely source of data
that can be used to rigorously investigate impact of electricity tariff increase due to the
reform\. It will allow comparison of elasticity and energy use during the same season\.
40
Annex 3\. Stakeholder Workshop Report and Results
n\.a\.
41
Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR
The following is a summary of the implementation Completion Report prepared by the
Government of Afghanistan for the PSIB II and III\. (The full report is attached\.)
I\. Borrowers Summary of the PSIB II and III program
(1) Assessment of the PSIB II, III Objectives, Design, Implementation and
Operational Experience
The overall objective of the PSIB II was to continue deepening the ongoing reforms in
the areas of public administration and fiscal management\. This operation also supported:
(a) better allocation of the fiscal resources in the areas of human development (health and
education); and (b) private sector development (investment climate, financial sector and
privatization of the state-owned enterprises - SOEs)\.
The overall objective of the PSIB III was to ensure deepening of the reforms initiated by
the previous PSIB especially in the area of public administration and fiscal management
and implementation of the comprehensive sectoral reforms\.
In the Government's view the PSIB II and III have been timely prepared and processed\.
The design of both operations has been appropriate for the Afghan environment\. In
general, the operations' startup and implementation was largely satisfactory and the
supervision has been conducted on regular basis\.
(2) Assessment of the main PSIB II, III Outcomes
The Borrower's ICR summarizes in detail the progress in the implementation of prior
actions, triggers and outcome indicators during PSIB II and III for all pillars and then
discusses progress in the two broad areas of PSIB reform support: Public Financial
Management and Institution Building\.
Throughout the period of implementation of the PSIB II, III (2005-2007) the Government
has maintained macroeconomic stability\. The fiscal sector has undergone number of
reforms which led to increased domestic revenues and improved budget execution\.
Rapid development of the banking sector has improved the business environment for
private sector development\. Export has recorded robust growth\. Afghanistan's debt
situation has improved\. All prior actions for PSIB II and III were met and most triggers
were fulfilled as specified\.
(i) Public Financial Management
The World Bank has recently completed the assessment of the GoA's performance in
implementation of the public finance management reforms (i\.e\. the Public Financial
42
Management Performance Assessment, PEFA), which was the most important part of the
PSIB operations\.
The key findings from this latest PEFA have confirmed significant improvements that the
Government of Afghanistan has achieved between June 2005 and December 2007 which
coincides with the period of implementation of the PSIB II and III\. Among 28
performance indicators, 18 indicators improved, 4 indicators deteriorated (out of which 2
relates to donors' performance) and 6 indicators remained unchanged\.
(ii) Progress in Institution Building
The Afghan authorities are of the view that the most important benefits of the PSIB II and
III are related to strengthening the institutional reforms and capacity\. This is particularly
relevant for the public finance management\. Both operations also proved to be
instrumental in developing the institutional framework for public administration reform\.
For the first time transparent and the merit based civil servant recruitments have taken
place together with reorganization of the payroll and developing the legal and
institutional framework for establishing a sustainable pension system\.
Apart from strengthening the fiduciary procedures and financial reporting, procurement
has significantly benefited from the institutional reforms supported by the PSIB II and
III: key government bodies such as the Public Procurement Unit and the Procurement
Appeal and Review Committee Panel were established together with the Special
Procurement Commission (SPC) for large value contracts\. Finally, the PSIB reforms
supported strengthening of the stability of the financial sector by increasing the capacity
of the DAB for the banking supervision\.
(3) Assessment of the Borrower's Own Performance
The implementation of the both PSIB operations (II, III) has been beneficiary to the
Government of Afghanistan\. The Government has demonstrated commitment and
ownership in implementing the PSIB reforms\. This has been evidenced by satisfactory
conclusions of the World Bank's PSIB appraisals, and noted in missions' Aid Memoires
during the PSIB supervision\. The PSIB supported reforms contributed to maintaining
macroeconomic stability and strengthening the budget process as well as to improving
fiduciary standards, accountability, procurement, audit and transparency of the public
finance\. Poverty statistical data have also been improved allowing for the first Afghan-
owned poverty diagnostics to be completed under the ANDS preparations\.
Despite the progress, limited capacity of the Government has proved to be a major
constrain for implementation of more comprehensive reform program\. This is the area
where future progress will be critical in order to be able to respond to the challenges of
implementing the ANDS\. The current heavy reliance of ministries and government
agencies on international advisers and donor funded local employees will have to be
slowly decreased and phased-out by strengthening more the capacity of the civil servants\.
43
In conclusion, progress has been achieved in most of the areas, albeit the advancements
in implementation of some reforms have been slow\.
(4) Assessment of the World Bank Performance
The Government is thankful to the World Bank for assisting it to prepare and implement
the PSIB series\. The WB advice proved to be crucial for developing the comprehensive
reform program that has led to achieving progress in number of areas, particularly in
strengthening the budget process and increasing accountability and transparency of public
finances\.
The regular supervision and other PSIB missions resulted in number of useful
recommendations\. The Government is particularly thankful for the open and frank
discussions conducted with the WB PSIB team\. They have deepened the Government's
knowledge about important macroeconomic reforms including strengthening of the fiscal
sustainability\.
The Government finds it particularly very useful that the PSIB team has continuously
raised importance of the capacity building\. Most of the PSIB reforms were designed to
improve institutional capacity in several critical areas\. Furthermore, stressing the
importance of combining macroeconomic with structural reforms contributed to
improved overall business environment for private sector development starting from
strengthening the financial sector regulations to approving the key legislations\.
The Government also finds it very useful that most of the PSIB reforms have been
coordinated with the other WB projects resulting in increased overall impact of the
general reform program\.
(5) Lessons Learned
As aforementioned, the implementation of the PSIB II and III series has benefited the
Government of Afghanistan in several important areas\. By strengthening institution
building and providing budgetary resources both operations have allowed the
Government of Afghanistan to:
Speed up implementation of its priority strategies;
Increase revenues and based on it expenditures for health and education to ensure
delivery of basic services to Afghan people, and
Mobilize the donor assistance and strengthen the National Budget
The key lessons learned from the implementation of the PSIB operations are related to
raising awareness of the Government about the importance of maintaining
macroeconomic stability, increasing fiscal sustainability and improving the public finance
accountability for the future development of the country\. Equally, key lesson learned
relate to the importance of improving public service delivery and speeding up structural
44
reforms to support private sector development for higher employment and poverty
reduction\.
The Government is of the view that the implementation of the PSIB series have resulted
in strengthening its ownership in implementation of crucial reforms\. Given the
importance of the WB budget support operations in supporting key reforms, the
Government regards that the future conditionality will continuously need to provide
balanced support to strengthening the institutional capacities and improving the service
delivery, especially at the sub-national level\. The important lesson for the Afghan
authorities is that the policy reforms in form of legislative activities do not always
produce excepted outcomes, especially if they proved to be premature\.
Finally, the Government acknowledges that greater progress could have been achieved in
implementing the public administration reform, strengthening the stability of financial
sector and improving the financial reporting of the SOEs\. Given this, the Government
will be ready to implement follow-up actions through the Successor Program to the PSIB
series\.
(6) Proposed Arrangements for Future Operations
The Government concurs with the WB findings (PSIB III, Aid Memoir, April - May
2008) that the overall success and general progress under the previous PSIB operations
justifies continuation of the direct budget support to Afghanistan\. Therefore, the
Government welcomes the intention of the WB to prepare Successor Program to the
PSIB series\.
Given the need to consolidate progress that has been achieved in the past and the need to
deepen the public finance reform program, the Government supports the WB proposal to
prepare a smaller adjustment operation which would mainly support further strengthening
of the public finance management\. With respect to this, the Government proposes to
focus on the following important areas:
Private sector development;
Custom and administration reforms;
Deepening the public administration reform process in the MoF;
Strengthening the mustofiats and revenue collection at the sub-national level; and
Improving the anti-corruption and transparency measures particularly in the area
of procurement and revenue mobilization\.
The Government would like to emphasize the importance of continuing with extending
the WB budget support to Afghanistan\. It will not only increase discretionary budgetary
funds, critical to implementation of the highest national development priorities from the
ANDS, it will also help to focus on the implementation of priority reforms and to
strengthen GoA's ownership of reforms\. The Government finds it particularly useful to
keep the frank and open dialogue with the WB, which has been developed under the
implementation of the previous PSIB operations\.
45
II\. Borrowers Comments on the ICR
The draft ICR was circulated to the Borrower on June 10, 2009\. As of June 20, 2009 the
Borrower had not provided official comments to the draft ICR or its own evaluation of
the issues raised\.
III\. Complete Borrowers ICR
Please see the following pages\.
46
47
48
49
50
51
52
53
54
55
56
Annex 5 Comments of Cofinanciers and Other Partners/Stakeholders
n\.a\.
57
Annex 6\. List of Supporting Documents
Aide memoires for PSIB II and III as filed in IRIS
Doing Business in South Asia 2007, World Bank 2006
Doing Business in South Asia 2008, World Bank 2007
Doing Business in South Asia 2009, World Bank 2008
ISRs for PSIB II and PSIB III as filed in IRIS
Interim Strategy Note for Islamic Republic of Afghanistan for the Period FY07-FY08\.
April 12, 2006 (Report No\. 35794-AF)
Program Document Programmatic Support for Institution Building\. July 06, 2004 (Report
No\. 28192-AF)
Program Document Second Programmatic Support for Institution Building\. November 03,
2005 (Report No\. 33915-AF)
Program Document Third Programmatic Support for Institution Building\. April 30, 2007
(Report No\. 38902-AF)
Simplified Implementation Completion Report Programmatic Support for Institution
Building\. September 16, 2005 (Report No\. 33000)
Transitional Support Strategy Afghanistan\. February 14, 2003 (Report No\. 25440-AF)
58
60°E 65°E 70°E 75°E
Amu To
Darya UZBEKISTAN Dushanbe
Murghob
TAJIKISTAN
To
Chardzhev To TAJIKISTAN
To Kulob To Shazud
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¯
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30°N
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NOVEMBER RAILROADS
Zereh 30°N IBRD
This map was produced by the Map Design Unit of The World Bank\. PROVINCE BOUNDARIES
The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank INTERNATIONAL BOUNDARIES 33358
2004 Group, any judgment on the legal status of any territory, or any
60°E PAKISTAN endorsement or acceptance of such boundaries\.
65°E 70°E | REVIEW |
P106355 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
MZ-Competitiveness & PS Dev (P106355)
Report Number : ICRR0020330
1\. Project Data
Project ID Project Name
P106355 MZ-Competitiveness & PS Dev
Country Practice Area(Lead)
Mozambique Trade & Competitiveness
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IDA-45460 30-Nov-2014 25,000,000\.00
Bank Approval Date Closing Date (Actual)
12-Feb-2009 30-Nov-2015
IBRD/IDA (USD) Grants (USD)
Original Commitment 25,000,000\.00 0\.00
Revised Commitment 24,999,215\.48 0\.00
Actual 25,336,294\.69 0\.00
Sector(s)
Public administration- Industry and trade(46%):General industry and trade sector(28%):Agricultural extension and research(12%):Other
industry(11%):Credit Reporting and Secured Transactions(3%)
Theme(s)
Micro, Small and Medium Enterprise support(34%):Other Private Sector Development(34%):Other rural development(15%):Trade facilitation
and market access(10%):Regulation and competition policy(7%)
Prepared by Reviewed by ICR Review Coordinator Group
Antonio M\. Ollero Fernando Manibog Christopher David Nelson IEGFP (Unit 3)
2\. Project Objectives and Components
a\. Objectives
According to the Financing Agreement, the project development objective of the Competitiveness and Private Sector Development Project of
the Republic of Mozambique is: to enhance the enterprise competitiveness and improve the business environment in Mozambique, by
strengthening the ability of local intermediaries to enable them to deliver business services to small and medium enterprises; developing
region specific interventions in the tourism and horticulture sectors; reducing the cost of doing business in the country; and, building technical
capacity at public sector agencies (Financing Agreement, page 5)\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
MZ-Competitiveness & PS Dev (P106355)
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components
The project comprised two technical and one administrative component, and six sub-components:
Enhancing Enterprise Competitiveness (US$14\.39 million estimate, US$15\.94 million actual) aimed to enhance the competitiveness of
small and medium enterprises (SMEs) and to promote broad-based growth through three sub-components: (a) the provision of access to
business development services, through a matching grant program that financed technical assistance and training to SMEs to maximize
their rate of sales growth and to business associations to strengthen their technical and administrative capacities; (b) the promotion of
tourism in Inhambane province by improving public sectorâs provision of services to the tourism industry through the design and
implementation of a tourism strategy and capacity development for the One-Stop-Shops, and by expanding the tourism-related supply
chain of the private sector through the rehabilitation of training facilities, the recruitment of trainers, and the provision of legal and advisory
services to the private sector to enhance their competitiveness; and, (c) the establishment of a fruits training center in Nampula province
consisting of a national training center specialized in tropical fruits operations and a demonstration farm to serve as a training facility for
the center\.
Improving the Business Enabling Environment (US$5\.3 million estimate, US$4\.5 million actual) was directed at supporting the
Governmentâs effort to improve the business environment, building the capacity of public agencies to play a catalytic role in export
services, and strengthening the accounting profession\. The component had four sub-components: (a) supporting the business
environment through trade facilitation, (b) supporting the business environment through licensing reforms; (c) supporting the
quality/standards infrastructure through the establishment of a twinning arrangement for the provision of standard-related services that
also promoted the growth of exports; and, (d) strengthening the accounting profession through the establishment of a twinning
arrangement with a member institution of the International Federation of Accountants to enhance the quality of professional services
offered by Mozambiqueâs Order of Professional Accountants and Auditors\.
Support to Project Implementation (US$3\.66 million estimate, US$4\.56 million actual) was directed at helping the Government organize
and operate a Project Implementation Unit that would be responsible for the oversight and reporting of the project, while delegating the
technical implementation of the various project components and sub-components to beneficiary agencies\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost: The Project Appraisal Document estimated the project cost, including front-end fees, at US$25 million, but that excluded
parts of the cost of: the Inhambane Center and the Nampula Center that was to be funded by the Republic of Mozambique; the licensing
reform sub-component that was to be financed by the Irish Aid; and, the matching grant program that was to be contributed by the
Mozambique private sector\. If these items were all included, the project cost at appraisal would have been estimated at US$29\.66 million\.
The actual project at closing, including all of these items, was US$29\.38 million\.
Financing: The IDA financed the project in the amount of US$25\.33 million\. The financing instrument was a Specific Investment Loan\.
The loan amount was fully disbursed\. As the loan was denominated in SDRs, and the SDR depreciated against the U\.S\. dollar in the last
year of project implementation, the project incurred a financing gap of US$1 million\. Responsibility for funding the gap was to be shared
between other Bank projects in Mozambique, in the amount of US$800,000, and the Government, in the amount of US$200,000\. Irish Aid
provided parallel financing in the amount of US$1\.35 million for the licensing reform sub-component of the project\. The Mozambique
private sector provided US$1\.1 million for the matching grant program\.
Borrower Contribution: The Republic of Mozambique provided in-kind contribution to the project valued at US$0\.7 million: US$0\.2 million
for the Inhambane Center and US$0\.5 million for the Nampula Center\.
Dates: The project was approved in February 12, 2009 and became effective in October 28, 2009\. It was restructured in July 23, 2013\.
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The Level II restructuring: reallocated project funds from the Small Enterprise and Business Association windows of the matching grant
program to the Microenterprise window; revised one of seven output indicators and two of three outcome indicators for the project, while
keeping the project development objective unchanged; and, extended the closing date of the project by a year\. The project closing date
was November 30, 2015\.
3\. Relevance of Objectives & Design
a\. Relevance of Objectives
The project was substantially relevant to economic conditions in Mozambique at the time of project appraisal in 2008\. Although the economy
had grown rapidly at an average eight percent per year between 1993 and 2010, existing firms and new investors continued to face a weak
business environment\. At the same time, a key challenge to the economy was to expand employment opportunities for a rapidly growing
population\. This could be achieved through a greater diversification of economic activity\. Agriculture was the second largest contributor to
GDP growth and employed 80 percent of the workforce, mostly in subsistence activities\. Tourism was an emerging sector and grew well since
2003\.
The project continues to be relevant to economic conditions in Mozambique at project closing\. Private sector development remains a long-
standing economic priority\. Private sector participation in the countryâs growth could be broadened by improving firmsâ access to services and
finance, by providing training and capacity building services, and by strengthening the institutional capacity of public sector agencies\. The
sectors in which the project is focused, namely, agriculture and tourism, and the geographic areas in which it operates, namely, the
Inhambane and Nampula provinces, remain a fertile ground in which these private sector development goals can be further pursued\.
The project was well aligned, at the time of project appraisal, with the strategic directions of the World Bank Groupâs Country Partnership
Strategy (CPS) for Mozambique for 2007-2012\. The CPS supported the vision, articulated in the Government Poverty Support Strategy
(PARPA II), of a more sustainable and broad-based growth of the economy\. Overall, the project would help the Government grow key sectors
of the economy, improve the business environment, stimulate exports, and develop SMEs\. Specifically, the project would contribute to
achieving four CPS outcomes: promoting the development of skills; improving the business environment through simplified starting business
procedures; facilitating access to finance linked to technical support to SMEs; and increasing local participation in the tourism sector and
improving government capacity to regulate and oversee the sector\.
The project continues to be well aligned, at project closing, with the strategic objectives of the World Bank Groupâs CPS for Mozambique for
Fiscal Year 2012-2015\. The CPS supports the three pillars of Governmentâs development strategy --- competitiveness and employment,
vulnerability and resilience, and governance and public sector capacity\. The project is directly supportive of four of the eight outcomes aimed
at the first pillar: an improved regulatory environment; increased crop yields and overall productivity; increased employment and growth in the
tourism sector; and, a better educated, skilled and healthier workforce (CPS, pages 31-32)\.
Rating
Substantial
b\. Relevance of Design
The overall design of the project is broadly aligned to the projectâs objectives\. The project development objective is well specified\. And, the
Results Framework for the project follows a logical chain from activities to intermediate outcomes to the project objective (ICR, Table 2, page
12)\.
There are two primary objectives for the operation:
The first objective is to enhance enterprise competitiveness\. Within the context of this particular project, "competitiveness" is defined along the
lines of private business enterprise development, hence its core indicators focus on the volume of additional sales, improved business services
to SMEs, and enhanced technical training to two key industries\. The outcome of this first objective --- an enhanced enterprise competitiveness
--- is equated with increased sales and is to be attained through three project activities: (a) a matching grants program --- which should lead
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improved business services to SMEs; (b) a tourism industry institute training program --- which should lead to a trained tourism industry
workforce; and, (c) a tropical fruits institute training program --- which should lead to trained horticultural industry entrepreneurs and to
strengthened business linkages between horticultural producers and tourism establishments\. With business services strengthened and
with entrepreneurs and workers trained, enterprises --- SMEs, tourism businesses and horticultural producers --- are expected to increase their
sales, achieving the first objective of the project (ICR, Figure 1, page 31)\.
The second objective is to improve the business environment\. The second outcome --- an improved business environment --- is associated
with reduced costs of doing business and is to be attained through four project activities: (a) trade facilitation --- which should lead to reduced
export and import processing time; (b) business licensing reform --- which should lead to reduced industrial and commercial business license
issuance time; (c) quality and standards development --- which should lead to a an improved product standards infrastructure; and, (d) support
to the accounting profession --- which should lead to enhanced accounting capability in the country\. With trade processing and business
licensing time reduced, the standards infrastructure developed, and the accounting capability enhanced, enterprises should face an improved
business environment, achieving the second objective of the project (ICR, Figure 2, page 34)\.
Rating
Substantial
4\. Achievement of Objectives (Efficacy)
PHREVISEDTBL
Objective 1
Objective
To enhance enterprise competitiveness in Mozambique\.
This objective was to be achieved through three sets of activities, for which the results in terms of outputs and outcomes are assessed
below: (a) a matching grants program for SMEs; (b) a tourism industry institute training program in Inhambane province; and, (c) a tropical
fruits institute training and business linkage program in Nampula province\.
Rationale
Outputs
⢠US$3\.5 million of matching grant funds was provided by the project to 363 micro enterprises, SMEs, and business associations\. The program
funded 70 percent of the cost of business services to microenterprises, and 50 percent to SMEs\. The support to business associations amounted to
75 percent of the cost of the services, which principally consisted of capacity building activities and commissioned studies\. Some 59 percent of the
beneficiary firms were engaged in services and commerce, and 13 percent in agro-processing and industry\. About 67 percent were located in
Maputo, notwithstanding outreach efforts directed at other provinces\. And 27 percent were women-owned or women-led (in part, reflecting the
fact that women were more active in the informal rather than formal sector)\.
⢠A new Tourism Training Center was created in Inhambane province\. An existing building, made available to the training center by the
Government, was rehabilitated\. Minor works remain, but the training facility should be fully operational in 2016\. The Ministry of Culture and
Tourism partly financed equipment for the training center\. Strong support to the training program was provided by the Eduardo Mondlane
University and by the Inhambane Tourism Higher Training School\. The new Tourism Training Center developed 40 different course and workshops\.
⢠A new Fruits Training Center was created in Nampula province as a public institute offering training and development services to the tropical fruit
industry\. Existing facilities, made available to the training center by the National Institute of Agriculture Research, were rehabilitated\. While minor
civil works remain, the training center has been fully equipped (office equipment) and furnished (office and dormitory furniture)\. Preparatory work
for the development of a demonstration farm to serve the new Fruits Training Center has started, in partnership with the National Institute of
Agriculture Research\. The farm would serve as a training venue for the center\. Revenue earned by the farm would also support the center\. The
business plan for the center and the farm has also been developed\. The new Fruits Training Center has developed 31 training modules organized
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around five topics: general training in management, product quality and logistics; banana; pineapple; mango; and, papaya production and fruit
operations\. The special by-laws governing the new Fruits Training Center have yet to be passed, however\.
⢠In a linkage program between horticulture producers and tourism establishments, the private firm, Mocambique Organicos, was engaged to
construct nine greenhouses in the Inhacongo and Massinga districts, provide training to 21 local horticulture producers, and serve as an
intermediary buying and distributing the local production to the market\. A refrigerated delivery car was also purchased\.
Outcomes (Final and Intermediate)
The project's achievement of its primary objective of enhancing the enterprise competitiveness in Mozambique is rated high:
The sales of enterprises assisted with matching grant, business service, institute training, and business linkage programs increased:
⢠Sales by micro and SMEs were enhanced through financial support provided by the matching grant program\. The annual average sales growth of
businesses benefitting from the program was 23\.5 percent higher than in the control group\. This exceeded the target for this outcome of 10
percent\.
⢠Revenues of business associations were also enhanced through financial support provided by the matching grant program\. The increase in
revenue in business associations benefitting from the program was 140 percent\. This exceeded the target for this intermediate outcome of 10
percent\.
⢠Sales by horticulture producers were enhanced through the training and business linkage program\. Sales by businesses and producers in the
horticulture industry increased\. The value of incremental sales in businesses supported by the project in the horticulture sector in Nampula province
was US$12 million\. This exceeded the target for this outcome of US$4 million\.
Business services were delivered to SMEs:
⢠A total of 852 business development services --- principally, the design of marketing and promotion materials, website development, training of
employees, and quality certification --- were delivered by professional business service providers to SME beneficiaries of the matching grant
program\.
Skills of workers in the tourism industry were enhanced:
⢠Skills of workers in the tourism industry in Inhambane province improved\. The number of trainees in the new Tourism Training Center in
Inhambane province was 1,316\. The target for this intermediate outcome was 800\. Of the 800 private individuals completing training, 596 found
employment in the industry by the project closing date\. In addition, 566 public sector staff were trained in tourism planning, marine biodiversity,
and solid waste management\.
Skills of producers and entrepreneurs in the horticultural industry were enhanced:
⢠Skills of horticulture producers in Nampula province improved\. The number of trainees in the new Fruits Training Center in Nampula province
was 695\. The target for this intermediate outcome was 800\. A total of 566 were trained in tropical fruit operations\.
⢠Business linkages were established between horticulture farmers and tourism enterprises\. The number of linkages contracts between SME
horticulture producers participating in the greenhouse management program and tourism establishments in Inhambane province was 78\. The
target for this intermediate outcome was 58\.
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Rating
High
PHREVISEDTBL
Objective 2
Objective
To improve the business environment in Mozambique\.
This outcome was to be achieved through four sets of activities, for which the results in term of outputs and outcomes are assessed below:
(a) trade facilitation; (b) business licensing reform; (c) quality and standards development; and, (d) support to the accounting profession\.
Rationale
Outputs
⢠Two technical assistance packages for trade facilitation were extended to two Government agencies\. The first, consisting of 10 activities,
delivered policy recommendations, as well as training, to the Customs Agency on trade facilitation\. One of the ten activities, the Time Release Study,
submitted to the Government in November 2014, recommended a number of reforms to achieve trade facilitation --- the use of a risk based
scanning system, the establishment of a dedicated cargo clearance terminal, and the creation of a One-Stop Border Post\. The second, directed at
the Institute for the Promotion of Exports: designed a management information system for exporting firms that produced statistics on the countryâs
exports; provided equipment to implement the information system; produced an exporters directory and a foreign trade operators manual;
designed a pre-assessment system for the certification of mango, pineapple and bean producers; produced promotion materials for the institute;
and, implemented capacity building activities to improve government services to SME exporters\.
⢠Supported by parallel financing from the Irish Aid, the project assisted the National Directorate for Private Sector Support (DASP) streamline the
licensing system and develop capacity at the One-Stop-Shops (OSS)\. The following outputs were produced: various consultants were hired to help
the DASP manage the OSS; computer equipment was purchased for the DASP; promotional materials were produced for the OSS; equipment was
purchased for the OSS in Maputo City and in several provinces; training was provided to OSS staff in licensing procedures, commercial law, and the
English language; overseas training was provided to the OSS staff on the installation, configuration, and administration of computer networks for
purposes of the electronic One Stop Shop (e-BAU); licensing information was digitized for the e_BAU; surveys were completed to determine the
satisfaction of OSS users; a regional conference on the Ease of Doing Business Initiative was sponsored; and, exchange visits to Rwanda and
Mauritius on Doing Business Reforms were arranged\.
⢠To support the quality/standards infrastructure, a total of 227 individuals (62 from private companies, 14 from public agencies, and 150 from the
National Institute of Standardization and Quality) were trained in 15 courses on quality and standards\. Another 326 individuals (125 from private
companies, 119 from public agencies, and 82 from the National Institute of Standardization and Quality) were trained in six seminars on
certification\.
⢠To support the financial accounting profession, the Order of Professional Accountants and Auditors (OCAM) was created in 2012\. The OCAM
aimed to help develop and serve the accounting and auditing profession in Mozambique\. At the project closing date, the OCAM counted on 3,006
member: 2,815 accountants and 91 auditors\. A twinning arrangement between the OCAM and the Institute of Certified Public Accountants of
Ireland was established\. The Institute of Certified Public Accountants of Ireland provided goods, technical assistance and training to OCAM\. The
twinning arrangement produced manuals and procedures on OCAM operations, although the manuals were written in English rather than
Portuguese\.
⢠Outside the original set of agreed activities, the project also produced the first phase of a study for the establishment of an industrial park in the
Mocuba district\. The new activity was requested by the Government during project implementation\.
Outcomes (Final and Intermediate)
The project's achievement of its primary objective of improving the business environment in Mozambique is rated high:
The export and import clearance system was improved, with clearance processing times reduced:
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⢠The number of days to clear exports was cut to 21 from 26 days, and imports, to 25 from 32 days, using the Doing Business data\. Although the
number of days for processing exports and imports was reduced, the reduction was not sufficient enough to meet the target for this intermediate
outcome\. The targets were 13 days for exports and 16 days from imports\.
The business licensing process was streamlined, with license issuance times reduced:
⢠The number of days to obtain a commercial license was cut to seven days, from 42 days in the baseline\. The target for this outcome was 11 days\.
The target was met as new regulations issued by the Council of Ministers in August 2013: automated licensing procedures; reduced the number of
steps in the procedure from nine to six; reduced fees for certain commercial licenses; eliminated the pre-inspection of activities that did not involve
risk to the environment, safety, hygiene and public health; decentralized the issuance of licenses; and made most commercial licenses valid
indefinitely\.
⢠The number of days to obtain an industrial license reduced to 13 days, from 32 days in the baseline\. The target for this outcome was 20 days\. The
target was met as new regulations issued by the Council of Ministers in May 2014: eliminated pre-inspection for many industries; reduced the
number of procedures; reduced the licensing costs for many medium-sized firms by 45 percent; and decentralized the issuance of licenses to the
provincial and district levels\.
The quality and standards infrastructure was improved:
⢠The number of standards introduced for which standard setting had been initiated by the private sector totaled 12 standards\. The target for this
intermediate outcome was nine standards\. The National Institute of Standardization and Quality (INNOQ) developed the standards, aided by a one-
year twinning arrangement with the Spanish National Standards Body\. The INNOQ certification had not been recognized in other countries by the
project completion date, however\. A certification by the Portuguese Accreditation Institute should allow for the international recognition of export
firms certified on management systems\.
Evidence for an enhanced of accounting capability, as defined in the project, was not available:
⢠The percentage of financial statements prepared by medium and large enterprises which were in accordance with the International Financial
Reporting Standards (IFRS) was not traceable, however\. A survey that would have determined and validated this number was not carried out due to
a lack of resources\. The target for this intermediate outcome was 75 percent of all financial statements prepared by medium and large enterprises\.
Additionally, the institutional capacity of public sector agencies relative to improve the business environment was strengthened as a result
of the project\. The Ministry of Industry and Commerce championed reforms to the business licensing system that the Council of Ministers
approved\. The Customs Agency and the Institute for the Promotion of Exports played catalytic roles in trade facilitation\. The One-Stop-
Shops are better able to deliver services following automation\. The Institute of Standardization and Quality is able develop standards and
offer services in metrology, standardization, and certification\. The newly-created Order of Professional Accountants and Auditors is an
active professional accounting body\. And, the new Inhambane Tourism Training Center and the new Nampula Fruits Training Center are
able to deliver quality training services to the tourism and horticulture industries\.
Rating
High
5\. Efficiency
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Economic Efficiency
The economic rate of return (ERR) of the project, computed at project closing, is 93 percent\. It is significantly higher than that estimated at
appraisal, 48 percent, both based on an analysis of benefits and costs for the first component of the project (Enhancing Enterprise
Competitiveness) for which benefits are quantifiable\. The significantly higher result can be attributed to: higher than expected sales achieved
by SMEs benefitting from the matching grant program; higher than expected values achieved by horticulture production companies in
Nampula province; and, higher than expected tourism receipts earned in Inhambane province\.
Sensitivity analyses keep the ERR high and greater than the discount rate: shortening the horizon period from ten to eight years yields an
ERR of 90 percent, and raising the discount rate from 12 to 18 percent yields an ERR of 83 percent\.
Administrative and Implementation Efficiency
Other measures of the efficiency of the project, however, detract from the high ERR achieved by the project\.
First, the Nampula Fruits Training Center turned out to be 80 percent costlier than originally planned (US$5\.24 million, compared to US$2\.92
million)\.
Second, the project took a year longer to complete than initially expected (the project closing date was moved from November 2014 to
November 2015)\. The cumbersome process for clearing contracts by the Government Administrative Court and by the Commission for
Foreign Economic Relations, the longer lead time to prepare and procure large contracts, and changes to the eligibility criteria for business
organizations applying for matching grants delayed the timely implementation of the project\.
Third, the project management cost was 25 percent higher than originally estimated (US$4\.56 million, compared to US$3\.66 million)\. The
extension of the project implementation period, the translation of all procurement materials from English to Portuguese to meet prior review
requirements, and the 15 percent tax charged on all consulting contracts increased the project management cost\.
And fourth, the project incurred a financing gap of US$1 million\. The SDR, in which the project loan was denominated, depreciated against the
dollar in the last year of project implementation, and there was little allowance between commitments and the balance on the project loan\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated
value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
63\.00
Appraisal ï¼ 48\.00
ï¨Not Applicable
63\.00
ICR Estimate ï¼ 93\.00
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
The outcome for the project is rated as Satisfactory\.
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The project objective --- to enhance enterprise competitiveness and to improve the business environment --- is substantially relevant to current
country economic conditions in Mozambique, and is well aligned with the strategic directions of the World Bank Groupâs CPS for Mozambique for
2012-2015\.
The project design is substantially relevant to the objectives of the project\. The results framework is logical and tracks a coherent causal chain
from project components and sub-components to intermediate outcomes and to final outcomes\.
The efficacy of the project's objective of enhancing enterprise competitiveness in Mozambique is high\. The efficacy of the objective of improving
Mozambique's business environment is also high\.The competitiveness of small and medium enterprises was enhanced, with business services
strengthened and with entrepreneurs and workers trained\. The business environment was improved, with trade processing and business
licensing time reduced, the standards infrastructure developed, and the accounting capability enhanced\.
The efficiency of the project is assessed as Substantial, with a high ERR of 93 percent in the base case, but with some operational inefficiencies\.
a\. Outcome Rating
Satisfactory
7\. Rationale for Risk to Development Outcome Rating
The risk to the sustainability to the development outcome is assessed to be Moderate\. In most cases, mitigation measures have been introduced
to address the adverse consequences from risk events that might materialize\.
The risk that the Inhambane Tourism Training Center, the Nampula Fruits Training Center, and the Nampula Demonstration Farm will not be
maintained or be financially sustainable is assessed as Moderate\. In the short term, the Ministry of Culture and Tourism will support the
operations of the Inhambane Tourism Training Center through the Bankâs Mozambique Tourism Institutional Capacity Strengthening Project\. In
the long-run, the Eduardo Mondlane University will cover the centerâs operational costs while the Inhambane Tourism Higher Training School will
be responsible for its management\. Meanwhile, the National Institute for Agricultural Research will support the operational costs of the Nampula
Fruits Training Center\. The institute has planned the development of a 142 hectare demonstration farm for the center, in partnership with a
private firm, Amarula Farms\. The demonstration farm will serve as a training facility as well as a source of revenue for the center\.
The risk that the greenhouse management model pursued under the project may not be sustainable or replicable is assessed as Negligible\. The
Eduardo Mondlane University has established a public-private partnership (PPP) with a private firm, Mocambique Organicos, providing for the
continued use of the greenhouses for farm training and expanded market activity as well as the use of the refrigerated vehicle for produce
delivery\.
The risk that the business organization, the Order of Professional Accountants and Auditors, might not be financially sustainable is assessed as
Moderate\. Current revenues are sufficient to keep it operational\. The organization has benefitted from support from the Irish Aid, with which it
has been able to provide training on accounting, auditing and ethical standards to more than 1,500 members\. Moreover, the organization has
been accepted as a member of the Pan African Federation of Accountants and is preparing a five-year strategic plan to ensure its long-term
sustainability\.
The risk that the Government's commitment to private sector development will wane is assessed as Moderate\. The Government is determined to
continue with competitiveness enhancement programs targeted at SMEs\. The Institute for the Promotion of SMEs was designated as the
implementing agency of future matching grant programs\. The Government also remains firmly committed to improving the countryâs regulatory
framework\. The Council of Ministers approved a Doing Business-focused reform action plan in February 2016\. The World Bank Group continues
to engage the Government in improving the countryâs business environment, with the Bank and the IFC providing technical assistance in support
of the effort, the former through the Mozambique Integrated Growth Poles Project that will be implemented through 2019\.
The risk that political, security, or economic (a debt crisis) shocks will undermine the development outcomes achieved by the project is assessed
as Significant\. Any of these events will damage the countryâs investment climate, resulting in the flight of foreign investment, reducing tourism,
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and diminishing the Governmentâs capacity to operate the training centers established by the project\.
a\. Risk to Development Outcome Rating
Modest
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The project benefitted from strong points at entry:
The project was underpinned by sound fundamental analysis\. The market failures addressed by the project were identified in the
Bank's analytical work and through the Bank's engagement and dialogue conducted with stakeholders in Mozambique\. The Private Sector
Working Group --- the forum for dialogue among the Government, the private sector, civil society, and donors on policy-related issues
pertaining to private sector activities in Mozambique --- was a vital Bank partner\. The economic analysis conducted at appraisal underlined
the incremental benefits that could be expected from the project: the increased output from SMEs, the improved efficiency of government
agencies, and the rationalization of the business licensing system that would help improve the business environment\.
Because it continued the Bankâs long-running engagement with Mozambique on private sector development, the project was firmly dedicated
to achieving medium- and long-term results\. The Bank anchored the project on supporting the goals of poverty reduction and on advancing
structural reforms for a more broad-based growth, as articulated in the Governmentâs Poverty Reduction Support Strategy and reiterated in
the Bankâs CPS for Mozambique for 2007-2012\.
The project incorporated valuable lessons learned from previous Bank private sector development initiatives in Mozambique and in other
Bank borrower countries\. Learning from the Mozambique Enterprise Development Project that was completed in 2006, the project: focused on
the sectors with growth and export potential business, namely, agribusiness and tourism; expanded the geographic outreach of business
support services organized around key value chains; and, planned for the sustainability of development outcomes at the outset\. The project
drew lessons from the finding by the Bank that stand-alone credit lines had not achieved the goal of promoting sustainable access to finance
by SMEs and the recommendation that future interventions consider both the financing and technical aspects of access to finance\.
The design of the project was fundamentally sound\. The appraisal document provided a coherent explanation for the choice of sectors
(agriculture and tourism) and geographic areas (the provinces of Inhambane and Nampula)\. The appraisal document also clearly outlined the
intended synergies among various interventions advanced by the project --- business services, financial services, and business environment
reforms\. Moreover, the Bank team thoughtfully considered guidance provided during project preparation to simplify the project and to exclude
a proposed partial credit guarantee component\.
The Bank designed mitigation measures to address the findings of early risk assessments of the project\. Expecting weak implementation
capacity on the part of the implementing agency, including in procurement and financial management, the Bank mandated that the Project
Implementation Unit be integrated and mainstreamed into the Ministry of Industry and Commerce by mid-term\. The Bank also stipulated that
the Project Implementation Unit carry two mandates: to execute the project management functions, and to build up the Ministry of Industry
and Commerceâs own capacity in procurement and financial management\.
Quality-at-Entry Rating
Satisfactory
b\. Quality of supervision
The project had a delayed start\. Implementation of key activities, including the matching grant program and the tourism development activities,
began in earnest only in mid-2011\. Disbursements of project funds was a low 34 percent by mid-term in November 2012, lagging 10 months
behind the original disbursement schedule\. The Bank had to intensify supervision of the project going forward\. A task team leader, based in
Mozambique for two years, provided implementation support\.
Eleven Implementation Status and Results Reports were produced over the life of the project\. The supervision reports rated the Development
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Outcome of the project as Satisfactory, except in the five reporting periods from December 2011 to December 2013 when the rating was
posted as Moderately Satisfactory\. The supervision reports also rated the Implementation Progress of the project as Satisfactory, except in the
six reporting periods from June 2010 to June 2013 when the rating was Moderately Satisfactory\. The Mid-Term Review was conducted in
November 2012, when the overall disbursement rate for the project was 34 percent\. The review rated most project performance indicators as
Moderately Satisfactory\.
The Bank swiftly agreed to a restructuring of the project in July 2013, approximately six months after the Mid-Term Review\. The findings from
the eight supervision reports prepared from May 2009 to June 2013 as well as the Mid-Term Review in November 2012 helped in restructuring
the project in July 2013\. The eligibility criteria for business associations to avail of matching grants was modified\. Considering the larger than
estimated costs for the Nampula Fruits Training Center, project funds were re-allocated among the project cost categories\. The closing date for
the project was extended by a year, largely because of the longer than expected time needed to prepare and procure large contracts and
difficulties in obtaining clearances for contracts from the Mozambique Administrative Court and the Commission for Foreign Economic
Relations\.
The Bank took active steps to make headway with the activities that had been delayed\. The construction period for the Nampula Fruits Training
Center was adjusted from three to two years, taking into consideration the long lead time needed to secure two large contracts\.
Notwithstanding the early problems with the construction work at the Inhambane Tourism Training Center and the Nampula Fruits Training
Center, the training programs were successfully delivered\. Temporary facilities were used in the interim\.
The Bank warned the PIU early on, in December 2014, to closely monitor the SDR/USD exchange rate and to avoid over-commitments
considering that the committed amounts were nearly equal the remaining balance on the project funds\. Eventually, the depreciation of the SDR
against the U\.S\. dollar during the last year of project implementation resulted in a financing gap of US$1 million\. Most project activities were
well underway in the final year of the project when the problem arose\.
Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
The Governmentâs commitment to the project was strong at the outset\. The Government requested a private sector development operation
following the completion of the IDA- and multi-donor-supported Enterprise Development Project in 2006\. The Ministry of Industry and
Commerce was actively involved in the preparation of the project\.
The Government and the Bank collaborated closely to ensure the completion of the project, agreeing to share in the responsibility of
finalizing tasks remaining after the project closing date\. Unfinished works on the Inhambane Tourism Training Center will be concluded by
the Inhambane Tourism Higher Training School\. Remaining works on the Nampula Fruits Training Center will be completed using funds
from the IDA-funded Agriculture Productivity Program for Southern Africa\. The Bank will source funds from other Bank operations in
Mozambique to cover US$800,000 of the US$1 million due to contractors and consultants of the project\. The Government will cover the
balance of US$200,000\.
Government Performance Rating
Moderately Satisfactory
b\. Implementing Agency Performance
The Ministry of Industry and Commerce acted as implementing agency of the project\. A Project Implementation Unit (PIU) was created for
this purpose\. It took longer than the expected six months (the time prescribed in the Financing Agreement) to fill in all the key positions in
the PIU\. A plan to integrate the PIU into the Ministry of Industry and Commerce was not carried out, and the PIU was maintained as a
separate organization throughout project implementation\. A high turn-over of staff at the Ministry of Industry and Commerce hindered the
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
MZ-Competitiveness & PS Dev (P106355)
PIU from transferring procurement and financial management skills gained from the project to the Ministry\.
A National Advisory Committee, chaired by the Ministry of Industry and Commerce and consisting of the Ministry of Economy and Finance,
the Ministry of Culture and Tourism, the Ministry of Agriculture and Food Security, the Central Bank, the Institute for the Promotion of
SMEs, and representatives from the private sector, was constituted in 2011 to oversee the implementation of the project\. However, the
committee did not function as intended: the committee did not meet regularly and there was limited participation by many of its members\.
As implementing agency, the Ministry of Industry and Commerce was actively and constantly involved in the implementation of the project,
notwithstanding changes in the leadership of the ministry following the presidential elections in 2010 and 2014\.
The PIU collaborated closely with the Bank to finding solutions to problems stalling the implementation of the project\. The PIU hired a
lawyer to help address problems encountered in obtaining clearances for project contracts from the Mozambique Administrative Court\.
Implementing Agency Performance Rating
Moderately Satisfactory
Overall Borrower Performance Rating
Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization
a\. M&E Design
The project had a logical Results Framework, and consequently a coherent M&E design\. The four indicators picked to reflect the achievement of
the project outcomes were appropriate\. Sales growth of MSEs benefitting from the matching grant program and exports growth of horticultural
producers benefitting from the Nampula Fruits Training Center were suitable measures of the enhanced enterprise competitiveness gained by
firms benefitting from the matching grant and training programs\. Similarly, reductions in the time to obtain business licenses (i\.e\., a more
streamlined business licensing system) was a suitable measure of the improved business environment resulting from government efforts to
reduce the costs of doing business\.
However, the guidance on how to implement the M&E was lacking in operational detail\. The project monitoring system was based on a standard
Results Monitoring Plan, which basically comprised only of information available in the project appraisal document\. This standard plan does not
provide detailed guidance on how to measure results for customized project indicators or how to set up and collect baseline data\. Considering
that M&E practices are generally poor in Mozambique, a detailed M&E manual would have helped ensure the collection of better quality
information and a more consistent reporting of results over time\.
b\. M&E Implementation
Following the restructuring of the project in July 2013, two of the final four outcome indicators and one of the eight intermediate outcome
indicators were revised to better reflect the results being measured\. The original outcome indicator "rate of annual sales growth of SMEs
benefitting from the matching grant program compared to the control group" was a "rate of a rate" target (e\.g\., a 20% higher rate than the 10%
sales growth in the control group would translate to a 12% sales growth in the beneficiary firms)\. This was revised to become a differential
rate target, "the sales growth for SMES benefitting from the matching grant program compared to the control group" (e\.g\., a 10% higher rate
than the 10% sales growth in the control group would translate to a 20% sales growth in the beneficiary firms)\. Similarly, the original outcome
indicator "value of incremental exports generated by businesses benefitting from the Nampula Training Center" was revised to "value of
incremental sales generated by businesses benefitting from the Nampula Training Center" to reflect the fact that firms were selling produce in
the domestic as well as international market\.
Gaps to the M&E dataset were also filled in during project implementation\. Missing baseline numbers were added by the time of the mid-term
review\. Generally, results data for all final and intermediate outcome indicators were reported except for one --- "the percentage of financial
statements prepared by medium and large enterprises in accordance with International Financial Reporting Standards (IFRS)"\. Data to track
this intermediate outcome indicator depended on a survey, funding for which was not available\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
MZ-Competitiveness & PS Dev (P106355)
Although not required in the M&E plan, the project disaggregated person-level data by gender to provide a count of the number of women
beneficiaries of the project\.
Overall, M&E implementation was executed competently and according to plan\.
c\. M&E Utilization
Data gathered from the M&E implementation were used to improve project performance\.
M&E Quality Rating
Modest
11\. Other Issues
a\. Safeguards
Environmental Safeguards: The project was classified as an Environmental Category B at appraisal\. The safeguards policies triggered
were: OP4\.01 Environmental Assessment, OP4\.09 Pest Management, and OP4\.12 Involuntary Resettlement\. The following were prepared
to address the safeguards issues: an Environmental and Social Management Framework, a Pest Management Plan, and a Resettlement
Policy Framework\.
The final supervision mission, in November 2015, noted deficiencies in the construction of Inhambane Tourism Training Center: the lack of
an adequate ventilation and exhaust system posed a hazard to students and staff\. It was agreed that the Inhambane Tourism Higher
Training School, as manager of the center, would rectify the deficiency\. Overall, the final supervision mission raised the safeguards rating of
the project to "Satisfactory"\.
The ICR mission, in February 2016, noted that some roofing plates containing asbestos had not been removed from warehouses in the
Nampula Fruits Training Center\. It was agreed that the asbestos plates would be removed from the facility, with the cost of the disposal
funded by the Bank project, Agricultural Productivity Program for Southern Africa\.
Social Safeguards: Other than generally stating that gender and vulnerable group empowerment concerns were considered by the project
in line with social management sustainability, the ICR does not cite any other social safeguards issues with the project\.
b\. Fiduciary Compliance
Procurement: Compliance with procurement guidelines was assessed as only "Moderately Satisfactory": numerous delays in the execution of
the procurement plan and deficiencies in the records filing system were issues\. The process for clearing all project contracts with the
Mozambique Administrative Court remained a major bottleneck throughout project implementation\. Delays in obtaining clearances from the
Administrative Court dragged down the timely implementation of the project, leading to a project restructuring in July 2013\. The same problem
plagued the entire Bank portfolio in Mozambique\. A Bank consultant found problems with the quality and completeness of documents submitted
to Administrative Court in the clearance process\. The Project Implementation Unit hired a lawyer to help address the issues, but the problem
persisted until the completion of the project in November 2015\.
Financial Management: The financial management of the project was rated as "Satisfactory" throughout project implementation\. The financial
management function was adequately staffed and benefitted from training provided on fiduciary requirements\. Interim Financial Reports were
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
MZ-Competitiveness & PS Dev (P106355)
submitted on time\. Except for the first two audit reports, all audit reports for the project were unqualified\.
c\. Unintended impacts (Positive or Negative)
The project did not have any unintended impacts\.
d\. Other
No other issues were raised by the ICR\.
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory ---
Risk to Development Outcome Modest Modest ---
Bank Performance Satisfactory Satisfactory ---
Borrower Performance Moderately Satisfactory Moderately Satisfactory ---
Quality of ICR Substantial ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted
beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\.
13\. Lessons
The first three lessons are drawn from the ICR, with some adaptation (ICR, pages 27-28), the next two, from IEG\.
One, the successful implementation of the matching grant program in Mozambique offers several valuable lessons for future Bank matching
grant programs elsewhere: (a) the "first-come-first-served" approach to grant making works best over the "window" approach in the late stage of
the program when demand exceeds the available funds; (b) vetting a roster of business development service providers helps ensure that only
qualified providers are selected and quality services are provided; (c) having a sufficient number of business advisers enables a program to offer
coaching and mentoring services; (d) adequate resources should be allocated for field work and due diligence functions; and, (e) impact surveys
are valuable to improve program design\.
Two, harmonizing the Bankâs fiduciary requirements with a borrowerâs fiduciary practices will aid project implementation\. Differences between
the Bankâs and the Governmentâs (the Mozambique Administrative Courtâs) legal requirements and operational procedures for the approval of
procurement actions, including the clearance of contracts, stalled the implementation of the project\. The project was burdened with complying
with two different sets of procurement rules and procedures\. Further analysis showed that the same problem plagued other Bank operations in
Mozambique\.
Three, actively engaging other development partners and donors yields incremental benefits\. The contribution of the project to improving the
business environment in Mozambique was greater than originally envisioned because of the provision by Irish Aid of parallel funding to the
project, and by the IFC, of complementary technical assistance to the Government\. The partnerships helped build the network of One-Stop-
Shops, including the electronic One-Stop-Shop (e-BAU), which offered a range of services to help entrepreneurs start a business\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
MZ-Competitiveness & PS Dev (P106355)
Four, the beneficiary profile of a project needs to be reviewed at mid-term to ensure consistency with project goals\. Firms benefitting from the
matching grant program were largely commercial and service enterprises (59 percent), based in Maputo (67 percent), and male-owned (73
percent)\. A review of the beneficiary profile at mid-term may have helped intensify efforts to target firms that were engaged in agro-processing
and industry, located in poorer provinces, and women-owned or women-led\.
And five, both project design and project implementation have to be carefully executed\. Works on the demonstration farm for the Nampula
Fruits Training Center had started\. The site lacked water for irrigation; a new site had to be secured\. The Project Implementation Unit paid little
attention to movements in the SDR/USD exchange rate, and did not provide a suffcient allowance between contract commitments and fund
balances\. The project ended with a financing gap of US$1 million at the closing date\. The gap was readily covered but, together with the
unfinished work in the Inhambane Tourism Training Center and in the Nampula Fruits Training Center, was another problem to worry about as
the project closing date approached\.
14\. Assessment Recommended?
No
15\. Comments on Quality of ICR
The strengths of the ICR are:
One, the document is well organized, with the discussion unified around a single analytic framework --- the results chain\. The Logical Results
Chain matrix (Table 2, page 12) is excellent\. It depicts the relationships between the development objectives, the intermediate outcomes, the
components, the clusters of project activities and the associated results indicators clearly, concisely, and completely\. The ICR uses this matrix
to organize the assessment of the projectâs outcome, in the main text (pages 13-22), and the enumeration of the projectâs outputs, in an annex
(pages 31-38)\. The assessment of the achievement of the projectâs development objective could not have been more systematically presented\.
Two, the analysis of the project is evidence-based and comprehensive\. The results of the project are not merely discussed\. Rather, the
attribution of the results to the project interventions are also considered\. Risks to the development outcome are not simply enumerated\. In
addition, the probability of the risk events materializing and impact of the risks are evaluated as well\. The discussion of the beneficiary survey
results for the key components of the project --- the matching grant program and the Nampula Fruits Training Center --- are substantial\. The
impact of the components are evaluated; lessons from their implementation are drawn\. The conclusions are well argued and backed by
evidence and empirical data, with the details presented in the annexes to the report\.
Three, the assessment of the achievement of the outputs, intermediate outcomes, and final outcomes of the project is candid\. Results that are
missed are reported in addition to goals that are met\. Construction and rehabilitation work on the facilities of the Inhambane Tourism Training
Center and the Nampula Fruits Training Center are substantially completed, but minor works remain\. The twinning arrangement between the
Order of Professional Accountant and Auditors and the Institute of Certified Public Accountants of Ireland produce operations manuals for the
new body, but the manuals are written in English rather than Portuguese\. The National Institute of Standardization and Quality ably produced
twelve new standards, but the certification has not gained international accreditation\.
Overall, the ICR was written following OPCS guidelines\.
a\. Quality of ICR Rating
Substantial | REVIEW |
P009106 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 19303
IMPLEMENTATION COMPLETION REPORT
UKRAINE
INSTITUTION BUILDING LOAN
Loan No\. 3614-UA
June 3, 1999
Poverty Reduction and Economic Management Unit (ECSPE)
Country Unit: Ukraine and Belarus
Europe and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS 1/
Calendar Exchange Rate
Year (end of period)
(UAH/US$)
1992 0\.0064
1993 0\.126
1994 1\.042
1995 1\.794
1996 1\.889
1997 1\.889
1998 3\.427
1999* 4\.410
1/ In September 1996, the official currency of Ukraine was converted from the Karbovonets (Krb) to the Hryvnia (UAH), at a
rate of 100,000 to 1\.
* World Bank and IMF forecasts\.
WEIGHTS AND MEASURES
Metric System
ABBREVIATIONS AND ACRONYMS
AMC Anti-Monopoly Committee
CAS Country Assistance Strategy
CEM Country Economic Memorandum
COM Cabinet of Ministers
EDAL Enterprise Development Adjustment Loan
EPS Electronic Payment System
Goskomstat State Committee for Statistics
ICB International Competitive Bidding
ICR Implementation Completion Report
ID APL Institutional Development Adaptable Program Loan
IFC International Finance Corporation
IMF International Monetary Fund
LAN local area network
MOE Ministry of Economy
MOF Ministry of Finance
MOS Ministry of Statistics
NAUDEI National Agency of Ukraine for
Development and European Integration
NAURD National Agency of Ukraine for Reconstruction
and Development
NBU National Bank of Ukraine
PIU Project Implementation Unit
PTL Program Team Leader
SCED State Committee on Entrepreneurship Development
SPF State Property Fund
STA State Tax Administration
STI State Tax Inspectorate
TTL Task Team Leader
UAH Ukratnian Hryvnia
USAID United States Agency for International Development
UKRAINIAN FISCAL YEAR
January I to December 31
Vice President: Johannes Linn
Country Director: Paul Siegelbaum
Sector Leader: Hafez Ghanem
Teamn Leader: Rama Chandran
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
UKRAINE
INSTITUTION BUILDING LOAN
Loan No\. 3614-UA
TABLE OF CONTENTS
PREFACE
EVALUATION SUMMARY \.i
I\. PROJECT IMPLEMENTATION ASSESSMENT \. 1
A\. Project Objectives \.1
B\. Achievement of Objectives \.2
C\. Implementation Record and Major Factors Affecting the Project \.5
D\. Project Sustainability \.7
E\. Bank Performance \.8
F\. Borrower Performance \.8
G\. Assessment of Outcome \.8
H\. Future Operations \.9
I\. Key Lessons Learned \.9
II\. STATISTICAL TABLES
Table 1: Summary of Assessments \.11
Table 2: Related Bank Loans \.12
Table 3: Project Timetable \.12
Table 4: Loan Disbursements - Cumulative Estimated and Actual \.13
Table 5: Key Indicators for Project Implementation \. \.13
Table 6: Key Indicators for Project Operation \.13
Table 7: Studies Included in Project \.13
Table 8A: Project Costs \. 14
Table 8B: Project Financing \. 14
Table 9: Economic Costs and Benefits \. 14
Table 10: Status of Legal Covenants \. 15
Table 11: Compliance with Operational Manual Statements \. \. 15
Table 12: Bank Resources -Staff Inputs \. 15
Table 13: Bank Resources -- Missions \. \. 16
III\. APPENDICES
1\. Aide Memoire of Final Mission \. 17
2\. Borrower's Contribution to the ICR \. 23
3\. Map IBRD 27828R \. 45
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
IMPLEMENTATION COMPLETION REPORT
UKRAINE
INSTITUTION BUILDING LOAN
Loan No\. 3614-UA
PREFACE
This is the Implementation Completion Report (ICR) for the Institution Building
Loan (IBL) to Ukraine, for which loan number 3614-UA in the amount of US$27 million
was approved on June 8, 1993, and made effective on August 11, 1993\. This ICR
evaluates the implementation experience of this loan, the World Bank's first to Ukraine\.
Loan closing was postponed three times before it officially closed on
April 1, 1999, three years and three months after the original closing date of
December 1, 1996\. Final disbursement took place on April 20, 1999, at which time a
balance of US$68,817\.23 was canceled\. Cofinancing in the amount of $111,000 was
provided by UNDP\.
Preparation of the ICR, begun during the final supervision mission from October
12- 23, 1999, was managed by Rama Chandran, Task Team Leader (TTL), with inputs
from Maxim Ljubinsky (Project Officer in Kiev), Ali Hashim (Treasury component),
Sandra Bloemenkamp (Task Manager 1993-95) and Lilia Burunciuc (Task Manager
1996-97)\. The report utilizes materials from the project files and interviews with the
project management team\. The borrower contributed to the preparation of the ICR by
submitting project evaluations from the Anti-Monopoly Committee, the National Agency
of Ukraine for Development and European Integration, the National Bank of Ukraine,
and the State Committee on Statistics (attached as appendices)\. The ICR benefited from
valuable comments provided by Dusan Vujovic (Program Team Leader), Lilia Burunciuc
(Ukraine, Country Unit), and Paul Siegelbaum (Country Director, Ukraine and Belarus)\.
The ICR was reviewed by Pervaiz Rashid, Lead Specialist at ECSPE\.
IMPLEMENTATION COMPLETION REPORT
UKRAINE
INSTITUTION BUILDING LOAN
Loan No\. 3614-UA
EVALUATION SUMMARY
Introduction
1\. Formal contacts between Ukraine and the World Bank was initiated during a
Bank mission in January 1992, a few months after Ukraine's declaration of independence
from the former Soviet Union\. In September 1992, Ukraine joined the IBRD\. The
Institution Building Loan (IBL), approved in June 1993, was the Bank's first lending
operation in that country\. There was no Country Assistance Strategy (CAS) at the time
of IBL's approval, but a country economic memorandum (Report No\. 11 029-UA) was
distributed to the Board a week prior to consideration of the IBL\.
Project Objectives
2\. The IBL was designed to assist the Government to implement economic reforms
and to strengthen the institutions essential to the transition to a market economy\.
3\. The project consisted of three components, Enterprise Sector Reform, Financial
Sector Reform, and Public Economic and Financial Management Reform\. The original
programs were focussed on technical assistance for the implementation of reforms which
would simultaneously build capacity to manage the reforms essential for efficient
operation of a market economy through institutional building programs for the following
areas:
* Enterprise Sector Reform: (a) implementation of small enterprise privatization and
regulatory reform in selected cities; (b) pilot privatization of medium- and large-scale
enterprises; (c) national publicity campaign about privatization; and (d) initiation of a
demonopolization program\.
* Financial Sector Reform: (a) modernization of the payments system; (b) accounting
reform for financial institutions; and (c) institutional strengthening of banks\.
* Public Economic and Financial Management Reform: (a) establishment of a
treasury system; (b) modernization of tax administration; (c) modernization of the
statistical system; (d) strengthening economic analysis capacity of the Ministry of
Economy; and (e) support to a project implementation unit for the IBL\.
- ii -
4\. The project objectives were clear, though somewhat ambitious\. Selection of these
components was appropriate at the time of the design of the project in view of the urgent
need to build capacity in these sectors\.
5\. The IBL was launched in a very challenging environment given the fact that the
political consensus on economic reformn within the country needed to be developed\. At
the same time, the project objectives were broad and flexible enough to respond to
Ukraine's evolving priorities\. Consequently, the project was restructured in 1995-96
within the framework of the original objectives to reflect the Government's revised needs
and priorities\. Following the restructuring in 1995-96, the focus of investments shifted to
building up the individual institutions through the provision of training, and technical
assi stance, which aimed at the development of information technology systems as well as
building capacity to manage economic reforms\. The revised components consisted of the
following:
* Enterprise Sector Reform: (a) development of a computerization strategy for the
State Property Fund (SPF); (b) training for the SPF; (c) pilot demonopolization and
development of a demonopolization strategy; (d) training for the Anti-Monopoly
Committee (AMC); and (e) computerization of the AMC\.
o Financial Sector Reform: modernization of the payments system\.
* Public Economic and Financial ManagementReform: (a) establishment of a
treasury system; (b) pilot modernization of tax administration; (c) computerization of
the Ministry of Statistics (MOS) and training for MOS staff; (d) development of a
computerization strategy for the Ministry of Economy (MOE) and training for MOE
staff; (e) capacity-building of the National agency of Ukraine for Development and
European Integration (NAUDEI) and Cabinet of Ministers to manage external
financial resources; (f) computerization of Ministry of Finance (MOF) and training
for MOF staff; (g) training of the SCED; and (h) support to a project implementation
unit for the project\.
Implementation Experience and Results
6\. The implementation of the IBL faced initial delays which were largely due to weak
institutions, lack of consensus on policy approaches and the country's inexperience in
managing Bank-financed projects\. The conditions for project implementation improved
by 1995 as the Government had adopted a comprehensive stabilization and economic
reform program at the end of 1994 and over time the executing agencies had increased
their capacity to implement the IBL\.
7\. In general, the IBL successfully initiated the strengthening of institutions essential
to the efficient operation of a market economy\. All activities, with the exception of the
computerization of the SPF, were implemented\. Additional investments would be needed
in these areas in order to sustain the momentum for institutional development\. The
planned Bank investments (e\.g\., Treasury Systems Project, ID APL for Goskomstat and
STA) and initiatives by individual agencies, are likely to maintain this momentum\. A
- iii -
key accomplishment of the project was specifically in changing the way these agencies
think and do business, and this process is likely to be sustained as well\. Overall, both the
Borrower and the Bank performed satisfactorily\. The IBL has been rated "Satisfactory"
on both Development Objectives and Institutional Progress\.
8\. The outcome of the project was satisfactory due to the positive overall impact of
the project, which goes well beyond the individual components\. All the agencies
involved in the IBL have changed the way they do business, train staff, build capacity to
design and implement policies, and reinvent their own organizations\. The Bank has
learned a great deal about Ukraine, as has Ukraine about the Bank, allowing it to prepare
follow-up institution-building and other operations that would build on the achievements
and lessons learnt from the project\.
Summary of Findings, Future Operations, and Key Lessons Learned
9\. Although the implementation of the IBL got off to a slow start and the loan closing
date was extended three times, it had extremely positive outcomes\. The IBL has helped
to establish a broad constituency for economic reform, build up significant
implementation capacity within the Government, and demonstrate the importance of
institution building using a flexible approach\. In retrospect, the original programs in the
IBL may have been overly ambitious\. However, the limited and focussed programs after
its restructuring played an important role in engaging the Borrower\.
10\. Government ownership ofthe project is an important factor in institutional
development projects\. The IBL ambitiously set out to implement extensive reforms in
enterprise, financial, and the public sectors\. The mix of two objectives--implementing
economic reforms and building institutions--and the absence of a clear consensus for
economic reform within the government hampered the implementation during the initial
two years or so\. Implementation was slow and disbursement levels were at a low (14
percent of loan disbursed by end FY 1996) until the Government adopted a
comprehensive structural reform program and restructured the project\. These actions
enhanced the Government's commitment to the project\.
11\. Because of the lack of experience with reforms and Bank projects, the Borrower
was overwhelmed with the breadth, comprehensiveness and complexity of the project\.
The more focussed and limited programs included in the IBL following its restructuring
serves as an important lesson for institutional development\. Limited and focussed
programs, particularly pilot programs, are effective tools to launch reforms in politically
sensitive areas\. Through such focussed programs, the IBL has created a core of mid-level
public officials committed to reform\.
12\. Intensive supervision by experienced Bank staff is a key factor for IBL projects in
new member countries\. This was evidenced during the latter stages of the project\. Close
monitoring and supervision by the Bank's local staff was also a factor in achieving
implementation progress\. Flexibility in project design, and redesign during
implementation through cancellation of components that were moribund and allocation of
resources to agencies which were proactive helped to maximize the project's positive
impact in an evolving country environment\.
- iv -
13\. The relatively short shelf life of information technology and other computer
systems and the relatively long time required to complete the bidding process was
frustrating to the borrower\. The delay in procurement was because of the long learning
curve in comprehending and internalizing transparent and open bidding procedures\. This
was a source of significant dissatisfaction with many of the agencies under the IBL\.
14\. The deep-seated cultural and political bias in Ukraine against foreign consultants
presents a significant issue in all Bank-financed projects\. Although this bias has been
partly overcome through implementation of the project, there is a fundamental distrust of
foreign advice and its value\. This often leads to contractual disputes and a slowing down
in project implementation\.
15\. Ideally, direct assistance to and communication with the beneficiary, should be the
preferred choice for effective project implementation\. This was not possible during the
implementation of the IBL because of lack of capacity in the various institutions of the
project\. Consequently, a centralized Project Implementation Unit (PIU) at the Ministry
of Economy was chosen to coordinate the implementation\. This arrangement slowed
down implementation due to poor communication between the PIU and the beneficiary
agencies in the IBL\.
IMPLEMENTATION COMPLETION REPORT
UKRAINE
INSTITUTION BUILDING LOAN
Loan No\. 3614-UA
I\. IMPLEMENTATION ASSESSMENT
A\. Project Objectives
1\. In 1993, the World Bank approved and began to implement its first lending
operation in Ukraine based on the Government's support of transition to a market-based
economy\. This first lending operation, the Institution Building Loan (IBL), would
provide critically-needed technical assistance to the Government of Ukraine to erect the
basic institutions of a market economy while simultaneously building the capacity of the
Government to manage the transition\. By a decision of the Hard Currency Credit
Council in the Cabinet of Ministers, the Government certified its desire to borrow from
the Bank for the objectives of the IBL: to support the implementation of economic
reforms and to strengthen institutions essential to the efficient operation of a market
economy\. A Country Assistance Strategy (CAS) for Ukraine had not been prepared by the
time of the IBL's approval in June 1993\. However, Ukraine: Country Economic
Memorandum (Report No\. 11 029-UA) was distributed one week prior to the presentation
of IBL to the Board\.
2\. The IBL addressed one of the major objectives of the Bank's strategy at that time,
the initiation of systemic reforms, which was reflected in the project's three components:
Enterprise Sector Reform, Financial Sector Reform, and Reform of Public Economic and
Financial Management\. The original programs were focussed on technical assistance for
the implementation of reforms that would simultaneously build capacity to manage the
reforms within the following institutions\.
* Enterprise Sector Reform: (a) implementation of small enterprise privatization and
regulatory reform in selected cities; (b) pilot privatization of medium- and large-scale
enterprises; (c) national publicity campaign about privatization; and (d) initiation of a
demonopolization program\.
* Financial Sector Reform: (a) modernization of the payments system; (b) accounting reform
for financial institutions; and (c) institutional strengthening of banks\.
* Public Economic and Financial Management Reform: (a) establishment of a treasury
system; (b) modernization of tax administration; (c) modernization of the statistical system;
(d) strengthening economic analysis capacity of the Ministry of Economy; and (e) support to
a project implementation unit for the IBL\.
3\. The IBL was a demanding project for the Government to implement since it was
Ukraine's first experience with a Bank-financed project\. The volatile policy environment
in which the project had its beginnings and the lack of internal consensus for economic
reforms within the Government complicated matters\. Further adding to the complexity,
was that there were eight executing agencies for the various components in addition to
several layers of beneficiaries\. Implementation required coordination across many
Government departments and agencies, and superior management\. The lack of
implementation capacity also contributed to slow implementation\.
B\. Achievement of Project Objectives
4\. Overall, the IBL was moderately successful in achieving both its objectives of
assisting the Government of Ukraine to implement economic reforms and of
strengthening institutions essential to the transition to a market economy\. IBL's specific
achievements are detailed in this section\.
Enterprise Reform Component
5\. Privatization\. The Government established the SPF in the fall of 1991 when they
also adopted a number of fundamental laws that formed the legal foundations for
privatization in Ukraine\. Prior to its restructuring, the IBL included three distinct
privatization programs that aimed simultaneously at implementing economic reforms and
building the technical capacity of the SPF to manage the privatization process\. They
were: small enterprise privatization and regulatory reform in selected cities and oblasts,
pilot privatization of medium and large enterprises, and a national public information
campaign on privatization\.
6\. In 1995, all three of these programs were cut out of the IBL given either alternative
sources of financing (for the national public information campaign and small-scale
privatization) or changed priorities of the Government (such as the initiation of a mass
privatization program)\. Given these developments, IBL assistance was refocused to
provide direct institution-building support to the SPF, through which the SPF received
financing for office equipment, training in privatization, and a computerization strategy\.
The computerization strategy, developed by Consultants, was not implemented due to the
SPF's later dissatisfaction with the specifications of the bidding documents\. The SPF
asserted that the specifications no longer met their needs\. However, the Bank did not
agree with this conclusion, and the SPF ultimately cancelled the tender\.
7\. Despite the failure to implement the computerization strategy and the cancellation
of the original privatization programs in 1995, this sub-component achieved considerable
progress in strengthening the SPF as an institution and in implementing reforms\. The
IBL played a significant role in helping to launch the privatization program in Ukraine
and built a foundation for other Bank assistance\. For example, the Enterprise
Development Adjustment Loans (I and II), approved in FY1996 and FY1998
respectively, deepened support to Ukraine in privatization and post-privatization\. The
original activities in this sub-component may have been ambitious given the absence of a
consensus for reform\. This experience demonstrated important lessons about Ukraine for
the Bank\. For example, the deep-seated reluctance to borrow for technical assistance; the
- 3 -
difficulty in implementing reform programs without a clear mandate from the
government for reform; and the potential complications in financing information
technology systems given the relatively short shelf life of information technology
products and the long lead time in procurement\.
8\. Demonopolization\. The IBL's demonopolization efforts centered around
strengthening the Anti Monopoly Commission (AMC), which was created in September
1992, providing assistance in initiating a program to break up some of the largest
monopoly enterprises in Ukraine, and preventing practices aimed at restricting
competition\. Under IBL, the central office staff of the AMC received training and
technical assistance to demonopolize a large-scale breadmaking enterprise, based on
which a generally-applicable demonopolization methodology was developed\. Although
the breadmaking enterprise, Volin Hlyb, was ultimately demonopolized, political
opposition from vested interests had slowed down the implementation of the program and
led to the extension of the consulting services contract\. In addition to technical assistance
and training, AMC was computerized, which increased the efficiency of AMC
operations, improved record management and bookkeeping, and accelerated case and
data processing\. The IBL's demonopolization program made substantial progress in
initiating a demonopolization program as well as in strengthening the AMC\.
Financial Sector Reform
9\. The Financial Sector Reform component originally set out to introduce major
reforms in the sector through modernizing the payments system, overhauling the
accounting system of financial institutions, and overall institutional strengthening of
commercial banks\. However, this component was eliminated from the IBL in early 1996
based on the lack of implementation progress and the Government's perception that the
National Bank of Ukraine (NBU) could finance the modernization of the payment system
from its own resources\. However, the Government reversed its position on the latter and
requested the reintroduction of the original program to modernize the payments system\.
With technical assistance and equipment provided by IBL, the NBU enhanced an
electronic payment system (EPS), upon which the NBU has continued to build\. This
subcomponent successfully achieved its objectives, further building the institutional
capacity of the NBU and at the same time establishing a market-oriented payments
system\.
Reform of Public Economic and Financial Management
10\. Treasury System\. The IBL originally intended to finance technical assistance for
the functional analysis of a treasury system, in addition to hardware and software to
establish an interim system\. Consultants completed the functional analysis and issued bid
documents for the procurement of hardware and software, however, a newly appointed
head of the treasury department wanted to modify the bid documents to include hardware
only\. The software would be developed in-house\. This decision led to an impasse with
the Consultants and resulted in the ultimate cancellation of the bid documents, the
contract with the Consultants, and the sub-component in 1996\.
- 4 -
11\. In its first years, the treasury department was a growing but weak institution which
was severely understaffed, suffered from frequent changes in management, and had
limited institutional capacity, particularly to fully value the work of the consultants\.
These institutional weaknesses were eventually overcome, however, and although the
sub-component suffered a setback following the contract cancellation, the treasury
continued to develop the system using its own resources\. In 1997, IBL resumed support
to the treasury department with additional procurements of hardware and technical
assistance to elaborate drafts of legislative and normative acts as well as to analyze the
treasury department's functional and organization structure\. There was also significant
collaboration with the IMF, the Bank and the Treasury\. The investments into the
Treasury department established the basis for the Treasury Systems Project, which was
approved by the Bank in 1998\. In addition, equipment was provided to the MOF for a
network to link several departments in the MOF with the treasury department\. IBL thus
achieved significant progress in introducing and initiating a functional and automated
treasury system in Ukraine\.
12\. Tax Administration\. The State Tax Administration (STA) implemented the roll-
out of an IMF-financed pilot in 14 tax offices throughout Kiev using IBL-financed
technical assistance and equipment\. The original pilot upgraded and modernized the
operations of the local tax office in Darnitsa rayon, city of Kyiv\. Under the pilot, the
administrative structure of the office was reformed, new procedures for assessment,
collection enforcement and auditing introduced, and information technology integrated
into its operations\. Although the pilot is unlikely to be replicated and the hardware
configured and software developed under the project, its experience established an
important foundation for future investments into modernizing and improving itself is
unlikely to be replicated beyond IBL, its impact goes well beyond the pilot\. The STA
improved its administrative and management skills base with the introduction of new
processes, such as analyzing and re-engineering its business procedures in administering
taxes, designing functional and structural improvements, optimizing human resources,
assessing risk, contingency planning and using international advisory services\. Although
the pilot is unlikely to be replicated and the hardware configured and software developed
under the project, its experience established an important foundation for future
investments into modernizing and improving tax administration in Ukraine\. The STA
has begun the preparation of programs for potential financing under the Institution
Development Adaptable Program Lending (ID APL)\. This sub-component achieved
significant progress in building the STA's capacity even though it was only partially
successful in achieving the objective of fundamentally transforming tax administration in
Ukraine\. There was also some collaboration with the IMF during the earlier stages of the
IBL\. This tapered off towards the latter stages of the project\.
13\. The System of Statistics\. Under IBL, the State Committee for Statistics (or
Goskomstat, formerly the Ministry of Statistics) received technical assistance, equipment,
and computer training to elaborate and implement a new information system to
modernize its statistical system, in addition to receiving equipment to improve the
telephone system and the printing facilities\. Building on the foundations of reform
established by IBL and in accordance with a 1997 Presidential decree, implementation of
a National Program on International Standards of Statistics began in 1998 which would
begin the process of converting Ukraine's statistical system to international standards\.
Moreover, Goskomstat is currently preparing future programs for potential financing
under ID APL\. This sub-component was partially successful in introducing institutional
changes to and restructuring the statistical system in Ukraine\.
14\. Economic Analysis and Policy Formulation\. Since the Ministry of Economy
(MOE) was given a lead role in spearheading the country's economic reform effort, the
IBL was designed to provide technical assistance and training to aid this process\.
Although MOE did not receive technical assistance for economic policy formulation, it
did benefit from an extensive staff training program in economic analysis and policy
formulation, in addition to the implementation of an integrated computer system\.
However, the success of the training program has been reduced by a high turnover of
IBL-trained staff: by 1998, about 30 percent of those trained under IBL had left the
MOE\. Thus, this sub-component was only partially successful in achieving its goal of
building capacity in economic analysis and policy fortnulation within MOE\.
15\. External Financial Resource Management\. This sub-component, implemented
jointly with UNDP, provided technical assistance, training, and equipment, separately to
the Cabinet of Ministers (COM) and the National Agency for Development and European
Integration (NAUDEI)\. Both entities have benefited from training as well as the
computerization of their operations\. Internal sources within the Bank report an improved
dialogue with NAUDEI\. This sub-component was successful in strengthening the
capacity of COM and NAUDEI to manage external resources\.
16\. Project Implementation Unit\. Technical assistance, training, and equipment were
allocated in the IBL to coordinate project implementation as well as to build capacity in
the Cabinet of Ministers to and later, the Ministry of Economy, to facilitate future World
Bank lending\. The performance of the PIU was mixed, particularly given the difficulty in
maintaining clear lines of communication with the IBL executing agencies, which
mitigated against timely and effective project implementation\. Overall, this sub-
component achieved some progress in meeting its objectives, particularly in building
capacity for future Bank lending as demonstrated by the contribution of former IBL PIU
staff to other Bank projects\.
C\. Implementation Record and Major Factors Affecting the Project
17\. Between project effectiveness in August 1993 and the initiation of a comprehensive
stabilization and structural reform program by the Government at the end of 1994, there
was very little implementation progress in IBL (little over 10 percent of the loan was
disbursed against 20 percent of estimated disbursements)\. Until this time, the IBL had
been used mainly to facilitate the policy dialogue with mid-level government officials,
and overall, there was neither the political commitment nor will to implement reforms\.
Following the introduction of the Government's reform program at the end of 1994,
however, the Bank's dialogue with its IBL counterparts dramatically improved and
facilitated an effective process in project restructuring\. There were many factors not
subject to Government control which affected project implementation, most of which
were related to their limited experience in implementing reforms\.
- 6 -
Factors Not Subject to Government's Control
18\. Upheaval of the Transition Period\. Project implementation was complicated by
the rapidly changing social, political, and economic landscape in Ukraine in the first few
years of its transition, particularly as many of the original activities became less relevant
during implementation, leading to the cancellation or addition of some activities and the
restructuring of others\.
19\. Reorientation to Independent Nation\. The psychological effect stemming from
Ukraine's newly gained status as an independent nation cannot be underestimated as a
factor in implementation delays, particularly given the nature of its previous status under
the former system\. Ukraine, as with all the former republics of the Soviet Union, used to
be rewarded for executing orders from the center, not by crafting its own policies\. The
newly-gained freedom to govern itself, as well as the reorientation in thinking, although
heady at times, was very demanding at other times\.
20\. Weak Implementation Capacity\. IBL, as the first Bank operation in Ukraine, was
the Government's first meaningful experience with the World Bank\. This was a
significant factor contributing to implementation delays not only because of the
Ukrainians' nescience vis-a-vis Bank's procedures (particularly procurement), but also in
terms of its lack of experience in communicating and working with the Bank as an
institution\.
21\. Inexperience with Competitive Procurement and Contract Management\. IBL
was the government's first exposure to the concept of competitive procurement and
contract management\. Given the radically different concepts behind selecting and
managing contractors and suppliers in the past, learning the process of open, transparent
and cost effective public procurement was a long exercise which will likely continue with
other Bank projects\.
22\. Multiple Changes in Project Management\. During the implementation of the IBL,
both Bank management and the heads of some of the executing agencies changed several
times\. This was also a contributing factor in slowing down implementation\.
23\. Ambitious Project Design\. Although there were only three components under the
project, each component contained within it multiple activities involving far-reaching
policy reforms\. Given that there was no institutional experience with Bank projects, the
complex project design significantly contributed to delays in jump-starting
implementation\.
24\. Competing Assistancefrom other Donors\. Some of the activities under the loan
were delayed and ultimately abandoned after other donors provided grant financing in the
same area\.
Factors Generally Subject to Government's Control
25\. Unfocused Policy Environment\. The unfocused policy environment in Ukraine
adversely effected the implementation of the majority of IBL's programs until the end of
1994, when the Government adopted a comprehensive structural and economic reform
program\. The unfocused policy environment translated into unclear commitment to the
project in the first years of IBL implementation\.
26\. Inefficient Project Management Structure\. During project design, the First
Deputy Minister of Economy was delegated overall responsibility for project
implementation, with responsibility of day-to-day project administration given to the
PIU, which was originally established within Cabinet of Ministers\. Under this
organizational structure, however, the PIU lacked the authority to manage the project
because it had to receive approvals from the Minister of Economy for standard
documentation\. Until the PIU was transferred to the Ministry of Economy in 1995, this
arrangement slowed down project implementation\.
Factors Subject to Implementing Agencies' Control
27\. Lack of Interagency Collaboration and Cooperation\. The project provided direct
assistance to ten government entities, in addition to providing indirect assistance to many
others\. A coordination council was created to take executive decisions on the loan\.
Given this complex landscape of project beneficiaries, diligent attempts at interagency
collaboration would have been necessary to ensure smooth implementation\. The problem
was particularly pronounced vis-a-vis communication between the PIU and the
beneficiary entities, and even despite the efforts of the Bank's resident mission to help in
coordination\.
D\. Project Sustainability
28\. Since the IBL provided only the basic initial investment, for the organizations
included in the project, additional investments are needed to maintain the momentum of
institution building\. This process has already begun with other Bank loans (e\.g\.,
privatization, treasury system, tax administration, statistical system, etc\.) or with the
organization's own initiative (e\.g\., payments system)\. Furthermore, given the
fundamental change the IBL-supported agencies have undergone in the way they think
and do business, the IBL investments are likely to be sustained\.
29\. Enterprise Reform Component\. The project's support to the SPF is being
supplemented by EDAL I and EDAL II and thus is likely to be sustained\. The
sustainability of investments into the AMC, however, is uncertain given the political
opposition to demonopolization\. However, in view of the AMC's demonstrated
commitment to public education in demonopolization, if the resources became available,
the AMC could make significant progress in this area and sustain IBL investments\.
30\. Financial Sector Reform\. Given the momentum generated by the IBL in
enhancing the NBU's payments system, this sub-component is highly likely to be
sustained\.
31\. Public Sector Economic and Financial Management\. The investments into the
treasury department, STA, Goskomstat, MOE, and NAUDEI\. Additionally, the
investments into the PIU are also likely to be sustained given that IBL PIU staff have
-8 -
already contributed to the preparation of other Bank-financed activities, such as the
Treasury Systems Project\.
E\. Bank Performance
32\. The Bank management team performed well in sustaining the IBL given the
turbulent and uncertain political setting under which the project was prepared and
implemented\. Although not all the programs prepared under the IBL were ultimately
implemented, the fact that some of these prepared prograrns were either financed by other
donors or included as part of other Bank loans is a statement in praise of the Bank
preparation team\. This is remarkable since the IBL was prepared in a short time and in
the same year, in which the Bank sent its first mission to Ukraine (January 1992)\.
33\. The supervision effort of the IBL also deserves recognition\. Implementation
assistance for the IBL, particularly in the early transition period, was extremely difficult
given the turbulent reform environment and the inexperience of the Borrower not only
with the Bank, but with standard business practices of the commercial world\. The
patience and time devoted to supervision, particularly after the restructuring was
completed in 1996, is commendable\. The active participation of a project officer in the
Kiev Resident Mission also significantly contributed to the quality of Bank supervision\.
34\. One factor that negates to some extent an otherwise estimable supervision effort
was the fact that project management changed five times during the life of IBL\. This was
a contributing factor to delays in decision making and responsiveness to the Client's
requests\.
F\. Borrower Performance
35\. Borrower performance was varied, depending on the capacity of various executing
agencies\. In general the executing agencies performed well, given their lack of
experience with external assistance, reform, and Bank projects\. There was a very steep
leaming curve during the initial period of two years in trying to understand the nuances
of a market economy, the requirements of transparency in public procurement, building
of internal consensus on reform etc\.,\. The learning curve began to flatten during the later
stages of the project and this was demonstrated by improved performance, more in some
agencies and less in others\.
G\. Assessment of Outcome
36\. Although progress in meeting the development objectives of the project were
moderate, the outcome of the project was extremely positive in that the IBL built a broad
constituency for reforms as well as developing strong working relations with the
executing agencies and institutional capacity to prepare and implement Bank-financed
projects\. More importantly, the overall positive impact of the project goes well beyond
the individual components\. All the agencies involved in the IBL have changed the way
they do business, train staff, build capacity to design and implement policies, reorganize
and reinvent their own organizations\. Additionally, the Bank has learned a great deal
- 9-
about Ukraine, as has Ukraine about the Bank, allowing it to prepare its own institution-
building projects for consideration under the ID APL\.
H\. Future Operation
37\. Both Enterprise Development Adjustment loans (EDAL and EDAL II) which are
currently under implementation are providing technical assistance to the SPF to build on
the initial training they received on privatization under the IBL; in particular, EDAL and
EDAL II address case-by-case privatization (CBC), foreign investment, and post-
privatization restructuring\.
38\. Although it has not secured it to date, the AMC is actively seeking funding to
disseminate information to the public at large about the benefits of demonopolization,
with a focus on development of curricula on demonopolization in schools and
universities\. The AMC has received some technical assistance from TACIS, but would
require additional funding in order to accomplish its objectives of educating the public
about demonopolization\. In spite of its desire, the political environment in Ukraine is not
prepared for full-scale implementation of the demonopolization program developed under
the IBL\.
39\. The NBU has already initiated various efforts in building on the EPS developed
under the IBL, and have several programs currently under development, including
increasing the capacity of EPS\. In this regard, the NBU is seeking assistance in software
development\. In addition to its internal activities, the NBU held a conference on its EPS,
one of the results of which may be the provision of assistance to Armenia, Azerbaijan,
and Kazakhstan in the future for establishing EPS's in those countries\.
40\. Although the Treasury Systems Project, which would build on the initial
investments made by IBL, was approved by the Bank in February 1998, it has not been
declared effective since it has not been approved by the Ukrainian Parliament despite two
readings\. Given the strong political opposition to the project, it is unclear when the
project will become effective\.
41\. Programs for Ukraine are under preparation at the time of this ICR\. Two areas
already identified as priorities were tax administration and statistical systems
modernization based on the outcome of the IBL\. The IBL played -a critical role in
preparing both the STA and Goskomstat for future lending, and for helping both the Bank
and the Borrower identify future investment needs\.
I\. Key Lessons Learned
42\. Although the implementation of the IBL got off to a slow start and the loan closing
date was extended three time thereby increasing the implementation period, the overall
outcomes have been positive\. The IBL has helped to establish a broad constituency for
economic reform, build up significant implementation capacity within the Government,
and demonstrate the importance of institution building using a flexible approach\. In
retrospect, the original programs in the IBL may have been overly ambitious\. However,
-10-
the limited and focussed programs after its restructuring played an important role in
engaging the Borrower\.
43\. Government ownership of the project is an important factor in institutional
development projects\. The IBL ambitiously set out to implement extensive reforms in
enterprise, financial, and the public sectors\. The mix of two objectives--implementing
economic reforms and building institutions--and the absence of a clear consensus for
economic reform within the government hampered the implementation during the initial
two years or so\. Implementation was slow and disbursement levels were at a low (14
percent of loan disbursed by end FY 1996) until the Govermnent adopted a
comprehensive structural reform program and restructured the project\. These actions
enhanced the Government's commitment to the project\.
44\. Because of the lack of experience with reforms on the one hand and experience
with Bank projects on the other, the Borrower was overwhelmed with the breadth,
comprehensiveness and complexity of the project\. The more focussed and limited
programs included in the IBL following its restructuring serves as an important lesson for
institutional development\. Limited and focussed programs, particularly pilot programs,
are effective tools to launch reforms in politically sensitive areas\. Through such focussed
programs, the IBL has created a core of mid-level public officials committed to reform\.
45\. Intensive supervision by experienced Bank staff is a key factor for IBL projects in
new member countries\. This was evidenced during the latter stages of the project\. Close
monitoring and supervision by the Bank's local staff was also a factor in achieving
implementation progress\. Flexibility in project design, and redesign during
implementation through cancellation of components that were moribund and allocation of
resources to agencies which were proactive helped to maximize the project's positive
impact in an evolving country environment\.
46\. The relatively short shelf life of information technology and other computer
systems and the relatively long time required to complete the bidding process was
frustrating to the borrower\. The delay in procurement was because of the long learning
curve in comprehending and internalizing transparent and open bidding procedures\. This
was a source of significant dissatisfaction with many of the agencies under the IBL\.
47\. The deep-seated cultural and political bias in Ukraine against foreign consultants
presents a significant issue in all Bank-financed projects\. Although this bias has been
partly overcome through implementation of the project, there is a fundamental distrust of
foreign advice and its value\. This often leads to contractual disputes and a slowing down
in project implementation\.
48\. Ideally, direct assistance to and communication with the beneficiary, should be the
preferred choice for effective project implementation\. This was not possible during the
implementation of the IBL because of lack of capacity in the various institutions of the
project\. Consequently, a centralized PIU at the Ministry of Economy (MOE) was chosen
to coordinate the implementation\. This arrangement slowed down implementation due to
poor communication between the PIU and the beneficiary agencies in the IBL\.
II\. Statistical Tables
Tables 1-13
Table 1: Summary of Assessments
A\. Achievement of Objectives Substantial Partial Negligible Not Applicable
(x) (x) (x) (x)
MACRO POLICIES O O x
SECTOR POLICIES O O O x
FINANCIAL OBJECTIVES O O O x
INSTITUTIONAL DEVELOPMENT O x O O
PHYSICAL OBJECTIVES X O O O
POVERTY REDUCTION O O O x
GENDER ISSUES O O O x
OTHER SOCLAL OBJECTIVES O5 O1 x
ENVIRONMENTAL OBJECTIVES O °1 x
PUBLIC SECTOR MANAGENENT O1 x O1 O
PRIVATE SECTOR DEVELOPMENT O O x O
OTIER (SPECIFY) O O °
B\. Project Sustainability Likely Unlikely Uncertain
(x) (x) (x)
x O O1
C\. Bank Performance Highly Satisfactory Satisfactory Deficient
(x) (x) (x)
IDENTIFICATION O x O
PREPARATION ASSISTANCE O x O
APPRAISAL O X O
SUPERVISION O x O
D\. Borrower Performance Highly Satisfactory Satisfactory Deficient
(x) (x) (x)
PREPARATION O x O
IMPLEMENTATION O x O
OPERATION (IF APPLICABLE) O O O
E\. Assessment of Outcome Highly Highly
Satisfactory Satisfactory Unsatisfactory Unsatisfactory
(x) (x) (x) (x)
x O1 O C]
- 12-
Table 2: Related Bank Loans
Year of
Loan Title Purpose Approval Status
\.l ~~~~~~~~~~~(FY)
Preceding Operations
NONE
Following Operations
I\. REHABILITATION Stabilization and structural reforms 1995 Closed 6/30/96
2\. AGRICULTURAL SEED DEVELOPMENT Agricultural productivity and export 1995 Under -
development implementation
3\. ENTERPRISE DEVELOPMENT ADJUSTMENT Private-sector development 1996 Under
I_implementation
4\. AGRIcuLTuRE SEcToRADJusTMENT Development of market-based agriculture 1997 Closed 12/31/98
5\. TREASURY SYSTEMS Functioning and automated treasury 1998 Not yet effective
system
6\. ENTERPRISE DEVELOPMENT ADJUSTMENT II Structural reforms 1999 Under
implementation
7\. FINANCLAL SECTOR ADJUSTMENT Banking sector reform 1999 Under
_______________________ ____________________________ ____I implementation
Table 3: Project Timetable
Steps in Project Cycle Date Planned | Date Actual
IDENTIFICATION September 29, 1992 As planned
(EXECUTIVE PROJECT SUMMARY)
PREPARATION November 29, 1992 As planned
APPRAISAL May 5, 1993 As planned
NEGOTIATIONS May 7, 1993 May 10, 1993
BOARD PRESENTATION June 8, 1993 As planned
SIGNING June 25, 1993 As planned
EFFECTIVENESS August 11, 1993 As planned
MIDTERM REVIEW Not Applicable Not Applicable
PROJECT COMPLETION June 30, 1996 December 31, 1998
LOAN CLOSING December 31, 1996 April 1, 1999
- 13 -
Table 4: Loan Disbursements - Cumulative Estimated and Actual
(USSmillions)
FY93 I FY94 FY95 FY96 i FY97 FY98 L FY99
EEST7ATE* 0 5\.1 9\.7 10\.1 2\.1 0 0
ESTIMATED 0 5\.1 14\.8 24\.9 27\.0 0 0
CUMULATIVE
ACTUAL 0 \.78 2\.09 1\.04 7\.08 11\.44 4\.02
CUMULATIVE ACTUAL 0 \.78 2\.87 3\.91 10\.99 22\.43 26\.45
ACTUAL AS % OF 0 15 21\.5 10 337 1144 402
ESTIMATE
*ESTIMATED DURING APPRAISAL
DATE OF FINAL DISBURSEMENT: April 1999
Table 5: Key Indicators for Project Implementation
[ Key Implementation Indicators in SAR I Estimated Actual
Not Applicable
Table 6: Key Indicators for Project Operation
Key Operating Indicators in SAR Estimated Actual
Not Applicable
Table 7: Studies Included in Project
Study Purpose as Defined at Status J Impact
Appraisal/Redefined | of Study
INSTITUTIONAL Diagnostic review of all major Cancelled in 1996 N/A
DEVELOPMENT OF areas of banking, with a focus
BANKS on identifying major
institutional development
needs\.
-14-
Table 8A: Project Costs
(US$thousands)
Component Appraisal Estimate Actual/Latest Estimate*
Local Foreign Total Local Foreign Total
Costs I Costs I Costs Costs
ENTERPRISE REFORM 371 4,275 4,646 N/A N/A 3,445
FINANCIAL SECTOR REFORM 411 4,750 5,161 N/A N/A 2,987
PUBLIC ECONOMIC AND FINANCIAL 1,218 14,075 15,293 N/A N/A 20,567
MANAGEMENT
UNALLOCATED 0 2,000 2,000 N/A N/A 0
Table 8B: Project Financing
(US$thousands)
Financier Appraisal Estimate Actual/Latest Estimate*
Local |Foreign Total Local [ Foreign 1 Total
Costs [Costs Costs [Costs
IBRD 0 27,000 27,000 0 27,000 27,000
GOVERNMENT OF UKRAINE 2,000 0 2,000 0 0 0
UNDP 0 0 0 0 111 111
TOTAL 2,000 27,000 29,000 0 27,111 27,111
*The actual estimates were provided by the IBL PIU\.
Table 9: Economic Costs and Benefits-
NOT APPLICABLE
- 15 -
Table 10: Status of Legal Covenants
Original Revised 1 1 Comment
Agreement Section Covenant Present I Fulfillment Fulfillment Description of Covenant
Type Status | Date Date_
Loan 3\.03 5 CD N/A N/A The Borrower shall ensure that the PIU is at all Until 1995,
times headed by a coordinator with the P1U was
qualifications, terms of reference and understaffed\.
experience satisfactory to the Bank, who shall
be assisted by qualified staff in adequate
numbers and by consultants, acceptable to the
Bank, advising on procurement and
disbursement matters\.
Loan 4\.01 CD Annually on N/A The Borrower shall maintain or cause to be The Borrower
June 30 maintained records and accounts adequate to delayed the
reflect in accordance with sound accounting submission to
practices the operations, resources and the Bank of
expenditures in respect of the Project of the the annual
departments or agencies of the Borrower audit of 1994\.
responsible for carrying out the Project or any
part thereof\. The Borrower shall have the
records and accounts for the project including
those for the Special Account and Statements of
Expenditure for each fiscal year audited in
accordance with appropriate auditing principles
consistently applied by independent auditors
acceptable to the Bank; furnish to the Bank as
soon as available, but in any case not later than
six months after the end of each such year, the
report of such audit\.
Covenant Types: Present Status:
I = Accounts/audits 9 = Monitoring, review and reporting C = Covenant complied with
2 = Financial performance/revenue generation from 10 = Project implementation not CD = Covenant complied with after delay
beneficiaries covered by categories I - 9 CP = Covenant complied with partially
3 = Flow and utilization of project funds 11 = Sectoral or cross-sectoral NC = Covenant not complied with
4 = Counterpart funding budgetary
5 = Management aspects of the project or executing or other resource allocation
agency 12 = Sectoral or cross-sectoral
6 = Environmental covenants policy/regulatory/institutional
7 = Involuntary resettlement action
8 = Indigenous people 13 = other
Table 11: Compliance with Operational Manual Statements
Statement Number and Title I Describe and Comment on Lack of Compliance
NOT APPLICABLE
Table 12: Bank Resources -- Staff Inputs
\.___________________________ Planned Revised Actual
Stage of Project Cycle Weeks US$000 Weeks US$000 Weeks US$000
PREPARATION TO APPRAISAL - - - 70\.7 176\.5
APPRAISAL - - - 18\.4 51\.6
NEGOTIATIONS THROUGH BOARD - - - 3\.5 10\.0
APPROVAL
SUPERVISION - - - 267\.8 390\.5
COMPLETION - - 99\.1 63\.8
TOTAL -_I_ _ - 459\.5 692\.4
-16-
Table 13: Bank Resources -- Missions
Number Days
Stage of Project Month/ of in the Specialty Performance Rating Types of Problems
Cycle Year Persons Field
Implementation Development
Objectives
THROUGH APPRAISAL 11- 12/92 8 E, L N/A N/A N/A
APPRAISAL THROUGH
BOARD APPROVAL
SUPERVISION 7/93 2 E, P N/A N/A N/A
SUPERVISION 9/93 2 E, P
SUPERVISION 10 - 11/93 2 10 TM, E
SUPERVISION 6/94 2 TM, P S S
SUPERVISION 6/95 4 TM, P, F, IT U S
SUPERVISION 4/96 2 13 TM S S Management of
special accounts,
procurement,
tumover of
government
officials/project
management staff
SUPERVISION 6-7/96 1 10 TM S S Administrative
problems (Sectoral
ministries/agencies),
project management,
procurement,
borrower
commitment,
tumover of
government
officials/project
management staff
SUPERVISION 10-11/96 1 10 IT S S Administrative
problems (Sectoral
ministries/agencies),
procurement,
borrower
commitment,
turnover of
government
officials/project
management staff
SUPERVISION 6/97 1 TL, PA S S Procurement,
supplier/contractor
performance,
turnover of
government
officials/project
management staff
SUPERVIS'ON 12/97 2 8 TL, PA S S None specified in
Form 590
SUPERVISION 4 - 5/98 2 13 TL, PA S S None specified in
Form 590
COMPLEnON 10/98 2 13 TL, PA S S None specified in
Form 590
Skills Represented: Performance Rating
E = Economist S = Satisfactory
F = Financial Analyst HS = Highly Satisfactory
IT = Information Technology U = Unsatisfactory
L= Lawyer
P = Procurement
PA= Project Analyst
TM = Task Manager
- 17 -
III\. Appendix 1
Aide Memoire of Final Mission
UKRAINE: INSTITUTION BUILDING LOAN (L3614-UA)
WORLD BANK MISSION
AIDE MEMOIRE: October 12-23,1998
Introduction
1\. The mission led by Mr\. Rama Chandran 'would like to take this opportunity to thank the
National Agency of Ukraine for Development and European Integration (NAUDEI), Cabinet of
Ministers of Ukraine (COM), Ministry of Economy (MOE), National Bank of Ukraine (NBU),
State Committee of Statistics of Ukraine (Goscomstat), Antimonopoly Committee (AMC), State
Tax Administration (STA), Treasury, Ministry of Finance (MOF), the National Agency for
Informatization (NAI), and Project Implementation Unit (PIU) for their cooperation and help
during its stay in Kyiv\.
2\. The mission discussed the preparation of the implementation completion report that
would follow the Loan closure due on December 31,1998, and the Year 2000 issues (Y2K) with
concerned ministries\.
Antimonopoly Committee (AMC)
3\. The mission met with representatives of International Relations Department and
Informatization Department of AMC\. AMC managers confirmed a successful completion of the
Pilot Project (Volin Hlyb)\. Following are the highlights of the pilot project:
* Implementation of the pilot project was slowed down due to lack of support from
some state agencies, although it was supported by the oblast administrations;
* Volin Hlyb corporation was restructured to a number of smaller companies, and state-owned
share does not exceed 20 percent of capital;
* The Volin project model may be effectively used to demonopolize other industries; and
* AMC anticipates the replication of this pilot would be met with stiff opposition from some
large monopolies, central state agencies, regional and municipal administrations\.
4\. A training program for AMC staff has been completed\. AMC employees used this
opportunity to develop new skills and for re-training\. There is a critical issue of high staff
turnover in the agency due to insufficient wages at AMC\.
The mission included Maxim Ljubinsky of the World Bank Resident Mission, Kiev
- 18 -
5\. The accomplishment of the training program highlights the following pending problems
regarding staffing and educational activities:
* a lack of specific faculties/courses on antimonopoly issues in universities;
* a need to launch programs to train trainers in AMC, who will be able to continue carrying
out courses for AMC, other state agencies, entrepreneurs, universities, NGOs, etc\.; and
* text-books, manuals, and other disseminating materials are required to facilitate the
promotion of economic education programs on demonopolization\.
6\. AMC has purchased and installed PCs, printers, and local network in the central office in
Kyiv\. This has improved record management, data processing, and connection with regional
offices\. AMC is planning the installation of a fully automated system that includes all regional
offices\.
7\. The mission was also informed that AMC collaborates with TACIS on Competitive
Policy Development Program, training programs, and IT development\.
Modernization of the National Bank of Ukraine (NBU) Electronic Payment System (EPS)
8\. The mission met with Mr\. Savchenko, Member of the Board, and managers of IT
Department and Interbank Processing Centre\. The NBU representatives underlined the
following:
- NBU is satisfied with EPS financed by IBL and will use it as a core for further development;
- IT experts are currently implementing projects aimed at improvement of EPS,
communication system, etc\.; and
- NBU is planning to increase the capacity of EPS and would be interested in future assistance
on software development\.
9\. The mission was given information of NBU's projects on expansion of use of credit cards
in Ukraine, which are being made with foreign partners, as well as with domestic banks\. After
the meeting, the mission visited the Interbank Processing Centre that is not only a part of the
operating IT Centre of NBU but also a test place for new projects\.
10\. On the Y2K problem, the NBU reported that all PCs, which were identified as susceptible
to Y2K problem had been replaced\. Presently application softwares are being tested\. Overall,
the NBU is on top of the Y2K issues and implementation\.
State Committee of Statistics (Goscomstat)
11\. The mission was briefed on the preparation of the proposed APL and Goscomstat
component\. The Senior managers of Goscomstat informed the mission about the delays in
contract with one of the suppliers - Comparex, and that they were hopeful of completion of
- 19-
installation by the year-end\. The mission stressed the need to ensure that the work completion
and payment should be completed before the Loan closing date of December 31, 1998\.
12\. On the Y2K issues, the Managers said that (a) they were aware of the issues, and (b) they
were in consultation with the NAI and (c) all the computers at the Oblast level were very old and
had BIOS chips that were not Y2K compliant\.
State Tax Administration (STA)
13\. The discussion with the STA managers were devoted to the following issues:
* the status of contracts' completion under STA portion of IBL:
* a problem of payment to a supplier of equipment was not resolved yet; but PIU and STA had
found a compromise and assured the mission that the matter was close to resolution;
* STA shall co-operate with PIU to sort out the problem of payment to an international
adviser, for which the contractual details are missing and there is no continuous paper trail in
the files;
* STA praised the Darnitsa Pilot Project financed from the IBL, and said that it is replicating
it in rayons of the city of Kyiv\. The mission was told of procedural improvements on
submission of tax declarations, audit planning, etc\., which are noted by some taxpayers in
Damitsa\. Although, STA representatives stressed that the pilot does not enable them to
accurately evaluate an increase of tax collection caused by the implementation of the project,
because of a relatively short period of its small scale;
- the mission explained to STA managers the principle of the World Bank procurement and
specifically advised on how to better apply them, and the issues of conflict of interest, and
about an individual working in the STA as "volunteer"\. STA was also given suggestions on
the selection of staff to the Project Preparation Unit for the STA Modernization Project, a
component of Adaptable Program Lending for Institutional Development\. The mission
emphasized on the importance of carrying out all procurement procedures in a transparent
way to allow free and fair competition; and
* STA reported that all computers had been tested on the susceptibility to Y2K problem with
the help of four testing programs given by National Agency on Informatization\. 4,500
working stations out of more than 15,000 were identified to be removed\. Shortly an expert
group will be established by STA to study and prevent the impact of Y2K on Darnitsa Pilot
Project and take remedial measures\.
Strengthening the Capacity of the NAURD (former abbreviation of NAUDEI) to Manage
External Financial Resources
14\. The joint NAURD/UNDP project (the Bank commitment is US$860,000) is under
implementation\. An additional allocation from IBL to this component was made in 1998\. The
delivery and installation of computer equipment is now underway\. A training program was also
extended\. The mission emphasized that all activities under the project should be completed
before the end of 1998\.
- 20 -
Strengthening the Capacity of the Cabinet of Ministers of Ukraine (COM) to Manage
External Financial Resources
15\. The joint COM/UNDP project (the Bank commitment is US$330,000) has been
successfully completed\. The office of National Director and National Co-ordinator is preparing a
final report on the project\. A copy of this report will be sent to the World Bank\.
Ministry of Economy (MOE)
16\. The mission met with managers of the Information and Analytical Department of MOE to
discuss completion of IT component of MOE program under IBL\. Installed servers and software
are being tested at present\. Though MOE informed the mission of a delivery of displays,
printers, etc\. is pending and thus has slowed down the installation process on the whole\. In the
opinion of the MOE experts this delay was caused by the increase of quantity of equipment under
the contract\. There are also the following problems that could impede the installation
completion:
* A sub-contractor that should have installed and tested application software is behind
schedule;
- some technical issues arose in MOE while implementing the project;
- air-conditioning has collapsed and needs to be urgently replaced otherwise hardware cannot
operate in the summer;
* a security software is required to be installed to the system of MOE; and
* is now installing a network that includes all state offices placed in the House of the
Government and therefore MOE has to adopt its installation and testing schedule with COM
and others\.
17\. MOE emphasized the point of a new training program to be initiated for staff of the
ministry\. At the same time, there is a problem of staff turover in MOE and the average
percentage of trained under IBL among those who had left MOE is very high (30 percent on the
average)\.
18\. A training program on issues of integration to Europe for representatives of MOE, MOF,
State Committee on Entrepreneurship Development, and regional administrations has begun in a
partnership with a German consulting company\.
Treasury
19\. The mission met twice with Mrs\. Levchenko, First Deputy Head of Treasury,
Mr\. Nikolaev, Head of IT Department, and Treasury PIU\. The mission also met with the IMF
advisor to Treasury, Mr\. Janis Platais\.
20\. The following issues were touched during the meetings:
- 21 -
* the mission reminded the Treasury of the closure of IBL and of the requirement to complete
all entered contracts by the end of 1998;
* ICB on hardware in amount of $600,000: a new evaluation report along with
recommendations on a contract award was officially submitted to the World Bank at the end
of October 12" for the Bank's review;
* other issues on procurement out of the Treasury portion of IBL were also discussed\. The
Treasury representatives informed the mission that all proposals would be submitted for the
World Bank review by the end of the next week; and
* Head of IT Department informed Y2K issues are under control in Treasury\. PCs were tested
three times\. Interim System of Treasury will be provided with a new version of software that
is currently in use\. It was mentioned that software "Client-Bank", which is used by Treasury,
is still being tested by NBU\. Also, from point of view of Treasury experts, an encryption
system can be affected by this problem and thus some actions should be undertaken as soon
as possible to prevent this\.
Ministry of Finance (MOF)
21\. MOF together with Treasury PIU is conducting International Shopping to procure
computers and office equipment for the Budget Policy and Macroeconomic Analysis
Department\. The mission was informed of a training component of MOF, which includes a few
trips to Ministry of Finance and Economy of France and English lessons for staff\. The mission
drew MOF representative attention to a fact of four-month delay in implementation of this
portion and reminded them of the need for urgency in view of the Loan closing date of December
1998\.
State Committee on Entrepreneurship Development (SCED)
22\. Recently SCED entered into a contact to procure hardware and office equipment\. After
installation is finished, USAID experts will connect a computer network\. A part of this
procurement is aimed at the establishment of a Press Centre of SCED to disseminate materials on
deregulation all over the country, begin active information dissemination program on small and
medium business support, etc\.
National Agency for Informatization (NAI)
23\. The mission discussed Y2K issues with recipients of IBL that have procurements of
hardware and software\. All of those agencies have started testing their information systems\.
Representatives of IT departments informed of a support provided by NAI\.
24\. A meeting was made with representatives of NAI\. During this meeting both sides
discussed issues on the status of activities aimed at resolution of this problem in Ukraine\. NAI
has submitted a request to obtain a planning grant on Y2K from the World Bank\.
- 22 -
Project Implementation Unit (PIU)
25\. PIU collected reports from some implementing agencies and presented its conclusions to
the mission\. There are mainly two participants of IBL: Treasury and Goscomstat that, from point
of view of PIU, failed to fully implement their portions and thus would cause an unspent balance
of the loan\.
26\. PIU reported on two pending issues referring to the final payment to the Supplier of
equipment for Darnitsa Pilot Project of STA and the IMF advisor to STA\. PIU has discussed the
above with STA and found a solution for this\. The mission also advised PIU on how to expedite
this process\.
27\. Further activities of PIU related to the loan completion were discussed\. PIU is preparing
a contract and selecting a company as soon as possible to conduct audit of FY'98\. PIU confirmed
its willingness to contribute to Implementation Completion Report on IBL\.
28\. An issue of disbursement out of Special Account and Loan Account was also taken into
account\. The mission emphasized to the PIU to ensure that all contracts made under IBL are to
be completed by the end of 1998\. PIU may draft and send to the World Bank a special request if
any exceptional payments need to be processed after the Loan closing
29\. Mr\. Bessarab, Head of PIU, said a training program for PIU staff has been carried out
successfully\.
Overall Assessment of IBL Implementation
30\. Procurement of some of the items for a few agencies are behind schedule\. The Bank has
been continuously stressing that the clock was running out, and speedy decision making was
required to meet the loan closing deadline\. With only 2 months left for loan closing, it is
possible that some of the funds allocated for Treasury, Goskomstat, would remain unspent\.
31\. The mission stressed to the PIU that no contract should have a completion date later than
the loan closing date, and all payments with rare exceptions should be completed before
December 31, 1998\. It was pointed out that failure to observe the above procedures would mean
that the GOU would have to find its own funds to meet the payments\.
- 23 -
Appendix 2
Borrower's Contribution to the ICR
ANTIMONOPOLY COMMITTEE OF UKRAINE
8 Lvivska Sq\., Kyiv-53, MCrI-655 254655 Ukraine
Tel\.: (380 44) 212-50-54, Fax: (380 44) 212-48-05
January 28, 1999, # 25-27-2/04-290
Mr\. M\. Liubinsky
Institution Building Loan Coordinator
World Bank Resident Mission in Ukraine
Fax: (380 44) 247-6670
Dear Mr\. Liubinsky:
Referring to your letter of January 14, 1999, we are sending you an evaluation
report on the results of implementing three components by the Antimonopoly Committee
of Ukraine under the World Bank-supported Institution Building Loan (IBL)\.
Sincerely yours,
(signature)
V\.P\. Suprun
Deputy Chairman
Attachment: 4 pages in 1 copy
- 24 -
Evaluation report of the Anti-monopoly Committee of Ukraine on the Results of
Implementing the World Bank-supported Institution Building Loan
The Antimonopoly Committee of Ukraine (AMCU) has realized three components
under the World Bank-supported IBL:
* program of training for the AMCU staff;
* provision of consultative services to prepare and implement a pilot project of
de-monopolizing the "Volynkhlib" enterprise;
* procurement of computer hardware and software for the AMCU\.
The main purpose of realizing all the three components was to develop a
competitive policy in Ukraine as well as its institutional framework\. It is explained by the
fact that the introduction of the competitive policy and appropriate legislation as well as
creation of an institutional framework for this purpose began in our country only in 1992
after Ukraine obtained independence and proclaimed a course toward forming a socially
oriented market economy\.
All the three components have been carried out on a high professional level and
successftilly completed\.
During their implementation, complications occurred, both of internal nature and
those associated with problems of cooperation with the World Bank\.
The complications, common for the three components, occurred during their
preparation and before implementation\. They were connected with their many stages and
complex nature of the preparation process which included: development and coordination
of the terms of reference (TOR), selection of firms that could fulfil the component,
preparation of bidding documents and holding a tender as well as preparation and
coordination of contracts with contractors\. Besides, all the materials had to be agreed
with the World Bank and therefore were prepared in two languages (English - to
cooperate with the Bank and the firms as well as Ukrainian - for internal use)\.
The said complications and absence of experience in working with the World Bank
led to a situation when the preparation process had been going on for more than a year
before implementation started\.
We think that the simplification and shortening of this process would have enabled
us to make the preparation of the components easier before their implementation and
increase efficiency of communication between the borrowers and the Bank\.
The realization of joint projects with the World Bank not only enriched us with
experience in accomplishing specific tasks assigned before the beginning of each project
and in cooperating with the Bank but also gave a new impetus to the development of
competition in Ukraine\.
- 25 -
Program of Training for staff of the Antimonopoly Committee of Ukraine
The training program was aimed at upgrading the professional level of the AMCU
staff which was the most topical problem for developing the institutional framework of
the competitive policy\.
This problem was brought about by the absence in Ukraine of an appropriate
training base in the sphere of competitive policy as well as respective legislation,
regulatory and procedural documents, high-skilled and experienced teachers\. Under these
conditions, the staff of AMCU agencies were being formed out of specialists in different
areas who had to change entirely their occupations and qualifications\.
In view of the above, to organize its efficient operation the Committee had to train
its personnel abroad attracting for this purpose competitive agencies from developed
countries\.
In accordance with the signed contract, 5 educational tours were held within the
framework of the project in four European countries (Germany, Great Britain, Italy and
Poland) where training courses were conducted on the basis of agencies responsible for
pursuing the competitive policy and implementing the respective legislation\. These
courses combined the study of theoretical fundamentals of a market economy, issues of
setting up the competitive environment and its regulation, the operation of competitive
agencies, the legislative framework of their functioning and the mechanism of its
formation, interaction with other public structures, solving of procedural issues associated
with the consideration of cases dealing with violations of the competitive legislation\.
The educational tours were carried out in compliance with preliminarily developed
special programs each devoted to the study of a number of specific problems with regard
to the results of previous programs, thus avoiding overlapping\.
The curriculum was executed very strictly on a highly-skilled level in full accord
with the conditions of the contract as well as assigned objectives and was extremely
useful for the Committee staff\. The participation in the educational tours as well as the
information and documents obtained facilitated the mastering and development of
occupational skills that enable the staff to use the competitive legislation\.
Certain complications occurred during the preparation of the final financial
statement and were brought about by several mistakes made by the contractor in the
financial reports which required to submit appropriate requests to correct them and
caused delays in payments\.
Provision of Consultative Services to Prepare and Implement the Pilot Project of
De-monopolizing the "Volynkhlib" Enterprise
The main purpose of this component was to provide the Antimonopoly Committee
of Ukraine with consultative services in order to:
-26 -
* create a competitive environment on the bread market in the Volyn region by means
of dividing the monopoly structure "Volynkhlib" into several separate enterprises;
work out a mechanism of dividing monopoly structures on the basis of de-
mono4polizing "Volynkhlib" to be used for the purposes of de-monopolization in other
regions of Ukraine as well as other sectors of the economy;
* liberalize and de-regulate the bread market in the Volyn region by means of phasing
out administrative regulatory methods and replacing them with a market mechanism\.
All the project objectives have been accomplished\. As a result of project
implementation, economic analysis of the bread sector and related markets of grain
elevator and grain processing industries as well as technical and economic analysis of the
"Volynkhlib" enterprise have been made, a number of alternative versions of its de-
monopolization have been developed, a de-monopolization version has been selected
which is the most acceptable for the current economic conditions, recommendations have
been given on: price liberalization in the Volyn region, monitoring of bread supply in the
region after the de-monopolization and price liberalization, necessary actions on the part
of the AMCU to ensure conditions for the development of fair competition\.
Complications occurred during the project implementation caused by certain
contradictions between various ministries and agencies involved in the de-
monopolization process which tried to safeguard their interests\. That was brought about
by great social and economic significance of the bread sector in Ukraine\.
Regardless of certain internal complications in the project implementation and the
delays caused by them, this component was successfully completed on a high
professional level\. The recommendations issued to the AMCU during the project
implementation and the experience obtained during the de-monopolization of monopoly
structures have been used when carrying out de-monopolization in other regions and
other sectors of the economy\.
1
Procurement of Computer Hardware and Software for the AMCU
The project's main goal was to considerably raise the efficiency of the AMCU
agencies by means of equipping the workstations with modern office technique and
introducing modem infornation technologies\.
During the project implementation, office equipment, computer hardware and
software fhave been delivered, training of Information Science Department specialists has
been conducted, a network for the Committee central office has been installed\. These
steps have facilitated access to the regulatory and legal information received now through
the "Pravo" (Law) system, analytical processing of statistical data, enabled to initiate
electronic document circulation between individual officials, structural units and regional
branches\.
During the project implementation, there were complications associated with the
complexity and long-term nature of procedures of project coordination as well as
preparation and conduct of tenders\. Within the period of coordinating the project with the
- 27 -
World Bank and preparing tenders to select contractors, the specifications which were a
part of the bidding documents became obsolete that led to a necessity to revise them and
then again coordinate them with the World Bank\.
Evaluating the results of project implementation in terms of the obtained
experience, the following should be mentioned:
* The most topical for the period of project preparation but nevertheless rather
narrow objectives were assigned to all the components which was stipulated first
of all by the insufficiency of funds allocated to the Antimonopoly Committee
under the IBL\.
* The implementation of these components allowed the Committee to ephance
the efficiency of performing its functional responsibilities\. However, as of today,
a whole number of issues remains unresolved in the area of developing the
competitive policy and respective legislation which have acquired an even
greater importance in the conditions of the European integration initiative
proclaimed by Ukraine\.
Among these issues there are first and foremost: the improvement of the regulatory,
legal and procedural framework of the competitive policy, the development of the
institutional framework for protecting the competition and competitive policy
introduction mechanisms as well as the creation of social and economic conditions which
ensure free and fair competition on the market on the basis of introducing rules of
competition\.
The solution of these problems in the current complex economic situation in
Ukraine requires funds within the international technical assistance and from World Bank
loans\. This resulted in submitting by the Committee to the World Bank a proposal to
consider a possibility of providing a rather large-scale loan in the sphere of competition
development that got a fairly positive response\. i
At present, if a decision is taken to prepare the said project for implementation, the
experience obtained in cooperating with the Bank will considerably expedite both the
preparatory phase and the realization of the project in collaboration with the Bank\.
- 28 -
January 28, 1999
Mr\. Maxim Lubinsky
IBL Project Coordinator
Resident Mission of the World Bank in Ukraine
Dear Mr\. Lubinsky:
With reference to your letter of 14 January 1999, we send the completed borrower's
appraisal report questionnaire\. I hope that the information provided by the State Statistics
Committee of Ukraine will be useful for appraisal of performance of the work related to
the preparation and implementation of the World Bank loan\.
Sincerely yours,
O\.G\. Osaulenko
Chairman
State Statistics Committee of Ukraine
- 29 -
BORROWER'S APPRAISAL REPORT QUESTIONNAIRE
1\. Appraisal ofproject targets, its content, implementation, and gained experience of
work
(A) To what extent were project targets importantfor the borrower?
Project targets that included upgrading of a software and hardware framework of
state statistics bodies, improvement of methods and an indicator system, training and
improvement of skills of experts employed within a framework of the State Committee
for Statistics, and introduction of advanced information technologies for information
processing and dissemination corresponded fully to tasks specified by the State Program
of Transition to the International System of Accounting and Statistics\. Being aimed at
bringing the Ukrainian statistics into compliance with the methods of collection,
development, analysis, and dissemination of information that are commonly accepted in
international practices and at introducing international standards into statistics-related
work, the execution of project components assisted to increase the importance and quality
of statistical information provided to state power bodies and the public at large\.
(B) By what means could the project content be improved?
The project content could be improved by including separate components
/subprojects which would take into account the most important current issues that have
emerged in the course of reforming the state statistics system\.
(C) What couldfacilitate the project implementation?
From the standpoint of organizing the project implementation, its successful
introduction would be assisted by creating a special project implementation unit within
the State Statistics Committee\. It could be facilitated by improving the level of skills and
experience of experts working in the central apparatus and the MPC (Main Processing
Center) of the State Statistics Committee and by creating a data base of reference and
regulatory documents relating to issues of loan introduction and work with foreign
consultants and firms\.
It is useful for loan implementation that the World Bank and the IBL Group of the
Ministry of Economy would hold some workshops on organizing the work related to loan
introduction within the entire period of the World Bank credit\. In particular, a special
attention should be given to questions of preparing contracts, training experts of the State
Statistics Committee, and rendering services with a help of short-term assigned individual
consultants of the World Bank by calculating the cost of contracts and agreements and
developing a procedure of document processing and issuance, as well as to issues of
currency regulation\.
(D) To what extent was the project successful from standpoints of each of the
aspects (see Item 1) and at large?
- 30 -
We think that the project was successful on the whole\. Its implementation resulted
in the improvement of the quality of statistical information and the level of work and
skills of experts of state statistics bodies as necessary consultations, new skills, and
practical experience were gained and the software and hardware equipment of statistics
bodies was either renewed or modernized\.
2\. Appraisal of the borrower's own work from the standpoint of project
development and introduction\.
A\. Does the borrower consider that its work under the project has changed or
improved during this period? If it has, what conditioned such change or improvement?
Yes, it has\. Skills and practical experience of the work with World Bank projects
were gained in the course of implementing IBL\. Specialists of the State Statistics
Committee have been familiarized with organizational aspects and a procedure of
development, preparation, and realization of some loan components /subprojects\.
B\. Referring to the past, has the borrower done all possible to obtain maximum
advantage from the project?
No\. It has not\. There were delays in implementing some loan stages /components\.
Their removal would have enabled to use more effectively loan funds\.
C\. Would the borrower do something otherwise under the project if there was such
opportunity now?
Yes\. It would\. Some changes would have been made to some components, in
particular with respect to software and hardware support\. In view of the organizational
aspect of loan implementation, it should have been necessary to determine more clearly
responsibilities, to set up a special project implementation unit within the State Statistics
Committee, and ensure execution of some loan stages in optimal terms\.
D\. Has the borrower gained some important experience/knowledge that would be
helpful infuture?
The experience obtained while implementing the loan can facilitate considerably
realization of similar projects in future\.
3\. Appraisal of the World Bank work from the standpoint of project development
and introduction\.
A\. What the borrower considers the best and the worst with respect to the World
Bank approach to the project?
The best is that it understood borrower's problems, supported its proposals, and
provided necessary consultations\.
- 31 -
B\. To which extent were relations between the World Bank and the borrower
effective?
In the course of the work experts of the World Bank and employees of its resident
mission in Ukraine have established fruitful cooperation with specialists of the State
Statistics Committee\. We would like to acknowledge active participation of resident
mission employees and in particular permanent help on part of IBL Project Coordinator
Mr\. Lubinsky\.
C\. If the borrower was able to change something regards the World Bank what it
could be?
It would be desirable from the beginning of project development to provide for
more complete support of regulatory, reference, and methodological information on
requirements of the World Bank in relation to organization of the work and holding
tenders, and to hold workshops on project development and implementation within the
entire period of loan realization\.
- 32 -
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a TaKoxc Ma5IH 6ixibmHAI gocBig eKCIiinyaTaLMi eJIeKTpOHHO1 iiiiaTi)KHoY cHcTeMH, AK Ile
MajiO MiCIle Ha IIi3HiIIHX eTaIIaX BTijieHH31 ripOeKTy, TO, MO)IMHBO, B)Ke ;O iiepuioro
BapiaHTy npoeKTy 6yrnI 6 3aKna,eHi 6inibm CTOCOBHi BHXXiAHi iOIOoxeHHS, 3aB,ZKH qOMy
3MeHIllHJIiCSI 6 noTpe6a y BAOCKOHaiieHHi nIpOeKTy B npoileci Horo BTineHHA, a
ne3ynJBTaTH MOFJIH 6 6yTE 6inbm IIpHCTOCOBaHHMll ,O 3anpOBagrKeHHsI HaftCy'aCHi]IIHX
piIIIeHb y IliA raaly3i\. AnIe CJIi)D BpaxyBaTH, ILO BHaCiiAEOK pi3HHX o6'cicrHBHHIx Ta
cy6'CKTHBHHX IIPHIxH pO3po6Ka i B1IPOBag)xeHHS npOeKTy 3HaqHo PO3TrIJIHCS y 'laci,
TOMy 6inblnicTm HOTO'qHHX BOcKoHanieHb 6yna BHIKnHxaHa He CTiJIJKH HegojiiKaMH1
3agyMy, CKlJIBKH 3MiHaMH 3aranbHOl CHTyaL-ilf AK y 6aHKiBCBKO-+iHaHCOBirX c4epi
YKpaYHH, TaK i y uapHHi PO3BITKy riiiaTix)HHx CHCTeM Ta iHd)OpMa:uiHHlx TeXHOjiOriHI
B3araJIi\. BeniHy porn) y cipaBi oKioipamaHHS 3a,yMy poecKTy 6e3nepeIHo morina 6
BiAirpaT4 HaSIBHicTB 6inilroro OCBiAgy criiBnpa1i Mix( BceCBiTHiM BaHKOM i HEY,
Kpaiie 3HaiAoMcTBo HEY 3 BHMOraMH Ta HpOueLypaMH BCeCBiTHBoro BaHKy i Kpane
3HagOMcTBO BCeCBiTHbOrO BaHKy 3 oco6JIIBOCTsnMH, llOTpe6aMH4 Ta MO)KJLBOCTSMH HEY
i yKpalHCBKOi 6aHKiBCBKoY CHCTeMH\.
c\. Ilo Morjio 6 nonermTHI BHpOBa,;eHHS npoeKTy?
FIo3HTHBHy poib ,IMJI5i BIpOBa42KeHHA IpOeKTy MOrJIH 6 6yTH Ti CaMi 4)aKTOpll, XIKi
3ra,qyBajIHcR y BiXnriOBiAi o rionepeAH6oro IyHKTy: 6iBIIima o6i3HaHiCT6 3 HIPHHLHIIaMH
CTBOpeHHX Ta BHKOpHCTaHH1 cyqaCHHX IuJIaTi)KHHx CHCTeM, 6iJIbmHri 'OCBig
eKmniyaTaui1 eJIeKTpOHHOf HIaTiKHO1 CHCTeMH, 6JIBIiImH 4OCBiq CIIiBIIpagi Mi)
BceCBiTHiM BIaHKoM i HEY, Kpaue 3HaROMCTBo HEY 3 BHMOraMH Ta npougegypamil
BceCBiTHboro BaHiy i Kpawe 3Ha#OMCTBO BceCBiTHboro aHicy 3 OCO6JIHBOCT3fMH,
no'ipe6aMH Ta MOxKIHBOcTSMH HEY i yKpalHcbxoi 6aHKiBCbKOi cHcTeMH\. He 3aBazEmia 6
TaKO) 6ijIbIi OIIepaTHBHa B3acMogi3 Mi)X 4 aXiBUAMH HEY Ta Bi=OB1iHHMH
IIiApo33,ijiaMH BcecBiTH6oro ESanKy, a TaixoK yKpa1HcBEKHMH YPSAIOBHMH opraHi3auiSMH,
MeHIIHi piBeHi 6iopoKpam3aijiY\.
- 34 -
d\. HaCKiJIbKH yCIHiIIIHHM 6yB ripOeKT 3 TO'IKH 30py KO)KHOFO 3 IXHx acnIeKTiB i
B uiaOMy?
Ha HaIny tyMKy, iipOeKT 6yB JOCHTB yCIIiuHHM, 6o B iuiomy iiocTaBjeHi jiJii 6yau
lOCArHyTi\. HoBa TexHi'IHa IIJIaT4opMa 3a6e3rieHFJIa MO)KJIHBiCTB 3afOBOJIBHHTH IIOTOtIHi
noTpe6H uilaTi)KHOY CHCTeMH i 3rOAOM iiepetiTH go eIieKTpOHHOY CHCTeMH
Mi)K6aHKiBCbKHX pO3paXyHKiB HOBOrO HoKoJIiHHS\. He3BaxcaIHMu Ha XeqKi, 3ragaHi BHuie
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IIO3HITHBHi HacJIiiK - YMOXACIHBHJIa BgOCKOHaAeHHS i OHOBJIeHHA TIPOeKTY 3
BpaxyBaHHXM 6iiiiu cy'IaCHHX MOxCJHBOCTeH i rOTpe6\.
2\. OuiHKa IKOCTi BjTaCHOl gigSUbHOCTi H03HMaJTbHHKa B rpoieci BTiJLeHHS i
BIIpOBagIKeHHS HpOeKTy\.
a\. TMH BBajae HO3HiJaRBHHK, 1110 SKiCTB ioro 1AiLbHOCTi 3MiHHaacs a6o
IIOKPHIJ1;JIaCA 3a ueA qac? AingO TaK, TO SKi HpWHHH 3MiHH 1H HOKpaBiaHHA?
3a iac pO3po6KH, BTiJIeHHA i 3aripOBa)KeHHAsi HpOeKTY HaMH 6yB Ha6yTHH 3HaqHHIi
JOCBig AK y 3B'y9,8 , 66ei yij&&81i, 6oa 3f19Aa iei\. 3oKpeMa, nocBi,g CfliBHipaui 3 BceCBiTHiM
SaHKOM Ta iHIIllMH Mi)KHapOJHHMH opraHi3auisMH, 3apy6i)KHHMH 6aHKaMu Ta 4ipMaMH,
IgO WiOTh B raIiy3i 6aHKiBCbKIuX ilopMaiXiHHHX TeXHoJIoriji, JOCBi ripOBegeHHS
Mi2KHapOJaHHX TeHJepiB\. AyKe KOpHCHHM e TaKow XgOCBiA po6omT yKpalHcL,KoY
6aHKiBCbKOi CHCTeMH B HOBHX YMOBaX Ta rOiriH6JIeHH \.gOCBi eKcnlyaTa&if
eIieKTpOHHOf HiiaTi)KHO1 CHCTeMH, if B3aeMOgli 3 iHIIHMH CHCTeMaMH BCepeXHHi H8fOl
EpaiHuu Ta nIO3a HeiO\. Ha Haxny xyMKy, Bce ge MaJIO I03HTHBHHlI BIIIHB Ha 1KiCTm HamoY
AiAJSI6HOCTi\. HeBHHHI HeraTHBHHH BHJIHB 6yB o6yMoBneHrnd Bax)KO1O eKOHOMitHO1O
CHTyaliClo B YKpaiHi Ta eSAKHMH HeCHpH5TJIHBHMH O6CTaBHHaMH 1103a Helo\.
b\. 3BepTalotmcb ,o MHHyJIOrO, I'm 3po6nIeHO HHMH BCe MOXCIlHBe, wuo6
OTHMpaTH AKHasi6iabIy KOpHCTb BiA iipOeKTy?
HaiLioHaJIbHHul 6aHK YKpaHHa XOKJIaB yCiX 3yCHJIE ,zvz Hai46ijmm IIOBHOrO i
e4eKTHBHOFO BHKOPHCTaHHS KOHITiB IHCTHrTyLiHHOH fIo3rHU BcecBiTHuboro BaHKy\.
3awwKu OTpMmaHHM KOiITaM B,aJIocM fpHJl6aTH cyqacue o6siaajaHHr i uporpaMHi
3aco6H, sKi ,03BOJIHJIH MogepHi3yBaTH CHCTeMy eiJeKTPOHHHX Mi)K6aHKiBCbKHX
fiiiaTexKiB i 3aKIiaCTH OCHOBH ,JR CTBOpeHHX riiiaTiKHO1 cHCTeMH HOBOrO rIOKOJiHHA\.
MoxcimiBo, Maimo' 6iimmiiiA JAOCBig, MOKHa yGyo 6 CKOPOTHTH ac BTieHHA npoeKTy
3aBfliKH TOMY, HIO BCA Heo6xijHa goOKyMeHTaiLiA 6yna 6 oxpa3y LiVrOTOBaHa 3
BpaxyBaHHh1M BCiX BHMOr BcecBiTHbIoro aiaHKy i BigrifaIa Heo6xiHicTEm y gOBrOTpiBaJIHX
y3roQzKeHHAX\. AJe 3j1e6i1MIIIOrO 3aTpHMKH i 3BoJIiKaHHS Big6yBanucsr He 3 HaI11O1 BHHH\.
Ha43BH'qaIHO BeIiHKY yBary 4iaxiBn4i HEY IpuHainUHI rIpOBe,geHHlo TeHuepy iaa Bu6opy
Bi,AZOBiaHOrO HOCTaliaBJTHHKa 3 MeTOIO HaHKpaiUOrO 3a8OBOJIeHHS iCHyio'HX IoTpe6\. Ha
HaIy ,AYMKY, BpaXOBYIO'IHr eBHHi 6paK AOCBiJy B ilil raJIy3i, 3pO6JIeHO BCe MOXHBe,
nxo6 OTpHMaTH SKHaiiGii6ly KOPHCT6 Bi, IipOeKTy\.
C\. MuI 3po6HB 6u HlO3HMaJITHHK I4OCb iHaKilie y npoeKTi, AKII1o 6yjia 6 TaKa
MOKIEHBiCTb?
- 35 -
Ha HamIy AyMKy, Mo)KHa 6yno 6 geio CKOpOTHTH BHTPaTH Hacy i KOIUTiB Ha
KOHCYJIbTauiUtHi IIOCJLyrI, KpamLe opraHi3yBaTH B3aeMoaiio 3 BCeCBiTHiM BaHKOM,
KOHCYJIbTaHTaMH Ta HOCTalqanbHHKaMH, Kpane BH3HaTHTH Hami IIoTpe6H y TeH)iepHiH
,oKyMeHTa1ui1\. 51K B)Ke Biq3Ha,IaAiocs, MO)KHa 6ynio 6 Kpaiue BH3HaRHTH BHiMorH Ta
iioTpe6H HauioHanbHoro 6aHKy B TeHiepHiH AoKyMeHTaLiu, snaO BOHa 6 royBaniacq
Bigpa3y B OCTaTOIHOMy BHFJI1i Ha MoMeHT nepeq 11POBegeHHqM TeHltepy\. HliABegeHHS
HliCyMKiB TeHgepy Ta yKiageHHA KOHTpaKTY TaKOx MO)KHa 6yjio 6 3AiiCHHTH Kpale,
ierIIe, CKOpilIIe 3a yMOBH HaABHOCTi 6inbnIIoro ,gocBiJgy\.
d\. LIH HaB'iHBCS F103wiajubHHK R0FOCb Ba)KJHBoro, IIO CTaHe y HarogJi B
Mari6yTHbOMy?
HIeBHHH iHTepec CTaHOBHYIa oLXiHKa MiwHapoAHHMH eKCifepTaMH CTBopeHO1 4)aXiBiiMH
HEY CHCTeMH eJIieTpOHHHX nIiaTe)KiB, oTpiMaHa B XOZi KOHCyJIbTaJiiRi B paMKaX
3,lIiCHeHHS npoeXTy BAOCKOHajieHHA njiaTiwHoi CHCTMeH YKpaiHH Ha KOHITH
IHCTHTygir4HOY IIO3HKH, a TaKoxc JAaHi HHMH peKoMeHAaUii, AKi 6ynI BHKcopHcTaHi HIpH
pO3po6&i I pOeKTy IIjiaTi)KHOL CHCTeMH HOBoro ITOKOJIiHHA\. KOpUCHHM 6yB TaKo)K ,AocBia
iipoB3eeHH\.q Mi)XHapozAHoro TeHiepa 3a MeTOUHKoiO BceCBiTHboro BaHKy, AKHii HaAaai
BH4KOpHCTOByBaBc,q i xxKH nepeg6aiaeTbcsL BHKOpHCTaTH ilpH yKJIazeHHi HBY iHmux
KOHTpaKTiB y aHaIToFitIHHx o6nacTux\. MeToaUHqHi Ta iHCTpyKTHBHi AOKYMeHTH
BcecBiTHboro BaHKy, HagaHi Ha HaIIe lIpOXaHHA, TaXKoX MOXCyTB CTaTH y Harogi B
Mari6yTHbOMy\.
3\. OisiHKa XKocTi iXijibHoCT BcecBiTHboro FaHKy B IipoieC BTinjeHHxl i BHIpOBa,)KeHHA
rpoeKTy\.
a\. Mlo FJO3nIJaTbHHK BBssa)C HaUKpaWHM i HaiiripmHIIIM CTOCOBHO
BceCBiTH]6oro BaHKy y 3B'y,ceo 4 IIpoeKToM?
XoTiJocsL 6 BiA3HaqHTH Ao6po3UIlHBe CTaBjieHHA BCiX npeacTaBHHKiB BceCBiTHbOrFO
SaHKy, 3 AKHMH ZOBejiocM MaTH CIIpaBy B XOJi Hi,ArOTOBKH Ta BTijieHHA rIpoeKTy, ix
rOTOBHiCTb )ao CniBnpaiui\. rloraHe BpaxCeHHA cIIpaBiAse Ha,ITO BUCOKHiX piBeHb
3a6lopoKpaTH3oBaHocTi ,iAJIbHocTi BcecBiTHBoro BaHKy, He,JOCTaTHM oIIepaTHBHiCTb, a
HOgexKy;H Hi xaiaTHiCTb uoro CiTiBpO6iTHHKiB y BHKOHaHHi CBOiX o6oB'y,c3a, a TaKowK
neBHa He,oooLiHKa 4faxOBOY KBaAi4iiKagi Ta MOXUHBOCTeH iTapTHepiB BceCBiTH'moro
BaHKy rio rpoeKTy\.
b\. HaCKiJIIKH e4eKTHBHHMH 6yniu CTOCYHKH BcecBiTHboro BaHKy 3
103H-IaMHHKOM?
Ha )KaIb, Hag3BHqa#HO sopMaji3OBaHi i He 3aBw,AuH ITOCJ1iOBHiBH BHMOFH i MeTOUHKH
BCCCBiTHboro BaHKy CHpUYUHHUJIHCA AO rIeBHOrO 3BOJIiKaHHq B peaJi3aii iiJiaHiB HEY i
'HaCOM BHMaraJIH HagJiHmKOBHX, Ha HaIUy AyMKy, BHTPaT YIaCy i 3yCHJIb BiA 1ipaUiBHHKiB
HaqioHaj6bHoro 6aHKy\. 3oKpeMa, 6ijmue POKY 3Ha,Ao6Hjioc, njo6 riepeKOHaTH
BceCBiTHirU SaHK repepo3IIo,4iJIHTH KOIITH 03HKH, BHAiJIHBIlJH 6inAby CYMY Ha
IpH,a6aHHA iTporpaMHO-TeXHiTIHHX 3aco6iB 3a paXyHOK 3MeHIIIeHHA qaCTHHH,
HpH3HaxeHOY Ha oIinaTy KOHCYJThTagiuHHX nocnyr\. JyKe TpHBaBjJM BH3LBHBCA npoixec
- 36 -
3aTBepg)KeHHA TeHgepHoli IoKyMeHTaLui (6inbie 4 MicAUiB), IHpHtIOMY CHiBpo6iTHHIKH
BceCBiTHboro BaHKy caMi BH3HJIHo 6rpyHToBaHiCTb HaiHX rpeTeH3iri BigHOCHO
HeIIOCJiAOBHOCTi i geAKoi HeageKBaTHoCTi BHMOr peileH3eHTiB, ;X HeonepaTHBHoCTi
(,EHB\. JIHCT Big 26\.09\.96p\.)\. rIpH 3aTBepg)KeHHi KOHTpaKTy, yxJiageHOrO 3a pe3yjibTaTaMH
TeHgepy, a TaKO)K AOIIOBHeH]6 i 3MiH I0 HbOFO Te)K BHHXKaJji 3BojihiKaHHA, BHKJHKaHi,
nepeBa)KHO, HeBHHM HeCOBip'AM eKcnepTiB BceCBiTHboro BaHKy 0 TO'{KH 30py 4aXiBUiB
HEY, xo'a B pe3yJIbTaTi gU eKC1iepTH IpaXKTHIHO 3aB)FH BHMymeHi 6yJIH BH3HaBaTH ix
ilpaBOTy\. HpHKpOIO HeCIIOgiBaHKOO cTania 3aTpHMKa OHJiiTH IIOCTaBOK 3a KOHTpaKTOM,
M11O Big6yjiacq 3 BHHH CiIiBpO6iTHHKiB BceCBiTHboro 6aHKy (gB\. Hau EIHCT Big
6\.08\.97p\.)\. YCKMa,HEOBaJa CTOCYHKH 3 BceCBiTHiM EaHKOM B ripoUeci BTijieHHq i
BI1POBa)KeHH3 HpoeKTY TaOo)K BigCYTHiCTb OCTaTO'HO 3aTBepa)KeHoro i HHHOrO Ha
HOTO'IHHH MOMeHT BapiaHTy BHMOF ZO TeHqepHOY qoKyMeHTauLL\ Ta B3araii go
niUrOTOBKH i BHIp0BamKeHHM no4i6HHXIipoeKTiB\. He3BawaiotrH Ha Big3HateHi HegoJIiKH,
H13Y BBa)Kac goCBig CIIiBiipai 3 BCeCBiTHiM BaHKoM qy)Ke II03HTHBHHM i 6axcaB 6H
11pO0OBX(HTH CrliBripaUlo 3 ypaXyBaHH3M 3po6iJeHHX 3ayBa)KeHb\.
C\. AKMO 103wHO a)IbHHK Mir 6H 3MiHHTH 1OCb, CTOCOBHO BCeCBiTHboro
BaHKy, iuo 6 ue Morao 6yTH?
AK Big3HaqaJIoCs BHie, XOTiJIOCS 6 3MeHiuHTH 6opoKpaTH3M y gisl\.bHOCTi BCeCBiTHbOoro
EaHKy, lIigBHIUHTH o6i3HaHiCTb Horo CHiBpo6iTHHKiB 3 KOHKpeTHOIO CHiTyaUieLo i
MOXMIHBOCT\.IMH Ha MiCa3Xm\. SaKaHo 6yuo 6 TaKO)K, mo6 B upoUeci BTijieHHM AKOFOCb
rpoeKTy, HaBiTT, SKTIO nefl lipoiec geiUo 3aTSryCTbCS, He 3MiHioBaBCA CKTim
Bi,gIIoBizBajibHHX 3a npoeKT MeHegwepiB, eKcnepTiB Ta iHIoroT nepcoHajiy BcecBiTHboro
EaHKy, 3aHHSLTOrO y IigrOTOB9i Ta BIpoBa4PKeHHi gLboro ipoeKTy\. Ha Ham uori,i, ue
CrIpH1Jlo 6 HABHimeHHio e4eKTIIBHOCTi y BHKoHaHHi npoeKTiB BcecBiTHEoro BaHKy\.
- 37 -
Borrower's Evaluation Report
4\. An assessment of the project objectives, design, implementation and operation
experience\.
a\. How relevant were the objectives of the project for the Borrower?
Although when the project started the Electronic Payments System of the National Bank
of Ukraine was meeting the current needs of our countries' banking system, its workload
was constantly growing and a need to migrate to a new, more up-to-date technical
platform became ever more insistent\. Only on such a platform will it was possible to start
the development of a new generation electronic payment system, based on RTGS
principles\.
b\. How could the project design be improved?
Were the NBU experts starting the project as familiarized with guidelines of
development and operation of modem payment systems and had they more experience in
running the Electronic Payments System as it was on later project implementation stages,
it might have been possible to incorporate more appropriate provisions in the first project
version already, which could have lessened the need to improve the project in the process
of its implementation and resulted in better fitness to implementation of most up-to-date
solutions in this area\. But one shall take into account that, for multiple objective and
subjective reasons, of different causes the project development and implementation took
a rather long time period, so majority of current improvements were caused not so much
by project deficiencies as by changes of general situation in Ukrainian banking and
financial sphere, as well as by developments in the area of payment systems and
information technologies on the whole\. There is no doubt that greater NBU experience
of cooperation with World Bank, better NBU knowledge of World Bank requirements
and procedures as well as better World Bank knowledge of specificities, needs and
capabilities of NBU and Ukrainian banking system could have contributed a lot to
improve the project design\.
c\. What could make implementation easier?
Positive impact on project implementation could have had the same factors that are
mentioned while answering the previous question: greater knowledge of development
and operation guidelines of modem payment systems, greater experience in running the
Electronic Payments System, greater experience in NBU of cooperation with World
Bank, better knowledge in NBU of World Bank requirements and procedures, as well as
better knowledge in World Bank of specificities, needs and capabilities of NBU and
Ukrainian banking system\. More efficiency in interaction of NBU staff, responsible
World Bank departments and Ukrainian governmental agencies, as well as lesser
bureaucracy level would be also of some help\.
d\. How successful was the project in each of these aspects and overall?
In our opinion, the project was rather successful, as, on the whole, the set objectives were
reached\. The new technical platform made it possible to meet the current needs of the
payment system and next to migrate to a new generation electronic interbank settlements
system\. Notwithstanding some above mentioned deficiencies, the project in its final
- 38 -
version reflected current needs and capabilities, and some delays in its implementation
made, alongside with negative, also a positive impact, allowing to improve and to update
the project taking into account more recent capabilities and needs\.
5\. An evaluation of Borrower's own performance as the project evolved and was
implemented\.
a\. Does the Borrower think that his own performance changed or improved
over time? If so, what caused the changel improvement?
As the project was developed, evolved and was implemented we gained considerable
experience both in connection with the project and independently\. That includes
experience of cooperation with World Bank and other international institutions, foreign
banks and companies operating in bank information technologies business, experience of
holding international competitive biddings\. Experience of Ukrainian banking system
working in new conditions and extended experience of operating the Electronic Payments
System, of its interaction with other systems, both domestic and foreign or international,
were also very useful\. In our opinion, all that made positive impact on our performance\.
Some negative impact was caused by difficult economic situation in Ukraine and by
certain unfavourable developments abroad\.
b\. In retrospect, did they do all that they could have done to get the most out
of the project?
The National Bank of Ukraine did its best to use the funds of the World Bank
Institutional Building Loan in the most comprehensive and efficient way\. Thanks to the
obtained funds it succeeded to procure modern equipment and software, allowing to
upgrade the Electronic Interbank Payments System and to create the base for
development of a new generation payment system\. Perhaps, with greater experience
available, we could have reduced project implementation period by preparing all relevant
documents in one go according to all requirements of World Bank and avoiding long-
lasting approval procedures\. But mainly, the delays and protractions were not our fault\.
Especially big attention was paid by NBU staff to hold competitive biddings choosing an
appropriate supplier to meet the current needs as well as possible\. In our opinion, taking
into account some lack of experience in this area, we did all that we could have done to
get the most out of the project\.
c\. Would the Borrower do anything differently in the project if it had the
chance?
In our opinion, it might have been possible to spend somewhat less time and funds on
consulting services, to organize better interaction with World Bank, consultants and
suppliers, to define better our needs in the bidding documents\. As mentioned above, it
might have been possible to define better the requirements and needs of the National
Bank in the bidding documents, had they been finalized in one go just before holding the
competitive biddings\. Evaluation of bids, awarding and negotiating of the contract might
have also been performed in a better, easier and prompter way, with greater experience
available\.
d\. Did the Borrower learn any important lessons that are relevant in the
future?
- 39 -
The assessment by international experts of the System developed by NBU electronic
payments staff, made within the framework of consulting services in implementation of
Ukrainian Payment System Development Project on proceeds of Institutional Building
Loan, was of some interest, as well as their recommendations, which were used in
development of the new generation payment system\. The experience of international
competitive biddings according to the procedure of World Bank was also useful, and it
has been afterwards applied and is planned to be applied in future when NBU negotiates
other contracts in similar areas\. The World Bank methodology documents and guidelines
delivered on our request may also be relevant in the future\.
6\. An evaluation of the Bank's performance as the project evolved and was
implemented\.
a\. What did the Borrower like best and least about the Bank vis-a-vis the
project?
We would like to note the favourable attitudes of all World Bank representatives we had
to deal with in designing and implementing of the project, their willingness to cooperate\.
Unfavourable impression is left by too high bureaucracy level in the World Bank
activities, lack of expediency and sometimes by negligence of its staff in performing of
their tasks, as well as some underestimation of World Bank project partners' skills and
capabilities\.
b\. How effective was the Bank's relationship to the Borrower?
Unfortunately, overformalized and not always consistent requirements and procedures
of World Bank caused some delay in NBU plans implementation and at times required,
in our opinion, too much time and efforts from the National Bank staff\. For instance, it
took more than a year to persuade the World Bank to redistribute the Loan funds,
allotting greater amount for procurement of hardware and software while reducing the
share allotted to pay for consulting services\. The approval procedure of bidding
documents was too long (more than 4 months), while the World Bank representatives
themselves had admitted soundness of our claims as to inconsistency and some
inadequacy of reviewers' requirements, their lack of expediency (see the letter of
26\.09\.96)\. In approval procedures of the contract awarded in competitive biddings, as
well as of its addendums and modifications there were also delays, caused, mainly, by
distrust of some World Bank experts in opinion of NBU specialists, though at the end
these experts practically always had to admit it was just\. Annoying surprise was caused
by a delay in payment for contract deliveries by fault of World Bank staff (see our letter
of 6\.08\.97)\. The relationships with World Bank in project development and
implementation were also complicated by lack of finalized, approved and currently in
force version of requirements to bidding documents and to design and implementation of
this kind of projects in general\. Notwithstanding the mentioned deficiencies, NBU
considers the experience of cooperation with World Bank to be very positive and
would like to continue the cooperation taking into account the above remarks\.
c\. If the Borrower could change anything about the Bank, what could it be?
As mentioned above, we would like to come across less bureaucracy in the World Bank
activities, to find with its staff more awareness of individual situation and capabilities on
site\. It is also desirable, as some project evolves, even if this process is somewhat
- 40 -
protracted, not to change the team of responsible managers, experts and other World
Bank staff involved in preparation and implementation of this project\. In our view, it
could contribute to better performance in implementation of World Bank projects\.
- 41 -
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Ta CBponeriCEKO1 iHTerpaiBif B ynpaBniHHi 3OBHiIHiMH f iHaHCOBHMH pecypcaMH>>
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Pea\.ji3auiA npoeKTy CniBnaia 3 4OPMyBMHHAIM HauioHaREHoro areHTCTBa YKpaiHH 3 nHTaHb
PO3BHTKY Ta CBpOneriCbKO1 iHTerpauiif K opraHy BHKOHaBBqO1 BJIBaH, iuO 3girHCHIOC KoopgHHauiio
po6OTH MiHiCTepCTB i Bi,OMCTB 3 nHTaHb 3ajiyqeHHS Ta BHKOPHCTaHHS 3OBHilHiX 4iHaHCOBHX
pecypciB\.
ToMy BripoBaBKeHHS TaKHX KOMnOHeHTiB npoexTy, AK HiABHiijeHHA i1po4eciiHHol riirOTOBKH
nepcoHaAy, 3a6e3nie'eHHs Cy"aCHHM TeXHiqHHM o6nagHaHH3iM, KOHCyJIbTauLiHHa goHoMora,
6ynui i C Heo6xigHHMH i KOPHCHHMH\.
rlpaKTHKa peaj1i3auil npoeKTy noKa3aiia, uLo npo4eciHHI4H TpeHiHr, TexHi'He OCHaBUeHHS1,
3aCTOcyBaHHA HOBiTHiX iH4opMaijuiiHHHX TeXHoJIori B ripo eciHHiH i SAIAbHOCTi MalOTb
ripiopHTeTHe 3HaqeHHB ARs HpaBiBHI4KiB HauiOHambHoro areHTcTBa\. ToMy PO3iiiHPeHHA npoeKTy
3jiHCHIOBanocb came B UHX HarpsAMax\.
rlo\.ieriueHHmo y BnpoBaaKeHHi npoeicTy MOMfH 6 CJIyryBaTH cRiiAyio'i aKTOpH:
- )lo noqaTKy peaji3auiY ripoeKTy npOBeaeHHA BiRROBiAHoro TpeHiHry nepcoHaAy PIU 3
nHTaH6 MiCKHapOAHHX 3aKyniBeJIi Ta BHTpaT KOHTiB upOeKTy;
- HpOBegeHHA ynepegwcyiomHx KOHCyJIbTaiAiH igogo y3rogweHHA npoueAyp IIPOOH Ta
CBiToBoro 6aHKy;
- Ha roqaTKy peani3auil npoeKTy BHAieHHS nOBHOf Heo6XiAHo-i CyMH KOlUTiB, a He noeTranHe
po3lIlHpeHHh KOMnOHeHTiB npoeKTy (sK ue 6yno npaKTHqHO 3lIiRCHeHO)\.
B3arani, peajii3aLiiio npoeKTy 3a uoro HanpmSaMH Ta npaKTHMqHHMH pe3yJIbTaTaMH Mo)KHa
BBaBKaTH yCIlimHOlO\. Pa3OM 3 THM, po6oTa, uAo 6yna npoBeReHa, noTpe6ye nouanbloli
nif4TPHMKH i Hpr)ooB)KeHHA\.
1\. OILiHKa BjiaCHOY po60TH flO3Hman1THHKa 3 TO0lKH 30py PO3BHTKy npoeKTfy i Horo
BnpOBa,JKeHHA
3a qac peaji3aOi\. npoerry piBeHb po6oTH 3a npoeKToM nepcoHany PIU CyrTeBO HigBHIA4BCSr\.
UbOMy CflpHwH c]iTi0i 4awKTOpw
- yqaCTb nepCOHajiy PIU B cnelUiaii3oBaHHx ceMiHapax 3 nHTaHb Mmi*KHapOAHHX 3aKyniiBejb Ta
npouegyp BHTpaT KOIIITiB npOeKTy, XKi ITpOBOaHJTHCb ITpeACTaBHHKaMH CBiTOBoro 6aHKy Ta
YKpaiHCbKof acoLAiaJiJf ynpaBjiiHHA npoeKTaMH;
- KOHCyflbTaLiiHa aorioMora Ha rOioaTKOBoMy eTani 3 6oKy FpynM BHPOBaBKeHHS
IHCTHTy11i4iHOI IIO3HKH;
- KOHcynbTaLuiHHa ;onoMora 3 6oKy MeHe,pKepiB HpeaCTaBHHiATBa CBiToBoro 6aHKy B YKparHi
Ta cHeUiaJiicTiB 3 BaUIHHrToHy\.
BBaKacMo, 140 HaijiOHalianHHM aFeHTCTBoM 6yjno 3po6JIeHo BCe MOWnHBe ARA ROCACrHeHHS1
e4eKTHBHOCTi npoeKTy\.
5IKWo 6yna 6 MOXCIHBiCTb BHeCTH AKiCL KOpCKTHBH y BnpOBa,AKeHHA HpOr KTy, TO, B nepwy
Hepry, 6yrnH 6 BpaXoBaHi Ti 4DaKTOpH, AKi BKa3aHi B n\. 1\.
HpaKTHqHHi4 ROCBiA po60TH 3 npoecKTOM AaB MOKJHBiCTb 3aKpinHTH TeopeTHHHi 3HaHHA, IUO
6yIH OTpHMaHi Ha CeMiHapaX 3 nrHTaHb yflpaBJIiHHA iipOeKTaMH\. Ile MO)Ke CJyryBaTH 6a3o0o ARA
nogaimbioro HUaBHrieHHA KBanii4iKauIi nepCOHaniy Ta rlpOaoB)KeHHA po60TH 3 ripOeKTaMH Ha
-42 -
6inBmEI BHCOKOMy ripod)ecirlHOMy piBHi, iiae MOWKAHBiCT6 YHHKHYTiH HOMHIOK B rIpHiHAXTri piMeHb
no npoeKTax Ta HaAaBaTH Heo6xiJHi KOHCyJIbTauiY iHIIIHM cneitianicTaM\.
1\. OLIiHKa po6oTH CBiToBoro 6aHKy 3 TOHqKH 30py PO3BHTKy npoeKTy i HorO BnpOBaJJKeHHI
3ara6nbHa oLiHKa po6oTH CBiToBoro 6aHKy no BnpoBaAKeHHIO npoeKTy c rO3HTHBHOIO\.
CneuianicTaMH CBiToBoro 6aHKy HaJAaBaIHCb Heo6xiAHi KOHcynIbTaOil nepcoHany PIU, Ha 3aniHT
HaLuioHanbHoro areHTcTBa OnTepaTHBHO 6yno BHpimueHO iiHTaHHA y3roWKeHMu npollelyp
IIPOOH Ta CBiToBoro 6aHKy\. 3 MeTOiO YHHKHeHHI He6axcaHHx 3aTpHMOK B peaAi3auif npoeKTy
rlpeACTaBHHUTBy CBiToBoro 6aHKy B YKpaYHi 6ynH HagaHi InOBHOBa)KeHHi y3aOwyBaBTH
KOHTpaKTH\.
Pa3oM 3 THM 3aTSryBaHHA pillIeHHA CTOCOBHO ocTaTO'Horo rnepepo3nTo,iny KOIlUTiB
IHCTHTyIUiHHoY riO3HKH npH3Benjo \.o 6iJbIll Hanpy2KeHoY po6OTH nepcoHajiy PIU, BpaxOByio'IH
3aKiHqeHHA TepMiHy peani3aLli1 IHCTHTyIUirH0O nO3HKH\.
- 43 -
Evaluation Report of the NAUDEIlUNDP/World Bank Project Implementation
"Strengthening capacity of the National Agency of Ukraine for Development and
European Integration in Managing External Financial Resources"
1\. Assessment of the project objectives, design, implementation, and operation
experience
Implementation of the Project happened to be simultaneous to establishing the
National Agency of Ukraine for Development and European Integration as an executive
institution, co-ordinating the work of ministries and agencies upon attraction and
utilisation of foreign financial resources\.
Thus, realisation of such project components, as improving professional skills of the
stuff, provision of modem technical equipment, consulting services was and is useful and
substantial\.
The experience of the project implementation has revealed, that professional training,
technical equipment, employment of advanced information technologies in the
professional activities have priority importance for the personnel of the National Agency\.
Therefore, extension of the project was made exactly in these directions\.
The following factors could have facilitated project implementation:
* Holding pre-implementation training of the PIU personnel upon international
procurement and project disbursement
* Carrying out advance consultations upon reconciling UNDP and World Bank
procedures
* Allocation of the complete budget at the beginning of the project, instead of stage-by
stage extension of project components (as it used to be in reality)\.
In general, implementation of the project within its objectives could be considered successful\.
At the same time, the accomplished work requires additional support and continuation\.
2\. Evaluation of Borrower's own performance as the project evolved and was
implemented
When implementing the project, the level of work of PIU personnel has substantially
increased\. The following factors have contributed thereto:
Participation of the PIU personnel in the specialized workshops as regard international
procurement and project disbursements, held by the representatives of the World Bank and the
Ukrainian Association of Project Management\.
* Consulting support at the first stage from the IBL Project Implementation Unit
* Consulting support from the managers of the World Bank Office in Ukraine as well
as professionals from Washington\.
- 44 -
We consider that the National Agency has made its best in attainment of project
efficiency\. If it were possible to make some minor changes to the project implementation,
those would be the factors, mentioned under item I\.
Practical performance of the project has enabled to reinforce theoretical knowledge,
gained on seminars upon project management\. It could provide the basis for further
improvement of personnel qualification and continuation of work upon projects on a
higher professional level, as well as enable to avoid mistakes in project decision making
and provide other specialists with requisite consultation\.
3\. Evaluation of the Bank's performance as the project evolved and was
implemented
The overall evaluation of the World Bank's performance upon project
implementation is positive\. The professionals of the World Bank have provided necessary
consultation for the PIU, the issue of reconciling procedures of the World Bank and
UNDP had been promptly settled upon the request of the National Agency\. With the end
of avoiding unwanted delays in project implementation, the World Bank Office in Kyiv
has been conferred with the authority to approve the contracts\.
At once, protraction with the decision upon final reallocation of the Institution
Building Loan costs has lead to a more strenuous work of the PIU personnel, taking into
consideration the expiration of the IBL implementation term\.
IBRD 27828R
20' 25' 30 35' 40'
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- -- - g\. 0 -, FEDERATION RAILROADS
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NATIONAL CAPITAL
------ ~~~~~~~~~~~~~~~~~~~~~~~~~AUTONOMOUS REPUBLIC OR
OBLAST BOUNDARIES
POLAND ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~INTERNATIONAL BOUNDARIES
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REPUBLIC n Chyrsisy
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To fl~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~T oi~
/ ! ~~~~~ROM!ANIA ;ofct$ MOLDOVA (t4Cpm-ik-<{>oo
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RUSSIAN FEDERATION
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POLAND -45' \. 4;'
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BULG iMARIA*> 4 ~ ' T 0 GEORGIA ARIA 3% ;
MARCH 1997 | REVIEW |
P008967 |  Third agricultural credit project
Report No: ; Type: Report/Evaluation Memorandum ; Country: Turkey; Region: Europe And Central Asia; Sector: Agricultural Credit; Major Sector:
Agriculture; ProjectID: P008967
November 3, 1995
Turkey: Third Agricultural Credit project (Loan 3090-TU)
The Implementation Completion Report (ICR) on the Turkey Third Agricultural Credit project (Loan 3090-TU,
approved in FY89) was prepared by the Europe and Central Asia Regional Office\. The Borrower prepared an
evaluation report, which is summarized in the ICR, and sent brief comments which have been annexed to the ICR\.
The principal objectives of the project were: (i) to further strengthen the institutional capabilities of the Agricultural
Bank (TCZB), and (ii) to increase farm productivity and farmer's incomes through expanded access to seasonal credit
and the financing of productive investments at the farm level\. Government also committed itself to raising all TCZB
onlending rates to positive levels, a failed objective of the predecessor project\. The scope of the project was also
expanded to include viable units of the Agricultural Credit Cooperatives (TKK)\. The Bank and the Overseas
Economic Development Fund of Japan each provided loans of $250 million to the operation\.
The "action plan" for institutional reform was implemented as designed, substantially improving TCZB's financial
position and managerial and technical competencies\. Farm plans supporting the investments were upgraded, TCZB's
field staff were trained, farmer repayment rates were maintained above 80 percent, and almost all overdues were
collected within two years\. The TKK program was also successfully executed, though repayment rates are lower and
only half the local units maintained their eligibility for re-finance\. Government provided capital transfers to TCZB
above the agreed levels\. However, Government again failed to meet commitments on interest rate adjustments,
arguing that the effects of the Gulf War and continuing inflation forced it to postpone action\. The interest rate issue
dominated Bank-borrower relations and led in June 1992 to the cancellation of US$70\.7 million, the balance of the
loan allocated to farm credit\.
The ICR rates project outcome as satisfactory, giving greater weight to institutional and farm-level impacts than to
the borrowers failure to take correct action on interest rates\. In the same way, the Operations Evaluation Department
(OED) rates project sustainability as likely, whereas the ICR rates sustainability as uncertain, based exclusively on
doubts about future progress on interest rate reform\. Institutional performance was strong across the board, and is
rated as substantial in the ICR and by OED\.
The ICR is well prepared and a model for future ICRs\. It is deficient to the extent that economic rates of return were
re-estimated for only three farm models (ranging from 17 percent to 59 percent), and no supporting data is provided\.
The plan for future operation has three parts: (i) rollover of repayments of TCZB's long-term sub-loans for the same
term throughout the repayment period for the Bank Loan; (ii) agreements to maintain or improve the performance of
TCZB when measured against the key indicators of net worth, sub-loan recoveries, and other management practices;
and (iii) progress towards positive interest rates and full coverage of all lending related costs as soon as feasible\.
No audit is planned\. | REVIEW |
P050619 |  ICRR 11632
Report Number : ICRR11632
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 09/09/2003
PROJ ID : P050619 Appraisal Actual
Project Name : Erso Iii Project Costs 110 110
US$M )
(US$M)
Country : Ghana Loan/ US$M ) 110
Loan /Credit (US$M) 110
Sector (s): Board: EP - General public Cofinancing
administration sector US$M )
(US$M)
(50%), Banking (30%),
Crops (10%), Health (5%),
General industry and trade
sector (5%)
L/C Number : C3553
Board Approval 02
FY )
(FY)
Partners involved : Closing Date 12/31/2001 12/31/2002
Prepared by : Reviewed by : Group Manager : Group :
Michael R\. Lav Jorge Garcia-Garcia Kyle Peters OEDCR
2\. Project Objectives and Components
a\. Objectives
To support restoration of macroeconomic stability and market confidence allowing the new Government to develop
its agenda of reform for accelerated growth and poverty reduction \.
b\. Components
1\. Restoring macroeconomic stability and strict governance through : (a) reducing the domestic and foreign debt
burden by curtailing the fiscal deficit and seeking debt relief under the enhanced HIPC initiative; (b) strengthening the
management and control of public expenditures; and (c) eliminating the deficit of key public enterprises \. 2\.
Restarting Structural Reform through : (a) Improved budgetary management by limiting budgetary expenditures and
improving public expenditure management; (b) Public enterprise divestiture including divestiture of shares in 10
state-owned enterprises in addition to the Ghana Commercial Bank (GCB) and the Electric Company of Ghana
(ECG); (c) Financial Sector Reform including: (i) divestiture of GCB and National Investment Bank (NIB); (ii)
improving supervision and regulation of the banking sector through legislation to strengthen the supervisory powers
of the Bank of Ghana (BOG); (iii) divestiture by the BOG of all its shareholdings in financial institutions; and (iv)
restructuring or taking over the debt of Tema Oil Refinery (TOR); (d) Cocoa export marketing\. The Government
reaffirmed its commitment to implement the medium-term strategy for the cocoa sector including : (i) increasing
producers' price from 65 percent of the f\.o\.b\. price in the 2000/01 crop season to 70 percent by 2004; (ii) reducing the
cocoa export tax to 15 percent of the f\.o\.b\. price by 2004/5; (iii) partially liberalizing external marketing by allowing
qualifying local buying companies (LBCs) to export 30 percent of their purchases, beginning with the 2000/01 crop
season; (iv) deepening internal marketing competition by giving LBCs equal access to Cocobod's warehousing crop
financing facilities; and (v) discontinue price discounts given to local cocoa processors \. 3\. Ghana Poverty Reduction
Strategy\. Prepare a draft report of the Ghana Poverty Reduction Strategy (GPRS) in the context of a broad
participatory consultation process for discussion with stakeholders during the second half of 2001 and integrate the
GPRS into the annual budget starting in 2002\.
c\. Comments on Project Cost, Financing and Dates
The project cost US$110 million financed by an IDA credit of US$ 110 million in one tranche\. The project was
appraised in May, 2001, approved by the Board on July 26, 2001, made effective on August 6, 2001, and closed on
schedule on December 31, 2002\.
3\. Achievement of Relevant Objectives:
1\. Restoration of Macroeconomic Stability \. (a) External debt was reduced in the context of a Paris Club agreement
(May, 2002)\. In addition, Ghana has sought debt relief under the enhanced HIPC for which the decision point was
approved in February 2002\. Under the HIPC decision point document, 20 percent of the relief provided will be used
for domestic debt reduction\. (b) Management of public expenditures was strengthened : (i) regular and
comprehensive reconciliations of ministry and banking data were achieved for the majority of accounts in early 2003;
(ii) Government proceeded with the roll -out of the initial phase of the budget and public expenditure management
system (BPEMS) starting in 2003\. (iii) 3,000 "ghost workers" were removed from the civil service payroll \. 2\.
Restarting Structural Reforms\. (a) Public enterprise divestiture\. The Cocoa Processing Company was sold \. (b)
Financial sector reform\. A new BOG law was passed by Parliament clarifying the objectives of the central bank and
strengthening its independent regulatory role \. BOG sold all of its remaining shareholdings in the financial institutions
it supervises in December, 2001 (but note that the condition appeared to have been the sale of all shares in other
institutions, not just the ones it directly supervised )\. (c) the cocoa buying price was raised from 65 percent to 67
percent of world prices in December 2002\. 3\.The Ghana Poverty Reduction Strategy (GPRS) was prepared in
2002-2 using a broad-based consultative process, and integration of the GPRS with the budget began in 2002 and
strengthened in 2002\. A Joint Bank-Fund assessment of the GPRS concluded that the strategy provided a sound
framework for implementing the Government's anti -poverty agenda\.
4\. Significant Outcomes/Impacts:
Macroeconomic performance improved : (i) annual GDP growth rose from 3\.7 percent in 2000 to 4\.2 percent in 2001
and 4\.5 percent in 2002; (ii) the overall fiscal balance (including grants and after domestic arrears clearance ) fell from
9\.7 percent of GDP in 2000 to 6\.8 percent of GDP in 2002; (iii) the rate of inflation fell from 40\.5 percent to 13
percent over the same period; (iv) the deficit of the current account of the balance of payments (including grants)
which was 8\.6 percent of GDP in 2000 was replaced by a surplus (0\.6 percent of GDP in 2002); and (v) gross
international reserves rose from the equivalent of 0\.9 months of imports to 1\.9 months of imports by end-2002\.
In addition, the impact indicators in the President's Report and ICR are informative : (i) domestic interest payments as
a share of recurrent expenditure, which were targeted to decline from 28\.7 percent in 2000 to 27\.7 percent in 2002,
actually fell to 22\.6% for 2002; (ii) expenditures on primary health care and education rose from 3\.5 percent of GDP
in 2001 to an estimated 4\.0 percent of GDP in 2002, and poverty-related expenditures (PRSP definition) rose from
4\.5 percent of GDP in 2001 to 5\.6 percent of GDP in 2002 (this information received subsequent to the ICR ); (iii)
non-performing loans in the banking system are estimated to have fallen to 19\.2 percent in 2002, from 19\.6 percent
in 2001 and 22\.6 percent and 26\.5 percent for Dec\. 1999 and Dec 1998 respectively\. Although the ICR also cites
this ratio as 12\.1 percent for December, 2000, the Country Department informs that this number appears is
inaccurate, and OED concurs; and, (iv) private sector credit as a share of total credit was only 48\.1 percent at
end-September, 2002, the latest information available in the ICR, against a projected 50\.0 percent for 2002\.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Domestic debt rose from 26\.8 percent of GDP in 2001 to 29\.0 percent in 2002\.
The President's Report (Annex A) called for an increase in the domestic primary fiscal surplus to 4 percent of GDP in
2001 and 5\.3 percent in 2002\. The ICR (Table 1) indicates an increase in the domestic primary fiscal deficit from 2\.7
percent in 2001 to 5\.0 percent in 2002 (compared to a surplus in the domestic primary deficit of 2\.4 percent of GDP in
2000)\. The overrun in net domestic financing in 2002 (after application of a program adjuster for shortfalls in external
financing) was equivalent to 3\.3 percent of GDP\.
Only one enterprise (in addition to GCVB and ECG) was sold instead of the target of 10 enterprises\. Neither financial
enterprise targeted for sale (GDC and NIB) were privatized\. Cocoa market licenses to export were only issued to 3
firms in 2001, but these firms failed to meet requirements and so could not market externally \. The ICR does not
explain these requirements and why the firms were deemed to have failed to meet them \. The Country Department
feels that the government made a reasonable effort, but in the end, Cocobod dominated exports as in the past \.
Although the buying price for cocoa was raised as a percentage of the export price, the increase was minimal (from
65 percent to 67 percent)\. The Country Department points out that this small percentage increase occurred at a time
of large increases in the world price, so that the cash increment to farmers was substantial, and therefore feels that
the condition was met\. Nevertheless, the small percentage increase still leaves the government with a large portion
of the export price\.
Operating losses for selected public enterprises were not eliminated, although the operating losses of the four main
state-owned enterprises (ECG, Ghana Water Corporation (GWC), Volta River Authority (VRA) and TOR) did fall from
7\.2 percent of GDP in 2001 to 4\.5 percent of GDP in 2002\. Increases in tariff rates for water and electricity of 40
percent were originally decided in May, 2002, but were only implemented in August, 2002 (requiring some additional
subsidy to cover losses ) and a second round of tariff increases was implemented in March 2003 after which
electricity tariffs had been raised by 56 percent and water tariffs by 79 percent\. The ICR states that these increases
should allow the two companies to cover costs \. Petroleum prices were not adjusted in line with the automatic formula
which contributed to the Government having to assume debt of the TOR amounting to almost 3 percent of GDP\.
However, in January 2003 petroleum prices were raised by 90 percent on average, bringing retail prices to import
parity levels\. A Debt Recovery Levy on petroleum products was enacted to help retire the "TOR bonds" that were
issued in exchange of TOR's debt to the Ghana Commercial Bank \.
The final review of Ghana's PRGF 1999-2002 Arrangement with the IMF could not be completed in 2002\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Taking the component ratings of the ICR
Unsatisfactory yields an average of "Moderately
Satisfactory", in agreement with the text of
the ICR (page 6) rather than
"Satisfactory"\. However, important
shortfalls noted in Section 5 above
warrant a rating of "Moderately
Unsatisfactory"\. These shortfalls include
fiscal adjustment (the primary deficit was
not converted to a surplus as projected ),
public enterprise financial adjustment (the
deficit of key public enterprises was not
eliminated as projected), unsatisfactory
public enterprise divestiture,
unsatisfactory banking sector reform, and
lack of reform in cocoa marketing \.
Institutional Dev \.: Negligible Modest The restoration of macroeconomic
stability and growth will help Ghana make
better use of its resources, an important
aspect of the broader definition of
institutional development\. Specific
institutions were also assisted \.
Government budget mechanisms were
improved with the rollout of BPEMS\.
Therefore, despite some disappointing
shortfalls such as in the sale of public
enterprises, the project achieved enough
to warrant an IDI rating of "Modest"\.
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory The ICR notes that overall Bank
Performance is rated marginally
satisfactory, but this is not an option for
the Evaluation Summary\. Despite some
shortfalls, a rating of "satisfactory" is
warranted\.
Borrower Perf \.: Satisfactory Unsatisfactory The ICR states that Government's overall
performance is rated as marginally
satisfactory, and notes weaknesses in
implementing agency performance
without proposing a specific rating for this
component of Borrower Performance\.
Marginally satisfactory is not an option,
and in view of the numerous shortfalls in
implementation noted above, a rating of
"unsatisfactory" is warranted\.
Quality of ICR : Satisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
1\. Development of ownership may take some time after a new government comes to office, especially if capacity
constraints limit the new government's ability to buy into a solid reform program \. The long list of unmet objectives in
the Letter of Development Policy suggest that whatever ownership which did exist did not transfer very well into
implementation\. Adjustment operations of this sort need to be carefully formulated to ensure a higher degree of
ownership\. The Bank will need to take a supportive capacity -enhancing role, but should be prepared to accept less
robust programs (and adjust its support appropriately ) while support for reforms develops \. 2\. Technical assistance
should be seriously considered to assist in development and implementation of reforms \. At the same time, care
should be taken to ensure that this technical assistance supports capacity -building, rather than supplants it \.
8\. Assessment Recommended? Yes No
Why? The outcome of this project is quite mixed \. Macroeconomic performance is broadly satisfactory,
but there are important shortcomings in structural reforms \. This seems to continue a pattern in Ghana which an
audit, if combined with audits of other adjustment operations and a CAE, might be useful in clarifying and identifying
improved patterns of assistance \.
9\. Comments on Quality of ICR:
This is a complex operation which is difficult to capture in an ICR \. Nonetheless, the ICR could have more carefully
correlated conditions as stated in the President's Report and the Development Credit Agreement and measured
implementation against them more accurately \. However, the ICR is rated "Satisfactory" because it does cover a
large amount of the material in an acceptable manner \. | REVIEW |
P044485 |  ICRR 12714
Report Number : ICRR12714
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 08/15/2007
PROJ ID : P044485 Appraisal Actual
Project Name : Cn-shanghai US$M ):
Project Costs (US$M): 1,898\.0 1,345\.3
Waigaoqiao
Country : China Loan /Credit (US$M):
Loan/ US$M ): 400\.0 372\.6
Sector Board : EMT US$M):
Cofinancing (US$M ):
Sector (s): Power (100%)
Theme (s): Climate change (23% -
P)
Regulation and
competition policy
(22% - P)
Other financial and
private sector
development (22% - P)
Pollution management
and environmental
health (22% - P)
Decentralization (11%
- S)
L/C Number : L4197
Board Approval Date : 06/24/1997
Partners involved : Closing Date : 01/31/2006 12/31/2006
Evaluator : Panel Reviewer : Group Manager : Group :
Robert Mark Lacey Fernando Manibog Alain A\. Barbu IEGSG
2\. Project Objectives and Components:
a\. Objectives:
The objectives of the Project were to: (a) reduce the acute electricity shortages in Shanghai Municipality
through the development of two coal-fired supercritical thermal units to increase electricity supply; (b)
improve air quality management in Shanghai Municipality through the development of a program to
apply the Bubble Concept* for cost effective air quality management; (c) support the Borrowerâs ongoing
power sector reform by restructuring the Shanghai Municipal Electric Power Company (SMEPC) in line
with the power sector reform strategy and the goal of increasing private sector involvement in the power
sector; and (d) improve the access of power entities to international financial markets through promotion
of an innovative and diversified financing model for large infrastructure projects\.
*The Bubble Concept aims to achieve SO2 emissions reduction in a certain geographic area in the most cost
effective manner\. Instead of necessarily constructing flue gas desulfurization (FGD) facilities at the project site, these
may be installed at an alternative, existing thermal power plant where the unit cost of reducing emissions may be
lower\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project had five components: (a) construction of two 900 MW coal-fired, supercritical thermal units
in Pudong (US$ 1,021\.3 million at appraisal, US$996\.8 million at closure); installation of FGD facilities
at Shidongkou Thermal Power Plant (US$77\.3 million at appraisal, US$51\.9 million at closure); (c)
Construction of two 500 kV transmission lines with associated substations (US$65\.2 million at appraisal,
US$158\.4 million at closure); (d) Construction management and engineering services (US$68\.3 million
at appraisal, US$59\.6 million at closure); and (e) technical assistance and training (US$7\.8 million at
appraisal, US$8\.1 million at closure)\. Physical and price contingencies and taxes and duties, estimated at
US$416\.7 million at appraisal, turned out to be zero during implementation\. Interest during construction
was calculated at US$241\.4 million at appraisal and was in fact US$70\.5 million\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost\. Total project costs at closure were US$1,345\.3 million, about 30 percent lower than the
US$1,898\.0 million estimated at appraisal\. However, the entire difference was accounted for by the fact
that none of the allowances for contingencies and taxes had to be called upon, and interest during
construction was US$170 million less than anticipated\. Actual baseline costs, at US$1,274\.8 million,
were about US$35 million more than the appraisal estimate\. There were significant (US112 million)
savings in the plant equipment and materials for the thermal power stations, mainly due to lower than
expected boiler and turbine prices\. Nevertheless there were also substantial cost overruns, notably in civil
works, which cost US$282\.2 million, compared with an appraisal estimate of US$149\.4 million, and the
transmission lines (US$158\.4 million at closure, US$65,8 million at appraisal)\. Preparatory works and
engineering services also cost substantially more than anticipated\. Regrettably, the ICR does not discuss
these overruns or the reasons for them\. It is also noteworthy that, even where there were savings, these
were less pronounced than those for other Bank-supported power projects in China during this period\.
These other projects were able to benefit significantly from the decreases in equipment prices in the wake
of the East Asian financial crisis of the late 1990s\. It would have been interesting to know why this
project has seemingly benefited to a lesser extent\.
Financing\. Of the IBRD loan of US$400 million, which was to have financed 21 percent of the total
estimated project cost, US$372\.6 million were disbursed, just under 28 percent of final project costs\. The
undisbursed balance of US$27\.4 million was cancelled at closure\. US$807\.4 million was contributed
through local loans raised by SMEPC and the Waigaoqiao Power Generation Company (WPGC)\.
Suppliersâ credits amounted to US$131 million, and a bilateral loan from the Japan Bank for
International Cooperation provided a further US$34\.3 million\. The latter two were substantially less than
the US$500 million foreseen at appraisal thanks to the lower cost of the FGD component\.
Dates\. Delays in implementation were caused by a temporary slowdown in the demand for electricity
(itself resulting from the East Asian financial crisis) and a consequent government moratorium on new
thermal power construction\. Thanks to the efforts of the implementing agencies, SMEPC and WPGC, the
two year delay was halved during implementation\. There were also unforeseen system interface problems
necessitating additional supplier coordination and performance testing\. The project closed, 11 months
later than anticipated, on December 31, 2006\.
3\. Relevance of Objectives & Design:
The project was highly relevant to Chinaâs development needs\. Its development objectives responded to
two key themes of the Country Assistance Strategy â infrastructure development and environmental
protection\. The project alleviated serious power shortages which were acting as a brake on growth in the
Shanghai area\. It also included an innovative components to address environmental issues related to
thermal power generation and facilitate the access of power utilities to international finance\. The
project's design drew on the lessons of previous power sector operations in China and on the conclusions
of Economic and Sector Work completed in 1993 and 1994\. Despite considerable changes in the Chinese
economy and power sector, and the turbulence associated with the East Asian financial crisis, the
project's development objectives remain highly relevant at closure\.
4\. Achievement of Objectives (Efficacy):
Objective (a) â see Section 2 a\. above â was fully achieved\. The two 900 MW thermal units were
successfully constructed and have been operating satisfactorily since their commissioning in 2004\. The
share of the plants in the electricity generated in the Shanghai area has averaged about 13 percent\. Load
shedding has been significantly reduced from the 14\.5 percent at the time of project preparation to 1\.3
percent in 2006\. Availability rates of the two plants have met or exceeded the project benchmarks\.
Average coal consumption in 2006, at 296\.2 gce*/kWh, was close to the target of 295\.
Objective (b) was achieved\. The Bubble Concept to reduce S02 emissions in the most cost-effective
manner was successfully piloted through the installation of FGD facilities at the phase I power generation
plant and the use of lower sulfur content coal at another thermal power plant located in the area\. The
achieved reduction in SO2 emissions â just over 46,000 tons per year â more than offset the annual
emissions from the phase II power generation plant\.
Objective (c) was partially achieved\. The SMEPC was successfully restructured in line with the national
power sector reform strategy, and the WPGC was established as an independent generating company
operating on commercial lines\. However, private investment in the power sector did not materialize as
anticipated at appraisal, despite an improved institutional environment and the presence of substantial
private investment in the Shanghai area\. This was due, first, to reluctance of the private sector globally to
become involved in power sector investments, especially in emerging economies (following the Enron
collapse and bad experiences in a number of countries); second, to the fallout from the East Asian
financial crisis; and, third, to the (partly consequent) postponement and eventual cancellation of the
listing of several divested generating companies on international stock markets\. Instead, China moved
towards listing larger and financially stronger companies, themselves owners of a number of individual
power plants\. Three of the companies with shares in WPGC were so listed, so that the project objective
can be said to have been partially and indirectly achieved\.
Objective (d) was achieved\. The project successfully piloted an innovative financing model for a large
infrastructure project in China\. International commercial parallel financing was secured without Bank or
government guarantee\. This was a first-time success for a Bank project in Chinaâs power sector\. The
financing amounted to about US$265 million, and it was obtained purely on the strength of WPGCâs
balance sheet\.
*grams of coal equivalent
5\. Efficiency (not applicable to DPLs):
The project was identified as the first priority investment of an optimal development program in a
least-cost expansion study covering the period 1997-2008\. To complement this, a cost-benefit analysis
was conducted at appraisal assuming unchanged tariffs\. This yielded an ERR of 18\.2 percent (taking
account of the installation of FGD facilities)\. At closure, a similar analysis produced an ERR of 20\.7
percent, thanks to higher than projected electricity prices in the municipality and expected longer hours
of plant operation\. The opportunity cost of capital is estimated at 12 percent\. Unit cost efficiency is
satisfactory according to international comparisons â US$747 per kW installed as against US$1,400 in
Germany and US$1,060 in the United States for similar coal-fired units with FGD\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 18\.2% 100%
ICR estimate Yes 20\.7% 100%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The outcome of the project is satisfactory\. The project was highly relevant to the development needs of
the Chinese economy in general and the Shanghai area in particular\. With the partial exception of
stimulating increased private investment in Chinaâs power sector, all the project objectives were
achieved\. Efficiency was high, and the rate of return well in excess of the opportunity cost of capital\.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The risk to the development outcome of the project is low\. The Borrower shows substantial
commitment to the goals of the project and to the continued reform of the power sector\. At the time of
closure, the second phase generation plants had already been operated successfully by highly competent
staff for over a year\. The new technology has proven to be reliable, efficient, and environmentally sound\.
Electricity demand in the Shanghai area continues to grow rapidly\. Tariffs are currently sufficient, not
only to cover operating costs, but also depreciation, and yield a substantial profit for the utility company,
WGPC\.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
The project was well prepared to a high technical standard, and Bank performance in ensuring
quality at entry was rated as highly satisfactory by QAG\. The project responded to the rapidly rising
demand for electricity in the Shanghai area and to the Borrowerâs environmental needs\. Preparation
met the Bankâs technical, financial, economic and environmental standards\. Risk assessment was
sound, and mitigating measures adequate\. The lessons of previous Bank operations and ESW in
China's power sector were applied\. Working relations with the implementing agencies were excellent\.
The project was successfully innovative on both the environmental and financing fronts\.
Supervision was also carried out to a high standard\. Two, and sometimes three, supervision missions
took place annually, and the supervision team was appropriately staffed at the technical level\.
Implementation of both the Environmental and Resettlement Action Plans was regularly monitored, as
were the financial performance of the implementing agencies and a wide range of policy and
institutional issues related to sector unbundling, tariff reforms, sourcing and pricing of coal, and air
quality monitoring\. The supervision teams displayed pragmatism and flexibility in the face of issues
which arose\. Relations with the implementing agencies remained harmonious throughout and were
characterized by mutual respect\. The quality of supervision was reviewed twice by the QAG, and
rated as highly satisfactory on both occasions\.
at -Entry :Highly Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Highly Satisfactory
c\. Overall Bank Performance :Highly Satisfactory
9\. Assessment of Borrower Performance:
Although the government showed continued commitment to power sector reform, supported the
efforts of SMEPC in securing private sector financing, and was effective in coordinating the activities
of the various financial institutions involved in the project, it also held up the clearance of the
project's feasibility study\. Further delays of about two years were caused by the moratorium on power
plant construction thereafter\.
The implementing agencies, SMEPC and WPGC, performed very well\. They showed strong
commitment to the projectâs development goals and their implementation responsibilities were
shouldered without disruption, even during the transfer of of project ownership from SMEPC to
WPGC\. Issues during construction were promptly identified and resolved\. Design modifications were
promptly performed\. Complicated interfacing issues were coordinated and thoroughly discussed with
suppliers\. This led to their rapid resolution and to the recovery of a considerable amount of the time
lost due to government-engendered delays\. Costs remained well within budget and all fiduciary and
environmental safeguards were fully complied with\. WPGCâs financial performance is excellent\.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Highly Satisfactory
c\. Overall Borrower Performance :Satisfactory
10\. M&E Design, Implementation, & Utilization:
Although the project was prepared prior to the introduction of the log-frame approach, achievement of
the projectâs development objectives was regularly monitored through quantifiable indicators developed
at appraisal\. These were adapted to the logical framework approach after the latterâs introduction in
August, 1997\. Some indicators were modified in the light of the evolving operating environment\. The
indicators provided in the ICR data sheet are generally adequate for measuring progress towards the
attainment of most of the development objectives, and provide a clear causal chain between the inputs
(project construction and reform measures) and most expected project outcomes (increased electricity
output and availability, reduced load shedding, fuel efficiency, tariffs related to long run marginal cost,
SO2 emission reduction and financial rate of return)\. Missing are measures for increased private sector
investment in the power sector and for increased access for power companies to international financial
markets\.
a\. M&E Quality Rating : Substantial
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Environment: The projectâs environmental category was A\. The Environmental Management Plan
(EMP) was carried out satisfactorily by WPGC, and the specified mitigating requirements implemented\.
Both the low NOx burners and the dust collection system exceeded EMP requirements\. As indicated in
Section 4 above, the Bubble Concept was successfully applied, and proved to be of overall benefit from
both environmental and economic viewpoints\. The FGD at the first phase power plant was operating at or
above the design efficiency of 90 percent\. The planned installation by WPGC of its own air quality
monitoring equipment did not, however, take place\. Instead, the Shanghai Municipality Environmental
Monitoring Center is providing data every six months from its three existing monitoring stations\. These
data indicate little change in air quality due to the second phase project power plants\. While this
arrangement is inferior to that foreseen, it is still adequate for the purposes of the Bankâs environmental
monitoring\.
Resettlement: Resettlement resulting from power plant construction involved relocation of 327
households (about 1,000 people), 16 work units and 16 enterprises\. In addition, one substation required
moving eleven households and economic rehabilitation of 94 farmers\. According to independent
follow-up surveys, land acquisition and resettlement were implemented in accordance with national and
local laws and regulations and with the approved Resettlement Action Plan, and were consistent with
Bank policy\.
Fiduciary: Financial covenants related to debt coverage ratio, submission of annual audit reports, and
annual submission of rolling eight-year financial projections were substantially met for both SMEPC and
WPGC\. The 8 percent rate of return on equity covenant for SMEPC was not achieved\. Anomalous sector
accounting practices (for example, under-statement of revenues, short amortization periods) distorted
rates of return\. Moreover, after the 2002 unbundling, SMEPCâs more profitable generating assets were
divested, and the covenanted rate of return was too high for expected profits from a grid utility\.
Following the transfer of project ownership to WPGC, the covenant ceased, in any case, to be relevant,
and was dropped with the Bankâs agreement\. WPGCâs financial situation is expected to remain highly
satisfactory â despite a high depreciation rate of 7\.7 percent, return on equity is projected to be about 11
percent over the period 2006-2013\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Negligible to Low Negligible to Low
Outcome :
Bank Performance : Satisfactory Highly Satisfactory There seems to be no reason to
differ from the QAG assessment of
both preparation and supervision
where no shortcomings were
identified\.
Borrower Performance : Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The main lessons which may be drawn from this successful operation are:
1\. Experience during implementation confirms that of other recently completed power sector projects
in China â construction management was successfully performed by the implementing agencies\. There
is really no need, in China (or perhaps in other countries where implementing agencies have staff of a
high technical competence), for the relatively heavy provisions for engineering and construction
management TA which have been included in most projects\. The use of external support on a selective,
as-needed basis, determined in consultation with the implementing agency, is to be preferred to the use
of international consultants for the entire task\.
2\. The project demonstrates the success of piloting new processes and new approaches â in this case,
for example, the Bubble Concept for more cost-effective emissions reduction, and the innovative
approach to accessing international finance\. However, possible extension to other countries should
depend upon the presence â as in China â of highly competent implementing agencies and strong,
demonstrated governmental commitment to sector reform\.
3\. Procurement based on separate packaging of goods can lead to lower bid prices through greater
competition\. However, such packaging is demanding for the implementing agencies which must deploy
considerable skill and time in resolving inevitable conflicts and interface problems\. There is a trade-off
between potential price advantages and the risks arising from the use of the packaging approach\.
4\. As with many other successful power projects in China and elsewhere, this operation demonstrates
the importance of a strong Bank project preparation and supervision team, drawing on all the necessary
range of skills\. Continuity of personnel is of great importance\. The practice of using the same team to
supervise multiple projects in the same country is not only cost-effective, but benefits from
inter-project synergies\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR is reasonably thorough, well written, and contains sufficient information and analysis necessary
to evaluate the outcome of the project\. More detailed discussion of the cost variations between appraisal
and closure would, nonetheless, have been useful, including an explanation of the reasons why the
project seems to have benefited less from lower than anticipated equipment prices than other roughly
contemporary power sector operations in China\. It would also have been interesting to know why WPGC
did not install its own air quality monitoring facilities as originally envisaged\. The loan amount on the
cover sheet should be that originally approved (US$400 million), rather than that actually disbursed
(US$372\.6 million)\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P076764 | Document of
The World Bank
Report No: 29774
IMPLEMENTATION COMPLETION REPORT
(IDA-37050)
ON A
CREDIT
IN THE AMOUNT OF SDR 11\.9 MILLION (US$ 15 MILLION EQUIVALENT)
TO
SERBIA AND MONTENEGRO
FOR A
STRUCTURAL ADJUSTMENT CREDIT (REPUBLIC OF MONTENEGRO)
August 5, 2004
CURRENCY EQUIVALENTS
(Exchange Rate Effective )
Currency Unit = Euro for Montenegro
Euro 0\.82 = US$ 1
US$ 1 = Euro 0\.82
FISCAL YEAR
January 1 to December 31
ABBREVIATIONS AND ACRONYMS
DFID Department for International Development, U\.K\.
EPCG Electric Power Industry of Montenegro
EU European Union
FDI Foreign Direct Investment
FIAS Foreign Investment Advisory Service
GOM Government of Montenegro
GDP Gross Domestic Product
IAS International Accounting Standards
IDA International Development Association
IMF International Monetary Fund
MTEF Medium Term Expenditure Framework
PRGF Poverty Reduction and Growth Facility
SAC Structural Adjustment Credit
TAL Technical Assistance Loan
SME Small and Medium Enterprises
SOE State-Owned Enterprise
TSS Transitional Support Strategy
TSSU Transitional Support Strategy Update
USAID United States Agency for International Development
WTO World Trade Organization
Vice President: Shigeo Katsu (ECAVP)
Country Director Orsalia Kalantzopoulos (ECCU4)
Sector Director Cheryl Gray (ECSPE)
Task Team Leader/Task Manager Bruce Courtney (ECSPE)
ICR Primary Author Richard J\. Carroll
SERBIA AND MONTENEGRO
SAC I (Montenegro)
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 12
6\. Sustainability 13
7\. Bank and Borrower Performance 14
8\. Lessons Learned 15
9\. Partner Comments 16
10\. Additional Information 17
Annex 1\. Key Performance Indicators/Log Frame Matrix 18
Annex 2\. Project Costs and Financing 19
Annex 3\. Economic Costs and Benefits 21
Annex 4\. Bank Inputs 22
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 23
Annex 6\. Ratings of Bank and Borrower Performance 24
Annex 7\. List of Supporting Documents 25
Project ID: P076764 Project Name: SAC I (Montenegro)
Team Leader: Bruce J\. Courtney TL Unit: ECSPE
ICR Type: Core ICR Report Date: August 5, 2004
1\. Project Data
Name: SAC I (Montenegro) L/C/TF Number: IDA-37050
Country/Department: SERBIA AND MONTENEGRO Region: Europe and Central Asia
Region
Sector/subsector: Central government administration (35%); Power (20%);
Compulsory pension and unemployment insurance (20%); General
industry and trade sector (15%); Law and justice (10%)
Theme: Debt management and fiscal substainability (P); Public expenditure,
financial management and procurement (P); Infrastructure services
for private sector development (P); Social risk reduction (S); Legal
institutions for a market economy (S)
KEY DATES Original Revised/Actual
PCD: 11/19/2001 Effective: 09/30/2002 03/12/2003
Appraisal: 05/01/2002 MTR: 11/01/2004 11/01/2004
Approval: 08/08/2002 Closing: 09/30/2003 01/31/2004
Borrower/Implementing Agency: FEDERAL REPUBLIC OF YUGOSLAVIA/REPUBLIC OF MONTENEGRO
Other Partners:
STAFF Current At Appraisal
Vice President: Shigeo Katsu Johannes Linn
Country Director: Orsalia Kalantzopoulos Christiaan Poortman
Sector Director: Cheryl W\. Gray Cheryl Gray
Team Leader at ICR: Bruce J\. Courtney Ardo Hansson
ICR Primary Author: Richard J\. Carroll
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
Background\. A review of recent political history is required to appreciate the setting for the Montenegro
Structural Adjustment Credit (SAC)\. The Federal Republic of Yugoslavia (FRY) was established on April
27, 1992\. FRY consisted of two republics, Serbia and Montenegro\. Out of a total population of 10\.6
million (including Kosovo), Montenegro accounts for about 616,000, or 6 percent of the total\.
Montenegroâs GNP per capita is about $2,500\. About 10 percent of Montenegroâs population is estimated
to live in absolute poverty\.
Following elections in 1997, the Government of Montenegro began to overtly oppose many policies of FRY
President Slobodan Milosevic\. Montenegro took a neutral stance during the Kosovo conflict in 1999 and,
with the support of the international community, began concerted stabilization efforts and launched a
structural reform program\. In 1999 and 2000 the European Union (EU), USAID and other donors
responded by actively supporting Montenegroâs reform program\. One pillar of this program was the
introduction of the Deutsch Mark (DM) as the sole legal tender\. Almost all fiscal links were severed with
the rest of FRY, leaving Montenegro with nearly full macroeconomic autonomy\. Generous foreign grants
covered Montenegroâs fiscal deficit\.
However, this high level of donor financing put Montenegro at risk of becoming aid dependent\. In 2000,
the consolidated republican deficit reached 8\.0 percent of Montenegroâs Net Material Product\. By
late-2000, the preclusion of monetary financing of the budget due to the adoption of the DM, a decline in
foreign financing and increased wages and social transfers forced a renewed focus on fiscal consolidation\.
The IMF was the first to support the fiscal reform through an Emergency Post-Conflict Facility for FRY
approved in December 2000\. This was followed by a Stand-by Arrangement (SBA) for FRY in June 2001
which covered the period through March 2002\.
On March 14, 2002, the Republics of Serbia and Montenegro signed an agreement entitled the Basis for
the Settlement of Relations between Serbia and Montenegro (the Belgrade Agreement) in which the FRY
was replaced with a looser union called Serbia and Montenegro (SAM)\. The Constitutional Charter and
the Law on its implementation were enacted nearly one year later by the republican and federal parliaments
on February 5, 2003\.
The Montenegro Structural Adjustment Credit (SAC) of US$15 million equivalent was approved by the
Board on August 8, 2002 to support the Government of Montenegroâs (GOM) economic reform program\.
The SAC was a two tranche operation and became effective on March 12, 2002 with the release of the first
tranche\. The second tranche was disbursed on January 22, 2004\. When the SAC was designed,
Montenegro faced the challenges of restoring macroeconomic stability and external balance, stimulating
growth and creating the basis for a sustainable supply response and improving the social well-being of the
most vulnerable\. The Transitional Support Strategy (TSS â Report 22090-YU, June 26, 2001) for FRY
proposed a broad program of support for FY02-04 focused heavily on policy reform\. Due to the highly
devolved nature of FRY and the different starting points and pace of reforms in the two constituent
republics, the reform agenda areas described in the TSS are differentiated\. The TSS Updates (TSSU) of
July 18, 2002 and February 18, 2004 confirmed the approach whereby the policy reform program â and the
Bankâs planned adjustment lending â is structured to address the specific needs of each republic\. This
approach envisioned credits provided to SAM and on-lent to the republics, to back primarily republic-level
reforms\. Such a differentiated approach addresses the different starting points, reform challenges and pace
of reforms in the two republics and avoids the risk of delaying disbursements to one republic due to a
lagged reform effort in the other\.
-2-
Objective\. The overarching goal of the Republic of Montenegroâs SAC was to support the GOMâs
structural reform program with the main objectives of enhancing medium-term fiscal sustainability and
improving the prospects for growth as a basis for sustained poverty reduction\. The SAC supported
reforms in five areas: public expenditure management, pensions, the energy sector, labor markets, and the
business environment\. The objectives specific to these areas were to: (i) improve public expenditure
management to deliver greater macro-fiscal control and accountability of the public financial management
system; (ii) improve the fiscal sustainability of the pension system; (iii) improve the efficiency of the power
sector; (iv) enhance the flexibility of the labor market and (v) improve the business environment\.
The SAC objectives were fully consistent with the principles in the June 2001 TSS and subsequent TSS
Updates\. The strategy was based on (i) restoring macroeconomic stability; (ii) private sector growth; (iii)
protecting the vulnerable and developing human capital; and (iv) developing institutional capacity\. The
objectives appropriately reflected the need to reduce macroeconomic imbalances, improve social protection,
and improve the business environment, both administratively and through increased labor market flexibility\.
(See Section 3\.5 for additional assessment of the SACâs design)\.
3\.2 Revised Objective:
The objective was not revised\.
3\.3 Original Components:
The components of the SAC consisted of:
1\. Public Expenditure Management
2\. Pension Reform
3\. Energy Sector
4\. Labor Market
5\. Business Environment
The rationale and scope of individual components were as shown below\. Specific tranche release
conditions that comprise each component are found in Table 3\.
1\. Public Expenditure Management
Following the enactment of the Law on the Budget System (LBS) and the establishment of the Treasury in
2001, the focus of this reform component was to help implement the changes introduced by the LBS\.
Improved monitoring and management of public expenditures would help limit unplanned expenditures and
achieve the development objective of greater macro-fiscal control\. Specifically, the SAC supported the
three key areas of improved management of public expenditures: (i) budget formulation, through the
development of a comprehensive medium-term macro/fiscal framework for budget planning; (ii) budget
execution, through the continued implementation of the new Treasury system; and (iii) audit and control,
through the establishment of an Internal Audit Department (IAD)\.
2\. Pension Reform
The SAC measures aimed at greater fiscal sustainability of pensions through reforms to the existing
pension system and improved implementation\. Reforms would include the enactment of a new Pension
Insurance Law which would: (i) increase the retirement age; (ii) change indexation of pensions from wages
to wages and cost of living; (iii) lengthen the work history included in the pension calculation; and (iv)
-3-
tighten eligibility conditions for disability pensions\. The Government would also avoid pension arrears and
would eliminate non-pension benefits from the Pension Fund budget\.
3\. Energy Sector
The SAC supported program focused on the goal of restoring the electricity utility to financial self
sufficiency and introducing the first steps in developing a legal and institutional framework to consolidate
the sectors' medium-term financial sustainability and ensure that it would contribute to Montenegro's
growth potential\. The program focused on electricity price reforms to enable prices to cover operating and
debt service costs\. The SAC program focused on 2 consecutive years of increases in the winter tariff\. To
cushion the social impact of this reform, a lifeline tariff on the first 500 kWh for poor consumers would
also be introduced\. Collections would be improved by disconnecting non-payers\. An Energy Law would
be submitted to Parliament which would establish an energy regulator and establish the functional
unbundling of the electricity sector\.
4\. Labor Market
The SAC supported the adoption of a new Labor Law designed to increase the flexibility of Montenegro's
labor market\. The new Labor Law would: (i) limit and differentiate severance pay; (ii) alter special leave
entitlements; (iii) introduce alternative mechanisms for dispute resolution; and (iv) reduce the statutory
minimum maternity leave\. The SAC also supported measures to improve incentives for job search,
providing an adequate, flat-rate unemployment benefit and to improve the provision of information on
vacancies, counseling and job search assistance\.
5\. Business Environment
The SAC supported program focused on the legal and institutional foundations for business which would
reduce the barriers to entry\. Enactment of the Law on Business Organization (Enterprise Law) would mark
the first tranche benchmark and the implementation of this law would mark the second tranche benchmark\.
Administrative barriers would be reduced through the streamlining of procedures for registering new
business, converting it from a system of approval to a system of notification\. The business registration
process would also be handled by a Central Registry rather than the commercial courts\. The SAC program
also focused on reducing barriers to restructuring and exit\. Enactment of a new law on Business
Organization Insolvency (Bankruptcy Law) would mark the first tranche benchmark and the
implementation of this law\. The implementation of the Bankruptcy Law would focus on increasing
capacity in dealing with insolvency through training of a core group of commercial judges, bankruptcy
administrators, attorneys, and accounts\. The SAC also supported the drafting and future implementation
of the Law on Secured Transactions\. This law would provide the legislative framework for collateral in
Montenegro\.
These components were consistent with the TSS\. In addition, prior to the SAC, there was already a large
USAID and, to a lesser extent, EU presence in Montenegro\. As a result, many reform areas were already
being intensively addressed by other donors either in terms of policy advice or capacity building\. The SAC
components comprised reform areas where the Bank had extensive experience in other countries and where
the activities of other donors could be leveraged\.
3\.4 Revised Components:
The SAC's components were not revised\.
-4-
3\.5 Quality at Entry:
Quality at entry was very good and is rated satisfactory\. (There was no QAG conducted for this
operation)\. The SAC was prepared early in the three year period of the TSS following nearly a decade of
disengagement\. Coming so early in the re-engagement of country dialogue, the SAC team did not have a
deep stock of ESW to draw on\. However, the preparation of the SAC did benefit from the analysis done in
the TSS itself as well as the first Country Report for FRY after readmission to active World Bank
Membership ("Breaking with the Past: The path to Stability and Growth")\. The preparation of the SAC
also benefited from the very high level of donor activity in Montenegro which preceeded the readmission of
FRY to Bank membership\. Finally, the SAC benefited from extensive country dialogue and a reform
champion in the Minister of Finance\. As outlined in the MOP, the SAC was designed to enhance recent
stabilization gains by supporting up-front actions to tackle major fiscal imbalances and sectoral reforms to
enhance medium-term fiscal sustainability\. It was also essential to provide financing to close Montenegroâs
budgetary gaps and bolster external reserves\. There was an active IMF Stand-by arrangement with FRY
(later SAM) which included fiscal targets and structural benchmarks for the Republic of Montenegro\. The
SAC formulation and implementation embodied good coordination with the IMF including mutually
reinforcing and complementary conditionality between the structural reforms of the SAC Policy Matrix and
the Stand-By Arrangement\. The Government was increasingly proactive in implementing the reform
program, which resulted in the completion of the second tranche conditions\.
The MOP also carefully elaborated number of risks\. The constitutional structure of the Federation was in
the process of being redefined and the relationships between the constituent republics had not yet been
sorted out\. The constitutional details following the March 2002 Belgrade Agreement on a looser federation
had not yet been agreed upon\. The potential inability to reach agreement between the republics could have
impeded the reform agenda\. Also, implementation capacity in Montenegro could have slowed the pace of
reform\. Other main risks cited by the MOP were a slowdown in the economy of key trading partners which
could threaten exports, foreign direct investment and other capital inflows\. The MOP noted the risk of
potential conflicts in the governing coalition of Montenegro that could have led to a change of government\.
Finally, a public expecting rapid improvements in living standards could have eventually tired of the
sacrifices which often accompany reforms\. The appraisal report for the SAC described most of these risks
to the reform program\. As elaborated below, many of these risks did materialize in one form or an other\.
The mitigation strategy in the MOP was limited to maintaining intensive policy dialogue\. In the end, this
mitigation strategy proved sufficient since all condition were met with just a four month extention of the
closing date\.
The strengths of the SAC were that it was a well-focused operation with several, high impact measures,
e\.g\., budget consolidation, pension sustainability and increasing the flexibility of the labor market\. This
strategy had the advantage that reform efforts could be focused on a few key areas where reforms were
politically difficult and at a time when the government was working out fundamental constitutional issues\.
(see Lessons Learned below)\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The achievement of development objectives is rated satisfactory\. The main achievements of the SAC
supported program were the development of increasingly fully functioning public sector institutions such as
the Ministry of Finance, the achievement of significantly greater fiscal control through improved budgeting
and pension reform, and the establishment of legislative foundations for a more flexible labor market and
an improved business climate\. Many of these measures are part of a long-term capacity building agenda
that is supported by IDA lending and considerable technical assistance (TA)\. This TA has been closely
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coordinated with other donors\. The SAC supported program has also improved the ability of the
Government to fight poverty\. The reforms which enhanced the transparency of public finances and the
pension reform and energy reforms which have advanced prospects for sustained fiscal consolidation leave
room for the Government to focus on anti-poverty expenditures\. This process was advanced earlier this
year when Montenegro published its first Poverty Reduction Strategy Paper (PRSP)\. The PRSP process
has been a collaborative effort between the Government and NGOs\. The authorities are also working with
the Bank and other donors to develop the data and analytical capacity required to ground future adjustment
operations in a deeper understanding of various policies on the living standards of the poor\. Montenegro's
PRSP still needs to be better aligned with the budget process, but the SAC supported reforms will help this
endeavor\. Through the implementation of SAC 2 the Bank will continue to assist in strengthening this
alignment\. The Government also demonstrated its capacity to manage the negative social impacts of
reform when it introduced following electrify tariff increases a program covering the first 500 kWh of
monthly consumption for those families eligible for the main means-tested social assistance program\.
Finally, as the recent Poverty Assessment emphasized, the shallowness of poverty in Montenegro suggests
that even small economic shocks can have potentially large effects on poverty\. A positive shock, such as
sustained economic growth, is likely to result in a disproportional decline in poverty, while a negative
shock, such as a recession, is likely to result in a disproportional increase in poverty\. The SAC supported
reforms have bolstered prospects for growth and left the Government with more fiscal space to fight
recessions\.
The detailed assessment of outcomes first looks at the overall macroeconomic picture and then examines
the results to date with respect to each of the major development objectives\.
Macroeconomic Stability
TABLE 1: Macroeconomic Indicators 2000-2003
(Montenegro and the Union of Serbia and Montenegro)
Indicators 2000 2001 2002 2003
Real GDP growth for SaM (percent change) /a 5\.0 5\.5 4\.0 3\.0
Real GDP growth (percent change) b/ na 1\.5 3\.6 2\.3
CPI, percent (end of period) b/ 22\.5 24\.0 9\.4 6\.7
Unemployment Rate (%), LFS b/ 15\.8 19\.9 17\.9 na
FDI, % of GDP /a 0\.3 1\.4 3\.6 6\.7
Gross Domestic Investment, % of GDP /a 14\.2 13\.6 16\.1 15\.3
Government Overall Cash Balance, % of GDP /c na -4\.7 -4\.3 -5\.2
Public Debt, % of GDP /a 119\.1 123\.2 84\.5 76\.6
Total External Debt, % of GDP /a 132\.5 103\.2 75\.6 69\.0
CAD, after grants, % of GDP /a -3\.9 -4\.6 -8\.8 -10\.2
Exports of GNFS, % of GDP /a 29\.6 23\.7 20\.7 19\.2
Imports of GNFS, % of GDP /a 46\.5 44\.6 43\.7 41\.8
Gross Official Reserves (months of imports) /a 1\.7 2\.9 4\.3 5\.4
a) for Serbia and Montenegro
b) for Montenegro
c) for Montenegro: General Government
consolidated data
Source: World Bank, MOF
-6-
Montenegro satisfactorily maintained a stable macroeconomic framework\. Data reliability in many areas
such as balance of payments, national accounts, and the monetary survey remain inadequate in
Montenegro\. Fiscal data has improved substantially\. Available data, combined with data at the federal
level for Serbia and Montenegro indicate that macroeconomic performance has been mixed\. While growth
has been fairly steady, it has been too slow to meet the expectations of the population\. Inflation has fallen
substantially to 6\.7 percent in 2003 from 24\.0 percent in 2001, when SAC-supported measures were
initiated\. However, unemployment remains fairly high at 17\.9 percent (2002)\. The consolidated budget
deficit was cut from about 8 percent of republican GDP in 2000 to about 5\.2 percent in 2003 and has
remained consistent with targets established in the IMF programs\. The renewal of outlays to cover
expenditures on Union-level functions placed new pressure on fiscal accounts in 2003\. Excluding these
outlays, the underlying budget deficit for 2003 fell to about 3 percent of republican GDP\. Montenegroâs
2004 Budget envisages a consolidated deficit of 4\.4 percent of republican GDP, or 1\.6 percent of GDP
excluding the outlays to cover expenditures at the Union level\.
Objective 1: Improve public expenditure management to deliver greater macro-fiscal control and
accountability of the public financial management system\.
The outcome is satisfactory\. The measures to consolidate the budget and better track how finances were
flowing throughout the budget was an essential first step toward improving fiscal discipline\. Building on
the passage of the LBS in 2001, the Government continued reforms and consolidated line ministry and
other direct spending unit (DSU) budgets under a single treasury account\. The transparency of budget
processes has improved substantially\. Transactions between public enterprises and the Government are
now publicly reported and are carried on a cash basis as opposed to the former practice of using offsets\.
The multi-year indicative fiscal framework now accompanies each annual budget law\. The Internal
Auditing Department (IAD) was established after a delay which required an extension of the closing date of
the SAC by four months\. Despite this delay, the IAD is now fully functioning and is benefiting from
intensive TA from USAID\. In all, a clearer picture of Montenegro's fiscal stance has been gained while the
underlying fiscal deficit has declined substantially, despite sluggish growth and is clearly on a path of fiscal
consolidation which envisages an elimination of the budget deficit by 2008\.
Objective 2: Improve the sustainability of the pension system especially through linking of contributions
to benefits\.
The outcome is satisfactory\. Under SAC, the pension system was identified as one of the sources of fiscal
instability\. In response, the Law on Pension Insurance was adopted in September 2003\. The law tightened
key parameters of the existing PAYGO system\. These changes (effective in January 2004) (i) increased the
retirement age by five years for men and women (65 and 60 respectively) over a ten-year period; (ii)
widened the calculation period from ten best years to full career over a 15 year period; (iii) changed the
indexation pattern from wage to a combination of wages and prices; (iv) introduced a point formula and
lowered the accrual rates from more than 2 percent to 1 percent per year of service; (v) tightened disability
conditions; and (vi) eliminated most social-related benefits from the pension system\. These changes should
lower the pension deficit to less than 1 percent of GDP by 2005 and eliminate the pension deficit by 2007\.
The declining path of the pension to GDP ratio will eventually create the fiscal space for the next round of
reforms which could eventually involve the introduction of funded pillars\. In addition to reform of the
PAYGO parameters, the legislation also introduced a number administrative changes in the system, such as
the transfer of collection and enforcement functions from the Pension Fund to the Internal Revenue Service
(DPR) by 2005 and the transfer of reporting requirements by employers from the Pension Fund to DPR\.
The Bank is following up on these reforms with a pension project which will provide TA to the DPR to
-7-
help it undertake its new role\.
Objective 3: Improve the efficiency of the power sector through tariff adjustments and establishment of a
regulatory body\.
The outcome is satisfactory\. The financial viability of the state electricity company (EPCG) has been
improved through tariff adjustments\. In fact the tariff increase went beyond what was envisaged in the
SAC program\. Average residential power tariffs were increased from 2\.4 Euro cents/kWh in 2000 to 4\.1
Euro cents in 2003 and are now at a level sufficient to cover marginal cost\. The SAC supported program
did not envisage a unification of seasonal tariffs\. However the lower summer tariffs were abolished in
early 2003 and the higher winter tariff has prevailed ever since\. Similarly, the Government ultimately
exceeded the other core second tranche condition in this area by enacting the Law on Energy in mid-2003\.
This law requires the establishment of the energy regulator by mid-2004 and the functional unbundling of
the EPCG by end-2004\. The implementation of these measures are currently part of the proposed SAC 2
program\. The energy regulator has been established and has begun to issue licenses\. The functional
unbundling of EPCG is on track for implementation by end-2004\. However, the non-core component of the
SAC program in the energy sector has not been implemented as successfully as the tariff adjustments and
the Energy Law\. The program envisaged improving payments discipline through the reduction of barter
and offsets and an increase in the ratio of collections to billings\. Here progress has been more modest than
envisioned in the SAC program\. A Bank investment project on metering, billing and collections is
following up to build capacity to achieve further loss reduction\. Ultimately, participation in the regional
energy market is expected to increase the efficiency of the power sector and lead to Montenegroâs longer
term goal of EU accession\. Finally, it should be noted that the SAC did not focus on high voltage
customers\. By far the largest consumer of electricity in Montenegro is the aluminum company\. It accounts
for nearly half of total energy consumption in the republic, but it contributes only 30 percent of EPCG
revenue\. The price paid by this company for electricity has been well below the marginal cost of supply\.
This low power tariff not only strains the cash flows of EPCG, it also jeopardizes system security in
Montenegro\. The Bank is following up on this issue in the proposed SAC 2, which envisages a significant
increase in the power tariff to the aluminum company\.
Objective 4: Enhance the Flexibility of the Labor Market\.
The outcome is satisfactory\. Major progress was achieved in the legal framework to bring about
increased flexibility of the labor markets, which will be a key for long-term economic growth\. The key
measure was the passage of the Labor Law, which was adopted in July 2003 and became effective in
January 2004\. The provisions of this Labor Law are fully consistent with those laid out in the SAC
program\. As of now, there are no data to measure possible employment effects, and, in any case, it is not
realistic to expect such effects so soon after effectiveness\. However, it is clear that the law has reduced
rigidities in the labor market by reducing the costs of firing workers (severance pay), special leave
entitlements, and the duration of maternity leave\.
Objective 5: Improve the business environment\.
The outcome is satisfactory\. The strategy to improve the business environment in Montenegro was similar
to that in neighboring countries: (i) reduce the cost of entry by establishing a business registry; (ii) reduce
the cost of exit by passing a new Law on Insolvency to facilitate bankruptcies; and (iii) reduce the cost of
access to finance through passing a Law on Secured Transactions\. Ultimately, effective enforcement of the
laws over time will be necessary to ensure the expected outcomes will be achieved\. Still, there has been
palpable progress in each of these areas\. Business registration is no longer conducted through the courts\.
-8-
It is now a simple administrative matter\. Thus registration times have been cut significantly\. The
Enterprise Law allows for four days, but now registrations are routinely done in one day\. Since the
adoption of the Enterprise Law in August 2002, nearly 4000 limited liability companies, 70 joint stock
companies, and 300 partnerships have been registered\. The bankruptcy process is improving though more
time will be needed before the exit mechanism is efficiently functioning\. USAID is providing technical
assistance and training\. The number of bankruptcy cases initiated since the Bankruptcy Law was adopted
in August 2002 stood at 852 at end-July 2004\. While many reorganization plans have been negotiated, few
have yet been resolved\. Since the establishment of the pledge registry in January 2003, 130 pledges have
been registered with an approximate value of Euro 23 million\. The process is transparent and all
information on registered pledges are publicly available on the internet (www\.rzcg\.cg\.yu)\. A new Law on
Mortgages adopted in July 2004 further streamlines the process for registering liens on immovable
property, in line that for movable property in the Law on Secured Transactions\.
TABLE 2: SAC Tranche Releases
Planned Amount Actual Amount
Tranche Expected Date Actual Date (million of SDR) (million of SDR)
1 9-30-2002 3-12-2003 5\.95 5\.95
2 9-30-2003 1-22-2004 5\.95 5\.95
Total 11\.9 11\.9
4\.2 Outputs by components:
The outputs for the SAC are considered satisfactory\. All 10 core first tranche conditions were fully met as
were all 9 core second tranche conditions\. Table 3 describes these conditions and the results to date\.
TABLE 3: Overview of SAC Core Components, Issues, Actions and Major Outcomes
Component Board Conditions Second Tranche Outcomes/ Results
Issue/Objective Conditions
1\. PUBLIC EXPENDITURE MANAGEMENT (SATISFACTORY)
Improve public Two pilot direct The Ministry of Budget for line
expenditure spending units (DSUs) Finance (MOF) has ministries and other
management to and the payroll of all developed a DSUs has been
deliver greater DSUs have been comprehensive consolidated into one
macro-fiscal control successfully medium-term treasury account\. This
and accountability transferred to the macro/fiscal allows more accurate
of the public Treasury\. framework including and transparent
financial major policy budgeting\. A
management commitments, and multi-year budget
system\. used this framework framework (MTEF) is
in the process of in place\.
formulating the 2003
budget\.
All budget users The Government of The Treasury system
financed from the Montenegro has is fully functioning\.
republican budget are designed and
using a standard implemented a
-9-
budget classification as satisfactory Treasury
provided by the new system and has
Law on the Budget transferred accounts
System (LBS)\. of Government of the
Republic of
Montenegro
budget-financed
ministries and
agencies into a single
treasury account\.
The MOF has The IAD was
established and established and staffed
staffed the Internal in December 2003\.
Audit Department USAID is following up
(IAD), outlined its with TA in this area,
functions, and including a resident
adopted its advisor\. The IAD is
procedures and the now fully functioning\.
annual audit plan for
2003\.
2\. PENSION REFORM (SATISFACTORY)
Increase The Government has The Republic of The Pension Law was
sustainability of accepted and submitted Montenegro has adopted in September
pensions by linking for public discussion a enacted a law on 2003 and became
benefits more draft law on pension pension and disability effective in January
closely to and disability insurance, insurance, 2004\. The actuarial
contributions\. satisfactory to the Bank\. satisfactory to the soundness of the
Bank\. pension system has
been significantly
improved\.
3\. ENERGY SECTOR (SATISFACTORY)
Improve the efficiency The Government has The Government has The Law on Energy was
of the electricity established an average submitted to the enacted in June 2003\. An
sector\. 2001/2002 winter tariff Parliament of the electricity regulatory
for electricity (excluding Republic of Montenegro authority has been
KAP) of 37 EUR/MWh a bill on a law on established and licenses
(representing a 50 energy, satisfactory to have begun to be issued\.
percent increase from the the Bank\. The next major task is
winter of 2000/2001) and the restructuring of the
cancelled the traditional EPCG, which is
reversion to lower underway\.
summer tariffs for 2002\.
The Government of The 2002/2003 winter
Montenegro has tariff were increased and
established and the summer tariff was
maintained a eliminated\.
satisfactory to the Bank
- 10 -
average level of
electricity tariffs during
EPCG has announced a 2002/2003 winter\.
program including A Bank investment
specific performance project on metering,
benchmarks for billing and collections is
disconnecting following up to build
non-payers, with capacity to achieve
demonstrated early further loss reduction\.
progress in
implementation\.
4\. LABOR MARKET (SATISFACTORY)
Increase labor market The Government has The Republic of The Labor Law was
flexibility by making it submitted a draft law on Montenegro has enacted enacted in July 2003\.
less expensive to fire labor, satisfactory to the a law on labor, which Severance pay and
workers Bank, to the Montenegrin includes provisions on maternity leave were
Parliament\. severance pay, reduced to lower the
maternity leave and costs of hiring and firing
special leave employees\.
entitlements, and which
is satisfactory to the
Bank\.
The Montenegrin The Employment Law
Parliament has adopted was adopted\.
an Employment Law,
satisfactory to the Bank\.
5\. BUSINESS ENVIRONMENT (SATISFACTORY)
Lower the costs of The Montenegrin The Government of The Enterprise Law was
doing business by Parliament has adopted a Montenegro has adopted\. The new
reducing entry and Law on Business adopted and begun to business registration
exit costs and Organizations implement registration procedures are in place\.
improving access to (Enterprise Law) procedures for new Business registration has
finance\. satisfactory to the Bank\. enterprises, developed been significantly
in accordance with the expedited\.
Law on Business
Organizations\.
The Montenegrin The Bankruptcy Law
Parliament has adopted a was adopted\.
Law on Business
Organization Insolvency
(Bankruptcy Law),
satisfactory to the Bank\.
The Government has The Republic of The Law on Secured
submitted a draft Law on Montenegro Pledge transactions was
Secured Transactions, Registry has been adopted\. The Pledge
satisfactory to the Bank, established and staffed\. Registry was established
to the Montenegrin in January 2003 and is
Parliament\. fully functioning\.
- 11 -
4\.3 Net Present Value/Economic rate of return:
Not applicable\.
4\.4 Financial rate of return:
Not applicable\.
4\.5 Institutional development impact:
The overall IDI was substantial\. At the beginning of the operation most institutions in Montenegro had not
been sufficiently developed to assume the responsibility required for the sudden and extensive devolution of
policy making to the republican level\. For example, the Ministry of Finance at the beginning of the country
dialogue had only about a dozen staff and was operating more like a regional branch of a finance ministry
rather than a national institution charged with conducting independent fiscal policy for the republic\. That
situation has improved substantially in the relatively brief SAC implementation period\. The MOF and the
Treasury were consolidated, budgeting became more rational and transparent and reporting more
consistent\. Fiscal policy is conducted exclusively at the republican level\. There was also significant
institution building in the areas of internal audit, business environment (with a much stronger legal
framework, which is lowers the costs of business entry and operation) and energy sector regulation\.
Bilateral donors have been providing intensive TA in each of these areas and also in other areas of the civil
service\.
Beyond SAC 1, the Bank continues to be engaged with the Govenment on institutional development issues
in the public administration component of the proposed SAC 2\. The Bank is working in close coordination
with other donors\. Much of this reform began during the SAC 1 implementation period\. In 2003 the
Government launched the process of comprehensive reform of public administration\. The Government has
designed, with donor assistance, an ambitious legislative and institutional reform agenda\. The Law on State
Administration and the Law on Inspection Scrutiny were enacted in the summer of 2003\. The Law on State
Administration foresees the reform of the structures of ministries, with policy-making functions to be
separated from service delivery and regulatory functions by end-2004\. The Law on Inspection Scrutiny sets
out modern principles and procedures of inspection oversight of public administration and private
companies and citizens\. Furthermore, the Law on General Administrative Procedure and the Law on
Administrative Dispute (Judicial Review) were adopted in October 2003\. Finally, in March 2004, the Law
on Civil Service and the Law on Salaries were enacted to depoliticize top level posts and establish a
merit-based civil service system\. A Civil Service Agency (CSA) will be established and staffed by Autumn
2004 and will be charged with implementing the horizontal human resource management system by
end-2004\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
As Montenegro emerged as a semi-autonomous republic, its institutional capacity was very low\. During
the decade of armed conflict and sanctions, many educated citizens of FRY left the country\. In Montenegro
the exodus of skilled labor was reinforced by the large number of citizens who attended university in Serbia
and remained outside of Montenegro following graduation\. With a population of about 620,000, such an
exodus of educated citizens has posed a significant challenge to the Government as it attempts to establish
an efficient civil service\. During the time of SAC preparation, the main counterpart agency, the MOF, had
only about a dozen staff\. Such an insufficient staff-level made it especially challenging to implement a
significant reform program that included major economic restructuring and basic institutional development\.
- 12 -
Another factor was the simultaneous pursuit of a reform program and the working out of fundamental
constitutional issues\. This factor increased the challenge of implementation, but did not undermine the
success of the reform program\.
A postive factor was the widely-shared goal of eventual EU accession, which provided a major impetus to
the reform program\. This factor helps sustain reform motivation over the long-term\. Candidacy for EU
membership is still years away, but the Government is committed to continuing to prepare Montenegro for
accession in the medium-term\.
Another positive factor was the strong coordination of the Bank, the Fund, and other donors\. Such donor
coordination has helped to focus the Government set priorities and sustain a fairly rapid pace of reform\.
5\.2 Factors generally subject to government control:
No specific factors\.
5\.3 Factors generally subject to implementing agency control:
No specific factors\.
5\.4 Costs and financing:
The total original loan amount was SDR 11\.9 million (US$15 million equivalent)\. The loan was fully
disbursed by the extended closing date of January 31, 2004\. The loan was made on modified IDA terms,
including a maturity of 20 years, a 10-year grace period and no acceleration clause\. The Borrower was the
Federal Republic of Yugoslavia (later Serbia and Montenegro), though the ultimate recipient of the
resources was the Republic of Montenegro\.
The financial arrangement for disbursements of this operation were complicated by the fact that the
proceeds would be on-lent from FRY to the Republic of Montenegro\. Special arrangements were made to
ensure that all negative list requirements were met given that the loan was denominated in Euro which is
also the only legal tender in Montenegro\. Despite the complexities of these flow of funds arrangements,
audits of both disbursements found that all activities were conducted in accordance with the loan
documents\. The Bank is currently in the process of conducting a Fiduciary Assessment of the Central
Bank of Montenegro (CBM)\. During SAC 2 negotiations it was agreed that the CBM would replace the
National Bank of Serbia as the Depository bank when the Bank is satisfied that appropriate arrangements
are in place\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The sustainability of the SAC-supported reform program is rated likely\. The Government completed all
core conditions and in some cases exceeded the expectations set out in the SAC\. Although the IAD
component required additional time, it was ultimately completed and the IAD is now effectively conducting
audits\. The SAC-supported reforms have achieved important institutional and legislative gains that will be
difficult to reverse in most cases\. During the SAC implementation period there have been a few instances
in which policies supported by the SAC appeared to be at risk, however, following discussions the
Government ultimately pursued policy choices consistent with the reforms\. Institutional growth has been
substantial as Montenegro has continued to develop its economic institutions\. One concern is related to
public expenditure management\. In early 2004, the Government proposed a large tax and contribution rate
cut, not envisaged in the 2004 Budget\. These cuts were to become effective abruptly in 2 stages during the
same year without being integrated into a supplementary budget\. In the end, the tax and contribution rate
- 13 -
cuts were reduced to a more affordable level and a supplementary budget was adopted simultaneously\.
Still, the impulsiveness of policy-making indicates that time will be needed for the Government to fully
internalize sound principles of public expenditure management\. Another area of concern arose out of the
multi-tiered collective bargaining agreements signed at the end of 2003, which, while not undermining the
specific reforms supported by the SAC, have not furthered the flexibility of the labor market\. The next
steps of reform are being supported by the planned SAC 2 in three main areas of the SAC-supported
program, which are the macroeconomic framework, energy sector, and pension reform\.
6\.2 Transition arrangement to regular operations:
The long-term goals of completing the transition to a fully functioning market economy and
eventually achieving EU membership are the driving forces behind the sustainability of the reform
program\. As Montenegro is following the transition to a market economy several years after
other countries in the region, there is a useful history of good practices that will help make
Montenegroâs reform path smoother than if it were navigating without relevant reference points\.
The proposed SAC 2 will continue supporting Montenegro's reform program\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
The Bank's performance was satisfactory\. The SAC was the first Bank operation in Montenegro after a
hiatus of more than a decade\. The SAC benefited from some ESW (including the CFAA and the Economic
Recovery and Transition Program-ERTP)\. In addition, a number of donors had re-engaged in Montenegro
several years ahead of the Bank As a result there was a large presence of USAID and to a lesser extent EU
in Montenegro, giving policy advice and TA across a wide range of sectors\. While leaving other areas such
as privatization to donors who were already playing a role, the Bank focused on areas where its advice
would complement the work of other donors and took the lead in other areas such as pension reform\. Since
Montenegro began its transition to a market economy nearly a decade after other countries in the region, the
Bank did have the benefit of exhaustive experiences in the nature and sequencing of reforms to support
such a transition\. The Bank also coordinated closely with the IMF\. The mutually supportive policy
documents (Letter of Intent and the Policy Matrix) and the combined policy resources of both institutions
were critical to gaining Government commitment and ultimately to a successful reform operation\.
7\.2 Supervision:
The Bank's performance was satisfactory\. Bank supervision was essential to the success of the program\.
In establishing the closing date for the project, Bank staff believed that it was allowing ample time for the
fulfillment of tranche conditions\. However, in the end, the Bank underestimated the time for
implementation given the fundamental political changes Montenegro was undergoing\. The limited human
capital resources of the Government of Montenegro were distracted for nearly a year between the signing of
the Belgrade Agreement in early 2002 and the adoption of the new Constitutional Charter in early 2003 in
the protracted negotiations between the two member republics in this process of drafting and agreeing to
this new constitutional arrangement\. Also elections in Montenegro in the Fall of 2002 contributed to the
delay in effectiveness\. As cited in the risk section of the MOP, intensive policy dialogue was required to
ensure effective implementation of a number of reforms\. The Bank fielded regular supervision missions
and called on the Belgrade office to maintain the policy dialogue under these challenging circumstances\.
Ultimately, all core second tranche conditions were met with only a four month extension of the closing
date\.
7\.3 Overall Bank performance:
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The Bank performance at all stages and overall is rated satisfactory\.
Borrower
7\.4 Preparation:
The Government's performance was satisfactory\. The Government was committed to the SAC supported
reforms, though it required intensive follow-up from the Bank especially in view of the political and
constitutional challenges elaborated above\. The Minister of Finance as well as the Minister of the
Economy acted as reform champions\. Both were willing to keep up the pace of reforms despite the low
level of implementation capacity which existed at the outset of the reforms\. The institutional development
during the implementation period was substantial from this low base (see Institutional Development
Impact)\. The Government agreed to a focused, but ambitious program that would improve the prospects
for medium-term growth and make a serious attempt to curb high unemployment and consolidate
government finances\.
7\.5 Government implementation performance:
The Government's performance was satisfactory\. The Government made conscientious efforts to meet
SAC conditions\. In some cases, such as the enactment of the Energy Law and the elimination of the
summer tariff, the Government exceeded the conditions set out in the SAC program\. However, there were
delays, as discussed, following the Fall 2002 parliamentary elections in Montenegro and in the midst of
negotiations on the new constitutional arrangements\. Also, during this time, the Government was faced
with implementing politically divisive reforms, such as energy price adjustments, labor and pension
reforms\.
7\.6 Implementing Agency:
The Government's performance was satisfactory\. The main counterpart was the Minister of Finance,
though several other ministries oversaw reforms in each of the sectors covered by the SAC\. Implementing
capacity was very low in all these ministries at the beginning of the SAC supported program\. Consultants
funded by other donors were the driving force behind the drafting of much of the legal framework for the
business environment and pension reform\. Because there was a general and strong Government
commitment, however, and because the institutional capacity improved during implementation, the
Government was able to pursue the next steps of making the legal framework operational\. Politically
difficult measures such as energy price adjustments, labor and pension reforms were adopted and continue
to be enforced\. The Government has continued to benefit from extensive donor-funded technical assistance
and has continued to improve the capacity of its civil service\. The Government launched a reform of its
public administration in 2003, which the Bank is supporting with the proposed SAC 2\.
7\.7 Overall Borrower performance:
Having fully implemented the program, the Government's performance was satisfactory\.
8\. Lessons Learned
An adjustment operation focused on a few key reforms allows the Government to concentrate its
political capital on the most urgent matters even if such reforms are politically contentious\. The
Montenegro SAC, unlike many adjustment operations, did not attempt to address structural problems at
once across all major economic sectors\. This strategy meant that pressure could be concentrated on
politically difficult, but key reforms like labor market flexibility, pension reform, and electricity tariffs\.
Coordination with other donors is critical, especially when other donors have a strong position in the
country\. Donor coordination in the SAC was good\. As noted, several large donors had been active in
Montenegro for more than a year ahead of the readmission of FRY to active World Bank membership\.
- 15 -
USAID contributed to this coordination as the largest donor in Montenegro (the Bank's office is in Belgrade
Serbia whereas USAID has offices in both Montenegro and Serbia) by arranging donor coordination
meetings when Bank missions arrived\. This coordination greatly enhanced the relevance of the
SAC-supported program\.
Regional consultants proved valuable and have good standing among Government counterparts\. The
Bank learned in some components (e\.g\., pensions) that consultants from the region had directly relevant
sector experience, were highly capable and knowledgeable about local conditions\. Government
counterparts also appreciated working with them\.
It is worthwhile to pursue a focused reform program, even when a country is drafting a new
constitution\. It may seem like an inopportune time to expect the Government to commit to economic
reforms at a time when policy-makers will be fully occupied with such fundamental tasks\. The conclusion
might be to wait until constitutional issues are settled\. The case of the Montenegro SAC demonstrated that
with intensive policy dialogue over a sustained period, it is feasible to pursue meaningful economic reforms
at such a time, particularly if the reforms are focused\.
9\. Partner Comments
(a) Borrower/implementing agency:
The following is the Government's assessment of the SAC\.
Background and Objectives
The Montenegro SAC addressed the challenges of broad structural reforms\. These included public
expenditures management, pension and energy sector, labor market and business environment\.
Implementation, Benefits
The Montenegro SAC provided necessary budgetary support for implementation of key structural reforms
based on newly adopted legislative and institutional framework, to enhance medium term fiscal
sustainability and improved the prospects for growth as a basis for sustain poverty reduction\. The
Government decision to tackle various issues from social and economic sphere resulted in a number of
positive effects\. Pension sector reform included the adoption of the new Law on Pension Insurance which
prescribes adoption of multi-pillar system, extension of working age period, and new formula for pension
calculation based on Swiss method\. The business environment has been significantly improved by adoption
of new Labor Law which increases flexibility and prepares the ground for employment increase\. In the area
of energy sector the Government of Montenegro adopted a new Energy Law, which envisaged
establishment of Regulatory Agency\. Additionally, increase electricity price improved financial position of
EPCG\. In the area of public expenditure management the Government of Montenegro established a more
consolidated medium-term framework for budget preparation, to continue implementation of the Treasury
system and to reinvigorate inspection and auditing procedures\.
Relationship with the Bank
During the preparation stage the Bank has closely worked with Government of Montenegro\. In our view the
Banks performance in preparation, implementation and compliance was highly satisfactory\.
Assessment of Outcome, Lessons Learnt
- 16 -
Based on cooperation with Bank from the previous period, we are now fully focused on continuation of
reforms in these sectors\. Since this was the first adjustment operation in Montenegro it was unique
experience to learn and understand Banks procedure\.
(b) Cofinanciers:
n/a
(c) Other partners (NGOs/private sector):
n/a
10\. Additional Information
TABLE 4: Summary of PSR Ratings for Montenegro SAC
Category 12/02 6/03 12/03
PDO S S S
Implement S S S
Proj\. Mgmt\. NR NR NR
Financial Management NR NR NR
Other Legal Covenants NR NR NR
M&E NR NR NR
- 17 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
See Text Table 3 for Log Frame Summary of Key Performance Indicators
- 18 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Component US$ million US$ million
BOP/Budget Support 15\.00 16\.90 112\.7
Total Baseline Cost 15\.00 16\.90
Total Project Costs 15\.00 16\.90
Total Financing Required 15\.00 16\.90
Note: Actual dollar amount was higher than appraisal because of increase in dollar value of SDRs\.
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB 2 N\.B\.F\. Total Cost
NCB Other
1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
3\. Services 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. BOP/Budget Support 0\.00 0\.00 15\.00 0\.00 15\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.00 0\.00 15\.00 0\.00 15\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB 2 N\.B\.F\. Total Cost
NCB Other
1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
3\. Services 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. BOP/Budget Support 16\.90 0\.00 0\.00 0\.00 16\.90
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 16\.90 0\.00 0\.00 0\.00 16\.90
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Note: Actual dollar amount was higher than appraisal because of increase in dollar value of SDRs
1/
Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2/
- 19 -
Project Financing by Component (in US$ million equivalent)
Percentage of Appraisal
Component Appraisal Estimate Actual/Latest Estimate
IDA Govt\. CoF\. IDA Govt\. CoF\. IDA Govt\. CoF\.
BOP/Budget Support 15\.00 16\.90 112\.7
Note: Actual dollar amount was higher than appraisal because of increase in dollar value of SDRs
- 20 -
Annex 3\. Economic Costs and Benefits
Not applicable\.
- 21 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
July 2001 5 TTL, E, PSD, L S S
December 2001 5 TTL, E, PSD, L S S
Appraisal/Negotiation
March 2002 8 TTL, E, PSD, L S S
Supervision
December 2002 5 TTL, E, L, PSD S S
May 2003 3 TTL, E, L S S
December 2003 2 TTL, E, PSD S S
March 2003 3 TTL, E, L S S
June 2003 4 TTL, E, L, PSD S S
ICR
No mission 1 E S S
TTL - Task Team Leader, E - Economist, PSD - Private Sector Development Specialist, L- Labor Market
Specialist
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation
Appraisal/Negotiation 56\.02 270,808\.66
Supervision 46\.65 183,745\.11
ICR 4\.00 6,300\.00
Total 106\.67 406,853\.77
Note: Appraisal/Negotiation and Identification/Preparation inputs are combined\.
- 22 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 23 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 24 -
Annex 7\. List of Supporting Documents
Transitional Support Strategy for the FRY\.
Program Document for a Proposed Structural Adjustment Credit in the amount of US$15\.0 to the Republic
of Montenegro\.
Loan Agreement for SAC\.
Project Status Reports from supervision missions (project file)\.
Country Economic Memorandum: Federal Republic of Yugoslavia - Breaking with the Past\.
IMF Staff Reports\.
Other Project Files\.
- 25 -
- 26 - | REVIEW |
P115816 |  ICRR 13752
Report Number : ICRR13752
IEG ICR Review
Independent Evaluation Group
1\. Project Data : Date Posted : 10/29/2012
Country : Rwanda
Is this Review for a Programmatic Series? Yes No
Series ID :
First Project ID : P115816 Appraisal Actual
Project Name : Education For All - US$M ):
Project Costs (US$M): 35 35
Fast Track Initiative
Catalytic Fund Bridge
Grant
L/C Number : Loan/ US$M):
Loan /Credit (US$M): 35 35
Sector Board : Education US$M ):
Cofinancing (US$M):
Cofinanciers : Multi-donor Catalytic Board Approval Date : 10/09/2009
TF of 18 countries Closing Date : 06/30/2010 06/30/2010
Sector (s): Primary education (65%); Secondary education (30%); Pre-primary education (5%)
Theme (s): Education for all (100% - P)
Evaluator : Panel Reviewer : ICR Review Group :
Coordinator :
Pia Helene Schneider George T\. K\. Pitman Soniya Carvalho IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
This one-year operation consists of a single tranche Bridge Grant to the government âs general budget\. Subsequently,
Rwanda was to apply for a new three -year Second Grant with an updated analytical foundation from the Education
for All Fast Track Initiative Steering Committee (Program Document p\. 24)\.
The Program Development Objective (Program Document, p\. 23) is:
"to support the Government's policy reforms on Teacher Development and Management, Textbooks and Girl's
Education with the overall aim to improve the quality of basic education "
b\. If this is a single DPL operation (not part of a series), were the project objectives/ key
associated outcome targets revised during implementation?
No
c\. Policy Areas:
Government policy areas supported by the Bridge Grant operation include the implementation of the Nine -Year Basic
Education Policy and Strategy \.
This bridge grant supported government reform efforts in the design and implementation of three policy areas : the
improvement of teacher competencies, the effective and efficient procurement and distribution of textbooks, and the
improvement of girlsâ academic performance (Program Document p\. 26)\.
The three policy areas were:
1\. Teacher Development and Management Policy \. Improve better oversight through :
Adoption of teacher development and management policy to establish entity for oversight of teacher services \.
Adoption of cost-based strategy for coordinated in -service teacher training\.
2\. Effective and Efficient Procurement and Distribution of Textbooks \. Decentralize textbook selection and
procurement to the schools to improve the distribution and faster availability of textbooks through :
Adoption of procedures for decentralized procurement and selection of textbooks following textbook policy \.
Issuance of invitation to submit proposals of teaching material to be included in national list \.
3\. Improvement of Girls â Academic Performance \. Improve the lower attainment for girls through :
Adoption of girl's education policy, including Gender -specific data collection and analysis \.
Adoption of cost-based plan to implement girl's education strategy \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Financing : This one-year bridge operation was a single tranche Development Policy Operation (DPO)\. It was
funded from the Catalytic Fund Trust Fund which is the Fast Track Initiative (FTI) mechanism for the implementation
of endorsed education programs \. This was a bridge grant Trust Fund for 2009, and it followed-up a 2-year FTI Trust
Fund of $70 million implemented in 2007-2008\. In November 2010 Rwanda was approved for a follow-up 3-year FTI
Trust Fund for the period of 2010-2012\.
Borrower contribution : The Bridge Grant disbursed fully to the general government budget to co -finance the
implementation of the education sector strategy \. The education sector is co -funded by the government and other
donors who provide education budget support including DFID, AfDB, CIDA, the Netherlands and Belgium \.
Dates Disbursement suffered a seven -month delay (12/23/2009 instead of 5/29/2009) and this caused the Ministry
Dates:
of Finance to step in and reallocate funds to education until the Grant disbursed (ICR Annex 2)\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High
The objective of the operation, with a focus on improving quality of basic education through Government reforms in
teachers, textbook procurement, and girl's education, remains highly relevant \. These are crucial challenges for
Rwanda in its efforts to improve quality and access to basic education, achieve universal completion of primary
education, universalize nine -grade basic education, and continue addressing gender issues \. The objective is in line
with objectives of the poverty reduction strategy, the Growth Flagship and Vision 2020, and consistent with the fiscal
framework\. It supports the Country Assistance Strategy FY 09-FY12 that promotes economic transformation and
growth through increasing skills, and reducing social vulnerability \.
The 2008 Joint Donor and Government Review of the Education Sector identified improving the quality of basic
education as a key priority, requiring that quality factors related to teacher supply and qualification, textbook
procurement and distribution, and gender imbalances be addressed (Project Document p\. 24)\.
b\. Relevance of Design:
Substantial
The revised Operation Policy 14\.40 requires FTI funding to be implemented as Investment Lending or as a
Development Policy Loan with disbursement to the general budget \. The precedent set in Rwanda was that about half
of Bank support was implemented through DPOs \. Based on previous experience and education budget support by
other donors, the instrument choice as a DPO was appropriate in a multi -donor sector-wide approach context, where
the Bank had to prepare short -time bridge funding given the unpredictability of FTI \. However, an independent
External Quality Review (consultants hired by FTI secretariat ) and other donors recommended disbursement
earmarked to the education budget, which was not an option for the Bank \. Also, some donors had reservations about
the choice of the DPO instruments with prior actions to be met for disbursement, and Bank procedures to follow \.
The PAD contained a detailed results framework that plausibly linked the objectives, policy areas, expected
outcomes and key-indicators\. The policy areas with prior actions and the project objectives all emerge from
recommendations made in previous analytical work (Country Status Report 2003)\.Exogenous factors that could
affect outcome were taken into account, including an increase in capitation financing and an extension of the number
of school years in basic education \. Given the one-year time frame, the Government ICR considers the prior actions
as appropriate, although the first was on the ambitious side \.
4\. Achievement of Objectives (Efficacy):
Objective : to support the Government's policy reforms on Teacher Development and Management, Textbooks
and Girl's Education to improve the quality of basic education \.
It was not expected that the positive impact of the reforms supported by this Bridge Grant would be measurable
within the short, one-year implementation period of the operation \. Also the positive impact on the education
indicators of the reforms supported by this operation cannot be distinguished from other reforms that were carried out
during this operationâs implementation period\. However, this operation helped maintain the momentum of a
successful and ambitious reform process by maintaining a strong focus on the importance of the quality of basic
education, and pushing important reforms (ICR p\. 10)\.
An adequate macro-framework was maintained during the operation \. Average annual GDP growth rate for 2006-10
was 7%\. Rwanda achieved 8\.6% growth in 2011, exceeding the average growth for Sub -Saharan Africa of 5%
(Rwanda Economic Memorandum 2012)\.
The operation contributed about 20% of the basic education budget which helped to maintain and implement
challenging basic education reforms through the one -year bridge financing\.
Objective : Improve the quality of basic education - Substantial
Outputs :
Teacher development and management policy
Deputy Director-General appointed for teacher development and management under the Rwanda Education
Board
The Head of the teacher service commission (TSC) became the Deputy Director-General of the Education
Board, whose law has been passed by the Government (ICR p 20)\.
The Commission is establishing an electronic National Teacher Registration System and database to create a
teacher profession pathway; and is designing policies and tools for Teacher Development Systems \.
Guidelines for teacher in-service training providers were developed \.
As part of teacher management policy reform the Ministry of Education announced in Oct 2010 to review salary
increases and incentives, and provide better access to loans for teachers \.
The government increased the number of primary education teachers from 32,338 in 2008 to 40,299 in 2011
(World Development Indicators, WDI )\.
Textbook procurement to schools
The number of trained textbook evaluators increased from 0 in 2009 to 300 in February 2010, surpassing the
target of 250 evaluators\. Evaluators chose 4 publishers for each subject and each grade \.
The number schools with a textbook selection committee increased from Sept 2009 to Feb 2010 as follows: (i)
primary from 0 to 2,408 (100%) surpassing target of 1,926; and (ii) secondary from 0 to 1,449 (100%) surpassing
target of 1,159\.
Previous monopoly for textbook procurement was replaced by 28 publishers competing for textbooks with
national curriculum\. Textbook procurement contracts were awarded to 13 publishers\. 4 publishers were selected
for each grade and subject by the 300 newly-trained textbook evaluators \.
Of 13 contracted publishers, 9 fully completed distribution to schools and 5 publishers were late\. According to
the ICR most late deliveries were of supplementary materials rather than core textbooks \. Where publishers
delivered after specified deadlines or failed to meet production standards, letters were written drawing
publishers attention to contractual penalties \.
Each school made its own choice of textbooks to buy from the list of 4 for each subject and grade \.
Girl's academic performance policy
Gender sensitive core indicators were made available and were discussed during annual joint review of
education sector strategy \.
Girl's education policy to improve self -esteem, and performance of rural girls in particular, were disseminated to
every district\. Awareness-raising workshops took place in Nov 2010 to launch implementation (ICR p\. 19)\.
Outcomes
98% of schools made textbook orders on time (target 60%)\.
Distribution was accurate with very few queries \.
Textbooks reached all schools for the first time; however, the ICR does not report whether faster textbook
procurement had an impact on the textbook -to-student ratio\.
The primary completion rate for females (% of relevant age group) increased from 53% in 2008 to 73\.8% in 2010
and for males from 49% to 65\.4%, respectively (World Development Indicators, WDI )\. These stronger
improvements compared to the target are probably due to the extension of the number of school years in basic
education (from six to nine) and the consequent improvement in retention rates \. It is not possible to segregate
the impact of the reforms supported by the operation and the effect of the move to nine years of basic education
(ICR p\. 10)\.
Pupil to qualified teacher ratio in primary schools improved from 67:1 in 2008 to 63:1 in 2009 (meeting target 65
for 2009), and dropped to 58 in 2010 (meeting target of 65)\. However, this was mainly a result of increasing
capitation funding to schools in 2008 (co-financed by the first round of FTI Catalytic Fund that allowed the
contracting of nearly 2,000 additional qualified teachers\.
5\. Efficiency (not applicable to DPLs):
6\. Outcome:
The outcome is rated Satisfactory based on High relevance of objectives and Substantial relevance of design, and
Substantial improvement in the quality of basic education \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The education strategy implementation continues to be supported by the government and the donor community \.
However, limited basic education financing, double shifting and a reduction of subjects taught by class pose a risk to
the objective of improving quality of basic education \. Basic education financing is highly donor -dependent, with the
grants alone contributing between 20% to 25% annually of the public basic education budget in 2007 - 2009\.
Increased financing for basic education is needed to ensure the implementation of the basic education reforms and
address current constraints to quality including double -shifting due to a shortage of class rooms and qualified
teachers, and a reduction in the number of subjects taught by class \. Weak management capacity in lower
administration and in some schools increases the implementation risk of the education strategy and the procurement
risk for textbooks in a decentralized system \.
The government is addressing these risks by implementing a broad program of interventions to improve quality of
education, including the recruitment of 2,471 new teachers for primary education for the year 2010/11; construction
and equipment of 2,936 classrooms for nine-year basic education; construction of 5,714 latrines (benefitting girlsâ
education, which is one of the DPO's policy focus areas ); purchase and distribution of 3,768,467 textbooks for
primary and secondary education; training of 42,826 primary and secondary teachers in English language; and
distribution of 68,746 laptops to schools\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The Bank had been the supervising entity for the previous Catalytic Fund Grant, and incorporated lessons
from the previous experience in the preparation and appraisal of this bridge grant \. The team responded quickly to
the need for one-year bridge funding and completed appraisal within 3 months in a context of changing FTI
procedure rules and new Bank rules for the preparation of recipient executed trust funds in July 2008\. The time
pressure caused by the compressed processing time to meet FTI deadlines seems to have limited the time to
brief donors comprehensively about the DPO as an instrument \. Combined with changing FTI procedures and
internal Bank DPO procedures this adversely affected the perception of the Bank among donors and increased
transaction costs\. It also caused a delay in disbursement by more than three months \. Although the Bank
delivered this Bridge Grant on time, the experience of donors with the Bank âs rule changes led to the perception
that the new rules affected the decision -making process among donors with minimal consultation \. On the other
hand, the Bank team operated under strong time pressure and had to deliver this one -year operation within few
months and a limited budget, both of which may have constrained the time available to inform all donors \.
The preparation included a thorough assessment of the macro, fiscal and sector context, progress made in the
education strategy, gender and social aspects, and financing modalities \. Given the short time frame, the prior
policy actions were realistically linked to the Government âs education sector strategy which is endorsed by all
donors working in education\. The indicators used to assess progress include inputs and outputs and constitute a
sound results chain\. While the results framework in the Project Document does not report on intermediate
outcomes caused by the policy actions within the 1-year implementation time (e\.g\. number of text book per
student, textbook procurement time, number of in -service training for teachers, percent of female teachers etc ),
these quality indicators were tracked during strategy implementation \.
The team sought advice from an External Quality Review to strengthen the quality of the design \. The Quality
Review rated the design as Moderately Satisfactory including moderately unsatisfactory for funding due to a
financing gap in the Government budget for the education strategy implementation, and âanemic prior actionsâ?\.
The recommendations could only be used to a limited extend as the Review team seems not to have fully
understood the local context (DFID comments ICR p\. 23)\.
at -Entry Rating :
Quality -at- Moderately Satisfactory
b\. Quality of supervision:
Bank supervision was coordinated with development partners, and this improved coordination reduced the
bureaucracy for the Ministry of Education as reported by the borrower \. However, DFID identified increased
transaction costs with additional demands on policy actions (ICR p 23)\. Although all prior actions were
implemented by Sept 3, 2009, the operations only disbursed on December 23, 2009, causing the Ministry of
Finance to provide short-term funding to education (at an additional cost), to ensure continued implementation of
the education strategy\. This delay was caused by FTI -related administration required to approve disbursement of
the grant\.
DFID indicated that the delay in disbursement held back some planned activities; and that M&E activities became
vague after the disbursement of funds, raising questions whether enough information was available for the final
completion report\. However, the ICR and government both reported on progress based on indicators since the
December 2009 disbursement\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The government overall maintained a prudent macro - and fiscal framework and implemented structural reforms
during the economic slowdown in 2009\. When the FTI disbursement was delayed by 3 months in 2009, the
Ministry of Finance stepped in and allocated extra funds to education \.
The basic education reforms are an integral part of the government's reform program, highlighting strong
ownership\. The reforms were supported with increased government funding to basic education, elimination of
school-fees for the first 9 years, and a cost-based approach to strategy development and related resource
allocation\. As is highlighted in the CSR (p146), Rwanda allocated nearly 49 percent of its recurrent education
budget to primary education in 2008, which is similar to the average in other African countries and the EFA -FTI
indicative framework benchmark of 50 percent\. The GoR efforts to implement the nine-year basic education
policy resulted in substantial investments in lower secondary education, which is also a part of basic education \.
Currently, expenditures on basic education amount to 67% of total public education spending (Joint Review of
Education Sector, 2011/12 budget)\.
Government Performance Rating : Satisfactory
b\. Implementing Agency Performance:
The Ministry of Education implemented prior actions to continue education reforms with a small number of
staff and weak capacity at the lower administration level \. However the ICR (p\. 14) notes that its leadership of the
preparation process was less than optimal which was to a large extent due to the agency being forced to adjust in
a short term to new procedures enforced by the Bank and FTI \. The Ministry of Education, in collaboration with
DFID, successfully applied for a FTI -CF follow-up Trust Fund of $70 million for 2010-13 (approved in Nov 2010)
to continue support basic education \. The Ministry of Education also maintains a database to monitor indicators
and evaluate progress with the education strategy implementation which provided important information on
progress since the closure of this operation \.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The M&E design is in line with the country âs Common Performance Assessment Framework endorsed by the
Government and donors\. Given that data are available, additional output and outcome indicators could have been
included in the operation's results framework in the Project Document and the ICR since the 1-year operation
supported the implementation of an ongoing strategy \. The Task Team provided this additional information \.
b\. M&E Implementation:
The Education MIS was rolled out in 2009 to collect school- and college-based data for the education strategy
implementation\. The Government collected gender -specific data and used this information in monitoring and
evaluation\.
c\. M&E Utilization:
Education data were used to discuss strategy progress during the annual Joint Review of the Education Sector,
by-monthly education sector cluster group meetings, and during the annual Joint Budget Sector Review \. While the
Government in its contribution to the ICR reports several relevant output indicators, DFID indicates that M&E
activities slowed down after disbursement \.
M&E Quality Rating : Substantial
11\. Other Issues
a\. Safeguards:
No safeguard policies were triggered \.
b\. Fiduciary Compliance:
An audit of the Ministry of Education in December 2007 by the Auditor General was qualified \. The Ministry of
Education started to address these weaknesses, including lapses in compliance with laws and procedures,
weaknesses in control over payments, bank accounts and assets, and in the implementation of previous audit
recommendations\. The Ministry is now participating in a general Public Financial Management reform \. The impact of
this participation on improving the Ministry's financial management systems was not discussed in the ICR \.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Satisfactory Moderately Implementing Agency performance was
Satisfactory moderately satisfactory; according to
the IEG/OPCS harmonized evaluation
criteria, when government performance
and implementing agency performance
are both in the satisfactory range,
overall borrower performance is the
lower of the two\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
Lessons as identified in the ICR :
Allow more time for teams to adapt to changes in Operational Policy rules in a multi -donor context \. In this case,
the team was under pressure to prepare and deliver a one -year operation on time and adjust the operation to new
rules for FTI\. More time should be given in a multi-donor context to the dissemination and implementation of rule
changes to ensure all partners endorse the new rules \.
A sector -specific FTI focal person could improve sector -wide collaboration \. FTI operations involve heavy donor
collaboration which justifies an FTI focal point for the Africa education sector \.
Outcome indicators still should be reported even for single tranche DPOs \. Although this was just a one-year
DPO with a single disbursement, it still supports the implementation of an ongoing sector strategy which collects
outcome indicators\.
Decentralizing textbook procurement can substantially reduce procurement time and stock -outs \. This operation
found that a web-based system to handle all book orders from schools catalyzed the process \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The Bank ICR is comprehensive and is complemented by valuable information provided by the Government and by
DFID\. It reports the achievement of the objectives \. The ICR provides good quality analysis and explains
implementation issues in a concise way \. The ICR is internally consistent and outcome driven \. The relevant
indicators are report; however given that the data were available, the ICR could have included additional output and
outcome indicators in the operation's results framework \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |